Opinion 98 - 19


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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

FIRE DISTRICTS -- Apparatus and Equipment (referendum requirement for installment purchase contract)

PUBLIC CONTRACTS -- Installment Purchase Contracts (referendum requirement for in fire district)

REFERENDUM -- Mandatory (need for in fire district for installment purchase contract)

GENERAL MUNICIPAL LAW, §109-b: An installment purchase contract of a fire district is subject to a mandatory referendum.

You ask whether an installment purchase contract of a fire district is subject to mandatory referendum.

General Municipal Law, §109-b authorizes political subdivisions, including fire districts, to enter into installment purchase contracts for the financing of equipment, machinery and apparatus (see 1997 Opns St Comp No. 97-10, p 18). There are a number of procedural requirements set forth in section 109-b with respect to installment purchase contracts (see also 2 NYCRR Part 39). Among other things, section 109-b provides that, "subject to the provisions of subdivision five of this section", the governing board of the political subdivision must adopt a resolution authorizing the installment purchase contract (General Municipal Law, §109-b[2][b]). Subdivision 5 of section 109-b prescribes referendum requirements for installment purchase contracts.

As it relates to fire districts, subdivision 5(a) of section 109-b states that, if an authorization for the issuance of obligations to finance the equipment, machinery or apparatus would have been subject to mandatory or permissive referendum, then the authorization to enter into the installment purchase contract is "subject to a permissive or mandatory referendum, as the case may be, in the same manner as provided for such referendum on the issuance of obligations" (emphasis added). General Municipal Law, §109-b[5][b] similarly provides that if the authority for the issuance of obligations to finance the equipment, machinery or apparatus would have been required to be subject to a supermajority vote (see Local Finance Law, §33.00), a mandatory or permissive referendum, or both, then the authorization to enter into an installment purchase contract for equipment, machinery or apparatus is "subject to such vote, referendum or such referendum and vote, as the case may be, in the same manner as provided for such vote and/or referendum on the issuance of obligations" (emphasis added). The clear import of the quoted language is to make the installment purchase contract subject to the same type of referendum requirements (i.e. mandatory or permissive) as an issuance of obligations would have been if, instead of an installment purchase contract, obligations were issued to finance the equipment, machinery or apparatus (see, e.g., Memorandum for L 1983, ch 704 by the Association of Towns, July 13, 1983)(1).

Local Finance Law, §38.00 requires a referendum, at a regular or special election in the manner provided by Town Law, §179, prior to any issuance of obligations by a fire district (see, e.g., 1986 Opns St Comp No. 86-67, p 105; compare Local Finance Law, §§35.00, 36.00, applicable to towns and villages, respectively). Accordingly, since there is a mandatory referendum requirement for the issuance of obligations by a fire district to finance equipment, machinery or apparatus, an installment purchase contract of a fire district, pursuant to General Municipal Law, §109-b(5), is similarly subject to a mandatory referendum.(2)

October 15, 1998
Richard T. Nolan, Esq., Attorney at Law
Yaphank Fire District

1. With respect to supermajority vote requirements, Local Finance Law, §33.00(a)(1) provides that bond resolutions which are subject to mandatory referendum may be adopted by a three-fifths vote. Therefore, an installment purchase contract in a fire district also may be adopted by a three-fifths vote.

2. Note that periodic payments under an installment purchase contract are not exempt from a fire district's spending limitation (see Town Law, §176[18]; 1984 Opns St Comp No. 84-48, p 57). Therefore, voter approval to increase the fire district's spending limitation also may be necessary (Town Law, §§176[18], 179[1][d]).