2023 New York Laws › PBA - Public Authorities › Article 10 - New York State Municipal Assistance Corporation Act › Title 3 - Municipal Assistance Corporation for the City of New York › 3038 - Conditions on Extension of Benefits to the City.

* §  3038.  Conditions  on  extension  of  benefits to the city.   The
corporation shall, at the time of  any  exchange  of  the  corporation's
bonds  and  notes  for  short-term  obligations  of the city pursuant to
subdivision two of section three thousand thirty-five of this chapter or
any payment of funds of the corporation to the city or of  any  purchase
from  the  city  of  its  obligations pursuant to section three thousand
thirty-seven of this chapter, require the city to agree to  observe  and
perform  the  conditions  set  forth  below  in  this section, with such
limitations  as  to  the  implementation  of  such  conditions  as   the
corporation   may,   subject   to   any  contract  with  bondholders  or
noteholders, then approve; provided,  however,  that  no  such  specific
limitations  shall  be  so  substantial  as  to effectively constitute a
waiver of any such conditions. Any such conditions  may  thereafter,  in
the  discretion  of  the  corporation,  subject  to  any  contract  with
bondholders or noteholders, be further limited.  Such  conditions  shall
cease  to  apply  when  all notes and bonds have been repaid or when the
corporation has accumulated in its capital reserve funds or otherwise an
amount equal to the principal of all outstanding  notes  and  bonds  and
interest  accrued  thereon. The city shall have the right at any time to
pay the corporation an amount which, when added to the  capital  reserve
funds,  shall equal the principal of all outstanding notes and bonds and
interest accrued thereon and redemption premium  if  any.  If  the  city
makes  such payment at a time when the corporation has outstanding notes
or bonds that are not then callable, the city shall  agree  to  pay  the
corporation  on  demand  an amount equal to the amount, if any, by which
the amount  of  interest  on  such  notes  or  bonds  shall  exceed  the
corporation's  income  from  the investment of its funds. Subject to the
foregoing, the conditions that the corporation shall require the city to
observe and perform shall be as follows:
1. The city shall deliver a certificate, executed by the mayor and the
city comptroller in form prescribed by the corporation, (a) representing
that the city is in compliance with the conditions  described  below  in
this  section  as the corporation may specify, (b) undertaking to comply
with any of such  specified  conditions  as  the  corporation  may  then
require  and (c) stating that all local legislative and executive action
then required to permit such compliance by the city has been taken.  The
corporation may require the delivery with such certificate of an opinion
of  the  city's  corporation  counsel  that  all  such  legislative  and
executive action has been taken.
2. (a) The city  shall,  within  ninety  days  after  the  first  such
agreement,  initiate  steps  to adopt as the city's method of accounting
for purposes of reporting to the corporation with respect to the  city's
financial  condition and compliance with the conditions of this section,
the accounting principles set forth in the state  comptroller's  uniform
system  of  accounts  for municipalities, as the same may be modified by
the state comptroller, in consultation with the  city  comptroller,  for
application  to the city. The city shall complete the transition to such
accounting method as promptly as reasonably practicable thereafter  and,
in  any  event,  so that the audited financial statements for the fiscal
year ending June thirtieth,  nineteen  hundred  seventy-eight  shall  be
prepared  in accordance with such accounting methods, except as provided
below in this subdivision. It is recognized that the  adoption  of  such
accounting  principles  may  result  in substantial adjustments from the
accounting principles now followed by the city. The corporation and  the
city  shall consult, over the course of the introduction and adoption of
such accounting system and the accounting methods referred to in section
eight of the New York state financial emergency act for the city of  New
York, and until the expiration of the fiscal year ending June thirtieth,

nineteen  hundred  seventy-eight,  the  corporation  and  the  city  may
formulate a mutually acceptable method of phasing such adjustments  into
the  accounting  system described in this paragraph over such reasonable
period,  not exceeding ten years, as the corporation may determine to be
appropriate and the financial statements and  other  information  to  be
furnished to the corporation may, notwithstanding any other provision of
this  section three thousand thirty-eight be prepared in accordance with
such determination.
(b) For the  fiscal  year  ending  June  thirtieth,  nineteen  hundred
seventy-nine,  and  for  each fiscal year thereafter, the city's expense
budget shall be prepared in accordance with the  provisions  of  section
eight  of the New York state financial emergency act for the city of New
York.
