New York State Assembly

1998 Annual Report

Committee on Corporation, Authorities
and Commissions

Sheldon Silver, Speaker
Albert Vann, Chair

Albert Vann Assemblyman 56th District

THE ASSEMBLY STATE OF NEW YORK ALBANY

CHAIRMAN Committee on Corporations, Authorities and Commissions COMMITTEES Education Health Ways and Means Rules

December 15, 1998 

The Honorable Sheldon Silver
Speaker of the Assembly
State Capitol, Room 349
Albany, New York 12248

Dear Speaker Silver;

As Chairperson of the Assembly Standing Committee on Corporations, Authorities and Commissions, I am pleased to submit the Committee's 1998 Annual Report. In 1998, the Committee reviewed 380 bills, acting favorably on 68 of them. Ultimately, 27 of them became law. The Committee has been involved in several important issues, including competition in telecommunications, investigation of excessive LILCO executive bonuses, modernization of the Business Corporation Law and fare restructuring by the New York City Transit Authority (NYCTA).

The telecommunications industry is flourishing in New York State and its continued growth must be nurtured and encouraged to benefit all New Yorkers. Toward that end, the Committee has worked with the Public Service Commission (PSC) and industry, and approved a number of bills this past session that will further eliminate existing barriers to competition while ensuring that consumers are protected in the process.

The NYCTA continues to make exciting progress. Ridership levels are at their highest point since the early 1970's. The Assembly has long been a proponent of eliminating two-fare zones and offering volume discounts. These goals were realized this past year.

With respect to developments in the business law area, the Committee considered several important bills that became law. Collectively, the new laws will streamline and simplify the execution of corporate documents; permit mergers among various business entities; conform the procedures for service of process with respect to limited liability companies with that of business corporations; and authorize corporations to provide electronic notice of shareholder meetings.

The death care industry was the subject of an important bill which you sponsored that was reported by the Committee and became law. This law prohibits the combination of interests of not-for-profit cemeteries with for-profit funeral entities. The law was designed to protect citizens from high-pressure sales tactics when making important and difficult decisions regarding the burial of loved ones.

This past year, the Committee participated in two hearings examining problems associated with the New York City School Construction Authority. The first hearing dealt with the extremely slow pace at which coal burning furnaces are being removed from our public schools. It is very important to the people of New York City that the school coal conversion project move forward as expeditiously as possible. The second hearing examined the more general problems of the management of the SCA and dire conditions of many of New York City's public schools. The Assembly provided money in the budget that would have improved school facilities; unfortunately, the Governor vetoed this money that is so desperately needed by our schools.

The 1999 Session is likely to result in important changes in the many areas of jurisdiction of the Corporations Committee. Profound change is continuing in the telecommunication and energy fields, and the Committee is committed to protecting New York's utility consumers. In October, the MTA will submit a new 5 year Capital Plan and the Committee intends to carefully scrutinize this document to ensure that the progress championed by the Assembly in the field of mass transit is continued and expanded.

I would like to express my sympathy for the sudden passing of Assemblyman Anthony Genovesi. Tony was a member of the Corporations Committee since his arrival as a member in 1987. He was chair of the Corporate Law subcommittee and his expertise provided the Committee with invaluable guidance. His passion, hard work and good humor will be greatly missed by the Committee and the full Assembly.

I am pleased with the success of the Committee in 1998 and look forward to the coming session. I wish to extend my sincere thanks to the members of the Committee, my staff, the staff of the Corporations Committee, and to you, Mr. Speaker, for your continued support and concern.

Sincerely,

Albert Vann, Chairperson
Assembly Standing Committee on Corporations, Authorities and Commissions

Members of the New York State Assembly Standing Committee on
CORPORATIONS, AUTHORITIES AND COMMISSIONS

Albert Vann, Chairperson

Staff

Terri B. Crowley, Legislative Coordinator
Michael J. White, Legislative Associate
Philip Fields, Legislative Associate
Teri Kleinmann, Committee Counsel
Letitia James, Counsel to Chairperson Vann
Paul Webster, Legislative Associate to Chairperson Vann
Vincent Thomas, Economic Development Specialist
Adrienne Johnson, Committee Clerk
Shannel Arrington, Program and Counsel Secretary
Josie Huba, Program and Counsel Secretary

TABLE OF CONTENTS

  I. INTRODUCTION

Unlike the names of other Assembly Standing Committees, the name of the Committee on Corporations, Authorities and Commissions does not immediately identify its jurisdiction. It is often referred to simply as the Corporations Committee. Many people, both inside and outside of government, believe that its primary focus is on laws which govern New York State's businesses and not-for-profit corporations. While these laws are part of the Committee's jurisdiction, they are only one part of its wide-ranging responsibilities.

The Committee also exercises jurisdiction over legislation governing the State's commissions, most notably the Public Service Commission (PSC), and the State's many public authorities.

II. 1998 COMMITTEE ACTIVITIES AND INITIATIVES

   
A. MASS TRANSIT OPERATIONS AND FINANCE

Although the Assembly Transportation Committee has jurisdiction over a large portion of legislation affecting New York's highway and bridge network, the Corporations Committee oversees public authorities which provide mass transit services throughout the State. This Committee has historically been the Assembly's advocate for mass transit and has fought to see that these systems are adequately funded and are widely accessible and affordable.

