§ 2435. Loans to municipalities. 1. The agency may purchase, and
contract to purchase, municipal bonds from municipalities at such price
or prices, upon such terms and conditions and in such manner, not
inconsistent with the provisions of the local finance law, as the agency
shall deem advisable; provided, however, that the average interest rate
payable on all municipal bonds (taken as a group) purchased with the
proceeds of an issue of bonds shall equal or exceed the interest rate on
such issue of bonds. The agency shall not purchase the municipal bonds
of any municipality if (i) the aggregate principal amount thereof,
together with the aggregate principal balances of the municipal bonds of
such municipality then outstanding and held by the agency, exceed an
amount equal to ten percent of the aggregate principal amount of the
statutory authorization at the time for the issuance of bonds and notes,
as provided in section twenty-four hundred thirty-eight of this title,
and (ii) the aggregate principal amount thereof exceeds an amount equal
to fifty percent of the aggregate principal amount of all municipal
bonds proposed to be so purchased at the time; provided, however, that
this sentence shall not apply to local ARRA bonds or local public safety
communications bonds.

2. The agency shall require as a condition of purchase of municipal
bonds from municipalities that each such municipality shall agree (i) to
pledge its full faith and credit for the payment of the principal of and
interest on such municipal bonds, (ii) to make annual appropriations for
amounts required for the payment of such principal and interest, and
(iii) if at any time the municipality fails to make the required
appropriation to pay such principal and interest, or fails to make the
payment of the required principal and interest, the provisions of
section twenty-four hundred thirty-six and/or twenty-four hundred
thirty-six-b of this title shall take effect. All municipalities selling
municipal bonds to the agency are hereby authorized to make and carry
out the agreements with the agency required in this subdivision.

3. In connection with the sale or proposed sale of municipal bonds to
the agency, any municipality may, notwithstanding the provisions of any
general or special law to the contrary, pay (i) such fixed or annual
charges as may be prescribed from time to time by the agency for or with
respect to the purchase by the agency of the municipal bonds of such
municipality, and (ii) all charges or expenses necessary for the
conversion or reconversion of any of its municipal bonds from or into
coupon form or registered form as may be required by the agency in
connection with any sale or other disposition of such municipal bonds.