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Annual update & predictions for 2012

January 2, 2012

We thought it might be nice to recap the high points of the past year and offer some prediction for 2012, ever mindful the New York Times’ caution that the only safe thing to say about the future is that it lies ahead. At the outset we’d like to thank our readers—there have been more than 7,500 hits since we started the Public Authorities Blog in July and the number keeps on growing.

2011 Recap

The single most significant development of the past year was the Court of Appeals’ decision in Bordleleau v. New York State, which held that public authorities and state agencies, with appropriate legislative authorization, may provide grants and loans to private companies in an effort to promote economic development. The constitutionality of gifts and loans to private entities has been litigated for more than century, but now that the issue has been unambiguously settled, public authorities are likely to play an increasing role in the state’s economic development strategy.

Also in the legal category is a case not widely known but which also has the potential for spurring economic development. In Selevan v New York State Thruway, a federal district court upheld the discounted rates charged by the Thruway to residents and commuters across the Grand Island Bridge. Holding that differential rates are constitutional, a precedent is established for targeting public authority benefits to assist specific sub-groups. Although the practice of using authority assets to provide disparate aid is common (e.g., New York Power Authority allocations), judicial support is helpful.

Dwarfing all other authority projects is the impending construction of the new Tappan Zee Bridge. The project, which promises to be the largest public work project in the nation, has been fast tracked by the Governor and, at the Governor’s request, by the President. The unprecedented design build approach and what promises to be an unusual funding mechanism may provide a model for renovating the State’s aging transportation infrastructure.

On a slightly smaller scale is the NYC Economic Development Corporation’s recent announcement that Cornell and its partner Technion Israel Institute of Technology have been selected to build a $2 billion applied sciences campus of Roosevelt Island. The 2 million square foot campus, which will break ground in 2015 and be completed in 2017, will serve up to 2,500 students.

2010 Predictions

If we’ve learned anything, it’s that public authority activities are likely to be shaped over the next year by events and influences that we cannot now imagine. With that noted, I offer the following predictions:

IDAs and LDCs will hold center stage. As they’ve proliferated over the past five years, elected officials and civic groups have increasingly asked, why there are so many? why don’t they have verifiable performance standards? why are their subsidies are so large? who’s monitoring salaries and benefits? and why don’t they claw back grants and loans when promised developments or jobs aren’t delivered? There’s a consensus that most IDAs (less is known of about LDC’s) make a meaningful contribution to economic development throughout the state, but empirical measures and accurate record keeping are inconsistent. The Authorities Budget Office has recently pressed IDAs in certain areas to consolidate, harmonize their multi-year plans, and clearly delineate between their obligations and those of the sponsoring municipalities’ personnel. There will probably be a legislative movement in this direction in 2012.

Public authority infrastructure may also be on agenda. Reports are that the Governor and the Legislature have agreed on a new framework that would provide additional oversight of the Long Island Power Authority. Recall that the SAGE Commission, which was established to evaluate enhanced efficiency through agency and authority consolidation, recently recommended merging the Thruway Authority and the Bridge Authority, and where feasible, consolidation or enhanced coordination with the Department of Transportation. The SAGE Commission is expected to consider other Authority infrastructure changes next year. Although some authorities may contract in size, the selective expansion of public authority involvement in health care and economic development authorities is also likely. The Governor has proposed that New York’s proposed Health Insurance Exchange should be administered through a new public authority. On the economic front, conduit borrowing is likely to continue, and will perhaps even increase in an effort to spur economic development.

And the final prediction (nay wish) is that all of our readers should experience a healthy and happy New Year.

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