* § 109-b. Installment contracts. 1. As used in this section:

(a) "Political subdivision" shall mean a municipal corporation, school
district, district corporation or board of cooperative educational
services.

(b) "Installment purchase contract" shall mean any lease purchase
agreement, installment sales agreement or other similar agreement
providing for periodic payments between a corporation, person or other
entity and a political subdivision which has as its purpose the
financing of equipment, machinery or apparatus.

(c) "Certificate of participation" shall mean a security or other
instrument representing a proportionate interest or the right to receive
a proportionate share in lease, rental, installment or other periodic
payments made or to be made by a political subdivision or made by the
agency on behalf of a political subdivision pursuant to an installment
purchase contract.

(d) "Agency" shall mean the state of New York municipal bond bank
agency established by section twenty-four hundred thirty-three of the
public authorities law.

(e) "Agency certificates of participation" shall mean certificates of
participation executed and delivered by the agency on behalf of, for the
benefit of and pursuant to a written agreement with a political
subdivision.

(f) Functions performed by a governing board under this section shall,
in the city of New York, be performed by the mayor and comptroller, and
the approvals of the mayor and the comptroller of any agreement,
contract, instrument, arrangement or transaction contemplated by this
section shall be the only approvals required therefor, subject to the
provisions of the New York state financial emergency act for the city of
New York.

2. A political subdivision may enter into an installment purchase
contract subject to the following restrictions:

(a) Neither any person, partnership, corporation or other legal entity
nor any political subdivision, officer, employee, agency or department
nor the agency for agency certificates of participation shall execute
and deliver or cause the execution and delivery of certificates of
participation except in accordance with the provisions of this section
and with express written approval of the governing board of such
political subdivision and with the concurrence of the agency for agency
certificates of participation. The provisions of this section are hereby
made a part of every installment purchase contract entered into by such
a political subdivision or by the agency for agency certificates of
participation. Every such contract shall contain a clause expressly
reciting the provisions of this subdivision, provided, however, that the
absence of such clause in such a contract shall not obviate the duty of
all parties thereto to comply with the provisions of this subdivision.
Neither this provision, nor any other provision of this section, shall
be construed to prevent such political subdivisions from entering into
installment purchase or lease purchase agreements funded without the use
of certificates of participation or similar instruments, as otherwise
provided in this section.

(b) Subject to the provisions of subdivision five of this section, the
governing board of a political subdivision shall adopt a resolution
authorizing the installment purchase contract.

(c) Subject to the provisions of subdivision five of this section,
where the financing of equipment, machinery or apparatus pursuant to an
installment purchase contract is to be provided by agency certificates
of participation, the governing board of a political subdivision shall
adopt a resolution authorizing the written contract with the agency
setting forth the rights and liabilities of the agency and the political
subdivision as provided for in section twenty-four hundred thirty-five-a
of the public authorities law.

(d) The term of such installment purchase contract, including all
renewals thereof, shall not exceed the period of probable usefulness
prescribed by section 11.00 of the local finance law for the equipment,
machinery or apparatus being financed under the installment purchase
contract.

(e) The installment purchase contract shall separately state the
principal and interest component of the periodic payments to be made
thereunder. The total of all periodic payments which include both
principal and interest components made by the political subdivision
during each year throughout the term of the installment purchase
contract shall be substantially level or falling.

(f) The installment purchase contract shall contain the following
clause: "This contract shall be deemed executory only to the extent of
monies appropriated and available for the purpose of the contract, and
no liability on account thereof shall be incurred by the political
subdivision beyond the amount of such monies. The installment purchase
contract is not a general obligation of (insert name of political
subdivision(s)). Neither the full faith and credit nor the taxing power
of (insert name of political subdivision(s)) are pledged to the payment
of any amount due or to become due under such installment purchase
contract. It is understood that neither this contract nor any
representation by any public employee or officer creates any legal or
moral obligation to appropriate or make monies available for the purpose
of the contract." Where agency certificates of participation are the
security for such contract, such contract shall also contain the
following clause: "Further no liability on account thereof shall be
incurred by the state of New York municipal bond bank agency beyond the
amount of such monies. It is understood that neither this contract nor
any representation by any employee or officer of such agency creates any
legal or moral obligation to appropriate or make state monies available
for the purpose of the contract."

(g) No payment under the installment purchase contact except payment
for the total amount outstanding shall be financed from the proceeds of
obligations issued pursuant to the local finance law other than the
proceeds of revenue anticipation notes, tax anticipation notes or budget
notes.

3. (a) Installment purchase contracts for equipment, machinery or
apparatus shall constitute purchase contracts for public bidding
purposes and shall be subject to public bidding requirements to the
extent applicable by law. For purposes of determining whether the cost
of the equipment, machinery or apparatus exceeds the monetary threshold
fixed in section one hundred three of this article, the cost of the
equipment, machinery or apparatus, exclusive of the cost of financing,
shall be considered. If the equipment, machinery or apparatus is to be
financed by a party other than the party submitting the bid, the bid
specifications may provide that the political subdivision may assign its
right to purchase to a third party without the necessity of approval by
the other party to the contract. Nothing herein shall preclude a
political subdivision from advertising for bids in the alternative with
and without financing.

