Public authorities spend like mad

From Capital New York:

New York’s largest public authorities have increased their spending by $3.5 billion since 2013 and their combined debt has grown to more than a quarter of a trillion dollars, according to a new report released by state Comptroller Tom DiNapoli.

DiNapoli’s report found that 95 percent of the state’s public debt has been issued by public authorities, much of it through debt issued without ever being approved by voters—a process critics have dubbed “backdoor borrowing."

And the cost increases at state authorities, whose spending isn’t accounted for in the state’s budget, are being used to disguise hundreds of millions of dollars in extra state spending, DiNapoli's report shows.

The 1,180 state and local authorities employ 153,578 people, costing the state $10 billion a year in personnel charges and salaries, with nearly 13 percent of those employees earning more than $100,000 annually. By contrast, less than 8.7 percent of state employees, and 14.7 percent of New York residents earn that much.

But the authorities’ spending is also subject to fewer oversight and accountability measures, despite repeated audits showing failures among authorities to adhere to contracting rules and rein in improper spending.

Avella proposes land transfer bill

From Douglaston Patch:

State Sen. Tony Avella, D-Bayside, is calling on the state to require that all sales of property with a market value over $100,000 to private entities be reviewed by New York's attorney general and comptroller.

The senator's bill would amend the state's public authorities and public lands laws by requiring Attorney General Eric Schneiderman and Comptroller Thomas DiNapoli to review and approve the transactions when a public sale or auction is not required.

The legislation would also require a review from local members of the state's Legislature and the county executive in affected areas prior to the transfer of state land to a public benefit corporation or public authority.

Where our tax money really goes

From the Daily News:

The city will spend nearly $1 million in taxpayer money on a contest meant to encourage business in lower Manhattan - but two-thirds of the cash will likely go to consultants.

The city's Industrial Development Agency board Tuesday approved spending $950,000 on the Lower Manhattan Business Expansion Competition to award businesses that locate or expand in lower Manhattan prizes ranging from $20,000 to $650,000.

Three board members - representatives from the Manhattan and Bronx borough presidents and the city controller - angrily objected because the amount expected to go to consultants wasn't spelled out.

The Economic Development Corp. will oversee the project, but will hire a private consultant to run it.

EDC President Seth Pinsky wouldn't say how much the consultants would be paid because, he said, the agency is still taking bids.

A source familiar with the proposal said the EDC planned to spend about two-thirds - around $600,000 - on the consultant.

Public authorities dishing out ridiculous salaries

From the Daily News:

It's nice work if you can get it.

Nearly 5,500 employees spanning more than three dozen state public authorities raked in six-figure salaries last year, the Daily News has learned.

That amounts to 6% of the 90,237 state authority employees on the payroll, according to a recent review by the Authorities Budget Office.

Overall, the budget office found that the average total compensation package for a state authority worker is $70,600.

Long considered a "shadow government," public authorities serve as patronage mills that operate in secret and ring up hundreds of millions of dollars in debt, critics charge.

Former Assemblyman Richard Brodsky, who pushed for the creation of a body to oversee public authorities, said the new numbers shed light on the previously "secretive, Soviet-style bureaucracies."

"To finally have a light on the salary practices will require people to justify salaries which strike the average citizens as strange - and unusually high," Brodsky said.

The Metropolitan Transportation Authority topped the charts by employing the most staffers pulling in six figures.

Reforming and fining public authorities

From the NY Post:

An Assembly committee says the agency that oversees more than 700 public authorities in New York needs statutory authority to impose fines on the quasi-public entities that fail to report their borrowing, bonus payments or other activities.

In a report Monday, the Committee on Corporations, Commissions and Authorities says more than 100 authorities are essentially defunct and hundreds more are duplicative and should be shuttered.

The report urges applying technical analysis and common sense, noting a recent “disturbing trend” by local governments in establishing not-for-profit organizations that assert they aren’t subject to the oversight.

Committee Chairman Richard Brodsky says reform under the Authorities Budget Office has begun.

What a waste public authorities are!

MYFOXNY.COM - An investigation by the New York inspector general revealed that the Battery Park City Authority has squandered more than $300,000 on parties, gifts, and free lunches.

"Such excessive spending by a state authority was outrageous," said Inspector General Joseph Fisch, who also noted that the authority's staff complained of favoritism by top executives.

