Everything about Public Benefit Corporation totally explained
A
public benefit corporation is a
public corporation chartered by a
state designed to perform some public service. A
public authority is a type of public benefit corporation that takes on a more bureaucratic role, such as the maintenance of public
infrastructure, that often has broad powers to regulate or maintain public property.
Authorities borrow from both
municipal corporations law (that is, the laws responsible for the creation of
cities,
towns, and other forms of
local government) and private corporations law. Other public benefit corporations resemble private non-profit organizations, and take on roles that private corporations might otherwise perform. These corporations often operate in heavily regulated industries, such as broadcasting and transportation.
Corporations such as these are often found in
common law jurisdictions such as Commonwealth countries, including
Canadian provinces and
U.S. states.
Origins
Although ally associate corporations, sometimes negatively, with private business, corporations in theory began as means to serve public purposes. Corporate theory has its roots in primarily government and religious institutions, where the institution itself is identifiable independently of its membership's
mortality. For example, if the
Pope dies, the
Catholic Church continues to exist, just as it continues to exist as generations pass on and get replaced by new members.
Public benefit corporations likely have their direct roots in
mercantile capitalism. In the
early days of
European exploration and
colonization, a government or
monarch would sometimes grant a
charter to an entity allowing it to incorporate and make potentially risky investments. While certainly not public benefit corporations by today's standards, entities such as the
Massachusetts Bay Company,
Hudson's Bay Company, and the
Dutch East India Company arguably are early prototypes of publicly-chartered (in this case, crown-chartered) corporations successfully making risky investments.
History
The first public authority on record is the
Port of London Authority, established 1908. According to the
Port of London Acts The Authority is a public trust established to "administer, preserve and improve the Port of London." The goal was to create an entity that would be run self-sufficiently like a private company yet remain under the control of the government. The name
Authority is derived from the founding act of
Parliament which repeatedly stated that
"Authority is hereby given...."
The special status of this entity and the fact that it remained subject to
administrative law was established by the UK courts in [1919] 1 KB 176.
Incorporation and powers
Public benefit corporations are generally governed by boards of directors, which are appointed, rather than elected, and, internally, reflect
bureaucratic forms. The corporation is government-owned and performs a specific, narrow function for the public good.
Public benefit corporations are most often created by
statute. In many
Commonwealth countries, public benefit corporations continue to receive charters from the
British monarchy. In the United States, they receive their charters usually from states, but possibly from the federal government.
Public authorities are usually created with a specific mandate, such as the construction of bridges,
mass transit, etc. Unlike
departments or ministries of the state, these corporations usually are enabled by
statute to raise revenues through bond issues.
For more information, read below about individual jurisdictions.
Public benefit corporations by location
United Kingdom
The
BBC is a public benefit crown corporation in the
United Kingdom. Many universities have charters going back centuries, and these too are in theory corporations.
Public authorities include:
Canada
VIA Rail in
Canada is an independent
crown corporation offering intercity passenger rail services in Canada. The
Canadian Broadcasting Corporation is another example.
The
Province of
Ontario shares two international public benefit corporations with the U.S. state of New York:
Buffalo and Fort Erie Public Bridge Authority (External Link
) (also known as the Peace Bridge Authority) — international authority that maintains the Peace Bridge link between Buffalo, New York, and Fort Erie, Ontario.
Niagara Falls Bridge Commission (External Link) — international public authority controlling various bridges in the Niagara Falls. The Board of Commissioners has eight members — four appointed by the Ontario Premier, and four by the Governor of New York State.
Russia
In Russia the law “On Noncommercial Organizations” describes the status state corporations. It is a special form of noncommercial partnership founded by the state to fulfill socially significant tasks. The activities of each corporation are described in a special federal law. Assets transferred to a state corporation are not state property from the legal point of view. Under the law “On Noncommercial Organizations,” property transferred to as the investment in a partnership is the property of the partnership. The partnership itself is no one's property. It manages its assets as described in its charter. The rights of the founder are considerable in the partnership, but they're still not ownership rights. There is only one founder in a state corporation, and it's the Russian Federation. That is why the state corporation is independent. It is a set of assets that are managed for purposes established in its charter by managers appointed by the founder. State corporations, as a rule, are subordinate not to the government, but to the Russian president, and act to accomplish some important goal. The state corporations can manage those assets as demanded by the sketchily described goals and tasks of the charters and as allowed by the supervisory council, on which there's no one the president doesn't trust.
United States
Under the United States Constitution, per the United States Supreme Court, the United States federal government is an entity of limited sovereignty that can only exercise those powers conferred upon it by the Constitution (Amendment 10). The states, on the other hand, have unlimited sovereignty. They can exercise any power that isn't granted to the federal government under the terms of the U.S. Constitution, provided it isn't prohibited to them under their own constitutions.
Since the U.S. Constitution doesn't explicitly or implicitly empower the Government of the United States to create corporations outside of the confines of the federal government, the power to define and create corporations (other than as agencies of the U.S. government) is reserved to the individual states.
Private corporations were not so common in the early United States as they're today; corporations were often founded to create a public purpose, such as the maintenance of a toll bridge. Today, public benefit corporations are popular in some states in the United States, perhaps especially New York State. Many interstate compacts in the United States are public benefit corporations.
Examples of Federal public benefit corporations created, owned and operated by the U.S. Government include Amtrak, the United States Postal Service and the Corporation for Public Broadcasting.
