2023 New York Laws › PBA - Public Authorities › Article 5 - Public Utility Authorities › Title 12 - New York State Environmental Facilities Corporation › 1285-M - Drinking Water Revolving Fund.

§  1285-m. Drinking water revolving fund. 1. (a) The corporation shall
undertake and provide assistance in  support  of  the  program  to  make
financial  assistance  available  to recipients to encourage and support
the planning, development and construction of water supply facilities in
accordance with the provisions of this section and title four of article
eleven of the public health law.
(b) There is hereby established in the custody of  the  corporation  a
special fund to be known as the drinking water revolving fund. Except as
otherwise  provided  by  this  paragraph,  moneys  in the drinking water
revolving fund shall be segregated from all other funds  of  or  in  the
custody  of  the  corporation  subject  to  any  rights  of  holders  of
corporation bonds or notes issued for  the  purposes  of  this  section.
Moneys  in  the  drinking  water  revolving  fund  shall only be used in
accordance with the provisions of this section and title four of article
eleven of the public health law; provided  that,  in  addition,  to  the
extent  permitted  by federal or state law, moneys in the drinking water
revolving  fund  may  be  transferred  to  and  used  for  the  purposes
authorized for the water pollution control revolving fund, and moneys in
the  water  pollution  control  revolving fund may be transferred to and
used for the purposes authorized for the drinking water revolving  fund.
The  moneys  in the drinking water revolving fund shall be applied to or
paid out for  authorized  purposes  of  such  fund  in  accordance  with
subdivision four of this section and title four of article eleven of the
public  health law. To the extent approved by the commissioner of health
and the commissioner of environmental conservation  and  notwithstanding
the  provisions  of  paragraph  (a)  of  this subdivision, moneys in the
drinking water  revolving  fund  and  in  the  water  pollution  control
revolving  fund  may be held together; provided that all such moneys are
segregated from all other funds of or in the custody of the  corporation
subject  to  any  rights of holders of corporation bonds or notes issued
for the purposes of this section; provided further, that the corporation
shall establish and maintain  or  cause  there  to  be  established  and
maintained  a  system  of tracking the application of such moneys to the
purposes of this section.  The  corporation  may  establish  within  the
drinking  water  revolving  fund  additional accounts or subaccounts and
specify any conditions applicable to the transfer of moneys between such
accounts or subaccounts. With respect  to  each  eligible  project,  the
corporation  shall  establish  and  maintain  a record of the allocation
provided for the benefit of such project in accordance with the terms of
the applicable financing agreement.
2. As used in this section, the  terms  "allocation",  "construction",
"eligible  project",  "fund"  and  "financing  agreement" shall have the
meanings set forth in section eleven hundred sixty of the public  health
law.
3. Such fund shall consist of all of the following:
(a) the proceeds of bonds or notes issued by the state pursuant to the
Clean  Water/Clean Air Bond Act of 1996; provided that up to two hundred
sixty-five million dollars ($265,000,000)  of  such  proceeds  shall  be
available  to  finance state assistance payments in the manner set forth
in paragraphs (a), (d), (e), (f) and (g) of  subdivision  four  of  this
section,  and  up  to  ninety  million  dollars  ($90,000,000)  shall be
available to finance state assistance payments in the manner  set  forth
in paragraphs (d), (f) and (h) of subdivision four of this section;
(b)   federal  capitalization  grants  and  awards  or  other  federal
assistance provided pursuant to the federal safe drinking water act  for
purposes  of  deposit  in  the  fund  and  appropriated by the state for
deposit therein;
(c) moneys appropriated by the state legislature for  the  purpose  of
such  fund  or otherwise transferred by the state for deposit therein by
the comptroller as required by law;
(d)  payments of principal and interest made by recipients pursuant to
loan or other financing agreements entered into pursuant to subdivisions
eight  and  nine  of  this  section;  provided,  however,  if  financial
assistance  made  pursuant  to financing agreements were financed by the
issuance of bonds or notes of the corporation, deposit of such  payments
into  the  fund  shall  be  subject to the rights of the holders of such
bonds or notes to receive such moneys;
(e) investment earnings on amounts in such fund; and
(f) the proceeds of bonds or  notes  issued  by  the  corporation  for
purposes of providing financial assistance to recipients.
