Opinion 2006 - 9


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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.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 (on the transfer of property of a town sewer district to a county)
SEWER DISTRICTS -- Referendum (on the transfer of property of a town sewer district to a county)

TOWN LAW §198(12): The transfer of property and facilities of a town sewer district to a county on behalf of a county district pursuant to an agreement under which the county will assume the payment of debt service on obligations issued to finance the cost of the town district property and facilities, is subject to referendum.

You state that the town is proposing to transfer assets of a town sewer district to the county, in connection with the establishment of a county sewer district. You indicate that sewer services would not be terminated to property owners within the town district after the transfer. Rather, the property owners would receive the services from the county sewer district, instead of the town district. The transfer would be pursuant to an inter-municipal agreement under which the county would assume the debt service on outstanding town obligations issued to finance the town district. You ask whether the proposed transfer would constitute a “sale” for purposes of Town Law §198(12) and, therefore, be subject to the referendum requirements of that statute.

Section 198(12)(b) of the Town Law provides that the governing board of a town improvement district may sell all or any part of the property and facilities of the district to, inter alia, a county on behalf of a county district (Town Law §198[12][b]). Any such sale must be approved by a majority vote of the qualified electors of the district voting thereon ( id.). If all of the property or facilities of the district is to be sold, the proposition submitted to referendum must also provide for dissolution of the town district (Town Law §198[12][d]; 15 Opns St Comp, 1959, p 396).

Section 198(12)(b) expressly provides that, if all or any part of the property and facilities of the town district are purchased by, among other entities, a county on behalf of a county district, the town, by agreement with the purchaser, may provide that the “payment of the purchase price”, in whole or in part, may be made by the assumption of debt service payments, by the purchaser, on obligations issued to finance the cost of the town district property and facilities. The use of the phrase “payment of the purchase price” in reference to the situation when the consideration for the transfer of property and facilities is the assumption of debt service payments, makes it evident that such a transaction is considered a “sale” for purposes of section 198(12). As such, the transaction would be subject to the referendum requirement.

Further, the fact that, after the transfer, town district residents would still be receiving sewer services, albeit from the county district, does not negate the referendum requirement. There is no indication in the statute that the applicability of the referendum requirement is in any way dependent on the services to be provided after the transfer. Indeed, by authorizing the sale of all or part of town district property and facilities to a county on behalf of a county district, and providing for the dissolution of the town district if all property and facilities are sold, the statute clearly anticipates that the county district would continue to provide services to town district residents (see also, e.g., Bill Jacket, L 1973, ch 326, Budget Report on Departmental Legislation, October 19, 19721).

Accordingly, the transfer of property and facilities of a town sewer district to a county on behalf of a county district pursuant to an agreement under which the county will assume the payment of debt service on obligations issued to finance the cost of the town district property and facilities, is subject to referendum.

December 29, 2006

Ronald P. Bennett, Esq., Attorney at Law
Town of Aurora

 

1 Prior to the 1973 amendment, section 198(12)(b) authorized towns to sell all or part of a water supply and distribution system of a town water district or water storage and distribution district, to certain entities, including a county water district. The 1973 amendment expanded the scope of section 198(12)(b) to cover all or part of the property or facilities of any town improvement district and to add to the list of entities that could make such a purchase from the town. In commenting on the 1973 legislation, the cited Budget Report noted that the purpose of the amendment was to promote cooperation, consolidation and improvement of services among jurisdictions and “provide a town more flexibility in providing arrangements for supplying services and facilities to its inhabitants”.