§ 708 — Assumption of debt

§ 708. Assumption of debt. 1. Except as may be provided in an\nagreement among any of the affected local governments as authorized by\nsubdivision two of this section concerning the apportionment of any\nindebtedness and any contract or other liabilities, and interest\nthereon, any such indebtedness or liabilities, or interest, in the event\nof such annexation, shall be a charge upon and shall be paid by a local\ngovernment to which the territory is annexed, as the same shall become\ndue and payable, to the other affected local government in the same\nproportion to the whole of any such indebtedness or any such liability\nas the full valuation of the taxable real property of the territory to\nbe annexed bears to the full valuation of the taxable real property of\nthe local government in which the territory was situated prior to the\nannexation. Any such proportions shall be computed as of the date of the\nannexation. In the case of an annexation of territory of a town by a\nvillage located in the same town, any such apportionment of town\nindebtedness and contract or other liabilities shall not include any\nindebtedness or contract or other liabilities of the town in relation to\nwhich the debt service or payments thereon would, in the first instance,\nbe required to be raised in some manner other than by taxes, special ad\nvalorem levies, or assessments, on real property located in whole or in\npart inside such territory to be annexed. Full valuation of taxable real\nproperty shall mean the valuation derived by dividing the assessed\nvaluation of the real property concerned, as shown by the last completed\nassessment roll of, or utilized by, the local government in which it is\nsituated prior to such annexation by the equalization rate established\nby the authorized state officer or agency for such roll.\n 2. At any time prior to the making of their final determinations as\nprovided by section seven hundred eleven of this article, the governing\nboards of the affected local governments, or their designated\nrepresentatives, shall have power to agree as to the proportions, if\nany, of the various types of indebtedness and contract or other\nliabilities, and interest thereon, if any, which the local government to\nwhich territory is proposed to be annexed will assume and agree to pay\nin the event of such annexation. Such proportions may be based on the\nfull valuations of taxable real property, or on the basis of services\nwhich will continue to be rendered or will cease to be rendered, or on\nthe basis of benefits to be received or conferred or will cease to be\nreceived or conferred, or on any other equitable basis, and may provide\nhow such costs shall be raised, levied and collected. Such agreement\nshall be followed in the local law to be adopted pursuant to section\nseven hundred fourteen of this article.\n 3. Notwithstanding the foregoing provisions of this section, a local\ngovernment to which territory is annexed shall not be required to pay\nany portion of any indebtedness or contract or other liabilities, and of\nany interest thereon, which it has agreed to assume or will be required\nto assume pursuant to the provisions of this section, if the\nindebtedness or such liabilities have been contracted or incurred in\nrelation to a revenue-producing public improvement or service which is\nnot located in such territory and such revenues, after providing for all\ncosts of operation, maintenance and repairs thereof, required in any\nfiscal year are not used, or credited as between such local governments,\nto pay the interest on and amortization of, or payment of such\nindebtedness or liabilities contracted for such public improvement or\nservice, but to the extent that any such revenues are so used or\ncredited, and are not sufficient to provide in full for any such debt\nservice, then the local government to which the territory is annexed\nshall pay its proportionate amount of such deficiency.\n 4. The provisions of any agreement made and executed pursuant to\nsubdivision two of this section shall not affect the contract liability\nof the area of any affected local government under any obligation or\ncontract entered into prior to the effective date of the annexation, but\nany such agreement may provide that as to any such contract liability,\nthe local government annexing such territory shall not be compelled to\npay any portion of the debt service thereon except in the event of\ndefault in the payment thereof, or interest thereon, by the local\ngovernment in which such territory was located prior to such annexation.\n 5. The terms "indebtedness" and "contract or other liabilities", as\nused in this section, shall not include any indebtedness (a) evidenced\nby tax anticipation notes, revenue anticipation notes or budget notes,\nor (b) evidenced by serial bonds or capital notes having a maximum\nmaturity of less than three years which were issued or are to be issued\nto finance an object or purpose other than a capital improvement, or\nother than the acquisition of equipment, for which a period of probable\nusefulness is provided in paragraph a of section 11.00 of the local\nfinance law.\n