Opinion 90-32


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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.


REFERENDUM -- Mandatory (need for upon construction of building for highway department purposes) -- Permissive (need for upon construction of building for highway department purposes) -- Highway Garage (referendum requirements for construction of)
STREETS AND HIGHWAYS -- Highway Garage (construction - need for referendum) -- Highway Supplies and Equipment (acquisition of land and construction of building for storage of)
BONDS AND NOTES -- Referendum Requirements (for DEC ordered construction of town salt storage shed)

HIGHWAY LAW, §142(4); LOCAL FINANCE LAW, §35.00(b), (c); TOWN LAW, §§81(1), 220(3): A town resolution authorizing the issuance of bonds for the construction of improvements required to comply with an enforceable determination of the Department of Environmental Conservation would not be subject to a referendum. A resolution authorizing an expenditure of bond proceeds for the construction of a town salt storage shed is not subject to referendum under either Town Law, §§81 and 220, or Highway Law, §142(4). Inconsistent prior opinions are superseded.

You ask whether a town's proposed expenditure of moneys in excess of $100,000 to build a salt storage shed in settlement of a proceeding against the town by the Department of Environmental Conservation [DEC] would be subject to a mandatory referendum pursuant to section 142(4) of the Highway Law. You also ask whether any referendum would be required if the salt storage shed were to be financed by the issuance of bonds.

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 (see 1988 Opns St Comp No. 88-58, p 117; 1982 Opns St Comp No. 82-192, p 244; 1981 Opns St Comp No. 81-87, p 88; 1976 Opns St Comp No. 76-843, unreported). In Opn No. 82-192, supra, we concluded that if a salt storage shed could also be used for storage of highway machinery, tools, implements and equipment, then an expenditure in excess of $100,000 therefor would be subject to the mandatory referendum provisions of section 142(4) of the Highway Law (cf., e.g. 1970 Opns St Comp No. 70-212, unreported, pertaining to the expenditure of money for a combination town hall/highway garage). Therefore, since the proposed salt storage shed will cost in excess of $100,000, we believe that the authorization to construct the shed would be subject to a mandatory referendum pursuant to section 142(4) if the shed could be used to store highway machinery, tools, implements and equipment, unless there is any applicable exception to this referendum requirement.

Even if the proposed salt storage shed could only be used to store salt, we note that Town Law, §220(3) requires a permissive referendum on a resolution authorizing an expenditure for the construction of a building needed for town purposes where the expenditure is to be financed from taxes levied in the fiscal year in which the expenditure is made (see Opn No. 82-192, supra). Similarly, Town Law, §81(1)(c) provides for the submission of a proposition authorizing such an expenditure at a special or biennial town election on motion of the town board or upon petition under these circumstances. The referendum provisions of sections 81 and 220, however, do not apply where the expenditures are to be made from surplus funds or are financed pursuant to the Local Finance Law (see In re Town Board of the Town of Islip, 12 NYS2d 321, 239 NYS2d 541; New York Public Interest Research Group Inc. v Town of North Hempstead, 153 AD2d 743, 545 NYS2d 308).

If the proposed salt storage shed is to be financed with the proceeds of bonds, Local Finance Law, §35.00(c) is also pertinent. That section provides that "[t]he expenditure of money for which it is proposed to issue obligations shall not be subject to a permissive or mandatory referendum in any town". Relying on this provision and express language in Town Law, §§81 and 220, the Court in In re Town Board of the Town of Islip, supra, held that although the resolution authorizing the issuance of bonds may be subject to referendum (see discussion, infra), the expenditure of bond proceeds is not subject to the referendum requirements of Town Law, §§81 and 220. In reaching this conclusion, the Court stated with respect to section 35.00(c) that "[i]t seems rather clear that the only logical purpose to be attributed to this language was a desire on the part of the Legislature to avoid the possibility of a double referendum" (12 NY2d at 327, 239 NYS2d at 545). Although the case dealt with the referendum requirements of Town Law, §§81 and 220, the Court's statement also implies that section 35.00(c) eliminates the need to conduct a referendum on the expenditure of bond proceeds pursuant to Highway Law, §142(4) (see 24 Opns St Comp, 1968, p 774; see also 1970 Opns St Comp No. 70-203, unreported). Therefore, in our opinion, a resolution authorizing the expenditure of bond proceeds for the construction of a salt storage shed is not subject to referendum pursuant to either Town Law, §§81 and 220, or Highway Law, §142(4). Inconsistent prior opinions of this Office are hereby superseded.

We note that Local Finance Law, §35.00(b) generally requires a resolution authorizing the issuance of bonds by a town to be subject to a permissive referendum, unless one of the exceptions enumerated therein is applicable. Local Finance Law, §35.00(b)(1)(1) provides an exception to the referendum requirement for a bond resolution authorizing the issuance of bonds with a proposed maturity of not more than five years. Further, Local Finance Law, §35.00(b)(1)(4) provides an exception for bond resolutions authorizing the issuance of bonds "[f]or the payment of judgments, or compromised or settled claims against such town, or awards or sums payable by such town pursuant to a determination by a court, or an officer, body or agency acting in an administrative or quasi-judicial capacity".

In 1986 Opns St Comp No. 86-87, p 134, we concluded that a village bond resolution adopted to finance the cost of closing a landfill, pursuant to an order of the DEC, is not subject to referendum. We based this conclusion upon Local Finance Law, §36.00(a)(4) which, like section 35.00(b)(1)(4) with respect to towns, provides an exception to the referendum requirement of that section for bond resolutions authorizing the issuance of bonds for the payment of "judgments, or compromised or settled claims against the village ... pursuant to a determination by ... an officer, body or agency acting in an administrative or quasi judicial capacity". We stated that although section 36.00(a)(4) could be construed to apply only to those administrative orders which require the village to make direct expenditures of cash, the provision is also broad enough to apply to orders mandating the construction of improvements since these orders also require the expenditure of cash. This conclusion is equally applicable to the analogous exception for towns in section 35.00(b)(1)(4).

In reaching the above conclusion, we are aware that Chapter 451 of the Laws of 1965 expressly added language to the Local Finance Law to clarify that bond resolutions adopted by a city or village to finance the construction of sewage disposal or treatment facilities required by certain orders of the Commissioner of Health are not subject to referendum. We believe, however, that the language of Local Finance Law, §35.00(b)(1)(4) is broad enough to encompass payments which are necessary to comply with an administrative order, even though the sums are not required to be paid to the agency issuing the order but rather are necessary to construct a facility mandated by the order. Accordingly, if the town is obligated to build the shed as a result of an enforceable determination of the DEC, it is our opinion that a resolution authorizing the issuance of bonds for this purpose and the resolution authorizing the expenditure of the bond proceeds would not be subject to referendum.

August 21, 1990
Lisa E. Rubenstein, Esq., Attorney to the Town
Town of East Fishkill