The inspector general's report identified wasteful spending of public funds from 2005 through 2008 on items from $100,000 on executive lunches to $16,000 open-bar parties and $100,000 in inappropriate charitable donations, including a gift to Auburn University Foundation, in Alabama.

Money for nothing

From the NY Post:

These jobs are worth millions.

Nearly 600 city businesses got $262 million in tax breaks in exchange for creating or providing jobs -- but some are not making good on their pledges.

The companies -- many of them Fortune 500 firms headquartered in the Big Apple -- had created about 20,000 jobs as of 2008, according to self-reported figures.

But that's a fraction of the nearly 100,000 they had promised to deliver as part of long-term deals with the Industrial Development Agency, which offers tax incentives and exemptions to keep companies here.

Good-government groups are critical of the IDA deals, citing a lack of transparency and inadequate oversight.

2008 was the first year that the IDA-aided companies logged their annual results directly to state Comptroller Thomas DiNapoli, who is pushing legislation that would increase oversight of IDA's self-generated reports.

The city's Economic Development Corp., which oversees the IDA, said it requires companies to annually detail their hiring. But the agency doesn't audit what the companies report.

Public authorities are mostly wasteful

From the NY Times:

Last December, the State Legislature passed a new law aimed at making the long inscrutable agencies more transparent and reining in their spending. Now, a state office given more power to oversee the authorities has issued its first report.

And the results do not seem all that encouraging — at least to New York taxpayers.

New York’s public authorities racked up more than $17 billion in new debt in 2009 and many failed to comply with the reforms contained in the new law, according to the report released this month by the Independent Authorities Budget Office.

The $17 billion in new debt brings the total debt accrued by authorities to $133 billion, the report states. The largest contributors to the total debt are the Dormitory Authority, which accounted for more than $38 billion, and the Metropolitan Transportation Authority, which contributed more than $28 billion.

More than 140 authorities failed to provide budget reports to the Independent Authorities Budget Office and 175 did not provide annual reports, the report said.

Agency proposes eliminating many public authorities

ALBANY, N.Y. (AP/ 1010 WINS) -- Two New York lawmakers want to shutter 129 public authorities and agencies established to address urban renewal, industrial development, waste management and other public enterprises.

Assemblymen Sam Hoyt and Richard Brodsky say the state's new Independent Authorities Budget Office recommended the closings in its review of more than 700 quasi-governmental agencies.

Many are currently dormant.

Hoyt, a Buffalo Democrat, says taxpayers have had to deal for years with the organizations, which have been accountable to nobody.

Brodsky, a Westchester County Democrat, says this is the first and easiest step toward reform. Earlier Tuesday, Brodsky said he's pressing the Fulton County Economic Development Corp. for information about its finances after it paid almost $1 million in bonuses to two of its top executives.

Taxing colleges and public authorities?

From the Times Union:

A plan that would require nonprofit organizations -- from private colleges to public authorities -- to pay property taxes is being put together by a high-ranking lawmaker as Democrats who dominate the Senate develop a budget that will come with some real estate tax relief.

"It's our No.1 priority," said one senator headed for a private budget conference of Senate Democrats Tuesday.

Three Senate officials said a budget resolution to be released soon would likely include at least parts of a circuit-breaker bill introduced by Sen. Jeff Klein, D-Bronx, and quite possibly the whole package. The component of Klein's bill most likely to be part of the plan calls for a $290 million STAR program for low-income senior citizens. The circuit breaker Klein envisions would give property taxpayers a credit or rebate based on their income level.

While Klein's proposal would cost money -- Senate officials estimate $1.2 billion -- Senate Majority Leader Pedro Espada, D-Bronx, said he is researching a revenue-raising proposal. It would require nonprofits to pay into the real estate tax base so that tax relief would be spread through a community. He said he wants to include public authorities owned by the state in the group of currently tax-exempt entities that would have to share the real estate tax burden.

"Have nonprofits contribute at a time of national sacrifice," Espada said. "It's not such a bad idea." A person familiar with his plan said he is expected to introduce a bill next week. It is projected to raise hundreds of millions of dollars.

The Espada plan would likely require nonprofit property owners, including private colleges, to pay taxes. He is proposing some exemptions, such as for small nonprofits. It is unclear whether his bill would cover the nonprofit health services network he runs in the Bronx.

