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Transparency, corporate governance, and the political fight over the Westchester County IDA

August 26, 2011

The Westchester County IDA is facing growing scrutiny from the County Board of Legislators regarding its poor record of compliance with transparency and financial reporting requirements. Some of the concerns were prompted by the Comptroller’s 2011 annual report on IDAs, which identified the need for better job creation and retention numbers and more accurate information regarding PILOTs and tax exemptions. The County Board has also raised questions about the IDA’s use of objective (or not-so-objective) criteria in its evaluation of project proposals, the need for more robust cost-benefit analyses, its practice of conducting business in closed executive sessions, and its use of local development corporations.

The County Board’s Legislation Committee Chairman, John Nonna, is currently leading the campaign for better accountability and transparency measures at the IDA. As he stated in a press release earlier this month, “It is crucial that [the County] Board be apprised on a prompt basis about what the IDA is doing, and how it is faring in accomplishing its mission: to create jobs here in Westchester County.” He added that “We at the County Board are doing our due diligence in tracking Westchester’s IDA as recommended by the Comptroller.”

Meanwhile, over the past few months the IDA has been pushing back against a proposal to add a non-voting member to its board of directors to represent the County Board. Eileen Mildenberger, the IDA’s executive director, has opposed creating the new seat based on concerns that it could compromise the IDA’s autonomy. While the County Board refuted her initial assumption that the non-voting board member would be a county legislator, she contended that the new IDA board member would still be “wearing two hats,” and could possibly feel pressured to report confidential information to the County Board from the IDA’s executive sessions and negotiations with companies seeking development incentives.

County Executive Robert Astorino, who appointed Mildenberger, agrees that adding a non-voting position to be filled by the County Board would be a bad idea. A representative from his office stated that “this would create an unnecessary layer of bureaucracy.” Astorino has also taken the position that adding a non-voting board member to the IDA would create confusion regarding the IDA’s decision-making process, especially during confidential executive sessions.

Earlier this year, Astorino attempted to block the County Board’s adoption of a home rule request resolution asking the state legislature to create the new seat on the IDA board, but a supermajority of the County Board approved the resolution, making Astorino’s approval unnecessary. The home rule request resolution was approved by Assembly in June, but it’s still awaiting a vote by the Senate. A heated fight apparently developed earlier this summer regarding a communication sent by Mildenberger, on behalf of the IDA, asking State Senator Greg Ball to stall voting on the home rule bill. County Board Chairman Ken Jenkins, in response, sent an open letter to the Senator asking him to ignore Mildenberger’s request and noting that it was “both improper and irrelevant.”

Jenkins also claimed that Mildenberger’s letter to Senator Ball was sent at Astorino’a direction, and he said in another statement that “The people of Westchester should know that their County Executive, as usual, is operating behind the scenes and without any transparency on this issue while pressuring his subordinates to accomplish his dirty work. This kind of dictatorial regard for legislation passed by the [County Board] is unacceptable and should not be tolerated.”

County Economic Development Director Laurence Gottlieb, whose office oversees the Westchester IDA and is purportedly nonpartisan, opted to stay out of the fight, explaining that the administration didn’t want to interfere with “the effectiveness and the fluidity of what has become an extremely successful IDA for Westchester County … My feeling is that it’s results that matter and that the IDA at the present time is running on all cylinders – and why do anything to derail that?”

Well, at least the IDA has that going for it.

From what I can make of the situation based on these news reports, adding a non-voting member to the IDA’s board to be appointed by county legislators wouldn’t create a conflict of interest or interfere with the IDA’s autonomy, as argued by Mildenberger and Astorino. The County Executive currently has the authority to appoint all seven members of the IDA board, and even though this appointment power is subject to confirmation by the County Board, giving the County Board control over one seat, and a non-voting one at that, could help to balance out the interests being represented by the IDA. It’s also worth noting that the default rule for IDAs under the General Municipal Law is for the governing body of each municipality to appoint IDA board members, not the chief executive. The General Municipal Law, moreover, specifically permits public officials to serve as IDA board members, and under the Public Authorities Reform Act of 2009, all board members have a fiduciary duty to act independently, so adding a new board position shouldn’t detract from the IDA’s autonomy—although it might intrude somewhat on the County Executive’s ability to influence the board’s decisions.

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