When the New York Legislature passed a bill in July to impose new restrictions and oversight on public authorities, the legislation’s sponsor called it “the most thorough reform of the authority system in American history.”
But for Assemblyman Richard Brodsky, D-Westchester, who chairs the Committee on Corporations, Authorities, and Commissions, the passage of the bill didn’t signal the end of his effort to rein in what he has called “rogue agencies.”
More than two months later, the bill has been neither signed nor vetoed as Gov. David Paterson’s office negotiates with legislators over objections to the measure.
“It’s always possible to improve legislation and to the extent the governor is able to be persuasive, we’re certainly open minded to improve it,” Brodsky said.
However, objections raised by the governor’s office, the Dormitory Authority of the State of New York, and New York City Mayor Michael Bloomberg are fundamentally at odds with many of the very elements Brodsky has said are needed to bring greater transparency and accountability to public authorities.
A spokeswoman for Paterson said that “productive meetings” have been held and the parties are moving closer to an agreement.
State Comptroller Thomas DiNapoli has endorsed the bill.
“For too long, New York’s public authorities have operated in the shadows,” he said. “New Yorkers have the right to know if authorities are using public resources prudently and effectively. This reform legislation is a positive step toward holding authorities and their officers accountable and keeping taxpayers informed.”
The bill, A. 2209-C/S. 1537-C, would create a new oversight agency within the New York Department of State — an independent Authorities Budget Office. The office would be run by a director, chosen by the governor and confirmed by the Senate for a four-year term. The state already has an Authority Budget Office that was created as part of the executive branch under authority reforms passed in 2005. It is not clear what would happen to the existing agency.
DASNY general counsel Jeffrey Pohl complained in a letter to the governor’s general counsel that the new office would duplicate some responsibilities of the existing oversight office and of the Office of the Inspector General.
Brodsky said that the powers and duties of the first Authority Budget Office would be merged with those of the new Authorities Budget Office. Language that would clarify what would happen to the original office is under discussion, according to Kent Sopris, Brodsky’s legislative director.
The new office would collect and publish reports on public authorities and make recommendations on policy. It would also take complaints and could begin investigations into authorities.
That provision alarmed Brian McMahon, executive director of the New York State Economic Development Council, which lobbies on behalf of economic development professionals and industrial development agencies. The new bill could lead to costly delays for projects, he said.
“This makes it so much easier for any person, for whatever reason, regardless of merit, to hold projects up,” McMahon said. “The process that is in place now works, the standards are clear, the grounds for suing a public authority are clear.”
Brodsky took issue with McMahon’s characterization and said the bill would not cause unnecessary delays but would rather “allow for an independent look at what have been Soviet-style bureaucracies.”
“We’re in a system with these authorities where there’s nobody who can, under current law, provide a check and a balance,” Brodsky said. “The notion that a check and a balance in a democracy is the wrong way to go strikes me as not the correct approach to the problem.”
Under the bill, authority board members would have new fiduciary responsibilities.
In a Sept. 25 letter to Brodsky, Michelle Goldstein, director of legislative affairs for Bloomberg, said this provision “could effectively silence an elected official’s voice in connection with board decisions.”
“Under this provision, board members, if appointed by an elected official, would arguably be encouraged to ignore the concerns of the jurisdiction that appointed them and only consider the fiduciary interest and 'mission’ of the authority,” Goldstein wrote. Authorities’ missions are already aligned to state and local government, she added.
New York City Comptroller William Thompson Jr., who supports the bill and is running against Bloomberg for mayor, has called that critique “disingenuous.”
Some people “have complained that by requiring the appointment of independent board members, the proposed law reduces accountability when the reverse is clearly the case,” Thompson said in a letter to Paterson.
The bill would also require all debt-issuing authorities to create a finance committee, which Pohl wrote would create a burden on board members who are volunteers.
“The concept of a finance committee makes little sense for a conduit issuer, such as DASNY, because DASNY’s debt is not backed by DASNY’s own resources and, when DASNY issues state-supported debt, it does so only for debt previously authorized by the state,” Pohl wrote.
New requirements for board members would make it harder to attract qualified individuals, according to Pohl.
Brodsky did not agree.
“The notion that we’re going to make these things run responsibly and therefore good people won’t want to serve on them does not strike me as having been thought through,” he said. “When you’re handling the huge sums of money they handle, I think there ought to be a committee that is financially literate and can make decisions and help the board make decisions.”
The state comptroller’s office generally reviews all contracts for state agencies for more than $50,000. Just a few public agencies, such as the Long Island Power Authority and the New York State Thruway Authority, are currently required to submit contracts to the comptroller’s office. Under the new bill, all authority contracts over $1 million would be subject to review by the office.
“Our purpose here was to bring the comptroller in to review those contracts, the same way those contracts are reviewed for state agencies,” Brodsky said.
Pohl said that process could cause delays.
“The delays inherent in obtaining the comptroller’s approval are certain to increase costs in the construction business, 'where time is money,’ ” Pohl wrote.
The bill restricts an authority’s ability to sell or lease property for below-market value.
McMahon said that IDAs often sell land at an industrial park at below market rates as an incentive to attractive new companies. He said the bill “creates roadblocks to doing that.”
Goldstein said that the ability to dispose of property for less than market value provides “crucial flexibility that is necessary to undertake economic development projects and other community initiatives.” Current rules already require transparency, she said.
Requiring that property be sold or leased at fair market values allows the public to “know the real value of the subsidy,” Brodsky said. Instead of disposing of property at a discount to stimulate economic development, authorities would still be able to provide an equivalent grant, he said.
“There’s no reason in the world why an entity which is in the business of doing economic development deals could not take the proceeds of a fair-market sale and return it to the party involved in a simultaneous transfer,” Brodsky said.
Robert Ward, the deputy director of the Rockefeller Institute of Government, an Albany-based think tank, said there was an element of a tug-of-war between the Legislature and the executive branch over authority reform.
“Public authorities generally have been a tool by which governors can get things done,” Ward said. “We want governors to get things done. At the same time, we want the Legislature to provide the checks and balances that ensure integrity and openness in the process ... with some of these provisions, almost by definition, you will be making the process longer, more complicated, and potentially diminish the result that you want.”