The idea follows a plan developed by Richard Ravitch before he became lieutenant governor. He came up with a payroll tax for all New York metropolitan-area employers, including nonprofits, as a new revenue stream for the Metropolitan Transportation Authority.

It sounds interesting until you realize that the MTA is a public authority that owns property and that many public authorities are funded by taxes. So...

Perkins calls on Cuomo to investigate Atlantic Yards bond issuance

From Atlantic Yards Report:

Well, if state Senator Bill Perkins can't get a written statement from Governor David Paterson's office regarding the Atlantic Yards bond deal, maybe Attorney General Andrew Cuomo will weigh in.

Perkins, as he promised, sent a letter to Cuomo yesterday:

"I write to request your opinion of the recent bond issuance on behalf of Forest City Ratner for the construction of the arena at Atlantic Yards.

On December 18, 2009 I sent a letter to Governor Paterson outlining my concerns. Your office was carbon copied. In essence, the ESDC crafted an unusual transaction whereby a nearly defunct entity, the Job Development Authority (JDA) was used to form the Brooklyn Atlantic Yards Development Corporation (BALDC) which then issued the $511 million worth of arena construction bonds.

I believe that the bond issuance was done in this manner to avoid a review by the Public Authorities Control Board (PACB) and the state Comptroller. I respectfully request that your office issue an opinion as to whether the process employed during the bond issuance was legal, as the public must have utmost confidence in the processes of government.

Enclosed please find a copy of my letter to the Governor. I look forward to your diligent response."

Update: note contrast

Note that Perkins's letter focused on the avoidance of PACB review, not the other issue raised in his letter to Paterson, whether the BALDC deserves a tax exemption.

Looks like Cuomo is going to be asked to investigate every state or city-supported development scheme... simply because of how corrupt they all are.

Atlantic Yards bonds may be issued illegally

From Atlantic Yards Report:

The issue was unearthed by Amy Lavine, a staff attorney at the Albany Law School's Government Law Center who has been studying public authorities.

Typically, public authorities have to get their bonds approved by the Public Authorities Control Board--the governor, Senate Majority Leader, and Assembly Speaker hold the controlling votes--and the state Comptroller.

The BALDC [Brooklyn Arena Local Development Corporation] was authorized under § 1411 of the Not-For-Profit Corporation Law. The PACB approves the financing and construction of any project proposed by the ESDC or the sibling Job Development Authority, which created the BALDC.

"ESDC apparently did not want to go through this process," she said, and thus it created the BALDC, to which it will lease the arena land. The BALDC in turn will lease the land to the private company that will manage the arena.

The ESDC, she said, does have the authority to issue bonds, but "by skirting the process that's supposed to be followed, it seems that the bonds may have been issued illegally."

"Basically, the LDC is not a public entity," she said. "And it's controlled by different sections of the tax code in New York State. Either ESDC didn't think of the implications of this or they didn't think anyone would notice, because it is rather esoteric. It seems that, under the tax section that applies to the LDC, they're not eligible for exemption from property taxes." (The LDC is subject to §420-a of the property tax code.)

And if they're not exempt from property taxes, she said, there's no way to divert property taxes to pay for the arena bonds, via PILOTs (payments in lieu of taxes), and so nothing backing the bonds.

"To go forward, I believe that the process has to start over and ESDC will have to do this properly and get it reviewed by the Public Authorities Control Board and the state Comptroller," she said.

And that means they'd have to review the financial merits of the bonds, which hasn't happened, she said.

I'd add that the BALDC was also apparently set up to ensure that the bonds would be issued before the end of the year, beating a December 31 deadline, after which the arena would not have been eligible for such bonds.

(Yet the MTA is expected to close on this tomorrow.)

From DDDB:

State Senator Perkins (D- Harlem), Chair of the Senate Committee on Corporations, Authorities and Commissions, sent a letter to Governor Paterson on Friday explaining the legal concerns, which the Senator described as "raising the spectre of fraud," and rendering the bonds "effectively worthless."

Senator Perkins said at a Saturday community meeting confronting eminent domain abuse that he spoke to the governor's counsel, Peter Kiernan, who was taking the matter seriously. He asked that the Governor halt reportedly imminent closing on Atlantic Yards project agreements. He said that if the state did not respond, legal action would be considered.