The following bills were signed into law by the Governor:

Chapter 108 of the Laws of 1998 (A.11021, Rules, Espaillat). This law extends for one year the authority of the Triborough Bridge and Tunnel Authority (TBTA) to issue variable rate obligations which pay interest other than semi-annually. This law will provide savings in TBTA debt service, as well as increase investment proceeds which will benefit the TBTA Capital Program.

Chapter 396 of the Laws of 1998 (A.5750-B, Nolan). This law increases membership, from 10 to 12 members, of the Long Island Rail Road Commuter's Council to include membership from Queens and Brooklyn. The additional members would be appointed by the Borough Presidents of Queens and Brooklyn. Also, this law increases membership, from 10 to 11 members, of the Metro-North Rail Commuter Council to include membership from Bronx County, who would be appointed by the Bronx Borough President.

Chapter 498 of the Laws of 1998 (A.11224, Rules,Cook). This law extends provisions applicable to procurement by the Metropolitan Transportation Authority from January 1, 1999 to January 1, 2002. It also changes the vote needed for the procurement of New York City Transit rail cars and buses from 11 members to two-thirds of the membership then in office.

The following bills passed the Assembly but were not acted upon by the Senate:

A.701 (Colman). This bill would, if enacted, allow each of the four board members, representing Dutchess, Orange, Putnam and Rockland counties, of the Metropolitan Transportation Authority (MTA) that currently cast one collective vote, to each cast a 1/4 vote.

A.2317-B (Nolan). This bill would, if enacted, establish performance indicator posters for the purpose of reporting indicators of the quality and quantity of service on rapid transit routes operated by the New York City Transit Authority (NYCTA). Such indicators would include statistics that represent the frequency of service, subway car and bus cleanliness, reliability of service, adequacy of service, level of standees and crowding, and adequate heat and air-conditioning.

A.6095-A (Glick). This bill would, if enacted, require the MTA to formulate and annually update a long-range strategic plan devised to convert its existing diesel bus fleet to an alternative fuel vehicle fleet in order to promote improved air quality, provide safe and efficient public transportation, advance environmental equity, support statewide transit industries and adopt alternative fuels as comparable energy sources for surface transportation.

A.9126-B (Kaufman). This bill would, if enacted, establish reasonable, uniform provisions for maintaining the confidentiality of E-Z pass records, while at the same time authorizing disclosure in cases of legitimate law enforcement need. Heavy volume and fewer toll collection lanes combined with the elimination of bulk tokens have forced many people to buy E-Z passes who otherwise would not choose to do so. Many of these people are very concerned about protecting the privacy of information obtained by these monitoring devices. This bill serves to ensure their privacy by strengthening provisions limiting the use of information obtained by the E-Z pass system.

A.10087 (Abbate). This bill would, if enacted, require the assignment of lieutenants and sergeants to certain facilities of the Triborough Bridge and Tunnel Authority.

(A.10847 Vann). This bill would, if enacted, provide for open meetings of the Port Authority of New York and New Jersey and make available public meeting agendas and public documents.

 B. CORPORATE LAW

The Corporations Committee reviews, monitors, and examines proposed revisions to laws pertaining to business and not-for-profit corporations. The Committee's goal is to attract and retain these vital entities in the State. Specifically, the Committee maintains jurisdiction over issues of corporate governance and structure as they relate to business corporations, not-for-profit corporations, cooperatives corporations, limited liability companies and other business entities.

The following bills were signed into law by the Governor:

Chapter 375 of the Laws of 1998 (A.10105, Vann). This law amends the Business Corporation Law (BCL), the Not-for-Profit Corporation (NFP) Law, the Limited Liability Company Law, the Partnership Law and the General Business Law to simplify the execution requirements of documents for various business entities. The law simplifies provisions covering the parties permitted to sign such documents; expands the number of individuals authorized to sign documents; and eliminates the requirement that certificates be dated and that the signing of such certificates be either verified, acknowledged or affirmed. Requirements related to the location of the name, capacity and address of the signer are also simplified. The BCL and NFP Law are amended to eliminate the requirement that an address be set forth in terms of a number and street. The BCL is further amended to require the name and respective business address of the corporation's chief executive officer, rather than those of the chairman of the board of directors.

In summary, this law modernizes the procedures required for the execution of documents required to be filed with the Department of State. Prior to the enactment of this law, the applicable statutes provided needlessly complicated and often confusing requirements as to the execution of documents. The Department of State routinely rejected documents submitted for filing which failed to comply with these requirements which resulted in inconvenience to filers as well as delayed business transactions related to these documents.

Chapter 498 of the Laws of 1998 (A.11231,Rules,Vann). This law will enable New York State's corporations to conduct certain official communications with their shareholders electronically. This law amends the BCL to allow notices of shareholders' meetings to be either written or electronic and allows shareholders to electronically waive notice of such meetings.

In 1997, the Legislature enacted a number of amendments to the BCL to both modernize the law and encourage more active participation among shareholders in the corporate governance of the companies in which they hold shares. Among other changes, the new law permitted the electronic transmission of proxy votes. This change in New York law was met with considerable acclaim by many of the State's corporate citizens and shareholders and has already been utilized with great success this year. This law will facilitate even more electronic communications between New York's corporations and their shareholders. New York corporations will be able to further streamline their corporate governance operations thereby making them more efficient and cost effective. The ease of use that this method of communication provides encourages and entices more shareholders to take an active role in the decision-making process of the corporations in which they hold stock.

