Legislative Update from the
NYS Assembly Committee on

Authorities and

Sheldon Silver, Speaker • Richard Brodsky, Chair • April 2006

Assembyman Richard Brodsky
Message from the Chair...

I’ve reported the past several years on how the public authorities of the State behave like shadow governments, making secret decisions that dramatically affect the daily lives of all New Yorkers. Whether you are concerned about mass transit, school construction, public debt, the cost of electricity, economic development, or the environment, state authorities are directly exercising enormous power over your lives.

The Committee on Corporations, Authorities and Commissions has spent the past three years investigating public authorities throughout the State to great effect, holding public hearings into the activities of State authorities from Long Island to Buffalo. These investigations have uncovered mismanagement at the Roosevelt Island Operating Corporation, the MTA, the Empire State Development Corporation, and other State authorities.

These investigations led the Committee to introduce the most comprehensive reform of New York’s public authorities ever passed in the State. The Public Authorities Accountability Act of 2005 was signed into law this January, and will make authorities more transparent and accountable to the people of New York. Some provisions in this wide-reaching law include the creation of an independent Inspector General and Budget Office to oversee the State’s authorities, as well as new rules on procurement lobbying and the disposition of property by public authorities.

More specific information on the Committee’s work is contained in the pages of this newsletter. As always, if you have any questions or concerns, please feel free to contact me.

Richard L. Brodsky

Committee Continues to Investigate
Mismanagement at Public Authorities

Chairman Richard Brodsky released the results of a nineteen-month investigation into the policies and practices of the Roosevelt Island Operating Corporation (RIOC). The RIOC’s lack of transparency, failure to return Freedom of Information Law (FOIL) requests on time, and fiscal problems prompted the investigation. The investigation showed a historic pattern of patronage, secrecy, and fiscal mismanagement, which is consistent with behaviors found in other state authorities investigated by Assemblyman Brodsky over the past three and half years.

The Committee held public hearings jointly with the Assembly Committee on Cities to review past practices and the current management of the RIOC. The RIOC was plagued with several years of budget deficits which were complicated by the RIOC’s inadequate long-term planning, failure to secure potential outside grants, and the use of onetime revenue shots at the expense of long-term income streams.

The Committees also examined the impact of the Public Authorities Accountability Act of 2005 on RIOC activities and whether additional legislation is necessary to bring greater accountability and transparency to this government entity.

Due in large part to Assemblyman Brodsky’s leadership, recent cooperation between the RIOC and the Committee has already led to stronger fiscal management, more openness of RIOC operations, and greater collaboration between residents and the board. Thanks to the public hearing and the Committee’s investigation, residents of the Island can now expect a higher standard of service from the board. The Committee will continue its oversight of the RIOC to assure sound fiscal management.

Committee’s Investigations and Unparalled
Oversight Lead to Bipartisan Authority Reform

As Chairman of the Committee on Corporations, Authorities and Commissions, Assemblyman Brodsky has developed the role of Chairman into the public’s chief investigator of New York State’s public authorities. Without oversight, transparency, or public accountability, these authorities and public benefit corporations have managed to operate multibillion-dollar budgets behind closed doors and off the books. Currently, over 700 public authorities use taxpayers’ dollars for projects and expenditures with minimal oversight or accountability. Recent scandals uncovered by the Committee include the Thruway Authority’s sale of the development rights of the Erie Canal to a politically-connected developer for a mere $30,000, and the MTA’s attempted sale of the West Side Railyard well below market value. These investigations, among others, have proven that these shadow governments needed reform.

In response to the growing evidence of public mismanagement and corruption, Assemblyman Brodsky authored the most comprehensive authority reform bill ever passed in New York State, The Public Authorities Accountability Act of 2005 (A.9007). Some provisions in this wide-reaching piece of legislation include:

photo Assemblyman Brodsky chairs a hearing to investigate wrongdoing at the MTA. Also pictured are Assemblymembers Michael Cusick of Staten Island and Felix Ortiz of Brooklyn.
  • The creation of an independent Inspector General to ensure greater accountability of authority-related activities.

  • The establishment of a new independent Budget Office to provide oversight and ensure full compliance with the guidelines included in the bill.

  • New requirement that authority properties be sold at their fair market value.

  • New policies regarding procurement lobbying.

  • Separation of the oversight and executive functions of public authorities’ boards.

