BILL NUMBER: S3368
SPONSOR: SKOUFIS
 
TITLE OF BILL:
An act to amend the general municipal law and the public authorities
law, in relation to the purposes and powers of industrial development
agencies and to improve the accountability and transparency of such
agencies; to amend the public authorities law, in relation to extending
the bond issuance charge to the debt issued by not-for-profit corpo-
rations acting on behalf of the state or its political subdivisions; to
amend the not-for-profit corporation law, in relation to the purposes
and powers of local development corporations and certain other not-for-
profit corporations thereof; and to repeal subdivision 3 of section 859
of the general municipal law relating to an evaluation of the activities
of industrial development agencies and authorities in the state prepared
by an entity independent of the department
 
PURPOSE:
To improve the accountability and transparency of certain public author-
ities, including industrial development agencies and local development
corporations. While also permitting industrial development agencies the
authority to issue certain financial incentives.
 
SUMMARY OF PROVISIONS:
Section 1: Amends the definition of projects in subdivision 4 of section
854 of General Municipal law to include certain civil facilities and
continuing care retirement community projects. Amends the definition of
financial assistance in subdivision 14 of section 854 of General Munici-
pal law to include grants and loans as eligible forms of financial
assistance available for approved projects. Adds subdivision 21 of
section 854 of General Municipal law to include the definition of civic
facility.
Section 2: Amends section 856 of the General Municipal Law to increase
the minimum number of board members of a public benefit corporation from
three to five members.
Section 3: Amends section 858 of the General Municipal Law to permit
industrial development agencies the power to acquire real property from
a municipality for its corporate purposes. Permits industrial develop-
ment agencies to provide financial assistance through loans and grants
to improve, maintain, or equip one or more projects consistent with its
corporate purposes.
Section 4: Adds a new section 858-c to the General Municipal Law to set
forth the legal process by which an agency may acquire real property
owned by a municipality. It requires public notice or bidding before
selling or leasing municipality-owned real property to an industrial
development agency. Requires a public hearing concerning certain sale
and notification procedures for such public hearing.
Section 5: Repeals subdivision 3 of section 859 of the General Municipal
Law.
Section 6: Amends section 859-a of the General Municipal Law to require
certain prerequisites to providing any financial assistance totaling
more than one hundred thousand dollars to any project. Requires agen-
cies to adopt a resolution describing the project and the type and
amount of financial assistance the agency is contemplating. Requires
agencies to hold a public hearing not less than thirty days prior to
executing a written agreement to provide financial assistance. Public
hearings must be held in each city, town, or village where the project
to receive financial assistance is located or proposes to be located.
Adds a new subdivision 3-a to require industrial development agencies to
maintain a complete record of public hearings, including all documents
received, and provide that record to all board members at least within
seven days following the hearing.
Section 7: Amends general municipal law to add multiple sections 859-c
859d, 859-e and 859-f. 859-c is added to require agencies to develop a
project application that must be submitted for any request for financial
assistance and specific approval criteria for evaluating an application
for financial assistance. Such criteria that must be evaluated include
strategic objectives, job creation, the financial viability of the
project, economic benefits, and legal issues. The agency must provide
the Authorities' Budget Office director with a copy of the application
and project approval criteria. Requires the agency to retain a written
record of the evaluation of each project application to document its
decision to provide or deny financial assistance.
Section 859-d is added to require agencies to enter into a written
agreement with the project application prior to the provision of finan-
cial assistance. The agreement must include a description of the amount
and type of financial assistance to be provided, the amount of financing
to be provided by the project applicant, the purpose of the project, the
amount, types, sources, and commitments of any private financing, the
projected number of new full-time and part-time positions, the number
and types of full-time and part-time jobs to be retained, the types and
value of other forms of financial assistance provided to the project or
requested by the project applicant from other governmental agencies or
authorities, and the penalties to be imposed on the project applicant if
the terms of the agreement are not met. Restricts the length of an
agreement to no more than five years; however, an agreement may be
renewed for up to five additional years if the agency determines that
the project applicant has acted in good faith to meet the terms and
conditions of the agreement. Requires the agency to adopt a methodology
