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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

FIRE DISTRICTS -- Powers and Duties (authority to negotiate lease of unneeded real property)

REAL PROPERTY -- Leases (authority to negotiate lease of unneeded real property)

TOWN LAW, §176(14): A fire district may, without referendum, negotiate a lease of a portion of its vacant land with a not-for-profit association, if it is determined the land is temporarily not needed for fire district purposes. The lease may be for a reasonable term and must be in exchange for fair and adequate consideration. Prior to negotiating with any particular lessee, the fire district board of commissioners should take steps to ensure that the negotiated lease is upon the best or most beneficial terms. The lease may permit the lessee to construct, maintain and operate, with the lessee's own funds, a building on the vacant land, subject to applicable zoning, building code or other similar requirements.

This is in reply to your letter concerning a proposed lease of fire district property. You state that the fire district owns a vacant parcel of real property which it intends, in the future, to utilize for a fire district purpose. You ask whether the fire district may temporarily lease a portion of the parcel to a not-for-profit association which intends, at its own expense, to construct, maintain and operate a building on the property.

Town Law, §176(14) authorizes a fire district to lease portions of its real property not required for fire district purposes. Section 176(14) does not prescribe the procedures for entering into, or the terms or conditions of, such a lease. In the absence of any specific statutory direction, this Office has previously concluded that the lease must be in exchange for fair and adequate consideration (1981 Opns St Comp No. 81-55, p 57; 27 Opns St Comp, 1971, p 175). Further, although there is no statutory requirement that bids be obtained, fire district officials have a fiduciary duty to secure the best price obtainable in their judgment or the most beneficial terms in the public interest (see 1993 Opns St Comp No. 93-21, p 36). The method of choosing a lessee is within the discretion of the board of fire commissioners, but should be the one which the board believes will yield the maximum financial benefits (id.). To fulfill this fiduciary duty, the board should take appropriate measures to ensure that the lease is upon the most beneficial terms.

No referendum is required or authorized with respect to the lease of unneeded fire district real property (cf. Town Law, §176[23], relating to the sale or "other disposition" of real or personal property of a fire district; but see 1973 Atty Gen [Inf Opns] p56, concluding that a 99-year lease was a "disposition" of real property within the contemplation of Town Law, §176[23]). As to the duration of the lease, it may cover any reasonable term and may extend beyond the terms of office of the current board of commissioners, but should contain a provision reserving the right to cancel the lease in the event that the property is needed for fire district purposes at some future date (see 1992 Opns St Comp No. 92-23, p 57).

We are aware of no prohibition against including in a lease of unneeded fire district real property permission for the lessee to construct, maintain and operate a building on the vacant fire district land, subject, of course, to any applicable zoning, building code and other similar restrictions. The lease, however, should contain provisions to ensure that the construction and operation of the building by the lessee will not interfere with the performance of the functions of the fire district. Also, the lease should set forth provisions as to ownership of the building during the lease term and the disposition of the building upon termination of the lease.

Accordingly, a fire district may, without referendum, negotiate a lease of a portion of its vacant land with a not-for-profit association, if it is determined the land is temporarily not needed for fire district purposes. The lease may be for a reasonable term and must be in exchange for fair and adequate consideration. Prior to negotiating with any particular lessee, the fire district board of commissioners should take steps, such as advertising the availability of the property and soliciting price quotations from several prospective lessees or obtaining a professional estimate of the rental value of the property, to ensure that the negotiated lease is upon the best or most beneficial terms. The lease may permit the lessee to construct, maintain and operate, with the lessee's own funds, a building on the vacant land, subject to applicable zoning, building code or other similar requirements, but should contain provisions to ensure no interference with fire district functions, and set forth provisions as to ownership of the building during the lease term and disposition of the building upon termination of the lease.

September 12, 1994
William F. Glass, Jr., Esq., Attorney at Law
Deer Park Fire District