Opinion 2002 - 9


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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.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 (contract for provision of services by private organization); (contribution to private organizations)
PUBLIC CONTRACTS -- Contracts Not Requiring Competitive Bidding (contract for services pursuant to General Municipal Law 120-w below the competitive bidding monetary threshold)
REFUSE AND GARBAGE -- Solid Waste Facility (contract for services of individuals to coordinate volunteer workers)
VOLUNTEERS -- Use of (to assist at recycling center)

STATE CONSTITUTION, ARTICLE VIII, 1; GENERAL MUNICIPAL LAW 103, 104-b, 120-w; TOWN LAW 64(8): A town may not make a gratuitous payment to private individuals who voluntarily assist the town in coordinating volunteers from not-for-profit organizations in providing services in connection with the town's recycling program. The town may, however, in accordance with applicable procurement procedures, contract with individuals for the provision of such coordination services in connection with the operation of the town's recycling center and pay the individuals consideration for such services under the contract.

You ask whether a town may pay a small "stipend" to one or more individuals who provide assistance in the operation of a town recycling center, by coordinating volunteers from not-for-profit organizations who provide services in connection with the town's recycling program. You indicate that the total payments would not exceed $20,000.

Initially, we note that we have previously concluded that a town, pursuant to its authority generally to accept gifts for public purposes (see, e.g., Town Law 64[8]), may accept a gift of services from volunteers (see, e.g., 1977 Opns St Comp No. 77-225, unreported; see also 1987 Opns St Comp No. 87-58, p 88; 1973 Opns St Comp No. 73-811, unreported). We have cautioned, however, that, before a town decides whether to accept services of volunteers, the town should carefully consider the legal and practical ramifications of utilizing such services, including the potential for liability for acts of the volunteers or for injuries to the volunteers, as well as the potential applicability of statutes such as the State's Labor Law (id.; see, e.g., Labor Law, article 4 [employment of minors], articles 8 and 9 [prevailing wage]; cf. Matter of Onondaga-Cortland Madison BOCES v McGowen, 285 AD2d 36, 728 NYS2d 109).

With respect to the payment of a "stipend" to an individual who coordinates volunteer workers, we note that article VIII, 1 of the State Constitution prohibits municipalities from making gifts or loans of public money or property to or in aid of private individuals, corporations, associations or undertakings. This provision was intended to curb raids on the public purse for the benefit of favored individuals or enterprises furnishing no corresponding benefit or consideration to a municipality (see, e.g., Teachers Association, Central High School District No. 3 v Board of Education, Central High School No. 3 Nassau County, 34 AD2d 351, 312 NYS2d 252) and, generally, has been construed to require that there be a contractual or statutory obligation by a municipality before funds can be paid to, or expended on behalf of, private individuals or entities (see, e.g., Piro v Bowen, 76 AD2d 392, 430 NYS2d 847 lv den 52 NY2d 702, 437 NYS2d 1025). Article VIII, 1 is applicable even if the private activity is not undertaken for profit and serves a laudable purpose (see, e.g., 1986 Opns St Comp No. 86-70, p 109; cf. 1978 Opns St Comp Nos. 78-914 and 78-225, both unreported). Accordingly, as a general rule, a town may not make outright contributions to a private individual or entity even if in furtherance of a proper municipal purpose. There is no violation of article VIII, 1, however, if municipal moneys are paid to a private individual or entity in furtherance of a proper municipal purpose pursuant to a duly authorized contractual arrangement under which the municipality receives fair and adequate consideration (see, e.g., Antonopoulou v Beame, 32 NY2d 126, 343 NYS2d 346; Opn Nos. 86-70, 78-914 and 78-225, supra; 1984 Opns St Comp No. 84-31, p 38).

General Municipal Law 120-w(2) authorizes municipalities to enter into a contract with any "person", upon such terms and conditions as may be agreed upon, for, among other things, the operation and maintenance of a solid waste management-resource recovery facility, or for the processing or disposal of solid waste. For this purpose, a solid waste management-resource recovery facility includes a recycling center (General Municipal Law 120-w[1][b]). The word "person" is defined in section 120-w to include a municipality or other governmental body, public corporation or authority, private corporation, partnership or individual (General Municipal Law 120-w[1][d]).

Contracts entered into pursuant to section 120-w generally must be awarded either pursuant to public bidding in compliance with General Municipal Law 101 and 103 or, as an alternative thereto, the request for proposal procedures set forth in General Municipal Law 120-w(4)(e) (General Municipal Law 120-w[4][e]; Ramapo Carting v Reisman, 192 AD2d 922, 596 NYS2d 602; Metropolitan v Town of Hempstead, 135 Misc 2d 548, 515 NYS2d 956; cf. NYPIRG v Broome County R.R.A., 189 AD2d 1079, 592 NYS2d 883; see also 1982 Opns St Comp No. 82-96, p106; 1981 Opns St Comp No. 81-109, p 111).1 If a contract for services entered into pursuant to section 120-w involves an expenditure less than the competitive bidding monetary threshold (currently, $20,000), then, in our opinion, neither competitive bidding requirements, nor the alternative request for proposals procedures under section 120-w would apply. The primary purpose of the monetary threshold is to relieve political subdivisions of the administrative costs of competitive bidding when the costs will exceed the potential savings to taxpayers through use of the bidding process (see, e.g., 1978 NYS Legislative Annual, p 197). Although section 120-w does not, by express language, exempt contracts involving expenditures below the threshold from both competitive bidding and the alternative request for proposal requirements, we believe that, consistent with the purpose of the competitive bidding threshold, it is unlikely that the Legislature intended local governments to incur the expense of bidding or the statutorily-prescribed request for proposal procedures for contracts involving a relatively small dollar amount. Such a contract, however, would be subject to the town's procurement policies and procedures adopted pursuant to General Municipal Law 104-b. At a minimum, the policies and procedures adopted pursuant to section 104-b must provide, inter alia, that when competitive bidding is not required by law, alternative proposals or quotations will be secured by requests for proposals, written or verbal quotations, or other methods which further the purposes of section 104-b, except in limited circumstances (see General Municipal Law 104-b[2][b],[f]).

Accordingly, based on the foregoing, it is our opinion that the town may not make a gratuitous payment to private individuals who voluntarily assist the town in coordinating volunteers from not-for-profit organizations in providing services in connection with the town's recycling program. The town may, however, in accordance with applicable procurement procedures, contract with individuals for the provision of such coordination services in connection with the operation of the town's recycling center and pay the individuals consideration for such services under the contract.

July 18, 2002

Albert P. Roberts, Esq., Town Attorney
Town of Wappinger

1. General Municipal Law 103 provides that, with certain exceptions, all purchase contracts involving an expenditure in excess of $10,000 and all contracts for public work involving an expenditure in excess of $20,000 shall be awarded by the appropriate officer, board or agency of a political subdivision to the lowest responsible bidder after public advertisement for sealed bids. Section 101 of the General Municipal Law contains further bidding requirements with respect to contracts for the erection, construction, reconstruction or alteration of buildings, when the entire cost of the work will exceed $50,000. It has been held that competitive bidding requirements apply even though the public work is to be performed at favorable prices, but in excess of the competitive bidding monetary threshold, by not-for-profit organizations (District Council No. 9 v MTA, 115 Misc 2d 810, 454 NYS2d 663 affd 92 AD2d 791, 460 NYS2d 973 app withdrawn 61 NY2d 761).