Chapter 448 of the Laws of 1998 (A.10384, Vitaliano). This law permits an addressee for service of process of a limited liability company (LLC), a limited partnership (LP) and a registered limited liability partnership (LLP) to resign. It provides a method by which process may be served against an LLC, LP and LLP whose process addressee has resigned and provides fees for such certificates. The law also amends the LLC Law and the Partnership Law to allow an addressee or registered agent for service of process to change his or her own address currently on record with the Department of State. Before this law, no statutory provisions existed in the LLC Law or the Partnership Law to authorize a party whose address has been designated by an LLC, LP or LLP as its address for process, to terminate its responsibility as addressee, without authorization of the designating entity. Consequently, process addressees who had severed their relationships with these entities have found it impossible to remove themselves from this responsibility in the face of opposition. Parties who have been named as process addressees without their consent have encountered similar problems without available remedy. Similarly, process addressees who have lost touch with the designating LCC, LP or LLP have also been unable to avoid the unwanted burden of acting as agent for this transmittal process. This law conforms the LLC Law and the Partnership Law to the BCL as amended by Chapter 469 of the Laws of 1997, which extended the provisions of this law to the addresses and agents of corporations.

Chapter 374 of the Laws of 1998 (A.10104-A, Vann). This law amends the Limited Liability Company Law, the Partnership Law and the Business Corporation Law to permit mergers between and among limited liability companies, limited partnerships, business corporations and other business entities. The intent of this legislation is to provide the flexibility necessary to make these business entities more useful to the business and legal communities.

Chapter 17 of the Laws of 1998 (A.8994, Vann). This law makes technical corrections to the BCL reform and modernization bill enacted last year (Chapter 449 of the Laws of 1997).

Chapter 560 of the Laws of 1998 (A.8641-A, Rules, Silver). This law amends the Not-for-Profit Corporation Law, the Religious Corporations Law, the Village Law, the General Municipal Law, the Town Law, the County Law and the Public Health Law to prohibit the combination of interests of cemeteries and funeral entities, and to codify the prohibitions of the sale of monuments by cemeteries. The law also codifies the existing Cemetery Board regulation prohibiting the sale of monuments by cemeteries; gives the Commissioner of Health the ability to revoke or suspend the license of, or otherwise discipline, any funeral firm which accepts a consideration from a financial institution or trust company for placing pre-need funds on deposit in that institution; and grandfathers any existing arrangement whereby a funeral home is operating a crematory or crematorium that was in operation January 1, 1998.

The State has a vital interest in the oversight of its cemeteries and in their viability as not-for-profit entities, as well as the protection of its citizens when making important and difficult decisions regarding the burial of loved ones. The combination of profit-making ventures with not-for-profit ventures often raises conflicting business interests. New York courts have repeatedly held that the operation of a cemetery is imbued with a public purpose, subjecting any contracts or business activity in relation to the operation of a cemetery to changes in State law pursuant to the valid exercise of the State's police powers.

Chapter 548 of the Laws of 1998 (A.6162, Vitalino). This law amends the Not-For-Profit Corporation Law to provide to cemetery corporations the exclusive right to offer annual care services. It is anticipated that such services will create consistency with regard to the maintenance of cemetery plots, give the Cemetery Board the ability to negotiate the cost of annual care services with outside contractors, and provide a steady stream of income to cemeteries.

Chapter 301 of the Laws of 1998 (A.8582, Rules, Doran). This law permits the Clifton Springs Sanitarium Company, a domestic not-for-profit corporation that operates a hospital under Article 28 of the Public Health Law, to adopt, amend and rescind matters relating to its management, governance and operations pursuant to the procedures set forth in the Not-for-Profit Corporation Law. The corporation had been bound by the provisions described in a deed of trust made by Henry and Mary E. Foster in 1881, and under the terms of the deed of trust, the corporation had to petition the Legislature for the passage of special legislation each time it wished to amend such provisions. By permitting the corporation to adopt, amend and rescind provisions concerning its governance, management and operations, it may make such changes in a more expeditious manner, similar to other not-for-profit hospital corporations, while retaining oversight by the State through the provisions of the Not-for-Profit Corporation Law and other applicable laws. In addition, the bill frees the Legislature from involvement in the day-to-day activities of the corporation, which in the past has required over fifteen acts of the Legislature.

The following bills were passed by the Assembly but were not acted upon by the Senate:

A.645 (Sanders). This bill would, if enacted, amend the BCL to require that meetings of the board of directors of cooperative corporations shall be opened to members of the cooperative corporation unless the members vote to close any part of such meetings. If the board decides to close part of a board meeting, the board must provide seven days' notice in a published agenda. Exceptions to this requirement are provided for emergencies as well as "housekeeping" or administrative matters.

A.11241,(Rules, Vitaliano). This bill would, if enacted, amend the Religious Corporations Law to provide an exemption to the current requirement for court approval of the sale, mortgage or lien of property owned by a religious corporation. The exemption would apply to property whose fair market value and purchase price is $50,000 or less, or to the mortgage of real property where such mortgage secures a debt of less than $50,000. This bill is intended to eliminate the often difficult and time-consuming process currently in place whereby a religious corporation must obtain permission of the Supreme Court of the judicial district, or the County Court of the county, of its principal place of business, in order to sell any real property.

