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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.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 (granting of license or concession for fair and adequate consideration)
REAL PROPERTY -- License (authority of school district to grant)
SCHOOL DISTRICTS -- Powers and Duties (authority to grant license)

STATE CONSTITUTION, ARTICLE VIII, §1: There is no contravention of the gift and loan prohibition in article VIII, §1 of the State Constitution if a municipality or school district grants a duly authorized license or concession to a private entity in furtherance of a proper municipal or school district purpose for fair and adequate consideration. 23 Opns St Comp, 1972, p 35, 20 Opns St Comp, 1964, p 86 and 16 Opns St Comp, 1960, p 485 are superseded to the extent inconsistent.

You ask that we reconsider our view on whether a school district may permit the installation of privately owned vending machines on school property for the use of school district employees.

In several prior opinions, we have concluded that, in general, a school district may not permit a private party to install vending machines owned by the private party on school district property for the use of school district employees. We based our conclusion on the prohibition in article VIII, §1 of the State Constitution against gifts and loans of money or property of, among other entities, a school district to or in aid of any individual or private corporation, association or undertaking (see, e.g., 28 Opns St Comp, 1972, p 36; 20 Opns St Comp, 1964, p 86; 16 Opns St Comp, 1960, p 485; cf. 1975 Opns St Comp No. 75-1256, unreported, concluding that vending machines may be installed in a teacher's lounge to implement a term or condition in a collective bargaining agreement; 1974 Opns St Comp No. 74-278, unreported, concluding that a school district, pursuant to Education Law, §1725, could lease vending machines). Upon re-consideration, we hereby supersede those prior opinions to the extent inconsistent with the analysis and conclusion herein.

It is a well-established principle that property held for public use may not be used by or on behalf of a private entity in furtherance of purely private purposes (see, e.g., 1988 Opns St Comp No. 88-41, p 81; 1985 Opns St Comp No. 85-37, p 51). Further, even if the purpose of such use is public in nature, it may not be accomplished in violation of article VIII, §1 of the State Constitution. Generally, to avoid contravening article VIII, §1, there must be a contractual or statutory obligation by the municipality or school district before funds may be paid to or property used on behalf of private entities (Piro v Bowen, 76 AD2d 392, 430 NYS2d 847). Accordingly, there is no violation of article VIII, §1 if municipal or school district property is used by a private entity in furtherance of a proper municipal or school district purpose pursuant to a duly authorized contractual arrangement under which the municipality or school district receives fair and adequate consideration (see, e.g., Antonopoulou v Beame, 32 NY2d 126, 343 NYS2d 346; Opn No. 88-41, supra; 1984 Opns St Comp No. 84-31, p 38). Under those circumstances, an incidental private benefit will not invalidate a transaction which has as its primary objective a public purpose (see, e.g., Matter of Waldo's v Village of Johnson City, 74 NY2d 718, 544 NYS2d 809; Murphy v Erie County, 28 NY2d 80, 320 NYS2d 29; Deniham Enterprises v O'Dwyer, 302 NY 451; Rodrigues v Town of Beekman, 120 AD2d 724, 502 NYS2d 778). 

Based on the foregoing, it is our opinion that article VIII, §1 would not be contravened if a duly authorized license or concession is granted to a private entity in furtherance of a proper school district purpose for fair and adequate consideration. We suggest, however, that you contact the State Education Department regarding whether a school district has authority under the Education Law to grant a license or concession for the placement of vending machines on school district property and whether there are any limits upon this authority (see, e.g., Education Law, §915 prohibiting the sale of certain sweetened foods in public schools during certain times).

The granting of a license or concession is not subject to the competitive bidding requirements of General Municipal Law, §103 (Citiwide v NYCTA, 62 NY2d 464, 478 NYS2d 593; 1988 Opns St Comp No. 88-60, p 119). Nonetheless, 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). In order to assure that municipalities properly fulfill this duty, competition should be solicited by proposals or quotations prior to the granting of licenses or concessions (see Opn No. 88-60, supra; 1982 Opns St Comp No. 82-237, p 298; cf. General Municipal Law, §104-b).

28 Opns St Comp, 1972, p 35, supra, 20 Opns St Comp, 1964, p 86, supra, and 16 Opns St Comp, 1960, p 485, supra are superseded to the extent inconsistent herewith.

February 25, 1992
Vanessa M. Sheehan, Esq., Attorney at Law
Three Village Central School District