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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

HISTORIC PRESERVATION -- Contracts (by village with historical society)
PUBLIC CONTRACTS -- Consideration (services by an historical society for use of village building)

VILLAGE LAW §1-102(1); STATE CONSTITUTION, ARTICLE VIII, §1; ARTS AND CULTURAL AFFAIRS LAW §57.07: A village may not permit an historical society to use an unneeded portion of a village building without consideration. A village may, however, enter into a contract with the historical society pursuant to Arts and Cultural Affairs Law §57.07(2) and, as consideration under the contract, permit the historical society to use the unneeded space in a municipal building, without payment of cash rent, so long as the village determines that the value of the services received under the contract is at least equal to the value of the use of the space in the building.

You ask whether a village may permit an historical society to utilize vacant space in a village building without the payment of rent.

Village Law §1-102(1) authorizes villages to "lease, sell and convey such real and personal property as the purposes of the corporation may require". Pursuant to this grant of authority, a village may lease to a third party unneeded space in a village building (see, e.g., 1991 Opns St Comp No. 91-62, p 165; 1988 Opns St Comp No. 88-1, p1).

With respect to the gratuitous use of village property, article VIII, §1 of the State Constitution prohibits municipalities from making gifts or loans of municipal property or money to or in aid of private individuals, corporations, associations and undertakings. There is no exception to this prohibition for transactions between the municipality and a not-for-profit organization (see e.g. 2002 Opns St Comp No. 2002-16, p 35; 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. Opn No. 2002-16, supra; 1986 Opns St Comp No. 86-70, p 109). Therefore, in light of the prohibition against gifts and loans in article VIII, §1, the village may not permit a historical society to utilize unneeded space in a village building without consideration (1982 Opns St Comp No. 82-111, p 140; 17 Opns St Comp, 1961, p 261). Rather, the village board should take steps to ensure that any lease is for fair and adequate consideration, and upon the best or most beneficial terms to the village (see, e.g., Opns St Comp No. 94-12, p 19; 1990 Opns St Comp No. 90-37, p 84; see also Ross v Wilson, 308 NY 605).

We note that the consideration for the use of unneeded village real property need not necessarily be in cash in order to avoid contravening article VIII, §1, but may be in exchange for services rendered under a duly authorized contract (see, e.g. Opn No. 86-44, supra). Pertinent here, Arts and Cultural Affairs Law §57.07(2) authorizes municipalities to contract with the trustees of an historical association for the support of any or all of the historic edifices situated within the boundaries of the municipality, or to maintain such historic edifices for public use under such terms and conditions as may be stated in the contract. We have expressed the opinion that, in consideration for services rendered by the historical society under such a contract, a municipality may permit the historical society to use the unneeded space in a municipal building (see, e.g., Opn No. 82-111, supra; 1973 Opns St Comp No. 73-1104, unreported). The municipality should determine that the value of the services received under the contract is at least the reasonable equivalent of the value of the use of the space in the building (Opn No. 86-44, supra).

Accordingly, a village may not permit an historical society to use an unneeded portion of a village building without consideration. A village may, however, enter into a contract with the historical society pursuant to Arts and Cultural Affairs Law §57.07(2) and, as consideration under the contract, permit the historical society to use the unneeded space in a municipal building, so long as the village determines that the value of the services received under the contract is at least equal to the value of the use of the space in the building.

September 29, 2004

John K. Plumb, Esq., Village Attorney
Village of Randolph