Wow, so if I am reading this correctly, this entire project may get derailed because the state fucked up on a technicality. Six years of court battles, buying up land and demolishing a neighborhood because they thought they had it in the bag when in fact what was being pushed was illegal. Nice work! How much did this folly cost the taxpayers of New York State?

Time to BRING IN THE FEDS.

Using this as evidence, we can also speculate why Claire's LDC was formed by the EDC. I kind of thought the agenda didn't stop with sending the old battle axe out there to lobby her fellow tweeders to simply vote "yes" on the Willets Point project...

Paterson signs Public Authorities Bill

From the NY Times:

After years of debate and a string of corruption scandals, state officials moved on Friday to impose sweeping new oversight provisions on the state’s hundreds of public authorities, which have long functioned as a virtual shadow government largely immune to public accountability.

The law, passed by the Legislature this month and signed by Gov. David A. Paterson on Friday, was hailed by government watchdog groups as one of the most significant reforms in decades. It was one of the few such efforts led chiefly by the Legislature, long a place where bills intended to promote greater government accountability go to wither and die.

Public authorities have been a powerful yet inscrutable force in New York for decades, charged with running the state’s highways and mass transit systems, spearheading economic development and managing power plants. They range from the sprawling Metropolitan Transportation Authority to the small Oneida-Herkimer Solid Waste Authority.

“Today, we return to the control of the people of the state their most powerful institutions,” said Assemblyman Richard L. Brodsky, a Westchester Democrat, who was a chief sponsor of the new legislation. “If you go to school in New York City, you use the School Construction Authority. If you go to a hospital, you use the Health and Hospitals Corporation. The subways. The buses. The lives of New Yorkers are impacted by the operations of state authorities to an infinitely greater extent than they are by the departments of state government.”

For the first time, board members of those authorities will have a legal obligation, known as a fiduciary duty, to protect the interests and mission of the authorities they supervise, rather than being beholden to the mayors, governors and legislative leaders who appoint them. The new law will require authorities to seek approval from the state comptroller for most contracts of over $1 million that are not competitively bid.

Blame Bruce Ratner's sweetheart deal

From NY1:

The Metropolitan Transportation Authority is facing an unexpected budget shortfall, which could have consequences for commuters.

The MTA says tax revenues earmarked for the agency are $220 million less than the state projected. That's on top of a $143 million cut in funding under the state budget deal passed last week.

Earlier this year, the state bailed out the agency and instituted a new payroll tax to fund mass transit.

At that time, the MTA promised no fare hikes until 2011 and also scrapped plans for service cuts.

While the agency says fare hikes are still off the table, it says some difficult choices will have to be made in the agency's budget which comes out next week.

From Develop Don't Destroy:

Some simple math...
In 2005 the MTA appraised the 8-acre Vanderbilt Yards at $214.5 million. They then undertook a sham RFP process. Extell Development Company bid $150 million and Forest City Ratner (which wanted the Yards for its 22-acre Atlantic Yards project) bid $50 million. The MTA told Ratner that bid was too low and after six weeks of "negotiating" Ratner upped it to $100 million.

Ratner was then supposed to pay the MTA $100 million cash at closing. They didn't.

Fast forward to the summer of 2009. The MTA announces that it has "negotiated" a new deal with Ratner. Despite having Ratner over a barrel the MTA strikes a deal where Ratner pays only $20 million at closing. The rest would be paid over a 22 year period. The MTA and Ratner expected to close in 2009. But they haven't

$100 million minus $20 million is $80 million. At minimum the $200 million MTA shortfall, should be only $100 million and $120 million maximum. Of course had the MTA had a competitive bidding process for the Vanderbilt Yards there is a reasonable chance they'd have no shortfall this year.

Aaaaand this is why we need public authorities oversight.

Public authorities need reform now

NY 'Shadow Government' Debt Rises To $140 Billion

NEW YORK (AP) ― The latest state records show New York's public authorities -- long criticized as a shadow government subject to little outside scrutiny -- have increased their debt to more than $140 billion. That's a 16 percent increase over the past five years, reflecting more borrowing even when fiscal times were good and revenue was healthy.

Democratic Assemblyman Richard Brodsky says Wednesday the growth in borrowing by public authorities through unelected boards shows the need for reform required in a bill now before Gov. David Paterson.

