The world’s coolest manhole cover designs, via The Atlantic Cities. Click image for source.

• Cities are reevaluating waste infrastructure with planning, technology, and design. [The Architect’s Newspaper]
• “When it comes to public-private partnerships, or P3s, the U.S. moves at its own pace. Add another ‘P’ to P3 for patience.” [The Deal]
• What are New York’s PIT (personal income tax) bonds? [Public Authorities Blog]

New York City’s watersheds, as illustrated in the August 1937 issue of Popular Mechanics, via mammoth. Click image for source.

• Fake winter has been tough on the three New York ski areas overseen by the Olympic Regional Development Authority. [NYT City Room Blog]
• The Long Island Power Authority brought in $92 million last year from ratepayers and grants to finance energy-efficiency and renewable-energy programs, but $28 million of that went unspent in large part due to program delays. [Suffolk County LIPA Oversight Committee, via Long Island Business News]
• Could “service design” improve interactions between public authorities and the people they serve? A new nonprofit in Brooklyn plans to collaborate on an interdisciplinary service design program with tha New York City Department of Housing Preservation (and presumably with the New York City Housing Authority as well). [The Architect’s Newspaper]
• Speaking of housing authorities, check out this essay exploring the “striking parallels between Cabrini-Green’s slum-clearance origins in the 1930s and ’40s and the more recent fate of this site under the Chicago Housing Authority’s ongoing Plan for Transformation. [Design Observer]

The LDC employees are appealing the Comptroller’s ruling, but that’s raised another question—whether the IDA can pay for their legal defense. The answer isn’t exactly clear, but as the Watertown Daily News commented, “the question seems to strike at the heart of the larger debate about for whom these employees actually work.” Former Assemblyman Richard Brodsky, who spearheaded public authorities reform legislation in 2005 and 2009, agreed with this view, stating that “the whole issue may rest on that distinction…. If they are IDA employees, this is not a big legal issue. If they’re not IDA employees, it’s a big deal.”

David Kidera, the director of the Authorities Budget Office, had a somewhat different response, explaining that just because an LDC has to file audit reports under the Public Authorities Law doesn’t mean that its employees are entitled to state retirement benefits. “An LDC is a local authority for purposes of complying with the various provisions of these two [public authority] reform acts,” he said, but “when you start extending it to other requirements of state law, I think you’re getting on less solid ground.”

More details about the local development corporations involved in this fight were provided in an article in today’s Watertown Daily News, which also discusses a 1989 letter from state pension officials that denied retirement benefits to an LDC employee.

A vault built into the base of the Brooklyn Bridge that was once rented to a wine merchant for champagne storage because the temperature changed so little during the year, via Edible Geography. Click image for source.

• “House Republicans seek to eliminate the Mass Transit Account from the federal Highway Trust Fund. The Mass Transit Account is where public transportation programs get their steady source of funding. Without it, transit would be devastated, and urban life as we know it could become untenable.” [Salon]
• Extending a successful pilot program that began in 2008, the California legislature approved a bill authorizing San Francisco to enforce parking violations in transit-only traffic lanes by installing automated forward-facing cameras on public transit vehicles. [The Atlantic Cities] [AB 1041]
• Video: The Spectacular Destruction of Ohio’s Fort Steubenville Bridge. [Rustwire]

Since the MTA is installing new stainless steel benches in the subways, it’s selling the old wooden ones, for just $650 each, via Gothamist. Click image for source.

• The private company that took over the MTA’s Long Island Bus service has announced $7.2 million in proposed service cuts. [2nd Ave. Sagas]
• Can subways ever really be rat-free? [The Atlantic Cities]
• Maybe. The MTA’s “bold and seemingly moronic experiment” to reduce subway litter by removing trash cans is apparently working, at least by some accounts. [NY Daily News]
• New renderings of the MTA’s $1.4 billion reconstruction of the Fulton Transit Center, which was partially damaged after 9/11 and has long been in need of an upgrade. [Transportation Nation]
• Finally,  according to records reviewed by the Rochester Democrat and Chronicle, “the Rochester-Genesee Regional Transportation Authority, the agency that runs the region’s public bus system, paid its chief executive more in bonuses last year than over half its 886 employees received in wages.” [Rochester Democrat and Chronicle]

The state, of course, still finances a lot of public authority debt, but so long as the state never promises to pay a public authority’s debts for more than a year, it’s never considered “state debt” and doesn’t have to comply with the constitution’s debt restrictions. It’s a little gimmicky, but the Court of Appeals approved these back-door borrowing schemes long ago. It’s enough that the state could theoretically decide not to make an annual appropriation, even if there’s no realistic chance of that happening.

