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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

CONFLICTS OF INTEREST -- Exceptions (contracts for rental of room owned by officer and used in official duties)
PUBLIC OFFICERS AND EMPLOYEES -- Powers and Duties (rental of home as office)
REAL PROPERTY -- Leases (payment of rental to town officers); (by town from volunteer fire company)
TOWNS -- Powers and Duties (lease of office from town officers and fire companies)

TOWN LAW, §§64(2), 220; GENERAL MUNICIPAL LAW, §802(2)(c): A town board may enter into an agreement for the payment of reasonable rental to a town officer who utilizes a portion of his or her home as an office in connection with the performance of his or her official town duties. A town is authorized to lease office space from a fire company.

You ask whether a town may agree to pay rent to the town tax collector, clerk, justice and supervisor for the use of a portion of their homes as offices from which they regularly perform their official town duties. You also ask whether a town may lease office space from the private volunteer fire company with which the town has a contract for fire protection on behalf of a fire protection district.

A town is authorized to lease property for town purposes (Town Law, §§64[2], 220[3]), including space in a building for town offices (see 11 Opns St Comp, 1955, p 243). Such a lease would be subject to permissive referendum when the rent payable by the town is to be raised by taxes in the fiscal year in which the expenditure is to be made (Town Law, §220[3]; see also 20 Opns St Comp, 1964, p 295; 11 Opns St Comp, 1955, supra; cf. General Municipal Law, §72-h, authorizing a town to lease property from various governmental entities without referendum). Leases of real property by political subdivisions are not subject to competitive bidding under General Municipal Law, §103, unless they also constitute contracts for public work (Davies v Mayor, 83 NY 207; Albion Industrial Center v Town of Albion, 62 AD2d 478, 405 NYS2d 521). In negotiating leases, however, local officials have a fiduciary duty to acquire the property by bona fide lease upon the most beneficial terms and conditions, including price, in the public interest, and not in an arbitrary and capricious manner (1989 Opns St Comp No. 89-64, p 140).

Town Law, §§64(2) and 220(3) do not provide any restriction or limitation with respect to who the lessor of the property may be. Moreover, except as is otherwise provided in article 18 of the General Municipal Law, discussed below, we are aware of no other statute that would prohibit a town from renting office space from a town official. Thus, this Office has previously concluded that a town board may enter into an agreement for the payment of reasonable rental to a town officer who utilizes a portion of his or her home as an office in connection with the performance of his or her official town duties (27 Opns St Comp, 1971, p 158; see also 1980 Opns St Comp No. 80-59, unreported; 26 Opns St Comp, 1970, p 267; Town Law, §116[1]). The board should determine that the rental is upon the most beneficial terms and conditions in the public interest.

As suggested above, an agreement to pay rental to the town officer would be a contract for purposes of the conflict of interest provisions of article 18 of the General Municipal Law (General Municipal Law, §800[2]). Moreover, since the rental payments would provide a pecuniary benefit to the officer, he or she would have an interest in that contract (General Municipal Law, §800[3]). That interest would be prohibited if the officer or employee, individually or as a member of a board, has any of the powers and duties listed in General Municipal Law, §801, unless an exception in General Municipal Law, §802 is applicable. Section 802(2)(c) provides an exception for a contract for the payment of a reasonable rental of a room or rooms owned or leased by an officer or employee if the room(s) are used in the performance of his or her official duties and are so designated as an office or chamber. Therefore, because of the provisions of General Municipal Law, §802(2)(c), an interest in the rental agreement would not be prohibited, even if the officer has powers and duties listed in General Municipal Law, §801 in connection with that contract, so long as the property being rented by the town will be used by the officer to perform his or her official duties and is designated as an office or chamber. Moreover, the officer's interest in that contract need not be disclosed pursuant to General Municipal Law, §803 (General Municipal Law, §803[2]).

Even if it is determined that article 18 does not prohibit the contemplated lease agreements, the town's code of ethics should be reviewed to determine whether it contains any restrictive provisions applicable to these agreements. Also, to avoid even the appearance of impropriety, the town supervisor should recuse herself from discussion relating to the rental agreement or payment thereunder and abstain from voting on such matters.

With respect to leasing office space from the fire company, we are aware of no statute which would prohibit the town from entering into a lease for town office space with a fire company providing fire protection to a town fire protection district. Accordingly, since it appears that a fire company is authorized to lease real property to the town (see Not-For-Profit Corporation Law, §§202[a][5], 509) unless restricted by its by laws or charter, it is our opinion that the town may lease office space from the fire company if it is determined that the lease is upon the most beneficial terms and conditions in the public interest (see 1972 Opns St Comp No. 72-297, unreported; 1971 Opns St Comp No. 71-67, unreported).

June 3, 1992
Charles E. Shaffer, Esq., Town Attorney
Town of Tyre