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2000-5: Unspent Funds in a Transition And Inaugural Entity ("TIE") Account Must Be Returned to TIE Donors

Wednesday, October 11, 2000

Re: Administrative Code §3-801(1), (7); Campaign Finance Board Rules 11-02; 11-04(a)(4), (b)(4); Advisory Opinion No. 2000-5.

An advisory opinion has been requested by Eva's Council Committee, City Council Member Eva Moskowitz's transition and inaugural entity (hereinafter, the "TIE").1 The TIE was opened to support Eva Moskowitz's inauguration on September 14, 1999 and currently is inactive. The TIE asks what may be done with the $283.04 that remains in the TIE bank account now that all planned inaugural and transition activities have taken place and all liabilities associated with those activities have been paid.

Prior to 1998, the financing of transition and inaugural activities undertaken by successful candidates for City office for purposes of commencing their term in office was not regulated by either State law or by the New York City Campaign Finance Act. Concerned that this lack of regulation increased the likelihood, or at least the appearance, that wealthy special interests would have undue influence over elected officials, the New York City Council amended the New York City Administrative Code to regulate private financing of transition and inaugural activities. See Local Law 39 of 1998, §1.

New York City Administrative Code §3-801(1) states that:

Candidates elected to the office of mayor, public advocate, comptroller, borough president, or member of the city council may authorize one or more entities, other than a political committee, for the purpose of accepting donations and loans, and for making expenditures, for transition or inauguration into office. Such donations and loans may not be accepted and such expenditures may not be made on behalf of the candidate prior to the registration with the campaign finance board of each such entity...

Section 3-801 further provides that "entities required to be registered pursuant to subdivision one of this section shall not incur liabilities for purposes other than transition or inauguration into office." New York City Administrative Code §3-801(7).

Campaign Finance Board Rule 11-04(b)(4) elaborates upon the restrictions placed upon transition and inaugural entities by prohibiting such entities from incurring liabilities or making expenditures "for purposes other than transition or inauguration into office." Additionally, under Rule 11-04(a)(4), an elected candidate may not "continue in existence an entity registered under Rule 11-02 after it has paid all liabilities it incurred for transition and inauguration into office."

Accordingly, having registered with the Campaign Finance Board as a transition and inaugural entity under Board Rule 11-02, the TIE is prohibited from making expenditures for any purposes unrelated to Eva Moscowitz's transition and inauguration into public office. If, as represented by the TIE, no further inaugural or transition activities are to be undertaken, and there are no outstanding liabilities associated with such activities, then there remain no permissible expenditures that the TIE may make with its remaining unspent funds.

The TIE has not proposed any use for the funds remaining in the bank account. The bar against elected candidates maintaining a transition or inaugural entity after it has paid all liabilities incurred for transition and inauguration activities, however, precludes the TIE from retaining the unspent funds in anticipation of future inaugural or transition activities that may be associated with a later election. Thus, the Board concludes that under New York City Administrative Code §3-801, the only permissible use for the TIE's unexpended funds is for the funds to be returned to one or more of the TIE's donors.


1 The request was made by Eric Grannis, Treasurer to the TIE, by letter dated September 14, 2000.