If there’s a point where this sort of constitutional evasion becomes too blatant to ignore, the New York courts haven’t found it yet. They’ve never considered personal income tax bonds, however…

Personal income tax bonds—or PIT bonds, as they’re known—are essentially loans guaranteed by the state’s income tax revenues (yes, your tax dollars). Of course, it’s not that simple, because bonds backed by personal income taxes would seem to qualify pretty easily as “state debt.”

PIT bonds get around this problem because they’re not technically backed by personal income taxes. Instead, they’re backed by annual appropriations connected to a bond fund that’s made up of 25% of the state’s annual personal income tax revenues, and if the legislature doesn’t make an annual appropriation, then it can’t access this money. Additionally, if the amount of money in the bond fund ever falls below what’s needed to pay the debt service on outstanding PIT bonds, the comptroller is required to transfer enough money to cover the difference from the state’s general fund, without the need for further appropriations.

PIT bonds haven’t been around for very long. They were envisioned by former governor George Pataki as a way to lower interest rates and reduce the cost of borrowing, and legislation authorizing them was enacted in 2001 (N.Y. State Fin. Law sections 68-a to 68-c, and 92-z). Since then, about $29 billion in PIT bonds have been issued by the five public authorities that are permitted to use them (the Environmental Facilities Corporation, the Dormitory Authority, the Housing Finance Agency,  the Thruway, and the Empire State Development Corporation). This works out to about 40% of the state’s outstanding securities.

Because they’re backed by personal income taxes, PIT bonds have been given AAA ratings by Standard & Poor’s—higher than the AA rating given to the state’s own general obligation debt and higher even than for U.S. Treasuries. These ratings reflect the safety of PIT bonds, which were backed by about $9 billion held in the revenue fund last year, an amount equal to nearly 15% of the state’s total tax receipts.

But tax revenues are subject to some fluctuation, as evidenced by recent declines in the debt coverage ratio for PIT bonds caused by the recession. Former Assemblyman Richard Brodsky, who helped get important public authorities reforms enacted in 2005 and 2009, has noted that this could cause serious problems: “If things were to go wrong—for example, if the economy suffers, or demands for services go out of whack—the statute essentially gives bondholders a priority over taxpayers and citizens.” Similarly, former Lieutenant Governor Richard Ravitch explained that “if the state pledges all of its income tax revenue as payment to debt then there will be nothing left to pay for everything else. That’s why we have to strike the right median….”

More information on PIT bonds:

• Martin Z. Braun, Cuomo Budget Fixes Prolong New York Tax Debt’s Biggest Rally: Muni Credit, Bloomberg, Jan. 6, 2012
• Pei Shan Hoe, How New York State borrows billions against your paycheck, out of public view, The New York World, Dec. 23, 2011
• E.J. McMahon, A Risky Debt ‘Reform’, The New York Post, Feb. 11, 2001
• Lebenthal’s Municipal Bond Education Center, “Never Follow a Disclaimer With Yes, But….”

Aerial view of railroad infrastructure at the Jersey City Waterfront, circa 1960, via the Railfan Window Blog. Click image for source.

Housing Authorities

• The Saratoga Springs Housing Authority is facing an audit from the state comptroller. [TU]

LDCs

• N.Y. Attorney General Eric Schneiderman wants to impose new board requirements on nonprofits, including—presumably—a lot of LDCs. [NY Post]
• Speaking of LDCs, the comptroller’s office concluded that the Village of Cornwall-on-Hudson used an LDC to avoid state procurement laws and construct a public works garage that was built on unsuitable land, failed to meet building codes, and cost nearly $1 million. [Press Release]

MTA

• MTA chairman Joe Lhota announced his opposition to a bill that would ban eating on the subway. [NYT]
• Lhota also made some negative comments about the bill and its sponsor, Senator Bill Perkins, and then apologized. [Transportation Nation]
• Stainless steel seating is being used to replace the iconic wooden benches in the subway. [NY Daily News]

Port Authority

• Former Governors Eliot Spitzer and David Paterson think the latest Port Authority audit was unfair. [Transportation Nation]
• The Port Authority announced a $500 million rehab project for the George Washington Bridge. [NJ Real Time News]

Power Authorities

• The former head of the Green Island Power Authority collected over $17,000 in “double dip” pension payments before he actually left the payroll. [TU]
• Customer satisfaction is deteriorating at the Long Island Power Authority. [Suffolk County LIPA Oversight Committee]

Thruway Authority

• New York has applied for a $2 billion federal loan to finance the new Tappan Zee Bridge. [Bloomberg]

Transit beyond NY

• Congress is considering a bill that would give the Federal Transit Administration oversight powers and the authority to set standards for the nation’s subways and light rail systems. [WaPo]
• Boston’s transit agency is proposing a 25% fare hike. [Boston Globe]
• In Detroit, early morning bus service may be cut. [Free Press]

The Comptroller first raised questions about using the IDA as a conduit to provide state benefits to LDC employees in 2009.

