New York Laws
Title 4 - New York Local Government Assistance Coporation
3237 - Capital Reserve Fund.

§ 3237. Capital reserve fund. 1. The corporation shall create and
establish one or more special funds (each herein referred to as a
capital reserve fund), which may be funded initially from proceeds of
bonds or notes of the corporation issued pursuant to this title, in an
amount equal to the capital reserve fund requirement of the bonds or
notes secured thereby. All amounts held in a capital reserve fund shall
be used solely for the payment of principal of or interest on the bonds
or notes secured thereby, sinking fund payments thereon, the redemption
thereof and payments to providers of bond or note facilities in respect
of payments of such principal, interest or sinking fund payments made by
them, in accordance with the applicable provisions of any and all
resolutions and trust indentures, if any, securing such bonds and notes.
Any income or interest, not required to be rebated to the United States
to provide for continued exclusion from gross income for federal income
tax purposes of interest on the bonds and notes of the corporation,
earned by, or increment to, the capital reserve fund due to the
investment thereof, in excess of the amount thereof needed to pay
interest on the bonds or notes issued to fund the capital reserve fund,
shall be used to pay debt service on bonds or notes issued by the
corporation. Any amounts released from a capital reserve fund shall be
applied, or set aside to be applied when practicable, by the corporation
to the payment of principal on the applicable bonds or notes, or to
redemption thereof or to the providers of bond or note facilities.

2. In computing the amount of the capital reserve fund for the
purposes of this section, obligations 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 a premium above or a discount below par, the value at any
given date obtained by dividing the total premium or discount at which
such obligations were purchased by the number of interest payment dates
remaining to maturity on such obligations after such purchase, and by
multiplying the number so calculated by the number of interest payment
dates having passed since the date of such purchase; and (i) in the case
of such obligations purchased at a premium, by deducting the product
thus obtained from the purchase price; and (ii) in the case of such
obligations purchased at a discount, by adding the product thus obtained
to the purchase price. In lieu of a deposit of money or obligations to
the capital reserve fund, the corporation, having due regard for the
security and marketability of all affected bonds and notes, may satisfy
the whole or any portion of the capital reserve fund requirement by
providing one or more surety agreements, insurance agreements, letters
of credit or other type of agreement or arrangement satisfying the
provisions of all applicable resolutions or trust indentures, if any,
each of which provides for the availability, at all times required
thereunder, of the amount of money or the value of the obligations in
lieu of the deposit of which such agreement or arrangement is provided.