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Use of Profits from Vending Machines in Municipal Buildings

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Reviewed Date: August 17, 2017

Original Author: 
Hemsley, Sid
Date of Material: 
Jun 5, 1990

Revenue sources
Vending machines

Use of Profits from Vending Machines in Municipal Buildings

MTAS was asked whether revenues from vending machines in public facilities in local governmental entities are "public funds."

Knowledgebase-Use of Profits from Vending Machines in Municipal Buildings June 5, 1990

Your question is whether Attorney General's Opinion U89-134 applies to certain vending machines in the City's municipal buildings. As I understand it, some city departments have installed vending machines which they own. The machines are self-supporting; the departments themselves stock and maintain them from machine revenues. The profits from the machine are used for departmental parties.

Attorney General's Opinion 89-134 addresses the question of

Whether revenues from vending machine and pay telephone operations conducted in public facilities in local governmental entities, including city halls [and other local government buildings] are "public funds."

The opinion declares that absent any private act or charter provision that expressly provides for the distribution of such funds, the answer is yes, and concludes that such revenues should be handled in the same manner as are the other revenues of the local governmental entity.

I doubt that a municipal charter or a private act that expressly provides for the distribution of funds from vending or similar machines can be found in Tennessee.

However, the opinion in question "assumes" an arrangement in which the local government allows a private company to install the machines or pay telephone in a public building in exchange for a periodic payment of one kind or other from the private company; in other words, a space lease arrangement. In the city's case, the city departments own and operate the machines, including maintaining and stocking them from the revenues the machines generate. There is no use of a public building space by a private company. The departmental employees directly benefit from the machines in two ways: they have access to the machines while they are working, and they have parties from the profits generated by the machines.

Attorney General's Opinion 89-134 does not appear to contemplate the city's vending machine arrangement.

To remove any lingering question about the use of such funds, the city might consider a charter amendment during the next session of the General Assembly specifying that the city can own and operate vending machines and distribute the profit derived from them to the departments in which they are located for the benefit of their employees.

If I can help you further in this or any other matter, please let me know.

Yours truly,

Sidney D. Hemsley
Legal Consultant


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