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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

STREETS AND HIGHWAYS -- Improvements (municipal highway construction performed by State in connection with State project)
STATE COMPTROLLER -- Municipal Highways (approval of Department of Transportation contracts to construct municipal highways)

HIGHWAY LAW, §10(27); STATE FINANCE LAW, §112: Before approving contracts by the State Department of Transportation to perform municipal highway construction in connection with State highway projects, the State Comptroller generally requires either a deposit of the requisite funds by the municipality or proof that the municipal governing body has approved the project and appropriated the necessary funds.

This is in reply to your inquiry regarding the legal requirements municipalities must satisfy when the New York State Department of Transportation (DOT) performs highway construction on their behalf pursuant to subdivision 27 of section 10 of the Highway Law. You ask, based upon the Comptroller's contract approval function found in section 112 of the State Finance Law, what the Comptroller should receive to satisfy the legal requirements of this provision of the Highway Law.

Subdivision 27 of section 10 of the Highway Law provides that the Commissioner of Transportation shall:

Have power, upon the request of a municipality, to perform for and at the expense of such municipality, any work of construction or reconstruction, including the removal and relocation of facilities, provided the commissioner of transportation deems it practicable to perform such work for such municipality in connection with the performance of any work of construction, reconstruction or improvement under the provisions of this chapter. Whenever the commissioner of transportation shall approve such a request of a municipality, he shall make an estimate of the cost of the work which he is requested by such municipality to perform in accordance with plans and specifications submitted to him by such municipality, which cost estimates, plans and specifications shall be approved by the municipality in writing before the commissioner of transportation shall proceed with any such municipal work. Such municipality shall thereupon deposit with the state comptroller, who is authorized to receive and accept the same for the purposes of this subdivision, a sum equal to such estimate and subject to the draft or requisition of the commissioner of transportation. Provided, however, that nothing contained in this subdivision should be construed to prevent the commissioner of transportation from proceeding with the state work, incorporating the work requested by the municipality in accordance with cost estimates, plans and specifications approved by such municipality, if he determines it to be necessary and in the best interest of the state to do so . . . .

The remainder of this subdivision relates to the settlement procedures between DOT and a municipality for costs associated with the municipal work performed by DOT.

This provision authorizes DOT, upon the request of a municipality, to perform municipal highway construction or reconstruction in connection with any highway project undertaken by DOT pursuant to the Highway Law. Upon the approval of any such request, the Commissioner of Transportation is required to provide the municipality with cost estimates, plans and specifications which must be approved by the municipality prior to DOT undertaking the project. Thereafter, either the municipality must deposit sufficient funds with the State Comptroller for DOT to perform the work or the Commissioner of DOT may go forward with the municipality's portion of the highway project provided he determines that doing so is in the best interest of the State.

Subdivision 27 of section 10 of the Highway Law, prior to 1970, required any municipality requesting work by DOT pursuant to this provision to deposit with the State Comptroller sufficient funds to meet the cost estimates prepared by DOT. Chapter 159 of the Laws of 1970 added the proviso that the Commissioner could undertake projects, prior to receipt of a municipality's funds, when he determined that it was in the State's best interest to do so, where the municipality has requested the work and approved the plans, estimates and specifications.

In our opinion, this section essentially provides for the creation of a binding legal relationship between the State and the municipality, upon the approval of the plans, estimates and specifications by the municipality. As a general proposition, a municipality, like the State, cannot incur a liability unless moneys have been appropriated for such purpose and are available therefor (County Law, §362[3]; Town Law, §117; Village Law, §5-520[2]). As a result, in the absence of an appropriation, we believe the agreement by the municipality to the plans, estimates and specifications generally would not, as a matter of law, bind the municipality to the project (see, gen., Gill, Korff et al. v County of Onondaga, 152 AD2d 912, 544 NYS2d 393). Therefore, the current practice, which requires a certified copy of the board resolution authorizing the project and appropriating money therefor, would appear to be a reasonable method to protect the State's interest in those cases where the municipality does not deposit its estimated share of the project.

We recognize, however, that in certain cases, there may not be a specific board resolution for a project because the authority to undertake specific projects is vested in or has been delegated to a body or official other than the local governing board. In such cases, we believe that it would be acceptable for the State to approve the project upon receipt of: (i) documentation that the person approving the project on behalf of the municipality has the authority to do so; and (ii) a certificate or other documentation from the municipality's chief fiscal officer to the effect that there are moneys appropriated and available for the municipality's estimated share of the project in question.

We also wish to address one other issue raised by your inquiry. As indicated, where a municipality does not deposit its estimated share to a highway project, we may nonetheless proceed when we receive proof that moneys have in fact been appropriated for such purpose by the municipality. As also noted, however, a municipality cannot generally be obligated in excess of amounts appropriated by the municipal governing board. Therefore, the question arises as to what happens if the project ultimately costs more than the project estimate, and the municipality does not wish to appropriate money for such purposes.

Highway Law, §10(27) provides that:

In the event, upon the completion of the work authorized by this subdivision, it is determined by the commissioner of transportation that the amount of the cost to be borne by the municipality is in excess of the amount deposited by such municipality with the state comptroller, then, in such event, such municipality shall within ninety days of the receipt of the notice from the commissioner of transportation of the amount of the deficiency required to fully compensate the state for the municipality's cost of such work, pay such amount to the state comptroller.

We believe that this language expressly imposes upon a municipality which has authorized a project pursuant to section 10(27) a duty to pay for any additional costs above the estimate. As a result, we believe that the municipality is required to appropriate money for such purpose and that upon the failure of the municipality to either appropriate money or make payment to the State, the State could collect the money from the municipality either by litigation or by reducing amounts otherwise payable to the municipality pursuant to the State's right of set-off (see, e.g., Carlin v Regan, 98 AD2d 544, 471 NYS2d 896).

December 21, 1990
Jerry Lipfeld, Principal Auditor of State Expenditures
Office of the State Comptroller