6. The moneys in each such capital reserve fund shall be deposited [in a bank or trust company designated,] and secured in the manner provided by [law, as depository of the funds of such fire district] section ten of this article. The moneys in each such fund so deposited shall be kept in a separate bank account. The board of fire commissioners or the fire district treasurer of such fire district, if the board of fire commissioners shall delegate such duty to him, may invest the moneys in each such fund in the manner provided in section [six-f] eleven of this [chapter] article. Any interest earned or capital gains realized on the moneys so deposited or invested shall accrue to and become part of each such fund. The separate identity of each such fund shall be maintained, whether its assets consist of cash or investments or both. § 6. Subdivision 9 of section 6-h of the general municipal law, as amended by chapter 229 of the laws of 1958, is amended to read as follows: 9. The moneys in each such fund shall be deposited [in one or more of the banks or trust companies designated,] and secured in the manner provided by [law, as depositories of the funds of such_municipal corporation or fire district] section ten of this article. The moneys in each such fund so deposited shall be kept in a separate bank account. The governing board or the chief fiscal officer of such municipal corporation or fire district, if the governing board shall delegate such duty to him, may invest the moneys in each such fund in the manner provided in section [six-f] eleven of this [chapter] 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 maintained whether its assets consist of cash, investments, or both. § 7. Subdivision 3 of section 6-j of the general municipal law, as amended by chapter 340 of the laws of 1973, is amended to read as follows: 3. The moneys in such fund shall be deposited [in one or more of the banks or trust companies designated,] and secured in the manner provided by [law, as depositories of the fund of such municipality, school district or fire district] section ten of this article. The money in such fund so deposited shall be kept in a separate bank account. The governing board, or the chief fiscal officer for officer having custody of such moneys] of such municipality, school district or fire district, if the governing board shall delegate such duty to him, may invest the moneys in such fund in [obligations specified] the manner provided in section [six-f] eleven of this [chapter] article. Any interest earned or capital gain realized on the money so deposited or invested shall accrue to and become part of such fund. The separate identity of such fund shall be maintained whether its assets consist of cash or investments or both. § 8. Section 6-k of the general municipal law, as added by chapter 457 of the laws of 1952, is amended to read as follows: in § 6-k. Electric utility depreciation reserve funds. The governing board of any municipal corporation operating an electric public utility service shall establish solely by appropriations from the revenues of such service, a depreciation reserve fund, the assets of which shall be used solely for, and for no other purpose than, the improvement, extension, or replacement of such service, or the payment of indebtedness incurred in relation to the construction, improvement, extension or replacement of such service, except as otherwise provided in section 123.00 of the local finance law and section eight of this [chapter] article. Such governing board shall require that out of the revenues of such service there shall be deposited in the reserve fund, annually, quarterly, or monthly in [their] its discretion, the amounts entered the depreciation reserve account of such service as the depreciation accruals for any such period. A depreciation reserve account is an account in which the original cost of the service is being distributed to expenses in substantially equal annual, quarterly or monthly amounts during the expected service life of the component parts of the service, by direction of the public service commission. The moneys in the fund shall be deposited [in one or more banks or trust companies in this state designated,] and secured in the manner provided by law, as depositories of the funds of such municipal corporation] section ten of this article. The governing board, or the chief fiscal officer of such municipal corporation if the governing board shall delegate such duty to him, may invest the moneys of such fund in the manner provided in section [six-f] eleven of this [chapter] article. Any interest earned or capital gains realized on the moneys so deposited or invested shall accrue to and become part of the fund. The separate identity of the fund shall be maintained whether its assets consist of cash or investments or both. § 9. Subdivision 6 of section 6-1 of the general municipal law, as added by chapter 1052 of the laws of 1965, is amended to read as follows: 6. The moneys in each such fund shall be deposited [in one or more of the banks or trust companies designated,] and secured in the manner provided by [law, as depositories of the funds of such municipal corporation, fire district or school district] section ten of this article. The moneys in each such fund so deposited shall be kept in a separate bank account. The governing board or the chief fiscal officer of such municipal corporation, fire district or school district, if the governing board shall delegate such duty to him, may invest the moneys in each such fund in the manner provided in section [six-f] eleven of this [chapter] 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 maintained whether its assets consist of cash, investments, or both. § 10. Subdivision 3 of section 