 
C. PUBLIC AUTHORITIES

All New Yorkers are affected profoundly by New York's network of public authorities. While public authorities play a significant and often beneficial role in providing essential goods and services to New York State residents, the authorities' autonomy and lack of accountability in certain cases have fostered growing concern about some of their operations, practices and governance. The Corporations Committee has continued to examine issues affecting the accountability and governance of public authorities operating in New York State and will continue to do so.

The following bills passed the Assembly and became law:

Chapter 5 of the Laws of 1998 (A.9999-A, McEnemy). This law promotes the financing, construction and reconstruction of state office facilities in the city and county of Albany in and on property which will be owned by the State. Specifically, this law allows for the construction of a new building for the State Department of Audit and Control. Further, this law authorizes the Department of Transportation to locate its principal office in the City of Albany, and the Department of Environmental Conservation to locate its principal office in the County of Albany. Specifically, this law allows for the construction of a new building for the New York State Department of Audit and Control.

Chapter 16 of the Laws of 1998 (A.8879-A, Sweeney). This law permits the New York State Environmental Facilities Corporation (EFC) to sell bonds on behalf of entities that would otherwise be prohibited from participating in projects in cooperation with EFC due to restrictions in their charters related to the sale of bonds and notes.

Chapter 41 of the Laws of 1998 (A.9947, Vann). This law increases the authorization of the Dormitory Authority of the State of New York, as successor to the New York State Medical Care Facilities Finance Agency pursuant to the Health Care Financing Consolidation Act of 1995, to issue hospital and nursing home project bonds and notes from $9.1 billion to $10 billion. The Dormitory Authority anticipated that it would exhaust the then current bond cap by April 1998.

Chapter 124 of the Laws of 1998 (A.10673-A, Rules, Tonko). This law creates the Schenectady Metroplex Development Authority in certain areas of Schenectady County. The Authority will consist of an eleven member board whose purpose it is to develop, plan, finance, construct, renovate, administer and manage the Metroplex facilities and parks within the service district. The facilities and parks that the Schenectady Metroplex Development Authority has jurisdiction over include: trade exhibition and public show facilities; public entertainment facilities and parks; hotel and overnight accommodation facilities; transportation and parking facilities, historic preservation, tourism, sporting events, special entertainment, education, cultural and social facilities and parks; infrastructure facilities; industrial and manufacturing facilities and parks; and business, commercial, retail and government office space buildings and facilities.

The law requires that the Authority provide a five year capital plan; allows the County Legislature to approve projects in which more than one-third of the bonds for a project are taxable; requires that 70% of the one-half percent in the county sales tax pay for the bonds of the authority, and the remainder (30%) of the one-half percent in the county sales tax to be dedicated for real property tax relief; and grants a real property tax exemption phased out over ten years for hotel, industrial, manufacturing, business, commercial and retail facilities.

Chapter 223 of the Laws of 1998 (A.11194, Rules,Gromack). This law increases the membership of the Rockland County Solid Waste Management Authority from fifteen to seventeen members, with the two new members being mayors from villages within Rockland County. This legislation was requested by the Rockland County Legislature and approved by the Rockland County Executive. The Legislature desires to provide representation of the villages on the Rockland County Solid Waste Management Authority.

Chapter 268 of the Laws of 1998 (A.8826, Wright). This law amends the PAL to provide Dormitory Authority financing and construction for all necessary and related facilities for the Harlem Dowling-West Side Center for Children and Family Services.

Chapter 285 of the Laws of 1998 (A.11354, Rules, Lentol). This law authorizes the Dormitory Authority to provide for the financing and construction of facilities for Yeshiva Beis Leivy, a New York State not-for-profit corporation which is constructing housing facilities in Williamsburg, Brooklyn, in conjunction with schools that it operates. Financing by the Dormitory Authority will facilitate the process and allow development at a substantially lower cost in comparison to conventional financing.

Chapter 303 of the Laws of 1998 (A.8842-A, Colman). This law amends the PAL to extend the corporate existence of the Village of Suffern Parking Authority to December 31, 2004. The parking authority is in charge of administering commuter parking facilities within the Village of Suffern. Village officials determined that it was in the best interest of the village and its residents to continue the existence of the authority.

Chapter 304 of the Laws of 1998 (A.11301, Rules, Denis). This law authorizes the Terence Cardinal Cooke Health Care Center to obtain financing and construction services from the Dormitory Authority. The Terence Cardinal Cooke Health Care Center is in need of improved facilities for the aged, disabled, chronically impaired, mentally retarded and developmentally disabled persons. Statutory authorization is necessary to enable the Center to obtain certain services from the Dormitory Authority.

Chapter 327 of the Laws of 1998 (A.11381, Rules, Farrell). This law expands the types of guaranteed investment agreement providers available to the New York State Environmental Facilities Corporation ("EFC"). The law will allow moneys in the water pollution control revolving fund and the drinking water revolving fund to be invested in guaranteed investment contracts provided by corporate affiliates of insurance companies or reinsurance companies. Two major insurance-related companies which might reasonably be expected to bid on EFC's guaranteed investment contracts under the water pollution control revolving fund are corporations which are affiliates, but not subsidiaries, of the insurance companies with which they are affiliated. Both have expressed an interest in bidding on EFC's guaranteed investment contracts in the future. This law would expand the number of potential guaranteed investment contract providers from which EFC may choose, without eliminating any of the limitations under current law for the safety of such investments. As a result, this law will allow EFC to diversify its investment portfolio, thereby reducing EFC's risk, and enable EFC to seek higher yielding investments, without sacrificing safety.

