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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.
IMPROVEMENT DISTRICTS -- Expenses (allocating cost of increase or improvement of facilities); (of excess water tank capacity); (payment of the cost of preparing a general map, plan, and report); (of preliminary study)
WATER DISTRICTS -- Improvement of Facilities (allocating cost of increase or improvement of facilities) -- Water Supply (financing water study)
GENERAL MUNICIPAL LAW, §99-d: A town board may authorize the expenditure of available general town funds to pay for the advance planning of capital improvements. If the planning is undertaken on behalf of an existing or proposed town improvement district, the existing district, or the proposed district, when established, must reimburse the town for the cost of the plans.
TOWN LAW, §§192-a, 194-a, 202, 202-b: The cost of a water storage tank may be allocated between proposed and existing districts.
This is in reply to your inquiry concerning the financing of a proposed town water study and the allocation of the cost of a new water storage tank. You indicate that a number of water districts in the town are supplied by a neighboring city. A storage tank within the city which supplies certain of these districts has reached its capacity to serve new users. The developer of a subdivision in an area adjacent to an existing water district has expressed a willingness to pay for the construction of a new storage tank to serve the homes within the subdivision. The city has also indicated that it would be willing to pay part of the cost of a new storage tank as a back-up to its existing tank. Both the town and the city believe, however, that a water supply study is necessary before any such storage tank is constructed. The city has indicated that it will not pay any portion of the cost of the study. You ask whether, in light of the fact that the subdivision that would necessitate the construction of the storage tank is not currently within a water district, the cost of the study can be paid out of general town funds. You also ask how the cost of the new storage tank may be allocated.
Section 99-d(1) of the General Municipal Law provides that the governing board of any municipal corporation "may authorize the preparation of surveys, preliminary plans and detailed plans, specifications and estimates necessary for planning for a capital improvement which is contemplated might be undertaken in the future and may provide for the manner in which the cost thereof shall be financed...." It is our opinion that this section authorizes the use of available general town funds to pay for the advance planning of capital improvements (30 Opns St Comp, 1974, p 180; 1976 Opns St Comp No. 76-1247, unreported). If advance planning is undertaken on behalf of an existing or proposed town improvement district, or any extension thereof, however, the existing district or extension, or the proposed district or extension when established, must reimburse the town for the cost of the planning (General Municipal Law, §99-d).
Here, the proposed water study would appear to be within the type of advance planning contemplated by section 99-d. Therefore, the cost of the study may be paid from the town general fund. To the extent that the planning relates to a proposed district or extension, reimbursement would be made by the district or extension, if and when established. The town board may also determine that a portion of the cost of the planning be attributed to one or more existing districts or extensions. The existing districts or extensions would reimburse the general fund for that portion of the cost allocated to them by the town board.
In the alternative, the town board may authorize the payment of the expense of a general map and plan for the establishment or extension of a water district pursuant to the provisions of sections 191-a and 209-b of the Town Law. Under these sections, which apply to districts established or extended under Article 12 and Article 12-A of the Town Law, respectively, the town board may adopt a resolution, subject to permissive referendum, appropriating a specific amount to pay the cost of preparing the general map and plan. This cost is, in the first instance, a town-wide charge to be assessed, levied and collected in the same manner and at the same time as other town charges. If, however, after payment of the cost of the general map and plan, the town board does establish or extend the proposed water district pursuant to Article 12 or 12-A of the Town Law, then the expense incurred by the town for the preparation of the map and plan is deemed to be a part of the cost of the improvement, for which the town general fund must be reimbursed by the district or extension, either in the amount paid "or such portion of that amount which the town board at a public hearing ... shall allocate against such district" (Town Law, §§191-a, 209-b; see also 1987 Opns St Comp No. 87-62, p 94).
In relation to the allocation of the cost of the construction of the new water storage tank, we note that your inquiry does not specify whether the town is concerned solely with allocating the cost among the existing and proposed districts within the town, or whether it is also concerned with the proper method for allocating the cost between the districts in the town and the city. Consequently, we will discuss both the authority for the town and the city to share the cost of the storage tank and the authority of the several districts to share that cost.
