S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   6047
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                               May 16, 2019
                                ___________
 
 Introduced  by  Sens.  SAVINO, LITTLE -- read twice and ordered printed,
   and when  printed  to  be  committed  to  the  Committee  on  Housing,
   Construction and Community Development
 
 AN  ACT  to amend the private housing finance law, in relation to estab-
   lishing the New York state first home savings program,  which  author-
   izes  first time home buyers to establish savings accounts to purchase
   a home; and to amend the  tax  law,  in  relation  to  establishing  a
   personal income tax deduction for deposits into such accounts
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. The private housing finance law is amended by adding a  new
 article 28 to read as follows:
                              ARTICLE XXVIII
                         NEW YORK STATE FIRST HOME
                              SAVINGS PROGRAM
 SECTION 1250. PROGRAM ESTABLISHED.
         1251. PURPOSES.
         1252. DEFINITIONS.
         1253. FUNCTIONS OF THE COMPTROLLER.
         1254. POWERS OF THE COMPTROLLER.
         1255. PROGRAM REQUIREMENTS; FIRST HOME SAVINGS ACCOUNT.
         1256. PROGRAM LIMITATIONS; FIRST HOME SAVINGS ACCOUNT.
   §  1250. PROGRAM ESTABLISHED. THERE IS HEREBY ESTABLISHED A FIRST HOME
 SAVINGS PROGRAM AND SUCH PROGRAM SHALL BE KNOWN AND MAY BE CITED AS  THE
 "NEW YORK STATE FIRST HOME SAVINGS PROGRAM".
   §  1251.  PURPOSES.  THE PURPOSES OF THE PROGRAM SHALL BE TO AUTHORIZE
 THE ESTABLISHMENT OF FIRST HOME SAVINGS ACCOUNTS AND TO  PROVIDE  GUIDE-
 LINES FOR THE MAINTENANCE OF SUCH ACCOUNTS TO:
   1.  ENABLE  RESIDENTS  OF THIS STATE TO BENEFIT FROM THE TAX INCENTIVE
 PROVIDED FOR QUALIFIED STATE FIRST HOME SAVINGS ACCOUNTS  UNDER  SECTION
 SIX HUNDRED TWELVE OF THE TAX LAW; AND

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD11818-01-9

 S. 6047                             2
 
   2.  INCENTIVIZE  RESIDENTS  TO  SAVE  FOR THE PURCHASE OF A FIRST HOME
 WITHIN THE STATE.
   §  1252.  DEFINITIONS.  AS  USED  IN THIS ARTICLE, THE FOLLOWING TERMS
 SHALL HAVE THE FOLLOWING MEANINGS:
   1. "ACCOUNT" OR "FIRST HOME SAVINGS ACCOUNT" SHALL MEAN AN  INDIVIDUAL
 SAVINGS  ACCOUNT  ESTABLISHED  IN ACCORDANCE WITH THE PROVISIONS OF THIS
 ARTICLE FOR THE EXCLUSIVE BENEFIT OF THE  ACCOUNT  OWNER  OR  DESIGNATED
 BENEFICIARY  THAT IS THE FIRST TIME BUYER OF A HOME, TOWNHOME, CONDOMIN-
 IUM OR UNIT IN A COOPERATIVE HOUSING CORPORATION.
   2. "ACCOUNT OWNER" SHALL MEAN A TAXPAYER WHO ENTERS INTO A FIRST  HOME
 SAVINGS  AGREEMENT PURSUANT TO THE PROVISIONS OF THIS ARTICLE, INCLUDING
 A PERSON WHO ENTERS INTO SUCH AN AGREEMENT AS A FIDUCIARY  OR  AGENT  ON
 BEHALF  OF  A TRUST, ESTATE, PARTNERSHIP, ASSOCIATION, COMPANY OR CORPO-
 RATION.
   3. "DESIGNATED BENEFICIARY" SHALL MEAN, WITH RESPECT TO AN ACCOUNT  OR
 ACCOUNTS,  THE  DESIGNATED  INDIVIDUAL OR INDIVIDUALS   WHOSE FIRST HOME
 PURCHASE EXPENSES ARE EXPECTED TO BE PAID FROM THE ACCOUNT OR ACCOUNTS.
   4. "FINANCIAL ORGANIZATION" SHALL MEAN AN ORGANIZATION  AUTHORIZED  TO
 DO  BUSINESS  IN  THE STATE, AND (A) WHICH IS AN AUTHORIZED FIDUCIARY TO
 ACT AS A TRUSTEE PURSUANT TO THE PROVISIONS OF AN ACT OF CONGRESS  ENTI-
 TLED  "EMPLOYEE  RETIREMENT  INCOME  SECURITY  ACT  OF  1974",  AS  SUCH
 PROVISIONS MAY BE AMENDED FROM TIME TO TIME, OR  AN  INSURANCE  COMPANY;
 AND  (B)(I)  IS  LICENSED  OR  CHARTERED  BY THE DEPARTMENT OF FINANCIAL
 SERVICES, (II) IS CHARTERED BY AN  AGENCY  OF  THE  FEDERAL  GOVERNMENT,
 (III)  IS  SUBJECT  TO THE JURISDICTION AND REGULATION OF THE SECURITIES
 AND EXCHANGE COMMISSION OF THE FEDERAL GOVERNMENT,  (IV)  IS  ANY  OTHER
 ENTITY  OTHERWISE  AUTHORIZED TO ACT IN THIS STATE AS A TRUSTEE PURSUANT
 TO THE PROVISIONS OF AN ACT OF CONGRESS  ENTITLED  "EMPLOYEE  RETIREMENT
 INCOME  SECURITY  ACT  OF  1974", AS SUCH PROVISIONS MAY BE AMENDED FROM
 TIME TO TIME, (V) OR ANY BANKING ORGANIZATION AS DEFINED IN  SUBDIVISION
 ELEVEN  OF SECTION TWO OF THE BANKING LAW, NATIONAL BANKING ASSOCIATION,
 STATE CHARTERED CREDIT  UNION,  FEDERAL  MUTUAL  SAVINGS  BANK,  FEDERAL
 SAVINGS AND LOAN ASSOCIATION OR FEDERAL CREDIT UNION.
   5.  "FIRST  TIME  HOME BUYER" SHALL MEAN AN INDIVIDUAL OR INDIVIDUALS,
 NEITHER OF WHOM HAS OR HAD AN OWNERSHIP INTEREST IN  A  PRINCIPAL  RESI-
 DENCE  AT  ANY  TIME, INCLUDING RESIDENCES OWNED IN THE UNITED STATES OR
 ABROAD.  NO SUCH PERSON SHALL OWN ANY OTHER HOME INCLUDING  VACATION  OR
 INVESTMENT  RESIDENCES,  INCLUDING RESIDENCES OWNED IN THE UNITED STATES
 OR ABROAD, EXCEPT AS OTHERWISE PROVIDED IN THIS SUBDIVISION.  IF  EITHER
 THE  INDIVIDUAL  OR  INDIVIDUALS ARE NOT FIRST TIME HOME BUYERS, NEITHER
 THE INDIVIDUAL OR INDIVIDUALS SHALL BE  CONSIDERED  A  FIRST  TIME  HOME
 BUYER.  IF AN INDIVIDUAL'S ONLY POTENTIALLY DISQUALIFYING PRESENT OWNER-
 SHIP INTEREST IS OWNERSHIP OF A MOBILE OR MANUFACTURED HOME,  THE  INDI-
 VIDUAL SHALL BE CONSIDERED A FIRST TIME HOME BUYER AND SHALL BE ELIGIBLE
 FOR  A  FIRST HOME ACCOUNT DEDUCTION. FOR THE PURPOSES OF THIS ARTICLE A
 "MOBILE OR MANUFACTURED HOME" SHALL MEAN A STRUCTURE THAT IS  VALUED  AS
 PERSONAL PROPERTY AND NOT REAL PROPERTY. IF, DUE TO HIS OR HER OWNERSHIP
 OF  A  MOBILE  OR  MANUFACTURED  HOME, THE INDIVIDUAL HAS CLAIMED A REAL
 ESTATE TAX OR HOME MORTGAGE DEDUCTION ON HIS OR HER PERSONAL INCOME  TAX
 RETURNS, SUCH INDIVIDUAL SHALL NOT BE CONSIDERED A FIRST TIME HOME BUYER
 REGARDLESS  OF  WHETHER  THE  MOBILE OF MANUFACTURED HOME WAS CONSIDERED
 PERSONAL OR REAL PROPERTY.
   6. "OWNERSHIP INTEREST" SHALL MEAN A  FEE  SIMPLE  INTEREST,  A  JOINT
 TENANCY, A TENANCY IN COMMON, A TENANCY BY THE ENTIRETY, THE INTEREST OF
 A  TENANT-SHARE  HOLDER  IN  A  COOPERATIVE,  A  LIFE  ESTATE  OR A LAND
 CONTRACT. INTERESTS WHICH DO NOT CONSTITUTE OWNERSHIP INTERESTS  INCLUDE

