N.Y. General Municipal Law § 6-c: Capital reserve funds for counties, cities, villages, towns and sewer and water improvement districts

§ 6-c. Capital reserve funds for counties, cities, villages, towns and

sewer and water improvement districts. 1. As used in this section:

a. The term "governing board", insofar as it is used in reference to a

village, shall mean the board of trustees thereof; insofar as it is used

in reference to a town, shall mean the town board thereof; insofar as it

is used in reference to a county, shall mean the legislative body

thereof; insofar as it is used in reference to a city, shall mean the

"local legislative body" thereof, as that term is defined in subdivision

seven of section two of the municipal home rule law, as amended from

time to time; insofar as it is used in reference to a town or county

improvement district, shall mean the town board of the town or the

legislative body of the county in which such district is located unless,

in the case of a town improvement district, such district has a separate

board of commissioners, in which case it shall mean such board of

commissioners.

b. The term "capital improvement" shall mean:

(1) Any physical public betterment or improvement or any preliminary

studies and surveys relative thereto.

(2) Land or rights in land.

(3) Any furnishings, equipment, machinery or apparatus for any

physical public betterment or improvement acquired at the time when such

betterment or improvement is constructed, reconstructed or acquired.

c. The term "equipment" shall include any equipment, machinery or

apparatus not included in the definition of the term "capital

improvement" and for the acquisition of which a period of probable

usefulness has been provided by law.

d. The term "obligations" shall include bonds, notes, certificates or

other evidences of indebtedness.

2. The governing board of any county, city, village, town or sewer and

water improvement district may establish capital reserve funds for the

financing of all or part of the cost of:

a. The construction, reconstruction or acquisition of a specific

capital improvement or the acquisition of a specific item or specific

items of equipment.

b. The construction, reconstruction or acquisition of a type of

capital improvement or the acquisition of a type of equipment.

3. The provisions of paragraph two shall not apply to:

a. Capital improvements to be constructed, reconstructed or acquired,

or equipment to be acquired, on behalf of an improvement district or

other similar district located within such municipality other than a

sewer and/or water improvement district, or

b. Capital improvements or equipment, all or part of the cost of which

is to be borne by assessments for benefit or ad valorem taxes upon the

real property within an area of benefit within such municipality other

than a sewer and/or water improvement district.

4. If the governing board authorizes the establishment of a capital

reserve fund for the financing of all or part of the cost of the

construction, reconstruction or acquisition of a specific capital

improvement or the acquisition of a specific item or specific items of

equipment, it shall set forth in such authorization the estimated

maximum cost thereof. However, if the authorization by such governing

board of the issuance of obligations for such capital improvement or

equipment is required by law to be subject to a permissive or mandatory

referendum, then the authorization of the establishment of such a fund

shall be subject to a permissive referendum. In the event that the

authorization by such governing board of the issuance of obligations for

such capital improvement or equipment is required by law to be subject

to a permissive or mandatory referendum only if such obligations are to

have a maturity of more than five years or not less than some other

minimum period, then the authorization of the establishment of such a

fund shall be subject to a permissive referendum only if the period of

probable usefulness of such capital improvement or equipment is equal to

or more than such minimum period of maturity. A permissive referendum on

the authorization of the establishment of such a capital reserve fund

shall be governed by:

a. Sections twenty-four, twenty-five and twenty-six of the municipal

home rule law, as amended from time to time, so far as they may be

applicable, in the case of cities.

b. Article seven of the town law, as amended from time to time, in the

case of towns.

c. Article nine of the village law, as amended from time to time, in

the case of villages.

5. There may be paid into any fund:

a. Such an amount as may be provided therefor by budgetary

appropriation or raised by tax therefor.

b. Such revenues as are not required by law to be paid into any other

fund or account, including the proceeds from the sale of any capital

improvement or equipment owned by such county, city, village or town.

This provision shall not prevent the use of town highway moneys for the

establishment of a capital reserve fund, provided that such moneys are

expended therefrom for the purpose for which they were levied or

received, that the consent of the town superintendent of highways and

town board, together with the approval of the county superintendent of

highways, is given to the establishment thereof, and that such moneys

are only expended therefrom on order of the town superintendent of

highways upon audit and with the consent of the town board.

7. The moneys in each such fund shall be deposited and secured in the

manner provided by section ten of this article. The governing board or

the chief fiscal officer of such municipality, if the governing board

shall delegate such duty to him, may invest the moneys in each such fund

in the manner provided in section eleven of this article. Any interest

earned or capital gains realized on the moneys so deposited or invested

shall accrue to and become part of each such fund. The separate identity

of each such fund shall be maintained, whether its assets consist of

cash or investments or both.

