HIGHWAY LAW, §10(27); STATE FINANCE LAW, §112: Before
approving contracts by the State Department of Transportation
to perform municipal highway construction in connection with
State highway projects, the State Comptroller generally
requires either a deposit of the requisite funds by the
municipality or proof that the municipal governing body has
approved the project and appropriated the necessary funds.
This is in reply to your inquiry regarding the legal requirements municipalities must satisfy when the New York State Department of Transportation (DOT) performs highway construction on their behalf pursuant to subdivision 27 of section 10 of the Highway Law. You ask, based upon the Comptroller's contract approval function found in section 112 of the State Finance Law, what the Comptroller should receive to satisfy the legal requirements of this provision of the Highway Law.
Subdivision 27 of section 10 of the Highway Law provides that the Commissioner of Transportation shall:
The remainder of this subdivision relates to the settlement procedures between DOT and a municipality for costs associated with the municipal work performed by DOT.
This provision authorizes DOT, upon the request of a municipality, to perform municipal highway construction or reconstruction in connection with any highway project undertaken by DOT pursuant to the Highway Law. Upon the approval of any such request, the Commissioner of Transportation is required to provide the municipality with cost estimates, plans and specifications which must be approved by the municipality prior to DOT undertaking the project. Thereafter, either the municipality must deposit sufficient funds with the State Comptroller for DOT to perform the work or the Commissioner of DOT may go forward with the municipality's portion of the highway project provided he determines that doing so is in the best interest of the State.
Subdivision 27 of section 10 of the Highway Law, prior to 1970, required any municipality requesting work by DOT pursuant to this provision to deposit with the State Comptroller sufficient funds to meet the cost estimates prepared by DOT. Chapter 159 of the Laws of 1970 added the proviso that the Commissioner could undertake projects, prior to receipt of a municipality's funds, when he determined that it was in the State's best interest to do so, where the municipality has requested the work and approved the plans, estimates and specifications.
In our opinion, this section essentially provides for the creation of a binding legal relationship between the State and the municipality, upon the approval of the plans, estimates and specifications by the municipality. As a general proposition, a municipality, like the State, cannot incur a liability unless moneys have been appropriated for such purpose and are available therefor (County Law, §362; Town Law, §117; Village Law, §5-520). As a result, in the absence of an appropriation, we believe the agreement by the municipality to the plans, estimates and specifications generally would not, as a matter of law, bind the municipality to the project (see, gen., Gill, Korff et al. v County of Onondaga, 152 AD2d 912, 544 NYS2d 393). Therefore, the current practice, which requires a certified copy of the board resolution authorizing the project and appropriating money therefor, would appear to be a reasonable method to protect the State's interest in those cases where the municipality does not deposit its estimated share of the project.
We recognize, however, that in certain cases, there may not be a specific board resolution for a project because the authority to undertake specific projects is vested in or has been delegated to a body or official other than the local governing board. In such cases, we believe that it would be acceptable for the State to approve the project upon receipt of: (i) documentation that the person approving the project on behalf of the municipality has the authority to do so; and (ii) a certificate or other documentation from the municipality's chief fiscal officer to the effect that there are moneys appropriated and available for the municipality's estimated share of the project in question.
We also wish to address one other issue raised by your inquiry. As indicated, where a municipality does not deposit its estimated share to a highway project, we may nonetheless proceed when we receive proof that moneys have in fact been appropriated for such purpose by the municipality. As also noted, however, a municipality cannot generally be obligated in excess of amounts appropriated by the municipal governing board. Therefore, the question arises as to what happens if the project ultimately costs more than the project estimate, and the municipality does not wish to appropriate money for such purposes.
Highway Law, §10(27) provides that:
We believe that this language expressly imposes upon a municipality which has authorized a project pursuant to section 10(27) a duty to pay for any additional costs above the estimate. As a result, we believe that the municipality is required to appropriate money for such purpose and that upon the failure of the municipality to either appropriate money or make payment to the State, the State could collect the money from the municipality either by litigation or by reducing amounts otherwise payable to the municipality pursuant to the State's right of set-off (see, e.g., Carlin v Regan, 98 AD2d 544, 471 NYS2d 896).
December 21, 1990