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New York, Local Agencies Fail to File Reports

lohud.comJuly 5, 2012

By Carla Matthews

The independent Authorities Budget Office opened in March 2010 with the mission of making New York’s ever-expanding “shadow government” of state and local quasi-public agencies more accountable to the public.

More than two years later, 26 percent of New York’s 553 state and local authorities are not keeping the Authorities Budget Office abreast of their activities and finances, a report this week from the office found. Fifteen of them are in the Lower Hudson Valley, and two previously were censured for not submitting the documents: the Village of Haverstraw Urban Renewal Agency and the Sleepy Hollow Parking Authority.

The number of authorities continues to expand, as does the debt they issue and tax exemptions they hand out. There was a net increase of 63 authorities the office tracks from 2010 to 2011, for a total of more than 550 of the public benefit and not-for-profit corporations, the report said. All but two of the 63 are local development corporations, which can issue tax-exempt bonds, take over property for economic development purposes and contract for projects without using the public bidding process.

State and local authorities spent more than $53 billion last year and have $233.3 billion in outstanding debt, the report said. Twenty-six state authorities had operating deficits in 2011.

Almost every New York resident and taxpayer are impacted by state and local authorities’ financial decisions and activities, David Kidera, executive director of the Authorities Budget Office, wrote in a letter accompanying the annual report Monday.

“It is time for a comprehensive debate on the future of our public authorities and whether New York state, its local governments and its taxpayers can continue to support the growing size and cost of this system,” Kidera wrote.

Public authorities, first created in the early 1900s, have long been criticized for being able to incur debt and undertake major development projects with little public oversight. Lawmakers revamped state public authorities law in 2009 amid myriad scandals involving the independent entities.

Industrial development agencies, another type of local authority, lost their ability to finance not-for-profit and civic facilities projects in January 2008, prompting an increase in local development corporations. More than 19 percent of LDCs — 52 — were incorporated in the past two years, the report said. IDAs gave out nearly $1.5 billion in tax exemptions in 2010 and 2011. Local governments received $708 million in payments in lieu of taxes, but they lost out on roughly $773 million in revenue.

In the Lower Hudson Valley, some authorities that haven’t filed their required annual reports are actually inactive.

Haverstraw Mayor Michael Kohut sent a letter to the state Monday to explain that the Urban Renewal Agency was defunct and request information on how to dissolve it. It was created sometime in the early 2000s as a village redevelopment tool, but it never had a board, budget or meeting, he said.

Authorities have to file dissolution papers with the Department of State and the attorney general, Kidera said Tuesday. “There is a legal process, and until such time as you complete that process, you are still a legally constituted entity and subject to all requirements,” he said.

Sleepy Hollow Administrator Anthony Giaccio said village officials voted to dissolve the defunct parking authority March 27.

In New Rochelle, the local development corporation for the city-owned garage at New Roc City has no assets and is in the process of being dissolved, said Michael Freimuth, city development commissioner. The city refinanced the garage with municipal bonds at a lower interest rate than what had been obtained through the LDC, he said.

New Rochelle’s IDA hasn’t filed its annual report and audit report due March 31 because it hasn’t received reports from a number of aid recipients, Freimuth said. The IDA’s board is pursuing the reports and could rescind some of the awards. The state’s system doesn’t allow authorities to file partial reports, he said.

The Local Development Corp. of Mount Vernon hasn’t filed its budget, which was due Nov. 1, or its annual report and audit report due in March, the state report said.

Charlene Indelicato, commissioner of planning and community development since January, said she wasn’t aware there was an LDC and it’s likely defunct.

The city Urban Renewal Agency’s annual and audit reports were due March 31. Indelicato, director of the Urban Renewal Agency, said they would be completed as soon as possible. The agency has a new treasurer, she said.

Ramapo Local Development Corp. is on the list of delinquent filers for not submitting a budget in November. The authority submitted a budget for the wrong fiscal year and is expected to submit the correct one in a few days, the Authorities Budget Office said.

The Authorities Budget Office said it lacks enough resources to enforce compliance or reporting, or to take action against authorities that submit inaccurate, incomplete or misleading information. If the state is serious about cracking down on authorities, “then you need the enforcement tools to ensure that the transparency and accountability are occurring,” Kidera said.

Absent increased staff and resources, the office wants the ability to assess fines, suspend directors or curtail certain activities of an authority and its board, he said.

Another concern highlighted in the annual report is the compensation for employees of public authorities. Just under 1,100 employees received more than $179,000 each, which is what the governor makes. More than 72 percent work for the six health-care corporations that are defined as public authorities, including the corporation that runs Westchester Medical Center.

Beyond that, the office recommends creating a new type of local authority that would combine the powers and purposes of LDCs and IDAs and thereby eliminate the need to have multiple local economic development agencies.

Pending legislation adopted by the Senate and Assembly would dissolve 28 defunct state authorities and 95 local authorities. Other bills sent to Gov. Andrew Cuomo would dissolve other local authorities.

Local authorities that will be dissolved if the bills are signed include urban renewal agencies in Mamaroneck, Mount Kisco, New Rochelle, Nyack, Sloatsburg, Tuckahoe and Yorktown; IDAs in Kent and Carmel; the community development agency in Peekskill; parking authorities in New Rochelle, Peekskill and Spring Valley; and the Peekskill Civic Center Authority.

Three local LDCs were created last year: Philipstown Depot Theatre Development Corp., Westchester County Local Development Corp. and East of Hudson Watershed Corp., which includes towns in northern Westchester, Putnam and Dutchess counties.


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