Then, in 2011, the Comptroller released an opinion concluding that IDAs don’t have the authority to hire employees and then assign them to serve as LDC staff. As the opinion explained:

[The IDA Act] does not provide IDAs with express authority to assign IDA employees to serve as the staff of another entity. In fact, IDAs’ express authority to use municipal employees (General Municipal Law § 858 [6]) lends support for reading article 18-A as not authorizing any other personnel sharing…, such as the use of IDA employees by a development corporation.

The opinion also rejected the contention that IDAs have implied authority to assign staff to work at LDCs, because IDAs’ implied powers only extend so far as necessary to carry out their own purposes, and “while an IDA and a development corporation may have common purposes, they are separate corporate entities…, the operations and activities of which are separate and distinct.” Additionally, the opinion noted that IDAs were created primarily to provide financial assistance to development projects, and “providing IDA personnel to staff a development corporation… is not a ‘project,’ and not even necessarily related to any particular ‘project.’”

While it’s convenient to draw a line between IDA and LDC employees, the distinction isn’t always so clear, especially when LDCs have basically the same purposes as IDAs. The problem is closely related to the whole issue of trying to figure out when LDCs qualify as local public authorities, and when they’re just private nonprofit corporations.

A photo of the MTA's new 7 line extension. Click photo for source.

Economic development

• Tax exempt revenue bonds issued by the New York City IDA to finance an unecessary parking garage at Yankee Stadium are poised to go into default by the end of the year. More on this soon. [NY Daily News] [StreetsBlog]
• The Niagara County IDA adopted a provision asking subsidy applicants to use their “best efforts” to hire local workers. [Tonawanda News]
• Some people in the Bronx think the subsidies offered to online grocer FreshDirect (to persuade the company not to move to New Jersey) are insufficiently transparent and an improper use of city funds. Mayor Bloomberg disagrees. [Politicker] [NY Daily News] [also NY Daily News]
• Meet the New York City IDA’s board members. [StreetsBlog]
• Do industrial development agencies really create jobs? [Innovation Trail]
• The Independent Democratic Caucus released a report on easing New York’s regulatory burdens and promoting business. [Report] [TU Capitol Confidential Blog]

The Port Authority & Thruway Authority

• More on the Port Authority audit released last week. [Capital NY] [NYT] [Transportation Nation] [also Transportation Nation]
• It’s time to address the calamity that is Penn Station. [NYT]
• The Moynihan Station Development Corporation (which is actually a subsidiary of ESDC, not the Port Authority) rejected bids for a project to revamp a concourse and upgrade passenger amenities in a portion of Penn Station because they well all too high. [WSJ]
• Over the past decade, the Thruway Authority has spent $500 million on routine maintenance and repairs for the aging Tappan Zee Bridge, and a report compiled for the proposed replacement bridge says that it will cost more than twice that much to keep the bridge in working order for another decade. [Journal News]

Transit authorities beyond New York

• Why does it take so long to build subway lines? Oh, just little things like bureaucracy, lack of funding, politics, existing infrastructure, mismanagement, addiction to cars, and labor and environmental laws. [Salon]
• D.C. Metro signs ask people to exit alight from buses. Maybe Metro officials should consider some of the federal plain language guidelines. [WaPo]
• Video of Detroit’s increasingly desperate transit situation. [Rustwire]
• Transit authorities across the country fight crime with classical music. [The Atlantic Cities]
• But jazz, it seems, is deadly: a popular BART station saxophone busker was arrested on suspicion of murdering his ex-wife 25 years ago. [SF Chronicle]

The Ogdensburg-Prescott International Bridge, which doesn't charge a toll for Ogdensburg Port Authority board members.

