2023 New York Laws › RSS - Retirement and Social Security › Article 4-A - Investments of Public Pension Funds › 177 - Eligible Investments.

§  177.  Eligible  investments. In addition to the powers contained in
any  other  provision  of  law,  including   the   provisions   of   the
administrative  code of the city of New York, the trustee or trustees of
a fund shall have the power to invest the moneys  thereof  in:  1.  Such
securities in which the trustees of a savings bank may invest the moneys
deposited therein as provided by law, subject, however, to the following
limitations:
(a)  (i)  Except as provided in sections one hundred seventy-eight and
three hundred six of the public housing law,  no  conventional  mortgage
may  exceed  sixty  per  centum  of  the appraised value of improved and
unencumbered real property or seventy-five per centum of  the  appraised
value  thereof  if  such  real  property  is  improved  by a building or
buildings, the major portion of which is used,  or  in  the  case  of  a
building  under  construction  is to be used, for residential, business,
manufacturing  or  agricultural  purposes;  (ii)  the  aggregate  unpaid
principal  amount  of  all  conventional mortgages at any time held in a
fund shall not exceed thirty per centum of the assets of such fund;  and
(iii)  not  more than five per centum of the assets of any fund shall be
invested in any one conventional mortgage;
(b) the aggregate unpaid principal amount  of  obligations  issued  or
guaranteed  by the international bank for reconstruction and development
at any time held in a fund shall not  exceed  five  per  centum  of  the
assets of such fund;
(c)  the  aggregate  unpaid principal amount of all obligations of the
Dominion of Canada, of any province of the Dominion of  Canada,  and  of
any  city of the Dominion of Canada at any time held in a fund shall not
exceed five per centum of the assets of such fund;
(d)  the  aggregate  unpaid  principal  amount  of   equipment   trust
certificates at any time held in a fund shall not exceed five per centum
of the assets of such fund; and
(e)  not  more  than  two and one-half per centum of the assets of any
fund shall be invested  in  the  obligations  of  any  one  railroad  or
industrial  corporation,  or  any  one  corporation engaged directly and
primarily in the production, transportation, distribution,  or  sale  of
electricity or gas, or the operations of telephone and telegraph systems
or waterworks, or in some combination thereof; and
(f) not more than thirty per centum of the assets of any fund shall be
invested  in  bonds  of  electric  and  gas  corporations  as defined in
subdivision thirteen of section two hundred thirty-five of  the  banking
law,   notwithstanding   the   provisions   of  paragraph  (h)  of  such
subdivision.
1-a. Obligations payable in United States funds of the United  States,
any  state of the United States, District of Columbia or Commonwealth of
Puerto Rico, of any department, agency or political subdivision thereof,
or  of  any  corporation,  company  or  other  issuer  of  any  kind  or
description created or existing under the laws of the United States, any
state  of  the  United  States,  District of Columbia or Commonwealth of
Puerto Rico and obligations payable in United States funds of Canada  or
any province or city of Canada, provided
(a)  each  such  obligation  at  the time of investment shall be rated
investment grade by two nationally recognized rating services or by  one
nationally  recognized rating service in the event only one such service
rates such obligation; and
(b) the aggregate investment by a fund in the obligations of  any  one
issuer  pursuant  to this subdivision (other than the obligations of the
United States, or those for which the faith  of  the  United  States  is
pledged  to  provide  payment  of  the interest and principal) shall not

exceed two per centum of the assets of such fund or five per  centum  of
the direct liabilities of such issuer.
