Town Law Be Damned!

O.K. so let's start getting to the heart of the problems with the bonding or more importantly the lack of concern elected town officials seem to have regarding following Town Law.

Bond Proposition #6 is for a Gradall, a front end loader, a small dump truck and a small plow truck in the amount of $415,800. According to information on the town website, the Gradall is currently being leased from Vantage Equipment for $5,000 a month with the lease payments being applied to the purchase price.

Where do I begin? We sent the Town Clerk a Freedom of Information Request (FOIL) to obtain a copy of the lease purchase agreement mentioned on the Town website for the Gradall. The first lease agreement we were given clearly was not a purchase agreement because there was no mention of any money to be spent.

So we contacted the Town Clerk and suggested that she go back to the Highway Superintendent to get the "real" contract. A day later, we received a completely different lease contract. This time the agreement details the equipment, which by the way is a 2006 model and we suspect is used equipment or a demo as was stated in the first agreement, and the agreement also states that 100% of the rent of $5,000 for the first three (3) months is to be applied to the purchase price. The story was slightly different at the February 7, 2007 town board meeting though. Highway Superintendent didn't seem to know what percentage of the lease payment would be applied to the purchase price, but seemed to think it might be 10%. By the way, so far we have had this Gradall sitting in our Highway Garage for 6 months.

First of all, there is no record of the town board approving a resolution allowing the Highway Superintendent to enter into a lease purchase agreement with Vantage Equipment. After being asked several times if a resolution was passed by the Town Board allowing for the lease purchase agreement to be entered into, Highway Superintendent Roger Cleveland finally quietly answered "No". According to Town Law:

ARTICLE 5-A PUBLIC CONTRACTS

* S 109-b. Installment contracts.
1. As used in this section:
(a) "Political subdivision" shall mean a municipal corporation, school district, district corporation or board of cooperative educational services.

(b) "Installment purchase contract" shall mean any lease purchase agreement, installment sales agreement or other similar agreement providing for periodic payments between a corporation, person or other entity and a political subdivision which has as its purpose the financing of equipment, machinery or apparatus.

2. (b) Subject to the provisions of subdivision five of this section, the governing board of a political subdivision shall adopt a resolution authorizing the installment purchase contract.

Secondly, the Highway Superintendent signed a lease purchase agreement with Vantage Equipment from Syracuse on September 21, 2006. The 2006 Equipment Lease budget line only had $1,500--no where near enough to pay for the lease of the Gradall. However, to date, according to Councilman Payne at tonight's town board meeting, $15,000 has been paid to Vantage for the lease of the Gradall. We checked minutes of 2006 town board meetings and no resolution was passed by the town board authorizing the $15,000 expenditure or authorizing the transfer of funds from another account to cover this expenditure. By law, monies cannot be spent outside the adopted budget without the passing of a resolution by the town board. The 2007 Equipment Lease budget line has $0. No resolution thus far in 2007 has been approved to transfer funds from another budget line to pay for the lease of the equipment. According to Town Law:

ARTICLE 8 FINANCES
S 117. Certain contracts and expenditures prohibited. Except as authorized by law, no officer, board, department or commission shall during any fiscal year expend or contract to be expended any money or incur any liability or enter into any contract which by its terms involves the expenditure of money for any purpose, unless provision therefor shall have been made in the annual budget, and in no case in excess of the amount appropriated for such year...
...Nothing in this section shall be construed to prevent the allowance of any claim by the town board for any lawful town purpose in excess of the amount appropriated for such year for such purposes, where the said town board has by resolution transferred sufficient funds to said budgetary fund...

Next, there was no requests for bids for the purchase of the Gradall until it was advertised in the legal section of the Observer Dispatch sometime in February 2007, months after the lease purchase agreement was signed by Highway Superintendent Roger Cleveland. Again, after being asked several times if the bidding process took place prior to the signing of the lease purchase agreement, Highway Superintendent answered "No". And hard as it may be to believe, Vantage Equipment, the same company the town has been leasing the Gradall from for 6 months, was awarded the winning bid. According to Town Law:

ARTICLE 5-A PUBLIC CONTRACTS

3. (a) Installment purchase contracts for equipment, machinery or apparatus shall constitute purchase contracts for public bidding purposes and shall be subject to public bidding requirements to the extent applicable by law.

Third, if an expenditure is subject to permissive referendum, than so is the signing of a lease purchase agreement. According to Town Law:

ARTICLE 5-A PUBLIC CONTRACTS
5. (a) If an authorization for the issuance of obligations to finance
the equipment, machinery or apparatus would have been required by law to be subject to a permissive or mandatory referendum, then the authorization to enter into an installment purchase contract shall be subject to a permissive or mandatory referendum, as the case may be, in the same manner as provided for such referendum on the issuance of obligations.

ARTICLE 5-A PUBLIC CONTRACTS
5. (b) If the authorization for the issuance of obligations to finance the equipment, machinery or apparatus would have been required by law to be subject to: (i) a certain super majority vote of the governing board, (ii) a mandatory or permissive referendum, or (iii) both, then the authorization to enter into an installment purchase contract for equipment, machinery or apparatus shall be subject to such vote, referendum or such referendum and vote, as the case may be, in the same manner as provided for such vote and/or referendum on the issuance of obligations.

I believe we all agree that this purchase of part of the bond vote on March 29, 2007 because the purchase was subject to permissive referendum and signatures were collected to force the vote. The passing of the bond resolution also required a super majority meaning that 4 of the 5 town board members had to vote in favor of the bonding.

Lastly, according to town law, the monies that have already been expended cannot be repaid to the town as a result of any bonding for the equipment.

ARTICLE 5-A PUBLIC CONTRACTS
(g) No payment under the installment purchase contract except payment for the total amount outstanding shall be financed from the proceeds of obligations issued pursuant to the local finance law other than the proceeds of revenue anticipation notes, tax anticipation notes or budget notes.

So it looks to me like Vantage Equipment can reduce the purchase price by $15,000 as stated in the lease contract, but the amount bonded for the purchase of the Gradall must also be lowered by $15,000 and the town board will have to find some money in another budget line to cover that cost as well as any lease monies to be paid for the first 3 months of 2007. Just where will the town board and the Highway Superintendent get the money to move into the Highway Department Lease Budget Line to cover the monies that have already been expended? Guess we will have to wait to see what year-end transfers take place in December of 2007 unless a resolution is passed prior to year-end to transfer monies. And if I am reading the law correctly, even if they try to use a BAN or Bond Anticipation Note to pay for the Gradall, they still cannot BAN for more than the outstanding balance. In other words, it would appear that they cannot BAN for the monies already expended--only for the remaining balance. And believe me, we are and will be watching!

By the way, at tonight's town board meeting, the Highway Superintendent was asked if this was an emergency purchase--thinking that it might explain his actions. He stated that it wasn't an emergency purchase. It seems that the Gradall the town did own was "sold" last Fall and the Highway Superintendent now "needs" a Gradall. We heard through the grapevine that the Gradall the town owned was indeed sold so we put in a Freedom of Information (FOIL) request to find out who purchased the Gradall, for how much, etc. The Town Clerk replied that she is waiting on the Highway Superintendent to supply the information to her so she can forward it on to us. Here is the caveat. There is no town board resolution to request bids for the sale of the used Gradall, and there is no town board resolution accepting the bid offer. So what happened to the Gradall we used to own and why was it sold prior to the passing of Bond Resolution #6?

(to be continued)