* § 3038. Conditions on extension of benefits to the city. The\ncorporation shall, at the time of any exchange of the corporation's\nbonds and notes for short-term obligations of the city pursuant to\nsubdivision two of section three thousand thirty-five of this chapter or\nany payment of funds of the corporation to the city or of any purchase\nfrom the city of its obligations pursuant to section three thousand\nthirty-seven of this chapter, require the city to agree to observe and\nperform the conditions set forth below in this section, with such\nlimitations as to the implementation of such conditions as the\ncorporation may, subject to any contract with bondholders or\nnoteholders, then approve; provided, however, that no such specific\nlimitations shall be so substantial as to effectively constitute a\nwaiver of any such conditions. Any such conditions may thereafter, in\nthe discretion of the corporation, subject to any contract with\nbondholders or noteholders, be further limited. Such conditions shall\ncease to apply when all notes and bonds have been repaid or when the\ncorporation has accumulated in its capital reserve funds or otherwise an\namount equal to the principal of all outstanding notes and bonds and\ninterest accrued thereon. The city shall have the right at any time to\npay the corporation an amount which, when added to the capital reserve\nfunds, shall equal the principal of all outstanding notes and bonds and\ninterest accrued thereon and redemption premium if any. If the city\nmakes such payment at a time when the corporation has outstanding notes\nor bonds that are not then callable, the city shall agree to pay the\ncorporation on demand an amount equal to the amount, if any, by which\nthe amount of interest on such notes or bonds shall exceed the\ncorporation's income from the investment of its funds. Subject to the\nforegoing, the conditions that the corporation shall require the city to\nobserve and perform shall be as follows:\n 1. The city shall deliver a certificate, executed by the mayor and the\ncity comptroller in form prescribed by the corporation, (a) representing\nthat the city is in compliance with the conditions described below in\nthis section as the corporation may specify, (b) undertaking to comply\nwith any of such specified conditions as the corporation may then\nrequire and (c) stating that all local legislative and executive action\nthen required to permit such compliance by the city has been taken. The\ncorporation may require the delivery with such certificate of an opinion\nof the city's corporation counsel that all such legislative and\nexecutive action has been taken.\n 2. (a) The city shall, within ninety days after the first such\nagreement, initiate steps to adopt as the city's method of accounting\nfor purposes of reporting to the corporation with respect to the city's\nfinancial condition and compliance with the conditions of this section,\nthe accounting principles set forth in the state comptroller's uniform\nsystem of accounts for municipalities, as the same may be modified by\nthe state comptroller, in consultation with the city comptroller, for\napplication to the city. The city shall complete the transition to such\naccounting method as promptly as reasonably practicable thereafter and,\nin any event, so that the audited financial statements for the fiscal\nyear ending June thirtieth, nineteen hundred seventy-eight shall be\nprepared in accordance with such accounting methods, except as provided\nbelow in this subdivision. It is recognized that the adoption of such\naccounting principles may result in substantial adjustments from the\naccounting principles now followed by the city. The corporation and the\ncity shall consult, over the course of the introduction and adoption of\nsuch accounting system and the accounting methods referred to in section\neight of the New York state financial emergency act for the city of New\nYork, and until the expiration of the fisc
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