Can a NY city's public bus system sell advertising space on the buses to generate revenue?

Subject

City bus system may sell advertising space through competitive bidding

Plain-English summary

The City of Kingston, which operates a public bus system, asked whether it could sell advertising space on its buses to raise revenue.

The AG concluded yes.

The constitutional and statutory framework gives cities authority to operate transit. NY Constitution Article IX § 2(c)(7) and Municipal Home Rule Law § 10(1)(ii)(a)(7) authorize local governments to acquire, own, and operate transit facilities. General Municipal Law § 119-r authorizes municipal mass transportation systems and lets them contract with privately owned systems. Operating transit necessarily includes regulating how it is operated (New York State School Bus Operators Assoc. v County of Nassau, 39 NY2d 638 [1976]).

The AG acknowledged a line of prior office opinions concluding that a municipality cannot let public property be used solely for private business advertising, on the ground that no public benefit accrues (Op Atty Gen [Inf] No. 92-56; 1973 Op Atty Gen [Inf] 51). The Kingston situation is different. The city is selling the space through a competitive bidding process and committing the revenue to operating the bus system. That gives the activity a public purpose: defraying operating costs and (presumably) subsidizing fares. The sale of advertising space is also a common practice among common carriers, including the private mass transit systems that General Municipal Law § 199-r(1)(d) allows municipalities to contract with.

So Kingston's plan met two filters: it was within the city's authority over its own transit system, and it served a public purpose connected to that authority.

Currency note

This opinion was issued in 1995. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

What was the AG worried about in the prior opinions?

The prior opinions involved use of public property for purely private advertising with no clear public benefit. Letting a city building's facade host a billboard, for example, would be using public property to enrich a private advertiser without any operational tie. The AG's view was that this kind of arrangement does not advance any public function and instead lets private parties exploit public property.

Why is the Kingston situation different?

Because the city is operating a bus system as a public function, and the advertising is a recognized revenue stream for that public function. The buses exist to serve riders; the ads pay for the buses. The city is not just letting private parties use city property; it is using a business model that is standard in the transit industry.

Why does competitive bidding matter to the analysis?

Competitive bidding ensures the city gets fair market value for the advertising space and prevents the appearance of favoritism toward particular advertisers. The AG flagged it as a feature of the Kingston plan that supported the public-purpose conclusion. Sole-source contracts at below-market rates could raise different questions.

Could a city sell advertising space on other public assets, like government buildings or police cars?

The reasoning here is specific to transit and would not automatically extend to other public property. The transit case is strong because advertising on vehicles is an industry-standard revenue practice. For other public property, the AG would still ask whether the advertising relates to a legitimate public function the city is performing and whether the public benefits.

Are there constitutional limits on the advertising content?

Yes. The First Amendment and the New York State Constitution impose limits on government regulation of speech, including ads accepted on government property. A city operating an advertising program may have to apply content-neutral acceptance standards. Cases on bus and subway advertising have explored when ads create public-forum issues. This 1995 opinion does not address the First Amendment dimension; counsel should consult that separate body of law.

Statutory framework

NY Constitution Article IX § 2(c)(7) authorizes local governments to acquire, own, and operate transit facilities.

Municipal Home Rule Law § 10(1)(ii)(a)(7) is the parallel home-rule grant.

General Municipal Law § 119-r authorizes mass transportation systems and lets municipalities contract with private operators.

General Municipal Law § 199-r(1)(d) recognizes that private mass transit systems commonly sell advertising space, supporting the AG's "industry-standard practice" reasoning.

New York State School Bus Operators Assoc. v County of Nassau, 39 NY2d 638 (1976), supports the principle that operating authority includes the authority to regulate the manner of operation.

Source

• Landing page: https://ag.ny.gov/libraries-documents/opinions/opinions-year
• Original PDF: https://ag.ny.gov/sites/default/files/opinions/I_95-38_pw.pdf

Original opinion text

Opn. No. 95-38
NY CONST ART IX § 2(c)(7); GENERAL MUNICIPAL LAW § 199-r(1)(d); MUNICIPAL HOME
RULE LAW § 10(1)(ii)(a)(7).
There is nothing legally objectionable to the sale of advertising space on Kingston's bus system, as it is a
business activity directly related to the legitimate public function of operating Kingston's transit system.
July 25, 1995
Robert D. Cook, Esq. Informal Opinion
Corporation Counsel No. 95-38
City of Kingston
City Hall, One Garraghan Drive
Kingston, NY 12401
Dear Mr. Cook:
You have inquired as to whether the City of Kingston may raise revenue by permitting private
enterprises to advertise on the City's public bus transportation system.
Local governments have the constitutional and statutory power to acquire, own and operate transit
facilities for the benefit of their residents. NY Const Art IX § 2(c)(7); Municipal Home Rule Law § 10
(1)(ii)(a)(7). Among other powers, the General Municipal Law grants a municipal corporation the
authority to operate mass transportation systems in order to serve the public at adequate levels and at
reasonable costs, and to contract with privately owned mass transporation systems for provision of
service to its residents. General Municipal Law § 119-r.
Since a municipality has the authority to operate a public bus system, it also by necessity has the
authority to regulate the manner in which it is operated. See, New York State School Bus Operators
Assoc. v County of Nassau, 39 NY2d 638 (1976). Your letter of inquiry accurately notes that several of
our previous opinions have expressed the view that a municipality is not authorized to permit public
property to be used for the sole purpose of private business advertising--no benefit accrues to the
municipality or the public weal. See, Op Atty Gen (Inf) No. 92-56; 1973 Op Atty Gen (Inf) 51. In the
instant case, however, the City of Kingston plans to sell advertising space on its buses through a
competitive bidding process, securing the revenue generated for the operation of its bus transit system.
In defraying the cost of bus operations and presumably subsidizing fares, the sale of advertising space
serves a public purpose. Further, the authority, under State law, to operate mass transportation systems
reasonably includes the sale of advertising space, a common endeavor among common carriers.
Municipalities specifically are authorized to contract with private systems, which typically sell
advertising space to raise revenue. General Municipal Law § 199-r(1)(d). Kingston's decision to sell
advertising space on its public bus transportation system may thus be deemed appropriately authorized
and conducted under State law.
We find nothing legally objectionable with the sale of advertising space on Kingston's bus system, as it
is a business activity directly related to the legitimate public function of operating Kingston's transit
system.
The Attorney General renders formal opinions only to officers and departments of State government.
This perforce is an informal and unofficial expression of the views of this office.

Sincerely,
JOSEPH M. CONWAY
Assistant Attorney General