NY Gen Mun L § 10 (2021)
2021 New York Laws GMU - General Municipal Article 2 - General Municipal Finances 10 - Deposits of Public Money; Security.

§  10.  Deposits  of  public  money; security. 1. For purposes of this section:   a. "Local government" shall mean  any  municipal  corporation,  school district,   board   of   cooperative   educational   services,  district corporation, special improvement district governed by a  separate  board of commissioners, industrial development agency or authority or a public library.   b. "Public funds" shall mean funds of a local government.   c.  "Public deposits" shall mean deposits of public funds in a bank or trust company which are available for all uses  generally  permitted  by the  bank  or  trust  company  to  the  depositing  local government for actually and finally collected funds under the bank's or trust company's account agreement or policies.   d. "Bank" shall mean a bank  as  defined  by  the  banking  law  or  a national  banking  association  located and authorized to do business in New York.   e. "Trust company" shall mean  a  trust  company  as  defined  by  the banking law and located and authorized to do business in New York.   f. "Eligible securities" shall mean any of the following:  (i)  Obligations  issued  by  the  United States of America, an agency thereof  or  a  United  States  government  sponsored   corporation   or obligations  fully  insured or guaranteed as to the payment of principal and interest by the United States of America, an  agency  thereof  or  a United States government sponsored corporation.  (ii)  Obligations issued or fully guaranteed by the International Bank for Reconstruction and Development, the Inter-American Development Bank, the Asian Development Bank, and the African Development Bank.  (iii) Obligations partially insured or guaranteed by any agency of the United States of America, at a proportion of the  market  value  of  the obligation that represents the amount of the insurance or guaranty.  (iv)  Obligations issued or fully insured or guaranteed by this state, obligations issued  by  a  municipal  corporation,  school  district  or district  corporation of this state or obligations of any public benefit corporation which under a specific state  statute  may  be  accepted  as security for deposit of public moneys.  (v) Obligations issued by states (other than this state) of the United States  rated  in one of the three highest rating categories by at least one nationally recognized statistical rating organization.  (vi) Obligations of Puerto Rico rated in  one  of  the  three  highest rating  categories  by  at  least  one nationally recognized statistical rating organization.  (vii) Obligations of counties, cities and other governmental  entities of  another  state having the power to levy taxes that are backed by the full faith and credit of such governmental entity and rated  in  one  of the   three  highest  rating  categories  by  at  least  one  nationally recognized statistical rating organization.  (viii) Obligations of domestic corporations rated in one of  the  four highest   rating  categories  by  at  least  one  nationally  recognized statistical rating organization.  (ix) Any mortgage related securities, as  defined  in  the  Securities Exchange  Act of 1934, as amended, which may be purchased by banks under the limitations established by federal bank regulatory agencies.  (x) Commercial paper and bankers' acceptances issued by a bank  (other than the bank with which the money is being deposited or invested) rated in the highest short-term category by at least one nationally recognized statistical rating organization and having maturities of not longer than sixty days from the date they are pledged.  (xi)  Zero-coupon obligations of the United States government marketed as "Treasury STRIPS".   g.  "Eligible  surety bond" shall mean a bond executed by an insurance company authorized to do  business  in  this  state,  the  claims-paying ability of which is rated in the highest rating category by at least two nationally recognized statistical rating organizations.   h.  "Eligible  letter  of  credit" shall mean an irrevocable letter of credit issued in favor of the local government for a term not to  exceed ninety days by a bank (other than the bank with which the money is being deposited  or  invested)  whose  commercial  paper  and  other unsecured short-term debt obligations (or, in the case of  a  bank  which  is  the principal  subsidiary  of  a  holding  company,  whose holding company's commercial paper and other unsecured short-term  debt  obligations)  are rated in one of the three highest rating categories (based on the credit of  such  bank or holding company) by at least one nationally recognized statistical rating organization or by a bank (other than the  bank  with which  the  money  is  being deposited or invested) that is incompliance with applicable federal minimum risk-based capital requirements.   2. a.  (i)  The  governing  board  of  every  local  government  shall designate one or more banks or trust companies for the deposit of public funds,  the  disposition  of which is not otherwise provided for by law, received by the chief fiscal officer or any other officer authorized  by law  to  make  deposits.  Such designation shall be by resolution of the governing board or, in the case of a city, such other  body  as  may  be authorized or required by law to designate depositaries. Such resolution shall  specify  the  maximum  amount which may be kept on deposit at any time in each such bank or trust company. Such designations  and  amounts may be changed at any time by further resolution.  (ii) The governing board of a local government that has designated one or  more  banks  or  trust  companies  for  the  deposit of public funds pursuant to subparagraph (i) of this paragraph may, in  its  discretion, authorize  the  designated  bank  or  trust  company  to arrange for the redeposit of the  local  government's  funds  in  one  or  more  banking institutions,  as  defined in section nine-r of the banking law, for the account of the local government, through  a  deposit  placement  program that meets all of the following conditions:  (A)  On  or  after  the  date  that  the  local government's funds are received, the designated bank or trust  company  (I)  arranges  for  the redeposit  of  such  funds  into deposit accounts in one or more banking institutions and (II) serves as custodian for the local government  with respect to the funds redeposited into such accounts.  (B)  Local  government  funds  deposited in a designated bank or trust company in accordance with this subparagraph and held in the  designated bank  or  trust  company  in excess of the amount insured by the federal deposit insurance corporation pending redeposit of the funds pursuant to this subparagraph shall be secured in accordance with subdivision  three of this section.  (C)  The  full  amount  of  local  government funds redeposited by the designated bank or  trust  company  into  deposit  accounts  in  banking institutions  pursuant  to  this subparagraph (plus accrued interest, if any) shall be insured by the federal deposit insurance corporation.  (D) At the same time  that  the  money  of  the  local  government  is redeposited  pursuant  to  this  subparagraph,  the  selected depository receives an  amount  of  deposits  from  customers  of  other  financial institutions pursuant to the deposit placement program that are at least equal  to  the amount of the local government's funds redeposited by the designated bank or trust company.    b. Except as otherwise provided by law, all deposits shall be made  to the credit of the local government. The deposit of public funds pursuant to this subdivision shall release the officer making the deposit and his or her surety from any liability for loss of such public funds by reason of the default or insolvency of any such bank or trust company.   c.  The  governing  board  of  a  local government, in which a banking development district  has  been  designated  by  the  superintendent  of financial  services pursuant to section ninety-six-d of the banking law, may designate a bank, trust company or national  bank  located  in  such district  for  the  deposit of public funds, the disposition of which is not otherwise provided for by law, received by the chief fiscal  officer or  other  officer  authorized  by  law  to  make  such  deposits.  Such designation shall be by resolution of the governing  board  or,  in  the case  of a city, such other body as may be authorized or required by law to designate depositories. Such resolution  shall  specify  the  maximum amount  which  may  be kept on deposit at any time with such bank, trust company or national  bank  located  in  such  district.  Subject  to  an agreement  between  such  governing  board and such banking institution, public funds deposited in such banking  institution  may  earn  a  fixed interest rate which is at or below such banking institution's posted two year certificate of deposit rate. In those instances where there is such an  agreement,  its  terms and conditions shall also be specified in the resolution. Any such designation, amount, or agreement provisions may be changed at any time by further resolution.   3. All public deposits in excess  of  the  amount  insured  under  the provisions  of  the  Federal  Deposit  Insurance Act as now or hereafter amended shall be secured in accordance with this subdivision:   a. The officers making a deposit  may  accept  a  pledge  of  eligible securities  having in the aggregate a market value at least equal to the aggregate amount of public deposits from such officers, or a pledge of a pro rata portion  of  a  pool  of  eligible  securities  having  in  the aggregate  a  market  value  at  least  equal to the aggregate amount of public deposits from all such officers within the state at such bank  or trust company, together with a security agreement from the bank or trust company.  The  security  agreement  and  custodial agreement referred to below may be the same agreement including when the bank or trust company holding the public deposits holds the collateral for  the  public  body. The  security  agreement  shall provide that such eligible securities or pro rata portion of a pool of eligible securities are being  pledged  by the  bank or trust company as security for the public deposits, together with agreed upon interest, if any, and any costs or expenses arising out of the collection of such deposit upon a default. It shall also  provide for  the  conditions under which the securities or pro rata portion of a pool of eligible securities held may be  sold,  presented  for  payment, substituted  or released and the events of default which will enable the local government to exercise its rights against the pledged  securities. Such  agreement  shall  include  all  provisions  deemed  necessary  and sufficient to secure in a satisfactory  manner  the  local  government's interest  in  the collateral. The custodial agreement shall provide that the pledged securities or  pro  rata  portion  of  a  pool  of  eligible securities  will be held by the custodial bank or trust company as agent of, and custodian for, the local government, and will be  kept  separate and apart from the general assets of the custodial bank or trust company and  it shall also provide for the manner in which the custodial bank or trust company shall confirm the receipt, substitution or release of  the collateral.   