When Can A Municipal Board Approve a Contract “In Substance?” The Answer May Be Different in a Village Versus a Town
June 18, 2018
It turns out, according to the Supreme Court, Orange County, that the standards for review of municipal contracts are noticeably less stringent for New York Village Boards than for Town Boards. Village Boards may approve a contract in principal, allowing the Mayor some room for further negotiation and language changes. Town Boards must review and approve the actual, final contract; and the Supervisor may not refine or sign any other contract. That was the Court’s analysis in Guazzoni v. Village of Tuxedo Park, ____ N.Y.S.3d ____, 2018 N.Y. Slip Op. 28177, 2018 WL 2946114 (Sup. Ct., Orange Co. 6/12/2018).
The Trustees of the Village of Tuxedo Park passed a resolution that the Village enter into a consulting agreement with an outside Consultant. (The Court’s opinion does not disclose the nature of the consulting.) The Board’s resolution states that the contract was to be “substantially” in the form reviewed by the Trustees, “together with such changes as may be reviewed by counsel and approved by the Mayor” and one of the Trustees. The Mayor then signed a contract under which the consultant was paid approximately $5,371 per month and an additional sum of $800 per month for costs or reasons not discussed in the opinion.
Plaintiffs were not happy with the contract – again, for unspecified reasons. They brought an action claiming that the Mayor had not been authorized to enter into the contract as it was finally drafted and signed after review and modification by counsel (presumably the Village Attorney), the Mayor and the single Trustee specified by the Board.
The Court held that a Village Board did not have to approve the final contract. The Court recognized that statutory restrictions on a municipality’s power to contract serve the purpose of protecting the public from “corrupt or ill-considered actions of municipal officials.” However, it was sufficient that the Trustees had authorized the Mayor to sign a contract that was substantially like the terms the Trustees had reviewed.
The Court relied on NY Village Law §4-412(1)(a) which defines the general powers of Village Trustees as, broadly speaking, the “management of village property and finances.” The Village Law does not specify the manner in which village contracts must be made, and there is “no express statutory provision requiring village boards to approve contracts in their entirety before their execution by the mayor.”
In contrast, NY Town Law §64 defines the powers and duties of Town Boards and states that a Town Board “may award contracts” to “be executed by the supervisor in the name of the town after approval by the town board.” Therefore, says this opinion, a Town Board must approve the exact contract with all details before the Supervisor can sign it – but Village Boards may approve the substance of a deal with a municipal contractor; and the Mayor may sign any contract that does not change the substance approved by the Trustees.
It was not strictly necessary for the Court to construe Town Law §64 to decide the village case before it – although the analysis is certainly interesting. The lack of any detail of how the final contract negotiated by the Mayor and one of the Trustees differed from the substance approved by the Trustees is also intriguing. Without that information it is difficult to know why the plaintiffs were concerned enough to bring an action challenging the contract and, more importantly, how this recent case may affect future municipal contracts.
Since the Court ultimately did not dismiss the complaint because the record was insufficient, the case will continue; and there might be further lessons to learn. The lesson for now is that it is crucial to review the procedure by which contracts are adopted if your client is the municipality or a citizen challenging the municipality’s contracts.