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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.
FEES -- Franchise Fees (fund to which town cable television franchise fees are credited)
MUNICIPAL FUNDS -- Accounting (fund to which town cable television franchise fees are credited)
REAL PROPERTY -- Franchise (fund to which town cable television franchise fees are credited)
TOWN LAW §64(7); PUBLIC SERVICE LAW §§212, 218: Revenues derived from a town’s non-exclusive franchise agreement with a cable television company, which is only operative in the unincorporated area of the town, are to be credited to the part-town general fund.
You ask whether revenues derived from the town’s non-exclusive franchise agreement with a cable television company, which is only operative in the unincorporated area of the town, are to be credited to the town-wide or part-town general fund.
Town Law §64(7) authorizes the town board, after a public hearing, to grant franchises “for the use of the streets, highways, and public places or any part thereof or the space above or under them or any of them, for any specific purpose authorized by law upon such terms and conditions as it may deem proper and as may be permitted by law.” Pursuant to this authority, towns, by resolution, may grant franchises to cable television companies and, subject to certain limitations (see, e.g., Public Service Law §218; 16 NYCRR 894.8[d]), impose fees upon the franchisees (see, e.g., 25 Opns St Comp, 1969, unreported; 23 Opns St Comp, 1967, p 708; 22 Opns St Comp, 1966, p 757; 22 Opns St Comp, 1966, p 74; see also Public Service Law §219).1
This Office has stated that, as a general rule, unless a statute provides otherwise, and except for revenues received as a result of a part-town function or activity, revenues received by a town are credited to the general fund, town-wide (1990 Opns St Comp No. 90-1, p 1; 1980 Opns St Comp No. 80-784, p 214). Neither Town Law §64(7) nor any other statute specifies the manner in which the proceeds from the cable television fee are to be utilized (compare, e.g., Tax Law §261, pertaining to mortgage recording tax). Thus, unless the granting of a franchise to a cable television company is in the nature of a part-town activity, the franchise fees would be credited to the town-wide general fund.
The grant of a cable franchise may be generally described as an authorization for the construction of a cable television system over public rights of way within the area to be served (see 47 USC §541[a]; see, gen.,103 NY Jur 2d, Telecommunications, §191). In this case, the public highways and rights of way within the area served by a franchise granted by a town are limited to the area of the town outside of any incorporated villages (see Public Service Law §212; Town Law §§64, 132; cf.1976 Atty Gen [Inf Opns] 11; Town Law §64; see also Town Law §132; Municipal Home Rule Law §10[ii][a][a]).2 As such, in our opinion, the granting of a franchise to a cable company is a part-town function and the franchise fees must be credited to the part-town general fund (see, e.g., 1977 Opns St Comp No. 77-609, unreported).
Accordingly, it is our opinion that revenues derived from a town’s non-exclusive franchise agreement with a cable television company, which is only operative in the unincorporated area of the town, are to be credited to the part-town general fund. 3
February 1, 2006
Eugene K. Ferencik, Esq., Deputy Town Attorney
Town of Hempstead
1 In awarding a cable franchise pursuant to said section, the town board must comply with the procedures prescribed by the Public Service Commission (Public Service Law §§215, 216; 16 NYCRR §§ 892-3.3, 892-3.4, 892-3.6, 894.0, 895.1, 895.2, 895.3, 895.5). These procedures include, inter alia, specific requirements for the notice and conduct of the public hearing (16 NYCRR §894.7) and, in certain circumstances, a request for proposals process (16 NYCRR §§894.3, 894.4, 894.9).
2 In this regard, we note that villages are authorized to separately grant franchises to cable companies within each village (Public Service Law §212; Village Law §§4-412, 6-602; cf. 1976 Atty Gen [Inf Opns] 11, supra).
3 The inquiry refers to the town “highway fund” as a potential repository of the franchise fees. Highway Law §141 provides that the town highway superintendent’s annual budget estimate of expenditures specify four major categories of expenditures: (1) the amount of money necessary to be levied and collected for the repair and improvement of highways; (2) the amount of money necessary to be levied and collected for the repair and construction of bridges having a span of five feet or more; (3) the amount of money necessary to be levied and collected for the purchase, repair and custody of certain equipment, tools and implements; and (4) the amount of money necessary to be levied and collected for the removal of obstructions caused by snow and for other miscellaneous purposes. While there are certain revenues that are derived from the operation of the highway department that must be credited to the four highway categories (see, e.g. Highway Law §§142-b, 142-c; 1981 Opns St Comp No. 81-345, p 377), the franchise fees at issue result from an act of the town board and would not be credited to the highway portion of the budget.