APPEAL from an order of Supreme Court at Special Term (NEWMAN, J.), entered November 9, 1953, in Chemung County, which denied a motion for a dismissal of the complaint on the ground that the complaint fails to state a cause of action.
Harry Moseson for City of Elmira Parking Authority, appellant.
George H. Winner, Corporation Counsel, for City of Elmira and another, appellants.
L. H. Teeter for respondent.
Plaintiff brought this taxpayer's action for judgment voiding an agreement of May 8, 1950, between defendants, City of Elmira and the City of Elmira Parking Authority (hereinafter referred to as the Authority), and for incidental injunctive relief. Defendants moved at Special Term for the dismissal of the complaint as failing to state facts sufficient to constitute a cause of action. This appeal is from the order denying that motion.
The Authority was created as a public benefit corporation 'for the benefit of the people of the city of Elmira and its environs,' (Public Authorities Law,§ 1495), and as being a public purpose, by chapter 637 of the Laws of 1948, amending the Public Authorities Law by the addition of title 9 to article 7 thereof. It is to continue for a period of five years only and thereafter until all its liabilities have been met and its bonds paid in full or discharged. The declared purpose of the Authority is to provide parking areas in Elmira. At the termination of its existence all of its properties and rights pass to the city. Its stated powers include the acceptance of grants, loans or contributions from the city, inter alia. The city may convey to the Authority, with or without consideration, real or personal property for the latter's use as a project or projects. Bonds or other obligations of the Authority shall not be a debt of the State or of the city. Neither shall be liable thereon, nor shall the bonds be payable out of any funds other than those of the Authority (Public Authorities Law, § 1493).
Implementing the statute, section 73 of the Elmira City Charter was amended by Elmira Local Law No. 5 of 1949. The amendment permits the council to adopt a resolution to authorize a contract between the city and the Authority, pledging all or any part of the net revenues received or to be received from the city's street parking meters, such pledge to extend as long as the bonds of the Authority remain outstanding, but in no event for a period longer than thirty years from the date of the execution of the contract.
The contract in question was executed following action by the Authority providing for the issuance of its bonds in the
amount of $500,000. This action particularly challenges the legality of two features of the contract. The first is the agreement that the city pay to the Authority the amount of the estimated deficit, if any, in the latter's operation and maintenance fund and debt service fund, not exceeding $25,000 in any calendar year, such payments to be made exclusively from the 'net revenues of City parking meters' as thereinafter defined. The pledge of net returns is limited to existing meters, but not meters later installed except as substitutes. The second controversial item of the contract is the city's promise that it will not substantially reduce the number of parking meters used on the streets of the city during the existence of the agreement, with the qualification that it 'shall not be construed to prevent the City from abandoning or changing the sites of existing parking meters, it being the intention of this paragraph that the source of revenues from parking meters by the City is not to be decreased to a point below the City's pledge during the life of this agreement.'
The pledge and agreement to pay net parking meter revenues are said to be such a gift or loan of the city's credit as to violate constitutional and other prohibitions, meaning section 1 of article VIII of the State Constitution and ...