§ 4. To effectuate any of the purposes of this article, the
legislature may authorize any city, town or village to contract
indebtedness to an amount which shall not exceed two per centum of the
average assessed valuation of the real estate of such city, town or
village subject to taxation, as determined by the last completed
assessment roll and the four preceding assessment rolls of such city,
town or village, for city, town or village taxes prior to the
contracting of such indebtedness. In ascertaining the power of a city,
or village having a population of five thousand or more as determined by
the last federal census, to contract indebtedness pursuant to this
article there may be excluded any such indebtedness if the project or
projects aided by guarantees representing such indebtedness or by loans
for which such indebtedness was contracted shall have yielded during the
preceding year net revenue to be determined annually by deducting from
the gross revenues, including periodic subsidies therefor, received from
such project or projects, all costs of operation, maintenance, repairs
and replacements, and the interest on such indebtedness and the amounts
required in such year for the payment of such indebtedness; provided
that in the case of guarantees such interest and such amounts shall have
been paid, and in the case of loans an amount equal to such interest and
such amounts shall have been paid to such city or village. The
legislature shall prescribe the method by which the amount of any such
indebtedness to be excluded shall be determined, and no such
indebtedness shall be excluded except in accordance with such
determination. The legislature may confer appropriate jurisdiction on
the appellate division of the supreme court in the judicial departments
in which such cities or villages are located for the purpose of
determining the amount of any such indebtedness to be so excluded.

The liability of a city, town or village on account of any contract
for capital or periodic subsidies to be paid subsequent to the then
current year shall, for the purpose of ascertaining the power of such
city, town or village to contract indebtedness, be deemed indebtedness
in the amount of the commuted value of the total of such capital or
periodic subsidies remaining unpaid, calculated on the basis of an
annual interest rate of four per centum. Such periodic subsidies shall
not be contracted for a period longer than the life of the projects
assisted thereby, and in no event for more than sixty years.
Indebtedness contracted pursuant to this article shall be excluded in
ascertaining the power of a city or such village otherwise to create
indebtedness under any other section of this constitution.
Notwithstanding the foregoing the legislature shall not authorize any
city or village having a population of five thousand or more to contract
indebtedness hereunder in excess of the limitations prescribed by any
other article of this constitution unless at the same time it shall by
law require such city or village to levy annually a tax or taxes other
than an ad valorem tax on real estate to an extent sufficient to provide
for the payment of the principal of and interest on any such
indebtedness. Nothing herein contained, however, shall be construed to
prevent such city or village from pledging its faith and credit for the
payment of such principal and interest nor shall any such law prevent
recourse to an ad valorem tax on real estate to the extent that revenue
derived from such other tax or taxes in any year, together with revenues
from the project or projects aided by the proceeds of such indebtedness,
shall become insufficient to provide fully for payment of such principal
and interest in that year.