Thursday, June 26, 2008

Bloomberg's desire to control board members is part of why public authorities reform bill died

Yes, the bill to reform public authorities in the state was derailed by last-minute objections raised by Mayor Mike Bloomberg, drawing a furious reaction from Assemblyman Richard Brodsky, the sponsor.

In a letter to Bloomberg Monday, Brodsky wrote:
We have been working on ways to reform public authorities for five years. The investigations we’ve conducted, often with other Committees of jurisdiction, include the activities of the MTA, the Power Authority, the Javits Operating and Construction Corporations, ESDC, the Long Island Power Authority, the Thruway Authority, the Capital Resources Corporation, The New York City IDA, the Port Authority, and many, many others. What we’ve concluded is that public authorities are making critical decisions about the daily lives of New Yorkers, and are often wildly out of control, sources of unrestrained debt, hosts to repeated incidents of malfeasance and corruption, secretive and unaccountable, and in the end as close to Soviet-style bureaucracies as anything we have in government.

We can recite the painful specifics at enormous length. At the MTA, we’ve seen the criminality of the 2 Broadway deal, the secret cash assets, the controversies about EZ-Pass and real estate deals, and others. We’ve seen massive subsidies provided for sports facilities, favoritism at the Erie Canal, intervention by powerful former public officials at the Port Authority and MTA, repeated failures to consummate development deals on the West Side of Manhattan, hundreds of millions wasted at the Javits Convention Center, the list goes on and on.

Our work has been assisted by the private sector, most notably by the Millstein Commission, and we have produced a sweeping reform bill that will fundamentally change these authorities, and return them to the control of democratic institutions. Last year the Governor and Assembly agreed on legislation which we passed, while the Senate passed a very similar bill. All this was known to the City. Now, at the last minute the City has produced a list of demands which would destroy the progress we’ve made on reaching a consensus, make the system worse than it is today, and leave the problems we’ve identified completely unchanged.
(Emphasis added)

Previous reports

Here are links to previous reports on public authorities reform: Public Authority Rreform: Reining in New York's Secret Government (2/04), by the New York State Comptroller; PUBLIC AUTHORITIES IN NEW YORK STATE: Accelerating Momentum to Achieve Reform (2/05), by the New York State Comptroller; Public Authority Governance in New York State: Members of Boards of Directors (8/04), by the New York State Comptroller; and Public Authorities in New York State (4/06), by the Citizens Budget Commission.

Fiduciary duty

As I wrote last week, notably, the bill would require a fiduciary duty of authority board members--a duty of care arguably lacking in the Empire State Development Corporation's (ESDC) treatment of the Atlantic Yards project.

Bloomberg opposed such a rule; while he doesn't have appointments to the ESDC, he does appoint members of the Metropolitan Transportation Authority and other boards.

Brodsky wrote:
First, you seek law that undercuts the fiduciary duty to the authority that permits a board member to “act in a manner consistent with the policies of the elected or appointed official” who appointed them. The laws creating public authorities sets forth a statutory mission, transportation for the MTA, economic development for ESDC, etc... . There is no basis for leaving control of those missions in the hands of local or state officials who have conflicting, if important, other goals and concerns. This would leave organizations like the MTA as mayoral or gubernatorial agencies without even the protection of legislative control of their budgets.

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