S T A T E   O F   N E W   Y O R K
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                                  6437

                       2013-2014 Regular Sessions

                          I N  A S S E M B L Y

                             March 27, 2013
                               ___________

Introduced by M. of A. JAFFEE -- read once and referred to the Committee
  on Local Governments

AN  ACT to amend the general municipal law, in relation to the mandatory
  reserve  fund  for  municipal  corporations,  fire  districts,  school
  districts and boards of cooperative educational services

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Section 6-l of the general municipal law, as added by chap-
ter 1052 of the laws of 1965, subdivision 2 as amended by section 10  of
part  A  of  chapter 93 of the laws of 2002, subdivision 2-a as added by
chapter 807 of the laws of 1977 and subdivision 6 as amended by  chapter
140 of the laws of 1996, is amended to read as follows:
  S  6-l.  Mandatory  reserve  fund  for  municipal  corporations,  fire
districts [and], school districts AND BOARDS OF COOPERATIVE  EDUCATIONAL
SERVICES.  1. As used in this section, the term "governing board," in so
far as it is used in reference to a municipal  corporation,  shall  mean
the  "legislative  body" thereof, as that term is defined in section two
of the municipal home rule law, as amended from time to time; in so  far
as  it  is used in reference to a fire district, shall mean the board of
fire commissioners thereof; in so far as it is used in  reference  to  a
school district OR BOARD OF COOPERATIVE EDUCATIONAL SERVICES, shall mean
the board of trustees thereof.
  2.  Notwithstanding any other provision of this chapter, upon the cash
sale by a municipal corporation, fire district [or], school district  OR
BOARD  OF  COOPERATIVE EDUCATIONAL SERVICES of a capital improvement, as
defined in section six-c of this chapter, for the cost  of  which  obli-
gations  were  issued pursuant to the local finance law, and when all or
part of such indebtedness is outstanding at the time  of  such  sale,  a
mandatory  reserve fund shall be established for the purpose of retiring
such obligations, or, as an additional alternative, paying principal of,
or redemption premiums in connection  with  such  obligations  or  other

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD09636-01-3
              

A. 6437                             2

obligations  of  at least equal weighted average life; provided however,
that, if the proceeds of the sale are used or set aside to be  used  (i)
to  pay  or provide for the construction, reconstruction, acquisition or
installation of capital improvements or equipment, as defined in section
six-c  of  this  chapter,  or  (ii)  for the payment of principal of, or
redemption premiums in  connection  with,  any  outstanding  obligations
issued by the municipal corporation, fire district [or], school district
OR  BOARD  OF  COOPERATIVE  EDUCATIONAL SERVICES to finance such capital
improvements or equipment, in an amount not less than the lesser of such
proceeds or the principal amount of the indebtedness outstanding on  the
capital  improvement  sold,  then  such  fund  need  not be established;
provided, however, that if such amount to be so used, together with  any
other  amounts so used pursuant to this sentence in the same fiscal year
of such municipal corporation, fire district [or],  school  district  OR
BOARD  OF  COOPERATIVE EDUCATIONAL SERVICES, would exceed one percent of
the limit prescribed by section 104.00 of the local  finance  law,  then
such  fund shall nevertheless be established; and provided further, that
a municipal corporation, fire district [or], school district OR BOARD OF
COOPERATIVE EDUCATIONAL SERVICES shall within thirty days after the  use
of  such  proceeds  pursuant to clause (i) [herein] OF THE OPENING PARA-
GRAPH OF THIS SUBDIVISION, file a  report  with  the  state  comptroller
identifying:  (a)  the  asset  sold, (b) the amount of net proceeds from
such sale, (c) the amount to be paid or provided pursuant to such clause
(i), and (d) the capital improvements or equipment to be so paid for  or
provided.  When  a  municipal  corporation,  fire  district [or], school
district OR BOARD OF COOPERATIVE EDUCATIONAL  SERVICES  has  outstanding
indebtedness incurred to finance the cost of such a capital improvement,
federal  and  state  aid received on account of such improvement, to the
extent that it is not applied directly to the payment of a part  of  the
cost  of  such  improvement  or  to retire indebtedness issued in antic-
ipation of such aid, shall likewise be deposited in a reserve  fund  for
the  purpose  of  retiring  either such obligations or, as an additional
alternative, other obligations of at least equal weighted average  life.
The  entire  proceeds of the sale or such state or federal aid received,
as the case may be, shall be deposited  to  the  credit  of  such  fund,
provided  however, that if the aggregate amount thereof shall exceed the
principal of such indebtedness due or to become due,  or  if,  when  all
such  outstanding obligations have been retired, any moneys remain unex-
pended in the reserve fund, such excess  moneys  may  be  used  for  any
lawful municipal or district purpose, as the case may be. The provisions
of this section shall not apply in a case where a provision of any other
law  requires  that  the  proceeds  of the sale of a capital improvement
shall be deposited in a reserve fund  established  for  the  purpose  of
retiring outstanding obligations.
  2-a.  The  provisions  of this section shall apply to capital improve-
ments of town and county  improvement  districts.  For  the  purpose  of
implementing the provisions of this section in regard to such districts,
the term "governing board" shall mean the governing board of the town or
county,  as  the case may be, in which such district is located, and the
term "chief fiscal officer" shall mean the chief fiscal officer of  such
town or county.
  3. Appropriations from such fund shall be made only for the payment or
payments  of  all or part of the said outstanding indebtedness. However,
any balance remaining in said fund upon the payment of  all  outstanding
principal  and  interest  may  be expended for any lawful purpose of the

