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moneys shall release the fire district treasurer and such other fire district officers and their sureties from any liability for loss of such moneys by reason of the default or insolvency of any such depositary. ]

At the annual organization meeting of the board of fire commissioners of a fire district the fire district treasurer shall account with the board of fire commissioners for all moneys received and disbursed by him during the preceding fiscal year and shall produce all books, records, receipts, orders, vouchers and cancelled checks respecting the same.

At such meeting the fire district treasurer shall file with the board of fire commissioners a statement in writing showing his receipts and disbursements for the preceding fiscal year, which statement shall be in detail and shall be entered in the minutes of the meeting by the fire district secretary, except that the fire district treasurer, if authorized by the board of fire commissioners at a meeting held prior to the annual organization meeting, may within sixty days after the end of the fiscal year, submit to the said board a copy of the annual report required by section thirty of the general municipal law, in lieu of such statement, in which case the fire district treasurer shall account for all moneys received and disbursed by him during the preceding fiscal year, and shall produce all books, records, receipts, orders, vouchers and cancelled checks respecting the same, at the meeting of the board of fire commissioners at which the said annual report is submitted or at the next meeting held subsequent to the submission of the report if not submitted at a meeting of the board, in lieu of producing such records at the annual organization meeting: Such authorization shall remain in effect from year to year until rescinded by the board of fire commissioners. The annual report shall be entered in the minutes of the meeting by the fire district secretary. The board of fire commissioners may require the fire district treasurer to submit to the board of fire commissioners at any time for examination his books, records, receipts, orders, vouchers and cancelled checks.

§ 36. Subdivision l-a of section 215 of the town law, as amended by chapter 678 of the laws of 1976, is amended to read as foủlows: 1-a. May,

when specifically authorized by the town board and subject to such restrictions as the town board may impose not inconsistent with law, designate one of their members as treasurer and disbursing officer for such district in place of the supervisor, and when commissioner has been designated, the supervisor, and the receiver of taxes and assessments or town tax collector shall pay over to the treasurer of the district all taxes,

assessments water rates or rentals assessed, levied or collected for district purposes or services rendered by such district, and all proceeds of obligations issued for district improvements. The proceeds of obligations issued for district improvements shall be deposited, secured and used pursuant to the manner prescribed by section 165.00 of the local finance law. The treasurer shall, within ten days, deposit and secure all other moneys in the [name of the district in such national or state banks or trust companies designated by the board of commissioners, to be withdrawn only on the order of the treasurer upon the authorization of the commissioners. Such designation and deposit shall release such treasurer and his sureties from any liability for loss of such moneys by reason of the default or insolvency of any such depositary] manner provided by section ten of the general municipal law. The board of commissioners shall require

the treasurer so designated, before entering upon the duties of his office, to give an official undertaking, conditioned for the faithful performance of his duties and that he will well and truly keep, pay over and account for all moneys and property belonging to the district and coming into his hands treasurer, in such form, in such sum and with such sureties as the board of commissioners shall direct

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approve, and such approval shall be

indicated upon such undertaking; and when approved, such undertaking shall be filed in the office of the town clerk. The board of commissioners may determine by resolution that such undertaking shall be executed by a surety company authorized to transact business in the state of New York, and the expense thereof shall be a charge on the district.

§ 37. The closing paragraph of section 231 of the town law, as added by chapter 10 of the laws of 1974, is amended to read as follows:

Whenever unpaid assessment has been divided into annual installments pursuant to this section the town board may, at the time of making EXPLANATION-Matter in italics is new; matter in brackets [ ] is old law

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such division, or at any time thereafter, provide that all future annual installments may be prepaid together with a sum sufficient to meet all future pro rata shares of the annual interest payable on such obligations and which would otherwise have been added to such future installments had same not been prepaid. All sums received from such prepayments shall be deposited and retained in a separate account in (bank or trust company] depositary designated in the manner provided by section ten of the general municipal law to be applied only to the payment of the obligations issued pursuant to this section. Notwithstanding the foregoing, such sums so received may be invested in the manner permitted in section (six-f] eleven of the general municipal law.

§ 38. Paragraph 2 of subdivision 3 of section 4-412 of the village law is amended to read as follows:

(2) Banks of deposit. Shall designates, by written resolution duly adopted by a majority vote of such board which shall be entered its minutes, banks or trust companies in the manner provided by section ten of the general municipal law the depositaries for the deposit of all moneys received by the treasurer, clerk, receiver, and town receiver who is designated and appointed as village receiver; and may require report by the cashier thereof to each regular meeting of the board of th amount on deposit to the credit of the treasurer and such other village officers. [Such designation and deposit of the moneys received by any such village officer shall release him and his sureties from any liability for loss of such moneys by reason of the default or insolvency of any such depositary. ]

§ 39. Paragraph c of subdivision 3 of section 5-518 of the village law is amended to read as follows:

c. Whenever an unpaid assessment has been divided into annual installments pursuant to paragraph b of this subdivision the board of trustees

at the time of making such division, or at any time thereafter, provide that all future annual installments may be prepaid together with

sufficient to meet all future pro rata shares of the annual interest payable on such obligations and which would otherwise have been added to such future installments had same not been prepaid. All sums received from such prepayments shall be deposited and retained in separate account in a tbank or trust company] depositary designated in the manner provided by section ten of the general municipal law to be applied only to the payment of the obligations, issued pursuant to paragraph b of this subdivision. Notwithstanding the foregoing, such

received may be invested in the manner permitted in section (six-f] eleven of the general municipal law.

