§ 6-l. Mandatory reserve fund for municipal corporations, fire\ndistricts and school districts. 1. As used in this section, the term\n"governing board," in so far as it is used in reference to a municipal\ncorporation, shall mean the "legislative body" thereof, as that term is\ndefined in section two of the municipal home rule law, as amended from\ntime to time; in so far as it is used in reference to a fire district,\nshall mean the board of fire commissioners thereof; in so far as it is\nused in reference to a school district, shall mean the board of trustees\nthereof.\n 2. Notwithstanding any other provision of this chapter, upon the cash\nsale by a municipal corporation, fire district or school district of a\ncapital improvement, as defined in section six-c of this chapter, for\nthe cost of which obligations were issued pursuant to the local finance\nlaw, and when all or part of such indebtedness is outstanding at the\ntime of such sale, a mandatory reserve fund shall be established for the\npurpose of retiring such obligations, or, as an additional alternative,\npaying principal of, or redemption premiums in connection with such\nobligations or other obligations of at least equal weighted average\nlife; provided however, that, if the proceeds of the sale are used or\nset aside to be used (i) to pay or provide for the construction,\nreconstruction, acquisition or installation of capital improvements or\nequipment, as defined in section six-c of this chapter, or (ii) for the\npayment of principal of, or redemption premiums in connection with, any\noutstanding obligations issued by the municipal corporation, fire\ndistrict or school district to finance such capital improvements or\nequipment, in an amount not less than the lesser of such proceeds or the\nprincipal amount of the indebtedness outstanding on the capital\nimprovement sold, then such fund need not be established; provided,\nhowever, that if such amount to be so used, together with any other\namounts so used pursuant to this sentence in the same fiscal year of\nsuch municipal corporation, fire district or school district, would\nexceed one percent of the limit prescribed by section 104.00 of the\nlocal finance law, then such fund shall nevertheless be established; and\nprovided further, that a municipal corporation, fire district or school\ndistrict shall within thirty days after the use of such proceeds\npursuant to clause (i) herein, file a report with the state comptroller\nidentifying: (a) the asset sold, (b) the amount of net proceeds from\nsuch sale, (c) the amount to be paid or provided pursuant to such clause\n(i), and (d) the capital improvements or equipment to be so paid for or\nprovided. When a municipal corporation, fire district or school district\nhas outstanding indebtedness incurred to finance the cost of such a\ncapital improvement, federal and state aid received on account of such\nimprovement, to the extent that it is not applied directly to the\npayment of a part of the cost of such improvement or to retire\nindebtedness issued in anticipation of such aid, shall likewise be\ndeposited in a reserve fund for the purpose of retiring either such\nobligations or, as an additional alternative, other obligations of at\nleast equal weighted average life. The entire proceeds of the sale or\nsuch state or federal aid received, as the case may be, shall be\ndeposited to the credit of such fund, provided however, that if the\naggregate amount thereof shall exceed the principal of such indebtedness\ndue or to become due, or if, when all such outstanding obligations have\nbeen retired, any moneys remain unexpended in the reserve fund, such\nexcess moneys may be used for any lawful municipal or district purpose,\nas the case may be. The provisions of this section shall not apply in a\ncase where a provision of any other law requires that the proceeds of\nthe sale of a capital improvement shall be deposited in a reserve fund\nestablished for the purpose of r
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