Opinion 94 - 14
INDUSTRIAL DEVELOPMENT AGENCIES -- Powers and Duties (authority to finance projects located outside the municipality for whose benefit the agency was created); (development related to earlier projects as constituting modifications)
GENERAL MUNICIPAL LAW, §854(4): General Municipal Law, §854(4),
as amended by the Laws of 1993, chapter 356, prohibits industrial
development agencies (IDAs) from providing financial assistance
in respect of any project located wholly outside the municipality
for whose benefit the IDA was created. This prohibition does not
apply, however, to projects for which an agency has authorized
any assistance prior to October 19, 1993, the date on which
chapter 356 became effective, even if such projects are
thereafter modified. Whether continued development "related to"
an earlier project developed outside the municipality for whose
benefit the IDA was created constitutes a mere modification of
the earlier project and, therefore, is not prohibited by the
amended General Municipal Law, §854(4), is a question of fact.
Article 18-A of the GML (§§850 et seq.) contains provisions governing the establishment and operation of IDAs. Numerous amendments to article 18-A were made by chapters 356-7 of the Laws of 1993. Among other things, the definition of "project" was amended to mean:
Prior to this amendment, a project could also be located wholly outside the municipality for whose benefit the agency was created, subject to the consent of the other involved municipality and except to the extent the enabling act establishing the IDA restricted the IDA's activities to within the corporate limits of the municipality for whose benefit it was created (see 33 Opns St Comp, 1977, p 29; 1977 Opns St Comp No. 77-759, unreported; see, e.g., GML, §902-a). Since the projects in question are located wholly outside the city, the continued provision of financial assistance by the IDA for further development at the site of these projects would be prohibited under article 18-A if the 1993 amendment applies.
The amendment generally became effective October 19, 1993. It does not apply, however, to "projects for which an agency, through the issuance of its bonds, execution of leases, or the passage of an inducement resolution or bond resolution, has authorized any assistance prior to the date on which this act shall have become a law [October 19, 1993] whether or not such projects are thereafter modified ... " (L 1993, ch 356, §38). Thus, if the proposed financings are for the completion of one or more projects located outside the city, which projects are the subject of bonds, leases, or inducement or bond resolutions predating the amendment, then the amendment to article 18-A would not apply, even if the projects have been "modified". If, however, the projects located outside the city have been developed and completed, then further financial assistance for new projects, even if related to the original projects, in our opinion, would be prohibited by the amendments.
Whether the proposed financial assistance for the "continued development of projects related to" the earlier projects is for the completion of the earlier authorized projects, as modified, or is for new projects, is a question of fact. If the proposed transactions constitute mere modifications to the projects undertaken prior to the enactment of the amendments, then further IDA financial assistance may not be prohibited by GML, §854(4) as amended. On the other hand, if the projects located outside the city have been developed and completed, we question whether further development related thereto could be characterized as mere modifications of the original projects or rather, would be new projects (cf. Albert Elia Building v New York State Urban Development, 54 AD2d 337, 388 NYS2d 462). Nevertheless, this question of fact should be resolved, in the first instance, by the governing board of the IDA, on advice of counsel, as appropriate.
October 25, 1994