§ 7. Reserve funds and appropriations.

1. (a) For the purposes of the issuance by the agency of bonds, the
term "capital reserve fund requirement" shall mean, as of any particular
date of computation, with respect to each capital reserve fund of the
agency an amount of money equal to the greatest of the respective
amounts, for the then current or any succeeding calendar year, of annual
debt service payments of the agency on the bonds secured by such capital
reserve fund, such annual debt service payments for any calendar year
being an amount of money equal to the aggregate of the following with
respect to all such bonds of the agency outstanding on said date of
computation; (i) all interest payable during such calendar year, plus
(ii) the principal amount which matures (net of any sinking fund
payments payable in prior years) during such calendar year, plus (iii)
the amount of all sinking fund payments payable during such calendar
year; and the term "sinking fund payment" shall mean the amount of money
specified in the resolution authorizing term bonds as payable into a
sinking fund for the amortization of such term bonds. The agency may
create and establish one or more special funds to be known as capital
reserve funds and may pay into each such reserve fund (1) any monies
appropriated and made available by the state for the purposes of such
fund, (2) any proceeds of sale of notes or bonds, to the extent provided
in the resolution of the agency authorizing the issuance thereof, and
(3) any other monies which may be made available to the agency for the
purposes of such fund from any other source or sources. The monies held
in or credited to any capital reserve fund established under this
subdivision, except as hereinafter provided, shall be used solely for
the payment of the principal of bonds of the agency secured by such
reserve fund, as the same mature, sinking fund payments with respect to
such bonds of the agency, the purchase of such bonds of the agency, the
payment of interest on such bonds of the agency, or the payment of any
redemption premium required to be paid when such bonds are redeemed
prior to maturity; provided, however, that monies in any 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not be withdrawn therefrom at any time in such amount as would reduce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 capital reserve fund
requirement, except for the purpose of paying principal and interest on
the bonds of the agency secured by such reserve fund maturing and
becoming due or any sinking fund payments with respect to such bonds and
for the payment of which other monies of the agency are not available.
Any income or interest earned by, or increment to, any capital reserve
fund due to the investment thereof may be transferred to any other fund
or account of the agency to the extent it does not reduce the amount of
such capital reserve fund below the capital reserve fund requirement.

(b) The agency shall not issue bonds at any time if upon issuance, the
amount in the capital reserve fund securing such bonds will be less than
the capital reserve fund requirement unless the agency, at the time of
issuance of such bonds shall deposit in such reserve fund from the
proceeds of the bonds so to be issued, or otherwise, an amount which
together with the amount then in such reserve fund, will be not less
than the capital reserve fund requirement.

(c) To assure the continued operation and solvency of the agency for
the carrying out of the public purposes of this act, provision is made
in paragraph (a) of this subdivision for the accumulation in each
capital reserve fund of an amount equal to the capital reserve fund
requirement. In order further to assure the maintenance of each such
capital reserve fund, there shall be annually apportioned and paid to
the agency for deposit in each capital reserve fund such sum, if any, as
shall be certified by the chairman of the agency to the governor and
director of the budget as necessary to restore such reserve fund to an
amount equal to the capital reserve fund requirement. The chairman of
the agency shall annually, on or before December first, make and deliver
to the governor and director of the budget his certificate stating the
sum or sums, if any, required to restore each such capital reserve fund
to the amount aforesaid and the sums so certified, if any, shall be
apportioned and paid to the agency during the then current state fiscal
year.

(d) In computing any capital reserve fund for the purposes of this
section, securities in which all or a portion of such reserve fund shall
be invested shall be valued at par if purchased at par, or if purchased
at other than par, at amortized value. As used herein "amortized value"
shall mean, when used with respect to securities purchased at a premium
above or a discount below par, the value as of any given date obtained
by dividing the total amount of the premium or discount at which such
securities were purchased by the number of days remaining to maturity on
such securities at the time of such purchase and by multiplying the
amount so calculated by the number of days having passed since the date
of such purchase; and (a) in the case of securities purchased at a
premium, by deducting the product thus obtained from the purchase price,
and (b) in the case of securities purchased at a discount, by adding the
product thus obtained to the purchase price.

