[§201H-79]  Arbitrage provisions, interestrate.  (a)  Any other provision of law to the contrary notwithstanding,neither the corporation nor the director of finance shall make loans orpurchase mortgages with the proceeds of general obligation bonds of the Stateor 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 generalobligation 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 of1986, as amended, and the regulations of the Internal Revenue Servicepromulgated pursuant thereto.

(b)  The rate of interest on loans made underthis chapter from the proceeds of general obligation bonds of the State shallbe established by the corporation, with the approval of the director offinance, after each sale of general obligation bonds of the State, the proceedsof which are to be used for the purposes of making loans or purchasing mortgagesunder this chapter.  If no sale of general obligation bonds of the Stateintervenes in a twelve-month period after the last rate fixing, the corporationmay review the then existing rates on loans or mortgages made under thischapter from the proceeds of general obligation bonds of the State and retainthe existing rate or, with the approval of the director of finance, establishdifferent rates.

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