2023 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.