3. The city shall take such action as may be necessary to  enable  the
state  comptroller,  or  at his election an independent certified public
accounting firm retained by the  city  but  satisfactory  to  the  state
comptroller,   to  perform  an  annual  audit  and  to  furnish  to  the
corporation an annual report, for the fiscal year ending June thirtieth,
nineteen hundred seventy-eight upon  the  financial  statements  of  the
city. For each subsequent fiscal year the city shall take such action as
may be necessary to enable a nationally recognized independent certified
public  accounting firm selected and retained by the city at its cost in
accordance with the provisions of section seven-a of the New York  state
financial  emergency  act  for the city of New York to perform an annual
audit and to furnish to  the  corporation  an  annual  report  upon  the
financial  statements of the city. Each such report shall be prepared in
accordance with the accounting method prescribed under  subdivision  two
of  this  section.  The  city  shall  make  available for inspection and
copying all books, records, work papers and other data and  material  as
required  by  the  state comptroller or the independent certified public
accounting firm conducting such  audit  and  the  city  shall  make  its
officers  and  employees  available  to  and  shall  cooperate with such
auditors so as to permit such annual  audit  to  be  completed  and  the
report  issued  to  the  city  and to the corporation within one hundred
twenty days after the close of the fiscal year.  Such  report  shall  be
made available to the public promptly thereafter.
4.  Beginning  with  the  fiscal  year ending June thirtieth, nineteen
hundred seventy-seven and for each  fiscal  year  thereafter,  the  city
shall  deliver a proposed expense budget to the corporation. Delivery to
the corporation shall be made concurrently with the  initial  submission
of  the  proposed  expense  budget to the board of estimate and the city
council, but in any event  not  later  than  fifty  days  prior  to  the
beginning  of such fiscal year or such other date as the corporation may
approve upon the request of the city. Beginning  with  the  fiscal  year
ending  June  thirtieth,  nineteen  hundred  seventy-eight, and for each
fiscal year thereafter, the proposed expense  budget  submitted  to  the
corporation  shall be prepared in accordance with the accounting methods
referred to in subdivision two of this section.  Such  budget  shall  be
identical  to  the  proposed  expense  budget  submitted to the board of
estimate and city council. The proposed expense budget delivered to  the
corporation  shall  be  accompanied  by (i) a statement setting forth in
detail the assumptions of income and expense used  in  its  preparation,
(ii)  for  the  fiscal  year  ending  June  thirtieth,  nineteen hundred
seventy-eight, a reconciliation of the differences, if any, between such
proposed expense budget and the proposed expense  budget  based  on  the
applicable  accounting  methods  set  forth in subdivision two a of this
section but without  adjustments  or  modifications  permitted  by  this
title, and for each subsequent fiscal year a reconciliation between such

proposed  expense budget and the proposed budget based on the principles
described in section eight of the New York state financial emergency act
for the city of New York, and (iii) a certificate of the  mayor  stating
that  such  assumptions  are  reasonable  and  that operation within the
budget is feasible  and  explaining  the  reasons  for  any  differences
therein from the proposed expense budget described in clause (ii) above.
Subject to and in accordance with the provisions of section eight of the
New  York state financial emergency act for the city of the New York, as
the same may be amended from time to  time,  the  city  shall  in  every
fiscal  year  adopt and maintain an expense budget in which the total of
all income items equals or exceeds the total of all  expenditure  items.
For   the   fiscal   year   ending   June  thirtieth,  nineteen  hundred
seventy-eight and each subsequent fiscal year the total  of  all  income
items  shall  also equal or exceed the total of all expenditure items in
each expense budget as adopted by the city, after  the  adjustments,  if
any,  required  to  conform  to  the  accounting  methods referred to in
subdivision two of this section  (except  as  may  be  modified  by  the
application of subdivision five of this section) and the city shall also
maintain   a   budget   balanced  in  accordance  with  such  accounting
principles.  Prior  to  July  first,  nineteen  hundred  eighty-two  and
notwithstanding any other provision of this section to the contrary, any
expense  item  in  the  expense  budget  for any fiscal year, which item
relates to contributions by the city or other  public  employer  to  any
retirement system or pension fund, shall include only the amounts which,
under  the provisions of law, rules or regulations expressly prescribing
the method of determining  employer  contributions  to  such  retirement
system  or  pension  fund  and  the time of payment thereof, are due and
payable in such fiscal year, and no  such  expense  item  shall  include
amounts  for  any  such  contribution  which,  under such laws, rules or
regulations, do not become due and payable in such fiscal year.
