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2011 Annual Report of Public Authorities in New York Released – Highlighting Low Compliance Rate for Local Community Development and Redevelopment Authorities and Issues for Further Attention

July 31, 2011

The New York Authorities Budget Office (ABO) has published the 2011 Annual Report on Public Authorities. The ABO has enforcement and oversight responsibility for 46 state-level authorities and 445 local authorities (including industrial development agencies and local development corporations), which together, according to the report, spend more than $53 billion annually. The report states that “State authorities ended 2010 with more than $142.3 billion in outstanding debt, of which $51.0 billion was issued at the direction of the State or backed by its moral obligation or direct appropriations. The outstanding debt of local authorities totals more than $78.0 billion, more than 34 percent of which is issued on behalf of third parties that use their revenue sources to make debt service payments.”

Reporting on its operations for the first full year, the ABO report recounts the policy guidance issued this past year including: Annual Boards of Directors Evaluation, Compliance Review Requirements and Enforcement Powers of the Authority Budget Office. The Office conducted five audits this past year, and worked on legislation to dissolve certain public authorities (S.5227, S.5198-A, A.7583-A, and A.7580-A).

The ABO reports a high compliance rate among state level public authorities – more than 93% have complied with reporting requirements. However, the compliance rate for local community development and renewal agencies was less than 50%. With respect to this low compliance rate, the report states that “The continued failure to comply with the law is likely to result in the ABO invoking its power to censure these boards or to look at opportunities to dissolve these agencies officially and transfer any assets and liabilities to the municipal government.”

The report also raises a number of issues that require focus and attention in the coming year, including: the proliferation of local development corporations and the creation of additional entities by existing public authorities; ethical issues related to public officials serving as authority board members; staffing for public authorities (which raises, among other issues, potential for conflicts of interest); the use of executive sessions in violation of the Open Meetings Law; lack of awareness of new fiduciary responsibilities of board members; and the awarding of grants, sponsorships and scholarships that are not part of the mission of public authorities.  These issues, added to existing legislative reform proposals, signal a significant 2011-2012 agenda for the ABO.

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