 S. 6047                             3
 
 THE  FOLLOWING:  (A) REMAINDER INTERESTS, (B) A LEASE WITH OR WITHOUT AN
 OPTION TO PURCHASE, (C) A MERE EXPECTANCY TO INHERIT AN  INTEREST  IN  A
 RESIDENCE,  (D) THE INTEREST THAT A PURCHASER OF A RESIDENCE ACQUIRES ON
 THE  EXECUTION OF A PURCHASE CONTRACT AND (E) AN INTEREST IN REAL ESTATE
 OTHER THAN A RESIDENCE.
   7. "PROGRAM" SHALL MEAN THE NEW YORK FIRST HOME SAVINGS PROGRAM ESTAB-
 LISHED PURSUANT TO THIS ARTICLE.
   8. "QUALIFIED FIRST HOME PURCHASE EXPENSES" SHALL MEAN MONIES  APPLIED
 FOR  THE  PURCHASE OR CONSTRUCTION OF A HOUSE, TOWNHOUSE, CONDOMINIUM OR
 UNIT IN A COOPERATIVE HOUSING CORPORATION WITHIN THE STATE TO BE USED AS
 A PRIMARY RESIDENCE OF THE ACCOUNT OWNER OR DESIGNATED BENEFICIARY FOR A
 PERIOD OF NOT LESS THAN TWO YEARS AFTER PURCHASE.
   9. "QUALIFIED RESIDENTIAL HOUSING"  SHALL  MEAN  A  HOUSE,  TOWNHOUSE,
 CONDOMINIUM  OR  UNIT  IN  A  COOPERATIVE HOUSING CORPORATION WITHIN THE
 STATE.
   10. "QUALIFIED WITHDRAWAL" SHALL MEAN A WITHDRAWAL FROM AN ACCOUNT  TO
 PAY  THE  QUALIFIED  FIRST HOME PURCHASE EXPENSE OF THE ACCOUNT OWNER OR
 DESIGNATED BENEFICIARY OF THE ACCOUNT.
   11. "NONQUALIFIED WITHDRAWAL" SHALL MEAN A WITHDRAWAL FROM AN  ACCOUNT
 BUT SHALL NOT INCLUDE:
   (A) A QUALIFIED WITHDRAWAL;
   (B) A WITHDRAWAL MADE AS THE RESULT OF DEATH;
   (C) AN UNFORESEEABLE EMERGENCY; OR
   (D) NEED BASED UPON QUALIFYING FOR MILITARY SERVICE IN THE ARMED FORC-
 ES OF THE UNITED STATES AS DETERMINED BY RULES AN REGULATIONS PROMULGAT-
 ED BY THE COMPTROLLER.
   12. "COMPTROLLER" SHALL MEAN THE STATE COMPTROLLER.
   13.  "MANAGEMENT  CONTRACT"  SHALL  MEAN  THE CONTRACT EXECUTED BY THE
 COMPTROLLER AND A FINANCIAL ORGANIZATION SELECTED TO ACT AS A DEPOSITORY
 AND MANAGER OF THE PROGRAM.
   14. "FIRST HOME SAVINGS AGREEMENT" SHALL MEAN AN AGREEMENT BETWEEN THE
 COMPTROLLER OR A FINANCIAL ORGANIZATION AND THE ACCOUNT OWNER.
   15. "PROGRAM MANAGER" SHALL MEAN A FINANCIAL ORGANIZATION SELECTED  BY
 THE COMPTROLLER TO ACT AS A DEPOSITORY AND MANAGER OF THE PROGRAM.
   16.  "COMMISSIONER"  SHALL  MEAN  THE  COMMISSIONER  OF  TAXATION  AND
 FINANCE.
   § 1253. FUNCTIONS OF THE COMPTROLLER.  1. THE COMPTROLLER SHALL IMPLE-
 MENT THE PROGRAM UNDER THE TERMS  AND  CONDITIONS  ESTABLISHED  BY  THIS
 ARTICLE AND A MEMORANDUM OF UNDERSTANDING WITH THE COMMISSIONER RELATING
 TO  ANY TERMS OR CONDITIONS NOT OTHERWISE EXPRESSLY PROVIDED FOR IN THIS
 ARTICLE.
   2. IN FURTHERANCE OF SUCH IMPLEMENTATION THE COMPTROLLER SHALL:
   (A) DEVELOP AND IMPLEMENT THE PROGRAM IN A MANNER CONSISTENT WITH  THE
 PROVISIONS  OF THIS ARTICLE THROUGH RULES AND REGULATIONS ESTABLISHED IN
 ACCORDANCE WITH THE STATE ADMINISTRATIVE PROCEDURE ACT;
   (B) ENGAGE THE SERVICES OF CONSULTANTS ON A CONTRACT BASIS FOR RENDER-
 ING PROFESSIONAL AND TECHNICAL ASSISTANCE AND ADVICE;
   (C) SEEK RULINGS AND OTHER GUIDANCE FROM THE UNITED STATES  DEPARTMENT
 OF TREASURY AND THE INTERNAL REVENUE SERVICE RELATING TO THE PROGRAM;
   (D)  MAKE  CHANGES TO THE PROGRAM REQUIRED FOR THE PARTICIPANTS IN THE
 PROGRAM TO OBTAIN THE STATE INCOME TAX BENEFITS OR TREATMENT PROVIDED BY
 THIS ARTICLE;
   (E) CHARGE, IMPOSE AND COLLECT ADMINISTRATIVE FEES AND SERVICE CHARGES
 IN CONNECTION WITH ANY AGREEMENT, CONTRACT OR  TRANSACTION  RELATING  TO
 THE PROGRAM;
   (F) DEVELOP MARKETING PLANS AND PROMOTION MATERIALS;

