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Reinvent Albany's "Open ESD" report points to authority's convoluted structure, lack of independence, dubious math, & denial of public comment (+ cites me)

Two days ago, I wrote about the top-line recommendations from Reinvent Albany to reform Empire State Development (ESD, formerly ESDC), the gubernatorially-controlled state authority that oversee/shepherds Atlantic Yards/Pacific Park.

But the full "Open ESD" report, written by Elizabeth Marcello and available at Reinvent Albany and at bottom, is worth a read.

Let me point to a few key areas, where the report outlines ESD's convoluted structure, gubernatorial control, board as rubber stamp, lack of independence, dubious math in counting jobs, and failure to take public comment seriously.

In the latter four areas, the report cites my reporting, but also offers other examples.

Governance

From the report:
Empire State Development is an agglomeration of a state agency and two public authorities (one of which, bizarrely, does business under the name of its own subsidiary). ESD’s component units also have dozens of subsidiaries with their own governance structures, and ESD components and subsidiaries have in turn created hundreds of Limited Liability Companies as legal owners of specific ESD projects. One person serves as the chief executive of all three component entities. The big boss, who is appointed by the Governor, is simultaneously a state commissioner and CEO of two component public authorities.
The chart below shows ESD's convoluted and confusing structure, one that should not be surprising to Atlantic Yards watchers, especially when arena construction was financed.

Remember, the Brooklyn Arena Local Development Corporation, oddly enough, had been created not by the ESDC, but an agency alter ego, the Job Development Authority, which had neither a budget nor dedicated staff. 

Why, if the parent authority had its own bonding program for sports facilities, use the Job Development Authority, charged to promote job growth? No one explained, but this route evaded potential scrutiny by the state Comptroller and Public Authorities Control Board, suggested Sen. Bill Perkins.

Note: I don't believe any such chart appears on the ESD web site.

Gubernatorial power

The report notes that the state Governor "has total control over ESD," including hiring the authority's top leader, who can hire and fire all ESD staff. While the Governor, with consent of the Senate, appoints a superintendent of financial services, as an ex-officio ESD board member, the other six directors are appointed by the Governor. 

Notably, the ESD Board of Directors cannot fire the President and CEO of UDC d/b/a ESDC. That, according to the report, runs afoul of a state law dictating that board members should oversee such executives.
The board as rubber stamp

The report cites one Atlantic Yards episode, though there are many:
The ESD Board of Directors largely acts as a rubber stamp on ESD projects. ESD directors rarely engage in substantive discussion, ask questions, or reject any projects under consideration at their meetings. Instead, projects and programs are initiated by the Governor’s office and presented to the board for a perfunctory and performative vote. 

In the case of the Atlantic Yards/Pacific Park project in Brooklyn, an ESD project initially announced in 2003, the ESD Board did zero due diligence when approving the Final Supplemental Environmental Impact Statement (Final SEIS). [That cites my coverage.] Specifically, the Board did not ask questions of staff or of any commentators presenting evidence, nor did they raise concerns as to whether the Final SEIS was complete with respect to scope, content, and adequacy. Instead, the Board simply rubber-stamped the Final SEIS.
The same is true of the Penn Station Redevelopment project, according to the report, which notes ESD approval in July 2022 came without discussion of the costs, nor the fiscal and financial liabilities to the public. 

An amorphous mission

The ESD mission statement is "broad and vague," according to the report:
The mission of Empire State Development is to p romote a vigorous and growing state economy, encourage business investment and job creation, and support diverse, prosperous local economies across New York State through the efficient use of loans, grants, tax credits, real estate development, marketing and other forms of assistance. 
That means any project could be framed as something that could grow the state’s economy--and that reduces public accountability.

Driven by the governor

Reinvent Albany interviewed former senior officials and also cited my reporting to confirm "that the agency is an extension of the Governor’s office and does not act independently in the best interest of the public."

From the report:
As dictated by the Governor, ESD serves businesses before it serves the public. This has been documented by Arana Hankin, who served as Project Director for the Atlantic Yards/Pacific Park project for ESD. 

Once Hankin left ESD, she spoke truthfully about ESD’s practices. [This cites my coverage here and here.] Hankin stated in a public lecture that project agreements at ESD were “purposely drafted to be as complicated and obtuse as possible, to allow for multiple interpretations and maximum flexibility.” This flexibility allows ESD to escape public scrutiny and even public understanding of projects and activities. 
Similar problems plague ESD's approval of the Penn Station project, which generated pushback from New York City's nonpartisan Independent Budget Office

Counting jobs

The report cites my coverage regarding the dubious way to count jobs.
In a lecture, Arana Hankin, cited above, asserted that the results of REMI models are “sold” to community members during the public approval process to “convince the community why [a project] is good for them.” 30 But, she notes, the methodology is complicated and difficult to understand, and they “inflate expectations.” Once construction starts, she notes, “reality sets in.” She said:

"We make projections for jobs created and revenue raised, but no one actually counts the number of jobs created. No one actually tracks the amount of revenue that was raised. There is no accountability, and the methodology is super complicated."

She goes on to say that the jobs projected by REMI analyses are actually job-years, which is just one job for one year.
Ignoring public comments

The report included a screenshot of my tweet below, which "suggests that ESD’s Board does not take public comments seriously, nor does it consistently record and respond to them."
Notably, when "Reinvent Albany requested records of all communications between Norman Oder and ESD via FOIL, ESD did not return the above communication, confirming that the agency is not taking public comments submitted prior to Board meetings seriously," the report states. 

Wow. 

Failure of oversight

The report notes that the state Legislature "is empowered to hold hearings about any subject matter, including on business subsidies, megaprojects, and tax abatement programs," but "the Legislature has not held an ESD oversight hearing within the last 15 years."

Clearly that's overdue.

Note that the state Senate, when briefly controlled by Democrats, in May 2009 held an oversight hearing on Atlantic Yards, at a time when any such hearing by the Democrat-dominated Assembly would've been squelched by Assembly Speaker Sheldon Silver, an ally of original developer Forest City.

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