A. 6437                             3

municipal corporation, fire district [or], school district OR  BOARD  OF
COOPERATIVE EDUCATIONAL SERVICES.
  4.  The chief fiscal officer shall keep a separate account for each of
such funds established. Such account shall show:
  a. The date of creation of the fund and the amount credited thereto.
  b. The interest earned by such fund.
  c. The capital gains or losses resulting from the sale of  investments
of the fund.
  d. The interest or capital gains which have accrued to the fund.
  e. The amount and date of each withdrawal from the fund.
  f.  The  assets of the fund, indicating the cash balance therein and a
schedule of the amounts invested. The chief fiscal officer at the termi-
nation of each fiscal year shall render a detailed report of the  opera-
tion and condition of each of such funds to the governing board.
  5.  The members of the governing board are hereby declared trustees of
such funds and shall be subject to all the duties  and  responsibilities
imposed  by law on trustees, and such duties and responsibilities may be
enforced by  the  municipal  corporation,  fire  district  [or],  school
district  OR  BOARD OF COOPERATIVE EDUCATIONAL SERVICES, as the case may
be, or by any board, commission, agency, office or taxpayer thereof.  An
expenditure  from such mandatory reserve fund may be made only by appro-
priation pursuant to a resolution of the governing board.
  6. The moneys in each such fund shall be deposited and secured in  the
manner  provided  by section ten of this article. The governing board or
the chief fiscal officer of such municipal  corporation,  fire  district
[or],  school  district OR BOARD OF COOPERATIVE EDUCATIONAL SERVICES, if
the governing board shall delegate such duty  to  him,  may  invest  the
moneys  in  each  such  fund in the manner provided in section eleven of
this article. Any interest earned  or  capital  gains  realized  on  the
moneys  so  deposited  or  invested shall accrue to and become a part of
each such fund. The separate identity of each such fund shall  be  main-
tained whether its assets consist of cash, investments, or both.
  7. The members of the governing board shall be guilty of a misdemeanor
if they:
  a. Authorize a withdrawal from any such mandatory reserve fund for any
purpose other than as provided in this section.
  b. Expend any money withdrawn from any such mandatory reserve fund for
a purpose other than as provided in this section.
  S 2. This act shall take effect immediately.