Opinion 99 - 12


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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

SEWER DISTRICTS -- Consolidation (spreading costs of debt over entire district in connection with proceeding to consolidate) -- Extension (spreading costs of debt over entire district in connection with proceeding to extend)

WATER DISTRICTS -- Consolidation (spreading costs of debt over entire district in connection with proceeding to consolidate) -- Extension (spreading costs of debt over entire district in connection with proceeding to extend)

TOWN LAW, §§206, 206-a: Subject to public hearing and permissive referendum requirements, a town, in connection with a proceeding to extend or consolidate water districts, may determine to spread the cost of all existing and future debt of the district over the entire district, including existing and future extensions. Similarly, subject to public hearing and permissive referendum requirements, a town, in connection with a proceeding to extend or consolidate sewer districts, may determine to spread the cost of all existing and future debt of the district over the entire district, including existing and future extensions.

You state that your town has a water district and two sewer districts, each of which has extensions. Pursuant to Town Law, §202(5), the debt service costs for each extension are charged only against the benefited properties within the extension. You inquire as to the procedure by which the outstanding indebtedness issued for the water district and its extensions may be charged to the entire area of the districts and extensions. Similarly, you inquire as to the procedure by which the outstanding indebtedness issued for the sewer districts and extensions may be charged to the entire area of a new consolidated sewer district.

The enactment of a 1987 State Comptroller's Program bill added section 206-a to the Town Law. This section sets forth a procedure whereby a town board may determine to spread the cost of all existing and future debt of a district over the entire district, including all existing and future extensions. The determination may be made only in connection with a proceeding to extend a district or to consolidate districts (Town Law, §206-a[1]; see State Comptroller's Report Report to the Governor on Laws of 1987, ch 781, July 31, 1987).(1)

A proceeding to extend a town improvement district or to consolidate two or more improvement districts may be initiated by a petition of the property owners or by the town board's own motion (Town Law, §§191, 206[1], 209-d; see 1995 Opns St Comp No. 95-21, p 44; 1987 Opns St Comp Nos. 87-29, p 46). Whenever the town board calls a public hearing on the proposed extension (see Town Law, §§193, 209-d) or consolidation (see Town Law, §206[1]), the town board may, in its discretion, include in the order or resolution calling such public hearing, a determination that all the expenses of the district, including all prior and future extensions, will be a charge against the entire area of the district as extended (Town Law, §206-a[1]).

After the public hearing, in addition to those determinations required for the extension or consolidation by Town Law, §§194, 206 or 209-e, the town board must determine whether it is in the public interest to assess all expenses of the district, including all prior and future extensions, as a charge against the entire area of the district as extended.(2) Any resolution which, in addition to making the determinations required by Town Law, §§194, 206 or 209-e, determines that all expenses of a district, including all prior and future extensions, will be assessed as a charge against the entire area of the district as extended, is subject to permissive referendum (Town Law, §206-a[4]).

In a proceeding to extend a district, the notice of adoption of the resolution, any petition requesting a referendum and any referendum must be as provided in Town Law, article 12-A for an extension (see Town Law, §209-e[3]), except that the notices and ballot must include the determination or determinations made pursuant to Town Law, §206-a (Town Law, §206-a[4][a],[b]).(3) If the proposition authorizing all costs of the district to be levied against the entire area of the district, including extensions, is approved at a referendum or if no petition requesting a referendum is filed, a consolidated assessment roll would be prepared for the next year in which assessments are levied against the extended district (Town Law, §206-a[5]).

In a proceeding to consolidate districts pursuant to Town Law, §206, the notice of adoption, petition and referendum must be as provided in section 206, except that the notices and ballot shall include the further determination or determinations made pursuant to section 206-a (Town Law, §206-a[4][c]). The determinations made pursuant to Town Law, §206-a would take effect at the same time as the consolidation of the districts (Town Law, §206-a[5][b]).

Accordingly, subject to public hearing and permissive referendum requirements, a town, in connection with a proceeding to extend or consolidate water districts, may determine to spread the cost of all existing and future debt of the district over the entire district, including existing and future extensions. Similarly, subject to public hearing and permissive referendum requirements, a town, in connection with a proceeding to extend or consolidate sewer districts, may determine to spread the cost of all existing and future debt of the district over the entire district, including existing and future extensions.

December 24, 1999
Robert A. Schlansker, Esq., Deputy Town Attorney
Town of Niskayuna

1. Although not raised by this inquiry, we note that section 206-a also sets forth procedures for changing the basis of assessment of the district from ad valorem to benefit in certain circumstances (Town Law, §206-a[2][b],[c], [3], [4]).

2. In a proceeding to extend a district on petition, the town board also must determine whether it is in the public interest to extend the district only if all expenses of the district will be assessed against the entire district as extended, or whether it is in the public interest to extend the district without regard to whether the cost of the extension will be assessed against the entire district as extended (Town Law, §206-a[3][a], [b], [4][b], [5][a]).

3. Since a proceeding to extend a district on petition is normally not subject to permissive referendum, the section 206-a determinations will be the only items stated in the notices and, if a referendum is held, the ballot (Town Law, §206-a[4][b]).