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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.
PARKS AND RECREATION -- Concessions (to operate golf course); (as distinguished from lease)
PUBLIC CONTRACTS -- Contracts Not Requiring Bidding (concessions)
VILLAGE LAW, §§1-102(1); 4-412: An agreement to operate a facility at a park which is termed a license or concession, but which, in substance, constitutes a lease, contravenes the common law restriction against alienation of park property without specific legislative authority.
GENERAL MUNICIPAL LAW, §103: A true license or concession arrangement, which does not involve a direct or indirect expenditure of public moneys and the total character of which is neither a purchase nor contract for public work, is not subject to competitive bidding. However, public officials have a duty to secure fair reasonable terms for such arrangements.
You ask under what circumstances an agreement designated as a "license" or "concession" to operate a facility at a village park would constitute a lease of park property. You also ask whether such a license or concession would be subject to competitive bidding requirements.
Initially, we note that although villages are generally authorized to sell village real property which is no longer needed for village purposes (Village Law, §1-102), it is a well-established common law principle that municipally-owned property which has been dedicated as a public park is held in trust for the public and may not be diverted to other uses or alienated without a special act by the State Legislature (Gewirtz v City of Long Beach, 69 Misc 2d 763, 330 NYS2d 495, affd 45 AD2d 841, 358 NYS2d 957; Brooklyn Park Comr's v Armstrong, 45 NY 234; see also Parks, Recreation and Historic Preservation Law, §§15.09 and 17.09 providing that lands acquired with the aid of funds made available pursuant to articles 15 and 17 of that law may not be disposed or, with certain exceptions, used as other than a park without legislative authority). It is also well-settled that municipalities may establish and maintain facilities, including golf courses, refreshment stands and the like, which provide means of innocent entertainment and amusement and are incidental to a park, and may either operate these incidental facilities directly with municipal employees or hire out their operation to private parties (Williams v Gallatin, 229 NY 248; Rivet v Burdick, 255 App Div 131, 6 NYS2d 79; People v Ribinovich, 171 Misc 569, 13 NYS2d 135; Gushee v City of New York, 42 App Div 37, 58 NYS 967; 11 Opns St Comp, 1955, p 159; 15 Opns St Comp 1959, p 334; 1982 Opns St Comp No. 82-237, p 298; 1982 Opns St Comp No. 82-300, p 382). However, to avoid contravening the common law restriction against alienation of park property without specific legislative authority, any such arrangement with a private party would have to be in the form of a revocable license, grant of privilege or true concession, and not a lease (Miller v City of New York, 15 NY2d 34, 255 NYS2d 78; cf. Port Jefferson Yacht Club, Inc. v Village of Port Chester, et al., 123 AD2d 852, 507 NYS2d 465, stating, without discussion of Miller, supra, that a lease of park land to a private organization is valid so long as the land is to be used for or the lease serves a public purpose).
The Court of Appeals in Miller, supra, discussed the distinction between leases and licenses with respect to municipal park property. That case involved an agreement between the City of New York and a private firm which granted to the firm the right to construct a golf-driving range with accessory buildings in a public park and to operate the enterprise on a percentage basis for twenty years with certain termination rights reserved to the City.
In Miller, supra, the Court of Appeals held the agreement to be a lease and not a revocable license or grant of privilege or concession, citing as key factors the private firm's right to exclusive use of a specific area, the twenty year term and the fixed rental computed as a percentage of gross receipts. The Court also noted that the City's control as to prices, times of operation, right of termination when "required for a paramount park or other purpose", and choice of employees were not sufficient evidence of a license, "but rather was no more than would reasonably be demanded by a careful owner as against a lessee for such a business use and for so long a term" (15 NY2d at p 38, 255 NYS2d at p 81). With regard to the difference between a lease and license, the Court stated:
"...Although the contract speaks of a 'license' and avoids use of the word 'lease' it contains many provisions typical of a lease and conferring rights well beyond those of a license or holder of a mere temporary privilege....Since the property was as a park impressed with a trust for the public it could not without legislative sanction be alienated or subjected to anything beyond a revocable permit. *** A document calling itself a 'license' is still a lease if it grants not merely a revocable right to be exercised over the grantor's land without possessing any interest therein but the exclusive right to use and occupy that land..." (15 NY2d at p 37-8, 255 NYS2d at p 80).
Accordingly, it appears that whether a particular agreement constitutes a lease or a license, grant of privilege or concession is a question of fact which must be resolved by examining the elements of the agreement.
With regard to competitive bidding, section 103 of the General Municipal Law, with certain exceptions, requires competitive bidding for purchase contracts involving an expenditure in excess of $5,000 and contracts for public work involving an expenditure in excess of $7,000. Contracts by which a license or concession is granted are not, generally, subject to the competitive bidding requirements of General Municipal Law, §103, since they do not ordinarily involve an expenditure of public moneys (Citiwide News v NYCTA, 62 NY2d 464, 478 NYS2d 593). Nonetheless, the courts have noted that it is the duty of public officials to let out such contracts under terms which are fair and reasonable (Blank v Browne, 217 App Div 624, 216 NYS 664). This Office has advised that, in order to assure that municipalities properly fulfill this duty, competition be solicited on licenses or concessions (Opn No. 82-237, supra). This may be accomplished either through use of a request for proposals or, when appropriate, a less formal method (Opn No. 82-237, supra). In addition, it should be further noted that it has been held that an agreement purporting to be a "license" or "concession" which involves construction work by the licensee or concessionaire may constitute a contract for public work subject to competitive bidding if the agreement involves a direct or indirect expenditure of public moneys and the "total character of the arrangement" is that of a contract for public work (Citiwide, supra).
Accordingly, we conclude that a true license or concession arrangement, which does not involve a direct or indirect expenditure of public moneys and the total character of which is neither a purchase nor contract for public work, is not subject to competitive bidding. However, public officials have a duty to secure fair reasonable terms for such arrangements.
December 22, 1988
Cornelius F. Healy
Deputy State Comptroller