Bill S4690A-2011

Prohibits the formation of a subsidiary of a public authority without prior approval of the legislature

Prohibits the formation of a subsidiary of a public authority without prior approval of the legislature.



  • Jun 21, 2012: referred to corporations, authorities and commissions
  • Jun 21, 2012: PASSED SENATE
  • Jun 18, 2012: AMENDED ON THIRD READING 4690A
  • Mar 20, 2012: 2ND REPORT CAL.
  • Mar 19, 2012: 1ST REPORT CAL.374
  • Jun 24, 2011: COMMITTED TO RULES
  • May 23, 2011: 2ND REPORT CAL.
  • May 18, 2011: 1ST REPORT CAL.770





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 amend section 2827-a of the Public Authorities Law, to eliminate the exception to the general prohibition against public authorities establishing any new subsidiary corporation without prior statutory authority.

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 2011: Third reading; Committed to Rules


EFFECTIVE DATE: Immediately.


STATE OF NEW YORK ________________________________________________________________________ 4690--A Cal. No. 374 2011-2012 Regular Sessions IN SENATE April 14, 2011 ___________
Introduced by Sens. FLANAGAN, LARKIN -- read twice and ordered printed, and when printed to be committed to the Committee on Corporations, Authorities and Commissions -- recommitted to the Committee on Corpo- rations, Authorities and Commissions in accordance with Senate Rule 6, sec. 8 -- reported favorably from said committee, ordered to first and second report, ordered to a third reading, amended and ordered reprinted, retaining its place in the order of third reading 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. Subdivision 1 of section 2827-a of the public authorities law, as added by chapter 506 of the laws of 2009, is amended to read as follows: 1. Notwithstanding any law to the contrary, no state authority shall hereafter have the power to organize any subsidiary corporation unless the legislature shall have enacted a law granting such state authority such power for the organization of a specific corporation[, provided, however, that a state authority may organize a subsidiary corporation pursuant to the following requirements: a. the purpose for which the subsidiary corporation shall be organized shall be for a project or projects which the state authority has the power to pursue pursuant to its corporate purposes; b. the primary reason for which the subsidiary corporation shall be organized shall be to limit the potential liability impact of the subsidiary's project or projects on the authority or because state or federal law requires that the purpose of a subsidiary be undertaken through a specific corporate structure; and c. the]. ANY subsidiary corporation shall make the reports and other disclosures as are required of state authorities, unless the subsidiary corporation's operations and finances are consolidated with those of the authority of which it is a subsidiary. S 2. This act shall take effect immediately.


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