2. The agency may create and establish one or more special funds
(herein each referred to as a general reserve fund) and shall pay into
each such fund, to the extent required by agreements with holders of
bonds or notes secured by such fund, all fees and charges collected by
the agency pursuant to subdivision fourteen of section five of this act
and any monies which the agency shall transfer from the related capital
reserve fund pursuant to the provisions of paragraph (a) of subdivision
one of this section. Such monies and any other monies paid into a
general reserve fund may, in the discretion of the agency, but subject
to agreement with bondholders or noteholders, be used by the agency (a)
for the repayment of advances from the state in accordance with the
provisions of repayment agreements between the agency and the director
of the budget, (b) to reimburse the division of housing and community
renewal the reasonable costs of the services performed by the
commissioner and the division pursuant to the provisions of this act,
(c) to pay all costs, expenses and charges of financing, including fees
and expenses of trustees and paying agents, (d) for transfers to the
related capital reserve fund, (e) for the payment of principal and
interest on bonds or notes issued by the agency and secured by such
general reserve fund when the same shall become due whether at maturity
or on call for redemption and for the payment of any redemption premium
required to be paid where such bonds or notes are redeemed prior to
their stated maturities and any sinking fund payments, and to purchase
such bonds or notes issued by the agency, or (f) for such other
corporate purposes of the agency as the agency in its discretion shall
determine and provide.

3. (a) This subdivision shall be applicable if the agency shall issue
notes (herein called "secured notes") secured by the pledge and
assignment of assets or revenues of the agency, with provision under
certain circumstances for amortization of the principal amount of such
notes over a period of years. Upon the issuance of any secured notes,
and if necessary upon the actual commencement of amortization of
principal, the agency shall determine the amount which, notwithstanding
the actual terms of such notes for payment of interest and principal or
for the application thereto of receipts from the pledged assets or
revenues, would then be required to be provided as hypothetical monthly
level debt service payments in order to pay the stated interest on and
to amortize the maximum principal amount of the secured notes over the
longest period of years then allowed for full amortization of principal
under the terms of the secured notes. The aggregate for all secured
notes of the portion of such hypothetical level debt service payments
that would be payable in any twelve consecutive months during such
period of amortization thereof, but in no event an amount greater than
twenty per cent of the maximum principal amount of the secured notes, as
of any particular date of computation, is herein called the "note
service requirement" of the agency.

(b) The agency shall create and establish a special fund to be known
as the "note service reserve fund," and upon the issuance of any secured
notes shall create and deposit therein note payment certificates (herein
called "note payment certificates") in an aggregate principal amount
equal to the note service requirement as then computed. Any note payment
certificates that are in excess of the note service requirement upon a
recomputation of such requirement shall be withdrawn from such fund and
cancelled. Note payment certificates shall be obligations of the agency,
issuable and re-issuable in any denominations, deliverable as further
evidence of and security for unpaid amounts of interest or principal on
secured notes which are not paid when due because the agency has
insufficient funds available to make such payments in cash, bearing
interest to the same extent as the unpaid amounts of interest or
principal on the secured notes in connection with which they are
delivered continue to accrue interest, and redeemable by the agency upon
payment in cash of the principal amount of the redeemed note payment
certificates plus any interest accrued thereon from date of delivery to
date of redemption. Any note payment certificates so redeemed, or an
equal principal amount of certificates created in replacement thereof,
shall be redeposited in the note service reserve fund, to the extent
necessary to cause the principal amount deposited in such reserve fund
to equal the note service requirement, as then computed, and any excess
note payment certificates redeemed shall be cancelled. The note service
reserve fund may be maintained with any trustee or agent for the holders
of secured notes and the note payment certificates may be deposited with
such trustee or agent to be held in trust prior to delivery thereof as
further security for the payment of principal of or interest on the
secured notes when due. Such trustee or agent shall have no obligation
to realize upon any pledged assets or revenues either prior to
delivering note payment certificates upon the failure of the agency to
pay interest or principal when due or thereafter and prior to redemption
of such certificates. However, any realization upon any pledged assets
or revenues and any other payments made on account of the secured notes
shall be applied to the payments of principal of or interest on the
secured notes (including redemption of delivered note payment
certificates) in the order in which such payments originally became due.
The proceeds of each redemption of note payment certificates shall be
applied as payment of an equivalent amount of overdue principal of or
interest on the secured notes.

(c) In order to assure the availability of funds to maintain the note
service reserve fund at an amount equal to the note service requirement
of the agency, there shall be annually apportioned and paid to the
agency, for application exclusively to the redemption of delivered note
payment certificates, such sum, if any, as shall be certified by the
chairman of the agency to the governor and director of the budget as
estimated to be necessary to redeem by the end of the then current state
fiscal year all note payment certificates theretofore delivered and not
redeemed by payment in full of the principal amount thereof and any
interest accrued thereon. The chairman of the agency shall annually, on
or before December first, make and deliver to the governor and director
of the budget his certificate stating the sum, if any, estimated to be
required to redeem all such note payment certificates as aforesaid by
the end of the then current state fiscal year, and the sum so certified,
if any, shall be apportioned and paid to the agency during the then
current state fiscal year. Upon its receipt of such payment from the
state, the agency shall immediately apply such payment, to the extent
thereof, to the redemption of outstanding note payment certificates.