§ 40. Subdivision 3 of section 69 of the workers' compensation law, as added by chapter 849 of the laws of 1955, is amended to read as follows:

3. The committee or administrator may direct the county treasurer to invest moneys in any such reserve in the manner prescribed by section [six-f] eleven of the general municipal law.

§ 41. The banking law is amended by adding a new section 107-a to read as follows:

$ 107-a. Security for public deposits. 1. As used in this section, the following terms shall have the following meanings:

(a) "Public depositary". A bank, trust company or other depositary, whether state or federally chartered, authorized to accept and hold deposits of public funds under the laws of this state. (b) "Public funds". Funds of a political subdivision.

c) "Political subdivision". 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.

(d) "Public deposits". Deposits of public funds in a public depositary which are available for all uses generally permitted by the public de, positary to the depositing political subdivision for actually and finally collected funds under the public depositary's account

agreement or policies.

2. Whenever a political subdivision is required by any general or special law to obtain a pledge of assets or other security from a

a public depositary for its public deposits and such political subdivision has entered into a written agreement with such public depositary relating to such public deposits and has provided written notice in a form specified by such written agreement to the public depositary of such public deposits, the public depositary shall comply with the provisions of such law at the time it accepts any public deposits from the political subdivision; provided, however, that where the public depositary and political

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subdivision have agreed in writing as to the maximum amount of security which such depositary shall provide, and the terms, conditions and timing of the provisions of security pursuant thereto, and the depositary has at all times complied with such agreement, it shall be deemed to have complied with the provisions of such law for so long it shall comply with such agreement.

$ 42. The general municipal law is amended by adding a new section 39 to read as follows:

§ 39. Investment policies for local governments. ,1. Each local government, which for purposes of this section shall include counties, cities, towns, villages, school districts including boards of cooperative educational services and district corporations, within the meaning of that term as set out in subdivision three of section sixty-six of the general construction law, or any other governmental subdivision of the state, shall by resolution adopt comprehensive investment policy which details the local government's operative policy and instruct'ions to of ficers and staff regarding the investing, monitoring and reporting of funds of the local government. The investment policy shall be annually reviewed by the local government.

2. Funds of the local government, for purposes of this section, shall consist of all moneys and other financial resources available for investment by the local government on its own behalf or on behalf of any other entity or individual.

3. The investment policy adopted by the local government shall include, but not be limited to, the following:

(a) A list of the permitted types of investments of the local government, which shall be consistent with the appropriate provisions of law relating to the local government and any additional requirements pursuant to any contract with bondholders and noteholders or established by the local government.

(b). Procedures and provisions to secure in a satisfactory manner the local government's financial interest in investments:

(C) Standards for written agreements pursuant to which investments are made. Such standards shall be consistent with the appropriate provisions of law relating to the local government and any additional requirements pursuant to any contract with bondholders and noteholders or established by the local government.

(d) Procedures for the monitoring, control, deposit and retention of investments and collateral.

(e) Standards for security agreements and custodial agreements with banks or trust companies authorized to do business in the state of New York, pursuant to which obligations and collateral are held by such banks and trust companies for the local government. Such standards shall be consistent with the

appropriate provisions of law relating to the local government and any additional requirements pursuant to any tract with bondholder's and noteholders or established by the local government.

(f) Standards for the diversification of investments, including diversification with respect to types of investments and firms with whom the local government transacts business.

(8) Standards for the qualification of investment agents which transact business with the local government, such as criteria covering itworthiness, experience, capitalization, size and any other factors that make a firm capable and qualified to transact business with

the local government.

4. Each local government shall have the power to amend its investment policy from time to time in accordance with the provisions of this section.

5 43. Section 10 of the general municipal law, as added by section twelve of this act, is amended 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 EXPLANATION-Matter in italics is new; matter in brackets [] is old law

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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 bank defined by the banking law or a national banking association located and authorized to do business in New York.

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

obligations fully insured or guaranteed as to the payment of principal and in, terest 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 district corporation of this state or obligations of any public benefit corporation which under a specific state statute may

be accepted 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 nationally recognized statistical rating organization.

(ix) Any mortgage related securities, as defined in the Securities Exchange Act of 1934, as amended, which may be purchased by banks under 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".

g. "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 one nationally recognized statistical rating organization.

h. "Eligible "letter of credit" shall mean an irrevocable letter of credit issued in favor of the political subdivision 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 cured short-term 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 or 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. ]

2. 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

required by law to designate depositaries. Such' resolution shall

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specify the maximum amount which may be kept on deposit at any time in each such bank or trust company. Such designations and amounts may be changed at any time by further resolution.

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.

All public deposits excess of the amount insured under the provisions of the Federal Deposit Insurance Act as

hereafter amended shall be secured in accordance with this subdivision:

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 the 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 security for the public deposits, together with agreed upon interest, if any, and any costs

expenses arising out of the collection of such deposit upon a default. It shall also provide for the conditions under which the securities held 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 generál 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 or other liabilities and it shall also provide for the manner in which the custodial bank or trust company shall confirm the receipt, substitution

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

the local government's interest in the collateral. Such agreement may also contain such other provisions as the governing board may deem necessary.

[(ii)] b. 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 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. For purposes

of determining the market value of securities as required by this subdivision:

(i) 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, thosé EXPLANATION—Matter in italics is new; matter in brackets [] is old law

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