The New York State Authorities Budget Office issued their 2010 Annual Report on Public Authorities today.  The full report is available from the ABO website.

Newburgh is trebly delinquent

All three of Newburgh’s public authorities made it onto the ABO’s “Public Authority Delinquent Lists” section beginning on page 24.

The offenders are the Newburgh Community Development Agency, the Newburgh Industrial Development Agency, and the City of Newburgh Local Development Corporation.

All three failed to submit “a 2010 Budget Report in PARIS as of June 15, 2010.”  PARIS is the Public Authorities Reporting Information System, a computer system for authorities to file reports online.

Additionally, all three failed to submit “a 2009 Annual Report in PARIS as of June 15, 2010.”

NCDA•NIDA•NLDC: What’s going on?

The NCDA (Newburgh Community Development Agency) was recently voted by the council/NCDA board to be dissolved, with their assets and liabilities  transferred to the City.  Such an action would require final approval by the state legislature.  As of yet, though, there has been no bill referring to the NCDA (the successor of the Newburgh Urban Renewal Agency) appearing in either the Assembly or the Senate.  Other municipalities, Corning and Rome, have similar requests pending legislative approval, but not Newburgh.

This makes corporation counsel Bernis Nelson’s rush to transfer the agency assets a bit enigmatic.  With no bill on the horizon, why the need for speed?

Nevertheless, with a semi-dissolved agency, with governance of its assets and liabilities transferred to the city planning department, it is understandable why the NCDA would have failed to file.

The NIDA (Newburgh Industrial Development Agency) – in contrast to the other two authorities – has been actively working to get its books in order, with a board that meets regularly and auditors hired to prepare their needed annual reports.  But, as of the July 1 ABO report, they had not met their filing requirements.

The NLDC (Newburgh Local Development Corporation) is the mystery authority.  Comprised of members of the council, NCDA, and NIDA, it has not met in recent years yet continues to do business vis a vis the planning department.  (That is, business other than filing annual reports required by the ABO.)

Will the NLDC be meeting the new requirements?

In addition to the budgets and annual reports that must be filed, the ABO’s report describes changes brought about by the Public Authorities Reform Act.  New requirements for public authorities include (from page 2):

• Effective March 1, 2010 the directors of state and local public authorities, and their official designees, are required to sign an Acknowledgment of Fiduciary Duty. The purpose of this requirement is to focus board members on their legal obligations, including understanding that these duties are the means by which the board carries out the mission of the authority (See Policy Guidance 10-01 available on the ABO’s website: www.abo.state.ny.us).

• By March 31, 2010 state authority boards of directors, in cooperation with the management of the authority, were to review and consider the intended purpose for which the authority was created and to file with the Authorities Budget Office a statement defining that mission and the measures the authority would use to evaluate annually its performance against that mission. Local authorities are required to file a mission statement and performance measures by March 31, 2011 (see Policy Guidance 10-02 on the ABO web site for additional information).

• Each board is now required to perform an annual self-evaluation of its performance, measured against the authority’s mission statement, the authority’s goals and values, and the expectations of those served by the authority and the state as a whole.

• The boards of public authorities that issue debt are now required to establish a finance committee to review the authority’s proposed debt issuances; to make recommendations to the full board concerning the nature and appropriate level of the authority’s debt; and to make recommendations to the board concerning the appointment and compensation of bond counsels, investment advisors and underwriting firms.

Since the NLDC has not even met as a board, despite efforts by the NIDA to initiate such a meeting, makes it doubtful that the NLDC is compliant at this time.

It could be curtains for the Newburgh Community Development Agency (NCDA.)  At the city council work session held March 4, new corporation counsel Bernis Nelson proposed that the city assume the assets and liabilities of the NCDA.

What is the NCDA?

The NCDA is the successor to the Newburgh Urban Renewal Agency, created to manage urban renewal projects in the City of Newburgh.  The agency owns the chunk of urban renewal land around Marine Drive that awaits development.  Over the years, the agency has taken over various responsibilities, serving as a pass-through for the federal HUD CDBG funds, as well as offering various loans.

NCDA has been inactive

The last explicit reference to NCDA business I have found was resolution 9-2005, from January 10 of that year, appointing the officers of the NCDA.  Mayor Valentine was appointed Chairman; Councilwoman Angelo, Vice Chairman; Dawn Gobeo, Treasurer, and Councilwoman Elsa Figueroa App, Secretary.

