N.Y. General Municipal Law § 708: Assumption of debt

§ 708. Assumption of debt. 1. Except as may be provided in an

agreement among any of the affected local governments as authorized by

subdivision two of this section concerning the apportionment of any

indebtedness and any contract or other liabilities, and interest

thereon, any such indebtedness or liabilities, or interest, in the event

of such annexation, shall be a charge upon and shall be paid by a local

government to which the territory is annexed, as the same shall become

due and payable, to the other affected local government in the same

proportion to the whole of any such indebtedness or any such liability

as the full valuation of the taxable real property of the territory to

be annexed bears to the full valuation of the taxable real property of

the local government in which the territory was situated prior to the

annexation. Any such proportions shall be computed as of the date of the

annexation. In the case of an annexation of territory of a town by a

village located in the same town, any such apportionment of town

indebtedness and contract or other liabilities shall not include any

indebtedness or contract or other liabilities of the town in relation to

which the debt service or payments thereon would, in the first instance,

be required to be raised in some manner other than by taxes, special ad

valorem levies, or assessments, on real property located in whole or in

part inside such territory to be annexed. Full valuation of taxable real

property shall mean the valuation derived by dividing the assessed

valuation of the real property concerned, as shown by the last completed

assessment roll of, or utilized by, the local government in which it is

situated prior to such annexation by the equalization rate established

by the authorized state officer or agency for such roll.

2. At any time prior to the making of their final determinations as

provided by section seven hundred eleven of this article, the governing

boards of the affected local governments, or their designated

representatives, shall have power to agree as to the proportions, if

any, of the various types of indebtedness and contract or other

liabilities, and interest thereon, if any, which the local government to

which territory is proposed to be annexed will assume and agree to pay

in the event of such annexation. Such proportions may be based on the

full valuations of taxable real property, or on the basis of services

which will continue to be rendered or will cease to be rendered, or on

the basis of benefits to be received or conferred or will cease to be

received or conferred, or on any other equitable basis, and may provide

how such costs shall be raised, levied and collected. Such agreement

shall be followed in the local law to be adopted pursuant to section

seven hundred fourteen of this article.

3. Notwithstanding the foregoing provisions of this section, a local

government to which territory is annexed shall not be required to pay

any portion of any indebtedness or contract or other liabilities, and of

any interest thereon, which it has agreed to assume or will be required

to assume pursuant to the provisions of this section, if the

indebtedness or such liabilities have been contracted or incurred in

relation to a revenue-producing public improvement or service which is

not located in such territory and such revenues, after providing for all

costs of operation, maintenance and repairs thereof, required in any

fiscal year are not used, or credited as between such local governments,

to pay the interest on and amortization of, or payment of such

indebtedness or liabilities contracted for such public improvement or

service, but to the extent that any such revenues are so used or

credited, and are not sufficient to provide in full for any such debt

service, then the local government to which the territory is annexed

shall pay its proportionate amount of such deficiency.

4. The provisions of any agreement made and executed pursuant to

subdivision two of this section shall not affect the contract liability

of the area of any affected local government under any obligation or

contract entered into prior to the effective date of the annexation, but

any such agreement may provide that as to any such contract liability,

the local government annexing such territory shall not be compelled to

pay any portion of the debt service thereon except in the event of

default in the payment thereof, or interest thereon, by the local

government in which such territory was located prior to such annexation.

5. The terms "indebtedness" and "contract or other liabilities", as

used in this section, shall not include any indebtedness (a) evidenced

by tax anticipation notes, revenue anticipation notes or budget notes,

or (b) evidenced by serial bonds or capital notes having a maximum

maturity of less than three years which were issued or are to be issued

to finance an object or purpose other than a capital improvement, or

other than the acquisition of equipment, for which a period of probable

usefulness is provided in paragraph a of section 11.00 of the local

finance law.