6-m of the general municipal law, as added by chapter 616 of the laws of 1977, is amended to read as follows: 3. The moneys in such fund shall be deposited [in one or more of the banks or trust companies designated,] and secured in the manner provided by [law, as depositories of the fund of such municipality, school district, board of cooperative educational services, or fire district] section ten of this article. The governing board, or the chief fiscal officer [or officer having custody of such money] of such municipality, school district, board of cooperative educational services, or fire district, if the governing board shall delegate such duty to him, may invest the moneys in such fund in [obligations specified in] the manner provided by section [six-f] eleven of this [chapter] article. Any interest earned or capital gain realized on the money so deposited or invested shall accrue to and become part of such fund. The separate identity of such fund shall be maintained whether its assets consist of cash or investments or both. § 11. Subdivision 5 of section 6-n of the general municipal law, as amended by chapter 819 of the laws of of 1986, is amended to read as follows: 5. The moneys in such fund shall be deposited [in one or more of the banks or trust companies designated] and secured in the manner provided by [law as depositories of the funds of such municipal corporation] section ten of this article. The governing board, or the chief fiscal officer [or officer having custody of such money] of such municipal corporation, if the governing board shall delegate such duty to him, may invest the moneys in such fund [in obligations specified] in the manner provided by section [six-f] eleven of this [chapter; provided, however that moneys of school districts and boards of cooperative educational services may be invested in obligations specified in section seventeen hundred twenty-three-a of the education law] article. Any interest earned or capital gain realized on the money so deposited or invested shall accrue to and become part of such fund. § 12. Section 10 of the general municipal law is repealed and a new section 10 is added to read as follows: § 10. Deposits of public money; security. 1. For purposes of this section: a. "Local government" shall mean any municipal corporation, school district, board of cooperative educational services, district corporation, special improvement district governed by a separate board of commissioners or a public library. b. "Public funds" shall mean funds of a local government. c. "Public deposits" shall mean deposits of public funds in a bank or trust company which are available for all uses generally permitted by the bank or trust company to the depositing local government for actually and finally collected funds under the bank's or trust company's account agreement or policies. d. "Bank" shall mean a bank as defined by the banking law or a national banking association located and authorized to do business in New York. EXPLANATION-Matter in italics is new; matter in brackets [ ] is old law e. "Trust company" shall mean a trust company as defined by the banking law and located and authorized to do business in New York. f. "Eligible securities" shall mean any of the following: (i) Obligations issued by the United States of America, an agency thereof or a United States government sponsored corporation or obligations fully insured or guaranteed as to the payment of principal and interest by the United States of America, an agency thereof or a United States government sponsored corporation. (ii) Obligations issued or fully guaranteed by the International Bank for Reconstruction and Development, the Inter-American Development Bank, the Asian Development Bank, and the African Development Bank. (iii) Obligations partially insured or guaranteed by any agency of the United States of America, at a proportion of the market value of the obligation that represents the amount of the insurance or guaranty. (iv) Obligations issued or fully insured or guaranteed by this state, obligations issued by a municipal corporation, school district or district corporation of this state or obligations of any public benefit corporation which under a specific state statute may be accepted as security for deposit of public moneys. (v) Obligations issued by states (other than this state) of the United States rated in one of the three highest rating categories by at least one nationally recognized statistical rating organization. (vi) Obligations of Puerto Rico rated in one of the three highest rating categories by at least one nationally recognized statistical rating organization. (vii) Obligations of counties, cities and other governmental entities of another state having the power to levy taxes that are backed by the full faith and credit of such governmental entity and rated in one of the three highest rating categories by at least one nationally recognized statistical rating organization. (viii) Obligations of domestic corporations rated in one of the two highest rating categories by at least one nationally recognized statistical rating organization. under (ix) Any mortgage related securities, as defined in the Securities Exchange Act of 1934, as amended, which may be purchased by banks the limitations established by federal bank regulatory agencies. (x) Commercial paper and bankers' acceptances issued by a bank (other than the bank with which the money is being deposited or invested) rated in the highest short-term category by at least one nationally recognized statistical rating organization and having maturities of not longer than sixty days from the date they are pledged. (xi) Zero-coupon obligations of the United States government marketed as "Treasury STRIPS". 