Recent Legislation Requiring Fire Company Financial Disclosure Prior to Contract Negotiations


Attorney Kevin Mahoney
HoganWillig Attorneys at Law

Is your fire company incorporated? If so, does your fire company have a contract with a town, village, or fire district? Many volunteer fire companies in New York do, so at least at some point, each will be impacted by legislation that became effective January 1, 2018.

Specifically, Sections 176 and 184 of the Town Law and Section 4-412 of the Village Law were all amended in the same fashion to require an incorporated fire company to provide certain records "prior to commencing the negotiation process" for a new contract either (1.) with a fire district, if the company is outside the district but providing service within the district, (2.) a town for service within a fire protection district, or (3.) a village, if the company is outside the village but providing service within the district. 

Specifically, the fire company must file a "statement itemizing the estimated costs of the incorporated fire company attributable to the provision of services under the prospective contract." "The estimated costs attributable to the provision of services under the prospective contract itemized in the statement shall include, at a minimum, those, if any, for: supplies; materials; operation, maintenance and repair of equipment and apparatus; insurance; training; protective clothing, gear and other personnel costs; building rental, maintenance and operation; and a specified proportionate share of capital costs."

Included with that statement, the company must provide other documents if the company is otherwise required to prepare them (which most are):
  1. The fire company’s most recent annual report of directors pursuant to section five hundred nineteen of the Not-For-Profit Corporation Law;
  2. The fire company’s most recent verified certificate pursuant to subdivision (f) of section fourteen hundred two of the Not-For-Profit Corporation Law;
  3. The fire company’s most recent Internal Revenue Service form 990; and
  4. The fire company’s most recent annual report pursuant to section thirty-a of the General Municipal Law.
The required statement is, in many respects, an annual estimated budget and preparing it forces the company to give consideration to its actual and anticipated expenses. As the statute indicates, at a minimum, a fire company should have categories for supplies, materials, operation, maintenance and repair of equipment and apparatus, insurance, training, protective clothing, gear, and other personnel costs, building rental, maintenance, and operation, and a portion of capital costs (portion of a large expense, such as building construction or equipment acquisition).
 
The four additional attachments referenced in the statutes very likely apply to your company. Your company may have this information, although it may be labeled or referred to differently. As a result, the following is a brief explanation as to what is being referenced in the statute as a required submission:
  1. Most recent annual report of directors pursuant to NFPCL 519. The annual report is essentially a summary of the property and debts of the fire company, as well as its revenue and disbursements of funds. Many companies report at their monthly meeting as to revenue and expenses and often also report regarding at least the value of bank accounts. This annual report simply provides a comparison from the beginning of the year and the end of the year. It also is supposed to include the number of members of the company as of the date of the report, as well as an indication as to the change in the number of members during that time period. It also should include a location of where a list of the names and addresses of the current members of your company can be found. That may not be part of your normal process but, technically, is part of the annual report referenced in NFPCL 519. If your company does not already do so, a copy of that report should be made part of the company meeting minutes.
  2. Certificate pursuant to Section 1402. Section 1402 is a specific part of the Not-For-Profit Corporation Law that pertains to fire companies. Each year, your company is supposed to file in the county clerk’s office a report indicating the names of the directors and officers of the company, an inventory of company property, a statement of company debts, and a statement indicating that "the corporation had not engaged, directly or indirectly, in any business other than that set forth in its Certificate of Incorporation." This statement is supposed to be filed by January 15 of each year.
  3. Most recent IRS form 990. The IRS 990 form is an annual tax return that is used for tax exempt organizations.
  4. Most recent annual report pursuant to General Municipal Law 30-a. This section of the law requires any company receiving and disbursing foreign fire insurance premium tax funds (2 percent funds) to prepare and file a report. This report is made by the company treasurer and submitted to the New York state comptroller no later than the last day of February of each year for the preceding year. That report lists amounts received, expenditures, and balances regarding those funds.
 In these statutory changes, the word "shall" is used relative to the financial statement, as well as the attachments.  As a result, those are requirements and not optional.

Some fire protection contracts are set to automatically renew and the amendments specifically do not require this disclosure in the event of those renewals with towns and fire districts.
 
It is also worth noting that the town board, village board, and fire district commissioners have the option, by resolution, to waive the required production of all or some of the documents referenced above if there is "good cause shown" in order to enter into the resolution. 
 
Although it may be worth approaching the contracting municipality to make an exception, your company is probably better served to focus energy on marshaling the required information. Certainly, your company’s accountant and/or attorney are resources upon which to draw so these requirements are met well in advance of the expiration of the contract.

DISCLAIMER: The material above is designed to provide general information. It is not intended to provide legal advice and does not create an attorney client relationship.

About the Author:
Kevin Mahoney has been an attorney with HoganWillig in Amherst, N.Y. for over 22 years. He is an interior firefighter/EMT with the Bergholz Fire Company, where he currently serves as captain. Mahoney serves as general counsel to several volunteer fire and ambulance companies, as well as the Wyoming Erie Regional EMS Council. He can be reached here or by phone at (716) 636-7600.

New York State Association of Fire Chiefs