TOWN LAW, §§64(11-a), 68; STATE CONSTITUTION, Art. VIII, §1:
A town may expend moneys to pay for an improvement on private
property to alleviate a drainage problem if it is determined
that the improvement furthers primarily a proper town purpose
and only incidentally benefits the private owners. Also, if
the property owner or the adjoining owner has a good faith
claim against the town based on the existence of a "special
relationship", the town, subject to judicial approval, could
agree to undertake the drainage improvement on private property
as settlement of the claim so long as the value of the
improvement does not exceed the reasonable value of the claim.
This is in reply to your letter concerning the expenditure of town moneys to perform certain improvements on private property. It is our understanding that, after the granting of a town building permit, an in-ground swimming pool was installed on the private property. The owners of adjoining property now allege that, as a result of the installation of the pool, there is a drainage problem on their property. In particular, it is alleged that a 6" pipe installed under the patio in the pool area is insufficient to remove water in the same manner as before the pool construction. You state that the adjoining owners contend that the town was "remiss in permitting" the pool construction to proceed in the manner it did. The town has estimated that the cost to alleviate the drainage problem would be approximately $7,725 plus labor. You ask whether, under the circumstances, the town may expend moneys to pay for the improvements necessary to alleviate the drainage problem.
Town Law, §64(11-a) authorizes a town board, by resolution, to construct drains, culverts, ditches, sluices and other channels for the passage of water for the purpose of drainage and to protect property within the town from floods, freshets and high waters. Section 64(11-a) also authorizes town boards, by resolution, to deepen, straighten, alter, pipe or otherwise improve water courses in any part of the town. A resolution adopted pursuant to section 64(11-a) is subject to permissive referendum if the expenditure for these purposes is to be paid by taxes levied for the fiscal year in which the expenditure is to be made.
The authorization to expend moneys for drainage purposes pursuant to section 64(11-a) must be read in conjunction with article VIII, §1 of the State Constitution which prohibits municipalities from giving or loaning money or property to or in aid of any individual or private corporation, association or undertaking. This provision of the constitution was intended to curb raids on the public purse for the benefit of favored individuals or enterprises (Teacher's Association, Central High School District No. 3 v Board of Education, Central High School District No. 3, Nassau County, 34 AD2d 351, 312 NYS2d 252 ). Article VIII, §1 generally prohibits the expenditure of municipal moneys for the benefit of private parties unless it is in furtherance of a proper municipal purpose and is undertaken pursuant to a statutory obligation or properly authorized contract under which the municipality receives fair and adequate consideration (see, e.g., 1987 Opns St Comp No. 87-27, p 43; 1981 Opns St Comp No. 81-325, p 353).
Based on these constitutional principles, this Office has previously expressed the opinion that a town's authority under section 64(11-a) is generally limited to constructing and maintaining facilities which will benefit the town generally, and not those which will provide a private benefit to particular property owners (34 Opns St Comp, 1978, p 55). Therefore, we have concluded, for example, that a town may not expend funds to clean a clogged privately-owned drainage pipe which is situated on private property if the expenditure would benefit only the residents of one street (id.). Similarly, we concluded that a village could not expend funds pursuant to Village Law, §4-412(3)(1), which provides to villages statutory authority analogous to Town Law, §64(11-a), to alleviate flooding on private property caused by a pre-existing drainpipe on such property where only the parcel involved is affected by the flooding and the flooding is caused by a problem unique to that parcel (1975 Opns St Comp No. 75-1140, unreprted).
