Opn. No. ( 1981 )

David Axelrod, M.D. Commissioner NYS Department of Health

You have asked for our formal opinion on whether hospitals as defined in section 2801 (1) of the Public Health Law are among the facilities that may be assisted by industrial development agencies. You note our informal opinion in which we concluded that an "industrial development agency does not have the power to assist in financing nursing home and other health-related facilities under the law as now written" (1980 Op Atty Gen [Inf] 139). In support of that conclusion, we said:

"The original general law providing for these agencies was enacted in 1969. Chapter 1030 of the laws of that year had the title ``New York State Industrial Development Agency Act' and added Article 18-A to the General Municipal Law. At the beginning the emphasis was on the word ``industrial'. The original statement of legislative policy was to ``promote, attract, encourage and develop economically sound commerce and industry' (§ 852). The original definition of a ``project' spoke to property that would be ``suitable for manufacturing, warehousing, research, commercial or industrial purposes' (§ 854 [4]). The original statement of the purpose of an industrial development agency characterized the object of assistance as ``industrial, manufacturing, warehousing, commercial and research facilities'. Thus, in the beginning Article 18-A appeared to be limited to commerce and industry, perhaps even in the sense that the ``commerce' involved had to be of an industrial nature. Such a narrow reading of commerce has not been accepted, however. (See Grossman v. Herkimer County Industrial Development Agency,60 A.D.2d 172 [4th Dept, 1977] [Agency may finance a project involving demolition of an industrial facility to be replaced by a ``mercantile establishment.'])

"The original act has been amended several times to broaden the scope and purpose of industrial development agencies. Chapter 978 of the Laws of 1971 added industrial pollution control facilities to the list of facilities that could be assisted. Chapter 954 of the Laws of 1974 added winter recreation to the list. Chapter 267 of the Laws of 1977 added horse racing facilities, and chapter 630 of that year removed ``winter' so that all recreation facilities are covered. These several amendments reinforce the general thrust of Article 18-A — that is, that it is primarily designed to assist commerce and industry in the traditional understanding of that phrase. For instance, Assembly Bill 3006 introduced on February 12, 1979, would add hospital facilities.

"Section 858 today grants industrial development agencies the power to assist ``industrial, manufacturing, warehousing, commercial, research and recreation facilities including industrial pollution control facilities and horse racing facilities'. It is obvious that a nursing home or other health-related facility can be drawn into the grant of power only under the umbrella of the word ``commercial'. The legislative history set forth above is devoid of even a hint that ``commercial' is to be read so broadly.

"It is to be noted that section 852 in its present version speaks to the policy of the State to ``protect and promote the health' of its inhabitants, but it is also to be noted that those words were first added in conjunction with the amendment covering pollution control facilities and repeated in the amendment adding winter recreation facilities. There is no basis for inferring a legislative intent to cover a hospital, a nursing home, or any other health-related facility under the umbrella word ``commercial' simply because the State has a policy of protecting and promoting the health of the inhabitants of the State."

With specific reference to hospitals, we note that another bill — S. 3168/A. 4114 — to add hospital facilities is pending before the Legislature. We note also that simultaneously with the enactment of the industrial development agency law, Article 28-B, the Hospital Mortgage Loan Construction Law, was added to the Public Health Law (L 1969, ch 1035. The Governor approved the two bills on the same day). Article 28-B was designed to provide financial assistance to hospitals. It seems unlikely that a Legislature would simultaneously provide two sources of financial assistance for hospitals, one source denominated for hospitals, the other denominated for industrial development.

We conclude that industrial development agencies do not have the power to assist in financing hospitals as defined in section 2801 (1) of the Public Health Law.