Section 656. Reserve funds and appropriations

1. a. The corporation shall
  create and establish  special  funds  (herein  referred  to  as  capital
  reserve  funds)  and  shall pay into such a capital reserve fund (1) any
  moneys appropriated and made available by the  state  or  city  for  the
  purpose of such fund, (2) any proceeds of sale of notes or bonds, to the
  extent  provided  in  the  resolution  or resolutions of the corporation
  authorizing the issuance thereof, and (3) any other moneys which may  be
  made  available to the corporation for the purpose of such fund from any
  other source or sources. All moneys held  in  a  capital  reserve  fund,
  except  as  hereinafter provided, shall be used, as required, solely for
  the payment of the principal of bonds as the same mature or  the  annual
  sinking  fund payments, the purchase or redemption of bonds, the payment
  of interest on bonds or the payment of any redemption  premium  required
  to  be  paid  when  such bonds are redeemed prior to maturity; provided,
  however, that moneys in such fund shall not be  withdrawn  therefrom  at
  any  time in such amount as would reduce the amount of such fund to less
  than the maximum  capital  reserve  fund  requirement,  except  for  the
  purposes  of  paying  interest  on  bonds, principal of bonds and annual
  sinking fund payments, as the same become due and  for  the  payment  of
  which  other  moneys of the corporation are not available. Any income or
  interest earned by, or increment to, a capital reserve fund due  to  the
  investment  thereof  or  any  amount  in  excess  of the maximum capital
  reserve fund requirement may be transferred by the corporation to  other
  funds  or  accounts  of the corporation to the extent it does not reduce
  the amount of such  capital  reserve  fund  below  the  maximum  capital
  reserve fund requirement.
    b.  The corporation shall not issue bonds at any time if upon issuance
  the amount in the capital reserve fund will be  less  than  the  maximum
  capital reserve fund requirement, unless the corporation, at the time of
  issuance  of such bonds, shall deposit in such fund from the proceeds of
  the bonds so to be issued, or otherwise, an amount which, together  with
  the  amount then in such fund, will not be less than the maximum capital
  reserve fund requirement.
    c. No bonds or notes of the corporation shall be issued if  upon  such
  issuance  the  aggregate  principal  amount  of  bonds  and notes of the
  corporation then outstanding exceeds the lesser of eight  billion  seven
  hundred  fifty million dollars or such amount as would cause the maximum
  capital reserve fund requirement to exceed eighty-five million  dollars;
  provided  that,  in  determining  such aggregate principal amounts there
  shall be deducted (i) all sums then available for the  payment  of  such
  bonds  or notes either at maturity or through the operation of a sinking
  fund; (ii) the aggregate principal amount of  outstanding  bonds  issued
  (a) to refund notes and (b) to refund bonds, theretofore issued and then
  outstanding;  and  (iii)  the  aggregate principal amount of outstanding
  notes issued to renew notes theretofore issued and then outstanding. The
  provisions of the prior sentence notwithstanding, the corporation  shall
  not  issue  bonds  if such issuance shall cause the maximum reserve fund
  requirement to exceed  thirty  million  dollars  unless  prior  to  such
  issuance  the  senate  and  assembly  shall  have  adopted  a concurrent
  resolution passed by the votes of a majority of all the members  elected
  to  each such house and, subsequent thereto, the governor shall evidence
  in  writing  the  governor's  agreement  with  such  resolution  to  the
  chairperson  of the corporation, which resolution shall be in full force
  and effect on the date of issuance of the bonds, permitting the  maximum
  capital  reserve  fund  requirement to equal or exceed the amount of the
  maximum capital reserve fund requirement which would be  effective  upon
  the  issuance  of  the  bonds  in  question,  but in no event, shall the