Lopez lawsuit, need for director precipitates action

As reported earlier, Elaine and Hector Lopez filed suit against the NCDA on April 16, 2009, due to a personal injury Ms. Lopez allegedly suffered on NCDA property.  Counsel needed to be appointed to defend the NCDA.  Additionally, the former planning department director, Robert McKenna, had resigned.  The new director, Lourdes Zapata, had not been approved by the board to act on behalf of the NCDA.  At several meetings, corporation counsel Geoffrey Chanin endeavored to have the council meet as the board if only to appoint Ms. Zapata administrative director.  The council balked, expressing concerns about the agency’s need for compliance with the new public authorities law, and the burden of taking on additional responsibilities.  Nothing was done.

New corporation counsel proposes transfer of assets, liabilities

Last Thursday night, Courtney Kain, Acting Director of Planning and Development, and Bernis Nelson, Corporation Counsel, described the proposed action.

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Ms. Nelson stated that it came to her attention because “all these people were calling me” regarding their loans.  She proposed that the council meet as the NCDA board, pass a resolution approving the tranfer, then pass a resolution as the council, accepting the transfer, and that they could later dissolve the agency through state legislature action.

“You don’t need an urban renewal agency,” Ms. Nelson said.  “You can undertake urban renewal if you want to.”

Urban renewal agencies least compliant with the law

Public authorities such as the NCDA must comply with certain New York State reporting and training requirements.  They file their reports with the Authority Budget Office.  I spoke with David Kidera, director of the ABO, on Friday about Newburgh’s proposed transfer.

Mr. Kidera confirmed that the process would require the three steps Ms. Nelson described; a resolution by the NCDA, a resolution by the city council, and finally, a home rule action by the state legislature to officially dissolve the agency.

Johnston: Can they transfer assets?

Kidera: Yes, I think 554, and even 556, I believe talk about the authority of an urban renewal agency to transfer property and assets to municipal government, while the municipal government would have to vote to, in effect, accept that.  And, in theory, the transfer should be in accordance with some urban renewal plan that the community development agency should already have in place.  Obviously, if they haven’t met in years, they might not have a very active plan, but the law basically says that if they want to transfer assets to the city, it should be in accordance with some long-term plan that that property be redeveloped… consistent with whatever urban renewal strategy is in place for the city.

Johnston: I came across the two audits [done by the ABO], of the White Plains Urban Renewal Agency, and the Rome Urban Renewal Agency.  I was wondering if Rome or some other agency has [recently] dissolved.

Kidera: I think we’ve advocated that a couple do.  Back in the summer, what happened was we noticed that there were a healthy number of urban renewal agencies that were not complying with our law.  As a group, as a class, they were by far the highest percentage of noncompliant entities.  So we went out to 15 of them, randomly, and said “what’s going on.”  In a number of cases, it’s basically what you’re seeing in Newburgh, the agency is defunct, or it is inactive, or it really is functioning more, is viewed even within the local government, as a city government department, not as a public authority.  And so they really didn’t think that the law applied to them.  So we said, if it really is inactive, you really need to take steps to dissolve, because either you’re active and you’re complying with the law, or you’re dissolved.  So I think a number of them are going to dissolve.  I think Port Chester in Westchester may be the furthest along.  What we’ve been telling them is you really should be taking formal action that goes well beyond just a resolution by the board saying “we’re going to disband, we’re no longer going to meet,” because you in effect exist into perpetuity unless the legislature intervenes.  So that fact that you said “we’re not going to meet anymore” doesn’t mean you don’t exist.  So I would suggest that they take those steps.

The city should adopt a resolution accepting the transfer of assets, and the board should pass a resolution to formally begin the dissolution process.

Johnston: Is there any reason why Newburgh should continue to have this separate agency?  In one of these audits, I didn’t know that it was a violation to–

Kidera: employ staff?

Johnston: Yes. And that’s been the case here for…

Kidera: Right, and that’s really a violation of a comptroller’s opinion that was issued a number of years ago, that’s what we cite.  I assume that their opinion is based on some legal basis.  So I think, right, we were concerned about that, we suggested that all those local governments and urban renewal agencies consult with their local attorneys and make sure that they in fact are complying with the comptroller’s opinion.  And all our audits, when we found that to be an issue, were referred to the comptroller.  I don’t know that they’ve done anything, but I think that is an issue.

