Opinion 2006 - 7
AMBULANCE DISTRICTS -- Contracts (exchange of unneeded ambulance as consideration under contract); (for services provided using vehicles owned by service provider); (use of monies paid under ambulance contract to purchase vehicles)
TOWN LAW §§198(10-f), 198(12); GENERAL MUNICIPAL LAW §122-b: (1) A town may enter into an ambulance service contract on behalf of a town ambulance district under which the service provider will provide services, including the provision of vehicles owned and operated by the service provider. Monies paid by the town under the contract may be used by the service provider for the purchase of vehicles owned by the service provider and used to provide the service. (2) If the town board determines that it would secure the best price obtainable or most beneficial terms for an unneeded ambulance held on behalf of an ambulance district, it may, subject to public hearing requirements, convey the ambulance to the entity providing services to that ambulance district as part of the consideration under the ambulance service contract.
You ask whether a not-for-profit ambulance company (“service provider”) that provides services, under contract, to a town ambulance district may use monies paid to it under the contract to purchase and own ambulances used in connection with the provision of services under the contract. You also ask whether an unneeded ambulance owned by the town on behalf of an ambulance district may be transferred to the service provider.
Chapter 24 of the Laws of 1988 amended the Town Law to authorize towns, upon petition or on town board motion, to establish ambulance districts within the town.1 Town Law §198(10-f), added by chapter 24, provides that, in order to provide for an emergency medical service, a general ambulance service or a combination of those services within an ambulance district, a town board, on behalf of an ambulance district, has four alternatives. The town board may: (1) acquire, supply, equip, operate and maintain one or more suitable motor vehicles; (2) contract with certain individuals, municipal corporations, associations or other organizations for operation, maintenance and repair of such vehicles and for the furnishing of prehospital emergency treatment; (3) contract with certain individuals, municipal corporations, associations, or other organizations to supply, staff and equip suitable emergency medical service or ambulance vehicles and operate such vehicles for the furnishing of prehospital emergency treatment (hereinafter, “alternative 3”); or (4) employ any combination of methods (1), (2) and (3). (Town Law §198[10-f][a][i], [ii], [iii], [iv]).
The above-mentioned provisions of Town Law §198(10-f) parallel the provisions found in section 122-b of the General Municipal Law, which authorizes the provision of general ambulance service on a town-wide basis. It is apparent that the intent of section 198(10-f) of the Town Law was to allow a town board to provide ambulance service within an ambulance district in the same manner as such service may be provided for on a town-wide basis pursuant to General Municipal Law §122-b (see 1998 Opns St Comp No. 98-9, p 22). The Legislative history of General Municipal Law §122-b is, therefore, germane here.
In 1980, General Municipal Law §122-b was amended to add alternative 3 to that section (L 1980, ch 303). The Bill Jacket for this amendment indicates that a primary intent of the amendment was to provide express statutory authority for municipalities to contract to receive an “entire ambulance service”, including the provision of vehicles owned by the service provider, “and not just personnel to operate the municipally owned ambulance.” (Memorandum of the Association of Towns to Governor Carey, in Relation to Senate Bill 849, June 17, 1980; see also 10-Day Budget Report on Senate Bill 849 of 1980; Sponsors’ Memorandum in Support of A-1067 of 1980). Implicit in this express grant of authority, we believe, is that the consideration paid by the municipality to the service provider may take into account the service provider’s capital cost for the acquisition of vehicles. In this regard, shortly after the enactment of the 1980 amendment, this Office expressed the opinion that, in determining the amount to pay under such an alternative 3 contract, the municipality may consider such things as the service provider’s need to replace vehicles and the service provider’s need for new and different or additional equipment (1980 Opns St Comp No. 80-702, p 193). 2 We further concluded that the service provider could use the money paid by the municipality to purchase necessary vehicles to be owned by the service provider (Opn No. 80-702, supra). This still represents our views.3
Accordingly, a town may enter into an ambulance service contract on behalf of a town ambulance district under which the service provider will provide services, including the provision of vehicles owned and operated by the service provider. Monies paid by the town under the contract may be used by the service provider for the purchase of vehicles owned by the service provider and used to provide the service.
