Letter to The Journal News from NYS Comptroller Thomas P. DiNapoli

Given the turn of events in the Town of Ramapo related to the questionable financing of a minor league baseball stadium, is there any doubt New York’s local development corporations need more oversight?

Commonly known as LDCs, these entities are private, not-for-profit corporations often created by, or for the benefit of, New York’s counties, cities, towns and villages to spur economic growth or serve other public purposes. In many cases, LDCs are used for economic development such as rehabilitating industrial plants or encouraging businesses to locate or stay in a particular region.

Unfortunately, my office has uncovered too many instances of local governments using LDCs to avoid state laws or bypass oversight that would apply to projects undertaken directly by municipalities, sometimes driving up taxpayer costs. As recent news reports have outlined, my auditors long ago sounded the alarm about Ramapo officials leaving taxpayers on the hook for up to $60 million for the Provident Bank Park project. After the town’s voters rejected public financing, the town then agreed to guarantee LDC bonds issued for the stadium project.

In Monroe County, audits involving the county’s use of LDCs and an investigation, conducted with State Attorney General Eric Schneiderman as part of our Joint Task Force on Public Integrity, uncovered an elaborate bid-rigging scheme involving public and private defendants that saw hundreds of millions of dollars diverted for personal gain. Although those guilty were convicted, their actions contributed to county taxpayers being left with a bad deal and unnecessary debt.

These are just two of the most egregious examples. Other communities have seen their LDCs engage in back-door borrowing or undertake projects that avoid competitive bidding and public referendum requirements that apply to local governments. But under current law, the state comptroller cannot directly audit the state’s approximately 300 LDCs, even when they are controlled by a municipality.

Right now, the only way my office can examine the relationship between an LDC and a municipality is as a part of an audit of the locality. Even then, we cannot look beyond the financial or business relationship in order to examine the overall finances and operations of the LDC. This is a major omission in state law that needs to be addressed.

A bill I submitted to the state Legislature would expand my office’s authority to include direct audits of LDCs and similar entities, which are controlled by local governments. The much-needed oversight my proposal provides will help to shed light on the activities of these entities, and provide greater assurance they are operating in the public interest and fulfilling their intended purposes.

The bill has already passed in the Assembly this session. As the allegations in the Ramapo indictments demonstrate, New Yorkers cannot afford to wait any longer and need the Senate to pass this legislation.

We can’t fully understand the financial condition and operations of local governments unless we can directly examine the finances and operations of the organizations they control. The indictments in Ramapo and the criminal convictions in Monroe County show how important public oversight can be. New Yorkers need to know about the financial operations of their local governments and the entities they control before things go wrong, as they did in the town of Ramapo and Monroe County.

The writer is New York state Comptroller

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