BILL NUMBER: S7445

SPONSOR: COMRIE
 
TITLE OF BILL:

An act to amend the general municipal law and the public officers law,
in relation to prohibiting individuals in certain positions from taking
any position with a business or entity doing business with an industrial
development authority

 
PURPOSE OR GENERAL IDEA OF BILL:

To prohibit individuals in certain positions from taking any position
with a business or entity doing business with an industrial development
agency and to provide penalties for violations

 
SUMMARY OF PROVISIONS:

Section 1 amends Section 883 of the General Municipal Law with the
following provisions:

Subdivision 2 prohibits any IDA Board member, trustee, employee, .or
              

independent contractor, including attorneys, of the IDA to take a posi-
tion paid or unpaid - with any business or entity doing business with
the IDA,-including applying for or receiving a tax exemption or any
other benefit determined or granted by the IDA. This shall apply for the
duration of their tenure and until three years after such Board member,
trustee, employee, Or independent contractor concludes their role with
the IDA.

Subdivision 3 prohibits any elected official, officer, or employee at
any level of government (municipal, county, or State) may serve as an
IDA Board member, trustee, employee, or independent contractor of the
IDA. Nor shall any elected official, government officer, or government
employee take a position - paid or unpaid - with any business or entity
doing business with the IDA, including applying for or receiving a tax
exemption or benefit determined or granted by the IDA. This shall apply
for the duration of their tenure and until three years after such
elected official, government officer, or government employee concludes
their government role,

Subdivision 4 states that when any person violates subdivision 2 and 3
and is compensated or receives a benefit as a result of their prohibited
actions, said person shall pay restitution to the IDA equal to the
amount of compensation or benefit received. In addition, said person
shall pay a civil penalty to the IDA equal to ten times the amount to be
restituted. These penalties shall be in addition to any criminal liabil-
ity.

Section 2 amends section 73 of the Public Officer's law by adding a new
subdivision 19 with the following provision:

Subdivision 19 prohibits any elected official, officer, or employee at
any level of government (municipal, county, or State) may serve as an
IDA Board member, trustee, employee, or independent contractor of the
IDA. Nor shall any elected official, government officer, or government
employee take a position - paid or unpaid - with any business or entity
doing business with the IDA, including applying for or receiving a tax
exemption or benefit determined or granted by the IDA. This shall apply
for the duration of their tenure and until three years after such
elected official, government officer, or government employee concludes
their government role. The same penalties of subdivision 4 of section
883 of the General Municipal Law - which is created by this bill - apply
to any violation of this subdivision

Section 3 amends paragraphs c and d of subdivision 1 of section 805-a of
the General Municipal Law and adds a new paragraph e with the following
provision:

Paragraph e provides that any municipal officer or employee shall be
prohibited from serving as an IDA Board member, trustee, employee, or
independent contractor, of the IDA to take a position - paid or unpaid
with any business or entity doing business with the IDA, including
applying for or receiving a tax exemption or any other benefit deter-
mined or granted by the IDA. This shall apply for the duration of their
tenure and until three years after such municipal officer or employee
concludes their role.

Section 4 sets forth the effective date which is immediately.

 
JUSTIFICATION:

As New York State Thomas DiNapoli has said, "An Industrial Development
Agency's (IDA) core mission is to economically benefit their communi-
ties, not the officials running them."

Unfortunately, too many IDA officials have abused their positions by
enriching themselves by have having secret financial dealings with the
businesses that they either sign contracts with, or grant tax exemptions
in their official duties with the IDA. As a result, the interest of the
communities and taxpayers these IDA officials are meant to serve are
compromised and communities and taxpayers are instead defrauded of
significant tax monies, sometimes totaling in the millions and even
billions of dollars. These hidden conflicts and self-dealing call into
question the integrity of the IDA process.

Recently, the former managing director of the Orange County IDA, the
former CEO of the IDA and a former county executive who sat on the IDA
board pleaded guilty to felonies of committing a prohibited conflict of
interest. The managing director had set up a consulting firm which
received a contract with the IDA, the former CEO was on the payroll of
that consulting firm even as she signed contracts on behalf of the IDA
with that firm. And the former county executive was also on that firm's
payroll while he voted on the contracts that the IDA had with the
consulting firm.

