Opinion 88-58


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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.


MUNICIPAL FUNDS -- Capital Reserve Funds (referendum requirements for fund established for type of improvement)

STREETS AND HIGHWAYS -- Highway Garage (referendum requirement)

HIGHWAY LAW, §142(5); GENERAL MUNICIPAL LAW, §6-c(8): An expenditure for the construction of a highway garage made from a capital reserve fund established for the construction of town buildings would be subject to permissive referendum requirements.

You ask whether a referendum is required for a town to expend $40,000 from a capital reserve fund for the construction of a highway garage. You have indicated that the reserve fund was established for the construction of town buildings generally.

Highway Law, §142(4) provides that a town board may authorize the town highway superintendent to erect a building for the housing and storage of machinery, tools, implements and equipment owned by the town, but that the total cost, without referendum, may not exceed $100,000 (1981 Opns St Comp No. 81-87, p 88; 1976 Opns St Comp No. 76-843, unreported). Since the town anticipates that the cost of construction in this instance will be less than $100,000, no referendum would be required under section 142(4).

However, under section 6-c of the General Municipal Law, expenditures from capital reserve funds established for the construction of a type of improvement are subject to permissive referendum requirements under certain circumstances. An expenditure from such a reserve fund is subject to permissive referendum requirements if the issuance of obligations to finance the proposed improvement would be subject to referendum (General Municipal Law, §6-c[8]). Section 6-c(8) further provides that where the authorization to issue obligations would be subject to referendum only if the obligations have a maturity of more than five years or not less than some other minimum period (see Local Finance Law, §§35.00, 36.00), then the expenditure is subject to permissive referendum requirements only if the period of probable usefulness of the improvement is equal to or more than such minimum period of maturity (General Municipal Law, §6-c[8]). Since it appears that the period of probable usefulness of a highway garage is more than five years (see Local Finance Law, §11.00[a][11]), then the expenditure from the reserve fund is subject to permissive referendum requirements.

December 6, 1988
David J. O'Connor, Esq., Town Attorney
Town of Conquest