N.Y. Comp. Codes R. & Regs. tit. 9 § 1640-4.4
As has been previously pointed out, the local agency must look to sources other than advances made or to be made by the State for funds to pay indeterminate expenditures. The local agency may use any funds it has available for the purpose. A common source is a loan or appropriation by the municipality. Upon audit, review, and written approval by the division, the local agency may use loan funds advanced or to be advanced by the State to reimburse itself or its creditors to the extent that the indeterminate expenditures, within the maximum limitation set in advance by the division, have been declared by the division to be eligible to be charged to development costs. Funds of other State-aided projects shall not be used to pay indeterminate expenditures of another project or to reimburse such expenditures. No reimbursement shall be made from loan funds advanced or to be advanced by the State for a specific project under a given contract for State aid until an auditor of the division has examined the expenditures and reported his findings to the division for ruling, and the local agency shall have received written approval of the division as to admitted development costs. Indeterminate expenditures which have been reimbursed out of funds advanced or to be advanced by the State without the prior written authorization or approval of the division will be declared ineligible. The accounting entries reflecting the division's letter of approval are described in Part 1646, Development Period Accounting. See also the definition of account 1610, Indeterminate Expenditures, in Part 1641.
N.Y. Comp. Codes R. & Regs. Tit. 9 § 1640-4.4