Under Article 5-G of the General Municipal Law, (§119-m et seq.), municipal corporations and districts are authorized to enter into agreements for the performance among themselves or one for the other of their respective functions, powers or duties on a cooperative or contract basis or for the provision of a joint service or a joint water, sewage or drainage project (General Municipal Law, §119-o; see also General Municipal Law, §111). Section 119-o(2) sets forth certain items which may be included in an agreement under Article 5-G, including provisions for equitably allocating and financing capital and operating costs. It is our opinion that Article 5-G provides authority for the city and the town on behalf of town water districts to enter into an agreement to construct a new water storage tank and allocate the cost thereof between the city and the town. While the actual apportionment of the cost will be a matter of negotiation between the city and the town, we note that section 119-o(2)(a) provides that the allocation may be "on a ratio of full valuations of real property, or on the basis of the amount of services rendered or to be rendered, or benefits received or conferred or to be received or conferred or on any other equitable basis...."
With respect to the allocation among the proposed and existing water districts in the town of that portion of the cost of the new storage tank to be paid by the town, we note first that whatever portion of the cost of the storage tank the town board determines to apportion to the new district would be included in the maximum amount to be expended for the improvements in the district (Town Law, §§191, 209-d). Also, since your inquiry indicates that the developer of the subdivision has offered to pay a portion of the cost of the storage tank, we note that, pursuant to section 194-a of the Town Law, the town board is authorized, upon the adoption of a resolution, to:
...enter into such contracts, as it may deem necessary, with any person, corporation or association for the purpose of ensuring that the cost of any improvement district will not constitute an undue burden upon the property within such district and may require the filing of a surety bond or bonds or the deposit of cash or securities with the town board to ensure the performance of such contracts.
Such a contract would appear to be advisable when the proposed improvements are intended to serve property that has yet to be developed. To the extent that any portion of the cost of the storage tank attributed to the new district is not paid by the developer, the cost must be raised in the same manner as other expenses of the district (Town Law, §202).
If the new storage tank is of benefit to one or more of the existing water districts in the town, the town board may determine to allocate a portion of its cost to those districts as an increase or improvement of facilities pursuant to section 202-b of the Town Law. Subdivision 1 of section 202-b authorizes the town board, after a public hearing, to acquire and construct, on behalf of a water district, "additional facilities therefor and appurtenances thereto." The town board is authorized to apportion the cost of such facilities, including operation and maintenance, among the districts benefited (Town Law, §202-b; 24 Opns St Comp, 1968, p 355). The actual amount attributed to each of the districts is, in the first instance, within the discretion of the town board.
We note that section 192-a of the Town Law authorizes the town board, in causing a map and plan to be prepared or in approving the establishment or extension of a water district, to provide, by resolution, that the map and plan include water facilities in excess of those required for the proposed district or extension. The resolution providing for the excess facilities must specify the estimated cost of those facilities and is subject to permissive referendum (Town Law, §192-a). The cost of the excess facilities is a town charge to be assessed, levied, and collected in the same manner and at the same time as other town charges (Town Law, §192-a). If the improvement which includes the excess facilities is to be constructed by or on behalf of the petitioning owner, the town must reimburse the owner for the cost of the excess facilities (Town Law, §192-a; see also 25 Opns St Comp, 1969, p 404). The town board may authorize the use of any excess facilities by any district, districts or extensions thereof thereafter established in the town and that portion of the cost of the excess facilities attributed to such district or extension must be assessed, levied, and collected in the same manner as other charges against that district or extension (Town Law, §192-a).
Thus, in this instance, the town board may determine, pursuant to section 192-a, that the storage tank be constructed with excess capacity reserved for use by future districts or extensions. If the storage tank with excess capacity is to be constructed by the developer, as the petitioning owner, the town board must reimburse the developer for the cost of the excess facilities. While that portion of the cost of the storage tank attributable to excess capacity initially would be a general town charge, the general fund must be reimbursed if and when the excess capacity is utilized by a district or extension (Town Law, §§192-a, 208).
Finally, we note that section 15-1501(1) of the Environmental Conservation Law provides that a public corporation which is authorized and engaged in the acquisition, conservation, development, use and distribution of water for potable purposes, must obtain a permit from the Department of Environmental Conservation (DEC) before it can extend its supply or distribution mains outside the service area previously approved by DEC. To the extent that any of the plans proposed by the town entail the extension of water service to areas of the town never served before, a new water supply permit will be necessary. Since DEC must issue the permits required by section 15-1501 and since the provisions of the Environmental Conservation Law are administered by that department, you may wish to contact the Department of Environmental Conservation, Bureau of Water Resources, 50 Wolf Road, Albany, New York, 12233, for further information on the permit process.
July 26, 1989
Palma M. Gow, Supervisor
Town of Binghamton