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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.
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)
WORDS AND PHRASES -- "Dispose of" (meaning of for purposes of General Municipal Law, §858); (as including conveyance without consideration)
GENERAL MUNICIPAL LAW, §858: An IDA is not authorized to make a gift of its moneys to a town. IDA moneys may be expended to make improvements to municipal facilities, at no cost to the municipality, when the improvements are incidental to a proper IDA project and are intended primarily for the benefit of that project. Also, an IDA may utilize the services of agents, employees and facilities of a town, in furtherance of the IDA's corporate purposes, and pay the town an agreed proportion of the compensation or costs.
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).
Generally, the purposes of an IDA are to:
promote, develop, encourage and assist in acquiring, constructing, reconstructing, improving, maintaining, equipping and furnishing industrial, manufacturing, warehousing, commercial, research and recreation facilities including industrial pollution control facilities, educational or cultural facilities, railroad facilities, horse racing facilities and continuing care retirement communities ... and thereby advance the job opportunities, health, general prosperity and economic welfare of the people of the state of New York and to improve their recreation opportunities, prosperity and standard of living ... (General Municipal Law, §858; see also Postler & Jaeckle, supra).
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 comparison, even though municipalities are authorized generally to "convey" unneeded real property (see, e.g., County Law, §215[5,6]; Town Law, §64; Village Law, §1-102), General Municipal Law, §72-h was amended to expressly authorize municipal corporations and fire districts to make gifts of unneeded real property to another municipal corporation or fire district (L 1972, ch 406; see also Education Law, §405)2. Further, with respect to personal property of municipalities, we have contrasted the specific authority in General Municipal Law, §72-h for gifts of real property to other municipalities with the more general authority to "dispose" of or "convey" unneeded personal property, and concluded a municipality may authorize a gift of personal property to another public corporation, in furtherance of a public purpose of the donor municipality, but only by the enactment of a local law (1990 Opns St Comp No. 90-1, p 1; 1986 Opns St Comp No. 86-22, p 37, gift of municipal money to an IDA; 1982 Opns St Comp No. 82-342, p 434; 1982 Opns St Comp No. 82-164, p 173; compare Education Law, §256)3.
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).
While we conclude that an IDA is not authorized to make gifts of its moneys to municipalities, we have recognized that IDA moneys may be expended to make improvements to municipal facilities, at no cost to the municipality, when those improvements are incidental to the undertaking of a proper IDA project, and the improvements are intended primarily for the benefit of the IDA project (1986 Opns St Comp No. 86-69, p 108).4 We also note that an IDA, with the consent of the municipality, may use agents, employees and facilities of the municipality, paying the municipality an agreed proportion of the compensation or costs (General Municipal Law, §858). Thus, for example, if an IDA, in furtherance of its corporate purposes, required the services of a planner or an engineer, it may utilize the services of a planner or engineer employed by the town and make payments to the town for an agreed proportion of the planner's or engineer's compensation.
Accordingly, it is our opinion that an IDA may not make a gift of its moneys to a town. It may, however, expend moneys to make improvements to municipal facilities, at no cost to the municipality, when the improvements are incidental to the undertaking of a proper IDA project and are intended primarily for the benefit of that project. It may also utilize the services of agents, employees and facilities of the town, in furtherance of the IDA's corporate purposes, and pay the town an agreed proportion of the compensation or costs.
May 27, 1999
Joseph M. Fiano, Chairman
Rotterdam Industrial Development Agency
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:
... any land, any building or other improvement, and all real and personal properties located within the state of New York and within or partially within and partially outside the municipality for whose benefit the agency was created, including, but not limited to, machinery, equipment and other facilities deemed necessary or desirable in connection therewith, or incidental thereto, whether or not now in existence or under construction, which shall be suitable for manufacturing, warehousing, research, civic, commercial or industrial purposes ... which may include or mean an industrial pollution control facility, a recreation facility, educational or cultural facility, a horse racing facility, a railroad facility, a continuing care retirement community, or a civic facility ... . Provided further, that no agency shall provide financial assistance for any project where the project applicant has any agreement to subsequently contract with a municipality for the lease or purchase of such project or project facility (General Municipal Law, §854; emphasis added).
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).