Comereski v. City of Elmira

Desmond, J.

Plaintiff, as a taxpayer in the city of Elmira, sues for a judgment which would declare invalid a contract between the city and the Elmira Parking Authority, the latter being a public benefit corporation organized, in 1948, pursuant to a special act which is title 9 of article 7 of the Public Authorities Law. The general purpose of the authority, whose members are appointed by the Mayor of Elmira, is to acquire and use real and personal property for indoor and outdoor automobile parking “ projects ” in that city. The city of Elmira, itself, has, under section 72-j of the General Municipal Law, and section 54 of the Vehicle and Traffic Law, power to set up and operate parking lots and garages, and parking meters in its streets. However, in Elmira it was decided, for reasons not explained in the record and not important for our purposes, that the Parking Authority would develop and operate parking lots, while the city would own and operate parking meters in the Elmira streets. In order to use part of the city’s parking meter profit, if any, to defray the losses, if any, of the authority’s parking lots, the two public corporations, in May, 1950, entered into a contract, the validity of which is here questioned by plaintiff. The Appellate Division, for reasons with which we are in general agreement, has held the contract lawful, and has dismissed plaintiff’s complaint.

The contract recites that the authority has been created to alleviate traffic and parking problems, in the city of Elmira, through the acquisition, operation and maintenance by the authority of adequate parking facilities, and for the payment of the cost of the same out of their operation; that the city is desirous of co-operating with the authority in this respect and, to that end, will turn over to the authority part of the revenues from the city’s street meters. After reciting that the authority has authorized the issuance of $500,000 in bonds, the agreement goes on to provide that there shall be estimated, every year, the deficit, if any, in the funds of the authority to be available for the payment of its bonds, that the authority shall give notice to the city of the amount of such estimated deficit, if any, and that the city shall then pay the amount thereof to the authority. Such payments are, by the contract’s terms, to be made from the city’s net revenue from its own parking meters only, and, in no event, is more than $25,000 to be paid in any calendar year, the city further agreeing that, during the existence of the agreement, which is to run until the bonds are paid, the city may abandon any of its meters or change their sites but may not substantially reduce their number, and that the city will not cause to be operated any public parking areas except those operated by the authority. The only other important provision of the agreement is the one which says that the agreement shall be construed to be for the benefit not only of the parties but for the benefit of the holders of the bonds, also.

An Elmira Local Law (No. 5 of 1949) amended the city’s charter to permit the execution of this very contract (see Local Laws for 1949, published by the Secretary of State, p. 50). That Local Law, we are persuaded, is well within the grant of “ Home Rule ” powers found in section 12 of article IX of the State Constitution, and section 11 of the City Home Rule Law. Plaintiff insists, however, that the contract (and the Local Law) violates section 1 of article VIII of the State Constitution and, also, contravenes, or at least is not permitted by, the sixth and twelfth sections of the Elmira Parking Authority Act (Public Authorities Law, §§ 1487, 1493).

We deal, first, with the assertion of plaintiff that the making of this contract violated section 1 of article VIII of our State Constitution which says, among other things, that no city shall ‘ ‘ give or loan its credit to or in aid of any individual, or public or private corporation or association ’ ’. The principal decision answering this is Union Free School Dist. v. Town of Rye (280 N. Y. 469), where this court held (p. 474) that the same constitutional language here cited did not prohibit gifts of money by a city or county to another public corporation for a public purpose. In other words, the first part of section 1 of article VIII of the Constitution prohibits a gift or loan of money by a county or city to an individual or private group, whereas the second part of the section, with which we are here concerned, prohibits only the giving or loaning, of its credit, by a county or city, to an individual or public or private group. The Union Free School case (supra) is flat authority that the city may do what the city is doing here, and what it is specifically authorized by Local Law No. 5 (supra) to do, that is, make a gift of its public funds to another public corporation for proper public purposes (see Western N. Y. Water Co. v. Erie Co. Water Auth., 305 N. Y. 758; and see Davidson v. City of Elmira, 180 Misc. 1052, 1058, affd. 267 App. Div. 797, motion for leave to appeal denied 292 N. Y. 723).

