Opinion 88-33


This opinion represents the views of the Office of the State Comptroller at the time it was rendered. The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

SEWER DISTRICTS -- Construction (of laterals to serve previously unserved properties within the district)

IMPROVEMENT DISTRICTS -- Expenses (allocating cost of installation of laterals)

TOWN BOARD -- Powers and Duties (use of general fund moneys to pay cost of district improvements); (authority to compromise claim)

TOWN LAW, §§199, 202-d, 209-h; LOCAL FINANCE LAW, §104.10: Although the town board may not authorize the construction of laterals pursuant to §199 of the Town Law where the laterals were described in the original plans for the district or where the cost of the laterals will exceed the maximum amount proposed to be expended, the cost of constructing laterals intended to be installed at the time of a district's establishment may be authorized as an increase of the maximum amount to be expended. An application for the Comptroller's consent may be made under section 202-d or section 209-h of the Town Law and section 104.10(4) of the Local Finance Law.

TOWN LAW, §§68, 190, 209, 202(2), 202-a: Since the cost of improvements for a town sewer district must be raised wholly at the expense of the district, town general fund moneys may not be used to pay the cost of the improvements.

This is in reply to your letter concerning the authority of a sewer district to install, at the expense of the district or the town, lateral sewers to serve two properties within the district. The district was established by resolution of the town board on September 16, 1959 to serve one particular subdivision in the town.

Your inquiry states that "dry sewers", which could be activated at a later date, were to be installed by and at the expense of the developer of the subdivision. The plans referenced in the town board's resolution included laterals to serve all the properties within the subdivision. In 1961, when the subdivision was being constructed, it was determined that it was impractical to install the laterals to serve two properties and that the properties could be served more efficiently by lines to be constructed in adjoining subdivisions by the same developer. The town permitted the residences on these two properties to be built without laterals to serve them. In 1983, trunk lines were installed to activate the "dry sewers." The cost of constructing the trunk lines was assessed equally against all the properties within the district, including the two unserved properties. The adjoining subdivisions were not completed until 1986, the original developer having sold out to another developer. No laterals were installed to serve the two unserved properties. The cost of constructing the necessary laterals is estimated to be $8,000.

You state that the town does not believe that it can maintain an action to force either the original developer or the developer of the adjoining subdivisions to install the laterals necessary to serve the two properties and you ask whether district funds may be used to install the laterals. In the alternative, you ask whether town general funds may be used to install the laterals.

We note, initially, that in outlining the history of the sewer district you indicate that the cost of operation and maintenance is raised on an ad valorem basis. However, under section 202-a of the Town Law the costs of operation and maintenance must be assessed in the same manner as the expense of the improvement. Since section 202(2) of the Town Law requires that the expense of the establishment of a sewer district be assessed on the benefit basis, the cost of operation and maintenance must also be assessed on a benefit basis.

Under section 199 of the Town Law, the town board may, on petition of property owners or on its own motion, construct lateral sewers. The cost of the laterals must be assessed in proportion to the benefit received (Town Law, §199[1][a]). Section 199(4) provides further, however, that:

"[t]his section shall not apply to the construction of any lateral sewer, drain or water main described in any map or plan which shall have accompanied the petition or resolution for the establishment of a sewer, drainage or water district, provided that the cost of constructing such lateral sewer, drain or water main together with the cost of every other improvement constructed pursuant to such petition or resolution shall not exceed the maximum amount proposed to be expended as stated in such petition or resolution."

Here, although the improvements ultimately constructed in the district did not include the laterals necessary to serve the currently unserved properties, the original map and plan did make provision for their construction. Therefore, it is clear that the district was formed with the intent that these two properties be served. In addition, since the district was formed at no cost to the town, these laterals cannot be constructed without exceeding the maximum amount stated in the petition or resolution. Accordingly, it is our opinion that the town cannot proceed under section 199 to construct the laterals necessary to serve the unserved properties.

Although the town may not proceed under Town Law, §199 to install the laterals in question, it is our opinion that the town board may authorize an increase in the maximum amount to be expended to provide for the construction of the necessary laterals. At any time after the establishment of an improvement district, the maximum amount proposed to be expended may be increased by an order of the town board in a proceeding initiated either by a petition of taxpayers or by action of the town board on its own motion (Town Law, §§202-d, 209-h; 1968 Opns St Comp No. 68-923, p 861). Therefore, since it was always intended that all properties within the subdivision be served by laterals, we believe that the town should proceed under Town Law, §202-d or §209-h to construct the laterals in question (cf. Town Law, §202-b which authorizes a town to undertake the increase or improvement of facilities in a district). Both section 202-d and section 209-h require that the town board make an application to this Office for approval of the increase of the maximum amount.

In addition, if the town proposes to issue indebtedness to finance the improvements, an application must be made under the Local Finance Law (6 Opns St Comp, 1950, p 221). Under section 104.10(4) of the Local Finance Law, if a town has established an improvement district where the approval of the State Comptroller was not necessary, it may not issue bonds, bond anticipation notes or capital notes for district purposes, except for improvements made pursuant to Town Law, §199 or §202-b, without the approval of the State Comptroller. As a practical matter, however, we note that, where a town is required to seek the approval of this Office under both the Town Law, §202-d or §209-h and Local Finance Law, §104.10(4), a single application may be made for our approval under both statutes.

In light of the foregoing, it is possible for the town board to install the necessary laterals using district funds. Once the laterals have been installed, the expense of the improvements must be assessed by the town board in proportion to the benefit received (Town Law, §§202[2], 231). The determination of which properties are benefited and to what extent is within the discretion of the town board. In determining the amount of benefit that the improvements will confer on the two unserved properties, the town board may take into consideration that the properties were intended to be served by the district at the time it was established and that, although unserved, these properties have been paying the same benefit assessments as the properties served since 1983.

Your second inquiry asks whether the town may pay for the cost of installing the laterals out of town general funds. This Office has noted on several occasions that water supply and distribution are not, in general, town functions (1986 Opns St Comp No. 86-45, p 74; 1985 Opns St Comp No. 85-35, p 49). The same rule would apply to the provision of public sewers. A town may provide for public sewers only where an improvement district has been lawfully established pursuant to Article 12 or Article 12-A of the Town Law or an improvement is provided pursuant to Article 3-A or Article 12-C or the Town Law. Where, as here, the town has formed a sewer district, the improvements are required to be provided wholly at the expense of the district (Town Law, §§190, 198[1][k], 202, 202-a, 209). Consequently, town general funds are not, as a general rule, available to pay for improvements in a sewer district (cf. 1987 Opns St Comp No. 87-1, p 1, in which we concluded that a town could, pursuant to the authority conferred upon it by Town Law, §68, settle or compromise a claim against the town by using general town funds to finance the construction of a special district improvement).

July 5, 1988
Raymond R. D'Agostino, Esq., Town Attorney
Town of Onondaga