 S. 6047                             4
 
   (G)  ESTABLISH THE METHODS BY WHICH THE FUNDS HELD IN SUCH ACCOUNTS BE
 DISPERSED;
   (H)  ESTABLISH THE METHOD BY WHICH FUNDS SHALL BE ALLOCATED TO PAY FOR
 ADMINISTRATIVE COSTS; AND
   (I) DO ALL THINGS NECESSARY AND PROPER TO CARRY OUT  THE  PURPOSES  OF
 THIS ARTICLE.
   §  1254.  POWERS  OF THE COMPTROLLER. 1. THE COMPTROLLER MAY IMPLEMENT
 THE PROGRAM THROUGH USE OF FINANCIAL ORGANIZATIONS AS ACCOUNT  DEPOSITO-
 RIES  AND  MANAGERS.  UNDER  THE PROGRAM, AN ACCOUNT OWNER MAY ESTABLISH
 ACCOUNTS DIRECTLY WITH AN ACCOUNT DEPOSITORY.
   2. THE COMPTROLLER MAY SOLICIT PROPOSALS FROM FINANCIAL  ORGANIZATIONS
 TO  ACT AS DEPOSITORIES AND MANAGERS OF THE PROGRAM. FINANCIAL ORGANIZA-
 TIONS SUBMITTING PROPOSALS  SHALL  DESCRIBE  THE  INVESTMENT  INSTRUMENT
 WHICH WILL BE HELD IN ACCOUNTS.  THE COMPTROLLER SHALL SELECT AS PROGRAM
 DEPOSITORIES  AND  MANAGERS  THE  FINANCIAL ORGANIZATION, FROM AMONG THE
 BIDDING FINANCIAL ORGANIZATIONS THAT DEMONSTRATES THE MOST  ADVANTAGEOUS
 COMBINATION,  BOTH  TO POTENTIAL PROGRAM PARTICIPANTS AND THIS STATE, OF
 THE FOLLOWING FACTORS:
   (A) FINANCIAL STABILITY AND INTEGRITY OF THE FINANCIAL ORGANIZATION;
   (B) THE SAFETY OF THE INVESTMENT INSTRUMENT BEING OFFERED;
   (C) THE ABILITY OF THE INVESTMENT INSTRUMENT TO TRACK INCREASING COSTS
 OF RESIDENTIAL HOUSING;
   (D) THE ABILITY OF THE FINANCIAL ORGANIZATION TO SATISFY RECORDKEEPING
 AND REPORTING REQUIREMENTS;
   (E) THE FINANCIAL ORGANIZATION'S PLAN FOR PROMOTING  THE  PROGRAM  AND
 THE INVESTMENT IT IS WILLING TO MAKE TO PROMOTE THE PROGRAM;
   (F)  THE  FEES,  IF ANY, PROPOSED TO BE CHARGED TO PERSONS FOR OPENING
 ACCOUNTS;
   (G) THE MINIMUM INITIAL DEPOSIT AND  MINIMUM  CONTRIBUTIONS  THAT  THE
 FINANCIAL ORGANIZATION WILL REQUIRE;
   (H)  THE  ABILITY  OF BANKING ORGANIZATIONS TO ACCEPT ELECTRONIC WITH-
 DRAWALS, INCLUDING PAYROLL DEDUCTION PLANS; AND
   (I) OTHER BENEFITS TO THE STATE  OR  ITS  RESIDENTS  INCLUDED  IN  THE
 PROPOSAL, INCLUDING FEES PAYABLE TO THE STATE TO COVER EXPENSES OF OPER-
 ATION OF THE PROGRAM.
   3.  THE  COMPTROLLER MAY ENTER INTO A CONTRACT WITH A FINANCIAL ORGAN-
 IZATION. SUCH FINANCIAL ORGANIZATION MANAGEMENT MAY PROVIDE ONE OR  MORE
 TYPES OF INVESTMENT INSTRUMENT.
   4. THE COMPTROLLER MAY SELECT MORE THAN ONE FINANCIAL ORGANIZATION FOR
 THE PROGRAM.
   5.  A MANAGEMENT CONTRACT SHALL INCLUDE, AT A MINIMUM, TERMS REQUIRING
 THE FINANCIAL ORGANIZATION TO:
   (A) TAKE ANY ACTION REQUIRED TO KEEP THE PROGRAM  IN  COMPLIANCE  WITH
 REQUIREMENTS  OF  SECTION  TWELVE HUNDRED FIFTY-FIVE OF THIS ARTICLE AND
 ANY ACTIONS NOT CONTRARY TO ITS CONTRACT TO MANAGE THE PROGRAM TO QUALI-
 FY AS A "FIRST HOME SAVINGS  ACCOUNT"  UNDER  PARAGRAPH  FORTY-THREE  OF
 SUBSECTION (C) OF SECTION SIX HUNDRED TWELVE OF THE TAX LAW;
   (B)  KEEP  ADEQUATE  RECORDS OF EACH ACCOUNT, KEEP EACH ACCOUNT SEGRE-
 GATED FROM EACH OTHER ACCOUNT, AND  PROVIDE  THE  COMPTROLLER  WITH  THE
 INFORMATION  NECESSARY  TO  PREPARE  THE  STATEMENTS REQUIRED BY SECTION
 TWELVE HUNDRED FIFTY-FIVE OF THIS ARTICLE;
   (C) COMPILE AND TOTAL INFORMATION CONTAINED IN STATEMENTS REQUIRED  TO
 BE  PREPARED UNDER SECTION TWELVE HUNDRED FIFTY-FIVE OF THIS ARTICLE AND
 PROVIDE SUCH COMPILATIONS TO THE COMPTROLLER;