  maximum capital reserve  fund  requirement  exceed  eighty-five  million
  dollars.
    d.  In computing the amount of a capital reserve fund for the purposes
  of this section, securities in which all or a portion of such fund shall
  be invested shall be valued at par if purchased at par or  if  purchased
  at  other  than par, at amortized value. Amortized value, when used with
  respect to securities purchased at a premium above or a  discount  below
  par,  shall mean the value as of any given date obtained by dividing the
  total premium or discount at which such securities were purchased by the
  number of interest payments remaining to  maturity  on  such  securities
  after  such  purchase and by multiplying the amount so calculated by the
  number of interest payment dates having passed since the  date  of  such
  purchase;  and  (i)  in the case of securities purchased at a premium by
  deducting the product thus obtained from the purchase price, and (ii) in
  the case of securities purchased at a discount  by  adding  the  product
  thus obtained to the purchase price.
    e.  To  assure the continued operation and solvency of the corporation
  for the carrying out of its corporate purposes,  provision  is  made  in
  paragraph  a  of  this  subdivision for the accumulation in each capital
  reserve fund of an amount equal to  the  maximum  capital  reserve  fund
  requirement. In order further to assure such maintenance of each capital
  reserve  fund,  there  shall  be paid by the city to the corporation for
  deposit in each capital reserve fund on  or  before  the  first  day  of
  April,  in  each  year,  such  amount, if any, needed for the purpose of
  restoring each such capital reserve fund to the maximum capital  reserve
  fund requirement for such fund, as shall be certified by the chairperson
  of  the  corporation  to  the  mayor  and the director of management and
  budget on or before the first day of December next  preceding;  provided
  that  any such amount shall have been first appropriated by or on behalf
  of the city for such purpose or shall have been otherwise made available
  from the proceeds of notes or bonds of the city  authorized  and  issued
  pursuant  to  the  local  finance  law for such purpose, which is hereby
  determined to be a  specific  object  or  purpose  having  a  period  of
  probable  usefulness  of  five  years.  In  the  event of the failure or
  inability of the city to pay over to the corporation,  in  full,  on  or
  before  such  first day of April the amount so certified the chairperson
  of the corporation shall forthwith certify to  the  comptroller  of  the
  state  of  New  York the amount remaining unpaid and thereupon the state
  comptroller shall pay to  the  corporation,  out  of  the  first  moneys
  available  for the next succeeding payments of (i) state aid apportioned
  to the city of New York as per capita  aid  for  the  support  of  local
  government  pursuant  to  section fifty-four of the state finance law or
  (ii) such other aid or assistance payable by the state to the  city  and
  not  otherwise allocated as shall supersede or supplement such state per
  capita aid, including federal moneys apportioned  to  the  city  by  the
  state,  such amount remaining unpaid, after giving written notice to the
  director of management and budget of each amount to be paid out of  such
  state  aid,  until  the  amount  in  each  such  capital reserve fund is
  restored to  the  maximum  capital  reserve  fund  requirement  thereof;
  provided,  however,  that prior to the issuance of any notes or bonds of
  the corporation pursuant to this article the city shall have  enacted  a
  local  law  authorizing  payments  from such sources into such a fund so
  long as any notes or bonds of the corporation shall be  outstanding  and
  unpaid,  and  provided  further that moneys, if any, payable to the city
  university construction fund pursuant to  the  provisions  of  the  city
  university  construction  fund act shall be paid, in full, to such fund,
  prior to any payments therefrom to the corporation. Any amount  so  paid
  over  to  the  corporation  shall  be  deducted  from  the corresponding

  apportionment of such per capita state aid otherwise payable to the city
  of New York, and shall not obligate the state to make  nor  entitle  the
  city  to  receive  any additional apportionment or payment of per capita
  state  aid. All amounts paid over to the corporation as provided in this
  paragraph, including amounts  paid  by  the  state  comptroller  out  of
  payments  of  such  state  aid, shall constitute and be accounted for as
  non-interest bearing loans by the city to the corporation and,  subject,
  subordinate  and  junior  to  the  rights of the holders of any notes or
  bonds of the corporation theretofore  or  thereafter  issued,  shall  be
  repaid  to  the  city  from  (i)  moneys in such capital reserve fund in
  excess of the maximum capital reserve fund requirement thereof  or  (ii)
  any  moneys  of  the  corporation  not  required  for  any  other of its
  corporate purposes.
    f. In the event the chairperson of the corporation  shall  certify  to
  the  mayor  and  director  of  management  and  budget  or  to the state
  comptroller any amount necessary to restore a capital  reserve  fund  to
  the  maximum  capital  reserve  fund  requirement  thereof  pursuant  to
  subdivision e of this  section,  the  chairperson  shall  simultaneously
  deliver  to  such  persons  a  statement  of the cause or causes of such
  capital reserve fund deficiency and the measures  to  be  taken  by  the
  corporation or the department of housing preservation and development to
  insure  repayment  of  any  loans  made  by the city to the corporation,
  including amounts paid by the state comptroller out of payments of state
  aid, for the purpose of restoring  such  capital  reserve  fund  to  the
  maximum  capital  reserve  fund  requirement  thereof and to prevent the
  recurrence of any such deficiency.
    2. Notwithstanding the  provisions  of  subdivision  one  hereof,  the
  corporation  may  issue bonds for any of its corporate purposes, without
  making any deposit in a capital  reserve  fund  and  the  provisions  of
  subdivision  one  of section six hundred fifty-six of this article shall
  not apply to such bonds and the principal of and interest on such  bonds
  shall not be payable from or secured by any capital reserve fund.
    3. The corporation shall create and establish such other fund or funds
  as may be necessary or desirable for its corporate purposes.