to evaluate the conformance of each assisted project to the terms and
conditions of the financial assistance agreement. Requires the agreement
and evaluation methodology to be made available to the public on the
agency's website
Section 859-e authorizes agencies to recapture financial assistance to a
project from real property tax exemptions, mortgage recording tax
exemptions, or local sales or compensating use tax exemptions if (a) the
project is found to have violated federal or state law, rule, or regu-
lation, and such violation causes material harm to the local economy or
(b) all or part of the project's business activity or workforce is moved
to a location outside the community served by the agency and by doing so
violates the terms and conditions of its financial assistance agreement.
Requires recaptured financial assistance and any interest to be redis-
tributed to affected tax jurisdictions. Section 859-f requires recipi-
ents of financial assistance for construction, demolition, rehabili-
tation, or repair projects to pay workers engaged in such work no less
than the prevailing rate of wage and supplements under article eight of
the labor law.
Section 8: Amends subdivision 1 of section 862 of the General Municipal
Law to prohibit using financial assistance for any project if the
project approval or provision of financial assistance contributes to the
removal of all or part of the project occupant from one area of the
state to another area of the state or in the abandonment of one or more
facilities of the project occupant located within the state or provides
the project with a competitive advantage over existing businesses in the
same industry located in the same city, town, or village as such
project. Adds a definition of "competitive advantage" to the subdivi-
sion.
Section 9: Amends subdivision 4 of section 874 of the General Municipal
Law to require industrial development agencies to adopt a uniform finan-
cial assistance policy, subject to the approval of all affected tax
jurisdictions. The adopted policy must be provided to the chief execu-
tive and legislative officer and members of the governing body of each
affected tax jurisdiction. It shall be made available for public
inspection at the agency's office and on the agency's website. Requires
the agency to adopt criteria for deviations from the uniform financial
assistance policy, which shall be subject to the approval of all
affected local tax jurisdictions. Agencies are required to notify
affected jurisdictions at least sixty days prior to any deviation from
the uniform tax policy takes effect.
Sections 10, 11, 12, and 13: Amend Public Authorities Law to make
conforming changes to the governing statutes of the Troy Industrial
Development authority.
Sections 14, 15, 16, and 17: Amend Public Authorities Law to make
conforming changes to the governing statutes of the Auburn Industrial
Development Authority.
Section 18: Amends section 2976 of the Public Authorities Law to require
not-for-profit corporations that issue bonds on behalf of the state or a
political subdivision thereof shall pay to the state a bond issuance
charge upon the issuance of such bonds.
Section 19: Amends Not-For-profit Corporation Law to add a new section
206, permitting local development corporations and other not-for-profit
local authorities to enter into the same financial assistance agreements
as required of industrial development agencies. Subjects' local devel-
opment corporations and other not-for-profit local authorities to the
same restrictions and criteria as industrial development agencies
regarding issuing financial assistance for certain projects.
Section 20: Amends section 1411 of the Not-For-Profit Corporation Law to
state the purpose of a local government corporation will be to act in
the public interest. Requires notice of a public hearing shall include a
description of the real property proposed to be sold or leased; a state-
ment of the estimated fair market value of the real property proposed to
be sold or leased; the value for the real property proposed to be sold
or leased the value for the financial consideration to be received by
the county, city, town, or village from such sale or lease of the real
property, and a statement of the intended use or disposition of such
real property by the local development corporation.
Section 21: Amends section 1411 of the Not-For-Profit Corporation Law to
set forth the contracts of local development corporations and munici-
palities for acquiring real property. A contract between a local devel-
opment corporation and a municipality or a state or local authority is
sufficient justification to define the local development corporation as
a local authority under Section 2(2) of the Public Authorities Law. Such
a contract shall not be used to finance municipal operations or to
acquire or improve an asset for use by the municipality.
Section 22: Amends paragraph (j) of section 1411 of the Not-For-Profit
Corporation Law to subject corporations incorporated or reincorporated
under this section to paragraphs (c), (d), (e), (h) and (i) of this
section.
Section 23: Provides that the provisions of each section of this act
shall be deemed severable, and the declaration by a court of competent
jurisdiction that any part thereof is preempted or otherwise invalid
shall not affect the remaining parts thereof.
Section 24: Sets Effective Date.
 
