Opinion 99 - 4
INDUSTRIAL DEVELOPMENT AGENCIES -- Powers and Duties (authority to make a gift of
moneys to town); (expenditure of IDA moneys to improve municipal facilities); (authority to
utilize agents, employees and facilities of town)
This is in response to your inquiry regarding the authority of an industrial development agency ("IDA") to make a grant of its funds to the town for whose benefit the IDA was established. You indicate that such grants would be designated for specific undertakings such as conducting a feasibility study of expanding the town's municipal water service to help attract industrial or economic development, or hiring a town planner to assist in the development of a town master plan and the implementation of town planning.
IDA's are governed by the provisions of article 18-A of the General Municipal Law
(§§850-888) and are expressly declared to be corporate governmental agencies, constituting
public benefit corporations (General Municipal Law, §§852, 856).(1) It is a general rule that
public benefit corporations, such as industrial development agencies, have only those powers
which are conferred expressly by the State Legislature or by necessary implication therefrom
(see, e.g., Civil Service Forum v New York City Transit Authority, 4 AD2d 117, 163 NYS2d
476 affd 4 NY2d 866, 174 NYS2d 234). Accordingly, an IDA has "certain statutorily created
rights and powers", as set forth in article 18-A (Postler & Jaeckle v County of Monroe, 153
Misc 2d 392, 393, 582 NYS2d 328, 329), and those powers may be exercised only in furtherance
of its prescribed purposes (Grossman v Herkimer County Industrial Development Agency, 60
AD2d 172, 400 NYS2d 623; General Municipal Law, §858).
To carry out these purposes, an IDA is expressly granted certain enumerated powers in General Municipal Law, §858. Among other things, an IDA is expressly authorized to "acquire, hold and dispose of personal property for its corporate purposes" (General Municipal Law, §858), to "acquire, construct, reconstruct, lease, improve, maintain, equip or furnish one of more projects" (id., §858), to "accept gifts, grants, loans or contributions from, and enter into contracts and other transactions with ... any municipality ... or any other legal entity" (id., §858), and to "do all things necessary or convenient to carry out its purposes and exercise the powers expressly given in this title" (General Municipal Law, §858). Section 858 does not expressly authorize an IDA to make a grant of moneys to a municipality. Further, we do not believe the authority to make gifts of its moneys to municipalities is necessarily implied from any of the IDA's corporate purposes (see 1982 Opns St Comp No. 82-360, p 455).
In this regard, we note in particular that, while the authority to "dispose" of personal
property has been held, in certain instances, to include conveyances by gift (see, e.g., Application
of Kenisco Cemetery, 193 Misc 479, 83 NYS2d 73 revd on other grnds 275 App Div 681, 86
NYS2d 737; see also Masone v Unishops of Modell's Inc., 73 AD2d 611, 422 NYS2d 450), we
believe that, in the context of section 858, the word does not encompass gifts of moneys to
municipalities. In support of this, we note that IDAs are expressly authorized to "accept gifts,
grants, loans, or contributions from ... the United States and the state or any agency of either of
them, any municipality, any public or private corporation or any other legal entity, and to use any
such gifts, grants, loans or contributions for any of its corporate purposes" (General Municipal
Law, §858; emphasis added). The inclusion and the specificity of this language by the
Legislature implies that the authority of an IDA to accept gifts does not derive from the more
general authority to "... acquire ... personal property for its corporate purposes", which, like the
authority to "dispose" of personal property, is contained in General Municipal Law, §858(3). It
is our opinion that the Legislature would have provided analogous express language had it
intended IDAs to be authorized to make gifts to municipalities.
In addition, we note that an IDA's authority to "dispose" of personal property and engage
in "transactions" is general in nature and not limited to its dealings with municipalities (compare
General Municipal Law, §858, use of municipal employees). Therefore, if these grants of
authority were interpreted to authorize gifts of moneys to a municipality, they necessarily would
also encompass gifts of moneys to private entities, a conclusion which we believe is inconsistent
with the statutory scheme of article 18-A (cf. General Municipal Law, §854, defining
"financial assistance"; Postler & Jaeckle, supra, 153 Misc 2d at 393, 582 NYS2d at 329,
describing a "typical IDA financing"; see also 1991 Opns St Comp No. 91-32, p 91, construing
the word "convenient", as used in the phrase "necessary or convenient", in an analogous context).
May 27, 1999
1. For purposes of this opinion, we assume that the moneys in question are governed by article 18-A, and are not subject to other specific statutory or regulatory requirements such as those applicable to a federal program.
2. Article VIII, section 1 of the New York State Constitution prohibits a municipality from making gifts or loans of "any money or property to or in aid of any individual, or private corporation or association". This prohibition, however, does not apply to gifts from a municipality to another public corporation (see, e.g., Comereski v City of Elmira, 308 NY2d 248).
3. IDAs, of course, have no authority to enact local laws (see NY Const, art. IX, §3[d]; Municipal Home Rule Law, §2).
4. Subdivision 4 of section 854, in pertinent part, defines "project" as follows:
Note that the term "civic facility" is expressly defined generally to exclude "roads, buildings, water systems, sewer systems, or any public facility for use by a municipality in the performance of its governmental functions" (General Municipal Law, §854).