As to the transfer to the service provider of an unneeded ambulance owned by the town on behalf of an ambulance district, we note, initially, that the town may not gratuitously convey the unneeded ambulance to the service provider, inasmuch as such a conveyance would contravene the prohibition, contained in article VIII, §1 of the State Constitution, against gifts by towns to or in aid of private entities (see, e.g., 1970 Op Atty Gen [Inf] 174; see also 1980 Opns St Comp No. 80-271, unreported; 1979 Opns St Comp No. 79-492, unreported). Rather, any transfer would have to be for fair and adequate consideration.
We have previously expressed the opinion that there is no requirement that the consideration under an ambulance service contract be paid in cash (1982 Opns St Comp No. 82-73, p 90; see, gen., LaBarbera v Town of Woodstock, 29 AD3d 1054, 814 NYS2d 376 app dsmd 2006 Lexis 2583). Further, we have noted that there is no State statute that requires that unneeded personal property of a town improvement district be sold pursuant to at public sale (1999 Opns St Comp No. 99-14, p 31; see also Langdon v Town of Webster, 270 AD2d 896, 706 NYS2d 547 lv den 95 NY2d 766, 716 NYS2d 641). The town board, however, does have a fiduciary duty to take appropriate measures to ensure that the sale price of the property is upon the best price obtainable in its judgment or most beneficial terms in the public interest ( id.). If the board determines that it would secure the best price obtainable or most beneficial terms for an item of unneeded personal property held on behalf of an improvement district by exchanging the item as consideration for services to be rendered to that district at least equivalent to the fair market value of the item, we believe that it may choose that method of disposal ( id.).4 We note that a public hearing must be held if the value of the property exceeds $1,000 (Town Law §198[a]).
Accordingly, if the town board determines that it would secure the best price obtainable or most beneficial terms for an unneeded ambulance held on behalf of an ambulance district, it may, subject to public hearing requirements, convey the ambulance to the entity providing services to that ambulance district as part of the consideration under the ambulance service contract.5
September 20, 2006
Marie Michel, Esq., Assistant Town Attorney
1 Prior to the enactment of chapter 24 of the Laws of 1988, several towns, including the town in question, had been authorized by special act to establish ambulance districts (see, e.g., L 1978, ch 695; 1986 Opns St Comp No. 86-13, p 22). Town Law §198(10-f) applies to ambulance districts “including those established prior to the effective date” of section 198(10-f).
2 We cautioned, in Opn No. 80-702, supra, however, that alternative 3 may not be used as a means of circumventing the prohibition against gifts of municipal monies in article VIII, §1 of the State Constitution. Therefore, the amount paid by the municipality under the contract must be commensurate with the value of the services provided (see also 2005 Opns St Comp No. 2005-1, p 1). In addition, the total annual expense of providing ambulance services under the contract may not exceed the maximum amount, if any, stated in the petition for establishment or extension of the district, or in the final order, unless such maximum amount is increased pursuant to the Town Law (Town Law §198).
3 As noted in the inquiry, such purchases of vehicles by the service provider would not be subject to the competitive bidding requirements of General Municipal Law §103 ( cf. French v Board of Education of Three Village Central School District, 99 Misc 2d 882, 417 NYS2d 389 affd 72 AD2d 196, 424 NYS2d 235; 1987 Opns St Com No. 87-87, p 129). The town, however, may negotiate to provide in the service contract that vehicles purchased by the service provider must be acquired pursuant to competitive bidding requirements. Moreover, even if such a clause is not included in the contract, we believe it generally would be in the public interest for the service provider to seek competition before purchasing vehicles that will be wholly or partially funded by contract payments made by the town. Such a competitive process generally would help ensure that the cost of such services is reasonable.
4 In Opn No. 99-14, supra, we noted that the value of the property exchanged as consideration constitutes an indirect expenditure for purposes of the competitive bidding monetary threshold in General Municipal Law §103. The services at issue here, however, ambulance services, have been held to be professional services, exempt from bidding requirements ( Amherst v Gross, 80 AD2d 719, 437 NYS2d 137). They would be subject, however, to the town’s procurement policies and procedures, adopted pursuant to section 104-b of the General Municipal Law. Moreover, as suggested in footnote 2, supra, to avoid making a gift in violation of article VIII, §1 of the Constitution, the value of the services received by the district must be commensurate with the value of the ambulance plus any monies paid to the service provider under the contract.
5 Note that an ambulance held on behalf of one ambulance district may not be exchanged as consideration for services rendered to another ambulance district (see Town Law §198[a]).