N.Y. PBA Law § 3237

§ 3237. Capital reserve fund. 1. The corporation shall create and\nestablish one or more special funds (each herein referred to as a\ncapital reserve fund), which may be funded initially from proceeds of\nbonds or notes of the corporation issued pursuant to this title, in an\namount equal to the capital reserve fund requirement of the bonds or\nnotes secured thereby. All amounts held in a capital reserve fund shall\nbe used solely for the payment of principal of or interest on the bonds\nor notes secured thereby, sinking fund payments thereon, the redemption\nthereof and payments to providers of bond or note facilities in respect\nof payments of such principal, interest or sinking fund payments made by\nthem, in accordance with the applicable provisions of any and all\nresolutions and trust indentures, if any, securing such bonds and notes.\nAny income or interest, not required to be rebated to the United States\nto provide for continued exclusion from gross income for federal income\ntax purposes of interest on the bonds and notes of the corporation,\nearned by, or increment to, the capital reserve fund due to the\ninvestment thereof, in excess of the amount thereof needed to pay\ninterest on the bonds or notes issued to fund the capital reserve fund,\nshall be used to pay debt service on bonds or notes issued by the\ncorporation. Any amounts released from a capital reserve fund shall be\napplied, or set aside to be applied when practicable, by the corporation\nto the payment of principal on the applicable bonds or notes, or to\nredemption thereof or to the providers of bond or note facilities.\n 2. In computing the amount of the capital reserve fund for the\npurposes of this section, obligations in which all or a portion of such\nfund shall be invested shall be valued at par if purchased at par or, if\npurchased at a premium above or a discount below par, the value at any\ngiven date obtained by dividing the total premium or discount at which\nsuch obligations were purchased by the number of interest payment dates\nremaining to maturity on such obligations after such purchase, and by\nmultiplying the number so calculated by the number of interest payment\ndates having passed since the date of such purchase; and (i) in the case\nof such obligations purchased at a premium, by deducting the product\nthus obtained from the purchase price; and (ii) in the case of such\nobligations purchased at a discount, by adding the product thus obtained\nto the purchase price. In lieu of a deposit of money or obligations to\nthe capital reserve fund, the corporation, having due regard for the\nsecurity and marketability of all affected bonds and notes, may satisfy\nthe whole or any portion of the capital reserve fund requirement by\nproviding one or more surety agreements, insurance agreements, letters\nof credit or other type of agreement or arrangement satisfying the\nprovisions of all applicable resolutions or trust indentures, if any,\neach of which provides for the availability, at all times required\nthereunder, of the amount of money or the value of the obligations in\nlieu of the deposit of which such agreement or arrangement is provided.\n