5. The city shall, over a period of six fiscal years,  beginning  with
its  fiscal  year ending June thirtieth, nineteen hundred seventy-seven,
eliminate from its capital  budget  those  expenses  that  are  properly
includable  only in its expense budget, as determined in accordance with
the accounting principles set forth in the state  comptroller's  uniform
system  of  accounts  for municipalities, as the same may be modified by
the state comptroller, in consultation with the  city  comptroller,  for
application  to  the city. The determination of which items are properly
includable only in the city's expense budget shall be made in accordance
with the aforesaid accounting principles regardless of any  act  of  the
legislature  prior  or  subsequent  to  the effective date of this title
otherwise classifying such items. To implement the foregoing:
(a) The mayor and the city comptroller shall, not later  than  October
thirty-first, nineteen hundred seventy-five, certify to the corporation,
a  list,  to  the best of their information, of the expense items in the
city's capital  budget  for  the  fiscal  year  ending  June  thirtieth,
nineteen hundred seventy-six, and the amount of each such item;
(b)  The  comptroller  (or the independent certified public accounting
firm then retained pursuant to subdivision three of this section)  shall
prepare  a  determination of and shall report upon the expense items and
the amount thereof in the city's capital  budget  for  the  fiscal  year
ending  June  thirtieth,  nineteen  hundred  seventy-six  and  for  each
subsequent fiscal year, in  accordance  with  the  aforesaid  accounting
principles.  Such report shall also include a statement as to the city's
compliance with the conditions of this subdivision for the  fiscal  year
reported upon and in the budget for the succeeding fiscal year;
(c)  Unless  the  corporation shall approve the inclusion of a greater
amount with respect to any such fiscal year, the aggregate amount of all

such expense items included in the capital budget,  including  judgments
and  claims  related to other than capital projects, for the fiscal year
ending June  thirtieth,  nineteen  hundred  seventy-seven  and  for  the
following  fiscal  year  shall  be reduced at the cumulative rate of ten
percent per year from the aggregate  amount  for  the  nineteen  hundred
seventy-six  fiscal  year  set  forth  in  the report provided for under
paragraph (b) of this subdivision (or set  forth  in  the  certification
under paragraph (a) of this subdivision if such report has not then been
prepared).  For  the fiscal year ending June thirtieth, nineteen hundred
seventy-nine the maximum aggregate amount  of  all  such  expense  items
included  in  the  capital  budget  shall  be four hundred fifty million
dollars and for each of the following two  fiscal  years  the  aggregate
amount of all such expense items included in the capital budget shall be
substantially reduced from the aggregate amount for the nineteen hundred
seventy-nine  fiscal  year.  For  the fiscal year ending June thirtieth,
nineteen hundred eighty-two and thereafter, no such expense items  shall
be included in the city's capital budget;
(d)  For  the  fiscal  year  ending  June  thirtieth, nineteen hundred
seventy-seven and continuing thereafter, the city shall not include  any
new  or  additional item in its capital budget which, in accordance with
the aforesaid accounting principles, is properly includable only in  its
expense budget; and
(e)  To  implement  this  subdivision,  and  in  order to provide full
disclosure of all expense items properly includable only in the  expense
budget,  the  city  shall  include in its expense budget for each fiscal
year by appropriation all  expense  items  which  are  included  in  its
capital  budget  for  such fiscal year pursuant to paragraph (c) of this
subdivision including judgments and claims related to other than capital
projects, such items shall be stated separately and distinctly  and  the
city  may include in such expense budget as items of income, in addition
to all other items of income properly includable in such expense  budget
pursuant  to  this  section, all amounts to be applied to the payment of
such expense items,  which  amounts  may  be  derived  from  any  source
available to the city during such fiscal year, provided that such income
shall be listed separately and distinctly.
6.  If  after  the adoption of the expense budget for any fiscal year,
any increase therein, or an increase  in  total  expenditures  shall  be
proposed,  the  mayor  shall  cause such proposal to be submitted to the
corporation concurrently with its submission to the  board  of  estimate
and the city council, together with a statement of the source of current
income  or other identifiable and currently available funds required for
the payment of such additional amounts.
7. Commencing at such time as the corporation  may  specify,  but  not
later  than  December  1, 1975 the city budget director shall deliver to
the corporation, not less than thirty days before  each  fiscal  quarter
(except,  within  thirty days after the commencement of the first fiscal
quarter), an expenditure plan to implement the city expense  budget  for
such  fiscal quarter and within amounts based on current income or other
identifiable and currently available funds.  The  city  budget  director
shall  deliver  to  the  corporation within thirty days after the end of
each such fiscal quarter covered by an expenditure plan,  an  operations
report reflecting results of city operations for such fiscal quarter and
whether  the city has operated within the related expenditure plan. Each
expenditure plan and operations report shall be  in  such  form  as  the
corporation  may  specify  and  shall  be  certified  by the city budget
director and shall detail and report upon action taken by  the  city  to
maintain a balanced expense budget.
8. The city shall comply in all material respects with the expenditure
limitations  in  its  budgets  as adopted or modified in accordance with
subdivisions four and six of this section, and with section eight of the
New York state financial emergency act for the city of New York  as  the
same may from time to time be amended.