• Comptroller DiNapoli has a mostly positive view of the proposed state budget. He’s noted, however, that “public authorities would be authorized to transfer monies to any other public authority as long as the transfer is approved by their governing board. This raises the possibility that an authority could use monies generated for one program or purpose, such as tolls intended for highway or bridge maintenance, for an entirely unrelated purpose.” [Press Release] [Executive Budget Report]
• Former Assemblyman and public authorities watchdog Richard Brodsky thinks that letting public authorities move money like this would “create chaos.” [Democrat & Chronicle Vote Up NY Blog]
• Moving on the issue of transparency, lots of public authorities failed to submit timely annual reports. [Public Authorities Blog]
• State legislators in New York and New Jersey are sponsoring Port Authority reform bills that would increase accountability and oversight. [NJ Star-Ledger] [SILive]
• But  the Port Authority, at least, has hired an ethics consultant (for just $10,000 a month). [WSJ NY Blog]
• Although the ABO recommended otherwise, the Ogdensburg Bridge and Port Authority decided to maintain a policy allowing current and former board members (and their spouses) to cross the Ogdensburg-Prescott bridge without paying the $2.75 toll. [Watertown Daily Times]
• In the social responsibility department,  the Niagara County IDA adopted a provision asking subsidy applicants to use their “best efforts” to hire local workers. [Tonawanda News]

Just because: an 1860 map of Central Park.

MTA

• In its response to the lawsuit brought by passengers who were stranded on an A train during the Christmas blizzard of 2010, the MTA is using the “Act of God” defense. [Gothamist]
• The Transport Workers Union has declared the winner of its most-ugly-subway-rat contest. Be prepared to be horrified. [The Atlantic Cities] [Gothamist]
• Planning is underway for the year-long celebration of Grand Central’s 100th birthday, with events starting in February 2013. [Press Release]
• Cutting MTA bus service on Fridays could save $13 million. [Gothamist]

Ogdensburg Bridge & Port Authority

• Although the ABO recommended otherwise, the Ogdensburg Bridge and Port Authority decided to maintain a policy allowing current and former board members (and their spouses) to cross the Ogdensburg-Prescott bridge without paying the $2.75 toll. [Watertown Daily Times]

Port Authority

• With Chris Christie under scrutiny for patronage, the Port Authority quietly released a long-touted audit. [Capital NY]
• And what about that audit? “The Port Authority spends money like a blackout drunk with a credit card.” [Animal NY]
• More specifically, the audit estimated that the total cost of rebuilding the World Trade Center site will be $14.8 billion—a huge increase from the $11.5 billion estimate made in 2008. [NYT] [WSJ Metropolis Blog] [Gothamist]
• Bloomberg’s take on the audit: ‘Easy to play Monday morning quarterback.’ [Capital NY]
• Moving on to other Port Authority news, state legislators in New York and New Jersey are sponsoring reform bills that would improve the authority’s accountability and oversight. [NJ Star-Ledger] [SILive]
• Also, the Port Authority has hired an ethics consultant for only $10,000 a month. [WSJ NY Blog]
• And two New York-area auto clubs were denied a preliminary injunction against the Port Authority’s toll increases because they failed to show a likelihood of success on their claim that the Port Authority is illegally using toll proceeds to subsidize the World Trade Center project. But the judge also denied the Port Authority’s motion to dismiss, so the case will continue to trial. [Automobile Club of New York, Inc. v. Port Authority, 2012 U.S. Dist. LEXIS 14975 (S.D.N.Y. Feb. 6, 2010)] [Bloomberg] [NJ Star-Ledger]

Thruway Authority

• The Thruway Authority announced four engineering and construction companies that have been found qualified to bid on the $5 billion Tappan Zee Bridge project. [Times Herald-Record]
• But some of these contractors have histories of millions of dollars in cost overruns and months of construction delays on high-profile projects. [Journal News]

The New York State Authorities Budget Office has released a report that identifies those state and local authorities that have not filed a budget, annual and/or audit report as of January 27, 2012, for the most recent reporting period as required by the Public Authorities Law. The ABO considers these authorities out of compliance with State law. The ABO’s objective in releasing the list is to advise the directors and management of these authorities, pursuant to section 6(2)(f) of the Public Authorities Law, of their compliance status.

A PDF version of this report is available here.

The Authorities Budget Office has also posted this list on its web site. Please contact the ABO if you have additional questions.

(i)     A new monitoring and enforcement entity, the Joint Commission on Public Ethics (JCOPE), is established with a materially expanded enforcement power. Although the Act was effective last August, members were only appointed last month and it is unlikely that the Commission will be operational prior this Spring.

(ii)     PIRA establishes a very broad notification program for any individual or entity that appears before an entity or agency concerning procurement, rate making, or any other regulatory matter. It is not yet understood whether more casual but intended contacts will fall within the ambit of this requirement. Effective January 1, 2013, the State Department of General Services will be required to create an on-line data base which will reflect all agency and authority contacts.

(iii)     Financial Disclosure Statements have increased in scope and required detail. PIRA will randomly select and audit the Financial Statements to verify their accuracy.

