Opinion 88-30

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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

WATER DISTRICTS -- Assessments (properties deemed benefited to be assessed for costs of the district) -- Connections (requiring property owners to connect to a district water system)

TOWN LAW, §§130(15), 194(1)(b), 198, 201, 202, 202-a, 209-e(1)(b): (1) A town, by ordinance, may require district property owners to connect to a district water system in the proper exercise of its police powers. (2) The costs of establishing and operating and maintaining a district are, to the extent not raised by user charges, a charge upon all the properties in the district.

This is in response to your inquiry concerning the authority of a town board to require that a property owner in a water district connect to the water district water system. You state that the town is in the process of establishing a water district under Article 12-A of the Town Law. The proposed district includes a multi-family housing unit which currently contracts for the purchase of its water from a village. The contract with the village provides that the owner of this property must purchase all its water from the village unless the owner develops a private, on-site water supply. You ask whether, under these circumstances, the town can require the property owner to connect to the water district system.

The town board's powers in relation to improvement districts are set forth in Article 12 of the Town Law (§§190, et seq.). Section 198 of the Town Law authorizes the town board to adopt ordinances, rules and regulations for the operation of town water and sewer districts (Town Law, §198[1][g], [3][c]) and section 201 of the Town Law authorizes the town board to "adopt a resolution or ordinance prescribing how sewer or ... water connections shall be made." In addition, section 130(15) of the Town Law generally authorizes towns to adopt ordinances promoting the health, safety and general welfare of the community, not inconsistent with existing law.

Based on the above provisions of law, this Office has expressed the opinion that a town may enact an ordinance requiring property owners to connect to sewer district facilities where public health, safety or welfare are at risk (25 Opns St Comp, 1969, p 292; see People v Butcher, 28 Misc 2d 24, 209 NYS2d 723; 7 McQuillin, Mun. Corps., §24.264). In this regard, the U.S. Supreme Court has stated as follows:

"It is the commonest exercise of the police power of a state or city to provide for a system of sewers, and to compel property owners to connect therewith. And this duty may be enforced by criminal penalties ... It may be that an arbitrary exercise of the power could be restrained, but it would have to be palpably so to justify a court in interfering with so salutary a power and one so necessary to the public health" (Hutchinson v City of Valdosta, 227 US 303, 33 S Ct 290, 57 L ed 520).

While we found no reported New York case which has similarly held that a property owner could be compelled to connect to a municipal water system, courts of other states have reached this conclusion (see, e.g., B.F. McMahon, et al. v City of Virginia Beach, Virginia, 221 Va. 102, 267 SE2d 130; Lepre v D'Iberville Water and Sewer Dist. [Miss]., 376 So2d 191), and it would appear that the above stated principles would be equally applicable to municipal water systems. Accordingly, it is our opinion that a town, by ordinance, may require district property owners to connect to a district water system in the exercise of its police powers. It must be noted, however, the exercise of a town's police powers must be reasonable and within the limits of necessity, when weighed against constitutional equal protection and due process guarantees (see, e.g., Belle Harbor v Kerr, 35 NY2d 507, 364 NYS2d 160; Atlantic-Inland, Inc. v Town of Union, 126 Misc 2d 509, 483 NYS2d 612; Svenninesen v Passidomo, 95 AD2d 833, 463 NYS2d 874, affd 62 NY2d 967, 479 NYS2d 335, 468 NE2d 290).

You have indicated that in the instant matter the property owner in question has contracted with a village for its water supply. Therefore, should the town adopt an ordinance requiring connections in this case, the issue of whether the exercise of the town's police powers unlawfully impairs obligations of contracts also arises (US Const, art I, §10). In this regard, we note that the courts have generally concluded that a proper exercise of police power does not, notwithstanding its effect on rights and privileges arising from contracts, violate the provisions of the Federal Constitution barring impairment of the obligations of a contract (see, e.g., Keystone Coal Association v DeBenedictis, 480 US ___, 108 S Ct ___, 94 L Ed 2d 472; Wa-Wa-Yanda Inc. v Dickerson, 18 AD2d 251, 239 NYS2d 473). Whether in this instance the town can justify the exercise of its police powers to compel the property owners to connect to its water system and to avoid the Constitutional prohibition against contract impairment is a factual matter which cannot be resolved by this Office.

Although it is uncertain whether the town board in this case would be able to require the property owner to connect to the water system, we note that, under Town Law, §§194 and 209-e, prior to the establishment of a district, the town board must determine, among other things, that all property and property owners within the proposed district are benefited thereby (Town Law, §§194[1][b], 209-e[1][b]). This Office has stated on several occasions, and the courts have held generally, that once a town board has properly determined that all property owners within a water district are benefited by the improvement, even though certain owners may not be serviced by the district water system, all real property within the district must be assessed for the cost of the improvement. This general principle applies even though the owners not serviced by the district utilize their own private water supply (see Larkin v Farrell, 52 AD2d 1069, 384 NYS2d 605; Wright v Town Board of the Town of Carlton, 41 AD2d 290, 342 NYS2d 577; Koston v Town of Newburgh, 59 Misc 2d 540, 299 NYS2d 1007; In Re Assessment of Water Tax in Water District No. 3 of the Town of Niskayuna, Schenectady County, 235 AD 566, 258 NYS 690; 1987 Opns St Comp No. 87-64, p 96; 1979 Opns St Comp No. 79-521, unreported; 1971 Opns St Comp No. 71-521, unreported; 10 Opns St Comp, 1954, p 46; 6 Opns St Comp, 1950, p 334).

Section 202 of the Town Law provides that the expense of the establishment of a district established on the ad valorem basis "shall be assessed, levied and collected from the several lots and parcels of land within the district" and the expense of the establishment of a district established on the benefit basis "shall be borne by local assessment upon the several lots and parcels of lands which the town board shall determine and specify to be especially benefited by the improvement." Under section 202-a of the Town Law the expense of maintenance "shall be a charge upon the district or upon the lots or parcels of land against which the expense of the improvement was charged" and "shall" be assessed "in like manner" (see also, Town Law, §245). We also note that Town Law, §198(3)(d) authorizes the imposition of water rents in water districts and provides that the revenue from theses rents must be first applied toward operation and maintenance, and then toward the payment of principal and interest on bonds issued for district purposes.

Although the language of sections 202 and 202-a appears to be mandatory, at least one court, without detailed analysis, has stated that properties within a sewer district which are not serviced by the district may not be assessed for operation and maintenance costs (Chiocchi v Town of Montgomery, 2nd Dept., 120 AD2d 479, 502 NYS2d 34). However, based on the literal language of the Town Law and the interpretation given these sections in other court cases, including at least one other Second Department decision (see Derella v Town Board of Town of Clarkstown, 2nd Dept., 37 AD2d 978, 327 NYS2d 433, in which the court, citing sections 202 and 202-a, stated that the cost of establishing a district, as well as the costs of its operation and maintenance, must be assessed on the properties in the district), it is our opinion that, notwithstanding the court's comment in Chiocchi, towns must assess all properties in a district, including those not served by the district, for the costs of establishment and operation and maintenance, to the extent that such costs are not raised by user charges. We note, however, that, in the case of a district which is financed on a benefit basis, any assessments levied under Town Law, §202-a could take into account whether the property is connected to the water district system (see 29 Opns St Comp, 1973, p 24).

June 14, 1988
Mahlon R. Perkins, Esq., Town Attorney
Town of Dryden