§ 656. Reserve funds and appropriations. 1. a. The corporation shall
create and establish special funds (herein referred to as capital
reserve funds) and shall pay into such a capital reserve fund (1) any
moneys appropriated and made available by the state or city for the
purpose of such fund, (2) any proceeds of sale of notes or bonds, to the
extent provided in the resolution or resolutions of the corporation
authorizing the issuance thereof, and (3) any other moneys which may be
made available to the corporation for the purpose of such fund from any
other source or sources. All moneys held in a capital reserve fund,
except as hereinafter provided, shall be used, as required, solely for
the payment of the principal of bonds as the same mature or the annual
sinking fund payments, the purchase or redemption of bonds, the payment
of interest on bonds or the payment of any redemption premium required
to be paid when such bonds are redeemed prior to maturity; provided,
however, that moneys in such fund shall not be withdrawn therefrom at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 maximum capital reserve fund requirement, except for the
purposes of paying interest on bonds, principal of bonds and annual
sinking fund payments, as the same become due and for the payment of
which other moneys of the corporation are not available. Any income or
interest earned by, or increment to, a capital reserve fund due to the
investment thereof or any amount in excess of the maximum capital
reserve fund requirement may be transferred by the corporation to other
funds or accounts of the corporation to the extent it does not reduce
the amount of such capital reserve fund below the maximum capital
reserve fund requirement.

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

c. No bonds or notes of the corporation shall be issued if upon such
issuance the aggregate principal amount of bonds and notes of the
corporation then outstanding exceeds the lesser of nineteen billion
dollars or such amount as would cause the maximum capital reserve fund
requirement to exceed eighty-five million dollars; provided that, in
determining such aggregate principal amounts there shall be deducted (i)
all sums then available for the payment of such bonds or notes either at
maturity or through the operation of a sinking fund; (ii) the aggregate
principal amount of outstanding bonds issued (a) to refund notes and (b)
to refund bonds, theretofore issued and then outstanding; and (iii) the
aggregate principal amount of outstanding notes issued to renew notes
theretofore issued and then outstanding. The provisions of the prior
sentence notwithstanding, the corporation shall not issue bonds if such
issuance shall cause the maximum reserve fund requirement to exceed
thirty million dollars unless prior to such issuance the senate and
assembly shall have adopted a concurrent resolution passed by the votes
of a majority of all the members elected to each such house and,
subsequent thereto, the governor shall evidence in writing the
governor's agreement with such resolution to the chairperson of the
corporation, which resolution shall be in full force and effect on the
date of issuance of the bonds, permitting the maximum capital reserve
fund requirement to equal or exceed the amount of the maximum capital
reserve fund requirement which would be effective upon the issuance of
the bonds in question, but in no event shall the maximum capital reserve
fund requirement exceed eighty-five million dollars.

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

e. To assure the continued operation and solvency of the corporation
for the carrying out of its corporate purposes, provision is made in
paragraph a of this subdivision for the accumulation in each capital
reserve fund of an amount equal to the maximum capital reserve fund
requirement. In order further to assure such maintenance of each capital
reserve fund, there shall be paid by the city to the corporation for
deposit in each capital reserve fund on or before the first day of
April, in each year, such amount, if any, needed for the purpose of
restoring each such capital reserve fund to the maximum capital reserve
fund requirement for such fund, as shall be certified by the chairperson
of the corporation to the mayor and the director of management and
budget on or before the first day of December next preceding; provided
that any such amount shall have been first appropriated by or on behalf
of the city for such purpose or shall have been otherwise made available
from the proceeds of notes or bonds of the city authorized and issued
pursuant to the local finance law for such purpose, which is hereby
determined to be a specific object or purpose having a period of
probable usefulness of five years. In the event of the failure or
inability of the city to pay over to the corporation, in full, on or
before such first day of April the amount so certified the chairperson
of the corporation shall forthwith certify to the comptroller of the
state of New York the amount remaining unpaid and thereupon the state
comptroller shall pay to the corporation, out of the first moneys
available for the next succeeding payments of (i) state aid apportioned
to the city of New York as per capita aid for the support of local
government pursuant to section fifty-four of the state finance law or
(ii) such other aid or assistance payable by the state to the city and
not otherwise allocated as shall supersede or supplement such state per
capita aid, including federal moneys apportioned to the city by the
state, such amount remaining unpaid, after giving written notice to the
director of management and budget of each amount to be paid out of such
state aid, until the amount in each such capital reserve fund is
restored to the maximum capital reserve fund requirement thereof;
provided, however, that prior to the issuance of any notes or bonds of
the corporation pursuant to this article the city shall have enacted a
local law authorizing payments from such sources into such a fund so
long as any notes or bonds of the corporation shall be outstanding and
unpaid, and provided further that moneys, if any, payable to the city
university construction fund pursuant to the provisions of the city
university construction fund act shall be paid, in full, to such fund,
prior to any payments therefrom to the corporation. Any amount so paid
over to the corporation shall be deducted from the corresponding
apportionment of such per capita state aid otherwise payable to the city
of New York, and shall not obligate the state to make nor entitle the
city to receive any additional apportionment or payment of per capita
state aid. All amounts paid over to the corporation as provided in this
paragraph, including amounts paid by the state comptroller out of
payments of such state aid, shall constitute and be accounted for as
non-interest bearing loans by the city to the corporation and, subject,
subordinate and junior to the rights of the holders of any notes or
bonds of the corporation theretofore or thereafter issued, shall be
repaid to the city from (i) moneys in such capital reserve fund in
excess of the maximum capital reserve fund requirement thereof or (ii)
any moneys of the corporation not required for any other of its
corporate purposes.

f. In the event the chairperson of the corporation shall certify to
the mayor and director of management and budget or to the state
comptroller any amount necessary to restore a capital reserve fund to
the maximum capital reserve fund requirement thereof pursuant to
subdivision e of this section, the chairperson shall simultaneously
deliver to such persons a statement of the cause or causes of such
capital reserve fund deficiency and the measures to be taken by the
corporation or the department of housing preservation and development to
insure repayment of any loans made by the city to the corporation,
including amounts paid by the state comptroller out of payments of state
aid, for the purpose of restoring such capital reserve fund to the
maximum capital reserve fund requirement thereof and to prevent the
recurrence of any such deficiency.

2. Notwithstanding the provisions of subdivision one hereof, the
corporation may issue bonds for any of its corporate purposes, without
making any deposit in a capital reserve fund and the provisions of
subdivision one of section six hundred fifty-six of this article shall
not apply to such bonds and the principal of and interest on such bonds
shall not be payable from or secured by any capital reserve fund.

3. The corporation shall create and establish such other fund or funds
as may be necessary or desirable for its corporate purposes.