(iv)      PIRA now requires certain individuals who file Financial Disclosure Statements, including attorneys, real estate brokers, any professional licensed by the State Education Department or member of a firm required to register as a lobbyist, may be required to report the names of their clients that have certain business activities before the State and meet threshold criteria. There are a number of important caveats to the requirement, but given the potential relevance to existing and future board members, care should be given to the provision.

(v)     In one instance PIRA relaxes or at least clarifies the former prohibition on gifts that exceed a nominal value shall now be a prohibition on the provision of food and beverage valued in excess of fifteen dollars. It bears note that JCOPE reserves the right to deem an aggregation of multiple gifts of less than $15 a violation of law. PIRA also clarifies that the “widely attended event” exclusion is interpreted to mean (i) events at which at least 25 non-government personnel are invited to attend and (ii) the event is related to the duties or responsibilities of the public official.

• Is the Albany Convention Center Authority still alive? [Times Union]

BNYDC

• U.S. Senator Charles E. Schumer, joined by Borough President Marty Markowitz and local officials, announced that the Army has agreed to transfer the Admirals Row property at the Brooklyn Navy Yard to the City of New York, which will turn it over to the Brooklyn Navy Yard Development Corporation for redevelopment. [Press Release]
• Some history on the Brooklyn Navy Yard. [Inside the Apple]

ECHDC

• The community group Buffalo First! wants half of the businesses at Canalside to be reserved for local business owners (a promise that would be contained in a community benefits agreement). The Erie Canal Harbor Development Corporation responded with vague statements in support of local businesses. [ArtVoice] [WNED]

IDAs

• A recap of the New York State Economic Development Council’s annual IDA conference. [NY Muni Blog]
• The New York City IDA just released data on 623 discretionary subsidy deals. [Clawback Blog]
• The Rockland County IDA successfully recaptured nearly $2 million in benefits after the Olympus Corporation decided to move elsewhere. [Press Release]
• Thanks to subsidies from ESDC and the Monroe County IDA, Xerox will build a $4.3 million customer care center in Webster. [Rochester Business Journal]

LDCs

• Comptroller DiNapoli says that the actions of Ramapo town officials highlight the need for LDC reform. [Press Release]
• The Catskill Local Development Corporation may be disbanded. [The Daily Mail]
• The Griffis Local Development Corporation, which unsuccessfully fought the ABO over its classification as a local public authority, is now being criticized for refusing to disclose details about how it does business. [Observer-Dispatch]

NYC EDC

• Is the NYC Economic Development Corporation’s proposed Randalls Island Connector bridge really just a bridge to nowhere? [NY Daily News]

ABO

• The Authorities Budget Office has released a report identifying more than 200 state and local authorities that failed to file a budget, annual or audit report on time. [ABO Delinquent List] [Little Falls Times]

DASNY

• Dormitory Authority takes a ratings hit. [TU Capitol Confidential Blog]

LIPA

• Governor Cuomo signed the LIPA Oversight Bill into law. [Press Release]

MTA

• The MTA pays the state a bond issuance fee of $8.40 for every $1,000 it borrows—and over the last 6 years these fees have added up to $105 million. [NY Daily News] [2nd Ave. Sagas]
• Contract talks between the MTA and the Transport Workers Union are resuming today. [WSJ Metropolis Blog] [Transportation Nation] [Gothamist]
• A report from the Straphangers Campaign praised the MTA for keeping trash in check, but criticized it for all the stations that have peeling paint and exposed wiring. [WSJ Metropolis Blog]
• Another subway survey found that 61% of riders thing service has gotten worse since 2009. [Animal NY]
• Say hello to the MTA’s night subway map. [2nd Ave. Sagas] [Gothamist]

NFTA

• Assemblyman Sean M. Ryan is calling on the acting chairman of the Niagara Frontier Transportation Authority to resign because of alleged conflicts of interest and “failed leadership.” [Buffalo News]

Port Authority

• Former Port Authority head Chris Ward on the withering of New York transit and the bad politics of infrastructure funding. [Capital NY]
• Patronage hires at the Port Authority have increased under Governor Christie’s administration, critics say. [The Record] [Transportation Nation]
• But Christie isn’t apologizing. [The Record]

Bridge Authority

• Tolls go up on five mid-Hudson bridges today. The Bridge Authority calls the 25 and 50% increases “modest,” but drivers probably disagree. [TU Capitol Confidential]

