Opinion 92-57

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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

SEWER RENTS -- Interest and Penalties (by State to village)
STATE COMPTROLLER -- Approval By (for contracts for water and sewer services from village)
VILLAGES -- Powers and Duties (need for contract to provide water and sewer services to State)
WATER RENTS -- Interest and Penalties (by State to village)

STATE FINANCE LAW, §§112, 179-p; VILLAGE LAW, §11-1120: In the absence of an agreement approved by the State Comptroller and providing for the payment of interest by the State in the event of late payment, there is no authority for the State to pay to a village interest on late charges for water and sewer rents.

You inquire whether the State is responsible for the payment of late charges imposed by the Village of Attica (Village) on water and sewer rent bills sent to two state correctional facilities which were not timely paid.

In your inquiry, you indicate that, beginning in 1930, the Village and the Department of Correctional Services (DOCS) had entered into a series of contracts for the supply of water, the last of which expired as of 1987. The contracts for water contained no provision imposing a late charge and according to DOCS, the village, historically, never sought to exact any additional charge for late payments. We note that the correctional facilities had their own sewer system until recently.

Water and sewer service is presently furnished to the prisons pursuant to provisions the Village Code which were amended in 1990 to impose a late charge of 10% on any bill not paid by the due date as specified on the bill. DOCS has informed you that the Comptroller's rules and regulations prohibit interest payments to municipalities and apparently inferred that our position was based upon section 179-p of the State Finance Law ("the Prompt Payment Law").

Although we do not believe that the Prompt Payment Law has any application in this instance, it is nonetheless our opinion that the State is not liable for the late charges sought to be imposed by the Village.  The Prompt Payment Law does not apply to water or sewer rents due to a municipality from the State,1 and does not prohibit the imposition of interest or penalties pursuant to other provisions of law or by contract. Accordingly, our conclusion is not based upon the Prompt Payment Law. Rather, our conclusion is premised on the fact that the State cannot be liable to the Village for water and sewer services in the absence of a contract approved by the Comptroller pursuant to section 112 of the State Finance Law.

Several statutory provisions are relevant to this issue. Chapter 578 of the Laws of 1930, which amended then section 232 of the Village Law, provides in pertinent part as follows:

Section 1. *** The board of water commissioners of any village may contract with the state of New York or with the state authority having control and supervision of any state institute to furnish water to such state or state institution either within or without the corporate limits of said village upon such conditions and conferring such power in the state or such state authority and for such compensation as said board of water commissioners and the state of New York or such state authority may agree


§2 The state commissioner of correction is hereby authorized to contract with the board of water commissioners of any village for a supply of water for the new state prison at Attica, New York, and the provisions of section two hundred and thirty-two of the village law [now Village Law, §11-1120] as amended by this act shall apply thereto.

Both the plain language of these provisions and the legislative history thereof (as embodied in a letter from the Commissioner of the Department of Correction to the Counsel to the Governor in which the Commissioner refers to an opinion of the Attorney General stating that this type of legislation would be a prerequisite) indicate that, at least in the opinion of the State Attorney General, water supply to "the new State Prison at Attica" could only be effectuated by means of a contract between the Corrections Department and the Village.

Consistent with the above statutory requirements, the State and the Village entered into a series of contracts effective from 1930 through 1987. We are uncertain why a contract was not executed subsequent to 1987 but, in any event, the Village continued to supply water to the State prisons and the State paid the principal amount of the water charges.

No implied contract with the State can exist absent the approval of the Comptroller (see, Parsa v State, 64 NYS2d 143, 148, 485 NYS2d 27, 29; Campbell v State, 158 AD2d 937, 551 NYS2d 100 leave to appeal denied 75 NYS2d 710, 557 NYS2d 309). Clearly, there has been no approval by the Comptroller of any contract, express or implied, since 1987 except possibly insofar as the State Comptroller has approved payments to the Village for water and sewer service actually provided. Therefore, in the absence of an agreement approved by the Comptroller and providing for the payment of interest by the State in the event of late payment, we do not believe there is any authority for the State to pay interest or late charges to the Village. Consequently, it is our opinion that, as a matter of law, the State cannot pay the late charges which the Village has attempted to impose in this instance.

DOCS and the Village of Attica, consistent with the requirements of chapter 578 of the Laws of 1930 and Village Law, §11-1120, should enter into a formal written contract for water and sewer service. That contract, of course, would be subject to the approval of the Comptroller pursuant to section 112 of the State Finance Law.

October 28, 1992
Timothy F. Moran, Esq., Village Attorney
Village of Attica

1Section 179-p(3) of the State Finance Law, expressly makes the provisions of Article XI-A inapplicable to payments due and owing by the State to, inter alia, "any duly constituted unit of local government, including but not limited to counties, cities, towns, villages, school districts, special districts or any of their related instrumentalities...."

There have been several proposed amendments which would extend the Prompt Payment Law to municipal contract and aid to localities payments (See S8015/A10513 introduced in 1988, and S1678/A2586 introduced in 1989).

None of these has become law, however.