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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.
PUBLIC AUTHORITIES -- Municipal Cooperation (joint investments by municipalities and public authorities)
MUNICIPAL COOPERATION -- Municipal Funds (joint investments with public authorities)
MUNICIPAL FUNDS -- Deposits and Investments (joint investment with public authorities)
PUBLIC AUTHORITIES LAW, §§1197-e(22), 1197-j: The Water Authority of Great Neck North may not enter into a cooperative agreement for the joint investment of its funds with the funds of other public authorities and municipalities.
You ask whether the Water Authority of Great Neck North may participate in a cooperative plan for the joint investment of its funds with the funds of other public authorities and municipalities.
The Water Authority of Great Neck North ("Authority") was created by title 8-B of article 5 of the Public Authorities Law (§1197-a et seq.). Section 1197-d(1) provides that the Authority "shall be a corporate governmental agency constituting a public benefit corporation..." The purpose of the Authority is to construct, operate and manage a water supply and distribution system to serve the Water Authority of Great Neck North District. Section 1197-d(4) provides that the powers of the Authority shall be vested in, and exercised by, the board of directors.
With regard to the investment of monies of the Authority, Public Authorities Law, §1197-j provides that:
All monies of the authority from whatever source derived shall be paid to the treasurer and shall be deposited forthwith in one or more banks and/or trust companies in the state designated by the authority ... All deposits of such monies shall be secured by obligations of or guaranteed by the United States of America or of the state of a market value equal at all times to the amount on deposit and all banks and trust companies are authorized to give security for such deposits. Any moneys of the authority not required for immediate use or disbursement may, at the discretion of the authority, be invested in those obligations specified pursuant to the provisions of section 98-a of the State Finance Law ...
Thus, the treasurer is required to deposit monies of the Authority in one or more banks or trust companies located within the State designated by the board of directors of the Authority. Section 1197-j further authorizes the board of directors, in its discretion, to invest those monies in the same securities the State is permitted to invest its funds pursuant to State Finance Law, §98-a.
As your inquiry suggests, the only possible authorization for the Authority to invest its monies jointly with other public authorities or municipalities is found in subdivision 22 of section 1197-e. That provision provides that the Authority shall have the power to:
enter into cooperative agreements with other authorities, municipalities, counties, cities, towns, villages, water districts, utility companies, individuals, firms or corporations, within or without the territorial limits of the district for the interconnection of facilities, the exchange or interchange of services and commodities, the conservation, preservation and protection of the authority's water reserve as it is affected within and outside the authority's supply area, and, within the territorial limits of the district, to enter into a contract for the construction, operation and maintenance of a water supply and distribution system by the authority for any municipality having power to construct and develop a water supply and distribution system, upon such terms and conditions as shall be determined to be reasonable including, but not limited to the reimbursement of all costs of such construction, or for any other lawful purposes necessary or desirable to effect the purpose of this title. [emphasis added]
Subdivision 22 of section 1197-e, in effect, provides that the Authority may enter into cooperative agreements with any of the entities enumerated therein so long as the agreements are for a lawful purpose and desirable to effect the purposes of the Authority.
Section 1197-j, quoted above, clearly provides that the Authority has the duty and responsibility to deposit and invest its monies in the manner prescribed by that statute. Therefore, reading this provision together with Public Authorities Law, §1197-e(22), relative to cooperative agreements, it could be argued that the Authority may enter into cooperative agreements for the investment of its monies. If this interpretation were correct, however, the Authority could not only enter into cooperative investment agreements with municipalities, counties, cities, towns, villages and water districts, but also with private utility companies, individuals, firms or corporations.
We do not believe that this is what the Legislature intended. Rather, we believe that section 1197-e(22) was intended to enable the Authority to cooperate with both public and private entities so that it may fulfill its function of constructing, operating and managing water facilities for the purpose of supplying water to the district. This interpretation is supported by the specific purposes enumerated in subdivision 22 as being the proper subject of cooperative agreements made by the Authority (e.g., interconnection of facilities, conservation and protection of water reserves, and construction, operation and maintenance of water supply and distribution system).
The "necessary and desirable" language contained in Public Authorities Law, §1197-e(22) must be read in light of the purposes for which the Authority was created (See Citizens for Orderly Energy Policy v Cuomo 78 NY2d 398, 576 NYS2d 185; 1991 Opns St Comp No 91-32, p 91). Nothing in title 8-B of article 5 indicates that the Legislature intended to confer upon the Authority the power to enter into cooperative investment agreements with either public or private entities. Therefore, we conclude that section 1197-e(22) does not authorize the Authority to enter into a cooperative agreement for the investment of its monies.
Although we conclude that Public Authorities Law §1197-e(22) does not permit the Water Authority of Great Neck North to enter into investment agreements with other authorities or municipalities, we note that there is currently legislation pending in the Legislature which would amend article 5-G of the General Municipal Law to expressly authorize public authorities and municipal corporations to enter into cooperation agreements in accordance with that Article (S.5288/A.10337). Our reference to this legislation should not be construed as a recommendation by our Office that such legislation should be enacted. To date, we have not reached any conclusions regarding the merits of this legislation.
May 8, 1992
Stephen G. Limmer, Esq., Counsel
Water Authority of Great Neck North