See page 3 of the White Plains Urban Renewal Agency Audit; “urban renewal agency staff may not be utilized to perform work for municipal departments, even if those services are reimbursed by the municipality.”––JJ

Loss of NCDA would cut ability to issue debt

Kidera: If you’re asking the question, is there any reason a local government should be leery about accepting the assets, I think the question really comes down to a couple of points.  One is, does the urban renewal agency have debt.  If they do, then the city, in this case, becomes liable for that debt.  So that may give someone pause.  In this case, it doesn’t look like they have any outstanding debt, so it’s not particularly a big issue.

If you were in the middle of an urban renewal redevelopment of downtown, then certainly an urban renewal agency can be a means by which you can issue debt that is not city debt, in this case.  And so the debt would be paid off through rents on the property that’s being redeveloped, through the sale of the property, or whatever.  And it does not become a city obligation.  But in this case, it does not sound like the City of Newburgh is interested in issuing debt through the community development agency for any kind of urban renewal project.

So I think by transferring this function to the city, any future urban renewal projects that involve the issuance of debt, it becomes, again, city debt, and then you’re subject to constitutional debt limits, and all the rest of the stuff that applies to cities.  2% of your full value property, or whatever the  restrictions are.

So it does limit the city, a little bit.

Other than that, it makes a lot of sense to us, and what we advocated in some of those reports, was that if you really aren’t active, if you really aren’t engaged in anything, if you act as if you’re defunct, and there’s an acceptance of the fact that you really aren’t a functioning urban renewal agency, the go ahead and dissolve.

There are cities that don’t have active urban renewal agencies.  So that the city would develop an urban renewal plan, maybe through its department of economic development, and they’d be using federal funds, or the city would be issuing debt.  You don’t have to create an urban renewal agency.

Need for public referendum?

Johnston: In our charter, there’s a provision that waterfront land must have a public referendum if it’s going to be sold.

[See § C16.03. Rights of city in waterfront, lands under water, wharves, piers, docks, parks and playgrounds. [Amended 7-27-1961 by L.L. No. 1-1961]:

The rights of the city in its waterfront, lands under water, wharves, piers, docks, parks or playgrounds shall not be sold or conveyed unless such sale or conveyance shall first have been authorized by a plurality of votes cast at a special election at which all qualified voters of the city who registered at the last preceding general election shall be entitled to vote. The notice, officers, polling places, manner of conducting and other details of such special election shall be determined by ordinance of the Council.

Note that the City did not hold a public vote when waterfront property was sold from NCDA to Front Street on the Hudson in 1998.]

Kidera: I would assume your charter would supersede the provisions of general municipal law.  So if the general municipal law says they can transfer this land to the city for urban renewal purposes, without a competitive bid and negotiation… The charter requires some other step, whether it be a referendum or something else, then–without knowing the particulars –it would seem to me that that should have to be addressed by the urban renewal agency and the city before the transaction is completed.

If that is in fact true, and that’s what it requires, then I would think the city’s attorneys, or the urban renewal agency’s attorneys or someone would have to address whether or not that provision applies here.

Johnston: Because it is a transfer, even though they are both city entities.

Kidera: Yes.  If that’s what the charter requires, then someone ought to look at that very carefully.

P.S. Whoops! What about the Lopez suit?

As previously reported here, when former corporation counsel Geoffrey Chanin couldn’t get the council to act as the NCDA and approve Ms. Zapata to act for them and appoint legal counsel, the suit Elaine and Hector Lopez originally filed against the NCDA was expanded to include the City of Newburgh as well.  At a city council meeting, it was promptly approved by the council that this “new” suit be referred to the corporation counsel.  Tarshis, Catania, Liberth, Mahon & Milligram, PLLC were hired to defend the city.

On July 29, 2009, Michael Catania promptly delivers to the court an accompanying letter to his motion.  In that motion, Mr. Catania argues that the property on which Ms. Lopez allegedly was injured belongs to the NCDA––not the city––and thus the city should be dismissed from the suit.

Whoops!

Then came this:

Suddenly, Mr. Catania is now counsel for BOTH the City of Newburgh AND the Newburgh Community Development Agency.  How did that happen?  The NCDA never met to approve such an action, and no one was appointed to act on the agency’s behalf.  But, there it is, and with his new duties representing both entities, clearly Mr. Catania can no longer pin the blame on the NCDA.

On October 1, 2009, Mr. Catania withdraws his motion to dismiss the city from the suit and put the blame on the NCDA.

The legal wrangling has continued, and according to court records, is due to go to trial on May 5 before Judge Catherine M. Bartlett.

Somehow, this bit of NCDA business escaped Ms. Nelson’s attention Thursday evening.