 S. 6047                             5
 
   (D) IF THERE IS MORE THAN ONE PROGRAM MANAGER, PROVIDE THE COMPTROLLER
 WITH SUCH INFORMATION NECESSARY TO  DETERMINE  COMPLIANCE  WITH  SECTION
 TWELVE HUNDRED FIFTY-FIVE OF THIS ARTICLE;
   (E)  PROVIDE  THE  COMPTROLLER OR HIS DESIGNEE ACCESS TO THE BOOKS AND
 RECORDS OF THE PROGRAM MANAGER TO THE EXTENT NEEDED TO DETERMINE COMPLI-
 ANCE WITH THE CONTRACT;
   (F) HOLD ALL ACCOUNTS FOR THE BENEFIT OF THE ACCOUNT OWNER;
   (G) BE AUDITED AT  LEAST  ANNUALLY  BY  A  FIRM  OF  CERTIFIED  PUBLIC
 ACCOUNTANTS SELECTED BY THE PROGRAM MANAGER AND THAT THE RESULTS OF SUCH
 AUDIT BE PROVIDED TO THE COMPTROLLER;
   (H)  PROVIDE THE COMPTROLLER WITH COPIES OF ALL REGULATORY FILINGS AND
 REPORTS MADE BY IT DURING THE TERM OF THE MANAGEMENT CONTRACT  OR  WHILE
 IT  IS  HOLDING ANY ACCOUNTS, OTHER THAN CONFIDENTIAL FILINGS OR REPORTS
 THAT WILL NOT BECOME PART OF THE PROGRAM. THE PROGRAM MANAGER SHALL MAKE
 AVAILABLE FOR REVIEW BY THE COMPTROLLER  THE  RESULTS  OF  ANY  PERIODIC
 EXAMINATION  OF  SUCH MANAGER BY ANY STATE OR FEDERAL BANKING, INSURANCE
 OR SECURITIES COMMISSION, EXCEPT TO  THE  EXTENT  THAT  SUCH  REPORT  OR
 REPORTS  MAY  NOT BE DISCLOSED UNDER APPLICABLE LAW OR THE RULES OF SUCH
 COMMISSION; AND
   (I) ENSURE THAT ANY DESCRIPTION OF THE PROGRAM, WHETHER IN WRITING  OR
 THROUGH  THE  USE OF ANY MEDIA, IS CONSISTENT WITH THE MARKETING PLAN AS
 DEVELOPED PURSUANT TO THE PROVISIONS OF SECTION  TWELVE  HUNDRED  FIFTY-
 THREE OF THIS ARTICLE.
   6. THE COMPTROLLER MAY PROVIDE THAT AN AUDIT SHALL BE CONDUCTED OF THE
 OPERATIONS  AND FINANCIAL POSITION OF THE PROGRAM DEPOSITORY AND MANAGER
 AT ANY TIME IF THE COMPTROLLER HAS ANY REASON TO BE CONCERNED ABOUT  THE
 FINANCIAL  POSITION,  THE  RECORDKEEPING  PRACTICES,  OR  THE  STATUS OF
 ACCOUNTS OF SUCH PROGRAM DEPOSITORY AND MANAGER.
   7. DURING THE TERM OF ANY CONTRACT WITH A PROGRAM MANAGER,  THE  COMP-
 TROLLER SHALL CONDUCT AN EXAMINATION OF SUCH MANAGER AND ITS HANDLING OF
 ACCOUNTS.  SUCH  EXAMINATION  SHALL  BE CONDUCTED AT LEAST BIENNIALLY IF
 SUCH MANAGER IS NOT OTHERWISE SUBJECT TO  PERIODIC  EXAMINATION  BY  THE
 SUPERINTENDENT  OF  FINANCIAL  SERVICES,  THE  FEDERAL DEPOSIT INSURANCE
 CORPORATION OR OTHER SIMILAR ENTITY.
   8. (A) IF SELECTION OF A FINANCIAL ORGANIZATION AS A  PROGRAM  MANAGER
 OR DEPOSITORY IS NOT RENEWED, AFTER THE END OF ITS TERM:
   (I) ACCOUNTS PREVIOUSLY ESTABLISHED AND HELD IN INVESTMENT INSTRUMENTS
 AT SUCH FINANCIAL ORGANIZATION MAY BE TERMINATED;
   (II) ADDITIONAL CONTRIBUTIONS MAY BE MADE TO SUCH ACCOUNTS;
   (III)  NO NEW ACCOUNTS MAY BE PLACED WITH SUCH FINANCIAL ORGANIZATION;
 AND
   (IV) EXISTING ACCOUNTS HELD BY SUCH DEPOSITORY SHALL REMAIN SUBJECT TO
 ALL OVERSIGHT AND REPORTING REQUIREMENTS ESTABLISHED BY THE COMPTROLLER.
   (B) IF THE  COMPTROLLER  TERMINATES  A  FINANCIAL  ORGANIZATION  AS  A
 PROGRAM  MANAGER OR DEPOSITORY, HE OR SHE SHALL TAKE CUSTODY OF ACCOUNTS
 HELD BY SUCH FINANCIAL ORGANIZATION AND SHALL SEEK TO PROMPTLY  TRANSFER
 SUCH  ACCOUNTS  TO  ANOTHER FINANCIAL ORGANIZATION THAT IS SELECTED AS A
 PROGRAM MANAGER OR DEPOSITORY AND INTO INVESTMENT INSTRUMENTS AS SIMILAR
 TO THE ORIGINAL INSTRUMENTS AS POSSIBLE.
   9. THE COMPTROLLER MAY ENTER INTO SUCH CONTRACTS AS IT DEEMS NECESSARY
 AND PROPER FOR THE IMPLEMENTATION OF THE PROGRAM.
   § 1255. PROGRAM REQUIREMENTS; FIRST HOME  SAVINGS  ACCOUNT.  1.  FIRST
 HOME  SAVINGS  ACCOUNTS  ESTABLISHED  PURSUANT TO THE PROVISIONS OF THIS
 ARTICLE SHALL BE GOVERNED BY THE PROVISIONS OF THIS SECTION.
   2. A FIRST HOME SAVINGS ACCOUNT  MAY  BE  OPENED  BY  ANY  PERSON  WHO
 DESIRES  TO  SAVE  MONEY  FOR  THE  PAYMENT  OF THE QUALIFIED FIRST HOME

