§ 59-c. Insured housing initiatives fund. 1. The agency shall create
and establish a special fund to be known as the insured housing
initiatives fund and shall pay into such fund any moneys which may be
made available to the agency for the purposes of such fund from any
source, including, but not limited to, moneys appropriated by and made
available pursuant to appropriation by the state and any income or
interest earned by, or increment to, the fund due to the investment
thereof or moneys payable to the agency under any contract entered into
pursuant to subdivision two of this section. Subject to the provisions
of any contract with bondholders and noteholders and any contract
authorized pursuant to this section for the provision of insurance,
letters of credit or other financial mechanisms, the moneys held in or
credited to the insured housing initiatives fund established under this
subdivision, in the discretion of the agency, shall be used by the
agency in accordance with subdivision two of this section to enable it
to reduce the debt service that would otherwise be payable by the agency
on its bonds, notes and other obligations issued to make loans pursuant
to subdivision twenty-nine-a of section forty-four of this article, and
thereby to reduce the obligations of the borrower to the agency. The
reduction in debt service as a result of any contract entered into
pursuant to subdivision two of this section shall result solely in the
reduction of rents payable by low income individuals or families
residing in those units in the housing development assisted by the fund
that are required to be occupied by such individuals or families for
interest on obligations issued to finance such housing development to be
exempt from taxation pursuant to section 103(b)(4) of the internal
revenue code of 1954, as amended. Provided, however, to the extent that
such rents for such units are affordable to persons or families whose
income is not in excess of sixty-five percent of median income for the
area, as defined by the agency, then any remaining savings or benefits
shall be applied to the further reduction of such rents for such units,
and/or the reduction of rents payable by other low income individuals or
families residing in the housing development assisted by such fund
and/or the increase in the occupancy of low income individuals or
families residing in such housing development in excess of that required
pursuant to section 103(b)(4) of the internal revenue code of 1954, as
amended.

2. The agency may enter into contracts for the provision of insurance,
letters of credit or other financial mechanisms designed to reduce such
debt service on bonds, notes and other obligations of the agency in
accordance with this section, so long as such obligations receive an
investment grade rating from a recognized rating agency. The moneys held
in or credited to the fund shall not be used to pay the principal of or
interest on such obligations of the agency, the principal of or interest
on the obligations of the borrower to the agency or any fees of the
agency.

3. For the purposes of this section, "low income individuals or
families" shall mean persons or families with incomes of no more than
eighty percent of the median income for the area, as defined by the
agency.

4. The agency shall account separately for all moneys received by the
fund.