N.Y. Village Law § 11-1128
Notwithstanding the provisions of any other law, general or special, a village may (1) sell or lease its water supply and distribution system, or any part thereof, to a water authority, a county water district or a joint water works system established pursuant to article five-B of the general municipal law or (2) sell, transfer or lease properties constituting its water supply and distribution system, or any part thereof, for a fair consideration, to any person or public corporation for any use other than the supply or distribution of water for potable purposes upon a determination by the board of trustees of the village that the properties to be sold, transferred or leased are no longer necessary for water supply or other village purposes. The proceeds of such sale, transfer or lease shall be deposited in a reserve fund established for the purpose of retiring outstanding obligations issued by the village to finance the cost of the facilities sold and shall be expended only for such purpose, except as provided below. If the proceeds exceed the sum of all installments of principal of and interest on such indebtedness due or to become due, or if, when all such outstanding obligations shall have been retired, any moneys remain unexpended in the reserve fund, such excess moneys may be used for any village purpose.
N.Y. Village Law § 11-1128