NY State Fin L § 69-D (2021)
2021 New York Laws STF - State Finance Article 5-D - Variable Rate Debt Instruments 69-D - Interest Rate Exchange or Similar Agreements.

§  69-d.  Interest  rate exchange or similar agreements. 1. Authorized issuer; powers. In connection with the issuance of State-supported debt, or in connection with such State-supported debt already outstanding,  an authorized issuer shall have the power to:  (a)  enter  into interest rate exchange or similar agreements with any person under such terms and conditions  as  the  authorized  issuer  may determine,  including  provisions as to default or early termination and indemnification by the authorized issuer or any other party thereto  for loss of benefits as a result thereof;  (b)  procure  insurance, letters of credit or other credit enhancement with  respect  to  agreements  described  in  paragraph  (a)   of   this subdivision;  (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 is  authorized by applicable law with respect to security for its bonds, notes or other obligations,  provided,  however,  that  any  payment  or performance of obligations with respect to agreements described  in  paragraph  (a)  of this  subdivision  in  connection  with debt obligations which carry the full faith and credit of the state shall be subject to appropriation;  (d) the state, acting through the director  of  the  budget  or  other state  officials who are so authorized by applicable law with respect to such bonds, notes or other obligations,  shall  also  be  authorized  to enter  into  or amend agreements related to such State-supported debt to provide for payment, subject to appropriation, to such authorized issuer of any amounts required to be paid by such authorized issuer  under  any such interest rate exchange or similar agreement;  (e)  if  such  funds  are  available,  provide  collateral for its own obligations under any such interest rate exchange or similar  agreement; and  (f) modify, amend, or replace, such agreements.   2.  Interest rate exchange; limitations. Any interest rate exchange or similar agreements entered into pursuant  to  subdivision  one  of  this section shall be subject to the following limitations:  (a)  the  counterparty thereto shall have credit ratings from at least one nationally recognized statistical rating agency that is  within  the two  highest  investment grade categories and ratings which are obtained from any other nationally recognized statistical rating  agencies  shall also  be  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;  (b)  the written contract shall require that should the rating: (i) of the counterparty, if its payment  obligations  are  not  unconditionally guaranteed  by  another  entity,  or  (ii) of the entity unconditionally guaranteeing its payment obligations, if  so  secured,  fall  below  the rating   required  by  paragraph  (a)  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  authorized  issuer  and  such collateral  shall  be  deposited  with the authorized issuer or an agent thereof;  (c) the total notional amount of all interest rate exchange or similar agreements for all authorized issuers to be in effect shall  not  exceed an   amount   equal   to   fifteen   percent  of  the  total  amount  of state-supported debt outstanding as of the initial date of entering into  each new agreement; provided, however, that such total  notional  amount shall not include any excluded agreements.  (d)  no  interest  rate  exchange  or  similar  agreement shall have a maturity exceeding the maturity of the related State-supported debt;  (e) each interest rate exchange or similar agreement shall be  subject to  an  independent finding that its terms and conditions reflect a fair market value of  such  agreement  as  of  the  date  of  its  execution, regardless  of  whether such agreement was solicited on a competitive or negotiated basis; and  (f) each interest rate exchange or similar  agreement,  including  the modification or termination thereof, shall be subject to the approval of the  director  of  the  budget,  the  governing board of such authorized issuer, and shall not be  considered  a  project  for  the  purposes  of article one-A of the public authorities law.   3.  Guidelines  and  reports. (a) Prior to authorizing the approval of any contract for interest rate exchange or similar agreement pursuant to subdivision one of this section, the authorized issuer's governing board shall adopt guidelines for the use of interest rate exchange or  similar agreements which shall include, but not be limited to 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) standards for the procurement of  credit  enhancement,  liquidity facilities,  or  the  setting  aside of reserves in connection with such contracts;  (vii) provisions  for  collateralization  or  other  requirements  for securing the financial interest in such contracts;  (viii)  the  long-term implications associated with entering into such agreements, such as  costs  of  borrowing,  historical  trends,  use  of capacity  for  variable  rate bonds and related credit enhancements, and any potential impact on the future  ability  to  call  bonds,  including opportunities   to   refund   related   debt  obligations,  and  similar considerations;  (ix) the  methods  to  be  used  to  reflect  such  contracts  in  the authorized issuer's financial statements;  (x)  financial monitoring and periodic assessment of such contracts by the authorized issuer; and  (xi) such other matters relating thereto as the governing board  shall deem necessary and proper.  (b)  The  guidelines  to  be adopted pursuant to paragraph (a) of this subdivision shall be developed in consultation with and subject  to  the approval of the director of the budget.  (c) The authorized issuer shall issue a monthly report to the director of  the  budget,  the  chairs  of  the  senate finance committee and the assembly ways and means committee, and  the  state  comptroller,  on  or before the fifteenth day of each month 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, which 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, rates, maturity, the  estimated  market  value  of  each agreement, and other provisions 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; and  (vi)  such  report  shall include a copy of the guidelines required by paragraph (a) of this subdivision in the month after they are adopted or subsequently modified.  (d) In addition, the director of  the  budget  shall  issue  and  make public on or before October thirtieth of each year an annual performance report  for  the  prior  state fiscal year on interest rate exchange and similar agreements to the chairs of the senate finance committee and the assembly ways and means committee, which shall list  all  such  interest rate  exchange  or  similar  agreements  entered  into  pursuant to this section and in effect, and shall include, but not be  limited  to  their annual  and  cumulative  performance,  including  the  net impact of the related variable rate debt instruments, support and related costs,  and, for  any  excluded agreement entered into during such state fiscal year, an independent finding on how it reduced or eliminated  a  situation  of risk  or  exposure  under  an existing interest rate exchange or similar agreement. The authorized issuers shall  be  required  to  provide  such information  in  a  timely  manner  on  their  respective  interest rate exchange and similar agreements as the director of the budget determines necessary for the purpose of producing such annual performance report.