Opinion 2000 - 10


This opinion represents the views of the Office of the State Comptroller at the time it was rendered. The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.


MUNICIPAL FUNDS -- Mandatory Reserve Fund (need to establish when property sold was funded in part with Urban Development Corporation loan)

REAL PROPERTY -- Sale (use of proceeds by county when property sold was funded with county debt and Urban Development Corporation loan)

GENERAL MUNICIPAL LAW 6-l: When a county civic center is financed both by the issuance of county obligations, and a loan from the Urban Development Corporation ("UDC") pursuant to an act of the State legislature which requires the county to enter into a repayment agreement with the UDC providing that, in the event of the sale of the civic center, the unpaid portion of the loan will be repaid from the proceeds of the sale, the repayment requirements of such act take precedence over the mandatory reserve fund requirements of section 6-l of the General Municipal Law.

This is in reply to your request for our opinion regarding the financial implications of a sale by a county of its ownership interest in a civic center. Your letter indicates that the civic center was financed from several sources, including the proceeds of bonds issued by the county and a loan from the Urban Development Corporation ("UDC"). In addition, Federal and State moneys were used for the construction of a pedestrian walkway. In the event the proceeds from the sale of the civic center are insufficient to fully repay both the outstanding indebtedness and loan obligations, you ask how the proceeds from the sale must be applied in light of the requirements of General Municipal Law 6-l.1

Your inquiry requires consideration of three State statutes: Chapter 41 of the Laws of 1985, which authorized, inter alia, the State's involvement in financing the civic center and certain ancillary facilities; section 6-l of the General Municipal Law, relating to mandatory reserve funds; and article 13 of the Transportation Law (300 et seq.) with respect to the pedestrian walkway.

Chapter 41 of the Laws of 1985 authorized the county to develop the civic center and ancillary facilities. Section 11 of chapter 41 appropriated $6.5 million from the State to the UDC to be made available to the county for development of the civic center and ancillary facilities. Section 16 of chapter 41 authorized the State, the city in which the county is located, the county and the UDC to enter into those agreements necessary for the development of parking facilities for the civic center. Section 18 of chapter 41 states in pertinent part:

Notwithstanding the provisions of any general, special or local law or charter, no part of the appropriation made in section eleven of this act shall be made available for use for the purposes designated by this act for such appropriation until a certificate of approval of availability has been issued by the director of the budget

Section 19 of chapter 41 provides as follows:

The director of the budget shall not issue any certificate of approval of availability until: (a) the county . . . has entered into a written agreement with the director of the budget providing for repayment by such county to the state of New York of an amount equal to the total amount expended by the state from the appropriation made herein ... . The repayment agreement shall provide: . . . (b) in the event of the sale or other disposition of the project, for the payment to the state from the proceeds of such sale or disposition of an amount equal to the total amount expended by the state from the appropriation and not theretofore repaid; and (c) such other terms and conditions including the repayment of interest, sharing of any revenues or profits from the project and related parking facilities and securing the obligations contained therein (emphasis added).

Section 6-l of the General Municipal Law generally provides that, "[n]otwithstanding any other provision of this chapter [the General Municipal Law]", a municipal corporation, such as a county, must establish a mandatory reserve fund upon the cash sale of a capital improvement for the purpose of retiring any outstanding indebtedness issued to finance the cost of the capital improvement. With certain exceptions, this provision of law requires deposit of the entire proceeds of the sale to the credit of a mandatory reserve fund in an amount sufficient to pay the principal due or to become due on the outstanding obligations issued to finance the capital improvement.

Finally, in accordance with article 13 of the Transportation Law, the New York State Department of Transportation ("DOT") and the county entered into an agreement to construct pedestrian walkway ("walkway agreement"). Section of the walkway agreement provides, in pertinent, part:

If any Project [the pedestrian walkway] parts or facilities are so sold, other than for their replacement in such service with like facilities or equipment, the State share of the proceeds from such sale will be returned to the State Comptroller for deposit in the general fund.2