2.  Equity  securities,  and  interest-bearing  obligations payable in
United States funds which are convertible into equity securities, of any
corporation created or existing under the laws of the United States, any
state of the United States, District of  Columbia  and  Commonwealth  of
Puerto  Rico,  or  any  investment  company, as defined by, and which is
registered under, an act of Congress of the United States, entitled  the
"Investment   Company  Act  of  1940",  approved  August  twenty-second,
nineteen  hundred  forty,  as  amended,   subject   to   the   following
limitations:
(a)  the  maximum  investment  by  a fund in such securities shall not
exceed (i) in any one year fifteen per centum  of  the  assets  of  such
fund,  or  (ii)  seventy per centum in the aggregate; provided, further,
however, that more than fifteen per centum of such assets, but not  more
than  twenty  per centum thereof, may be so invested in any one year but
only to the extent that the per centum  of  such  investments  over  all
prior  years  from  the effective date of this act when added to the per
centum of such investments during that year does not exceed  an  average
of  fifteen  per  centum of the assets of such fund over all prior years
and the year in which the investment is being made;
(b) not more than two per centum of the assets of any  fund  shall  be
invested  in the equity securities of any one corporation and subsidiary
or subsidiaries thereof;
(c) not more than five per centum of the total issued and  outstanding
equity securities of any one corporation shall be owned by any fund; and
(d)  notwithstanding any other provision of law, the equity securities
acquired hereunder must be registered on a national securities exchange,
as provided in an act of congress of the  United  States,  entitled  the
"Securities Exchange Act of 1934", approved June sixth, nineteen hundred
thirty-four,  as  amended,  or otherwise registered pursuant to said act
and, if such  equity  securities  are  so  otherwise  registered,  price
quotations for such equity securities are furnished through a nationwide
automated  quotations  system  approved  by  the National Association of
Securities Dealers, Inc.
3. Conventional mortgages guaranteed by a state bank or trust  company
having  a net worth in excess of five hundred million dollars, provided,
however, that not more than ten per centum of the  assets  of  any  fund
shall be invested in any such mortgage so guaranteed.
4. Bonds and notes of any bank, trust company, savings bank or savings
and loan association organized under the laws of this state having a net
worth  of  at  least ten million dollars, which bonds and notes shall be
validly secured at all times to the extent of one hundred  and  ten  per
centum  of  the  unpaid  principal  amount  of  such  bonds and notes by
mortgages upon real estate insured by the federal housing  administrator
or  any  of his successors in office and guaranteed by the United States
under the  provisions  of  the  national  housing  act,  as  amended  or
supplemented,  and  to  the  extent  of one hundred and thirty-three and
one-third per centum of the unpaid principal amount of  such  bonds  and
notes  by conventional mortgages, the valuation of which mortgages shall
be based upon the unpaid principal amount thereof upon the date  of  the
pledge,  assignment  or  transfer thereof to such fund or its trustee or
trustees as security for such bonds and notes, such bonds or notes to be
amortized in substantially  equal  annual  or  semi-annual  payments  of
principal and interest over a period not in excess of twenty-five years,
provided  the  aggregate  unpaid  principal  amount  of  bonds and notes
secured by conventional mortgages shall not exceed five  per  centum  of
the assets of such fund.
5.  The  trustee  or  trustees  shall have the power to participate or
co-invest in any whole or part interest in any conventional mortgage  or
insured mortgage, or in any whole or part interest in any such mortgage,
which  mortgage  is  held  for the benefit of the holder or holders of a
whole  interest  or part interests therein, but no such investment shall
be made in any part interest which is junior or subordinate to any other
part interest therein nor if the aggregate amount of all investments  by
the  fund  in  whole  and  part  interests  in such mortgages when added
together  will  exceed  the  limitations  set  forth  in  the  foregoing
subdivisions   of   this  section  applicable  to  investments  in  such
mortgages.
6. Real estate only if acquired  or  used  for  one  or  more  of  the
following purposes and in the following manner:
(a)  The  land  and the building thereon in which it has its principal
office.
(b) Such as shall be requisite for its convenient accommodation in the
transaction of its business.
(c) Such as  shall  have  been  acquired  in  satisfaction  of  loans,
mortgages,  liens, judgments, decrees or other debts previously owing to
such fund in the course of its business.
(d)  Such  as  shall  have  been  acquired  in  part  payment  of  the
consideration  on  the  sale  of real property owned by it, if each such
transaction shall have effected a net reduction in the fund's investment
in real property.
(e) Such real property, other than property to be used  primarily  for
agricultural,  horticultural,  ranch, mining, recreational, amusement or
club purposes, as may be acquired, as an investment for  the  production
of  income (including capital appreciation), or as may be acquired to be
improved or  developed  for  such  investment  purpose  pursuant  to  an
existing program therefor, subject to the following limitations: (1) the
cost  of each parcel of real property so acquired under the authority of
this subdivision, including the  estimated  cost  to  the  fund  of  the
improvement or development thereof, when added to the value of all other
real  property  then  held by it pursuant to this subdivision, shall not
exceed ten per cent of its assets, and (2) the cost of  each  parcel  of
real   property  acquired  under  the  authority  of  this  subdivision,
including  the  estimated  cost  to  the  fund  of  the  improvement  or
development thereof, shall not exceed two per cent of the fund's assets.