MTA

• The MTA may refinance as much as $6.7 billion of debt this year. [Bloomberg]
• Lady McCartney has stepped down her position on the MTA board. [Transportation Nation]
• Remembering the MTA’s 2005 transit strike. [2nd Ave. Sagas]
• It could happen again: the Transport Workers Union has refused to rule out the possibility of a subway strike as its contentious negotiations with the MTA remain ongoing. [Gothamist]
• Legislation has been proposed to ban food on the subways, which is probably a great way to get rid of rats, at least theoretically. [2nd Ave. Sagas] [S.B. 6312]
• The MTA’s new “Pledge to Customers” promises to get Metro-North and LIRR riders to their destinations safely, comfortably, and on time. [Gothamist]
• Starting in February, MetroCards will finally be refillable. [2nd Ave. Sagas] [Gothamist]
• Refillable MetroCards are good news for pretty much everyone, except for John Jones, a homeless man who’s spent the past decade collecting discarded fares and bundling them into new MetroCards that he then sells to subway riders—a technically illegal scheme that’s netted him about $20,000. [The Atlantic Cities]

Port Authority

• A preliminary audit of the Port Authority, initiated after the approval of steep toll increases last fall, is expected to criticize the authority’s prior leadership but offer few suggestions on how it could save money. [Crain’s NY]
• More commuters rode PATH trains in 2011 than in any other year since the Port Authority took over the rail system in 1962. [WSJ Metropolis Blog]

The Tappan Zee 

• Predictably, people want more details about the $15 billion in transportation funding in Gov. Cuomo’s proposed budget. Of particular concern is where the money will come from, seeing as the state doesn’t really have it. [WSJ] [StreetsBlog]
• The state has released a draft environmental impact statement for the proposed Tappan Zee Bridge replacement, finding no serious environmental challenges. Transit advocates, however, say the DEIS doesn’t adequately address why transit isn’t included. [Transportation Nation]

Transit news from beyond New York

• Train in Vain: the idiotic Department of Transportation rule that’s hobbled America’s mass transit—and the wonderful regulation that may soon replace it. [Slate]
• What can transit authorities learn from Twitter? [The Atlantic Cities]
• How to pay for America’s infrastructure: state infrastructure banks. [The Atlantic]
• Starting in July, the Massachusetts Bay Transportation Authority will no longer allow alcohol advertisements on subway cars, trains, and buses. [Boston Globe]
• Just in time for Valentine’s Day: Philadelphia’s transit agency, the Southeastern Pennsylvania Transportation Authority, created a website where couples who met on the city’s buses, subways, or trolleys can submit their love stories. [The Atlantic Cities]
• The D.C. Metro board is considering a $6 fare for peak paper tickets. [Transportation Nation]
• Funding for California’s high-speed rail program, the first phase of which is estimated to cost around $100 billion, is becoming “increasingly risky,” according to a new state audit. [Courthouse News Service]

Contracts

• A company that installed closed circuit television cameras and message signs along the Thruway wasn’t entitled to additional compensation for “extra work exceeding the contract’s requirements,” the Third Department ruled, because it failed to notify the engineer-in-charge about the additional work or submit the proper account reports, as required by the contract. [Phoenix Signal & Elec. Corp. v. New York State Thruway Auth., 2011 NY Slip Op 9245 (3d Dept. Dec. 22, 2011)]

Due process & equal protection

• A federal district court dismissed a lawsuit alleging that the Gunhill Road section of Bronx County is being denied “equal access” to public transportation. As the court explained, the plaintiff’s subtantive due process claim failed because he didn’t allege any protected liberty or property interest and his equal protection claim failed because he didn’t adequately allege that the MTA treated him differently than similarly situated persons. The court also dismissed the plaintiff’s claims under 42 U.S.C. §1981 and 49 U.S.C. §5303, the Urban Mass Transportation Act. [Sawyer v. N.Y. State Dept. of Transp., 2012 U.S. Dist. LEXIS 3353 (S.D.N.Y. Jan. 11, 2012)]
• A federal district court dismissed equal protection and due process claims brought by employees of the City of Buffalo against the Buffalo Fiscal Stability Authority, which allegedly violated their contracts when it imposed a wage freeze. The court found that the authority’s actions were reasonably intended to address the city’s fiscal crisis and rejected the employees’ claim that the wage freeze was retaliatory. [AFSCME, Local 264 v. Tobe, 2011 U.S. Dist. LEXIS 145728 (W.D.N.Y. Dec. 19, 2011)]

Freedom of Information Law

• A plaintiff who alleged that he was fired from his position with the Thruway Authority in retaliation for complaining about a patronage hire was not entitled to an affirmation that the documents he received from a FOIL request were complete. As the court explained, the plaintiff’s “speculation that additional e-mails exist is insufficient to overcome counsel’s declaration that a search for responsive documents has been conducted” and disclosed. [Rusk v. New York State Thruway Auth., 2011 U.S. Dist. LEXIS 149156 (W.D.N.Y. Dec. 29, 2011]

