Charter Change Needed for Article XIV

Let every eye negotiate for itself / And trust no agent; for beauty is a witch / Against whose charms faith melteth in blood. –Much Ado About Nothing (II, i, 178-180)

I read the following letter at Monday evening’s city council meeting.

Re: Charter Change Needed for Article XIV—Department of Planning  and Development

Dear Mayor, City Council, and City Manager,

On the city’s new website, under “Job Opportunities” there is a listing for the “Director of Business and Industrial Development.”  I object to this position as it does not exist in the city’s charter.  Furthermore, the Planning and Development Department needs to have its powers and duties corrected in the city charter.

I am attaching Article XIV of the city charter, entitled “Department of Planning and Development.”  Please note that this article assigns the duties of managing the Industrial Development Agency, Local Development Corporation, and Community Development Agency to the Director of Planning and Development.  Currently, the IDA has elected to hire its own, independent employee to administer the IDA; no one has administered the LDC in years; and the CDA no longer exists.

Where does this new position fit into the department?  Will you also be hiring a Director of Planning and Development?

Why is it that most of the duties and responsibilities assigned to the “Director of Business and Industrial Development” aren’t handled by the IDA’s executive director?

Whatever you do with this new position, ultimately what is needed is a thorough evaluation of how Planning and Development is performing, whether services overlap or are duplicated with the IDA, recommendations for changes, and finally, a charter update.  In my opinion, the review and charter change should happen before any new hires are made.

Sincerely yours,
A. Jane Johnston

Ignoring the LDC had consequences

I wasted time, and now doth time waste me… Shakespeare, Richard II

If you’ve been reading any Newburgh news that’s been sandwiched between the Hurricane reports the past few days, you know about the audit that was issued by the State Comptroller’s Office this past Thursday.  The document is 31 pages in its entirety, can be downloaded from the link highlighted above, and has been summarized by both the Record and midhudsonnews.com (in both cases, though, relying on the press release and Herbek’s righteous retort.)

For my part, I would like to draw your attention to the LDC.  The State Comptroller points out that the city’s hired CPA firm was unable to complete the 2007 audit because they “lacked the records necessary for the CPA to complete the audit” (page 8.)  A second auditor completed audits for 2008 through 2010, but while “the second CPA was able to complete the audits and express an opinion, the CPA issued a disclaimer that financial information relating to the Local Development Corporation and Industrial Development Agency was not included, as the records were not available.”

Herbek mixes up the public authorities

In his letter of response August 14, Herbek addresses various items he disputes on behalf of the city.  And on the point of the problem with the annual auditors being incapable of rendering an opinion, and/or noting that LDC and IDA records were not available, he offers this recommended revision to the State Comptroller’s audit:

Although the second CPA was able to complete the audits and express an opinion, they issued a “qualified” opinion due to the omission of financial information from the Local Development Corporation (LDC) and Industrial Development Agency (IDA), whose records were not available.  It also should be noted that the City’s request for State legislation to dissolve the LDC has been pending for several years…

Actually, the city government, including the IDA, manager Herbek and city council, have collectively totally ignored the Newburgh Local Development Corporation.  For years the Authorities Budget Office would send a letter to the LDC stating it was out of compliance (no board has officially met as the LDC in years) and it would be promptly ignored by all of the above parties.  Despite the rare statement made by an IDA board member that a meeting of the LDC was in the works, nothing ever happens.  Herbek has simply mistaken the LDC with the NCDA, which was in fact dissolved two days after he wrote his letter, on August 16.

Ignoring the LDC, even though it puts the council and IDA board members at risk of censure, since they are technically still members of the LDC board according to its articles of incorporation, is likely to continue.

 Other thoughts, briefly

  • Newburgh should be ashamed of this audit, with its crazy practices, city council members who admit they don’t understand the financial statements, and no attempt to get the proper training for the Newburgh comptroller and staff as well as the council.  It seems obvious that if a council member is complaining about this to the state comptroller’s office, that he is probably not the only one who can’t read the financial statement, there are others on the council in the same boat and training is needed.  If the council is to avoid being slammed for poor oversight, they need to learn how to give good oversight.  Simply hiring Dwight Hadley as a financial consultant is not sufficient.
  • Re. the Cable Service Franchise Fees: the city should bring back the committee that never was, but that is in our charter, §C15.20. Cable Television Advisory Committee.

 

NCDA officially off the books

Today, August 16, 2012, Governor Cuomo signed into law two bills – A. 10288-A / S.5198-D and A. 8823-A / S. 5227-B – that repealed the statutory authority for 123 public authorities including industrial development agencies, urban renewal agencies, and other local public authorities, including our very own Newburgh Community Development Agency.

In a comment given before the bills were signed into law, the New York State Authorites Budget Office said:

The ABO fully supports enactment of this legislation.  The ABO has spent several years identifying inactive, defunct authorities that should be dissolved in law. The ABO worked with the Legislature to compile this list as well as companion legislation that dissolves inactive authorities authorized by Public Authorities Law.  In fact, the ABO drafted the initial dissolution bill about 4 years ago, which has since been amended and the list of authorities to be dissolved has been refined.

