Open letter to the Orange County IDA

 

Dear Orange County IDA,

There are three concerns the Newburgh Advocate wishes to bring to your attention.

1. Is the Newburgh Armory Unity Center Grant permissible?

The Newburgh Armory Unity Center (NAUC) at 321 South William Street in Newburgh promises to provide recreational opportunities for the city’s youth. Philanthropist William Kaplan has taken a great interest in the NAUC and promised to donate additional funds of $500,000 to the $100,000 his Kaplan Family Foundation has already contributed.  The NAUC, through its executive director Deirdre Glenn, has proposed that the Orange County IDA provide a matching $500,000 to Kaplan’s grant.

Is it appropriate for the Orange County IDA to make a $500,000 grant to this nonprofit project?

A. According to the Authority Budget Office (ABO), IDAs do not have the statutory authority to give grants to public or private entities.

B. According to the Office of the State Comptroller,

IDAs cannot give gifts/grants of their own monies (see OSC opinion.)  However, they are authorized to accept federal and state [more likely federal] grants (see §  858 and §  858(11)), and subject to the terms of those grants, they may be able to administer those grants.  The “parameters” would be the terms of the grant by the state or federal agency.

C. According to the ABO, there is a prohibition against IDAs either “financing or participating in civic facility projects.”

D. A civic facility project is “any facility which shall be owned or occupied by a not-for-profit corporation organized and existing under the laws of this state or authorized to conduct activities in this state.” (Full definition here.)

E. The Newburgh Armory Unity Center is a not-for-profit.

F. In an agreement with the City of Newburgh, which received council approval July 11, this project seems to be a civic facility:

Section 5.1… It is expressly understood that no land, space, improvement, or equipment is leased to Manager and that Manager shall not acquire any property interest in the Facility whatsoever, other than the Licensed Uses, which shall permit Manager to have the use of the Facility and the right to occupy and operate the Facility in order to carry out the purposes of this Agreement. (In A-F, emphasis added.)

It would be a very unfortunate if the Orange County IDA’s portion of Kaplan’s matching grant turned out to be impermissible and had to be repaid.  To prevent such a calamity, why not have the Orange County IDA ask the Office of the State Comptroller to render an opinion regarding the legality of this grant?

If it is deemed appropriate, the Orange County IDA would be secure to go ahead.

But if it is not appropriate, many people would be spared disappointment, inconvenience and embarrassment.  And if it is not permissible, hopefully there would be a group effort to find a more appropriate governmental or private entity that could assist with the funding of this project and match Mr. Kaplan’s grant.

 

2.  Philip Crotty and James Petro

James Petro is the Chairman of the Orange County IDA and, since May, has also been serving as an Orange County Legislator.  The Orange County IDA Attorney, Philip Crotty, is also the Treasurer for “Committee to Elect Petro,” the campaign fund for James Petro.

When asked about this situation, the Authority Budget Office responded thus:

In the absence of additional information, the situation, as you describe it in your email, does not appear to violate any provision of the Public Authorities Law.  Mr. Petro is legally entitled to serve on the IDA board and hold an elected county legislative position.  We assume Mr. Crotty is a private attorney who has a contract to serve as the IDA’s attorney.  We also assume that he receives no additional compensation from the IDA or from Mr. Petro to act as Mr. Petro’s campaign treasurer.  We do believe that the potential for a conflict of interest arises should the IDA, or Mr. Petro, attempt to direct other legal business to Mr. Crotty’s private law practice as a result of his relationship with the IDA and Mr. Petro, outside of the scope of services he provides to the IDA under the terms of his contract.

Moreover, it appears that Mr. Petro and Mr. Crotty’s relationship extends beyond their roles with the IDA.  Accordingly, it would be appropriate for this matter to be reviewed and discussed by the full board.  Given this apparent personal relationship, the board may wish to consider seeking new counsel for the IDA to avoid the appearance of any potential conflict or personal favor.  (Emphasis added)

 The Newburgh Advocate hopes the Board will take this to heart and discuss the issue and do what is necessary to “avoid the appearance of any potential conflict or personal favor.”

