Opinion 2002 - 16


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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

CONSTITUTIONAL LAW -- Gifts and Loans (payments to not-for-profit corporation to publicize resources available in downtown area)
MUNICIPAL CORPORATIONS -- Powers and Duties (publicizing resources available in downtown area)
MUNICIPAL FUNDS -- Appropriations and Expenditures (expenditures to publicize resources available in downtown area); Publicity Funds (expenditures to publicize resources available in downtown area)
TOWNS -- Powers and Duties (expenditures to publicize resources available in downtown area)
VILLAGES -- Powers and Duties (expenditures to publicize resources available in downtown area)

STATE CONSTITUTION, ARTICLE VIII, 1; TOWN LAW 64(6), (14), (23); VILLAGE LAW 1-102(5), 4-412: Subject to equal protection considerations, a town or a village may expend publicity fund monies under a contract with a not-for-profit corporation, to advertise and publicize resources available in the downtown area of the town or village, including a day labor hiring site, and to monitor and document the use of such resources.

You ask whether a coterminous village/town may enter into a contract for the payment of monies to a not-for-profit corporation for the performance of certain services in relation to the use of a day labor hiring site by contractors and day laborers who would otherwise congregate outside and cause congestion in the downtown area of the village/town. The hiring site was established by the not-for-profit corporation and is located in a building within the village/town leased by the corporation. The services to be performed by the not-for-profit corporation would include: advertising and publicizing the hiring site; encouraging use of the site; and monitoring and documenting use of the site. 1

Initially, we note that article VIII, section 1 of the State Constitution generally prohibits towns and villages from giving or loaning money or property to or in aid of any individual, private corporation or association, or private undertaking. There is no exception to this prohibition for not-for-profit organizations (see e.g. 1986 Opns St Comp No. 86-44, p 72), even if the activities of the not-for-profit corporation serve a laudable purpose (see, e.g. 1986 Opns St Comp No. 86-70, p 109). Article VIII, 1, however, does not prohibit the payment of monies by a town or village to a not-for-profit corporation pursuant to either a statutory obligation or contractual arrangement under which the town or village receives fair and adequate consideration, even though there may be an incidental benefit accruing to the not-for-profit corporation (see, e.g., Schulz v Warren County, 179 AD2d 118, 581 NYS2d 885 lv den 80 NY2d 754, 587 NYS2d 906; Murphy v Erie County, 28 NY2d 80, 320 NYS2d 29; Opn No. 86-70, supra).

It is also well established that, except where constitutional provisions are controlling, towns and villages, as municipal corporations, have only those powers expressly granted by statute and such additional powers as may be "necessarily" or, in the case of villages, "necessarily" or "fairly" implied from their express powers (see Village of Atlantic Beach v Kimmel, 18 NY2d 485, 276 NYS2d 993; Town Law 64[23]; Village Law 1-102[6], [7]; cf. Wells v Town of Salina, 119 NY 280). In this regard, we note that towns and villages have express general authority to enter into contracts in furtherance of the performance of their corporate functions (Town Law 64[6]; Village Law 1-102[5]; see, e.g., Massagli v Bastys, 141 Misc 2d 357, 532 NYS2d 638).

Towns and villages may establish publicity funds to be expended for the purpose of advertising the advantages of the town or village and promoting the general, commercial and industrial welfare of the town or village (Town Law 64[14], also setting forth the maximum amount that may be appropriated into the fund; cf. Village Law 4-412[1]). In the case of a village, the fund must be established by local law (1998 Opns St Comp No. 98-22, p 56; 31 Opns St Comp, 1975, p 53; 30 Opns St Comp, 1974, p 82). We have expressed the opinion that publicity fund monies may be used, for example, to pay a chamber of commerce, pursuant to contract, an amount to defray the cost of printing a phone directory and business guide (1980 Opns St Comp No. 80-109, unreported).2

Similarly, here, it is our opinion that a town or village, subject to equal protection considerations, may contract with a not-for-profit corporation, to advertise and publicize resources available in the downtown town or village, including a day labor hiring site, in order to promote the commercial and industrial welfare of the town or village and potentially encourage the use of the site and other resources. In addition, it is our opinion that such a contract may provide for monitoring and documenting the use of the site and other resources, in order that the town or village may gather information to help assess the results of the publicity fund expenditure.3  So long as the primary purpose of the contract is to further the purposes of the town or village publicity fund, any incidental benefit to private entities would not contravene the gift and loan prohibition of article VIII, 1 of the State Constitution (see Opn No. 80-671, supra).

Accordingly, it is our opinion that a village/town may expend publicity fund monies under a contract with a not-for-profit corporation to advertise and publicize the availability of resources in the village/town downtown area, including a day laborer hiring site, and to monitor and document the use of such resources.

December 24, 2002

Marianne Stecich, Esq., Village Attorney
Village/Town of Mount Kisco

1.  Although a proposed contract has been provided, we generally do not, in our advisory opinions to local governments, comment on the propriety of specific proposed contract provisions. Therefore, we will address the question generally, without reference to any particular proposed agreement.

2.  The primary focus of such a guide must be to further publicity fund purposes and not the direct promotion of private business interests (see 1980 Opns St Comp No. 80-671, unreported).

3.  Any such contracts, however, would be subject to the appropriate procurement processes (see General Municipal Law 103, 104-b; Schulz v Warren County, supra).