Section 313. Management of funds

a. The funds of the policemen's and
  firemen's retirement system shall be managed  in  accordance  with  this
  section.
    b.  The  comptroller  shall  be  trustee  of  the several funds of the
  policemen's  and  firemen's  retirement  system.  Such  funds  shall  be
  invested  by  the comptroller in securities in which he is authorized by
  law to invest the funds of the state,  except  that  he  may  invest  in
  obligations  consisting  of  notes, bonds, debentures or equipment trust
  certificates issued under an indenture, which are the direct obligations
  of, or in the case of equipment trust certificates are secured by direct
  obligations of, a railroad or industrial corporation, or  a  corporation
  engaged  directly  and  primarily  in  the  production,  transportation,
  distribution, or sale of  electricity,  or  gas,  or  the  operation  of
  telephone  or telegraph systems or waterworks, or in some combination of
  them; provided the obligor corporation  is  one  which  is  incorporated
  under  the  laws  of  the United States, or any state thereof, or of the
  District of Columbia, and said obligations shall be rated at the time of
  purchase within the three  highest  classifications  established  by  at
  least  two  standard  rating  services.    The  maximum  amount that the
  comptroller may invest in such obligations shall not exceed  thirty  per
  centum  of  the  assets  of the New York state policemen's and firemen's
  retirement system's funds; and provided further that not more  than  two
  and  one-half per centum of the assets of the New York state policemen's
  and firemen's  retirement  system's  funds  shall  be  invested  in  the
  obligations  of  any  one  corporation of the highest classification and
  subsidiary or subsidiaries thereof, that not more than two per centum of
  the assets of the New York state policemen's  and  firemen's  retirement
  system's  funds  shall  be  invested  in  the  obligations  of  any  one
  corporation of the  second  highest  classification  and  subsidiary  or
  subsidiaries  thereof, that not more than one and one-half per centum of
  the assets of the New York state policemen's  and  firemen's  retirement
  system's  funds  shall  be  invested  in  the  obligations  of  any  one
  corporation of  the  third  highest  classification  and  subsidiary  or
  subsidiaries  thereof.    He  shall,  however,  be subject to all terms,
  conditions, limitations and restrictions imposed by this article and  by
  law upon the making of such investments. The comptroller shall have full
  power:
    1.  To hold, purchase, sell, assign, transfer or dispose of any of the
  securities or investments, in which any of the funds of the  policemen's
  and  firemen's  retirement  system  shall  be  invested,  including  the
  proceeds of such investments and any monies belonging to such funds, and
    2. In his name as trustee, to foreclose mortgages upon default  or  to
  take  title  to real property in such proceedings in lieu thereof and to
  lease and sell real property so acquired.
    c. The comptroller annually shall credit to each of the funds  of  the
  policemen's and firemen's retirement system regular interest on the mean
  amount therein for the preceding year.
    d.  The  custody  of  all  funds  of  the  policemen's  and  firemen's
  retirement system shall be in the charge of the head of the division  of
  the  treasury  of the department of taxation and finance, subject to the
  supervision and control of the commissioner of taxation and finance.
    e. Payment of all pensions, annuities and other benefits shall be made
  as provided in this article. For the purpose  of  meeting  disbursements
  for  pensions,  annuities and other payments ordered by the comptroller,
  the head of such division may keep on deposit an  available  fund  which
  shall not exceed ten per centum of the total amount of the several funds
  of  the policemen's and firemen's retirement system.  Every such deposit
  shall be kept only in a bank or trust company organized under  the  laws