 S. 6047                             6
 
 PURCHASE EXPENSES OF THE ACCOUNT OWNER  OR  DESIGNATED  BENEFICIARY.  AN
 ACCOUNT  OWNER  MAY  DESIGNATE  ANOTHER PERSON AS SUCCESSOR OWNER OF THE
 ACCOUNT IN THE EVENT OF THE DEATH OF THE ORIGINAL  ACCOUNT  OWNER.  SUCH
 PERSON  WHO  OPENS AN ACCOUNT OR ANY SUCCESSOR OWNER SHALL BE CONSIDERED
 THE ACCOUNT OWNER.
   (A) AN APPLICATION FOR SUCH ACCOUNT SHALL BE IN THE FORM PRESCRIBED BY
 THE PROGRAM AND CONTAIN THE FOLLOWING:
   (I) THE NAME, ADDRESS AND SOCIAL SECURITY NUMBER OR EMPLOYER IDENTIFI-
 CATION NUMBER OF THE ACCOUNT OWNER;
   (II) THE DESIGNATION OF A DESIGNATED BENEFICIARY;
   (III) THE NAME, ADDRESS, AND SOCIAL SECURITY NUMBER OF THE  DESIGNATED
 BENEFICIARY; AND
   (IV) SUCH OTHER INFORMATION AS THE PROGRAM MAY REQUIRE.
   (B)  THE  COMPTROLLER  AND THE CORPORATION MAY ESTABLISH A NOMINAL FEE
 FOR SUCH APPLICATION.
   3. ANY PERSON, INCLUDING THE ACCOUNT OWNER, MAY MAKE CONTRIBUTIONS  TO
 THE ACCOUNT AFTER THE ACCOUNT IS OPENED.
   4. CONTRIBUTIONS TO ACCOUNTS MAY BE MADE ONLY IN CASH.
   5.  AN  ACCOUNT  OWNER MAY WITHDRAW ALL OR PART OF THE BALANCE FROM AN
 ACCOUNT AS AUTHORIZED UNDER RULES  GOVERNING  THE  PROGRAM.  SUCH  RULES
 SHALL INCLUDE PROVISIONS THAT WILL GENERALLY ENABLE THE DETERMINATION AS
 TO  WHETHER  A  WITHDRAWAL  IS  A NONQUALIFIED WITHDRAWAL OR A QUALIFIED
 WITHDRAWAL.
   6. (A) AN ACCOUNT OWNER MAY CHANGE THE DESIGNATED  BENEFICIARY  OF  AN
 ACCOUNT  IN  ACCORDANCE WITH PROCEDURES ESTABLISHED BY THE MEMORANDUM OF
 UNDERSTATING PURSUANT  TO  THE  PROVISIONS  OF  SECTION  TWELVE  HUNDRED
 FIFTY-THREE OF THIS ARTICLE.
   (B)  AN  ACCOUNT  OWNER MAY TRANSFER ALL OR A PORTION OF AN ACCOUNT TO
 ANOTHER FIRST HOME SAVINGS ACCOUNT.
   (C) CHANGES IN  DESIGNATED  BENEFICIARIES  AND  TRANSFERS  UNDER  THIS
 SUBDIVISION  SHALL  NOT BE PERMITTED TO THE EXTENT THAT THEY WOULD CAUSE
 ALL ACCOUNTS FOR THE SAME BENEFICIARY TO EXCEED THE PERMITTED  AGGREGATE
 MAXIMUM ACCOUNT BALANCE.
   7.  THE  PROGRAM SHALL PROVIDE SEPARATE ACCOUNTING FOR EACH DESIGNATED
 BENEFICIARY.
   8. NO ACCOUNT OWNER OR DESIGNATED BENEFICIARY OF ANY ACCOUNT SHALL  BE
 PERMITTED TO DIRECT THE INVESTMENT OF ANY CONTRIBUTIONS TO AN ACCOUNT OR
 THE EARNINGS THEREON MORE THAN TWO TIMES IN ANY CALENDAR YEAR.
   9.  NEITHER  AN  ACCOUNT OWNER NOR A DESIGNATED BENEFICIARY MAY USE AN
 INTEREST IN AN ACCOUNT AS SECURITY FOR A LOAN. ANY PLEDGE OF AN INTEREST
 IN AN ACCOUNT SHALL BE OF NO FORCE AND EFFECT.
   10. THE COMPTROLLER SHALL PROMULGATE RULES OR REGULATIONS  TO  PREVENT
 CONTRIBUTIONS  ON  BEHALF  OF  A  DESIGNATED BENEFICIARY IN EXCESS OF AN
 AMOUNT THAT WOULD CAUSE THE AGGREGATE ACCOUNT BALANCE FOR  ALL  ACCOUNTS
 FOR  A  DESIGNATED  BENEFICIARY  TO EXCEED A MAXIMUM ACCOUNT BALANCE, AS
 ESTABLISHED FROM TIME TO TIME BY THE COMPTROLLER.
   11. CONTRIBUTIONS TO A FIRST HOME SAVINGS ACCOUNT SHALL BE LIMITED  TO
 ONE  HUNDRED  THOUSAND  DOLLARS  PER ACCOUNT. THIS AMOUNT SHALL NOT TAKE
 INTO CONSIDERATION ANY GAIN OR LOSS TO THE PRINCIPAL INVESTMENT INTO THE
 ACCOUNT.
   12. IN THE EVENT THAT AN INDIVIDUAL MAKES A "NONQUALIFIED  WITHDRAWAL"
 OF MONIES FROM THE FIRST HOME SAVINGS ACCOUNT SUCH INDIVIDUAL SHALL HAVE
 THE  ENTIRE  ACCOUNT  TAXED,  INCLUDING  ANY  INTEREST, AS THOUGH IT WAS
 INCOME AT THE ACCOUNT OWNER'S FEDERAL TAX RATE  IN  THE  TAX  YEARS  THE
 MONIES WERE WITHDRAWN, AND INCUR AN ADDITIONAL TEN PERCENT STATE PENALTY
 ON  THE  AMOUNT  OF  EARNINGS. IN THE EVENT ACCOUNT OWNERS OR DESIGNATED