The District Attorney said that the IDA overpaid the consulting firm and
required both the former managing director and his partner to reimburse
the IDA One Million Dollars. The former CEO and county executive must
pay the IDA $175,000 and $90,000, respectively, in restitution repre-
senting.the payments made by the consulting firm to them. No jail time
Was received - only probation. Upon restitution and future cooperation,
the felony plea of the former county executive will be reduced to a
misdemeanor.

This bill eliminates opportunities for IDA fraud by prohibiting IDA
officials from being employed by any entity doing business with the IDA.
It also prohibits government officials at any level from either serving
on an IDA or taking employment with any of the entities doing business
with the IDA - either seeking tax benefits or receiving tax benefits.
These prohibitions shall stand until three years after the conclusion of
an individual's IDA or governmental role.

Violating these prohibitions will requite restitution. And since resti-
tution alone is not a penalty, this bill institutes a civil penalty
equal to ten times the amount to be restituted. A prohibition without a
penalty does not deter. The restitution and penalty are in addition to
any possible. criminal liability.

 
PRIOR LEGISLATIVE HISTORY:

None. New bill.

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

None.

 
EFFECTIVE DATE:
This act shall take effect immediately.

                                 
BILL NUMBER: S7445A          Revised 5/10/2022

SPONSOR: COMRIE
 
TITLE OF BILL:

An act to amend the general municipal law, in relation to prohibiting
individuals in certain positions from taking any position with a busi-
ness or entity doing business with an industrial development authority

 
PURPOSE OR GENERAL IDEA OF BILL:

To prohibit individuals in certain positions from taking any position
with a business or entity doing business with an industrial development
agency and to provide penalties for violations.

 
SUMMARY OF PROVISIONS:

Section 1 amends Section 883 of the General Municipal Law with the
following provisions;

New subdivision 2 of Section 883 prohibits any Industrial Development
Agency or Authority (IDA) Board member, officer, employee, or independ-
              

ent contractor to take a position, paid or unpaid, with any business or
entity which is applying for or receiving financial assistance or any
other benefit determined or granted by the IDA for the duration of their
tenure and within two years after the termination of such employment or
rendering of services.

New subdivision 3 states that when any person violates subdivision 2 and
is compensated or receives a benefit as a result of their prohibited
actions, that person shall pay a civil penalty to the IDA equal to five
times the amount of compensation or benefit received.  These penalties
shall be in addition to any criminal liability.

Section 2 sets forth the effective date which is immediately.

 
JUSTIFICATION:

As New York State Comptroller Thomas DiNapoli has said, An Industrie:
Development Agency's (IDA) core mission is to economically benefit their
communities, not the officials running them."  Unfortunately, too many
IDA officials have abused their positions by enriching themselves
through secret financial dealings with the very businesses that they
either sign contracts with or grant tax exemptions to in the course of
their official IDA duties. As a result, these IDA officials compromise
the interests of the communities and taxpayers they are meant to serve.
Instead, these communities and taxpayers are defrauded of significant
tax monies, sometimes totaling in the millions and even billions of
dollars.

These hidden conflicts and self-dealings call into question the integri-
ty of the IDA systems.

Recently, the former managing director, the former CEO, and a former
county executive who sat on the Orange County IDA board pleaded guilty
to felonies of committing a prohibited conflict of interest.  It was
shown that the managing director had set up a consulting firm which
contracted to do business with the IDA, and that the former CEO and
former county executive were on the firm's payroll even as they respec-
tively signed and voted upon contracts their employer had presented to
the IDA.

After the trio were indicted, the District Attorney required them to
return the more than $1.2 million dollars they had obtained through
their self-dealing scheme. However, no jail time was received-only
probation. Upon restitution and future cooperation, eho felony plea of
the former county executive will be reduced to just a misdemeanor.

This bill eliminates opportunities for IDA fraud by prohibiting IDA
officials, employees and independent contractors of the IDA from being
employed or taking any position, paid or unpaid, with any entity doing
business with the IDA-either applying for or receiving IDA benefits
while employed or rendering services to the IDA and for two years after
the conclusion of an individual's IDA employment or rendering of
services to the IDA.

A prohibition without a penalty does not adequately deter similar
crimes. That is why this bill mandates a strict penalty. Any person
violating these restrictions will be subject to a civil penalty of five
times the compensation or benefit received by the person. This civil
penalty is in addition to any criminal liability.

 
PRIOR LEGISLATIVE HISTORY:

None. New bill.

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

 
EFFECTIVE DATE:
This act shall take effect immediately.