  of  this state, or in a national bank located in this state, which shall
  furnish adequate security therefor.
    f.  The  comptroller,  however,  shall  have  a  fund in his immediate
  possession. Such fund shall be used for the immediate payment of:
    1. All pensions, annuities and other benefits, and
    2.  Such  expenses  as  may  necessarily  be  incurred  in  acquiring,
  servicing  and  foreclosing  mortgages  and  in  acquiring, managing and
  protecting investments, and
    3. Such special expenditures for which the policemen's  and  firemen's
  retirement system will be paid by the state or a participating employer.
  Such  fund  shall  be  reimbursed  from time to time by the head of such
  division on the warrant of the comptroller.
    g. Neither the comptroller nor any person employed on the work of  the
  policemen's and firemen's retirement system shall:
    1.  Except  as herein provided, have any interest, direct or indirect,
  in the gains or  profits  of  any  investment  of  the  policemen's  and
  firemen's  retirement  system, nor, in connection therewith, directly or
  indirectly, receive any pay or emolument for his services.
    2. Except as provided in section three hundred fifty of this article:
    (a) Directly or indirectly, for himself or as an agent or  partner  of
  others,  borrow  any  of  its funds or deposits or in any manner use the
  same  except  to  make  such  current  and  necessary  payments  as  are
  authorized by the comptroller, or
    (b)  Become  an endorser, surety or an obligor in any manner of monies
  loaned by or borrowed of such funds.
    h. The policemen's and firemen's retirement system may use a  part  of
  its  funds,  not  exceeding  ten  per  centum  of  its  assets,  (1) for
  purchasing or leasing of land in the city of Albany and the construction
  thereon of a suitable office building or buildings for  the  transaction
  of  the business of the retirement system, (2) for purchasing or leasing
  of land in the cities of  Albany,  Syracuse,  Buffalo,  Binghamton,  New
  York,  Rochester  and  Utica  and the construction thereon of a suitable
  office building or buildings for purposes of lease or sale to the state,
  (3) for purchasing or leasing of land in the city of Albany on the north
  and south sides of Washington avenue commonly known as the "Campus Site"
  acquired by the  state  for  a  state  building  site  pursuant  to  the
  provisions  of  chapter five hundred seventy-two of the laws of nineteen
  hundred  forty-seven  and  the  construction  thereon  of  power  plants
  including  service  connections,  electric substations including service
  connections,  garages,  warehouses  and  restaurant  facilities   deemed
  necessary  for  the  efficient  and  economical  operation of the office
  building or buildings constructed on such land and (4) for purchasing or
  leasing of land in the city of Albany acquired by the state for suitable
  parking facilities for the use primarily of employees of the  state  and
  persons  having  business  with state departments and state agencies and
  the  construction  thereon  of  such   structures,   appurtenances   and
  facilities  deemed  necessary for the efficient and economical operation
  of  the  parking  facilities  constructed  on  such  land  and  (5)  for
  purchasing  or  leasing  of  land  in  locations  approved  by the state
  university trustees and the construction,  acquisition,  reconstruction,
  rehabilitation  or  improvement  of  suitable  buildings  or  facilities
  thereon  for  purposes  of  lease  or  sale  to  the  state   university
  construction  fund, such buildings or facilities to be used by the state
  university or by state-operated institutions or  statutory  or  contract
  colleges  under  the  jurisdiction  of  the  state  university or by the
  students, faculty and staff of the  state  university  or  of  any  such
  state-operated  institution  or statutory or contract college, and their
  families.

    The policemen's and firemen's retirement system from time to time  may
  lease to any public agency any portion of a building constructed for the
  transaction  of its business which may not be required for such purpose,
  upon such terms and conditions as shall be deemed to  be  for  the  best
  interest of the policemen's and firemen's retirement system.
    Real  property  of  the  policemen's  and  firemen's retirement system
  acquired or constructed pursuant to this  subdivision  shall  be  exempt
  from taxation.
    i.  At  the  close of each fiscal year, the average rate of investment
  earnings of the retirement system shall be computed by the  actuary  and
  certified  to  the  comptroller.  This rate shall be determined from the
  investment earnings during the calendar year which  ended  three  months
  prior  to  the  close of the fiscal year. For any year that such average
  rate of earnings is in excess of three per centum but not in  excess  of
  four  per  centum,  the  comptroller  shall  declare  a  rate of special
  interest, for members earning regular  interest  of  three  per  centum,
  equal  to the difference between such average rate of earnings and three
  per centum, expressed to the lower one-tenth of one per centum, but  not
  in  excess  of  one per centum. For any year, commencing with the fiscal
  year the first day of which is April first,  nineteen  hundred  seventy,
  that  such average rate of earnings is in excess of four per centum, the
  special rate of interest for members earning regular interest  of  three
  per centum shall be equal to the difference between such average rate of
  earnings  and  three per centum, expressed to the lower one-tenth of one
  per centum, but not in excess of two per centum, and for members earning
  regular interest of four per centum, it shall be the difference  between
  such  average  rate  of  earnings  and four per centum, expressed to the
  lower one-tenth of one per centum, but not in excess of one per  centum.
  Special interest at such rates, shall be credited, by the comptroller at
  the  same  time  that  regular  interest  is credited, to the individual
  annuity savings accounts of persons who are members as of the  close  of
  the fiscal year. Special interest shall not be considered in determining
  rates of contribution of members. In the case of persons who last became
  members  on  or  after  July  first, nineteen hundred seventy-three, the
  provisions of this subdivision shall apply  only  to  the  fiscal  years
  beginning  April  first,  nineteen  hundred seventy-two and ending March
  thirty-first, nineteen hundred seventy-three.
    j. The retirement system may invest, within the limitations authorized
  for investments in conventional mortgages, a part of its funds in  first
  mortgages on real property located anywhere within the boundaries of the
  United  States  and  leased  to  the  government  of  the United States,
  provided however, that no such investment shall be made unless the terms
  of the mortgage shall provide for amortization  payments  in  an  amount
  sufficient  to  completely  amortize  the  loan within the period of the
  lease.