 S. 6047                             7
 
 BENEFICIARY DOES NOT USE THE QUALIFIED RESIDENTIAL HOUSING AS A  PRIMARY
 RESIDENCE  FOR A PERIOD OF NOT LESS THAN TWO YEARS AFTER THE PURCHASE OF
 SUCH HOUSING, THE ACCOUNT OWNER SHALL HAVE  THE  ENTIRE  ACCOUNT  TAXED,
 INCLUDING  ANY INTEREST, AS THOUGH IT WAS ORDINARY INCOME AT THE ACCOUNT
 OWNER'S FEDERAL TAX RATE IN THE TAX YEARS THE MONIES WERE WITHDRAWN  AND
 INCUR AN ADDITIONAL TEN PERCENT STATE PENALTY ON THE AMOUNT OF EARNINGS.
 FOR  PURPOSES  OF  THIS  ARTICLE, THE TWO YEAR PERIOD SHALL BEGIN AT THE
 TIME TITLE IS TRANSFERRED TO THE FIRST  TIME  HOME  BUYER.  THE  PENALTY
 SHALL  BE IN ADDITION TO ANY TAXES DUE PURSUANT TO A NON-QUALIFIED WITH-
 DRAWAL FROM A FIRST HOME SAVINGS ACCOUNT.
   13. PENALTIES MAY BE WAIVED BY THE COMMISSIONER IF THE INDIVIDUAL  CAN
 SHOW  PROOF  THAT  THE  REASON  THE INDIVIDUAL DID NOT USE THE QUALIFIED
 RESIDENTIAL HOUSING AS A PRIMARY RESIDENCE FOR A PERIOD OF TWO YEARS  OR
 MORE AFTER THE PURCHASE OR CONSTRUCTION WAS DUE TO EITHER:
   (A)  AN  EMPLOYMENT  RELOCATION  OUTSIDE THE STATE AND SUCH RELOCATION
 REQUIRED THE INDIVIDUAL TO BECOME A RESIDENT OF ANOTHER STATE;
   (B) AN UNFORESEEABLE EMERGENCY;
   (C) AN ABSENCE DUE TO QUALIFYING MILITARY SERVICE; OR
   (D) DEATH.
   FOR PURPOSES OF THIS SUBDIVISION, AN "UNFORESEEABLE  EMERGENCY"  SHALL
 MEAN  A  SEVERE  FINANCIAL  HARDSHIP RESULTING FROM ILLNESS, ACCIDENT OR
 PROPERTY LOSS TO THE ACCOUNT OWNER, OR HIS OR HER  DEPENDENTS  RESULTING
 IN CIRCUMSTANCES BEYOND THEIR CONTROL. THE CIRCUMSTANCES THAT CONSTITUTE
 AN  UNFORESEEABLE  FINANCIAL  EMERGENCY WILL DEPEND ON THE FACTS OF EACH
 CASE, HOWEVER, WITHDRAWAL OF ACCOUNT FUNDS  MAY  NOT  BE  MADE,  WITHOUT
 PENALTY,  TO  THE  EXTENT  THAT  SUCH  HARDSHIP IS OR MAY BE RELIEVED BY
 EITHER:
   (I) REIMBURSEMENT OR COMPENSATION BY INSURANCE OR OTHERWISE; OR
   (II) LIQUIDATION OF THE INDIVIDUAL'S ASSETS TO THE EXTENT  THE  LIQUI-
 DATION OF SUCH ASSETS WOULD NOT ITSELF CAUSE SEVERE FINANCIAL HARDSHIP.
   14.  THE  COMMISSIONER  AND THE COMPTROLLER ARE DIRECTED TO PROMULGATE
 ALL RULES AND REGULATIONS NECESSARY TO IMPLEMENT THE PROVISIONS OF  THIS
 SUBSECTION  AND ARE HEREBY DIRECTED TO ESTABLISH, SUPERVISE AND REGULATE
 FIRST HOME SAVINGS ACCOUNTS AUTHORIZED TO BE CREATED BY THIS SECTION.
   15. (A) IF THERE IS ANY DISTRIBUTION FROM A FIRST HOME SAVINGS ACCOUNT
 TO ANY INDIVIDUAL OR FOR THE BENEFIT OF ANY INDIVIDUAL DURING A CALENDAR
 YEAR, SUCH DISTRIBUTION  SHALL  BE  REPORTED  TO  THE  INTERNAL  REVENUE
 SERVICE  AND  THE  ACCOUNT  OWNER,  THE  DESIGNATED  BENEFICIARY, OR THE
 DISTRIBUTEE TO THE EXTENT REQUIRED BY FEDERAL LAW OR REGULATION.
   (B) STATEMENTS SHALL BE PROVIDED TO EACH ACCOUNT OWNER AT  LEAST  ONCE
 EACH  YEAR WITHIN SIXTY DAYS AFTER THE END OF THE TWELVE MONTH PERIOD TO
 WHICH THEY RELATE. THE STATEMENT SHALL IDENTIFY THE  CONTRIBUTIONS  MADE
 DURING  A PRECEDING TWELVE MONTH PERIOD, THE TOTAL CONTRIBUTIONS MADE TO
 THE ACCOUNT THROUGH THE END OF THE PERIOD, THE VALUE OF THE  ACCOUNT  AT
 THE  END  OF  SUCH PERIOD, DISTRIBUTIONS MADE DURING SUCH PERIOD AND ANY
 OTHER INFORMATION THAT THE COMPTROLLER SHALL REQUIRE TO BE  REPORTED  TO
 THE ACCOUNT OWNER.
   (C)  STATEMENTS AND INFORMATION RELATING TO ACCOUNTS SHALL BE PREPARED
 AND FILED TO THE EXTENT REQUIRED BY FEDERAL AND STATE TAX LAWS.
   16. AN ANNUAL FEE MAY BE IMPOSED UPON THE ACCOUNT OWNER FOR THE  MAIN-
 TENANCE OF THE ACCOUNT.
   17. THE PROGRAM SHALL DISCLOSE THE FOLLOWING INFORMATION IN WRITING TO
 EACH ACCOUNT OWNER OF A FIRST HOME SAVINGS ACCOUNT:
   (A)  THE  TERMS  AND  CONDITIONS FOR ESTABLISHING A FIRST HOME SAVINGS
 ACCOUNT;
   (B) ANY RESTRICTIONS ON THE SUBSTITUTION OF BENEFICIARIES;