4. Moneys in the drinking water revolving fund shall be applied by the
corporation  in  accordance  with this section and title four of article
eleven of the public health  law  to  provide  financial  assistance  to
recipients  for construction of eligible projects and, upon consultation
with the director of the division of the budget, for such other purposes
permitted by the federal safe drinking water act,  as  amended,  and  to
provide  for  the  administrative  and  management costs of the program,
provided however, that proceeds of bonds issued pursuant  to  the  Clean
Water/Clean  Air  Bond Act of 1996, other than proceeds of bonds used to
finance the state  match  for  federal  capitalization  grants  for  the
drinking  water revolving fund, shall not be used for administrative and
management costs; and provided further, that proceeds  of  bonds  issued
pursuant  to  the  Clean  Water/Clean  Air  Bond Act of 1996, other than
proceeds of  bonds  issued  to  finance  the  state  match  for  federal
capitalization  grants  for the drinking water revolving fund, shall not
be used to finance costs with respect to the Croton filtration  project.
As  used  in this section "financial assistance to recipients" means any
one or more of the following:
(a) making loans to recipients for construction of  eligible  projects
on  such  terms  as  the  corporation  may  determine,  subject  to  any
applicable provisions of federal or state law;
(b) buying or refinancing debt obligations of recipients at market  or
below  market  rates, subject to any applicable provisions of federal or
state law;
(c) guarantying, or purchasing insurance or other  credit  enhancement
for  municipal obligations where such action would improve credit market
access for or reduce interest rates on such municipal obligations;
(d) providing a source of revenue or security for payment of principal
and interest on bonds or notes issued by the corporation if the proceeds
of the sale of such bonds or notes will be deposited in the fund;
(e) providing interest rate subsidy allocations to subsidize loans  to
recipients made from the proceeds of the corporation's bonds or notes;
(f)  paying,  pursuant to subdivision seven of this section, the costs
of the corporation and the department of  health  of  administering  and
managing the program described in this section and title four of article
eleven  of the public health law and paying the costs of the corporation
and the department of health  of  providing  technical  assistance  with
respect  to  such  program;  provided,  however,  that proceeds of bonds
issued pursuant to the Clean Water/Clean Air Bond  Act  of  1996,  other
than  proceeds  of  bonds  used  to  finance the state match for federal
capitalization grants for the drinking water revolving fund,  shall  not
be used for such costs;
(g)  paying  up to seventy-five percent of the principal on loans made
to recipients under financing agreements if the  corporation  determines
that  the  recipient  would  be unable to carry out the eligible project

financed with such loan without creating a financial hardship on  system
users  and  without  the  subsidy afforded by such payment of principal,
provided that (i) the amounts applied to such purpose shall be paid from
interest  earned  on  funds  deposited  in  the  fund  and from interest
received on other loans made from the fund, (ii) the amounts so  applied
shall  not  exceed,  in the aggregate, the interest earnings received by
the fund on fifty percent of the amounts  deposited  to  the  fund,  and
(iii)   in   accordance  with  regulations  to  be  promulgated  by  the
corporation, preference shall be given to small and rural communities in
providing such principal subsidies; or
(h) making state assistance payments for the state share of  the  cost
of  an  eligible project from up to ninety million dollars ($90,000,000)
of the proceeds of state bonds and notes issued pursuant  to  the  Clean
Water/Clean  Air  Bond  Act  of  1996; provided that, in accordance with
regulations to be promulgated by the corporation,  preference  shall  be
given  to  recipients  which  would be unable to carry out such eligible
projects in the  absence  of  such  state  assistance  payments  without
creating a financial hardship on system users.
Subject  to  any  applicable  provisions  of federal or state law, any
financial assistance at an interest rate of  zero  percent  provided  to
recipients   that  meet  the  financial  hardship  criteria  regulations
established pursuant to title four  of  article  eleven  of  the  public
health  law,  may  have  a  final  maturity  up to forty years following
scheduled completion of the eligible project.
