NY Loc Fin L § 168.00 (2021)
2021 New York Laws LFN - Local Finance Article 2 - Local Indebtedness Title 12 - Miscellaneous Provisions 168.00 - Agreements for Credit Enhancement.

§  168.00  Agreements  for credit enhancement. a. The finance board of any municipality, school district  or  district  corporation  (herein  a "public  body")  is  hereby  authorized and empowered to enter into such agreements as it deems reasonable and appropriate, with  any  department or  agency  of  the  United  States  of America, the state, or any other financially responsible party, to facilitate the issuance, sale,  resale and  payment of bonds, notes, or other evidences of indebtedness of such public body, including, but not limited to letters of credit,  lines  of credit,  revolving  credit, bond insurance or other credit enhancements. Such agreements may provide for (i) the advance or advances of funds  on behalf  of  such  public  body  to pay the interest on and principal and premium of bonds, notes or  other  evidences  of  indebtedness  of  such public  body  on  their  date or dates of maturity or redemption or when interest is otherwise due, and (ii) the reimbursement of such advance or advances by such public body.   b. Such agreements may be executed on or before the date  of  issuance of  the obligations to be paid pursuant thereto, provided, however, that any reimbursement obligation of  such  public  body  arising  from  such agreements  shall be deemed indebtedness of such public body (i) only as of the date that the corresponding advance is made pursuant to paragraph a of this section, and (ii) only in  the  amount  of  the  advance  made pursuant to such paragraph. Such agreements may include a pledge by such public  body of its faith and credit for the payment of principal of and interest on any indebtedness deemed to be contracted  as  set  forth  in this  paragraph, and may provide that any such indebtedness arising from a reimbursement obligation contracted pursuant to this section shall  be paid  in  accordance with the terms of such agreement. Such indebtedness shall be excluded in ascertaining the  power  of  such  public  body  to contract  indebtedness  pursuant  to  title eight and title nine of this article. Such agreements shall also include such terms and conditions as the finance board shall deem appropriate, including provisions  for  the payment  of  reasonable  fees and expenses by such public body in return for a commitment to advance funds pursuant to such agreement. Such  fees and  expenses  shall be deemed part of the cost of the object or purpose in connection with which they are incurred.   c. Prior to procurement of any credit or liquidity enhancements,  such public body shall, to the extent practicable:  (1)  consider  the  ability  of  the  credit  or liquidity enhancement provider to make required payments as and when due under  the  terms  of the appropriate governing instruments;  (2)  consider  the  business  reputation  of  the  credit or liquidity enhancement provider;  (3) consider the maximum term of the credit or  liquidity  enhancement relative  to the maturity of the bonds, notes or other obligations being credit or liquidity enhanced;  (4) provide for the right of substitution for the credit or  liquidity enhancement provider in all agreements, including a provision permitting such substitution when the rating of the credit or liquidity enhancement provider  falls  below  the  probable credit rating of the issue without considering the credit or liquidity enhancer; and  (5) consider the cost of the credit or liquidity enhancement  relative to  the  savings  or  other  benefit  likely  to be achieved through the utilization of the credit or liquidity enhancement.   d.  Where  the  credit  or  liquidity  enhancement  procured   is   an irrevocable  letter  of  credit  or  an  acquisition  arrangement with a banking organization, such instrument shall be:  (1) issued or confirmed by  a  bank  holding  company  or  its  direct subsidiaries, a federally chartered bank or its subsidiaries, or a state  chartered  bank  or  its  subsidiaries,  licensed  or  authorized  to do business in this state or  (2)  issued  or  confirmed by an agency or branch of a foreign banking institution licensed to do business in this state with  total  worldwide assets in excess of five billion dollars.   e. Any such issuing banking organization referred to in paragraph d of this  section  shall meet the regulatory guidelines for capital adequacy as promulgated by the appropriate federal banking agency as  defined  in the Federal Deposit Insurance Act, 12 U.S.C. 1813(q).   f.  (1) Where the credit or liquidity enhancement procured is provided by an insurance  company,  such  insurer  shall  be  licensed  to  write financial guarantee insurance in this state.  (2)  Where  the credit or liquidity enhancement procured is from other than an entity described in paragraph d of this section  or  subdivision one  of  this paragraph, the provider shall be a financially responsible party, incorporated or authorized to  do  business  in  this  state  and having total assets in excess of ten billion dollars.   g.  The failure of a public body to comply with paragraphs c through f of this section shall not invalidate or impair any credit  or  liquidity enhancement contract or instrument.   h.  The finance board may, by resolution, delegate its authority under this section to the chief fiscal officer of such public  body  in  which event  the  chief  fiscal  officer  shall  exercise such power until the finance board, by resolution, shall elect to reassume the same.