New York State authorities treat private interests on behalf of the public

Like unexpectedly stumbling across a section of the zoo populated only with exotic animals, make the reader ponder the authorities.

If they resemble zebras with their familiar black pointed stripes, it wouldn’t just be the authorities’ stripes that would be scary. Some would have antlers, others would breathe fire. But they would all be recognized as relatives of the horse.

Fantastic metaphor or allegory alone cannot be relied upon to provide the most accurate picture possible of describing public authorities. The taxonomic rank implied here is important. Family. Genus. Species.

Authorities belong to the corporate family, where there is very little poetry. Also referred to as non-profit corporations, according to the state audit office, these are corporations that were founded to promote the public interest.

In the state of New York, promoting the public interest is legally recognized as creating “a material positive impact on society and the environment, considered as a whole, by a third-party standard, through the business and operations of a charity.”

Because of their ability to issue their own debt instruments without voter consent, these entities are most commonly used to fund or support local government infrastructure while circumventing a constitutional provision to the contrary. Municipalities and state governments have limits on how much debt they can take on. authorities do not.

This is known as backdoor borrowing. In 2021, debt issued by public agencies on behalf of the state accounted for $51.1 billion, accounting for just over 97 percent of all government-funded debt.

Debt service for these bonds is usually backed by income from the project being created, such as: B. Toll fees when a toll bridge is built or fees paid by third parties for the operation of the toll bridge. But when the state has allocated specific revenue streams to an agency so that the agency can pay the debt service, taxpayers’ money pays a debt that taxpayers never voted to authorize.

wood wool!

The IDAs

There are currently 594 agencies operating in New York State. Of these, 47 are state authorities and 547 are local authorities. They are further broken down into finer categories: resource reclamation agencies, land banks, IDAs, urban regeneration or not-for-profit entities, non-profit corporations affiliated with, sponsored by, or founded by local governments. and other vaguely described “various authorities.”

The first public authority in history, the now-gigantic Port Authority of New York and New Jersey celebrated its centenary last year. Authorities have since proliferated in ever greater numbers, embracing an inspired variety of missions in the name of the public good.

One of the most common types of non-profit corporations is the Industrial Development Agency (IDA). Originally established in 1969 “to facilitate economic development in certain localities,” approximately 108 IDAs operate in New York State. All 62 districts have at least one.


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IDAs can be considered the most business-friendly of all agencies in their interpretation of what constitutes the public good—although the specific public can vary.

Imbued with the ability to provide tax breaks in the interest of attracting jobs and projects, IDAs have been known in different communities to compete against each other in wooing and poaching potential developers. The flesh of one church can be the poison of another.

For an IDA performing its most typical function, look no further than the Ulster County Industrial Development Agency’s (UCIDA) $25 million, 25-year tax break that The Kingstonian, the mixed-use apartment building, hotel and 143-unit parking lot, granted and approved retail development for Uptown Kingston.

Granting a property tax exemption and negotiating a tiered payment in its place is called a payment in lieu of tax (pilot).

As County Comptroller March Gallagher notes, awarding a pilot to developers isn’t just mere favoritism. “There can be good reasons for that [granting a Pilot]’ says Gallagher. “They don’t want to strap the project down from a cash flow perspective and flood it in the first year. I think pilots can be useful to get what you need in terms of development. But I think you have to be careful with it. And it should be analyzed.”

school districts closed

School districts that derive their revenue from property taxes. are often less keen on pilots for housing developments. The student body in a given school district can be expected to grow while paying less taxpayer money to the schools than voters agreed to. More students, less money.

Herb Lamb, vice president of the Kingston School Board, addressed the issue at a meeting Oct. 19. “Among these things, a thousand new housing units are being moved into the Kingston School District,” Lamb said. “We need to get the public to understand that if this continues, eventually it will suffocate us. There is no way around the fact that we will have to exceed the tax ceilings if they stay that way.”

Another developer, Pennrose, has contracted Kingston to build a 164-unit residential project in Golden Hill. Pennrose is currently seeking a 40-year-old pilot. The UCIDA is happy to give the developer whatever it wants, provided Kingston Common Council agrees. The school district can refuse, but the UCIDA bylaws allow it to ignore the opinion of the school district committee.

Unlike the elected district board of directors, the board of UCIDA cannot be voted out of office. Its members are appointed by the state parliament.

IDAs are required to hold a public hearing before approving any project that proposes funding in excess of $100,000, but IDA Board Members are not required to attend such a hearing, let alone respond to questions or objections reply.

The Pennrose development provides another opportunity to observe a Land Development Corporation (LDC), another interesting type of non-profit corporation. A not-for-profit land development corporation, the Ulster County Housing Development Corporation (UCHDC), describes itself as “a public entity of, but separate and separate from, Ulster County”. This is interesting because it states in its charter in its composition of membership that the sole member of the body shall be the county. Quite a balancing act.

All but one of the board members exercise a dual duty by performing paid employment at the county administrative or legislature level.

The UCHDC

There is no language in the Articles of Incorporation that specifically grants the Ulster County Comptroller the power to audit public authorities. This raises questions of transparency. Like an IDA, the UCHDC can apply for and borrow unlimited money, create and accept negotiable bonds, execute and issue, and issue loans and grants, creating millions of dollars in debt.

In late 2021, UCIDA reported that it was carrying $7.8 million in conduit debt issued on behalf of a state or local government in favor of a third party that will be on the hook to repay the debt.

Ulster County Comptroller March Gallagher has submitted a recommendation to the county’s Charter Review Commission (CRC) to include wording in the charter that gives her office specific authority to audit all non-profit corporations operating in the county.

If the CRC agrees, the recommendation will come to a vote next year. Voters will get their chance to speak out.

The idea appeared to be popular with Commissioners, but Member Shannon Harris cooled the brakes and suggested that the Commission should hear from interested parties.

The UCRA

While Gallagher does not oppose the proposal, just two years ago the Ulster County Resource Recovery Agency tried to block the local auditor’s efforts to audit the agency, going so far as to go to court to prevent its audit. Although the agency lost, it managed to delay the exam by almost a year.

“Unfortunately, although we prevailed in this challenge to authority,” Gallagher wrote in a report to the county, “it resulted in additional and unnecessary costs to Ulster County taxpayers and the clients of the Ulster County Resource Recovery Agency.”

Even if the language change ends on the ballot, the language in the state law does not explicitly mention the rights of district auditors to audit public authorities, but instead refers to city auditors. It’s with details like this that lawyers sharpen their knives.

This could change soon. A bill first introduced in 2020 by state senator Shelley B. Mayer allowed district auditors to audit industrial development agencies and non-profit corporations. The measure is picking up speed. The bill was passed unanimously by the State Senate on February 8.

Two Republican state senators, Mike Martucci and Mario Materra, joined the bill as co-sponsors. At the end of the last session, the bill was still in the assembly. Mayer, who won her re-election bid, is sure to keep the bill moving when the session begins next year.

The New York State Authorities Budget Office (ABO) has significantly increased its reporting requirements for public bodies in recent years. Government law obliges government agencies to submit annual reports that are available for the general public to download, sort, search and analyze.

Transparency, control, accountability. All of these things serve the common good.

“We just want to protect taxpayers’ money,” says Gallagher. “I mean, that’s the whole point. Shine a light and follow the money.”