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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

BONDS AND NOTES -- Bond Resolution (exceeding maximum cost specified in)

LOCAL FINANCE LAW, §32.00: Where the lowest bid on the proposed installation of sprinkler systems in fire district buildings exceeds the estimated maximum cost for such purpose specified in a bond resolution, the board of fire commissioners may not expend moneys for this project in excess of the amount set forth in the bond resolution approved at referendum. In order to increase the maximum amount which may be expended for the project, the fire district may, subject to referendum requirements, repeal the original bond resolution and adopt a new resolution, amend the original resolution or adopt a supplemental resolution.

We are in receipt of your letter in which you state that the voters of a fire district approved a bond resolution for the installation of sprinkler systems in two buildings of the fire district at an estimated maximum cost of $70,000. Two bids were received for the work and both were for amounts greater than $70,000. You ask whether the board of fire commissioners may expend moneys for this project in excess of the amount approved at referendum.

Section 32.00(2) of the Local Finance Law provides, among other things, that if bonds are to be authorized for a specific object or purpose, the bond resolution, with certain exceptions not here applicable, must include "a statement of the estimate of the maximum cost of each item of such specific object or purpose". When a bond resolution is subject to referendum, the voters, therefore, are to be apprised of the estimated maximum amount to be expended for the object or purpose specified (see Mitchell v Town of Shelter Island, 3 Misc 2d 127, 148 NYS2d 212, affd 2 AD2d 712, 153 NYS2d 298). Based upon the mandatory nature of this provision of section 32.00, we have consistently stated that a local government may not expend for an object or purpose an amount greater than that which is stated as the estimated maximum cost in the bond resolution (11 Opns St Comp, 1955, p 22; 13 Opns St Comp, 1957, p 160; 16 Opns St Comp 1960, p 300; 22 Opns St Comp 1966, pp 581 and 636; 25 Opns St Comp 1969, p 337; 1979 Opns St Comp No. 79-919, p 214). There have been no subsequent judicial decisions or statutory amendments which would cause us to reach a different conclusion.

In the circumstances you describe, therefore, in order to increase the maximum amount which may be expended for the project, the fire district may repeal the original bond resolution and adopt a new bond resolution containing the new estimated maximum cost, amend the original bond resolution to increase the estimated maximum amount, or adopt a supplemental bond resolution for the excess amount to be expended for the project (25 Opns St Comp 1969, supra). Of course, since the original bond resolution was subject to a mandatory referendum (see Local Finance Law, §38.00[9]), any new, amended or supplemental bond resolution would also be subject to a mandatory referendum.

July 12, 1990
Mario John Albano, Esq., Attorney at Law
Verplanck Fire District