We applaud the passage of this bill and are confident that the Governor will sign it into law.

Full press release from the governor’s office here.

NCDA update

Time to update the city’s website

A casual visit to the city’s website yields the above page under the “government” heading.  However, the public authority described–the Newburgh Community Development Agency–was dissolved by the City Council through a resolution in 2010.  Under the recommendation of then Corporation Counsel Bernis Nelson, the NCDA’s assets and liabilities were transferred to the city itself.  (Additionally, there is some long antiquated language on the page referring to the IDA’s composition, but that description has not been true of the IDA since pre-2008, and it is not accurate of how the NCDA board was composed.)

And also the State’s law books…

As I wrote in this post of October 10, 2011, even though the city council voted to dissolve the NCDA, by law the entity existed in the legal code of the State of New York.  To fully remove the defunct public authority from the books, a law would have to be passed repealing the old section of the law.

Unsuccessful attempts were made in 2010 and 2011, under different bills.  However, 2012 may be the lucky year for defunct-public-authority-repealing-legislation.  Bill A08823A has passed both the senate and the assembly and now sits before Governor Andrew Cuomo, where it could be signed into law this week. The bill includes repealing the Newburgh Community Development Agency and passing its assets and liabilities to the city; numerous other defunct public authorities throughout the state are also included for repeal.

Assemblyman William Magnarelli is chair of the Local Government Committee and when spoken to this afternoon said he was hopeful that the bill would be approved by the governor, as it fits in with streamlining of government–one of the governor’s goals–by removing defunct public authorities that no longer perform an economic development function.

 

1 in 3 Newburgh public authorities has pulse

NCDA, NLDC, NIDA: all are in various states of legal limbo

The City of Newburgh has three public authorities: the Newburgh Community Development Agency (NCDA), the Newburgh Local Development Corporation (NLDC), and the Newburgh Industrial Development Agency (NIDA.)  None of the three are currently engaged in the activities for which they were created, although the NIDA shows signs of life.

NCDA status: terminal

The NCDA was formerly known as the Newburgh Urban Renewal Agency.  In its earlier years it had its own board and director, although it was later restructured such that the NCDA board became the Newburgh City Council.  In recent years, the agency was essentially dormant, a mere repository for various parcels of land with a board–the council–that never held a meeting.

In 2008 Elaine and Hector Lopez filed a personal injury lawsuit against the NCDA.  Ms. Lopez had fallen on NCDA property near the foot of South Street.  Corporation counsel of the time Geoffrey Chanin wanted the city council to meet as the NCDA and empower Lourdes Zapata-Perez, the economic development director, to act on behalf of the NCDA.  The majority of the council balked, refusing to take responsibility for another agency, although this refusal did not abnegate their responsibility.

The NCDA was also a delinquent agency according to the Authorities Budget Office, an oversight office of New York State.  Required reports and audits were not submitted.

When Bernis Nelson became corporation counsel, she made it her goal to dissolve the agency and transfer the land and any other assets and liabilities to the City of Newburgh.  While there were a few voices who questioned whether the NCDA could function as a land bank, Ms. Nelson prevailed, and the city council voted to dissolve the NCDA.  (A land bank would later be approved by the city February 28, 2011; it is structured as a nonprofit with 4 city appointees and 5 non-city appointees, with representatives from the city’s nonprofits and other groups.)

The Lopezs have settled their suit, receiving $15,000 this past March.

All that remains is for the language in the state code to be stricken.  The first bills that attempted to accomplish this were not successful.  The bills were reintroduced under new numbers, and their current status is:

In the Senate:
S2845 02/02/2011 REFERRED TO LOCAL GOVERNMENT
S4339 06/16/2011 COMMITTEE DISCHARGED AND COMMITTED TO RULES
Reciprocal bills in the Assembly:
S4339 = A2815  07/11/2011 enacting clause stricken
S2845= A7064 04/11/2011 referred to local governments
The state legislature reconvenes in January 2012 so Newburgh may have the ghost of the NCDA in the state code for at least a few more months.

NLDC: to be or not to be, ’twill write off debt

The Newburgh Local Development Corporation, or NLDC, is a delinquent public authority.  A brief history and description of recent events with the NLDC, including correspondence from the ABO threatening censure, is here.  The board of the NLDC, according to its bylaws, consists of the city council, the NCDA and the Newburgh Industrial Development Agency (NIDA).  As such, it would be logical that the city council and the NIDA have responsibility for this entity.

Warned of potential censure by the ABO, NIDA Chairman Joshua Smith said the NLDC would be on the agenda for discussion at the June NIDA meeting.  During that meeting, the minutes state that “Mr. Whyatt proposes convening a special LDC meeting at which the IDA members can vote as a majority on any actions it deems necessary, such as obtaining banking records, determining assets, etc.”