 

3. Transparency and non-compliance of OC IDA website

While the Orange County IDA has managed to spend $10,000 to produce a six minute YouTube video, it appears to have done the minimum to have an IDA page embedded in the Orange County Government website.  While some agendas and minutes are posted, there is no list of monthly meetings for the year with their times, dates and locations.  An agenda is never posted in advance of the meeting.

On April 12, 2010, the ABO issued Policy Guidance No. 10-03, “Posting and Maintaining Reports on Public Authority Web Sites,” citing Chapter 506 of the Laws of 2009.

From Page 4 of that report, the following are required to be posted on the board’s website:

Board Meetings:
Post schedule of all board meetings at beginning of the fiscal year
Post meeting notices and agendas at least one week in advance of a board meeting Post all board meeting minutes within 14 days of meeting
Meeting minutes should be maintained on web site for at least two years following the date on which the meeting was held

Additionally, committees must comply as well:

Post notices and proposed agendas of all committee meetings at least one week in advance of meetings
Names of all committees and their members should be posted permanently, and updated as necessary
Post minutes within 14 days of committee meeting
Maintain meeting minutes for at least two years following the date on which the meeting was held

The Newburgh Advocate hopes the Orange County IDA will take some time to review the entire document of requirements as there may be additional items.  Consider creating your own website, as neighboring IDAs in Sullivan, Ulster, and Dutchess Counties all do.

Most importantly, please post your meeting dates and agendas in advance, so that the Orange County IDA is more transparent and genuine when it says it is “open for business.”

It wasn’t the clerk

According to an article in today’s Times Herald-Record, it wasn’t a mere clerk who authorized the change in where the rent money for the Armory building was going from the bond trustee to Mr. Carchietta’s company:

But one document dispels the notion that a clerk single-handedly granted Carchietta’s request to wire about $61,000 to his bank each month instead of to M&T Bank, the bond trustee. That form shows that Finance Commissioner Joel Kleiman authorized the switch on July 20, 2009, four days after Carchietta asked for it.

This is a direct contradiction to the information the county provided via Deputy County Executive Jim O’Donnell and Assistant County Attorney Joseph Mahoney at the last Ways and Means Committee meeting (video here.)  Throughout that meeting, Mr. O’Donnell and Mr. Mahoney clearly explained that a female clerk had made the switch.

Also of interest, the county apparently has been consistent in insisting it was justified in its actions:

The papers show that the county’s attorneys have insisted from the outset that Carchietta was entitled to the armory rent, even though the 1996 lease arrangement stipulated that the county should pay only M&T unless the bank said otherwise in writing — an instruction it never issued.

Attorneys for both M&T and the bondholder disputed the county’s view in their own letters, declaring the rent switch a violation of the lease terms.

View the lease agreement and attornment agreement.

According to the article, the FOIL request includes a letter in which the bondholders promise not to sue the county.

Council breakdown


It began with Councilwoman Regina Angelo interrupting a public commenter, Michael Gabor, during the final public comments period. After that, things deteriorated, concluding with Mayor Nick Valentine ending the council meeting early.
This is the exchange described in today’s Record article:

“Shut your mouth!” Angelo yelled Monday at city resident and businessman Michael Gabor. Gabor had criticized Angelo and Councilman Curlie Dillard for voting for a controversial labor agreement with firefighters without telling taxpayers why. Angelo responded by accusing Gabor and two other city residents of forcing a developer out of the city more than four years ago. If unearthing an old argument seemed random and unrelated to the topic at hand, it also was a reminder that no battle is ever forgotten in Newburgh.

“I’ll never forgive you for that,” Angelo yelled as Gabor took to the microphone to defend himself.

Councilwoman Christine Bello said Tuesday residents who were fighting to keep their homes after taxes increased 71 percent had every right to criticize the council and demand answers.

“I think some of the elected officials need to develop a sense of humility because being (on the council) is a privilege,” Bello said.

For some reason the council meeting on the city’s site only provides audio of the meeting.
1/16/11 Update: I have had reports of the video working on the city’s site.