The bill was signed into law this January, and will create new oversight for public authorities and hold them accountable for their actions and expenditures.

Assembly Brodsky said, “This is the most fundamental reform of state government in decades. We have begun to bring these Soviet-style bureaucracies under control. This legislation will result in more honest and more effective government for New Yorkers. We will continue our investigations until the system works in the interest of the people of this State.”

Committee Introduces
Personal Privacy Amendment

Recent government and corporate actions have left people increasingly worried about their privacy. New Yorkers’ expectation that government and corporations may not invade their personal lives is at risk. Wiretaps, abuse of business records, intrusion into private and family matters, assaults on reproductive freedom; these have all diminished our ability to keep our private lives private.

To protect New Yorkers’ privacy, Chairman Brodsky has introduced an amendment to the State Constitution that will guarantee the right to personal privacy. The Constitution will be amended to read, “The inherent right of each person to personal privacy shall not be infringed.” The amendment will ensure that people’s banking and medical records are not sold without their knowledge; that their privacy is protected while using the internet; and would extend to sexual orientation and reproductive freedom.

Assemblyman Brodsky said, “The right to personal privacy must be defended against the power of government and large corporations. We must pass a constitutional amendment that would clearly delineate the individual privacy rights of every New Yorker.”

Committee’s Leadership Leads to
Reform of the Empire Zone Program

Assemblyman Richard Brodsky Assemblyman Brodsky discusses legislation that will reform the State’s Empire Zone program.

Chairman Richard Brodsky and the Committee have been investigating the Empire State Development Corporation (ESDC) and local Empire Zones for nearly three years. The Assemblyman’s investigations have uncovered numerous cases of mismanagement in the Empire Zone program: companies that received tax subsidies dramatically greater than the wages they ever paid, companies that created “new” jobs by re-incorporating their businesses’ property, and companies that received tax subsidies while simultaneously outsourcing New Yorkers’ jobs. Furthermore, some of the biggest political donors received the largest Empire Zone awards.

Assemblyman Brodsky identified a series of reforms that were required to make the program function effectively, including improvements in transparency and accountability that would enable citizens to track Empire Zone benefits—why benefits are awarded, in what amounts, and with what job-creation effects. Specific reforms include: audited benefits, reports on per-job subsidy costs, decertification of employers not creating jobs, ending the scattershot creation of company-specific zone boundary amendments, and perhaps most importantly, the elimination of subsidies greater than 1.4 times the wage of the job created and retained. Assemblyman Brodsky said, “This program has been out of control for years, and has failed to produce job impacts anywhere near the value of the taxpayer subsidies. This legislation will finally reign in Empire Zones, and will strengthen New York State’s economy by ensuring that tax breaks are reserved for those companies that actually create new jobs.” The Empire Zone program was originally established to spur economic growth in distressed communities by investing in strong job creating industries such as the manufacturing sector, but over the years some officials have figured out ways to abuse the tax benefits.

Throughout 2005, Assemblyman Brodsky repeated the call for immediate administrative changes of the Empire Zone program. After months of negotiations, the Empire Zone Reform bill passed the Assembly and Senate and was eventually signed into law by the Governor. This bipartisan bill will have a substantial impact on how economic subsidies are distributed in New York State. Chairman Brodsky said, “This legislation is a victory for every taxpayer and hard working business owner who has played by the rules. These reforms will restore fairness to the process of investing New York State tax dollars into private enterprise. Government support of local business can dramatically improve local economies, as long as it is economically sound.”

Committee Urges ESDC
to Expedite Javits Center Expansion

During the 2005 legislative session many of Albany’s most powerful leaders were debating the future of the West Side stadium, but what wasn’t reported was that the stadium deal was once tied to the expansion of the Jacob Javits Convention Center. The stadium plan eventually fell through, but not before Chairman Brodsky succeeded in introducing legislation to separate funding for the Javits Center from the proposed West Side stadium. By separating expansion of the Javits Convention Center from the West Side stadium project, the Legislature was able to move forward with the Convention Center expansion while reviewing the financial and community issues surrounding the stadium proposal.