 S. 6047                             8
 
   (C) THE PERSON OR ENTITY ENTITLED TO TERMINATE THE FIRST HOME  SAVINGS
 AGREEMENT;
   (D) THE PERIOD OF TIME DURING WHICH A BENEFICIARY MAY RECEIVE BENEFITS
 UNDER THE FIRST HOME SAVINGS AGREEMENT;
   (E)  THE  TERMS  AND  CONDITIONS  UNDER  WHICH  MONEY MAY BE WHOLLY OR
 PARTIALLY WITHDRAWN FROM THE PROGRAM, INCLUDING, BUT NOT LIMITED TO, ANY
 REASONABLE CHARGES AND FEES THAT MAY BE IMPOSED FOR WITHDRAWAL;
   (F) THE PROBABLE TAX CONSEQUENCES ASSOCIATED WITH CONTRIBUTIONS TO AND
 DISTRIBUTIONS FROM ACCOUNTS; AND
   (G) ALL OTHER RIGHTS AND OBLIGATIONS PURSUANT TO  FIRST  HOME  SAVINGS
 AGREEMENTS,  AND  ANY  OTHER  TERMS,  CONDITIONS,  AND PROVISIONS DEEMED
 NECESSARY AND APPROPRIATE BY THE TERMS OF THE MEMORANDUM OF  UNDERSTAND-
 ING  ENTERED INTO PURSUANT TO SECTION TWELVE HUNDRED FIFTY-THREE OF THIS
 ARTICLE.
   18. FIRST HOME SAVINGS AGREEMENTS SHALL BE SUBJECT  TO  SECTION  FOUR-
 TEEN-C OF THE BANKING LAW AND THE "TRUTH-IN-SAVINGS" REGULATIONS PROMUL-
 GATED THEREUNDER.
   19.  NOTHING  IN  THIS  ARTICLE OR IN ANY FIRST HOME SAVINGS AGREEMENT
 ENTERED INTO PURSUANT TO THIS ARTICLE SHALL BE CONSTRUED AS A  GUARANTEE
 BY THE STATE THAT THE ACCOUNT OWNER OR DESIGNATED BENEFICIARY WILL QUAL-
 IFY FOR THE PURCHASE OF A HOME.
   20.  TO ESTABLISH THAT AN ACCOUNT OWNER OR DESIGNATED BENEFICIARY IS A
 FIRST TIME HOME BUYER, THE INDIVIDUAL SHALL COMPLETE A FORM  PROMULGATED
 BY THE COMPTROLLER CERTIFYING, UNDER THE PENALTIES OF PERJURY, THAT SUCH
 INDIVIDUAL IS A FIRST TIME HOME BUYER.
   21. AN INDIVIDUAL MUST NOT INTEND TO USE ANY PORTION OF THE REAL PROP-
 ERTY  PURCHASED USING THE FIRST HOME SAVINGS ACCOUNT FUNDS IN A TRADE OR
 BUSINESS, OR AS A VACATION HOME OR AS AN INVESTMENT, EXCEPT AS AN  OWNER
 OCCUPIED MULTIPLE DWELLING WITH NO MORE THAN TWO RENTAL UNITS.
   22. MONIES WITHDRAWN FROM FIRST HOME SAVINGS ACCOUNTS AND ANY INTEREST
 WHICH  HAS  ACCRUED  SHALL  NOT  BE  CONSIDERED AS TAXABLE INCOME TO THE
 ACCOUNT OWNER FOR STATE PERSONAL INCOME TAXATION PURPOSES,  SO  LONG  AS
 THE  MONIES  ARE APPLIED FOR THE PURCHASE OR CONSTRUCTION OF A QUALIFIED
 FIRST HOME PURCHASE BY THE ACCOUNT OWNER OR  DESIGNATED  BENEFICIARY  OF
 THE ACCOUNT.
   § 1256. PROGRAM LIMITATIONS; FIRST HOME SAVINGS ACCOUNT. 1. NOTHING IN
 THIS ARTICLE SHALL BE CONSTRUED TO:
   (A)  GIVE ANY DESIGNATED BENEFICIARY ANY RIGHTS OR LEGAL INTEREST WITH
 RESPECT TO AN ACCOUNT UNLESS THE DESIGNATED BENEFICIARY IS  THE  ACCOUNT
 OWNER;
   (B) GUARANTEE THAT THE ACCOUNT OWNER OR DESIGNATED BENEFICIARY WILL BE
 FINANCIALLY QUALIFIED TO PURCHASE A HOME;
   (C)  CREATE STATE RESIDENCY FOR AN INDIVIDUAL MERELY BECAUSE THE INDI-
 VIDUAL IS A DESIGNATED BENEFICIARY; OR
   (D) GUARANTEE THAT AMOUNTS SAVED  PURSUANT  TO  THE  PROGRAM  WILL  BE
 SUFFICIENT  TO  COVER  THE DOWN PAYMENT OR CLOSING COSTS PURSUANT TO THE
 PURCHASE OF A QUALIFIED FIRST HOME.
   2. (A) NOTHING IN THIS ARTICLE SHALL CREATE OR BE CONSTRUED TO  CREATE
 ANY  OBLIGATION  OF THE COMPTROLLER, THE STATE, OR ANY AGENCY OR INSTRU-
 MENTALITY OF THE STATE TO GUARANTEE FOR THE BENEFIT OF THE ACCOUNT OWNER
 OR DESIGNATED BENEFICIARY WITH RESPECT TO:
   (I) THE RATE OF INTEREST OR OTHER RETURN ON ANY ACCOUNT; AND
   (II) THE PAYMENT OF INTEREST OR OTHER RETURN ON ANY ACCOUNT.
   (B) THE COMPTROLLER BY RULE OR REGULATION  SHALL  PROVIDE  THAT  EVERY
 CONTRACT,  APPLICATION,  DEPOSIT SLIP OR OTHER SIMILAR DOCUMENT THAT MAY
 BE USED IN CONNECTION WITH A CONTRIBUTION TO AN ACCOUNT CLEARLY INDICATE

