[§201H-79]  Arbitrage provisions, interest
rate.  (a)  Any other provision of law to the contrary notwithstanding,
neither the corporation nor the director of finance shall make loans or
purchase mortgages with the proceeds of general obligation bonds of the State
or from a revolving fund established or maintained from the proceeds of bonds,
at a rate of interest or upon terms and conditions that would cause any general
obligation bond of the State or any bond to be an "arbitrage bond"
within the meaning of that term as defined in the Internal Revenue Code of
1986, as amended, and the regulations of the Internal Revenue Service
promulgated pursuant thereto.



(b)  The rate of interest on loans made under
this chapter from the proceeds of general obligation bonds of the State shall
be established by the corporation, with the approval of the director of
finance, after each sale of general obligation bonds of the State, the proceeds
of which are to be used for the purposes of making loans or purchasing mortgages
under this chapter.  If no sale of general obligation bonds of the State
intervenes in a twelve-month period after the last rate fixing, the corporation
may review the then existing rates on loans or mortgages made under this
chapter from the proceeds of general obligation bonds of the State and retain
the existing rate or, with the approval of the director of finance, establish
different rates.



(c)  The director of finance shall approve
those rates so as to produce up to, but not in excess of, the maximum yield to
the State or the corporation permitted under the Internal Revenue Code of 1986,
as amended, and the regulations of the Internal Revenue Service promulgated
pursuant thereto, on the assumption that the general obligation bonds of the
State, the proceeds of which have been or are to be used for the purposes of
making loans or purchasing mortgages under this chapter, would otherwise be
"arbitrage bonds" under the Internal Revenue Code of 1986, as
amended, and the regulations of the Internal Revenue Service promulgated
pursuant thereto, were the maximum yield to be exceeded. The establishment of
the rates of interest shall be exempt from chapter 91. [L 2006, c 180, pt of §4]