S T A T E O F N E W Y O R K
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10181
I N S E N A T E
May 4, 2026
___________
Introduced by Sen. HARCKHAM -- read twice and ordered printed, and when
printed to be committed to the Committee on Local Government
AN ACT establishing the Birch Hill - Highview Water District in the town
of Southeast, Putnam County
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Legislative findings. It is hereby found and determined
that the town of Southeast, Putnam County, hereinafter known as the
town, spent general fund money in the amount of $348,544.39 to make
improvements to the water system, part of which had been owned and oper-
ated by the Birch Hill Water Company and part of which had been a shared
water system serving multiple individual homeowners prior to the estab-
lishment of the Birch Hill - Highview Water District in accordance with
the provisions of Article 12-A of the town law. In 2015, the town spent
general fund money in the amount of $268,906.32 for the construction and
repair of existing water well(s), improvements to the pump house(s) and
for the repair and replacement of distribution facilities. It was later
determined that the wells serving the water system contained higher than
acceptable levels of carcinogenic chemicals such as perfluorooctanoic
acid and related compounds, known generally as PFOA, which requires
remediation. In the years that followed, the town spent additional
general fund money in the amount $79,638.07 for the design and approval
of systems to remediate the water quality in the affected wells together
with additional repairs and replacement of supply and distribution
facilities of the water district. The expenditure of such funds by the
town board prior to the district's establishment as described above was
in violation of the provisions of section 165.10 of the local finance
law. Further, the town failed to repay the moneys advanced from the
general fund to make improvements to the former water system by the
close of the fiscal year in which the advance was made with reasonable
interest in accordance with section 9-a of the general municipal law.
Lastly, bond resolutions were not adopted by the town board at the
times such funds were paid and, as a result, the town is prohibited from
financing such costs with bonds or notes. The specific actions taken by
the town in furtherance of establishment of the Birch Hill - Highview
Water District and the construction and financing of improvements there-
in are more fully described as follows:
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD15744-01-6
S. 10181 2
Upon the death of the owner of the Birch Hill Water Company, the water
system fell into disrepair. The estate of the owner of the Birch Hill
Water Company made attempts to obtain approval of rate increases from
the public service commission to help fund the ongoing maintenance and
repair of the water system, which attempts were unsuccessful. Ultimate-
ly, the estate conveyed title to the water system to the town for nomi-
nal consideration and the town assumed operation of the water system and
commenced proceedings to establish a water district. Before the
proceedings to establish the water district could be concluded, the
Putnam County department of health, in determining what improvements
needed to be made to the water district, identified an unregulated water
system located adjacent to the proposed water district which served
multiple residences with water sourced from a common well. The health
department directed the town to incorporate the residences served by the
common well into the water district being formed. Whereupon the town
recommenced proceedings to establish the water district. In or about
2014, the town's engineer prepared a new map, plan and report to incor-
porate the additional residential lots as benefitted properties within
the Birch Hill - Highview Water District, obtained easements to install
and repair water distribution lines and made necessary repairs and
installations to the existing water supply and distribution facilities.
On October 23, 2014, the town board held a public hearing with respect
to the formation of the Birch Hill - Highview Water District and adopted
an order establishing the Birch Hill-Highview Water District on November
6, 2014. The town filed said order with the county clerk; however, the
town board did not obtain the permission of the state comptroller for
the establishment of the district as required by section 209-f of the
town law.
Before the town could obtain permission from the state comptroller for
the establishment of the Birch Hill - Highview Water District, it became
apparent that the identification of emerging PFOA contamination of the
water wells serving the water system and the associated need to design
and construct an appropriate filtration system would necessitate amend-
ing or restating the map, plan and report forming the basis for the
establishment of the water district. Moreover, it would entail seeking
the additional ability to finance the extraordinary expenses associated
with the necessary PFOA remediation measures. In 2023, the town's
consulting engineer prepared a new map, plan and report for the Birch
Hill - Highview Water District. On July 27, 2023, the town board held a
public hearing with respect to the establishment of the Birch Hill -
Highview Water District. On August 10, 2023, the town board adopted a
public interest order subject to permissive referendum and such order
was posted and published as required. No petition for referendum having
been filed with the town clerk in a timely manner, the public interest
order was thereafter filed with the county clerk. By verified applica-
tion dated March 8, 2024, the town board sought permission of the state
comptroller for the establishment of the Birch Hill - Highview Water
District in the town. Due to the passage of time and other irregulari-
ties in the establishment of the water district, the state comptroller
has opined that the formation of the proposed district would require a
special act of the legislature.
The town has operated the Birch Hill - Highview Water District as a de
facto water district in violation of the provision of articles 12 and
12-A of the town law since 2015. In addition to using general fund money
to pay the cost of the initial improvements described herein, the town
has spent general fund money to replace water mains on account of breaks
S. 10181 3
and other system improvements, including the design of necessary
improvements to remediate well water contamination, all to provide for a
properly functioning water system to serve 24 residences. The town has
been assessing residents for Birch Hill - Highview Water District opera-
tion and maintenance costs in accordance with a budget adopted annually.
As of December 31, 2025, the total amount of the initial payment by the
town that remains outstanding is $348,544.39. The town has applied for
and been approved to receive grants and loans to help offset the
extraordinary expenses associated with the PFOA remediation, but such
cannot be obtained without first having the water district properly
established.
The failure of the town board to adopt a bond resolution prior to the
expenditure of such moneys for the water system improvements was contra-
ry to the provisions of section 165.10 of the local finance law.
§ 2. Water district established. Notwithstanding the defects described
in section one of this act, the establishment of the Birch Hill - High-
view Water District is hereby legalized, validated, ratified and
confirmed. Said water district established pursuant to this act shall
be funded, operated, expanded and otherwise controlled in accordance
with the provisions of articles 12 and 12-A of the town law and the
provisions of this act. To the extent that the provisions of this act
shall in any way be in conflict with articles 12 and 12-A of the town
law, the provisions of this act shall be controlling. The imposition of
any special assessments by the town upon the properties previously
served by the Birch Hill Water Company and the unincorporated users
included within the water district are hereby validated.
§ 3. Bonds authorized. The town is authorized to issue bonds or notes
in the principal amount of $348,544.39 on behalf of the Birch Hill -
Highview Water District for the purpose of reimbursing the general fund
of the town from which the moneys have been temporarily diverted since
2015 to pay certain of the costs incurred in the establishment and
improvement of the water district acquired by the town in accordance
with the mandate of the public service commission and the Putnam county
health department, notwithstanding the provisions of section 165.10 of
the local finance law which provides, in effect, that a bond resolution
shall have first been adopted before any such temporary diversion of
funds shall have been made and notwithstanding section 9-a of the gener-
al municipal law which requires money advanced to be repaid to the fund
from which they were advanced not later than the close of the fiscal
year in which the advance was made with reasonable interest. The period
of probable usefulness for such improvements is forty (40) years from
the date of initial improvements, which occurred in 2015. In antic-
ipation of such bonds, bond anticipation notes are hereby authorized.
§ 4. Obligations. Except as otherwise provided herein, any obligations
issued pursuant to this act shall be issued in accordance with the local
finance law.
§ 5. Severability. If any clause, sentence, subdivision, paragraph,
section, or part of this act will be adjudged by any court of competent
jurisdiction to be invalid, judgment shall not affect, impair, or inval-
idate the remainder thereof, but shall be confined in its operation to
the clause, sentence, subdivision, paragraph, section, or part thereof
directly involved in the controversy in which such judgment shall have
been rendered.
§ 6. This act shall take effect immediately.