5. The corporation may make payments to the state in  accordance  with
subdivision   seven   of   this  section  to  reimburse  the  state  for
expenditures made pursuant to appropriation  to  pay  the  cost  of  the
corporation  and the department of health for administering and managing
the drinking  water  revolving  fund  program,  including  provision  of
technical assistance. Such reimbursement may be made from:
(a) available investment earnings on all amounts in the drinking water
revolving  fund  excluding all amounts in the fund which are the subject
of allocations or other financial assistance to a recipient;
(b) payments received from a recipient for such purpose; and
(c)  the  proceeds  of  federal  capitalization  grants,   awards   or
assistance available for administration and management of such program.
Notwithstanding the foregoing, if the sources of revenues described in
paragraphs  (a),  (b)  and  (c)  of  this  subdivision  are  at any time
insufficient to make a reimbursement  to  the  state  pursuant  to  this
subdivision  when  due, the corporation may make such reimbursement from
any other available  amounts  in  the  drinking  water  revolving  fund,
excluding  all  amounts  that  are the subject of allocations, provided,
that the amounts paid from fund sources other than  those  described  in
paragraphs (a), (b) and (c) of this subdivision shall be reimbursed upon
a  determination  by  the  director  of  the budget that future revenues
obtained from sources described in paragraphs (a), (b) and (c)  of  this
subdivision  are  in  excess  of  the  amounts reasonably needed to make
future reimbursements pursuant to this subdivision.
* 6. Moneys in the drinking water revolving fund may  be  invested  as
provided  in  subdivision  four of section twelve hundred eighty-four of
this title and may be further invested:
(a) in investment agreements continuously secured by obligations  with
any  insurance  company  or  reinsurance  company or corporate affiliate
thereof rated by a nationally recognized rating agency in one of its two
highest categories, any bank, trust company  or  broker  or  dealer,  as
defined  by  the  securities  exchange act of 1934, which is a dealer in
government bonds, which reports to, trades with and is recognized  as  a
primary  dealer  by  a  federal  reserve  bank  and  is  a member of the

securities  investors  protection  corporation,   if   such   investment
agreement provides that:
(i)   such   obligations   securing  such  investment  agreements  are
obligations as set forth in section ten of the general municipal law;
(ii) such obligations are to be delivered to a trustee for the benefit
of the corporation or, with respect to moneys pledged under an indenture
of  trust  or  trust  agreement  relating  to  bonds  or  notes  of  the
corporation,  to the trustee under such indenture or trust agreement, or
are  supported  by  a  safe  keeping  receipt  issued  by  a  depository
satisfactory  to  the  corporation  as  applicable,  provided  that such
investment agreements must provide that  the  value  of  the  underlying
obligations shall be maintained at a current market value, calculated no
less  frequently  than  monthly,  of  not less than the amount deposited
thereunder;
(iii) a prior perfected security interest in the obligations which are
securing such agreement  has  been  granted  to  the  corporation,  such
trustee or such depository as applicable; and
(iv)  such  obligations  are  free  and  clear  of adverse third party
claims; or
(b) in obligations  as  set  forth  in  section  ten  of  the  general
municipal law that are rated by a nationally recognized rating agency in
one of its two highest rating categories.
