NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A7089
SPONSOR: Magnarelli TITLE OF BILL:
An act to amend the town law and the village law, in relation to fire
protection contracts with incorporated fire companies
PURPOSE:
The purpose of the bill is to increase transparency relating to the
contract negotiation process for fire protection contracts between
incorporated fire companies and fire districts, towns or villages.
SUMMARY OF PROVISIONS:
Section 1 of this bill amends Subdivision 22 of Section 176 of the Town
Law to provide that, prior to commencing the negotiation process for a
fire protection contract between a fire district and an incorporated
fire company, the incorporated fire company must file with the fire
district board of fire commissioners a statement itemizing the estimated
costs of the fire company attributable to the provision of services
under the prospective contract. If the fire company is required to
prepare an annual report of directors pursuant to 519 of the Not-For-
Profit Corporation Law (NFPCL), a verified certificate pursuant to
Subdivision f of Section 1402 of the NFPCL, Internal Revenue Service
Form 990, or annual report on foreign fire insurance premium tax funds
pursuant to Section 30-a of the General Municipal Law, copies of the
most recent documents must be included with the statement. The statement
and copies are not required when the contract is deemed renewed in
accordance with Subdivision 22 of Section 176 of the Town Law. For good
cause shown, the board of fire commissioners may waive by resolution, in
whole or in part, the filing requirement.
Sections 2 and 3 of this bill make analogous amendments, respectively,
to Section 184 of the Town Law, relating to fire protection contracts
between incorporated fire companies and towns on behalf of fire
protection districts and Paragraph, 9 of Subdivision 3 of Section 4-412
of the Village Law relating to fire protection contracts between incor-
porated fire companies and villages.
Section 4 provides for an effective date of January first next succeed-
ing the date on which it shall have become a law and provides that it
shall apply to contracts with a term commencing after March first of the
year in which it shall have become a law.
JUSTIFICATION:
Fire districts, villages, and towns on behalf of fire protection
districts are authorized to enter into fire protection contracts with,
among other entities, certain incorporated fire companies. The Town Law
and the Village Law require that the fire protection contract specify a
"definite sum" to be paid each year for all fire protection services to
be rendered under the contract. The "definite sum" consideration under
the contract is established through a negotiation process between the
parties to the contract. In most cases, it is believed that there is a
free exchange of information during the negotiation process as to the
cost of providing fire protection. However, over the years, the Office
of the State Comptroller (OSC) has received a number of inquiries from
local governments which have had difficulty in eliciting cost informa-
tion from the fire company. In those situations, OSC has made several
recommendations, such as including provisions in the contract to allow
the local government access to fire company records pertaining to the
cost of fire protection, making access to such information a condition
of approving fire company fund raising activities pursuant to Section
204-a of the General Municipal Law, and obtaining copies of various
financial filings of the fire company.
Rather than remediating the problem on a case by case basis, this bill
would provide for a standard statutory process to ensure that the neces-
sary cost information is provided at the outset of the negotiations. The
submission of an itemized statement of estimated costs will help promote
a more transparent negotiation process that can better result in the
parties to the contract reaching a fair and equitable price for fire
protection services. This is especially appropriate since both the local
government and the fire company are discharging a function for the bene-
fit of the public in providing for fire protection. A waiver provision
is included for situations when, for good cause shown, a board of fire
commissioners, town board, or village board of trustees determines to
waive the filing requirement, in whole or in part. Such waiver may be
accomplished by resolution of the governing board.
The State Comptroller urges passage of this legislation.
LEGISLATIVE HISTORY:
This is a new bill.
FISCAL IMPLICATIONS:
None to the State. There may be minimal fiscal implications to incorpo-
rated fire companies, which should have the required information readily
available.
EFFECTIVE DATE:
The bill would take effect on January first next succeeding the date on
which it shall have become a law and shall apply to contracts with a
term commencing after March first of the year in which it shall have
become a law.
