Effectively consolidating two or more special improvement districts

The issue of whether to amend the General Municipal, Town, and Village Laws to provide for municipal consolidation of special districts, villages, and the like has become a highly debated topic in the past year. In some circles, consolidation symbolizes the death of local control. Others see it as an effective way to consolidate resources and reduce spending, thereby saving taxpayer dollars in a trying economy. This article will not address the proposed laws or those issues associated therewith. Instead, this article will provide lawyers with the ability to answer its municipal or taxpayer client’s questions about consolidation.

Can two districts with different methods of assessment consolidate?
Special districts typically employ two methods of assessment, those are, benefit assessment or ad valorem rate charge. Where the special districts to be consolidated employ two different methods of assessment, the town law permits a town board to consolidate the districts so long as it chooses one method for further assessment on behalf of the newly consolidated district.1

What about the board of com­mis-sioners, the property, and outstanding debt?
Section 206(c) of the Town Law provides for the abolition of the offices of district commissioners where one or more of the special districts to be consolidated are governed by a separate board of commissioners.2 In this instance, all rights, powers, and duties of the board of commissioners transfer to the town board, and the town board governs the newly consolidated district.3

Following consolidation, the consolidated district would have a single budget and all future debt would be issued on behalf of that district.6 All outstanding debt service owed by the original districts may be raised by the consolidated district following consolidation.7 Where two or more special districts formed for the same purpose, but not within the same geographic location consolidate, or where an extension exists, the consolidated district may charge taxpayers proportionally based on the benefit received.8 For example, if the town board, on behalf of sewer district A, issued a bond for one million dollars to upgrade its pump station five years ago where the life of said improvement is approximately twenty-five years, the taxpayers of sewer district B may be charged a rate proportionate to the remaining twenty-year life of the improvement and vice versa.

How do I get the ball rolling?
Section 206(1) of the Town Law provides that a town board may, on its own motion, adopt a resolution calling a public hearing to consolidate two or more special districts within its jurisdiction that were created for the same purpose or those that were created for different purposes, but have the same geographical boundaries.9

Alternatively, Section 206(1) of the Town Law provides that a town board must adopt a resolution calling a public hearing to consolidate two or more special districts when a petition, signed by at least ten percent of the owners of taxable real property in each affected district, is filed with the town clerk. When the process is initiated by petition, the town board must adopt a resolution calling a hearing within twenty days after the petition is filed.10

Given these two options, it may be wise to advise your municipal or taxpayer client to contact his or her local councilperson to determine whether they would support a resolution calling for a public hearing on the proposed consolidation. All your client has to lose in this situation is time, whereas the petition option may be burdensome and less practical to pursue.

Does the hearing require notice?
As with any public hearing held by a town board, public notice of the hearing on the proposed consolidation is required, and must be published by the town clerk at least ten days prior to the date of the hearing in the town’s designated newspaper.11 The notice must state the time and place of the hearing and, at a minimum, also: (1) describe the proposed consolidation and identify the districts to be consolidated; and (2) state (a) the proposed basis of future assessment and whether the current method of assessment will change; (b) that consolidation will result in the abolition of the offices of the commissioners, if any; and (c) the proposed disposition of property and indebtedness of the original district(s), if any.12 A public hearing will then be held as noticed and all interested parties will be given an opportunity to be heard.13

What happens after the Town Board adopts a resolution to consolidate?
Pursuant to Section 206 of the Town Law, the town board must determine whether it is in the public interest to: (1) consolidate some or all of the districts proposed; (2) assess future assessments on a benefit or ad velorum basis; and/or (3) abolish the offices of commissioners of one or more districts.14 If the town board answers one or more of these questions in the affirmative, Section 206(3) of the Town Law permits it to pass a resolution, subject to permissive referendum, consolidating the proposed districts, abolishing the offices of the commissioners, and providing for future assessments of cost of operations, improvements, and maintenance (i.e. benefit or ad valorem).15

Section 206(4) of the Town Law requires the town clerk to publish a notice of adoption of a resolution to consolidate in the town’s designated newspaper(s), on the town clerk’s bulletin board, and on the town’s website, if any, within ten days of adoption.16 To be effective, the notice must, at a minimum: (1) set forth the date on which the resolution was adopted; (2) contain an abstract of the resolution, describing the districts consolidated; (3) specify the offices of commissioners, if any, to be abolished; (4) set forth the basis for the future assessment of all costs of operation, maintenance and improvements (i.e. benefit or ad valorem); and (5) state that the resolution was adopted subject to a permissive referendum and shall not take effect until thirty days after its adoption.17

