BILL NUMBER: S10181
SPONSOR: HARCKHAM
 
TITLE OF BILL:
An act establishing the Birch Hill - Highview Water District in the town
of Southeast, Putnam County
 
PURPOSE OR GENERAL IDEA OF BILL:
This legislation will ratify and confirm the formation of the Birch
Hill-Highview Water District, which has operated as a de facto special
improvement district of the town of Southeast since 2015.
 
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 states the legislative findings.
Section 2 establishes to the Birch Hill - Highview Water District.
Section 3 authorizes the town of Southeast to issue bonds or notes in
the principal amount of $348,544.39 on behalf of the water district.
Section 4 states that any obligations issues pursuant to this act must
be complaint with local finance law.
Section 5 states a severability clause. If a court decides that one
specific part of this law is invalid or unconstitutional, the rest of
the law still stands and continues to be effective. The court's ruling
only applies to the specific portion being challenged, not the entire
act.
Section 6 states the affective date.
 
JUSTIFICATION:
The town of Southeast in Putnam County 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 operated by the Birch Hill Water Company and
part of which had been a shared water system serving multiple individual
homeowners. 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 therein are more fully
described as follows:
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. Whereup-
on the town recommenced proceedings to establish the water district. In
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 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. Additionally, 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..
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 application dated March 8, 2024, the town board sought permis-
sion 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 irregularities 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
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.
 
PRIOR LEGISLATIVE HISTORY:
New Bill
 
FISCAL IMPLICATIONS:
None
 
EFFECTIVE DATE:
This act shall take effect immediately