(b) Certificates of participation caused to be executed and delivered
by the political subdivision pursuant to this section, in connection
with one or more installment purchase contracts entered or expected to
be entered into by such political subdivision may be sold at public or
private sale, either independently or in connection with a pooled or
aggregate program, as determined by the governing board. The governing
board may, by resolution, delegate such power to the chief fiscal
officer, in which event such chief fiscal officer shall exercise such
powers and perform such duties until the governing board shall, by
resolution, elect to reassume the same. If certificates of participation
are sold at public sale, they shall be sold to the bidder offering the
lowest interest cost as computed in accordance with the net interest
cost method, taking into consideration any premium or discount, or the
actuarial or true interest cost method, whichever is specified in the
notice of sale, not less than four nor more than fifteen days, Sundays
excepted, after a notice of such sale has been circularized in
accordance with any rule or order prescribed by the state comptroller,
pursuant to paragraph d of section 57.00 of the local finance law, for
the circularization of notices for the sale of bonds. The terms of the
sale may not be changed unless a supplemental notice of sale is provided
in accordance with the procedure for the sale of bonds in paragraph b of
section 58.00 of the local finance law.

(c) Whenever in the judgement of the governing board, or if authorized
by the governing board, the chief fiscal officer, the interest of the
political subdivision will be served thereby, the governing board, or
chief fiscal officer as the case may be, may authorize the sale of such
certificates of participation at private sale, including such sale in
connection with a pooled or aggregate program.

(d) The state comptroller shall promulgate rules in conformance with
the state administrative procedure act governing the procedure which
shall be adhered to when entering into installment purchase contracts or
authorizing the execution and delivery of certificates of participation
pursuant to this section, including guidelines for the private sale of
certificates of participation. No private sale of certificates of
participation shall be conducted by a political subdivision without
prior approval of the state comptroller except as provided in such rules
which shall set forth the circumstances under which such approval shall
not be required. The state comptroller shall annually deliver to the
state division of the budget, the senate finance committee and the
assembly ways and means committee a report listing all negotiated sales
conducted in the previous year, including the name of the issuer and
amount of the issue for each such sale.

4. (a) The proceeds of certificates of participation executed and
delivered in connection with the installment purchase contract made
pursuant to this section, in addition to being applied towards the cost
of the equipment, machinery or apparatus, may also be used for the
establishment of reserve funds to secure such certificates, the cost or
premium of letters of credit, insurance or other credit enhancements,
the costs of bond counsel, a financial advisor, underwriter, trustees
and paying agent, and other actual and necessary expenses directly
related to the issuance of such certificates. The foregoing shall not be
construed to authorize the use of such proceeds for the payment of
personal service expenses of the political subdivision. Where agency
certificates are executed and delivered, proceeds may be used for
payment by the political subdivision of the expenses incurred by the
agency in connection with the execution and delivery and sale of such
certificates.

(b) Each political subdivision shall have the power to enter into
agreements providing credit enhancement with respect to the installment
purchase contract and/or certificates of participation, but any
reimbursement obligation of the political subdivision shall be subject
to appropriation.

(c) The proceeds from certificates of participation may be invested
only in obligations of the United States of America, obligations
guaranteed by agencies of the United States of America where the payment
of principal and interest are guaranteed by the United States of
America, obligations of the state of New York, or special time deposit
accounts in or certificates of deposit issued by a bank or trust company
located and authorized to do business in the state and secured by a
pledge of obligations of the United States of America, obligations of
the state of New York, or obligation of any political subdivision,
school district or district corporation of the state of New York.

(d) All certificates of participation shall contain the following
clause: "This certificate shall be deemed executory only to the extent
of monies appropriated and available for the purpose of the installment
purchase contract to which it relates, and no liability on account
thereof shall be incurred by the political subdivision beyond the amount
of such monies. The installment purchase contract is not a general
obligation of (insert name of political subdivision(s)). Neither the
full faith and credit nor the taxing power of (insert name of political
subdivision(s)) are pledged to the payment of any amount due or to
become due under such installment purchase contract. It is understood
that neither this certificate nor any representation by any public
employee or officer creates any legal or moral obligation to appropriate
or make monies available for the purpose of the contract."

Agency certificates of participation shall also bear the following
legend: "Further, the installment purchase contract is not a general
obligation of the state of New York municipal bond bank agency. Neither
the full faith and credit nor the taxing power of the state of New York
are pledged to the payment of any amounts due or to become due under
such installment purchase contract."

5. (a) If an authorization for the issuance of obligations to finance
the equipment, machinery or apparatus would have been required by law to
be subject to a permissive or mandatory referendum, then the
authorization to enter into an installment purchase contract shall be
subject to a permissive or mandatory referendum, as the case may be, in
the same manner as provided for such referendum on the issuance of
obligations.