* NB Effective until September 30, 2026
* 6.  Moneys  in  the drinking water revolving fund may be invested as
provided in subdivision four of section twelve  hundred  eighty-four  of
this title and may be further invested:
(a)  in investment agreements continuously secured by obligations with
any insurance company or  reinsurance  company  or  corporate  affiliate
thereof rated by a nationally recognized rating agency in one of its two
highest  categories,  any  bank,  trust  company or broker or dealer, as
defined by the securities exchange act of 1934, which  is  a  dealer  in
government  bonds,  which reports to, trades with and is recognized as a
primary dealer by a  federal  reserve  bank  and  is  a  member  of  the
securities   investors   protection   corporation,  if  such  investment
agreement provides that:
(i)  such  obligations  securing  such   investment   agreements   are
obligations as set forth in section ten of the general municipal law;
(ii) such obligations are to be delivered to a trustee for the benefit
of the corporation or, with respect to moneys pledged under an indenture
of  trust  or  trust  agreement  relating  to  bonds  or  notes  of  the
corporation, to the trustee under such indenture or trust agreement,  or
are  supported  by  a  safe  keeping  receipt  issued  by  a  depository
satisfactory to  the  corporation  as  applicable,  provided  that  such
investment  agreements  must  provide  that  the value of the underlying
obligations shall be maintained at a current market value, calculated no
less frequently than monthly, of not  less  than  the  amount  deposited
thereunder;
(iii) a prior perfected security interest in the obligations which are
securing  such  agreement  has  been  granted  to  the corporation, such
trustee or such depository as applicable; and
(iv) such obligations are  free  and  clear  of  adverse  third  party
claims; or
(b)  in  obligations  the  interest  on which is excludable from gross
income under section one hundred three of  the  internal  revenue  code,
provided  that  such  obligations  are  rated by a nationally recognized
rating agency in one of its two highest rating categories.
* NB Effective September 30, 2026
7. The corporation may transfer to the state on such schedule  as  the
corporation  and  the  department of health shall agree amounts from the
fund to reimburse  the  state  in  accordance  with  the  provisions  of
subdivision five of this section.
8.  In  addition to the powers of the corporation granted elsewhere in
this chapter, the corporation shall have the power to  enter  into  loan
and  other  financing  agreements  authorized  by  title four of article
eleven of the public health law. Notwithstanding the powers  granted  to
the  corporation  elsewhere  in  this  title, the corporation's power to
finance eligible projects from the fund is limited to eligible  projects
for which financing agreements have been executed pursuant to title four
of article eleven of the public health law.
9.  In  addition to the powers granted to the corporation elsewhere in
this  chapter,  the  corporation  may  make  loans  or  other  financial
assistance to recipients for purposes of financing eligible projects for
which  the  fund  may be used, subject to the limitations of subdivision
eight of this section, may accept the obligations of  any  recipient  as
security  for  the repayment of a loan to such recipient, and may assign
and pledge such recipient obligations and financing agreements  for  the
benefit  of the holders of obligations of the corporation. Loan proceeds
or other financial assistance may be disbursed to a  recipient  only  in
connection  with facilities that have been certified by the commissioner
of health as constituting an eligible project  and  in  accordance  with
other  restrictions  as  may  be imposed in connection with such loan or
obligations of the corporation from the proceeds of which such  loan  is
made.
10. The corporation is authorized to arrange, in consultation with the
department  of health, for any audits required by law for the purpose of
issuing  its  bonds  or  notes  to  provide  financial   assistance   to
recipients,  and  provide  for  the  implementation of any independently
conducted reviews or audits arranged  pursuant  to  subdivision  two  of
section eleven hundred sixty-six of the public health law.
11.  In  the  event a municipality participating in the drinking water
revolving  fund  program  shall  fail  to  make  any  payment  due   the
corporation  pursuant  to any financing agreement or other obligation of
the municipality sold to the corporation or issued as security  for  the
undertaking  of  the  municipality  thereunder,  the  corporation  shall
certify to the comptroller,  and  notify  the  chairman  of  the  senate
finance   committee,  the  chairman  of  the  assembly  ways  and  means
committee, the director of the division of the budget and the  governing
body  of the municipality that such municipality has failed to make such
payment. Such certificate shall be in such form as may be determined  by
the corporation provided such certificate shall specify the exact amount
of  debt  service and surcharge, if applicable, required to satisfy such
municipality's unpaid obligation. The comptroller, upon receipt of  such
certificate  from  the  corporation,  is authorized to and shall, to the
extent not  otherwise  prohibited  by  law  and  subject  to  any  other
provision   of   law  providing  for  withholding  of  payments  to  the
municipality which takes precedence over this subdivision, withhold from
such municipality the next succeeding payments of  state  aid  or  local
assistance  otherwise  payable to it to the extent necessary to meet the
certified amount of debt service and surcharge, if applicable,  due  the
corporation  and shall immediately pay over to the corporation as a debt
service payment on behalf of such municipality the amount so withheld.