JUSTIFICATION:
New York State has a complex system of public authorities formed to
achieve public or quasi-public objectives. Public authorities are
designed to function for the benefit of the people of New York through
various activities, including financing, building, and managing public
projects and improving a variety of governmental functions. Utilized at
all levels of government, the State relies on public authorities to
deliver vital services to the people of New York. Public authorities are
responsible for developing, operating, and maintaining some of the
State's most critical infrastructure, including roads, bridges, hospi-
tals, and schools. Public Authorities include state and local authori-
ties, industrial development agencies, and local development corpo-
rations.
Today, often unbeknownst to the public, the State frequently relies on
public authorities to fund and manage essential government functions
relating to energy, economic development, healthcare, education, and
transportation. Over the past 50 years, public authorities have become
a critical source of funds for New York State. As the needs of the
public have surpassed tax revenue, the State has increasingly relied on
public authorities to fund essential infrastructure by providing finan-
cial assistance to neither approved by the public nor reflected in the
state budget. The State's extensive reliance on public authorities plays
a significant role in the debt structure of New York State; over 96
percent of all State-funded outstanding debt was issued by public
authorities without voter approval. While public authorities perform
essential quasi-governmental functions for the benefit of the people of
New York, a lack of transparency and effective regulations may allow
waste and abuse to occur, undermining public trust. Their unique niche
between public agencies and private entities restricts the extent of
oversight, accountability, and transparency in their actions. As the
State increasingly relies on public authorities to provide essential
government functions to the public, including wholly funding and manag-
ing crucial infrastructure projects, the outstanding debt of public
authorities continues to grow. In 2018, public authorities reported over
one-quarter of a trillion in outstanding debt, approximately $282.1
billion, an 8 percent increase since 2014.193 Public authorities are
empowered to contract debt and issue financial assistance without public
approval, bypassing constitutional limits on state debt.
The State's extensive reliance on public authorities is problematic due
to insufficient statutory mandates that scrutinize their financial and
operational activities. Referred to as the "shadow government," public
authorities are often not subjected to sufficient public scrutiny,
creating questions about whether the interests of the communities they
serve are being supported by local development corporations (LDCs), as
well as other types of private organizations are frequently used by
local governments as a means to indirectly finance local government
operations and projects. Audits performed by the State Comptroller have
exposed that LDCs have been used to avoid constitutional or statutory
restrictions that apply to projects directly undertaken by a local
government. While LDCs are established as distinct entities, separate
from a local government, as a practical matter, they often function as
instruments of the local government.
This bill proposes to reauthorize industrial development agencies to
finance civic facility projects. Additionally, industrial development
agencies will also be permitted to issue loans and grants to certain
economic development projects, and to acquire real property directly
from municipalities. Importantly, this bill will subject industrial
development agencies to more stringent accountability and transparency
requirements. This bill will hold agencies accountable to the communi-
ties they were originally established to serve by increasing public
notification and disclosure requirements.
To protect the local communities, this bill authorizes industrial devel-
opment agencies and LDCs to recapture financial assistance granted to a
project if such a project is found to have violated federal or state law
to the extent that such a violation materially harms the community.
Additionally, this bill mandates that for specific projects, such as
public corporations, workers must be compensated with the prevailing
wage for such work. This bill also proposes to place important
restrictions on the powers of LDCs, minimizing the reliance on such
agencies for future projects.
 
LEGISLATIVE HISTORY:
Senate
2019: N/A
2020: S8961, Referred to Rules
2021: S1635, Referred to Local Government
2022: S1635, Referred to Local Government
2023: S1719, Referred to Local Government
2024: S1719, Referred to Local Government
Assembly
2019: N/A
2020: A11048, Referred to Local Governments
2021: A828, Referred to Local Governments
2022: A828, Referred to Local Governments
2023: A5215, Referred to Local Governments
2024: A5215, Referred to Local Governments
 
FISCAL IMPLICATIONS:
None to the state.
 
EFFECTIVE DATE:
This act shall take effect on the thirtieth day after it shall 17 have
become a law, or January 1, 2026, whichever shall come first; 18
provided, however, that section fifteen of this act shall apply to bonds
19 issued or re-issued on or after the effective date of this act.

Statutes affected:
S3368: 856 general municipal law, 856(2) general municipal law, 859 general municipal law, 859(3) general municipal law, 862 general municipal law, 862(1) general municipal law, 2976 public authorities law, 2976(1) public authorities law