(f)  Notwithstanding  any  other  provision  of  this article, for the
purposes of this subdivision, an investment in an entity that invests or
proposes to invest, directly or indirectly through  one  or  more  other
entities,  at least a majority of its assets in (1) any interest in real
property of any kind or character as an investment for the production of
income (including capital appreciation), or (2) debt instruments secured
by any interest in real estate may be considered an investment  in  real
estate  pursuant  to this subdivision and included in the assets subject
to the ten percent limitation of paragraph (e) of this subdivision.
7. The trustees of a fund shall have the power to  invest  the  moneys
thereof  in  limited partnerships, joint ventures, stock of corporations
(including subsidiaries of the fund), group trusts, common trust  funds,
collective  investment funds, investment companies (as defined by an act
of Congress entitled the "Investment Company  Act  of  1940"),  separate
accounts  established by a domestic life insurance company in accordance
with section forty-two hundred forty  of  the  insurance  law,  separate
accounts  of  the kinds authorized for domestic life insurance companies
in accordance with section forty-two hundred forty of the insurance  law
established  by  life  insurance companies doing business in this state,
real estate investment trusts (as defined in section 856 of the Internal

Revenue Code of 1986) or any other similar  investment  entity,  whether
owned  in  whole  or in part by the fund, provided that (a) such limited
partnership, joint venture, corporation (including a subsidiary  of  the
fund),  group  trust,  common  trust  fund, investment company, separate
account, collective investment entity, real estate investment  trust  or
other  similar  investment  entity  has  been  established  or organized
primarily for the purpose of investing in  securities,  real  estate  or
other  investments  in  which  the  trustee  or  trustees  of a fund are
authorized to invest pursuant to this section; and (b)  each  investment
by  a  fund  pursuant  to  this  subdivision  shall  be deemed to be the
investment of the fund in such investment entity  (rather  than  in  the
assets of such investment entity), except that in calculating the amount
of  the  fund's  investment  in  assets  for  purposes of the percentage
limitations, if any set forth in this section, there shall  be  included
all  assets  held  by any such investment entity in which the fund shall
have an investment as of the date of  determination,  but  only  to  the
extent of the fund's indirect interest in such assets resulting from its
investment in such investment entity.
8.  The  trustees  of a fund shall have the power to invest the moneys
thereof in foreign equity securities provided that (a) any  such  equity
security is registered on a national securities exchange, as provided in
an  act  of  congress  of  the  United  States, entitled the "Securities
Exchange  Act  of  1934",  approved   June   sixth,   nineteen   hundred
thirty-four,  as  amended,  or otherwise registered pursuant to said act
and,  if  such  equity  security  is  so  otherwise  registered,   price
quotations   therefor  are  furnished  through  a  nationwide  automated
quotation system approved by  the  National  Association  of  Securities
Dealers,  Inc.  or  is  registered  on  a foreign exchange organized and
regulated pursuant to the laws of the jurisdiction of such exchange  and
(b)  the corporation has averaged at least one billion dollars in annual
sales for the three consecutive years preceding the year  in  which  the
investment  is made or has market capitalization of at least one billion
dollars at the time the investment is made. Investments in such  foreign
equities  shall  be included together with a fund's investments in other
equity securities for purposes of the percentage limitations  set  forth
in the foregoing subdivisions of this section, and not more than ten per
centum  of  the assets of any fund shall be invested in the aggregate in
such foreign equities.
9. Investments, which do not qualify or are not  permitted  under  any
other  subdivision  of this section, notwithstanding any other provision
of law, provided
(a) the investments by a fund made pursuant to this subdivision  shall
not  at  any  time  exceed  thirty-five per centum of the assets of such
fund;
(b) such investments  shall  be  for  the  exclusive  benefit  of  the
participants  and  beneficiaries,  and the trustee or trustees of a fund
shall make such investments with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting  in
a  like capacity and familiar with such matters would use in the conduct
of an enterprise of a like character and with like aims; and
(c) such investments shall, to the extent reasonably possible, benefit
the overall economic health of the state of New York, so long  and  only
if such investments satisfy paragraph (b) of this subdivision.
10.  In  calculating  assets of a fund and percentages thereof for the
purposes of this section, a fund is authorized to use a market valuation
methodology, provided the valuation methodology is used consistently for
all such calculations and is in accordance  with  recognized  accounting
methodology.