Chapter 350 of the Laws of 1998 (A.11262-A, Rules, Vann). This law increases the authorization of the Dormitory Authority, as successor to the New York State Medical Care Facilities Finance Agency, pursuant to the Health Care Financing Consolidation Act of 1995, to issue hospital and nursing home project bonds and notes from $10 billion dollars to $10.7 billion dollars. The bond cap was increased in anticipation of the Dormitory Authority's exhausting the then-current bond cap within several months.

Chapter 371 of the Laws of 1998 (A.8534-B, Rules, Dinowitz). This law amends the Public Authorities Law (PAL) to provide construction and financing of facilities by the Dormitory Authority for the New York State Rehabilitation Association. This will enable community-based rehabilitation programs to obtain low-cost financing for construction and reconstruction of facilities.

Chapter 373 of the Laws of 1998 (A.10061-C, Brennan). This law corrects existing statute by listing the current legal name of the New York Association for Retarded Children, Inc. as NYSARC, Inc. The New York State Association for Retarded Children changed its name to NYSARC, Inc. in 1993. NYSARC, Inc. is now the Association's legal name.

Chapter 376 of the Laws of 1998 (A.10844-A, Rules, Farrell). This law will enable the Dormitory Authority to construct and finance facilities for Educational Housing Services, Inc. which provides student and faculty housing at institutions of higher education.

Chapter 355 of Laws of 1998 (A.11290, Rules, Gromack). This law provides for the lease of approximately 87 contiguous acres of land, including 30 buildings located at the Letchworth Developmental Center in Thiells, Rockland County, by the Dormitory Authority to the Haverstraw-Stony Point Central School District. The property may also be conveyed by the Dormitory Authority to the school district once the bonds attributable to this property are no longer outstanding. The school district is facing severe space needs due to rapidly increasing enrollment. At the same time, the State of New York is pursuing a strategy to dispose of vacant land and buildings at the Letchworth Development Center located within the district. This law will assist the district in meeting its space needs in a timely and cost-effective manner, while saving millions of dollars in state aid.

The following bills have passed the Assembly but were not acted upon by the Senate:

A.361 (Grannis). This bill would, if enacted, give Roosevelt Island residents a greater voice in the operation and management of Roosevelt Island. This bill would require that of the seven public members to be appointed to the board of the Roosevelt Island Operating Corporation, two members shall be Roosevelt Island residents who were duly elected president and vice-president of the Roosevelt Island Resident Association (RIRA) and one shall be elected by the governing body of RIRA.

A.8814-A (Calhoun). This bill would, if enacted, authorize McQuade Children's Services, New Windsor, a private, not-for-profit school, to be eligible for funding through the Dormitory Authority. In 1991, the Legislature authorized Dormitory Authority Capital Funding for certain schools: the Astor Learning Center, the Astor Home for Children, Devereux Foundation, Gateway Youth and Family Services, Green Chimneys School for Little Folk, Harmony Heights, Inc., Harmony Heights School, Lake Grove School, Lutheran Social Services of Upper New York, Nassau Order for the Developmentally Disabled Inc., Upstate Home for Children Inc.,Vanderheyden Hall Inc., and the Wyndham Lawn Home for Children. This bill would add McQuade Children's Services to this list.

A.10799-A (Rules, Grannis). This bill would, if enacted, provide Dormitory Authority financing for facilities and equipment of the MSMC Realty Corporation, a support organization of the Mount Sinai Hospital. This bill was necessary to allow for the financing of critical equipment and facilities related to patient care through the MSMC Realty Corporation for the purpose of improving patient services at Mount Sinai Hospital.

A.10847 (Rules, Vann). This bill would, if enacted, provide a public speaking time at meetings of the Port Authority of New York and New Jersey and make meeting agendas and public documents available to the public at least five business days before every meeting. While the meetings are open to the public, the public is not given any notice of the items to be decided or the opportunity to express their opinions on them. Presently, the public comment period is at the end of the meeting. This legislation would permit the public to receive notice of the items up for discussion on the agenda, and to comment before the vote is taken.

A.10874 (Rules, Grannis). This bill would, if enacted, rename the Kingston-Rhinecliff Bridge the "George Clinton Kingston-Rhinecliff Bridge". Ulster and Dutchess County Legislatures requested that the bridge be renamed in honor of former New York State Governor George Clinton, a native of that area.

  
D. TELECOMMUNICATIONS AND UTILITIES

The Committee exercises responsibility for the development and evaluation of legislation concerning the management and regulation of the State's investor-owned utilities, publicly-owned utility systems, and telecommunications providers.

The Committee examines the extent to which PASNY is meeting its public power obligations in a rational, effective and efficient manner. It is the nation's largest state-owned power organization, providing more than a quarter of New York's electricity. Its primary mission is to provide economical power to New York's government agencies and electric consumers. Oversight of PASNY includes an ongoing evaluation of its policies concerning the allocation of power, the development of small power and alternate energy resources, the operation of its two nuclear plants, and its efforts to encourage conservation.

