2006 New York Code - Restrictions on indebtedness of local subdivisions; contracting and payment of local indebtedness; exceptions.

 
    §  2. No county, city, town, village or school district shall contract
  any indebtedness except  for  county,  city,  town,  village  or  school
  district purposes, respectively. No indebtedness shall be contracted for
  longer  than  the period of probable usefulness of the object or purpose
  for which such indebtedness is to be contracted, or, in the alternative,
  the weighted average  period  of  probable  usefulness  of  the  several
  objects  or purposes for which such indebtedness is to be contracted, to
  be determined by the governing body of the county, city,  town,  village
  or  school district contracting such indebtedness pursuant to general or
  special laws of the state  legislature,  which  determination  shall  be
  conclusive, and in no event for longer than forty years. Indebtedness or
  any  portion  thereof  may  be  refunded  within  either  such period of
  probable usefulness, or average period of probable usefulness, as may be
  determined  by  such  governing  body  computed  from  the   date   such
  indebtedness was contracted.
    No indebtedness shall be contracted by any county, city, town, village
  or  school  district  unless  such county, city, town, village or school
  district shall have pledged its faith and credit for the payment of  the
  principal  thereof  and  the  interest  thereon. Except for indebtedness
  contracted in anticipation of the collection of  taxes  actually  levied
  and  uncollected  or to be levied for the year when such indebtedness is
  contracted and indebtedness contracted to be paid  in  one  of  the  two
  fiscal  years  immediately  succeeding  the  fiscal  year  in which such
  indebtedness was contracted, all  such  indebtedness  and  each  portion
  thereof  from  time to time contracted, including any refunding thereof,
  shall be paid in annual installments, the first of which, except in  the
  case  of  refunding of indebtedness heretofore contracted, shall be paid
  not more than two years after such indebtedness or portion thereof shall
  have been  contracted,  and  no  installment,  except  in  the  case  of
  refunding  of  indebtedness  heretofore  contracted,  shall be more than
  fifty per centum in excess of the smallest prior installment, unless the
  governing body of the county, city, town,  village  or  school  district
  contracting  such  indebtedness  provides  for  substantially  level  or
  declining debt service payments as may be authorized by law.
    Notwithstanding the foregoing provisions, indebtedness  contracted  by
  the city of New York and each portion of any such indebtedness from time
  to time so contracted for the supply of water, including the acquisition
  of  land  in  connection  with  such  purpose, may be financed either by
  serial bonds with a maximum maturity of fifty years, in which case  such
  indebtedness  shall  be  paid  in  annual  installments  as hereinbefore
  provided, or by sinking fund bonds with  a  maximum  maturity  of  fifty
  years,  which  shall be redeemed through annual contributions to sinking
  funds established and maintained  for  the  purpose  of  amortizing  the
  indebtedness  for  which  such  bonds  are  issued.  Notwithstanding the
  foregoing provisions, indebtedness hereafter contracted by the  city  of
  New  York and each portion of any such indebtedness from time to time so
  contracted for (a) the acquisition, construction or equipment  of  rapid
  transit  railroads,  or  (b)  the  construction  of docks, including the
  acquisition of land in connection with any  of  such  purposes,  may  be
  financed  either by serial bonds with a maximum maturity of forty years,
  in which case such indebtedness shall be paid in annual installments  as
  hereinbefore  provided, or by sinking fund bonds with a maximum maturity
  of forty years, which shall be redeemed through annual contributions  to
  sinking  funds  established and maintained for the purpose of amortizing
  the indebtedness for which such bonds are issued.
    Notwithstanding  the  foregoing  provisions,  but  subject   to   such
  requirements  as the legislature shall impose by general or special law,
  indebtedness contracted by any county, city,  town,  village  or  school


  district  and  each portion thereof from time to time contracted for any
  object or purpose for which indebtedness may be contracted may  also  be
  financed  by  sinking fund bonds with a maximum maturity of fifty years,
  which  shall  be  redeemed through annual contributions to sinking funds
  established by such county, city,  town,  village  or  school  district,
  provided,  however, that each such annual contribution shall be at least
  equal to the amount required, if any, to  enable  the  sinking  fund  to
  redeem,  on  the  date  of  the  contribution,  the  same amount of such
  indebtedness as would have  been  paid  and  then  be  payable  if  such
  indebtedness had been financed entirely by the issuance of serial bonds,
  except,  if  an issue of sinking fund bonds is combined for sale with an
  issue of serial bonds, for the same object or purpose, then  the  amount
  of  each annual sinking fund contribution shall be at least equal to the
  amount required, if any, to enable the sinking fund to  redeem,  on  the
  date  of  each  such  annual contribution, (i) the amount which would be
  required to be paid  annually  if  such  indebtedness  had  been  issued
  entirely  as serial bonds, less (ii) the amount of indebtedness, if any,
  to be paid during such year on the portion of such indebtedness actually
  issued as serial bonds. Sinking funds established on  or  after  January
  first,  nineteen  hundred  eighty-six pursuant to the preceding sentence
  shall be maintained and managed by the  state  comptroller  pursuant  to
  such  requirements  and  procedures  as the legislature shall prescribe,
  including provisions for reimbursement by the issuer  of  bonds  payable
  from such sinking funds for the expenses related to such maintenance and
  management.
    Provisions  shall  be  made annually by appropriation by every county,
  city, town, village and school district for the payment of  interest  on
  all  indebtedness  and for the amounts required for (a) the amortization
  and redemption of term bonds, sinking fund bonds and serial  bonds,  (b)
  the redemption of certificates or other evidence of indebtedness (except
  those  issued  in  anticipation  of  the  collection  of  taxes or other
  revenues, or renewals thereof, and which are described in paragraph A of
  section five of this article and those issued  in  anticipation  of  the
  receipt  of  the  proceeds  of the sale of bonds theretofore authorized)
  contracted to be paid in such year out of the tax levy or other revenues
  applicable  to  a  reduction  thereof,  and  (c)   the   redemption   of
  certificates or other evidence of indebtedness issued in anticipation of
  the  collection  of  taxes or other revenues, or renewals thereof, which
  are not retired within five years after their date of original issue. If
  at any time the respective appropriating authorities shall fail to  make
  such  appropriations, a sufficient sum shall be set apart from the first
  revenues thereafter received and shall be applied to such purposes.  The
  fiscal officer of any county, city, town, village or school district may
  be  required  to  set  apart and apply such revenues as aforesaid at the
  suit of any holder of obligations issued for any such indebtedness.
    Notwithstanding the foregoing, all interest need not be paid  annually
  on an issue of indebtedness provided that either (a) substantially level
  or  declining debt service payments (including all payments of interest)
  shall be made over the life of such issue of indebtedness, or (b)  there
  shall annually be contributed to a sinking fund created pursuant to this
  section,  the  amount  necessary to bring the balance thereof, including
  income earned on contributions, to the accreted value of the obligations
  to be paid therefrom on the date such contribution is made, less the sum
  of all required future  contributions  of  principal,  in  the  case  of
  sinking  fund  obligations,  or  payments  of  principal, in the case of
  serial obligations. When obligations are sold by a county,  city,  town,
  village  or  school  district  at  a discount, the debt incurred for the
  purposes of any debt limitation contained in this constitution, shall be


  deemed to include only the amount of  money  actually  received  by  the
  county, city, town, village or school district, irrespective of the face
  amount of the obligations.