The New York State Thruway Authority has failed to fully implement debt issuance recommendations made by the state comptroller's office four years ago, Comptroller Thomas DiNapoli said on Friday.
"In 2005, our office told the Thruway Authority to do a better job of managing how it issues debt," DiNapoli said in a press release. "There were too many unanswered questions and poorly documented procedures. Four years later, a lot of those questions remain unanswered."
The Thruway has only fully implemented one out of nine recommendations made in 2005 while partially implementing three others, according to an audit issued by the comptroller's office. The authority refuted many of the criticisms leveled at it with a statement issued hours after the audit's release.
Other than changes made when the authority in January adopted the guidelines of the governor's task force on minority- and women-owned business enterprises, the Thruway has not developed procedures that outline the criteria to be used when assigning underwriters and bond counsel to each debt issuance, the audit charged.
The audit also found that the authority has only partially implemented a recommendation to document the reasons particular firms were assigned to work on each debt issuance.
"The authority documented why firms were assigned for two issuances and decided this process was not adding value to the process," the audit said. "The authority instead uses a rotation to ensure all the major firms receive work."
Auditors found that a small number of firms managed most of the Thruway's debt sales and earned the largest share of fees. In 11 bond sales conducted from July 2006 through September 2008, one bond counsel firm was assigned to five sales, another was assigned to four, and a third assigned to the remaining two.
The Thruway responded that it selects its list of underwriters and bond counsel firms through a formal, transparent, and competitive request for proposal process.
"The underwriters and bond counsel in the respective pools were all chosen pursuant to written selection criteria and therefore are all qualified to provide the services required," the authority said.
"Firms are selected for individual transactions based on their different strengths. Having some discretion in forming a syndicate of banking firms for a transaction allows the authority to create the most effective team of underwriters, resulting in an efficient and cost effective transaction."
The authority said that its underwriter selection process was in line with the MWBE task force's, which included providing participating public authorities with discretion in selecting the underwriters so that minority- and women- owned firms will have better opportunities to senior manage transactions.
The comptroller's recommendations could "hamper" the agency's ability to meet the goals of the task force, it said.
The one recommendation that was fully implemented was that the authority determine the actual cost of issuance on each debt sale so it could evaluate how well it was estimating costs, the audit said.
The Thruway has issued $19.4 billion of new-money and refunding bonds since 2000, including $1.65 billion in the current year, according to Thomson Reuters. It has $2.3 billion of debt outstanding but is also an issuer of state-backed debt including personal income tax bonds.
The authority operates and maintains 641 miles of roadway, which includes a 496-mile toll road connecting New York City and Buffalo, as well as other major regional roads.