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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

IMPROVEMENT DISTRICTS -- Reserve Fund (authority to establish)

MUNICIPAL FUNDS -- Capital Reserve Fund (creation of by town for improvement district)

GENERAL MUNICIPAL LAW, §6-c(3)(a); TOWN LAW, §55-a: A town other than a suburban town may not establish a capital reserve fund for improvement district purposes. This is in reply to your letter asking whether a town of the second class may establish a capital reserve fund for improvement district purposes. You note that suburban towns are authorized by Town Law, §55-a to establish such a fund.

There is no general authorization for towns other than suburban towns to establish capital reserve funds for improvement district purposes. In this regard, we note that General Municipal Law, §6-c, which authorizes towns generally to establish capital reserve funds, specifically provides in subdivision (3)(a) that the provisions of that section authorizing the establishment of capital reserve funds shall not apply to:

"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. . ."

Accordingly, it is our opinion that, absent special legislation (see, e.g., L 1974, ch 642), towns other than suburban towns may not establish capital reserve funds for improvement district purposes. We note that our reference to special legislation is not intended as a recommendation with regard to any such legislation.

While towns generally may not establish capital reserve funds for district purposes, it should be noted that towns are authorized to establish repair reserve funds on behalf of improvement districts (General Municipal Law, §6-d). Moneys from such a fund may be used to pay for repairs of capital improvements or equipment so long as the repairs are of a type which do not recur annually or at shorter intervals (General Municipal Law, §6-d[3][a]).

March 22, 1988
Bruce W. Musacchio, Esq., Town Attorney
Town of Collins