Next, we come to plaintiff’s allegation that the contract is forbidden by, or at least not authorized by, section 1487 of the Public Authorities Law. That lengthy section, in its first subdivision, empowers the city to convey to the authority for the latter’s purposes any real or personal property owned by the city, subject to the requirement that, as to any real property so conveyed, title shall remain in the city. In other words, the city could have made a gift to the authority, of the parking meters themselves. Subdivision 3 of section 1487 authorizes the making, between the city and the authority, of contracts for conveyances by the city to the authority of property, which contracts “ may be pledged by the authority to secure its bonds ”, and the obligations of the city incurred thereby are to be provided for in the city’s capital budget. We need not decide whether this language in terms authorizes the city to agree to make up, out of its meter revenue, part of the authority’s operating deficit. At least, it does not forbid such a contract as we are here examining, and — what is more important — it is a broadly stated legislative consent that the city freely turn over property to the authority, and make contracts for such turning over, which contracts shall form part of the security for the authority’s bonds. No reason appears why the Legislature, thus giving the city a free hand to assign to the authority any real or personal property useful for the authority’s “ projects ”, should at the same time forbid the allocation of part of the city’s meter profits to help out the authority in making- up the latter’s deficits. In all these discussions, we keep in mind that both the city and the Parking Authority are public corporations of the people of Elmira carrying out public purposes (see legislative declaration in Public Authorities Law, § 1495, and see Denihan Enterprises v. O’Dwyer, 302 N. Y. 451), and that the members of the authority are public officials appointed by the Mayor of the city.

Plaintiff’s chief reliance, it seems, for its charge that this contract is illegal, is on that part of the Elmira Parking Authority Law, which appears as section 1493 of the Public Authorities Law, and reads thus: “The bonds and other obligations of the authority shall not be a debt of the state of New York or of the city, and neither the state nor the city shall be liable thereon, nor shall they be payable out of any funds other than those of the authority ”. Such provisions are common, indeed almost universal, in the various statutory systems creating “ public authorities ’ ’ in this State.1 Frequently, those statements, that municipalities are not liable on the authority’s bonds and that the bonds are payable out of the authority’s funds only, are coupled with authorization or mandates of various kinds of direct assistance to authorities from those same municipalities.2 Apparently, the Legislature did not see, nor do we, any inconsistency between the two kinds of statutory pronouncements. Provisions such as those in section 1493 mean just what they say: the authority’s bonds are to be a debt of the authority only, payable out of its funds only. They do not forbid the transfer of money or property by State or city to an authority. Indeed, the numerous statutes cited in note 2 hereinbelow show that a city’s nonliability on an authority’s bonds and the same city’s right or duty to assist the authority financially are part of the same conventional statutory pattern. We should not strain ourselves to find illegality in such programs. The problems of a modern city can never be solved unless arrangements like these (used in other States, too, see State ex rel. Bibb v. Chambers, 138 W. Va. 701) are upheld, unless they are patently illegal. Surely such devices, no longer novel, are not more suspect now than they were twenty years ago when, in Robertson v. Zimmerman (268 N. Y. 52, 62) we rejected a charge that this was a mere evasion of the constitutional debt limitations, etc. Our answer was this (p. 65): “ Since the city cannot itself meet the requirements of the situation, the only alternative is for the State, in the exercise of its police power, to provide a method of constructing the improvements and of financing their cost. The statute in question affords an equitable and proper method of accomplishing such a result ”. The Robertson case (supra) involved the transfer from the city of Buffalo of property and rights far more extensive and valuable than those in the present case.

The judgment should be affirmed, with costs.

1 See Public Authorities Law, §§ 109, 132, 159, 207, 237, 262, 287, 312, 511, 534, 564, 583, 639, 663, 708, 806, 831, 855, 884, 1037, 1061,1083, 1103, 1136, 1308, 1332, 1358, 1384, 1414, 1436, 1474, 1513, former 1531, 1553, 1577, 1611.

2 See Public Authorities Law, §§ 154, 230, 231, 255, 256, 281, 282, 308, 529, 556, 557, 579, 632, 633, 656, 657, 810, 835, 1041, 1053, 1079, 1095, 1355, 1379, 1404, 1407, 1449, 1468, 1507, former 1525, 1547, 1571, 1605.