The Assembly Corporations Committee has worked with the Assembly Energy Committee, the lead committee in this area, to move the electric industry to competition through legislation. Electricity costs in New York State are significantly higher than the national average. This disparity hampers economic prosperity for all consumers, especially businesses. The high cost of electricity threatens to erode the utilities' customer base, resulting in further rate increases for residential and small business customers who will be forced to bear a higher proportion of the utilities' fixed costs.

Increasing competition in the electricity industry, with proper regulatory safeguards, can result in lower electricity costs. Competition must be implemented in a manner that does not jeopardize the safety or reliability of the electric system and provides benefits to all classes of customers.

The Assembly Majority's legislative package, known as Competition Plus/Energy 2000, would provide a blueprint for the implementation of competition in the electric industry. These components include: legislation which would provide mandated rate reduction, allow for customer choice of electricity suppliers, deregulate competitive power producers, reorganize PASNY, maintain reliability of the electric system and retention of a skilled workforce by the state's electric corporations and PASNY and provides for the election of PSC Commissioners. In addition, as a component of comprehensive legislation establishing a competitive electric industry and with the appropriate conditions and restrictions, it has been argued that securitization has the potential to reduce electricity costs, if combined with cost reductions by power producers. The legislative package passed the Assembly but was not acted upon by the Senate.

Telecommunications is one of the most dynamic industries in today's economy. The benefits that this industry can bring our citizens in the areas of health, education and economic development are almost limitless. However, there are potential downsides in this telecommunications revolution which include: the potential threat to privacy from the unregulated dissemination of information; the continuation and development of monopolistic practices that could force out competition and hurt consumers; potential layoffs of skilled communication workers in cost-cutting measures that eventually affect service; ever-increasing costs endangering universal service, etc. It is against this backdrop of benefits and dangers that the Chairman, this Committee and the Assembly have attempted to promote this industry while ensuring that adequate protection be maintained for all New Yorkers. The Assembly Majority has sought to achieve these goals through legislation, public hearings and advocacy, and maintaining a dialogue with the New York State Public Service Commission (PSC).

The following bills were signed into law by the Governor:

Chapter 162 of the Laws of 1998 (A.8188, Vann). This law redefines a major change in utility rates from one that increases a company's aggregate revenue by $100,000 to a change that increases such revenue by $300,000. This law will aid small utilities by not requiring them to go through the expense of a major rate case, while still providing the PSC oversight that they would be subject to in a major rate case.

Chapter 446 of the Laws of 1998 (A.11090-A, Vann). This law provides that a telephone corporation's stock transfer be deemed approved by the PSC ninety days after its filing, unless the PSC notifies the corporation in writing that the public interest requires the PSC to review in detail such transfer and give its written consent or rejection. This will make it easier for telephone corporations to plan their futures while ensuring that the public interest is still protected.

The following bills passed the Assembly, but were not acted upon by the Senate:

A.1501-A (Harenberg). This bill, if enacted, would require the PSC to review the compensation and benefits provided to certain officers, directors and high level managerial employees of certain gas and/or electric corporations to ensure that they are not excessive. This review would occur once every three years or each time a major rate increase is requested.

A.2551 (Glick). This bill, if enacted, would impose limits on the advertising expenses of regulated public utilities.

A.2605 (Grannis). This bill, if enacted, would require the PSC to consider the economic impact of a utility rate increase on an area prior to approving any major rate increase.

A.2606 (Jacobs). This bill, if enacted, would prohibit public utility company revenues from being paid to any officer or director contingent upon a change in control of the utility.

A.3302 (Brennan). This bill, if enacted, would empower the PSC to provide for the refund of revenues received by any telephone corporation in excess of its authorized rate of return for a period of twelve months.

A.8245 (Tonko). This bill, if enacted, would require that the members of the PSC be elected to office rather than appointed by the Governor. Allowing the voters to elect PSC Commissioners would provide greater public participation and accountability in the regulation of the provision of utility service.

III. PUBLIC HEARINGS AND CONFERENCES

A. The Future of Mass Transit in New York City

On January 30, 1998 in New York City, the Assembly Standing Committee on Corporations, Authorities and Commissions, the Assembly Standing Committee on Ways and Means, the Assembly Standing Committee on Labor, the Assembly Subcommittee on Mass Transit, and the Legislative Commission on Critical Transportation choices held a public hearing to examine transit policy and encourage discounts to increase transit ridership.

In July 1997, a reformulated capital program and operating funding envelope was approved by the Metropolitan Transportation Authority Capital Program Review Board and the New York State Legislature. The plan covers the capital and operating needs of the MTA agencies through 1999 and was premised on no fare increases, elimination of two-fare zones and volume discounts for all subway riders. As part of the agreement, the MTA pledged to examine the increased use of NYCTA's in-house engineering staff in order to improve efficiency and effectiveness. The Committees had learned that both subsidy revenue and farebox revenue was up resulting in a surplus. Ridership had steadily increased on Long Island Rail Road and Metro-North as well as on New York City Transit's subway and bus system resulting in overcrowding, especially on Transit buses. Also, the Committee had received complaints regarding the contracting-out of engineering services and prevailing wage violations with construction contractors at the MTA and the NYCTA.

Through the efforts of the Assembly, two-fare zones have been eliminated and volume discounts were introduced resulting in a more seamless transit system.