8. "Eligible surety bond" shall mean a bond executed by an insurance company authorized to do business in this state, the claims-paying ability of which is rated in the highest rating category by at least two nationally recognized statistical rating organizations. h. "Eligible letter of credit" shall mean an irrevocable letter of credit issued in favor of the local government for a term not to exceed ninety days by a bank (other than the bank with which the money is being deposited or invested) whose commercial paper and other unsecured shortterm debt obligations (or, in the case of a bank which is the principal subsidiary of a holding company, whose holding company's commercial paper and other unsecured short-term debt obligations) are rated in one of the three highest rating categories (based on the credit of such bank holding company) by at least one nationally recognized statistical rating organization or by a bank (other than the bank with which the money is being deposited or invested) that is in compliance with applicable federal minimum risk-based capital requirements. or 2. a. The governing board of every local government shall designate one or more banks or trust companies for the deposit of public funds, the disposition of which is not otherwise provided for by law, received by the chief fiscal officer or any other officer authorized by law to make deposits. Such designation shall be by resolution of the governing board or, in the case of a city, such other body as may be authorized or required by law to designate depositaries. Such resolution shall specify the maximum amount which may be kept on deposit at any time in each such or trust company. Such designations and amounts may be changed at any time by further resolution. bank b. Except as otherwise provided by law, all deposits shall be made to the credit of the local government. The deposit of public funds pursuant to this subdivision shall release the officer making the deposit and his or her surety from any liability for loss of such public funds by reason of the default or insolvency of any such bank or trust company. 3. All public deposits in excess of the amount insured under the provisions of the Federal Deposit Insurance Act as now or hereafter amended shall be secured in accordance with this subdivision: the a. (i) The officers making a deposit may accept a pledge of eligible securities having in the aggregate a market value at least equal to aggregate amount of public deposits from such officers, together with a security agreement from the bank or trust company. The security agreement and custodial agreement referred to below may be the same agreement including when the bank or trust company holding the public deposits holds the collateral for the public body. The security agreement shall provide that such eligible securities are being pledged by the bank or trust company as security for the public deposits, together with agreed upon interest, if any, and any costs or expenses arising out of the collection of such deposit upon a default. It shall also provide for the conditions under which the securities held may be sold, presented for payment, substituted or released and the events of default which will enable the local government to exercise its rights against the pledged securities. Unless registered or inscribed in the name of the local government, such securities shall be delivered in a form suitable for transfer or with an assignment in blank to the local government or to a bank or trust company with which the local government has entered into a written custodial agreement. The custodial agreement shall provide that the pledged securities will be held by the custodial bank or trust company as agent of, and custodian for, the local government, will be kept separate and apart from the general assets of the custodial bank or trust company and will not, in any circumstances, be commingled with or become part of the backing for any other deposit other liabilities and it shall also provide for the manner in which the custodial bank or trust company shall confirm the receipt, substitution or or release of the collateral. Such agreement shall provide for the frequency of revaluation of collateral by the custodial bank or trust company and the substitution of collateral when a change in the rating of a security causes ineligibility pursuant to paragraph f of subdivision one of this section. Such agreement shall include all provisions deemed necessary and sufficient to secure in a satisfactory manner the local government's interest in the collateral. Such agreement may also contain such other provisions as the governing board may deem necessary. (ii) Whenever eligible securities delivered to a custodial bank or trust company pursuant to this paragraph are transferred by entries on the books of a federal reserve bank or other book-entry system operated by a federally regulated entity without physical delivery of the evidence of such obligations, the records of the custodial bank or trust company shall show, at all times, the interest of the local government in such securities as set forth in the security agreement. b. In lieu of or in addition to the deposit of eligible securities, the officers making a deposit may accept an eligible surety bond payable to such local government as security for the payment of one hundred percent, or an eligible letter of credit payable to such local government as security for the payment of one hundred forty percent, of the aggregate amount of public deposits from such officers and the agreed upon interest, if any. The terms and conditions of any eligible surety bond shall be approved by the governing board. c. For purposes of determining the market value of securities as required by this subdivision: (1) The eligible securities described in subparagraphs (viii), (x) and (xi) of paragraph f of subdivision one of this section shall be valued at eighty percent of their market value. (ii) The eligible securities described in subparagraph (ix) of paragraph f of subdivision one of this section shall be valued at seventy percent of their market value. (iii) of the eligible securities described in subparagraphs (v), (vi) and (vii) of paragraph f of subdivision one of this section, those securities rated in the highest category shall be valued at one hundred percent of their market value; those securities rated in the second highest rating category shall be valued at ninety percent of their market value; and those securities rated in the third highest rating category shall be valued at eighty percent of their market value. When EXPLANATION-Matter in italics is new; matter in brackets [ ] is old law two nationally recognized statistical rating organizations rate a security in two different categories, the security shall be considered to be rated in the higher of the two categories. § 13. Section 11 of the general municipal law, as amended by chapter 302 of the laws of 1958, subdivision 1 as separately amended by chapters 352 and 704 of the laws of 1970, subdivision 2 as amended by chapter 997 of the laws of 1973, the opening paragraph of subdivision 2 as amended by chapter 680 of the laws of 1976, subdivision 3 as added by chapter 984 of the laws of 1972 and subdivision 4 as added by chapter 265 of the laws of 1986, is amended to read as follows: § 11. Temporary investments. 1. For purposes of this section, the terms "local government", "bank" and "trust company" shall have the same meanings as in section ten of this article. 2. The governing board of any [municipal corporation or park or fire district and in the county of Nassau, the Great Neck park district, may authorize the chief fiscal officer or officer having_custody of moneys of such municipal corporation or park or fire district] local government or, if the governing board so delegates, the chief fiscal officer or other officer having custody of the moneys may temporarily [to deposit or] invest moneys not required for immediate expenditure, except [proceeds of loans and] moneys the investment of which is otherwise provided for by law, in special time deposit accounts in, or certificates of deposit issued by, a bank or trust company located and authorized to do business in this state, provided however, that such time deposit account or certificate of deposit shall be payable within such time as the proceeds shall be needed to meet expenditures for which such moneys were obtained and provided further that such time deposit account or certificate of deposit be secured [by a pledge of obligations of the United States of America, or any obligation fully guaranteed insured as to interest and principal by the United States of America acting through an agency, subdivision, department or division thereof, obligations of the state of New York or obligations of any municipal corporation, school district or district corporation of the state of New York] in the same manner as is provided for securing deposits of public funds by subdivision three of section ten of this article. or the or [2] 3. Investments pursuant to this section may also be made in obligations of the United States of America or in obligations guaranteed by agencies of the United States of America where the payment of principal and interest are guaranteed by the United States of America or in obligations of the state of New York, or with the approval of the state Comptroller in obligations issued pursuant to section 24.00 or 25.00 of local finance law by any municipality, school district or district corporation other than the municipality, school district or district corporation investing such moneys pursuant to this paragraph[,]. In addition, moneys in any reserve fund established pursuant to section six-c, six-d, six-e, six-g, six-h, six-j, six-k, six-1, six-m or six-n of this article may be invested in obligations of the municipality, school district, fire district or district corporation which has established the reserve fund, or in the case of a capital reserve fund established for a town or county improvement district, obligations of the town or county issued for the purposes of such district. All investments made pursuant to this subdivision shall be subject to the following conditions: a. Such obligations shall be payable or redeemable at the option of the owner within such times as the proceeds will be needed to meet expenditures for purposes for which the moneys were provided and, in the case of obligations purchased with the proceeds of bonds or notes, shall be payable or redeemable in any event, at the option of the owner, within two years of the date of purchase. in b. Such obligations, unless registered or inscribed in the name of the [municipal corporation or fire district] local government, shall be purchased through, delivered to and held in the custody of a bank or trust company or, with respect to the city of New York, a reputable dealer such obligations as shall be designated by the state comptroller, in this state [and]. Such obligations shall be purchased, sold or presented for redemption or payment [only] by such bank or trust company or dealer in obligations [upon receipt of only in accordance with prior written [instructions] authorization from the officer authorized to make the investment. All such transactions shall be confirmed in writing to the local government by the bank or trust company. All obligations held in the custody of a bank or trust company pursuant to this paragraph shall be held by such bank or trust company pursuant to a written custodial |