The bill would create an oversight board and require more transparency in how authorities provide services, including operations of the Thruway Authority and the Metropolitan Transportation Authority.

Perkins and Brodsky are onto Bloomberg

From Atlantic Yards Report:

Blaming New York City Mayor Mike Bloomberg for Gov. David Paterson’s apparent reluctance to sign sweeping legislation that would reform the governance of the state’s public authorities, state Senator Bill Perkins (D-Harlem) and Assemblyman Richard Brodsky (D-Westchester), yesterday urged Paterson to sign the bill, offered forceful rebuttals to Bloomberg’s concerns, and said they were considering public meetings and hearings to focus attention on the bill.

“This bill is as American as apple pie,” Brodsky (right) said of the Public Authorities Reform Act of 2009. “This is a power struggle between the needs of the people and the needs of a powerful mayor.” The bill has drawn broad support from editorialists and civic groups.

Perkins said Paterson should “return to his roots,” noting that, “when the governor had this office [state Senator from Harlem], he was a leading voice for reform.” They spoke at a hastily-called press conference at Perkins’s Harlem office, attended by journalists from the Associated Press, WNYC, and City Hall News, along with AYR.

Perkins and Brodsky, serving as the chairmen of committees that oversee public authorities, shepherded the bill through the legislature to nearly unanimous approval.

At least nine newspapers, including the New York Times, Newsday, the Rochester Democrat & Chronicle, the Buffalo News, the Albany Times-Union, and the Syracuse Post-Standard, have endorsed the bill.

Likening the debate over the bill to the polarized and distorted national discussion over health care reform, Brodsky said “were not going to allow the mayor or anyone else to mischaracterize what’s in the bill.” He noted that the authorities operate all over the state, with many of their activities having nothing to do with New York City. “This is not a New York City issue,” he said, citing widespread support for the bill.

Bloomberg apparently objects to a provision that requires records kept detailing all contact with lobbyists, including those from other government agencies.

“They don’t want the public to know when the mayor’s office calls in and tells the governor what to do,” Brodsky said.

As the Wonkster points out, the heat is on.

Paterson has said he supports 90% of the reform bill, but the 10% is no doubt what Bloomberg wants to see changed.

Paterson, Bloomberg opposed to public authorities reform

From the NY Times:

Gov. David A. Paterson is set to reject a sweeping overhaul of the state’s hundreds of public authorities that was passed by lawmakers last month but is opposed by the governor’s staff and Mayor Michael R. Bloomberg of New York City.

The Paterson administration will ask the Assembly to delay sending the bill to the governor’s desk, officials said, and will try to devise a new version of the legislation before a special legislative session next month. But the governor and mayor have so many objections to the current bill that it could be difficult to negotiate a new one with the Legislature in just a few weeks.

If the governor were to veto the bill, or leave it in limbo, he would be turning aside the most ambitious attempt in decades to overhaul the system, which includes groups ranging from the Metropolitan Transportation Authority to the Niagara Falls Bridge Commission, and which has been criticized as functioning as a shadow government with little oversight.

The Bloomberg administration has argued that the bill would unfairly infringe on the mayor’s power and that it contains a provision that would place prominent development projects in New York City at risk. Mr. Bloomberg has no official say in the matter, but he and the governor are on generally good terms, and their staff members have been discussing concerns about the legislation.

The governor’s office objects to a number of provisions, including one that would require the comptroller to review authority contracts of over $1 million — a restriction that Mr. Paterson and business groups say will be too time-consuming. They also oppose a provision that would require authorities to record and disclose all contacts with lobbyists because it appears to encompass contacts with officials in other government agencies or authorities.

Thank God for these two, who feel obligated to protect developers and lobbyists at any and all costs.

Bloomberg rejects public authorities reform

From NBC 4:

A bill to overhaul hundreds of state authorities is heading toward Governor Paterson's desk but the question is: why hasn't it reached him yet? The bill passed by sizable majorities in both houses of the Legislature. Reliable sources in Albany say the Mayor has weighed in against the legislation, putting pressure on the Governor to veto the bill. City Hall says the Mayor is indeed against the proposed legislation and for good reasons. The bill would set up an independent budget office with powers over the authorities, including the ability to issue subpoenas to compel witnesses to testify. Authorities would have to turn over their financial records to this budget office.

Oh, the humanity!