B. Coal Conversion and Other Issues Affecting Energy and Schools

On February 5, 1998 in New York City, the Assembly Standing Committee on Corporations, Authorities and Commissions, the Assembly Standing Committee on Education, the Assembly Standing Committee on Environmental Conservation, the Assembly Standing Committee on Energy, and the Assembly Subcommittee on Energy and Schools held a public hearing to gather information and hear comments on the topic of energy and schools, including the status of coal conversion projects in New York City schools.

The successful implementation of the Clean Air for Schools coal conversion projects are dependent upon the cooperative efforts of PASNY, the New York City Board of Education and the School Construction Authority. The Committees investigated the status of this program and the efforts that each of the parties were contributing to its timely and successful implementation.

C. State and Local Regulations of Wireless Communication Towers

On March 11, 1998, the Assembly Standing Committee on Corporations, Authorities and Commissions, the Assembly Standing Committee on Local Governments and the Assembly Majority Leader held a public hearing in Albany to review the siting of communications towers in New York State. Passage of the Federal Telecommunications Act of 1996, new technology and increased sale of airwave rights by the FCC have resulted in municipalities across the State being approached by providers of wireless communication services seeking approval for the installation of antennas or other structures.

While section 704 of the Federal Telecommunications Act preserves local zoning authority, it also provides for the restriction and preemption of such authority by the Federal Communication Commission (FCC) under certain circumstances. This limited preemption of state and local government regulation of the sighting of wireless communication facilities has resulted in controversy, confusion and concern in communities across the State as wireless licensees strive to meet federal deadlines, while municipalities seek to address local concerns.

The purpose of this hearing was to receive public input in identifying ways in which the state can both promote efficient and effective implementation of this new technology while protecting community concerns. The Committees are continuing to work on this issue in an attempt to reach a workable consensus.

D. Bus Service in the City of New York

On May 14, 1998, the Assembly Standing Committee on Corporations, Authorities and Commissions and the Legislative Commission on Critical Transportation Choices held a joint public hearing in New York City to examine the quality of bus service in New York City.

As a result of increasing ridership levels and reductions in service by the MTA, bus service in New York City has become an increasing problem for transit riders. Overcrowded buses, gaps in service, unreliable bus routes hampered by service disruptions, ineffective paratransit service, and limited access for riders in some neighborhoods of New York City continue to persist. The Committee and Commission were interested in hearing from officials of the MTA regarding their strategy for addressing these problems and from other interested parties on how to address these and other related concerns. The MTA promised that they were increasing service and would effectively meet the challenge of increased ridership.

E. Examination of the Oversight Role of the Public Service Commission (PSC) and the Long Island Power Authority (LIPA) Relating to the Payment of Bonuses to Top Executives of the Long Island Lighting Company (LILCO)

In Farmingdale, New York, on June 23, 1998, and on July 28, 1998, the Assembly Standing Committee on Corporations, Authorities and Commissions held public hearings to examine the circumstances under which LILCO's Board of Directors issued $67 million in bonuses to the Chairman of LILCO and several of its top executives, whether Long Island ratepayers had been harmed, what redress may be possible, and the extent to which this may have been a failure on the part of the PSC and of LIPA in their oversight roles.

These hearings examined whether officials and LIPA or the PSC knew or should have known of these bonuses or the possibility of these bonuses, prior to the closure and approval of the mergers and LIPA takeover. The hearing examined the negotiation and oversight processes employed by LIPA and the PSC, in order to determine whether the proper questions about executive bonuses were asked by the agencies charged with the responsibility of protecting ratepayers and taxpayers

F. An Examination of the Operations of the Long Island Rail Road (LIRR)

On September 24, 1998, the Assembly Standing Committee on Corporations, Authorities and Commissions held a public hearing in Farmingdale, Long Island to examine the operational problems which had occurred this past summer and ways to ensure these problems do not continue.

The Long Island Rail Road is a critical transportation link for the people of Long Island and the entire New York Metropolitan region. Its reliable, efficient operation is vital to the region's economic health. This past summer, there were numerous delays and equipment problems which adversely affected the traveling public. The Committee was concerned about the disruptions and inconvenience these problems have caused to commuters and what actions were undertaken to ensure they are resolved quickly and cost effectively. Management of the LIRR attributed these problems to an aging fleet, a wet spring and shortage of cars. The Assembly Corporations Committee had received complaints from concerned citizens and the commuting public.

The purpose of this hearing was to solicit testimony from LIRR management, LIRR employees, independent experts, commuter advocates, LIRR customers and other interested parties as to what caused this summer's problems, whether they could have been predicted, whether management planning and response was reasonable and adequate, and what measures are being taken and should be taken to ensure that the problems do not reoccur.

The Committee continues to be concerned that the railroad has not adequately planned and budgeted to meet its responsibilities. The Committee will closely monitor this situation.

G. Issues Facing the New York City School Construction Authority (SCA)

On December 9, 1998, the Assembly Standing Committee on Corporations, Authorities and Commissions, the Assembly Standing Committee on Education and the Assembly Standing Committee on Labor held a public hearing on the problems facing the SCA in New York City.

Chapter 738 of the Laws of 1988 established the New York City School Construction Authority to manage the acquisition, design, construction, and major rehabilitation of New York City schools. The Legislature found that "limitations on the construction process have proven to be inefficient, wasteful, and incapable of yielding quality construction on time and at a reasonable cost". To help address these issues, it was the intent of the Legislature that the new authority be exempt from certain local laws and regulations concerning the provision of school buildings in order to ensure the effectiveness of the Authority.