9. a. The city shall not, at any time issue any short-term obligations
which  would  cause  the  aggregate  principal amount of its outstanding
short-term obligations plus the aggregate principal amount of all  notes
and  bonds  issued  by  the  corporation (less any notes or bonds of the
corporation  which  have  been  refunded,  renewed,  redeemed,  paid  or
cancelled and less any notes and bonds deemed to have been paid pursuant
to  the  provisions  of any contract with noteholders or bondholders and
less any notes other than notes issued in anticipation of  the  issuance
of  bonds  of  the corporation, or bonds of the corporation issued for a
purpose  set  forth  in  subparagraph  (b)  of  section  three  thousand
thirty-seven  or  in subparagraph eighteen of section three thousand ten
of this  article,  and  less  any  notes  other  than  notes  issued  in
anticipation  of  the  issuance of bonds of the corporation, or bonds of
the corporation issued for the purpose of making deposits  into  any  of
its  capital  reserve  funds, and less any short-term obligations of the
city then held by the corporation) to exceed (i) six billion six hundred
million (hereinafter called the base debt limit) plus (ii) an additional
amount, not exceeding ten percent of  the  base  debt  limit;  provided,
however, that during the fiscal years ending June 30, 1976 and 1977 such
additional amount may not exceed thirty per cent of the base debt limit,
during  the  fiscal  year ending June 30, 1978 the additional amount may
not exceed twenty-five per cent of  the  base  debt  limit,  during  the
fiscal  year  ending June 30, 1979, the additional amount may not exceed
twenty per cent of the base debt  limit,  and  during  the  fiscal  year
ending  June  30,  1980 the additional amount may not exceed fifteen per
cent of the base debt limit.
b. In addition to the foregoing limitation the city shall not, at  any
date,  issue  any short-term obligations which would cause the aggregate
principal amount of its outstanding  short-term  obligations  (excluding
bond  anticipation  notes)  plus  the  aggregate principal amount of all
notes and bonds issued by the corporation (less (i) any notes  or  bonds
which  have been refunded or renewed and any notes or bonds in an amount
equal to the aggregate principal amount of bond  anticipation  notes  of
the  city  acquired  by the corporation, whether or not then held by the
corporation (except bond anticipation notes of the city acquired by  the
corporation  in consideration of the surrender by the corporation to the
city of bond anticipation notes of the city), and  any  notes  or  bonds
issued  for  a  purpose  set  forth  in  subparagraph (b), (c) or (d) of
section three thousand thirty-seven, in  subdivision  two-a  of  section
three  thousand  thirty-three, or subparagraph eighteen of section three
thousand ten of this article,  and  less  any  notes  or  bonds  of  the
corporation  issued  for  the purpose of making deposits into any of its
capital reserve funds, (ii) any short-term obligations of the city  then
held by the corporation other than bond anticipation notes and (iii) any
short-term  obligations  of  the city issued and payable within the same
fiscal year) to exceed four billion five hundred million  dollars  plus,
in  the  discretion  of the board of directors, an additional amount not
exceeding five hundred million dollars plus, in the  discretion  of  the
board  of directors, until June thirtieth, nineteen hundred seventy-six,
a further additional amount not exceeding two hundred million dollars.
c. Notwithstanding any other provision of this  act,  the  corporation
shall  not  have the authority to modify or waive the limitations on the
aggregate amount of  outstanding  short-term  obligations  of  the  city

permitted  to  be  outstanding  in  excess  of  the  limits specified in
paragraphs (a) and (b) of this subdivision.
d.  Not  less than twenty days prior to the issuance of any short-term
obligations by the city, other than such obligations to be issued to the
corporation, on or after July first, nineteen hundred seventy-five,  the
city  comptroller shall deliver to the corporation a notice of intent to
issue such obligations, specifying the amount and proposed terms thereof
and the authority under  which  such  obligations  are  proposed  to  be
issued,  together  with  a  certificate  of  the  city  budget  director
specifying the  purpose  and  the  proposed  source  of  funds  for  the
redemption  thereof.  The  city comptroller and the city budget director
shall provide such additional information and  shall  be  available  for
consultation  as  the corporation may request. If, within ten days after
the receipt of such a notice from the city, the  corporation  determines
after  consultation  with  the  city  comptroller  and  the  city budget
director, that the  issuance  of  such  obligations  would  violate  the
limitation  of  this  subdivision,  the corporation shall deliver to the
city comptroller a certified copy  of  such  determination  within  such
10-day  period  and the city comptroller shall not thereafter issue such
obligations.
* NB The corporation shall continue for a term  ending  the  later  of
July  1, 2008 or one year after its liabilities have been fully paid and
discharged per § 3033 sub 1.