The historic Public Authorities Reform Act (PARA) took effect on Monday, March 1, 2010. This sweeping legislation, authored by Chairman Brodsky and co-sponsored by more than fifty other members of the Assembly, has brought long-needed reform and fundamental change to New York’s “Soviet-style bureaucracies,” improving the lives of all New Yorkers and the financial future of the state.

The PARA, signed into law in December of 2009, is the most sweeping governmental reform Albany has seen in decades. It builds on reforms included in the Public Authorities Accountability Act of 2005, also authored by Assemblyman Brodsky. This legislation is a fundamental, top-to-bottom reform of New York State’s public authorities, including the Metropolitan Transportation Authority, the Thruway Authority, New York Power Authority, and the Empire State Development Corporation.

Members of public authority boards will now have an explicit fiduciary duty to the authority and their mission, no longer being beholden to those who appoint them. Board members’ sole responsibility will be to the authorities defined mission. This legislation also creates an independent Authorities Budget Office (ABO) with powers of investigation, referral, and oversight. The ABO will take the lead in ensuring that state authorities abide by all elements of the new law.

Among other reforms, the PARA requires state authorities to submit to the Comptroller all no-bid contracts costing over $1 million, to follow MWBE requirements, and to create a whistleblower program to protect those who report authority misconduct.

Assemblyman Brodsky stated, “This is the culmination of close to ten years of effort. I appreciate the long-standing commitment of the Majority Conference in the Assembly, Speaker Silver, my colleagues in the Senate, and Governor Paterson who signed the bill into law. At a time when the public is demanding real change, this is a reform that will benefit all New Yorkers and help them deal with the problems of daily life.”

Committee Hearings and Investigations Shine Light on “Bonuses,” Promote Transparency

Following the passage of the PARA, the Committee has continued its oversight of the vast web of state and local authorities, ensuring that these independent bodies are doing the job intended and not wasting taxpayer dollars.

In the late spring there were reports of excessive compensation paid to the Executive Directors of the Fulton County Economic Development Corporation and its affiliate Crossroads Incubator Corporation (FCEDC/CIC). Lacking any understanding of fiduciary duty, board members knew nothing about the excessive compensation packages discovered. Following the Committee’s investigation FCEDC/CIC performed an internal review that resulted in the dismissal of the executive directors of both authorities.

The Committee has expanded its inquiry to all state and local authorities. In June, Chairman Brodsky issued a letter requesting information on such practices and has received many responses. Accounts of excessive compensation at the local level were exposed, with a particular focus on the Greene County IDA and numerous local authorities in Western NY. Chairman Brodsky has since introduced legislation to prohibit the payment of contingent compensation by state and local authorities.

“It has become clear that contingent compensation practices present a serious and tangible danger to public authorities because they open the door for the possibility of excessive compensation to public authorities’ employees and the abuse of public funds that authorities are entrusted to spend wisely and fairly,” Chairman Brodsky stated.

Private Local Development Corporations: The New “Shadow Government”

The Public Authorities Reform Act included a number of provisions that increased oversight over and limited the power of local authorities such as IDAs and LDCs. The actions of these organizations had always been shrouded in a veil of secrecy but they are slowly being revealed.

At a recent hearing of the Committee, David Kidera, Director of the Authorities Budget Office, testified about a new local trend which has emerged following the enactment of PARA. Kidera reported that municipalities have been looking for a way to circumvent the restrictions on their ability to use IDAs and LDCs for certain government functions. He pointed to the creation of private LDCs, not subject to PARA, by local municipalities in order to undertake public tasks. As a comparison, only one authority has been created in the past legislative session while the ABO has counted 11 of these government-created private corporations since March.

The Committee was involved in its own investigation of these practices during the summer of 2010. The investigation focused on the Monroe County Security and Safety Systems LDC (M3SLDC) and its contracting with Navitech for the purposes of developing a new radio system for the county’s emergency responders. Monroe County appears to have created M3SLDC to avoid New York State’s procurement and bidding laws, privatizing what should be a public service. “Through contracting with a private company for the bidding process M3SLDC has sought to avoid the legal requirements under statute,” Chairman Brodsky stated.

Both Chairman Brodsky and the ABO support initiatives to close this costly loophole.

The Public Authorities Reform Act included a number of provisions that increased oversight over and limited the power of local authorities such as IDAs and LDCs. The actions of these organizations had always been shrouded in a veil of secrecy but they are slowly being revealed.

At a recent hearing of the Committee, David Kidera, Director of the Authorities Budget Office, testified about a new local trend which has emerged following the enactment of PARA. Kidera reported that municipalities have been looking for a way to circumvent the restrictions on their ability to use IDAs and LDCs for certain government functions. He pointed to the creation of private LDCs, not subject to PARA, by local municipalities in order to undertake public tasks. As a comparison, only one authority has been created in the past legislative session while the ABO has counted 11 of these government-created private corporations since March.

The Committee was involved in its own investigation of these practices during the summer of 2010. The investigation focused on the Monroe County Security and Safety Systems LDC (M3SLDC) and its contracting with Navitech for the purposes of developing a new radio system for the county’s emergency responders. Monroe County appears to have created

MWBE Reform Enacted into Law

M3SLDC to avoid New York State’s procurement and bidding laws, privatizing what should be a public service. “Through contracting with a private company for the bidding process M3SLDC has sought to avoid the legal requirements under statute,” Chairman Brodsky stated.

Both Chairman Brodsky and the ABO support initiatives to close this costly loophole.

Among the keystone accomplishments of the Assembly Committee on Corporations, Authorities and Commissions during the 2010 Legislative sessionwas the passage of a bill co-authored by Assemblyman Brodsky and introduced by Governor Paterson, aimed at leveling the economic playing field for minority and women-owned business enterprises (MWBEs), a cause that has been long championed by Brodsky. The bill passed both houses of the legislature overwhelmingly and was signed into law by the Governor on July 15.

This bill amends the public authority law to provide more opportunities for MWBEs by mandating that public authorities recognize and promote diversity in the workplace. It also rectifies earlier inconsistencies within the law that have led to discrimination in contracting by public authorities over the years. Every state authority must now abide by a strict set of guidelines that will invariably promote workplace equality for decades to come.

“Studies have shown over time that there is a real and tangible disparity when it comes to the issuance of contracts by public authorities to MWBEs,” Chairman Brodsky explained. “This landmark piece of legislation, in conjunction with the Public Authorities Reform Act of 2009, will finally put an end to MWBEs being shut out of the competitive bidding process, and mandate equality.”