• The New York City Transit Authority failed to establish that it was entitled to qualified immunity in a negligence suit, and the determination as to liability was a jury issue and couldn’t be resolved solely on the evidence that it complied with its own internal safety rules. [Tzilianos v New York City Tr. Auth., 2012 NY Slip Op 00026 (1st Dept. Jan. 5, 2012)]
• A wrongful death lawsuit involving an 87 year old decedent who fell backwards from the second step of an MTA Able-Ride bus was properly dismissed, the Second Department held, because the MTA “demonstrated that it did not owe an additional duty to the decedent, as its driver did not know, nor should he have reasonably known, of any disability that required him to render reasonable, additional assistance to her in boarding the bus.” The MTA’s policy of assisting only those bus passengers who requested assistance, moreover, was a generally accepted industry standard. [Kasper v. Metropolitan Transp. Auth. Long Is. Bus, 2011 NY Slip Op 9599 (2d Dept. Dec. 27, 2011)]
• The Second Department also dismissed a personal injury suit brought by a U.S. Airways employee who fell on an icy ramp while working on premises leased to U.S. Airways by the Port Authority.  The court held that out-of-possession landlords, such as the Port Authority in this case, are only liable for injuries when a duty has been imposed by statute or contract. Because the plaintiff failed to allege any such duty, the complaint was dismissed. [Seawright v Port Auth. of N.Y. & N.J., 2011 NY Slip Op 9617 (2d Dept. Dec. 27, 2011]

Trial procedure

• Maize v. Nassau Health Care Corporation involved the admissibility of prior criminal convictions in a civil suit alleging that the corporation violated the plaintiff’s civil rights by being deliberately indifferent to his medical needs. The court ruled that the plaintiff’s 2010 burglary conviction was admissible because theft crimes rank “high on the scale of probative worth on creditability,” but excluded the plaintiff’s prior rape convictions because their impeachment value was outweighed by their potential for unfair prejudice. Several other convictions were excluded because they were more than 10 years old. [Maize v. Nassau Health Care Corp., 2011 U.S. Dist. LEXIS 151750 (E.D.N.Y. Jan. 18, 2012)]

• What’s in the proposed state budget for public authorities? [Div. of Budget]
• State budget plan carves out $5 billion for new Tappan Zee Bridge. [Journal News]
• Questions surround Cuomo’s $15 billion fund for infrastructure. [Star Gazette]
• Cuomo’s $15B infrastructure plan hailed, but some question funding sources. [Journal News]

Economic development

• A company that received tax breaks from the Erie County IDA for decades and then moved to Rochester with help from the Monroe County IDA is being accused of job piracy. [WNED] [YNN]
• Hundreds of union members protested this weekend about the Niagara County IDA’s subsidy policies. [Niagara Gazette]
• Bronx in a ‘food fight’ with New Jersey over potential site of new Fresh Direct headquarters. [NY Daily News]
• Report: States Lack Sound, Consistent Policies to Enforce Job‐Creation and Other Performance Requirements in Economic Development Subsidy Programs [Good Jobs First]

MTA

• MTA chief Joe Lhota wants to tackle the subway’s “broken window” problems by repainting stations, making other cosmetic improvements, and getting rid of rats. [2nd Ave. Sagas]
• Lhota also says that the MTA needs new tax revenues, which could possibly come from an expanded MTA sales tax, public private partnerships, or tax increment financing. [Streetsblog]
• Speaking of rats, the Transport Workers Union launched an online subway rat picture contest. [Animal NY]
• And speaking of the Transport Workers Union, talks between the union and the MTA have stalled, with the union accusing the authority of bad faith negotiations. [NYT]
• Transit agencies grapple with the need for wider seats. [NYT]

NFTA

• The ABO has agreed to audit the Niagara Frontier Transportation Authority and investigate the cause of its budget problems. [Artvoice] [WGRZ]

Port Authority

• Port Authority chief Pat Foye wants the authority to return to its core mission after the “mission drift” that followed 9/11. [Capital NY]

Charles Haar, a former Harvard Law Professor who died yesterday at age 91, was in 1983 appointed Special Master to address contamination on Boston beaches resulting from raw municipal sewage and other sources. At his insistence and with the support of Governor Dukakis, the Massachusetts Water Resources Authority was created as an independent entity to fund needed improvements. The creation of the Authority served as the catalyst for the clean-up of Boston Harbor.

