Prohibits the formation of a subsidiary of a public authority without prior approval of the legislature; allows the formation of a subsidiary of a public authority without prior approval of the legislature if such public authority files a written notice sixty days prior to the organization of such subsidiary with the governor and the legislature.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A1768
SPONSOR: Colton (MS) TITLE OF BILL:
An act to amend the public authorities law, in relation to prohibiting
the formation of a subsidiary of a public authority without prior
permission of the legislature
PURPOSE OR GENERAL IDEA OF BILL:
This bill seeks to prohibit the formation of a subsidiary of a public
authority or public benefit corporation without prior permission of the
legislature.
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 of the bill amends section 2827-a of the public authorities
law to establish a procedure for state authorities to create subsidiary
corporations without the legislature enacting a law allowing for such
creation. In order to do so the state authority would have to submit
written notification of its intention to create a subsidiary, to both
houses of the legislature and the governor, 60 days prior to the
creation of the subsidiary. Both houses of the legislature and the
governor would then have 60 days after such submission to act to deny
the creation. If no action is taken by either house of the legislature
or the governor, the authority may create the subsidiary. If the written
notification is submitted and there is not 60 days left in the legisla-
tive session, both houses and the governor may act to deny the creation
within 60 days of January 1st of the next calendar year, and the author-
ity would not be able to create the subsidiary until such 60 day period
has elapsed.
JUSTIFICATION:
Public Authorities, the hybrid of a government agency and a private
corporation, were established to perform specific, focused missions on
behalf of the people of the state of New York. As finance, contracting
and operating entities, they have the flexibility and power to accom-
plish great tasks. From bridge, edifice, infrastructure, school and
highway building, to the operation of transportation systems, convention
and sports centers, economic development programs and public health and
infrastructure facilities, these entities perform an indispensable role
and dramatically enhance the quality of the daily lives of every New
Yorker.
Due to their flexibility and efficiency of operation, their design for
speed, as well as their focused mission and specific purpose, New York's
public authorities have often been tasked with performing the most chal-
lenging, difficult and controversial of state projects. From the time
they were used by Robert Moses to build the great bridges, buildings,
parks and edifices of early 20th century New York, to the present day,
there have been many questions and concerns raised regarding their role
and their lack of accountability. Without them, however, so many of the
things that make New York the Empire State, from our Thruway, to our
State University campuses, to our New York City Transit systems, to the
site for the 1980 Olympics where America's famous Miracle on Ice
occurred, to the very housing units millions of New Yorkers now call
home, simply would not exist today.
With the immense challenges and vast revenue streams which our public
authorities have been asked to oversee, there have been many amendments
to the public authorities law, to improve public accountability without
compromising their effectiveness or mission. These reforms include the
establishment of the Public Authorities Control Board as well as the
modernization of the state statutes governing their debt issuance, capi-
tal expenditures, contracting procedures, and reporting requirements.
As we step firmly into the realm of the new 21st century, we have again
witnessed some problems with certain operations within select public
authorities. It is therefore incumbent upon the legislature to once
again address these issues with the same determination, and in the same
manner, as to promote increased accountability without diminishing the
public benefit which these governmentally-created corporations provide.
Financial, budget and accounting questions involving billions of dollars
of public monies require reform. Uncertainty over the fairness and
propriety of procurement contract awards must be overcome to again
regain the public's confidence and trust. Accountability and opera-
tional soundness must be clearly demonstrated by these entities through
public disclosure and access, with the ultimate oversight resting with
the people's elected representatives in the State Senate and Assembly.
This bill seeks to accomplish an important and major reform by prohibit-
ing the formation of a subsidiary of a public authority without prior
permission of the legislature. Several public authorities have gotten
themselves into trouble due to lack of oversight and an express set of
guidelines of their subsidiaries. This bill seeks to correct this situ-
ation, and remain true to the spirit of § 5 of Article 10 of the State
Constitution which requires that only the stale legislature may create a
public authority. The formation of a subsidiary by a public authority
which itself must be constitutionally created by the legislature, should
not be allowed to be created by the parent public authority. To permit
otherwise not only violates the spirit of the constitution, but also
permits a questionable delegation and abrogation of state legislative
authority.
PRIOR LEGISLATIVE HISTORY:
2013-14: A.1599/Corps;S.1443/Corps/Passed
2005-06: S.5102-A/A.6757-Veto 369
2007: Passed Senate/Assembly Corps Authorities
2008: Passed Senate/ Assembly Ways & Means
2009-10: A.4298/Corps & Authorities; S.3919/Corps & Authorities
2011: Senate Rules/Assembly Corps & Authorities
2012: A.3228-A/Corps & Authorities; S.4690-A/Passed
FISCAL IMPLICATIONS:
None noted.
EFFECTIVE DATE:
This act shall take effect immediately.
STATE OF NEW YORK
________________________________________________________________________
1768
2023-2024 Regular Sessions
IN ASSEMBLY
January 20, 2023
___________
Introduced by M. of A. COLTON, ZEBROWSKI, BRONSON, REYES, NORRIS, DINOW-
ITZ, DICKENS, MAGNARELLI, ZINERMAN, SAYEGH, STIRPE, L. ROSENTHAL --
Multi-Sponsored by -- M. of A. McDONOUGH -- read once and referred to
the Committee on Corporations, Authorities and Commissions
AN ACT to amend the public authorities law, in relation to prohibiting
the formation of a subsidiary of a public authority without prior
permission of the legislature
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subdivision 1 of section 2827-a of the public authorities
2 law, as added by chapter 506 of the laws of 2009, is amended to read as
3 follows:
4 1. Notwithstanding any law to the contrary, no state authority shall
5 hereafter have the power to organize any subsidiary corporation unless
6 the legislature shall have enacted a law granting such state authority
7 such power for the organization of a specific corporation, provided,
8 however, that a state authority may organize a subsidiary corporation
9 [pursuant to the following requirements:
10 a. the purpose for which the subsidiary corporation shall be organized
11 shall be for a project or projects which the state authority has the
12 power to pursue pursuant to its corporate purposes;
13 b. the primary reason for which the subsidiary corporation shall be
14 organized shall be to limit the potential liability impact of the
15 subsidiary's project or projects on the authority or because state or
16 federal law requires that the purpose of a subsidiary be undertaken
17 through a specific corporate structure; and
18 c. the] without the legislature enacting a law granting such state
19 authority such power if such authority provides written notification
20 of its intention to organize such subsidiary corporation sixty days
21 prior to such organization. Such written notice shall be provided to the
22 governor, the speaker of the assembly, and the temporary president of
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD03999-01-3
A. 1768 2
1 the senate and shall be subject to denial by the governor, the senate,
2 or the assembly. Denial by the governor shall take the form of a signed
3 certification by the governor. Denial by either house of the legisla-
4 ture shall take the form of a resolution by such house. If the governor
5 and each house of the legislature receives notification of a proposed
6 organization during the months of January through March, the governor
7 and each house of the legislature may take any such action within sixty
8 days of receiving such notification, provided however, if the governor
9 and each house of the legislature receives notification of a proposed
10 organization and there is not sixty days remaining during the legisla-
11 tive session, the legislature may take any such action within sixty days
12 of January first of the following year. The state authority may not
13 effectuate the proposed organization of the subsidiary until such sixty
14 day period has elapsed. Any subsidiary corporation shall make the
15 reports and other disclosures as are required of state authorities,
16 unless the subsidiary corporation's operations and finances are consol-
17 idated with those of the authority of which it is a subsidiary.
18 § 2. This act shall take effect immediately.