(b) If the authorization for the issuance of obligations to finance
the equipment, machinery or apparatus would have been required by law to
be subject to: (i) a certain supermajority vote of the governing board,
(ii) a mandatory or permissive referendum, or (iii) both, then the
authorization to enter into an installment purchase contract for
equipment, machinery or apparatus shall be subject to such vote,
referendum or such referendum and vote, as the case may be, in the same
manner as provided for such vote and/or referendum on the issuance of
obligations.

(c) If the authorization for the issuance of obligations would have
been subject to a referendum only if the obligations had a maturity of
more than five years or not less than some other minimum period, then
the authorization to enter into the installment purchase contract shall
be subject to referendum only if the term of the contract is equal to or
more than such minimum period of maturity.

6. (a) Installment purchase contracts made pursuant to this section,
together with any certificates of participation executed and delivered
or caused to be executed and delivered in connection therewith, shall
not constitute or create indebtedness of the state or a political
subdivision for purposes of article seven or eight of the state
constitution or section 20.00 of the local finance law, nor shall they
constitute a contractual obligation in excess of the amounts
appropriated therefor. Neither the state nor a political subdivision has
any continuing legal or moral obligation to appropriate money for said
payments or other obligations due under the installment purchase
contract. No installment purchase contract shall contain any provision
which, in the event of non-appropriation, precludes a political
subdivision from acquiring equipment, machinery or apparatus for the
same or similar purpose as the equipment, machinery or apparatus
included in the installment purchase contract for a period of more than
sixty days from the date of expiration, termination or cancellation of
such contract, provided, however, that in no case shall an installment
purchase contract contain any provision which would preclude a political
subdivision from performing any statutorily or constitutionally required
duties or functions, or require the political subdivision to pay
liquidated damages.

(b) In the case of the failure to appropriate, the sole security,
apart from any security provided by a credit enhancement, for any
remaining periodic payments shall be the equipment, machinery or
apparatus subject to the installment purchase contract, and if
certificates of participation are executed and delivered or caused to be
executed and delivered, reserve funds, if any, or any remaining proceeds
from certificates executed and delivered by or on behalf of the
political subdivision. Any installment purchase contract or any
agreement for the execution and delivery of certificates of
participation to fund an installment purchase contract may provide that
the installment purchase contract or certificates of participation are
secured by the underlying equipment, machinery or apparatus and that, in
the event the political subdivision fails to appropriate funds
sufficient for payments required under the contract, the financed
equipment, machinery or apparatus may be sold on behalf of the holders
of the certificates or other person entitled to receive payments under
the installment purchase contract, provided that any excess proceeds
from such a sale, after deduction for and payment of fees, expenses and
any taxes levied on the sale, and distribution to the holders of the
certificates in the amount of the face value of the certificates plus
accrued interest shall be paid to the political subdivision.

(c) The aggregate amount of unpaid periodic payments, excluding
interest, to be made under any outstanding installment purchase contract
shall be deemed to be existing indebtedness for the purpose of
determining the power of any political subdivision to contract
indebtedness under section 104.00 of the local finance law. No political
subdivision shall enter into any installment purchase contract if the
amount of unpaid periodic payments, excluding interest, proposed to be
made under such installment purchase contract and those outstanding,
together with the amount of outstanding indebtedness, would exceed one
hundred fifteen percent of the limit prescribed by such section 104.00
or if the total amount of such payments, excluding interest, under such
proposed contract and those outstanding would exceed forty percent of
such limit.

7. A political subdivision shall not have the power to enter into an
installment purchase contract except as authorized in this section or
the education law and nothing in this section shall authorize the
conveyance or lease of property owned by a political subdivision except
as authorized by law.

8. Whether or not certificates of participation are of such form and
character as to be negotiable instruments under the terms of the uniform
commercial code, the certificates of participation are hereby made
negotiable instruments within the meaning of and for all purposes of the
uniform commercial code, subject only to the provisions of the
certificates of participation for registration.

9. All installment purchase contracts and certificates of
participation of a political subdivision and the interest thereon, shall
be exempt from taxation for municipal and state purposes.

10. Certificates of participation are hereby made securities in which
all public officers and bodies of this state and all municipalities and
municipal subdivisions, all insurance companies and associations and
other persons carrying on an insurance business, all banks, bankers,
trust companies, savings banks and savings associations, including
savings and loan associations, building and loan associations,
investment companies and other persons carrying on a banking business,
all administrators, guardians, executors, trustees and other
fiduciaries, and all other persons whatsoever who are now or may
hereafter be authorized to invest in bonds or in other obligations of
the state, may properly and legally invest funds, including capital, in
their control or belonging to them; and are also hereby made securities
which may be deposited with and may be received by all public officers
and bodies of the state and all municipalities and public corporations
for any purpose for which the deposit of bonds or other obligations of
the state is now or may hereafter be authorized.

11. Enactment of this section shall not be constructed as invalidating
any installment purchase contract for an improvement to real property
entered into by a political subdivision prior to the effective date of
such enactment.

12. References in this section to the agency and agency certificates
of participation shall cease to have force and effect on and after July
first, nineteen hundred ninety-two.

* NB Repealed July 15, 2027