There also may exist, however, situations when it would not contravene article VIII, §1 to expend municipal moneys to maintain, repair or improve private property because the expenditure would further primarily a proper municipal purpose and only incidentally benefit the private owner. It is well established that an incidental private benefit will not invalidate a project which has as its primary object a proper public purpose (see , e.g., Matter of Waldo's v Village of Johnson City, 74 NY2d 718, _____ NYS2d _____; Murphy v Erie County, 28 NY2d 80, 320 NYS2d 29; Denihan Enterprises v O'Dwyer, 302 NY 451; Rodrigues v Town of Beekman, 120 AD2d 724, 502 NYS2d 778). Therefore, we have stated that, pursuant to Town Law, §64(11-a), a town could repair a privately-owned dam built across a river which runs through the town if there is danger of flooding to the town generally (1979 Opns St Comp No. 79-372, unreported). Also, we have expressed the opinion that a village, pursuant to Village Law, §4-412(3)(1), could dredge a privately-owned artificial pond which was an integral part of the village's drainage system if the undesirable conditions in the pond were attributable to its status as part of the system (1977 Opns St Comp No. 77-426, unreported). Further, we have expressed the opinion that, pursuant to its general police powers, a town could repair a defect in a private water or sewer line representing an imminent threat to the general public's health, safety and welfare (1982 Opns St Comp No. 82-304, p 387).
In addition to those situations when a town may perform work on private property to further primarily a town purpose, it is also our opinion that a town, in appropriate circumstances, may perform work on private property in settlement of a claim against the town (see Town Law, §68; 1987 Opns St Comp No. 87-1, p 1). We note that section 68 of the Town Law authorizes towns to settle or compromise claims only with the approval of a justice of the Supreme Court of the judicial district in which such town is located.
It has been held that courts favor the compromise of claims and no prohibition is placed on municipal authorities to settle cases if it is done by competent authority, in good faith and for sufficient consideration. There is sufficient consideration for the compromise of a claim if the parties in good faith advance opposing contentions, although the claim be without legal validity and incapable of enforcement (Radinsky v City of New York, 133 NYS2d 540; O'Brien v Mayor, Etc. of the City of New York, 25 Misc 219, 55 NYS 50, affd 40 App Div 331, 57 NYS 1039, 160 NY 691). The reasoning behind this is that the real consideration which each party receives under a compromise is not the sacrifice of the right but the settlement of the dispute and the abandonment of the claim. The prevention of litigation is not only a sufficient, but a highly favored consideration (Dovale v Ackerman, 11 Misc 245, 33 NYS 13). Therefore, it seems apparent that when a municipality exercises its right to settle a disputed claim, it need not admit liability as part of such a settlement. Nevertheless, while a town has authority to compromise a claim against it, "it may not, under the guise of a compromise, impair a public duty owed by it or give validity to a void claim". (Andgar Associates, Inc. v Board of Zoning Appeals of Incorporated Village of Port Washington North, 30 AD2d 672, 291 NYS2d 991).
In evaluating the merits of any claim, consideration should be given to the general principles of law relative to the liability of a municipality for negligence in exercising its governmental functions. These principles were summarized as follows in Tuffley v City of Syracuse, 82 AD2d 110, 442 NYS2d 327:
The elements of a "special relationship" for purposes of tort claims against a municipality were stated by the Court of Appeals in Cuffy v City of New York, 69 NY2d 255, 513 NYS2d 372, as follows:
Therefore, in evaluating whether the adjoining landowners have a good faith claim against the municipality, the town should consider the above principles of municipal tort liability.
In summary, it is apparent from the above discussion that the town could, subject to the referendum requirement contained in Town Law, §64(11-a), expend its funds to pay for the improvement to private property if it is determined that the improvement furthers primarily a proper town purpose and only incidentally benefits private owners. Alternatively, if the property owner and/or the adjoining owner(s) have a good faith claim against the town relative to the swimming pool construction based on the existence of a "special relationship", the town, subject to judicial approval, could agree to undertake the drainage improvement in settlement of the claim so long as the value of the improvement does not exceed the reasonable value of the claim (see Opn No. 87-1, supra). In this regard, we note that, since the drainage improvements would be undertaken pursuant to the town's authority to settle claims and not pursuant to Town Law, §64(11-a), the permissive referendum requirements of section 64(11-a) would not, in our opinion, be applicable.
The inquiry does not indicate that the proposed project on private property would provide a benefit primarily to the town generally and only incidentally benefit private owners. Absent such a determination by appropriate town officials, no expenditure may be made pursuant to Town Law, §64(11-a). Similarly, the initial determination of the propriety of entering into any settlement agreement must be made by town officials based on an evaluation of any claim and, thereafter, by the court which must approve the settlement pursuant to Town Law, §68.
December 7, 1989
Myles Lavelle, Supervisor