While I have written to Miscione several times (and I am sure Cully has been privy to all my emails) regarding the sale of bonded equipment and/or funds received from federal and/or state grants, it is very probable that they don't believe what I say (or maybe they just don't care what I say...whatever!).Perhaps, if I cite a page from a 2015 project of NY Conference of Mayors (NYSCOM), they will heed my advice.
Mandatory Reserve Fund Creation and Use.
Pursuant to General Municipal Law § 6-l, a mandatory reserve fund must be established by the board of trustees upon the cash sale by the village of a capital improvement (as defined in Section 6-c) which had been purchased through the issuance of obligations pursuant to the Local Finance Law, when all or part of the indebtedness is outstanding at the time of the sale.
Additionally, any State or federal aid received on account of the capital improvement, after the sale of such an improvement, must be deposited in the mandatory reserve fund to the extent it is not required to be applied to retire indebtedness issued in anticipation of such aid.
Referendum. There are no referendum requirements.What this means is that besides consulting with bond counsel, if a piece of equipment is sold and it still has outstanding principal debt, the money cannot be used for any other town purpose other than to retire said debt on that particular piece of equipment.
Source of Funds. Under the circumstances discussed above, proceeds from the sale of a capital improvement, or State and federal aid received on account of a capital improvement, are paid into the fund.
Use of Fund Balances. If the proceeds from the sale and such State or federal aid received exceed the aggregate amount of principal (not including interest) due on the outstanding obligations, the excess may be used for any lawful village purpose.
So...if perchance, let's just say a piece of equipment that still had outstanding debt was currently being sold, the town board would need to adopt a resolution at the next town board meeting to create a Mandatory Reserve Fund to hold the proceeds of the sale.
In the case of equipment purchased with state/federal grants, as soon as the money is received from the state/federal government, it must be held in another separate Mandatory Reserve account for each item purchased by monies received from the grant and only spent to pay down the outstanding debt on each particular equipment purchase that was bonded to meet the criteria of the grant.