3. The subsidiary corporation shall have all of the powers vested in the transit authority by section twelve hundred four of this title except those contained in subdivisions five, six, eight, nine, fourteen and sixteen thereof. In addition, such subsidiary corporation shall have the following powers:

1. (a) pursuant to the provisions of this section, to maintain and operate the omnibus lines transferred to it by the city;
2. (b) to appoint officers and employees, assign powers and duties to them and fix their compensation. Said officers and employees shall not become, for any purpose, employees of the city or of the transit authority and shall not acquire civil service status or become members of the New York city employees' retirement system but, shall, for purposes of subparagraph (i) of paragraph three of subsection (c) of section six hundred twelve of the tax law be deemed to be officers and employees of a subdivision of the state;
3. (c) to improve, maintain and operate such buildings, structures and facilities as may be necessary or convenient;
4. (d) with the consent of the transit authority, to use officers, employees, agents and facilities of the transit authority and to reimburse the transit authority therefor;
5. (e) to utilize business methods and efficient procedures to promote the safety and convenience of the traveling public, in the carrying out of its corporate purposes;
6. (f) to operate omnibus lines on those routes in the city of New York where on February twenty-eighth, nineteen hundred sixty-two, omnibus lines were operated under franchises or temporary certificates of convenience and necessity which have been revoked, terminated, rescinded or condemned, or acquired by any other means, and to extend such routes so as to provide the complete service operated on February twenty-eighth, nineteen hundred sixty-two; and such operation, together with the necessary extensions, shall be deemed to constitute operation over approved routes with the same force and effect as if the said routes had been duly approved by the board of estimate of the city, as provided by law; and to operate on such other routes as the board may authorize by resolution adopted only after a public hearing held after notice thereof, and of the proposed route, and the proposed resolutions authorizing the same, have been published in full for at least fifteen days, except Sundays and legal holidays, immediately prior thereto in the City Record, and at least twice in two newspapers published in the borough or boroughs affected, to be designated by the board.

5. The agreement between the city and the subsidiary corporation by which the said omnibus lines are leased shall provide as follows:

1. (a) for the rate or rates of fare to be charged on such omnibus lines, provided, however, that from and after March first, nineteen hundred sixty-eight, the subsidiary corporation shall have full and exclusive control over the setting of such rate or rates of fare;
2. (b) the subsidiary corporation shall be entitled to utilize the officers, employees, agents, facilities and services of the city on the same terms and conditions as are applicable to or provided to the transit authority;
3. (c) capital costs not now charged by the transit authority as operating expenses shall be paid by the city; provided, however, that from and after March first, nineteen hundred sixty-eight, the subsidiary corporation shall also have the right to incur capital costs in its own name to the extent that capital funds are available to it pursuant to the provisions of sections twelve hundred nineteen-a and twelve hundred three-b of this chapter or of any other law, which capital costs shall not be payable by the city; and provided, further, that no project to be financed by the use of such capital funds which is estimated by the subsidiary corporation to involve an expenditure in excess of one million dollars shall be commenced unless the mayor and the board of estimate shall each have been notified in writing by the subsidiary corporation of the intent of the subsidiary corporation to undertake such project and of the nature thereof. No such project shall be commenced if and to the extent that either the mayor or a majority in voting power of the members of the board of estimate shall find that it is incompatible with sound planning for the development or redevelopment of the city, provided such finding, together with the reasons therefor, is set forth in a writing delivered to the subsidiary corporation within thirty days of the receipt by the mayor or the board of estimate, as the case may be, of the notification of the subsidiary corporation relating to such project. Where the city is required to pay the capital costs of the subsidiary corporation pursuant to such agreement, serial bonds or capital notes may be issued by the city, pursuant to the local finance law, to finance any such costs. The subsidiary corporation shall submit timely requests for the necessary capital funds to the city planning commission and the mayor of the city;
4. (d) The initial working capital of the subsidiary corporation shall be advanced by the city from any funds of the city (but not from borrowed funds) in the form of a grant or a loan in such amount as the parties shall deem necessary but in no event shall the said amount exceed five million dollars. If in the form of a grant, the advance shall be deemed to be in partial consideration of the acceptance by the subsidiary corporation of the initial transfer, in which case the sum shall not be repaid, but if in the form of a loan, the amount of the advance shall be repaid under such terms and conditions as shall be mutually agreed upon by the parties.