Opinion 2010 - 3


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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

 

FIRE PROTECTION DISTRICTS – Fire Protection Contracts (cost of debt service of fire company as part of “definite sum”); (not subject to referendum requirements)

TOWN LAW § 184: A fire protection contract between a town on behalf of a fire protection district and an incorporated fire company is subject to a public hearing, but is not required or authorized to be subject to a referendum. The fire company's debt service expenses for its debt incurred to finance a firehouse used in connection with providing the fire protection service under the contract is one of the expenses that may be considered in the course of negotiating the “definite sum” payable by the town under the contract.

You ask whether a fire protection contract between an incorporated fire company and a town on behalf of a fire protection district is subject to referendum requirements. You also ask whether the cost of debt service on debt incurred by an incorporated fire company for the construction of a firehouse by the company on land owned by the company may be “included” in the consideration payable under such a fire protection contract.

Town Law § 184 authorizes town boards to contract with, among other entities, an incorporated fire company maintaining adequate and suitable apparatus and appliances, for the furnishing of fire protection within a town fire protection district (Town Law §184 [1]). 1The contract may not be entered into until a public hearing has been held by the town board (Town Law § 184 [2]). It is well-established, however, that a question may not be submitted to referendum, whether upon petition, board motion or otherwise, in the absence of express constitutional or statutory authority (see e.g. McCabe v Voorhis, 243 NY 401; Greene v Town Board of the Town of Warrensburg, 90 AD2d 916, 456 NYS2d 873 lv denied 58 NY2d 604, 459 NYS2d 1027; Citizens For An Orderly Energy Policy v County of Suffolk, 90 AD2d 522, 455 NYS2d 32 app dismissed 57 NY2d 1045, 457 NYS2d 787; 1990 Op St Comp No. 90-64, at 145; 1999 Ops Atty Gen No. 99-32). Neither Town Law § 184 nor any other statute or any constitutional provision requires or authorizes a town board to submit the fire protection contract to voter approval (compare e.g. Town Law §§ 81, 170 [4] with Town Law § 184). Therefore, a town is not required or authorized to submit to referendum the question of whether to enter into a particular fire protection contract.

Town Law § 184 (5) requires the fire protection contract to state a “definite sum to be paid each year for all of the services to be rendered thereunder.” 2This Office has interpreted the quoted provision to mean that the sum specified in the contract is in lieu of any additional items of cost, such as materials and equipment used in rendering fire protection services, loss or damage to fire equipment, and premiums for insurance coverage against such loss or damage (1989 Ops St Comp No. 89-51, at 116; 1989 Ops St Comp No. 89-15, at 30; 1980 Ops St Comp No. 80-757; 1974 Ops St Comp No. 74-520; 23 Ops St Comp No. 67-790, at 697 [1967]; see also 1982 Ops St Comp No. 82-355, at 449). The parties to the contract, in effect, are presumed to have considered the expenses of the party providing the fire protection pertinent to the provision of services under the contract when negotiating the “definite sum” and, with one limited exception, 3 the contract may not provide for the town to make payments in addition to the sum specified for any additional costs (1989 Ops St Comp No. 89-51, supra; 1989 Ops St Comp No. 89-15, supra; 23 Ops St Comp No. 67-790, supra; 22 Ops St Comp No. 66-975, at 802 [1966]). Therefore, a fire protection contract may not provide for the town to pay an amount in addition to the stated “definite sum” to compensate the fire company for the fire company's debt service expenses for debt incurred to finance a firehouse used in connection with providing the fire protection service under the contract. 4On the other hand, consistent with the “definite sum” requirement, it is our view that the fire company's expenses for that debt service is one of the items that may be considered in the course of negotiating the “definite sum” (see 1970 Ops St Comp No. 70-182; 22 Ops St Comp No. 66-1034, at 853 [1966]).

Accordingly, a fire protection contract between a town on behalf of a fire protection district and an incorporated fire company is subject to a public hearing, but is not required or authorized to be subject to a referendum. The fire company's debt service expenses for its debt incurred to finance a firehouse used in connection with providing the fire protection service under the contract is one of the expenses that may be considered in the course of negotiating the “definite sum” payable by the town under the contract.

November 10, 2010

William A. Zutt, Esq., Town Attorney
Town of Putnam Valley

1 Town Law § 184 (1), as amended by chapter 599 of the Laws of 1994, also authorizes towns to acquire, by gift or purchase, “apparatus and appliances for use in a fire protection district” and to contract with, among other entities, an incorporated fire company for operation, maintenance and repair of the apparatus and appliances. Towns may not, however, construct a firehouse on behalf of a fire protection district. The 1994 amendment to Town Law § 184 (1) was intended to authorize towns on behalf of fire protection districts to directly purchase fire fighting apparatus and thereby be eligible to apply for loans from the New York State Emergency Services Revolving Loan Account (“Account') for such purchases (see Budget Report on Bills, Bill Jacket, L 1994, ch 599, at 10-11; Mem of the Department of State, July 14, 1994, Bill Jacket, L 1994, ch 599, at 17, at 5). The Account was also created by L 1994, ch 599, to fund loans for, among other things, the purchase of fire fighting apparatus by local governments and fire districts (see State Finance Law § 97-pp). There is no express authority for a town to construct a firehouse on behalf of a fire protection district, and no indication in the Bill Jacket for chapter 599 of the Laws of 1994 that the amendment to Town Law § 184 (1) was intended to provide, by implication, such authority.

2 A fire protection contract may be for a definite period of time not to exceed five years (Town Law § 184 [3]), or for an initial term of one calendar year or less subject to renewal(s), in total, not to exceed five years, in accordance with Town Law § 184 (4).

3Under Volunteer Firefighters' Benefit Law (“VFBL”) § 30 (12), a fire protection contract generally is required to provide that the party receiving fire protection must pay to the appropriate city, village, fire district or town a sum for any increases in the cost of VFBL insurance attributable to the protected area during the contract term unless a sum for such increased cost has been specifically included in the contract price.

4 The town also may not make a gift or loan of money to the incorporated fire company to cover the fire company's debt service costs (see e.g. 1980 Ops St Comp No. 80-271), or agree to guarantee the debt of the fire company (see e.g. 19 Ops St Comp No. 63-751, at 406 [1963]). Article VIII, §1, of the State Constitution, among other things, prohibits towns from making gifts or loans of money or property to or in aid of any private corporation, and from loaning its credit to or in aid of any private or public corporations. Not-for-profit corporations, such as incorporated fire companies, are not excepted from these prohibitions (see e.g., Matter of La Barbera v Town of Woodstock, 29 AD3d 1054, 814 NYS2d 376 lv dismissed 7 NY3d 844, 823 NYS2d 773; 2002 Op St Comp No. 2002-16, at 36; 1980 Op St Comp No. 80-271). To avoid contravening the gift prohibition, the town should ensure that the “definite sum” is commensurate with the value of fire protection services to be provided under the contract (see e.g. 2006 Ops St Comp No. 2006-7, at 15; 2005 Ops St Comp No. 2005-1, at 1; 1980 Ops St Comp No. 80-702, at 193).