Prohibits the formation of a subsidiary of a public authority without prior approval of the legislature.
BILL NUMBER:S4690 REVISED 10/03/11
TITLE OF BILL: An act to amend the public authorities law, in relation to prohibiting the formation of a subsidiary of a public authority without prior permission of the legislature
PURPOSE OR GENERAL IDEA OF BILL: This bill seeks to prohibit the formation of a subsidiary of a public authority or public benefit corporation without prior permission of the legislature.
SUMMARY OF SPECIFIC PROVISIONS: This bill would add a new §2829 to the Public Authorities Law, to prohibit public authorities from establishing any new subsidiary corporation without prior statutory authority therefore; to grandfather all legally created subsidiaries established prior to July 1, 2012; and, to require all such previously established subsidiaries to provide a justification report to the chairs of the Senate and Assembly Committees on Corporations, Authorities and Commissions on or before March 31, 2013.
JUSTIFICATION: Public Authorities, the hybrid of a government agency and a private corporation, were established to perform specific, focused missions on behalf of the people of the state of New York. As finance, contracting and operating entities, they have the flexibility and power to accomplish great tasks. From bridge, edifice, infrastructure, school and highway building, to the operation of transportation systems, convention and sports centers, economic development programs and public health and infrastructure facilities, these entities perform an indispensable role and dramatically enhance the quality of the daily lives of every New Yorker.
Due to their flexibility and efficiency of operation, their design for speed, as well as their focused mission and specific purpose, New York's public authorities have often been tasked with performing the most challenging, difficult and controversial of state projects. From the time they were used by Robert Moses to build the great bridges, buildings, parks and edifices of early 20th century New York, to the present day, there have been many questions and concerns raised regarding their role and their lack of accountability. Without them, however, so many of the things that make New York the Empire State, from our Thruway, to our State University campuses, to our New York City Transit systems, to the site for the 1980 Olympics were America's famous Miracle on Ice occurred, to the very housing units millions of New Yorkers now call home, simply would not exist today.
With the immense challenges and vast revenue streams which our public authorities have been asked to oversee, there have been many amendments to the public authorities law, to improve public accountability without compromising their effectiveness or mission. These reforms include the establishment of the Public Authorities Control Board as well as the modernization of the state statutes
governing their debt issuance, capital expenditures, contracting procedures, and reporting requirements. As we step firmly into the realm of the new 21st century, we have again witnessed some problems with certain operations within select public authorities. It is therefore incumbent upon the legislature to once again address these issues with the same determination, and in the same manner, as to promote increased accountability without diminishing the public benefit which these governmentally-created corporations provide.
Financial, budget and accounting questions involving billions of dollars of public monies, require reform. uncertainty over the fairness and propriety of procurement contract awards must be overcome to again regain the public's confidence and trust. Accountability and operational soundness must be clearly demonstrated by these entities through public disclosure and access, with the ultimate oversight, resting with the people's elected representatives in the State Senate and Assembly.
This bill seeks to accomplish an important and major reform by prohibiting the formation of a subsidiary of a public authority without prior permission of the legislature. Several public authorities have gotten themselves into trouble due to lack of oversight and an express set of guidelines of their subsidiaries.
This bill seeks to correct this situation, and remain true to the spirit of §5 of Article 10 of the State constitution which requires that only the State legislature may create a public authority. The formation of a subsidiary by a public authority which itself must be constitutionally created by the legislature, should not be allowed to be created by the parent public authority. To permit otherwise not only violates the spirit of the constitution, but also permits a questionable delegation and abrogation of state legislative authority.
PRIOR LEGISLATIVE HISTORY: 2005-06: S.5102-A/A.6757 - Veto 369 2007: Passed Senate/Assembly Corporations Authorities & Commission Committee 2008: Passed Senate/Assembly Ways and Means Committee 2009-10: S.3919 Corporations, Authorities & Commissions Committee
FISCAL IMPLICATIONS: None noted.
EFFECTIVE DATE: Immediately.
STATE OF NEW YORK ________________________________________________________________________ 4690 2011-2012 Regular Sessions IN SENATE April 14, 2011 ___________Introduced by Sen. FLANAGAN -- read twice and ordered printed, and when printed to be committed to the Committee on Corporations, Authorities and Commissions AN ACT to amend the public authorities law, in relation to prohibiting the formation of a subsidiary of a public authority without prior permission of the legislature THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. The public authorities law is amended by adding a new section 2829 to read as follows: S 2829. SUBSIDIARIES OF PUBLIC AUTHORITIES. 1. NOTWITHSTANDING ANY OTHER PROVISION OF LAW TO THE CONTRARY, NO PUBLIC BENEFIT CORPORATION SHALL ESTABLISH A SUBSIDIARY CORPORATION WITHOUT STATUTORY CODIFICATION. 2. NOTWITHSTANDING THE PROVISIONS OF SUBDIVISION ONE OF THIS SECTION, ANY SUBSIDIARY OF A PUBLIC AUTHORITY DULY AND LAWFULLY FORMED PRIOR TO THE FIRST DAY OF JULY, TWO THOUSAND TWELVE, SHALL BE DEEMED TO BE A PUBLIC AUTHORITY UNDER THE TERMS OF THIS CHAPTER, AND NOTWITHSTANDING ANY OTHER PROVISION OF LAW TO THE CONTRARY, SHALL BE SUBJECT TO ALL THE REQUIREMENTS, DUTIES AND RESPONSIBILITIES PROVIDED IN THIS CHAPTER. 3. ON OR BEFORE THE THIRTY-FIRST DAY OF MARCH, TWO THOUSAND THIRTEEN, ANY SUBSIDIARY PUBLIC BENEFIT CORPORATION, IN COOPERATION WITH ITS PARENT PUBLIC BENEFIT CORPORATION, SHALL PROVIDE TO THE CHAIRMAN AND RANKING MINORITY MEMBER OF THE SENATE FINANCE COMMITTEE AND THE CHAIRMAN AND RANKING MINORITY MEMBER OF THE ASSEMBLY WAYS AND MEANS COMMITTEE, A REPORT ON THE SUBSIDIARY PUBLIC BENEFIT CORPORATION. SUCH REPORT SHALL INCLUDE FOR EACH SUBSIDIARY: (A) THE COMPLETE LEGAL NAME, ADDRESS AND CONTACT INFORMATION OF THE SUBSIDIARY; (B) THE STRUCTURE OF THE ORGANIZATION OF THE SUBSIDIARY, INCLUDING THE NAMES AND TITLES OF EACH OF ITS MEMBERS, DIRECTORS AND OFFICERS, AS WELL AS A CHART OF ITS ORGANIZATIONAL STRUCTURE;EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD07376-01-1 S. 4690 2
(C) THE COMPLETE BYLAWS AND LEGAL ORGANIZATION PAPERS OF THE SUBSID- IARY; (D) A COMPLETE REPORT OF THE PURPOSE, OPERATIONS, MISSION AND PROJECTS OF THE SUBSIDIARY, INCLUDING A STATEMENT OF JUSTIFICATION AS TO WHY THE SUBSIDIARY IS NECESSARY TO CONTINUE ITS OPERATIONS FOR THE PUBLIC BENE- FIT FOR THE PEOPLE OF THE STATE OF NEW YORK; AND (E) ANY OTHER INFORMATION THE SUBSIDIARY PUBLIC BENEFIT CORPORATION DEEMS IMPORTANT TO INCLUDE IN SUCH REPORT. S 2. This act shall take effect immediately.