NY Pub Auth L § 2926 (2021)
2021 New York Laws PBA - Public Authorities Article 9 - General Provisions Title 7 - Investments of Public Authorities 2926 - Interest Rate Exchange or Similar Agreements for Court Facilities and Combined Occupancy Structures and Health Facilities.

§  2926.  Interest  rate  exchange  or  similar  agreements  for court facilities and combined occupancy structures and health  facilities.  1. In  connection  with the issuance of bonds, notes, or other obligations, or in connection with such bonds, notes, or  other  obligations  already outstanding,  for  court  facilities  and  combined occupancy structures pursuant to section sixteen hundred eighty-b of this chapter, and health facilities pursuant to paragraph (b) of subdivision one of section eight of section one of chapter  three  hundred  ninety-two  of  the  laws  of nineteen  hundred  seventy-three, the dormitory authority shall have the power to:  (a) enter into interest rate exchange or similar agreements  with  any person  under  such  terms and conditions as the dormitory authority may determine, including provisions as to default or early  termination  and indemnification  by  the  dormitory authority or any other party thereto for loss of benefits as a result thereof; and  (b) procure insurance, letters of credit or other  credit  enhancement with   respect   to  agreements  described  in  paragraph  (a)  of  this subdivision; and  (c) provide security for the payment or performance of its obligations with  respect  to  agreements  described  in  paragraph  (a)   of   this subdivision  from such sources and with the same effect as authorized by applicable law with respect to security for its bonds,  notes  or  other obligations; and  (d)  modify,  amend,  replace,  or  enter into new agreements, for the purpose of reducing or eliminating a situation of risk or exposure under an existing agreement, including, but  not  limited  to  a  counterparty downgrade, default, or other potential economic loss.   2.  Any  interest  rate  exchange  or  similar  agreement entered into pursuant to subdivision one of this section  shall  be  subject  to  the following limitations:  (a) any such agreement shall be in the form of a written contract with a  counterparty  to  provide  for  an  exchange  of  payments based upon interest rates, and shall be for exchanges in  currency  of  the  United States of America only; and  (b)  the  counterparty thereto shall have credit ratings from at least two nationally recognized statistical rating agencies  that  are  within the   three   highest   investment  grade  categories,  or  the  payment obligations of the counterparty shall be unconditionally  guaranteed  by an entity with such credit ratings; and  (c)  the written contract shall require that, should the rating of the counterparty,  if  its  payment  obligations  are  not   unconditionally guaranteed  by  another  entity,  or  should  the  rating  of the entity unconditionally   guaranteeing   the   payment   obligations   of    the counterparty, if so secured, fall below the rating required by paragraph (b) of this subdivision, that the obligations of such counterparty shall be  fully  and  continuously collateralized by direct obligations of, or obligations the principal and interest on which are guaranteed  by,  the United  States  of  America,  with  a  net  market value of at least one hundred two percent of the net market  value  of  the  contract  to  the dormitory  authority,  and  such  collateral shall be deposited with the dormitory authority or an agent thereof; and  (d) the total notional  amount  of  such  interest  rate  exchange  or similar  agreements  entered  into  by the dormitory authority shall not exceed an amount equal to twenty per  centum  of  the  total  amount  of bonds,  notes or other obligations outstanding or to be issued on behalf of a participating municipality  pursuant  to  section  sixteen  hundred eighty-b  of  this  chapter; provided, however, that such total notional amount shall not include the notional amount of interest  rate  exchange  or  similar  agreements  entered  into  for  the  purpose of reducing or eliminating a situation of risk or exposure under an existing agreement, including, but not limited to  a  counterparty  downgrade,  default,  or other potential economic loss; and  (e)  the  total  notional  amount  of  such  interest rate exchange or similar agreements entered into by the  dormitory  authority  shall  not exceed  an  amount  equal  to  twenty  per centum of the total amount of bonds, notes or other obligations outstanding or to be issued on  behalf of a participating municipality pursuant to paragraph (b) of subdivision one  of section eight of section one of chapter three hundred ninety-two of the laws of nineteen hundred seventy-three; provided,  however,  that such  total  notional  amount  shall  not include the notional amount of interest rate exchange  or  similar  agreements  entered  into  for  the purpose of reducing or eliminating a situation of risk or exposure under an  existing  agreement,  including,  but  not limited to a counterparty downgrade, default, or other potential economic loss.   3. (a) Prior to authorizing the approval of any contract for  interest rate  exchange  or similar agreement pursuant to subdivision one of this section, the board  of  the  dormitory  authority  shall  adopt  written guidelines addressing the following:  (i) the conditions under which such contracts can be entered into;  (ii)  the  methods  by  which  such  contracts are to be solicited and procured;  (iii) the form and content such contracts shall take;  (iv) the aspects of risk exposure associated with such contracts;  (v) standards and procedures for counterparty selection;  (vi) the procurement of credit enhancement, liquidity  facilities,  or the setting aside of reserves in connection with such contracts;  (vii)   collateralization  or  other  requirements  for  securing  the financial interest in such contracts;  (viii) the methods to  be  used  to  reflect  such  contracts  in  the dormitory authority's financial statements;  (ix) financial monitoring and periodic assessment of such contracts by the dormitory authority; and  (x)  such other matters relating thereto as the board of the dormitory authority shall deem necessary and proper.  (b) The dormitory authority shall issue a report to  the  director  of the  budget,  the  chairpersons  of the senate finance committee and the assembly ways and means committee, and  the  state  comptroller,  on  or before  March  first in any state fiscal year in which it enters into or continues to be a party to a contract  for  interest  rate  exchange  or similar  agreement.  Such  report  shall list all such contracts entered into pursuant to this section, and shall include, but not be limited to, the following information for each such contract, as applicable:  (i) a description of the contract, including a summary  of  the  terms and conditions thereof and the method of procurement;  (ii)  any amounts which were required to be paid and received, and any amounts which actually were paid and received thereunder;  (iii)  any  credit  enhancement,  liquidity   facility   or   reserves associated  therewith  including an accounting of all costs and expenses incurred, whether or not in conjunction with the procurement  of  credit enhancement or liquidity facilities;  (iv) a description of each counterparty;  (v)  an  assessment  of  the  counterparty risk, termination risk, and other risks associated therewith.   4. The dormitory authority shall not  enter  into  any  interest  rate exchange or similar agreement pursuant to this section unless the lease,  sublease,  or other agreement between the participating municipality and the dormitory authority:  (a)  expressly  authorizes  the dormitory authority to enter into such agreements with respect to bonds, notes or other obligations outstanding or to be  issued  in  connection  with  court  facilities  and  combined occupancy   structures  or  health  facilities  for  that  participating municipality; and  (b) further obligates the participating municipality  to  pay  to  the dormitory  authority any and all amounts payable by the authority under, or as a result of, such interest rate exchange or similar agreement.