(b) A thoroughbred track, other than a nonprofit thoroughbred track, may elect upon 30 days' written notice to the commission (with a copy thereof to the State Tax Commission) to withhold, in addition to any other amounts required by this section, one percent of the total deposits in pools resulting from regular and multiple bets; provided, however, that any thoroughbred track withholding pursuant to this subdivision shall use such one percent exclusively for capital improvements, as defined in subdivision (a) of this section, subject to the following provisions:

1. (1) All amounts withheld by the track on and after such 30-day written notice to the commission, as well as all monies paid over to the track by off-track betting corporations from additional withholding mandated upon such corporations pursuant to section 527 of such law, shall be deposited in a segregated interest-bearing account designated “Retention for Capital Construction” account. A track may withdraw monies from such account for the purposes of investment in segregated certificates of deposit or government securities, provided that the entire proceeds of such investments, including interest or dividends, are redeposited in such account within two years of such withdrawal.
2. (2) Within 30 days of the enactment of this rule (or if a track shall hereafter make such election, then with its notice of election to the commission), and annually thereafter, with its license application, each such electing track shall furnish the commission with a complete description of all capital improvements that it plans to make, together with the estimated cost thereof, the estimated inception and completion date, and how such capital improvement will be acquired or accomplished. Such capital improvements as are to be paid for from funds from the “ Retention for Capital Construction” account shall be so designated, together with estimated dates and amounts of withdrawals, and a statement as to how such improvement will further the objectives of the law to increase attendance or betting handle.
3. (3) A permit from the commission shall be required for all capital improvements to be financed from such “Retention for Capital Construction” account and, if such capital improvement shall involve construction or alteration of plant and structures, plans and specifications satisfactory to a consulting engineer or architect designated by the commission shall be furnished as a prerequisite to such purpose.
4. (4) No monies may be withdrawn from such account except for investments permitted pursuant to subdivision (c) of this section, or in payment for capital improvements for which a permit has been issued by the commission.
5. (5) Within 30 days of the end of the calendar year, such track shall submit a report to the commission, showing the balance of the account at the beginning of the year, the total added and the total withdrawn during the year, and the balance at the end of the year listing each bank account and investment. The report shall also describe the progress of planned capital construction, together with an itemized list of the withdrawals from the “Retention for Capital Construction” account, the payees of such withdrawals, and copies of all billings and vouchers supporting such withdrawals.
6. (6) The commission on its own initiative may require a track to make such capital improvements as it may deem necessary.
7. (7) The commission, at any time, may cause a track to be audited concerning its compliance with this section.