Many public authorities in the United States are interstate compacts or local and regional entities covering multiple municipaliies on the county or state level.
California
Los Angeles County Metropolitan Transportation Authority
Santa Clara Valley Transportation Authority
Los Angeles Universal Preschool
Delaware
The Delaware River and Bay Authority controls the Delaware Memorial Bridge and the Cape May-Lewes Ferry between Delaware and New Jersey, and is a bi-state agency created by an interstate compact with New Jersey.
DART First State (Delaware Transit Corporation) is an agency of the Delaware Department of Transportation (DelDOT)
which operates, funds and oversees bus and passenger rail service.
Delaware Solid Waste Administration (DSWA) is an independent establishment of the state of Delaware, created in 1975 to oversee solid waste planning, recycling and disposal, and to operate landfills.
Florida
Miami-Dade Transit
Jacksonville Port Authority
Jacksonville Aviation Authority
Jacksonville Transportation Authority
Illinois
The Bi-State Development Agency is a bi-state agency managing public transportation between southern Illinois and Missouri. It serves the St. Louis metropolitan area.
Maine
In the state of Maine, public benefit corporations (External Link):
are designated as a public benefit corporation by statute; or
are tax exempt under section 501(c)(3) of the Internal Revenue Code; or
are organized for a public or charitable purpose and is required to distribute assets to a similar tax exempt organization upon dissolution; or
have elected to be a public benefit corporation.
Maryland
Maryland Transit Administration
Massachusetts
Massachusetts Bay Transportation Authority (MBTA)
Massachusetts Port Authority
Massachusetts Turnpike Authority (MTA)
Missouri
See Bi-State Development Agency.
New Jersey
The New Jersey Turnpike Authority] (NJTA) is a public benefit corporation in New Jersey, created by the New Jersey Turnpike Authority Act of 1948.
The Delaware River and Bay Authority controls the Delaware Memorial Bridge between Delaware and New Jersey, and is a bi-state agency. The Delaware River Port Authority is a bi-state agency of New Jersey and Pennsylvania.The Port Authority of New York and New Jersey is a bi-state agency shared with New York.
NJ Transit, formed in 1979 operates bus, light rail and passenger rail service in New Jersey and in neighboring states as well as funding and planning of bus and rail services and programs.
Although "Public Benefit Corporation" isn't a statutorily defined term under State laws (New Jersey Statutes or the New Jersey Administrative Code), such corporations are among those included within the statutorily defined term "State Agency".
New Hampshire
Manchester Transit Authority (New Hampshire)
New York State
The widespread use of public authorities in the United States was pioneered in New York State by Robert Moses. The approval of the New York State Public Authorities Control Board is required in some cases when creating an authority. An authority may at times levy taxes and tolls; this means that they're not part of the usual state budgetary process, and gives them a certain independence. Furthermore, they may make contracts; because of public authorities' corporate status, there is, generally, no remedy against the chartering State for the breach of such contracts. John Grace & Co. v. State University Constr. Fund, 44 N.Y.2d 84, 375 N.E.2d 377; 404 N.Y.S.2d 316 (1978). On the other hand, as agents of the state, public authorities are not subject to many laws governing private corporations, and are not subject to municipal regulation. Employees of public authorities usually are not state employees, but are employees of the authority. Ciulla v. State, 191 Misc. 528; 77 N.Y.S.2d 545; (NY Court of Claims, 1948). Public authorities can also often condemn property. See Generally 87 NY Jur PUBLIC AUTHORITIES Section 1 et. seq..
Among the major public benefit corporations in New York State, the Port Authority of New York and New Jersey, an interstate compact, and the Metropolitan Transportation Authority, which manages most of the public transportation to, in, and around New York City, might be the most famous. New York has hundreds of lesser-known public benefit corporations. The Urban Development Corporation, founded to provide public housing, now has other priorities, and it boasts no less than 107 subsidiaries with devolved powers. One of these, the Lower Manhattan Development Corporation has been receiving a lot of press, in the wake of the September 11, 2001, terrorist attacks.
New York likely has the most extensive number of public benefit corporations in the United States.
» See New York State public benefit corporations
Pennsylvania
In this state, a Municipal Authority can have many similarities to a Public benefit corporation.
The Southeastern Pennsylvania Transportation Authority (SEPTA) provides public transportation in and around Philadelphia.
The Delaware River Port Authority is a bi-state agency of Pennsylvania and New Jersey.
Tennessee
Tennessee is arguably the banner state for the Tennessee Valley Authority's (TVA's) operations, which span a region extending into seven states (most of Tennessee and parts of six others), but the TVA is actually a Federally-owned public authority. The TVA has been key in aiding the region's economic development, most notably in the 1930s during the Great Depression.
Texas
Metropolitan Transit Authority of Harris County, Texas
Port of Houston
Vermont
Like Maine, the state of Vermont defines public benefit corporations broadly. They include public benefit corporations founded by the state and by private entities. The Vermont Economic Development Authority(External Link) is an example of a state-owned public benefit corporation.
Washington
Port of Seattle
Other meanings
More broadly, a public benefit corporation could be any corporation that exists for a charitable purpose, though these are generally called non-profit corporations if they aren't founded by a government. Some jurisdictions (the U.S. State of Maine, for instance) might define a public benefit corporation broadly. In California, public benefit corporations are one of several types of non-profit corporations.
Further Information
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