Such   agreement   shall  provide  for  the  frequency  of revaluation of collateral by the custodial bank or trust company and the substitution of collateral when a change in the  rating  of  a  security  causes  ineligibility pursuant to paragraph f of subdivision one of this section. Such agreement shall include all  provisions  deemed  necessary and sufficient to secure in a satisfactory manner the local government's interest  in  the collateral. Such agreement may also contain such other provisions as the governing board may deem necessary.   b. Whenever eligible securities delivered to a custodial bank or trust company pursuant to this paragraph are transferred  by  entries  on  the books of a federal reserve bank or other book-entry system operated by a federally  regulated entity without physical delivery of the evidence of such obligations, the records of the custodial  bank  or  trust  company shall  show,  at all times, the interest of the local government in such securities or pro rata portion of a pool of eligible securities  as  set forth in the security agreement.   c.  (i)  In  lieu  of  or  in  addition  to  the  deposit  of eligible securities, the officers making a deposit may accept an eligible  surety bond payable to such local government as security for the payment of one hundred  percent,  or an eligible letter of credit payable to such local government as security for the payment of one hundred forty percent,  of the  aggregate  amount  of  public  deposits  from such officers and the agreed upon interest, if any. The terms and conditions of  any  eligible surety bond shall be approved by the governing board.  (ii)  In lieu of or in addition to the deposit of eligible securities, the officers making a deposit may, in the case of an irrevocable  letter of credit issued in favor of the local government by a federal home loan bank   whose  commercial  paper  and  other  unsecured  short-term  debt obligations are rated in the highest rating category  by  at  least  one nationally  recognized  statistical  rating  organization,  accept  such letter of credit payable to such local government as  security  for  the payment  of  one  hundred  percent  of  the  aggregate  amount of public deposits from such officers and the agreed upon interest, if any.   d. For purposes of determining  the  market  value  of  securities  as required by this subdivision:  (i) The eligible securities described in subparagraphs (viii), (x) and (xi)  of  paragraph f of subdivision one of this section shall be valued at eighty percent of their market value.  (ii)  The  eligible  securities  described  in  subparagraph  (ix)  of paragraph  f  of  subdivision  one  of  this  section shall be valued at seventy percent of their market value.  (iii) Of the eligible securities described in subparagraphs (v),  (vi) and  (vii)  of  paragraph  f  of  subdivision one of this section, those securities rated in the highest category shall be valued at one  hundred percent  of  their  market  value;  those securities rated in the second highest rating category shall be  valued  at  ninety  percent  of  their market  value;  and  those  securities rated in the third highest rating category shall be valued at eighty percent of their market  value.  When two  nationally  recognized  statistical  rating  organizations  rate  a security in two different categories, the security shall  be  considered to be rated in the higher of the two categories.   4. (a) Notwithstanding any other provision of law to the contrary, the chief  fiscal  officer,  or  other  officer  authorized  by  law to make deposits, may, subject to the approval of the governing body of a  local government,  by resolution, enter into a contract with a courier service for the purpose of causing the deposit of public funds with  a  bank  or trust company as provided in this section.  (b)  The  entrusting of public funds for deposit pursuant to paragraph (a) of this subdivision shall release the officer entrusting the  public funds  to  the  courier service and his or her surety from any liability  for loss of such public funds by the courier service in the  process  of delivering such public funds to the designated bank or trust company.  (c)  The local government authorizing the deposit of public funds by a courier service pursuant to paragraph  (a)  of  this  subdivision  shall require  the courier service to obtain a surety bond for the full amount entrusted to the courier, payable to the local government  and  executed by  an  insurance  company  authorized to do business in this state, the claims paying ability of which is rated in the highest  rating  category by  at least two nationally recognized statistical rating organizations, to insure against any loss of public  funds  entrusted  to  the  courier service  for  deposit or failure to deposit the full amount entrusted to the courier.  (d) A deposit made by a courier on behalf of a local government  shall be  deemed  to  be  a  deposit made by the chief fiscal officer or other officer entrusting such funds for purposes of the requirements contained in this section for securing public deposits.  (e) A bank or trust company may, from time to time and as agreed  upon with  a  local  government, reimburse all or part of, but not more than, the actual cost incurred by the local government in  transporting  cash, negotiable  instruments  or  other  items  for deposit through a courier service.  Any  such  reimbursement  agreement  shall  apply  only  to  a specified  deposit  transaction,  and  may  be  subject  to  such terms, conditions and limitations as the bank or trust company deems  necessary to  ensure  sound  banking practices, including, but not limited to, any terms, conditions or limitations that may be required by the  department of financial services or other federal or state authority.