The issue surfaced again last week, when it was reported that three counties that with some fanfare formed a regional garbage disposal authority in 1989 were exploring whether to sell the authority’s operations to a private company.

The Montgomery-Otsego-Schoharie Solid Waste Management Authority was intended, at its inception, to centralize garbage transfer and disposal at reduced costs.  The reality is that almost since its creation, it has required millions of dollars in public subsidies. Legislation allowing the Authority to divest its assets is pending.  Given the frequency in which Authority dissolution may be warranted in the future, a generic statute setting forth a process for asset divestiture and debt assumption merits consideration.

The plaintiffs in Bordeleau challenged the constitutionality of appropriations made to the Urban Development Corporation for economic development purposes, and specifically those that would be disbursed to private entities. As the court explained:

Article VII, § 8(1) of the State Constitution broadly declares, in relevant part, “[t]he money of the state shall not be given or loaned to or in aid of any private corporation or association, or private undertaking; nor shall the credit of the state be given or loaned to or in aid of any individual, or public or private corporation or association, or private undertaking.” This provision contains two separate prohibitions: first, it precludes the State from giving or loaning “money” to private recipients and, second, it more broadly forbids the State from giving or lending its “credit” to private recipients or public corporations.

(The corresponding provision for local governments is found in article VIII, § 1.) The gift and loan clause, the court explained, was included in the state constitution in the nineteenth century in response to the state’s prior practice of subsidizing railroad and canal companies through long-term debt—a practice that ultimately had disastrous fiscal consequences for New York after the railroads defaulted on their debts during the economic depression of 1837.

In upholding the economic development funding at issue in Bordeleau, the court emphasized that public authorities were created to “insulate the State from the burden of long-term debt,” not to exacerbate it. Moreover, the court stated, “it is undisputed that [the constitution] permits the granting of public funds to public benefit corporations for a public purpose.” The court continued:

There is no doubt that the constitutional limitations at issue serve to prevent improvident fiscal decision-making and preferential treatment. Such concerns were the subject of debate during the 1938 Constitutional Convention. But the Convention and subsequent ratification of the amendments by the electorate demonstrated the approval for the ability of public benefit corporations to receive and expend public monies, enable the development and performance of public projects and be independent of the State. Thus, plaintiffs cannot challenge the grants at issue by a public benefit corporation, like the UDC, under article VII, § 8(1) of the State Constitution.

Two judges dissented, cautioning that “unconstitutional acts do not become constitutional by virtue of repetition, custom or passage of time. But that is what the majority opinion holds today.”

Bordeleau, indeed, is just the last in a line of cases rejecting gift and loan challenges to public authority funding mechanisms.

One of the earlier cases dealing with this issue was Comereski v. City of Elmira, which involved a contract between the City of Elmira and the Elmira Parking Authority that allowed the city to pay off the authority’s bonds. Concluding that this arrangement was permissible under the municipal gift and loan clause, the court explained that the constitution wasn’t intended to “prohibit gifts of money by a city or county to another public corporation for a public purpose.” The court also ruled that the funding agreement wasn’t precluded by the parking authority’s enabling legislation, which provided that the authority’s obligations wouldn’t be considered “a debt of the state of New York or of the city, and neither the state nor the city shall be liable thereon, nor shall they be payable out of any funds other than those of the authority.” As the court explained, these provisions might have disclaimed liability, but they didn’t “forbid the (voluntary) transfer of money or property by State or city to an authority.”

The gift and loan issue came up again in Wein v. State of New York, which involved a $500 million appropriation to the Municipal Assistance Corporation for the City of New York (MAC). The state had authorized the funding in response to the “desperate fiscal crisis” that arose in New York City in 1975. Under the legislation, the city and MAC entered into repayment agreements with the State Budget Director, and the State then sold short-term revenue anticipation notes to finance the arrangement. As in Comereski, the court recited that “the State may give or lend money, as distinguished from its credit, to assist a municipal or other public corporation in a public purpose.” The court then explained that under article VII, § 9 of the Constitution, “[i]t is also undisputed that the State may validly contract debts in authentic anticipation and receipt of taxes and revenues,” so long as the notes are paid from the taxes or revenues within one to two years from the date of issue, depending on the purpose and type of note issued. As a result, the temporary notes issued on MAC’s behalf were “validly issued in authentic anticipation of taxes and revenues to be received within one year of their date.” The court noted, however, that constitutional problems could arise if the city’s financial troubles continued and the revenue anticipation notes were made payable out of previously impounded revenues, as this would “roll over” the debt and violate the constitutionally mandated time limit.