Está en la página 1de 5
iat Sta New Yom em ace MEMORANDUM To: Sabrina Ty Ce Shelley Mayer, David Weinstein, Eric Eichenlaub From: Peter Kiernan Date: August 14,2009 Subject: $.1537-C (Perkins /A.2209-C(Brodsky) ‘This memorandum discusses the central components of the public authorities reform bill and identifies arcas of concer for the Chamber and recommendations we would advance for possible amendment. In addition to those listed below, there are various technical changes that ‘we might suggest, and some conforming changes to other sections to reflect these concems, General Powers and Duties of the Independent Authorities Budget Office (Section 5) Concerns: + A.2209-C does not repeal the law that established the Authority Budget Office (“ABO”)! Thus, the powers and duties of the new IABO and the previously established ABO would overlap, leading to redundant and unworkable government, ‘* The Division of Budget’s preliminary estimate of the cost of this bill is in excess of $2.7 million, as the [ABO would necessitate an increase in the current $1.3 millior: ABO | Budget to at least $4 million annually, and require a staff of 28 (up from the current 7). The [ABO would need counsel, investigators and additional policy analysts and compliance staff. This estimate excludes the costs of physically relocating the office to DOS, new office equipment, furniture and any ovethead and indirect costs that DOS may charge the IABO, as well as costs that might be incurred by Office of the State Comptroller pursuant to the bill. These extra costs could add over $1 million to the price tag of the office, + The bill does not contain any limits on how and with whom the JABO could share subpoenaed information, when it can issue subpoenas, or who can be subpoenaed. There is, for example, no predicate (such as some basis for believing a violation of law has occurred) for issuance of a subpoena. Further, the bill would duplicate the investigatory * ¢h.766 L. 2005. powers of the State Attorney General, the State Comptroller, the State Inspector General and the New York City Department of Investigation. + The IABO’s ability to issue regulations to “effectuate the purposes of this title” and other articles would grant it extraordinarily broad authority to govern the internal workings of authorities, beyond its tasks under this bill. Recommendation: The bill should repeal the provisions of Ch. 766 L. 2005 establishing the ABO. The IABO should undertake the duties of the former ABO: collecting information and reporting its recommendations to state and local government officials, as appropriate, and identify with specificity tose areas where additional authority is needed, such as board member training (including establishing standards for state-wide training) and standardization of annual/budget reporting procedures and processes. The IABO’s ability to issue regulations should be limited to matters related to its specific tasks under the bill, such as transparency and reporting. Subpoena power should be curtailed. Reporting Requirements (Section 6) Concerns: ‘© There are some concerns about certain specific requirements of this provision. In particular, our concems relate to paragraph (16), in that (a) we do not think it is appropriate or possible for the [ABO to be determining “fair market value” for a large number and broad array of goods; (b) providing a calculations of the estimates required by this reporting clement would be highly burdensome; and (c) the attestations required in the case of each such transaction are unnecessary. ‘© These requirements may be excessively burdensome on small authorities. Recommendation: The reporting requirement in paragraph (16) should be amended to address the issues above, and a carve-out should be considered for small authorities from some or all of these requirements. juciary Duty (Section 10) Concerns: © Inestablishing new fiduciary responsibilities for authority board members, the legislation would effectively silence elected officials’ voices on board decisions. Indeed, this bill ‘would impose a narrow conception of loyalty on board members, who would be required to subordinate the concems of the jurisdictions that appointed them relative to the particular interests of the boards on which they serve. While this approach may make sense for private corporate governance, itis highly questionable for public benefit corporations that are created to serve the common good. Public authorities are linked to the broader public interest through the elected officials who appoint their board members. ‘Thus, requiring board members to be “truly independent” of appointing authorities could impede the development of important state-wide and eross-authority initiatives, such as comprehensive energy, transportation and economic policy and planning initiatives. ‘* The bill does not make clear who would enforce the proposed fiduciary duty, and it thus increases the likelihood of vexatious litigation against board members by persons who simply disagree with board decisions. Such cases could consume scarce authority resources, make it difficult to recruit qualified individual to serve on authority boards, and make board members reluctant to undertake important but controversial matters. Recommendation: One possible alternative would be to replace this language with a provision analogous to the fiduciary provisions in section 7-a of the recent MTA legislation,” which recognizes the fiduciary duty of board members, but provides that the remedy for violation of such duty would be discharge. Appointment of Chief Executives (Section 11) Concern: The Senate-advice-and-consent requirement seems inconsistent with the principle that the board of an authority is responsible for overseeing management and assessing how well management performs. Such oversight would be wielded most effectively by the petsons who have the authority to appoint or remove the chief executive officer. In other words, the enactment of this provision would interfere with an authority board’s ability to retain and supervise management. It would also cause delays in appointment of such officials. Recommendation: ‘This provision should not be included in the bill. Authority Contraeting (Section 14) Concerns: * This provision arguably would violate Article V, § 1 and Article X, § 5 of the State Constitution. © The provision could interfere with State bond covenants. For example, the State covenants not to interfere with the promises of the MTA to bond holders that the MTA. will keep revenue-producing transit projects in good repair. The introduction of a possible Comptroller veto into the MTA contract process could imply to the finance community that MTA would no longer have ultimate control over its ability to enter into contracts necessary to fulfill this promise. ‘* This contracting procedure will cause unnecessary and costly delays. By adding to the procurement process 45 days for pre-review and 90 days for final contract approval by the Comptroller, the bill would unreasonably delay projects and purchases, impair organizational efficiency, and increase the cost of doing business for authorities. For authorities for whom timely contracting is crucial (.e., DASNY in regard to construction contracts; NYPA in regard to energy purchases), its impact could be particularly severe. The provision would also require greater staffing by the Comptroller, and thus have a fiscal impact. Recommendation: This provision should not be included in the bill. Alternatives include (1) restricting this function to authorities identified by the Comptroller or ABO by audit as. ? ch. 25 L. 2009,