However, it is not apparent that any action has been taken.  NLDC last appeared as an agenda item at the July meeting, but the chairman preempted discussion by saying there was nothing to discuss, and moved on to the next agenda item.  It has not reappeared since.

City Manager Richard Herbek wrote in an email September 23 that the city “has no plans at this time regarding the LDC.”

One disadvantage to outright dissolving the agency would be having to deal with the outstanding debt of $416,716 the city owes the NLDC.  This was money due to the NLDC following the purchase by the City of Newburgh of the old Broadway School to house its new courthouse; NLDC was one of the Den Cass partners who had owned the building.

Additionally, the December 31, 2006 Audit of the NLDC shows a debt to the NIDA of $752,540.

As mentioned in NYS Comptroller DiNapoli’s report linked to on the NIDA home page, and also in his report dealing specifically with LDCs here, local development corporations have recently been used as a legal way to fund civic facility projects, since industrial development agencies in New York cannot participate in such projects.  For example, were the NLDC functioning, it could provide bonds to fund a civic facility project such as the Newburgh Armory Unity Center, or a project at St. Luke’s Hospital, or the Greater Hudson Valley Family Health Center.

At the county level, the Orange County Industrial Development Agency had the Orange County Legislature authorize the creation of an LDC  on May 6, 2010 called “The Orange County Funding Corporation.”  It was created precisely because of the problem the County IDA was facing in being prohibited from funding civic facility projects.  In the preamble of the resolution it states:

WHEREAS, it is essential for the County to support the operation by both for-profit entities and not-for-profit corporations within the County to increase the employment opportunities for residents of the County and the ability to provide financing through the issuance of tax exempt and taxable bonds to projects of for-profit entities and not-for-profit corporations is essential to the continued development, construction, improvement and operation of projects by for-profit entities and not-for- profit corporations; and
WHEREAS, in furtherance of its public purposes, the County has supported the provision of taxable and tax exempt financing by the Orange County Industrial Development Agency (the “Agency”) and of certain other financial incentives to for-profit entities and not-for-profit corporations to promote the creation and preservation of employment opportunities for residents of the County and development of economically sound commerce consistent with the County’s burdens and responsibilities as expressed above;

The state has not looked favorably on the proliferation of LDCs, however, their use continues.

As for the NLDC, at this point it appears that the two responsible parties have no interest in either dissolving the corporation or in removing the corporation from delinquent status by submitting the proper reports and following the required legislation.  Even the threat of censure has not been sufficient for the city council or the NIDA to take action.

NIDA: a pulse, but not full flesh

The board of the Newburgh Industrial Development Agency was the city council members, plus two appointees, until 2008, when an independent board was selected by the city council.  The NIDA board happens to be all male, with seven board members.  The attendance of the board for the past 12 months is as follows:

2010-2011 Bedrosian Curry Gulliver Maldonado O’Shea Penney Smith
9/1/10 X X X X X X
11/1/10 X X X X X X
11/15/10 X X X X X
12/20/10 X X X X X
1/27/11 X X X X X X
2/22/11 X X X X X X
3/21/11 X X X X
4/18/11 X X X X X
5/16/11 X X X X X X
6/20/11 X X X X
7/18/11 X X X X X
8/15/11 X X X X
PRESENT 75% 92% 17% 58% 83% 100% 92%

At the September 2011 meeting, attendance proved to be such a problem that three board members, the NIDA attorney Thomas Whyatt, three members of the Foundry Tenants’ Association (representing the public) as well as Consultant Teri Waivada, City Economic Development Director/Planner Ian MacDougall, a consultant, and recording secretary Kippy Boyle had to wait thirty minutes until an additional board member showed up so that a quorum would be made.

The ABO has declared that the NIDA is delinquent, and therefore cannot offer tax exemptions.  They share this particular dishonor with four other IDAs; they are on the more egregious list of having not complied for the past four years:

The current list of IDAs that have not complied with General Municipal Law Section 859 for 2007, 2008, 2009 and 2010 is as follows:

  • City of Oneida Industrial Development Agency
  • City of Newburgh Industrial Development Agency
  • Town of Erwin Industrial Development Agency

The agency has been working on achieving certification (with the reinstatement of the ability to offer tax exemptions) for the past four years, and at last week’s city council work session, Courtney Kain from the Planning Department stated that the agency should be certified “very soon.”

Until then, the public can access agendas and minutes of the NIDA meetings, and additional information about the agency, from its homepage.

The public can also attend the monthly meetings, although the NIDA does not permit any public comments.  While not a statutory requirement, the Orange County IDA affords the public an opportunity to speak at the end of its meetings.  Considering the impact that IDA projects can have on communities it would seem to be a breath of open government to allow such an addition to the agenda.  At the September 2011 meeting, the three members of the Foundry Tenants’ Association had the mistaken impression that they would be allowed to voice some pressing concerns.  This was vetoed by Mr. Whyatt.

Typically the number of attendees of these meetings can be counted on one hand, and it is difficult to grasp why these constituents may be seen but not heard.