We believe that when chapter 41 is read together with General Municipal Law 6-l, it evinces the intent of the Legislature to ensure that, in the event of a sale of the civic center and its ancillary facilities, the State is to be repaid first from the proceeds. As noted above, section 18 of chapter 41 notwithstands "the provisions of any general, special or local law . . . " and precludes the use of the appropriation made in chapter 11 of the act until a certificate of approval of availability had been issued by the State Director of the Budget. Section 19 of chapter 41, in turn, prohibited the Director of the Budget from issuing the certificate of approval of availability until the county and the Director of the Budget entered into a written repayment agreement, which was required to provide, "in the event of the sale or other disposition of the . . . project, for the payment to the state from the proceeds of such sale or disposition of an amount equal to the total amount expended by the state from an appropriation and not theretofore repaid . . ." In addition, section 19 recognized the State's role in the project by requiring the repayment agreement to include provisions regarding the sharing of revenues and profits and securing obligations contained therein.

Thus, under chapter 41, notwithstanding the provisions of any general, special or local law, the moneys authorized to be spent for this project could not be paid without a certificate of availability, and the certificate could not be issued by the Director of the Budget until the repayment agreement between the State and the county had been executed ensuring repayments of both money and other assets provided by the State. We believe the provisions of chapter 41 requiring repayment of moneys or other consideration provided by the State for the civic center and the ancillary facilities indicate an intent that they take precedence over a general requirement such as General Municipal Law 6-l.

In further support of our conclusion, we note that General Municipal Law 6-1 applies "[n]otwithstanding any other provision of this chapter" (emphasis added), that is, notwithstanding only the provisions of the General Municipal Law. There is nothing in General Municipal Law 6-1, however, which suggests that it is to take precedence over a special act such as chapter 41. We note also that chapter 41 was enacted subsequent to General Municipal Law 6-l, and although General Municipal Law 6-l has been amended since the effective date of chapter 41, none of the amendments are relevant to the analysis herein. Thus, the well-established general rules of statutory construction that "[a] special act which is in conflict with a general statute covering the same subject matter controls the act" (see McKinney's Statutes, 397; People v Doe, 117 Misc 2d 35, 457 NYS2d 399 and the cases cited therein) and that the explicit language of a later statute controls the general words of an earlier enactment (People v Doe, 117 Misc 2d at 36, 457 NYS2d at 400, citing Bush v Salerno, 51 NY2d 95, 432 NYS2d; McKinney's Statutes 397), also support the conclusion that chapter 41 takes precedence.

It is important to note that, in our opinion, chapter 41 takes precedence over section 6-l only insofar as the two statutes are in conflict (id.). After the State has been repaid pursuant to the repayment agreement, the county is required to establish a mandatory reserve fund and place any other available proceeds from the sale of the civic center and the ancillary facilities in the fund to the extent required by section 6-l.

Finally, as to the interplay between General Municipal Law 6-l and article 13 of the Transportation Law and the walkway agreement, as noted, according to the information provided, the pedestrian walkway was constructed using only Federal and State funds. Under these circumstances, since we understand that no county debt was issued for the pedestrian walkway, General Municipal Law 6-l would not be applicable to the proceeds of any sale of the walkway.

August 7, 2000
Michael C. Lynch, Esq., County Attorney
County of Albany

1 We note that the opinion expressed herein relates solely to the application of the proceeds under State statutes and agreements. Any questions that may arise regarding the application of the Internal Revenue Code or regulations promulgated thereunder to the proceeds of the sale of the civic center are outside the scope of this opinion. In addition, the county should contact the Federal Transit Administration (the successor to the Urban Mass Transportation Administration) as to whether Federal approval is required for any sale of the pedestrian walkway and whether it is the position of the federal government that the county is required to repay the Federal funds used to construct the pedestrian walkway in the event of its sale.

2 We note that the repayment agreement between the Director of the Budget of the State of New York and the county for the civic center requires the approval of the Director of the Budget and the Chairman of the UDC (now doing business as the Empire State Development Corporation) prior to any sale of the civic center and its ancillary facilities. Pursuant to subdivision 3 of section 112 of the State Finance Law, the Comptroller would have to approve the agreement underlying any sale. Further, the walkway agreement between the county and the New York State Department of Transportation requires the express prior written approval of the Commissioner of Transportation and the Comptroller in the event the pedestrian walkway is to be sold.