When would a referendum be necessary?
Pursuant to Section 206(5) of the Town Law, following the adoption of the resolution, the town clerk shall prepare a petition for referendum form and provide one to any person requesting the same. If within thirty days after the adoption of the resolution approving the consolidation, a petition, signed by at least twenty-five qualified electors in each affected district, or by the proper number of qualified electors situated in any of the districts, is filed with the town clerk, the town board must hold a referendum.18 The proper number of qualified electors is determined by multiplying the number of districts by fifty, or by fifty percent of all the electors situated in one district.19 For example, if district A is to be consolidated into district B, one hundred signatures from qualified electors would be required.

Alternatively, the town board, on its own motion and pursuant to Section 91 of the Town Law, may hold a referendum on the proposed consolidation without the submission of a petition.20

In either instance, the town board is required, pursuant to Section 206(6) of the Town Law, to adopt a resolution that: sets forth a date for a special election (no less than twenty and no more than thirty days thereafter); states the hours of opening and closing of the polls; designates the voting place(s); and sets forth the proposition to be voted upon. The polls must be open between the hours of 6 p.m. and 9 p.m., at a minimum, but may be open additional hours if the town board so provides.21

Pursuant to Section 206(7) of the Town Law the owners of taxable property in the affected special districts are eligible to vote. Section 207(10) of the Town Law further provides that the cost of the election shall be borne by the districts affected, and shall be paid by them in equal amounts, regardless of their size, population or assessed value. For the proposition to be effective, it must pass separately in each affected district.22 In the event the proposition passes in each affected district, the resolution for consolidation becomes effective on the date the referendum was held.23

When does the consolidation take effect?
Although the resolution for consolidation becomes effective on the date the proposition passes, the consolidation does not take effect that day.24 Section 206(11) of the Town Law provides that the consolidation is effective December thirty-first of the year in which the resolution for consolidation becomes effective, if and only if, the resolution becomes effective on or before October first of that year. If the resolution for consolidation becomes effective after October first, the consolidation becomes effective on December thirty-first of the following calendar year.25

For example, the effective date of consolidation, where the resolution for consolidation becomes effective on September 29, 2009, is December 31, 2009. Whereas the effective date of consolidation, where the resolution for consolidation becomes effective on October 15, 2009, is December 31, 2010.

Where the offices of commissioners are abolished as part of the consolidation, the district is required, within ten days from the effective date of the consolidation, to: (1) deliver (a) all records, books and papers of the commissioners to the town clerk; (b) all funds to the town supervisor; and (c) all other property in the commissioners’ possession or under their control to the town board; and (2) present the town board with a complete and proper accounting thereof. In the event that the district fails to comply, the town board may initiate proceedings to enforce the consolidation.26

Does the resolution need to be filed? If so, where?
In addition to maintaining a copy of the final determination to consolidate the districts in the town clerk’s office, the town clerk is responsible for filing a certified copy of the determination with the Office of the County Clerk and the Office of the State Comptroller.27

The process of consolidation is far from simple. Several steps are required to effectively accomplish the goal. The lengthy process may be worthwhile to your client as consolidation, in some cases, has the potential to eliminate overlapping services, personnel and equipment, and to preserve resources. Nonetheless, in other cases, consolidation may not be worthwhile to your client. In this instance, it may be in your client’s best interest to explore cooperative programs with sister municipalities and special districts pursuant to Article 5 of the General Municipal Law.

Simone Marie Freeman is Deputy Town Attorney for the Town of Hempstead. In her current position, she serves as counsel to the Office of Inter-municipal Coordination and the Department of Public Works. Simone also handles Article 78 proceedings and appeals associated with building and land use and zoning matters. All correspondence should be directed to SfreemanJD2007@aol.com.

1. Town Law §§ 206(a) and (b).
2. Id.
3. Town Law § 206(12).
4. Town Law § 206(11).
5. Id.; See Town Law § 206-a; Thomas A. DiNapoli, Special District Consolidation in Towns, available at http://www.osc.state.ny.us/localgov/costsavings/ specialdistrict.htm.
6. See Town Law § 206(1)(a) and (1)(b) and (11); Matter of Esler v. Walters, as Supervisor of the Town of Guilderland, 56 N.Y.2d. 306, 437 N.E.2d. 1090 (1982).
7. See Town Law § 206(1)(a) and (1)(b) and (11); NYS Comptroller Opinion 99-12: Town Law §§ 206,206-a.