Senate Bill S6899

                                
 
BILL NUMBER: S6899

SPONSOR: PALUMBO
 
PURPOSE:

To authorize the Town of East Hampton to use any funds that are left
remaining after the dissolution of its wastewater disposal district for
town-wide capital projects

 
SUMMARY OF PROVISIONS:

Section 1. Notwithstanding paragraph (d) of subdivision 12 of Section
198 of the Town Law to the contrary, the town of East Hampton is author-
ized to direct proceeds from the dissolution of the East Hampton waste-
water disposal district for the purposes of paying all or a portion of
the cost of one or more town-wide capital projects.  Such authorization
shall be the subject of a public hearing held in a manner consistent
with Subdivision 12 of Section 198 of the Town Law.

Section 2. Effective date.

 
              

JUSTIFICATION:

Under current law, upon the dissolution of a special improvement
district, the assets of such district are required to be used first to
defease any outstanding indebtedness associated with the special
improvement district. Any funds remaining thereafter are required to be
apportioned on the basis of assessed valuation of the parcels of real
property located in the special district being dissolved. The amounts
apportioned must be credited to each such parcel of real property in
reduction of town taxes in each year until the funds are exhausted.
Exempt properties that paid assessments must also be refunded based upon
the last completed assessment roll at the time of distribution. The law
does not expressly permit a town to use any funds remaining to fund a
capital project.

In the case of the East Hampton Wastewater Disposal District, all of the
indebtedness of the Town issued to finance improvements in the District
has been defeased. The District has funds on hand of approximately
$1,735,000, which represents the balance of funds derived from the sale
of land owned by the District. Such sale was approved by the Town Board,
subject to permissive referendum, on November 16, 2017. The District has
no other assets. The Town Board has identified several critical town-
wide capital projects that it must undertake in the foreseeable future.
Typically, the Town would issue bonds to finance such capital projects
and levy taxes to pay the debt service on such bonds. If the Town can
use the remaining District funds, in lieu of borrowing, to pay for all
or a portion of the cost of such capital projects, the Town will be able
to offset, in whole or in part, the amount of additional taxes that
would have been required to be levied by the Town had such capital
projects been financed by bonds only.1' Further since this act requires
the Town to use such remaining funds to pay the costs of capital
projects which will benefit all residents of the Town, owners of exempt
properties, who may have paid District assessments, will also benefit.

 
LEGISLATIVE HISTORY:

2021: New Legislation

 
FISCAL IMPLICATIONS:

To be determined.

 
EFFECTIVE DATE:
Immediately.