8. An expenditure shall be made from a fund only by an authorization

of the governing board and for a specific capital improvement or a

specific item or specific items of equipment, the cost of which may be

financed therefrom. However, if a proposed expenditure is from a fund

established for a type of capital improvement or equipment and if it is

required by law that the authorization by such governing board of the

issuance of obligations for such capital improvement or equipment be

subject to a permissive or mandatory referendum, then the authorization

of such an expenditure shall be subject to a permissive referendum. In

the event that the authorization by such governing board of the issuance

of obligations for such capital improvement or equipment is required by

law to be subject to a permissive or mandatory referendum only if such

obligations are to have a maturity of more than five years or not less

than some other minimum period, then the authorization of such an

expenditure shall be subject to a permissive referendum only if the

period of probable usefulness of such capital improvement or equipment

is equal to or more than such minimum period of maturity. Such a

permissive referendum shall be governed in the manner provided in

paragraph four of this section. Notwithstanding any other provision of

this section, but subject to the provisions of this paragraph, if a

capital reserve fund has been established for a specific capital

improvement and it is later determined that a part of the cost of such

capital improvement is to be borne by assessments for benefit or ad

valorem taxes upon real property within an area of benefit within a

municipality, such fund may be expended to pay all or part of the share

to be borne by the municipality at large.

9. The governing board may authorize the transfer to the credit of

another capital reserve fund of all or part of:

a. The unexpended balance remaining in a fund established for a

specific capital improvement or a specific item or specific items of

equipment, which improvement has been completed or acquired, or which

equipment has been acquired, after deducting from such balance a sum

sufficient to satisfy all outstanding claims arising from the

construction, reconstruction or acquisition of such capital improvement

or the acquisition of such equipment.

b. The unexpended balance remaining in a fund established for a

specific item or specific items of equipment which have not been

acquired or a specific capital improvement which has not been completed

or acquired, or remaining in a fund established for a type of capital

improvement or a type of equipment. If the proposed transfer is from a

fund established for a specific capital improvement or a specific item

or specific items of equipment, the authorization of such transfer shall

be subject to a permissive referendum if the authorization of the

creation of a fund for such capital improvement or item or items of

equipment was subject to a permissive referendum. A permissive

referendum on the authorization of such transfer shall be governed in

the manner provided in paragraph four of this section.

c. Nothing in this subdivision shall be construed to authorize the

transfer to the credit of another capital reserve fund from a capital

reserve fund having a different tax base.

9-a. The governing board also may appropriate for:

1. An object or purpose for which bonds may be issued, or

2. The payment of interest on and principal of indebtedness, other

than indebtedness evidenced by bonds and notes described in paragraphs A

and D of section five of article eight of the state constitution, and

indebtedness for assessable improvements or renewals thereof,

all or part of the unexpended balance remaining in a fund established

for a specific capital improvement or specific item or items of

equipment. Any such appropriation may not be made unless the improvement

has been completed or acquired, or the equipment has been acquired, and

shall not include any moneys required to satisfy all outstanding claims

arising from the construction, reconstruction or acquisition of such

capital improvement or the acquisition of such equipment.

10. The chief fiscal officer shall keep a separate account for each

fund established. Such account shall show:

a. The date and amount of each sum paid into the fund.

b. The interest earned by such fund.

c. The capital gains or losses resulting from the sale of investments

of the fund.

d. The interest or capital gains which have accrued to the fund.

e. The amount and date of each withdrawal from the fund.

f. The assets of the fund, indicating the cash balance therein and a

schedule of the amounts invested in federal or state obligations.

The chief fiscal officer, at the termination of each fiscal year, shall

render a detailed report of the operation and condition of each of such

funds to the governing board.

11. The members of the governing board are hereby declared trustees of

such funds and shall be subject to all the duties and responsibilities

imposed by law on trustees, and such duties and responsibilities may be

enforced by the county, city, town or village, as the case may be, or by

any board, commission, agency, officer or taxpayer thereof.

12. The members of the governing board shall be guilty of a

misdemeanor if they:

a. Authorize a withdrawal from a fund for any purpose other than for a

capital improvement or an item or items of equipment, the cost of which

has been authorized to be financed in whole or in part from such fund.

b. Expend any money withdrawn from a fund for a purpose other than

that for which it was authorized to be withdrawn.

The provisions of this paragraph shall be considered to be in addition

to any other penalties provided by law.

13. Notwithstanding the foregoing provisions of this section, in any

town which is located wholly or partly within the Adirondack park and

has within its boundaries state lands subject to taxation assessed at

more than thirty per centum of the total taxable assessed valuation of

the town as determined from the assessment rolls of the town, as

completed from time to time, a capital reserve fund shall not be

established on and after May first, nineteen hundred forty-eight, unless

the state comptroller, on behalf of the state, shall consent thereto,

and, on and after May first, nineteen hundred forty-eight, in any such

town no expenditure or transfer shall be made from a capital reserve

fund heretofore or hereafter established unless the state comptroller,

on behalf of the state, shall consent thereto.