More than a year after legislation was passed to provide funding for a major expansion and renovation of the Javits Center, progress on this important project is slow and uncertain. New plans for the Convention Center released in January were insufficient for the needs of New York City, while simultaneously going way over the initial budget. Furthermore, the Empire State Development Corporation (ESDC) has failed to appoint any members to a community advisory board which was part of the agreement to expand the Javits Center and is intended to monitor the impact of the project on the community. In order to obtain information on the current status of the project, Chairman Brodsky subpoenaed relevant documents and held a public hearing to seek testimony from the Chairmen of ESDC and the Convention Center Operating Corporation.

Assemblyman Brodsky said, “I’m pleased we passed legislation that permits the expansion of the Javits Center without holding the project hostage to the failed West Side stadium deal. There is widespread support for expanding the Convention Center and agreement on the benefits it will bring to New York, but every time we remove a roadblock the ESDC seems to trip up the project again. The ESDC needs to provide assertive leadership to move the expansion forward.”

Committee Introduces a Comprehensive
Package to Protect Consumers from Internet Fraud

In light of the recent wave of identity theft and computer security breaches, Chairman Brodsky introduced a slew of internet security bills to protect consumers and businesses. With a growing number of older American’s using the World Wide Web, many enterprising thieves have devised creative measures to take advantage of unsuspecting internet surfers. This past year alone, identity theft affected millions of Americans and cost billions of dollars. In response to this growing epidemic, Assemblyman Brodsky authored the Comprehensive Internet Security Package which includes critical pieces of legislation aimed at combating three distinct forms of internet fraud: modem hijacking, phishing, and computer breaking and entering.

Phishing is the act of sending an e-mail falsely claiming to be a well-known enterprise in an attempt to scam the user into surrendering private information that will be used for identity theft. The FBI calls phishing the “hottest, and most troubling new scam on the internet.” Phishing e-mails have been sent from identity thieves posing as legitimate businesses and government agencies, including the FBI. Recent phishing attacks have capitalized on natural disasters such as Hurricane Katrina. Brodsky’s bill will allow the Attorney General, affected businesses, and nonprofits to recover damages from phishing perpetrators. Assemblyman Brodsky was joined by a broad coalition of groups in support of the legislation, including Microsoft, AARP, the Cable Telecommunications Association of New York, and the New York State Telecommunications Association.

On the issue of phishing, Assemblyman Brodsky said, “It is reprehensible that these thieves would take advantage of vulnerable and well meaning consumers, especially those who want to make a difference and contribute to charities. Not only does internet fraud harm our citizens and the economy, but it is also an issue of homeland security because many internet fraud operations are known to fund terrorist activities. Our legislation will help stop these crimes.”

Modem Hijacking
For many first time internet users, accessing the internet through a modem is a common practice. But unfortunately, dial-up access leaves computer users especially vulnerable to modem hijacking. Modem hijacking occurs when a person inadvertently downloads software that reprograms the modem to make international long distance calls. The victim usually does not learn about the hijacking until he or she receives the bill with unauthorized long distance calls. Modem hijacking costs consumers and telephone corporations millions of dollars annually. Assemblyman Brodsky’s bill will allow corporations to bring civil actions against the hijackers. The bill was a joint effort with Verizon Communications and the Internet Commerce Coalition—a trade association of leading Internet Service Providers and e-commerce companies including Amazon.com, AOL, AT&T, BellSouth, Comcast, eBay, MCI, SBC, and Verizon.

Computer Breaking and Entering
In response to the growing problem of internet fraud, Assemblyman Brodsky pioneered efforts to enact a new and separate section of law to deal with computer crimes. Like many other states, New York based the law on larceny and trespassing statutes. The Brodsky bill modified the old statues to bring them in line with ever-changing computer technology. The purpose of the bill is to allow prosecutors to charge people who intentionally disrupt, steal personal information, and plant malicious programs on people’s computers without authorization.

Assemblyman Brodsky’s Comprehensive Internet Security Package will ensure that internet users young and old will be protected while using the internet.

Committee Pushes for Corporate
Responsibility Legislation

As part of its reform agenda, the Committee has continued to push for a legislative package aimed at improving the accountability of private corporations. The package includes a Corporate Code of Responsibility that would govern the actions of all corporations doing business in New York, and the Corporate Disclosure and Responsibility and Taxpayer Protection Act which would ensure that companies use economic development funds for their intended purpose. The Committee will continue to push for this package in the upcoming session.

NYS Assembly Committee on Corporations
Room 422 LOB • Albany, NY 12248 • 518.455.5753

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