 S. 6047                             9
 
 THAT THE ACCOUNT IS NOT INSURED BY THE STATE AND NEITHER  THE  PRINCIPAL
 DEPOSITED NOR THE INVESTMENT RETURN IS GUARANTEED BY THE STATE.
   § 2. Subsection (b) of section 612 of the tax law is amended by adding
 a new paragraph 42 to read as follows:
   (42)  (A)  EXCESS  DISTRIBUTIONS RECEIVED DURING THE TAXABLE YEAR BY A
 DISTRIBUTEE OF A FIRST HOME SAVINGS ACCOUNT ESTABLISHED  UNDER  THE  NEW
 YORK  STATE  FIRST HOME SAVINGS PROGRAM PROVIDED FOR UNDER ARTICLE TWEN-
 TY-EIGHT OF THE PRIVATE HOUSING FINANCE LAW, TO THE EXTENT  SUCH  EXCESS
 DISTRIBUTIONS  ARE  DEEMED  ATTRIBUTABLE TO THE DEDUCTIBLE CONTRIBUTIONS
 UNDER PARAGRAPH FORTY-THREE OF SUBSECTION (C) OF THIS SECTION.
   (B) (I) THE TERM "EXCESS DISTRIBUTIONS" MEANS DISTRIBUTIONS WHICH  ARE
 NOT:
   (I)  QUALIFIED  WITHDRAWALS  WITHIN  THE MEANING OF SUBDIVISION TEN OF
 SECTION TWELVE HUNDRED FIFTY-TWO OF THE PRIVATE HOUSING FINANCE LAW;
   (II) WITHDRAWALS MADE AS A RESULT OF THE DEATH OR  DISABILITY  OF  THE
 DESIGNATED  BENEFICIARY  WITHIN  THE  MEANING  OF  SUBDIVISION ELEVEN OF
 SECTION TWELVE HUNDRED FIFTY-TWO OF SUCH LAW; OR
   (III) TRANSFERS DESCRIBED IN  PARAGRAPH  (B)  OF  SUBDIVISION  SIX  OF
 SECTION TWELVE HUNDRED FIFTY-FIVE OF SUCH LAW.
   (II)  EXCESS  DISTRIBUTIONS SHALL BE DEEMED ATTRIBUTABLE TO DEDUCTIBLE
 CONTRIBUTIONS TO THE EXTENT THE AMOUNT OF ANY SUCH EXCESS  DISTRIBUTION,
 WHEN  ADDED  TO  ALL  PREVIOUS  EXCESS  DISTRIBUTIONS  FROM THE ACCOUNT,
 EXCEEDS THE AGGREGATE OF ALL NONDEDUCTIBLE CONTRIBUTIONS TO THE ACCOUNT.
   § 3. Subsection (c) of section 612 of the tax law is amended by adding
 two new paragraphs 43 and 44 to read as follows:
   (43) CONTRIBUTIONS MADE DURING THE TAXABLE YEAR BY AN ACCOUNT OWNER TO
 A FIRST HOME SAVINGS ACCOUNT ESTABLISHED UNDER THE NEW YORK STATE  FIRST
 HOME  SAVINGS  PROGRAM  PROVIDED  FOR  UNDER ARTICLE TWENTY-EIGHT OF THE
 PRIVATE HOUSING FINANCE LAW, TO THE EXTENT NOT  DEDUCTIBLE  OR  ELIGIBLE
 FOR  CREDIT  FOR  FEDERAL  INCOME  TAX  PURPOSES, PROVIDED, HOWEVER, THE
 EXCLUSION PROVIDED FOR IN THIS PARAGRAPH SHALL NOT EXCEED FIVE  THOUSAND
 DOLLARS  FOR AN INDIVIDUAL OR HEAD OF HOUSEHOLD, AND FOR MARRIED COUPLES
 WHO FILE JOINT TAX RETURNS,  SHALL  NOT  EXCEED  TEN  THOUSAND  DOLLARS;
 PROVIDED,  FURTHER  THAT  SUCH  EXCLUSION SHALL BE AVAILABLE ONLY TO THE
 ACCOUNT OWNER AND NOT TO ANY OTHER PERSON.
   (44) DISTRIBUTIONS FROM A FIRST HOME SAVINGS ACCOUNT ESTABLISHED UNDER
 THE NEW YORK STATE FIRST HOME SAVINGS PROGRAM PROVIDED FOR UNDER ARTICLE
 TWENTY-EIGHT OF THE PRIVATE HOUSING FINANCE LAW, TO THE EXTENT  INCLUDI-
 BLE IN GROSS INCOME FOR FEDERAL INCOME TAX PURPOSES.
   § 4. This act shall take effect on the one hundred eightieth day after
 it  shall have become a law, and shall apply to taxable years commencing
 on or after the first of January next succeeding the date  on  which  it
 shall  have  become  law; provided, however, that effective immediately,
 the commissioner of taxation and finance and the comptroller are author-
 ized and directed to promulgate any rules or  regulations  necessary  to
 implement  the provisions of this act on its effective date on or before
 such date.