During the 10 years of its existence, the School Construction Authority has faced criticism for failing to address the issues it was created to correct. It was the purpose of this hearing to examine the Authority's performance to determine what changes may be necessary.

H. CONFERENCE ON TELECOMMUNICATIONS

The Corporations Committee hosted "Strategies For the Future V," the fifth annual conference on telecommunications, on February 13, 1998, in Albany. This gathering again focused on the need for greater access to the "information superhighway" by communities of color and small businesses. This conference brought together numerous experts from federal and state government, science, academia, and private industry for this day-long symposium. Amid the many changes within the telecommunications industry, African-American, Latinos, and other traditionally disadvantaged groups, regardless of where they live in New York State, must play a role in the development and implementation of communications systems.

While these conferences have proven to be extremely successful and received praise from participants and observers, they are only the first step in an ongoing dialogue with the telecommunications industry so that it recognizes the needs and aspirations of all New Yorkers during this communications transformation. To that end, the Committee will convene "Strategies For the Future VI" in February, 1999.

 IV. OUTLOOK FOR 1999

 
A. MASS TRANSIT

The New York City Transit Authority has experienced steadily increasing ridership over the last few years. Ridership has risen due to a variety of factors; including the improved economy, the elimination of two-fare zones, a decrease in crime on the transit system, and the improved infrastructure that has occurred as a result of 18 years of extensive capital investment through the MTA Capital Plan. The Assembly and the Committee have fought to increase funds for the capital plans.

The Committee is determined that any surplus not be used as an excuse to further cut subsidies to the Transit Authority. Toward this end, the Committee will continue to insist that money be reinvested in improvements in safety, service and cleanliness.

In 1999, the Committee will be examining the new Metropolitan Transportation Authority (MTA) Capital Plan for 2000-2004. The current five year MTA Capital Plan (1995-1999) is due to expire in December 1999. The Committee will advocate for increases and improvement in services and capital projects, and a promise to maintain the current fare structure for riders.

 
B. CORPORATE LAW

The Committee will examine a variety of business law issues in the coming session, including further fine-tuning of the BCL. As described in Section II.B. above, a major overhaul of the BCL was enacted this session. As corporations and practitioners do business using the modernized statute, additional amendments may be warranted in order to further improve the newly amended statute.

With thousands of limited liability companies up and running, further fine-tuning of the LLC law may also be expected next session. The LLC is a relatively new business entity in New York and elsewhere, and states are continuing to learn from each other's experiences and refining their statutes accordingly.

With respect to the Not-for-Profit Corporation (NFP) Law, the New York State Bar Association corporate law committee formed a subcommittee to examine the NFP Law with an eye towards modernizing and improving the statute where necessary. The Assembly Corporations Committee will closely examine any proposals which may result from these efforts.

C. PUBLIC AUTHORITIES

The Committee will continue to examine methods to improve the accountability and governance of public authorities operating in New York State. While the creation of these entities has proven to be a valuable tool in delivering services to citizens, effective oversight by the Legislature is critical. The Committee will continue to monitor the management and expenditures of New York's public authorities in order to ensure that these authorities are fulfilling then statutory mission.

D. TELECOMMUNICATIONS AND UTILITIES

The Federal Telecommunications Act of 1996 has brought major changes to the field of telecommunications. The New York State Public Service Commission (PSC) has instituted major changes in the telecommunications field through its negotiated agreements with the former Rochester Telephone Corporation (now Frontier Telephone), New York Telephone (now Bell Atlantic) and Taconic Telephone. Ensuring that New York State is at the forefront of telecommunications is a priority for the Committee and the Assembly Majority. It is imperative that telecommunication services be universally available to all residents of New York State in a manner which is accessible and affordable.

The PSC is continuing with its "Competition Proceeding", the goal of which is to bring fair competition to local telephone service in New York State which is expected to create a broader array of services as well as lower prices. The Committee will work with the Commission to ensure that New York retains its telecommunications edge while providing universal service for all New Yorkers.

The Committee will continue its efforts to monitor the business activities of the major telecommunications companies as they continue to merge and change with the enactment of the Telecommunications Act. These companies' business decisions will have a major impact on the New York marketplace and the Committee will remain vigilant in its duty to ensure that the needs of the State's business and residential consumers are met.

The Committee will be examining a new problem that has recently emerged in the telephone industry, the "cramming " of customer telephone bills. "Cramming" refers to the inclusion on consumers' local telephone bills of unauthorized, misleading or deceptive charges. The Committee will work with the PSC to see that the Commission and the FCC encourage local telephone companies to combat this practice expeditiously and aggressively. The nations' local phone companies, at the behest of the FCC, have announced new voluntary best practices guidelines. The Committee will monitor this problem to determine if any legislative action is required.

APPENDIX A

1998 SUMMARY SHEET

Summary of Action on All Bills
Referred to the Committee on
CORPORATIONS, AUTHORITIES, AND COMMISSIONS

APPENDIX B

BILLS THAT BECAME LAW

APPENDIX C

BILLS THAT WERE PASSED BY THE ASSEMBLY
BUT WERE NOT ACTED UPON BY THE SENATE