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A04078 Summary:

COSPNSRZebrowski, Abinanti, Bronson, Reyes, Norris, Dinowitz, Dickens, Magnarelli, Englebright, Zinerman, Galef
Amd §2827-a, Pub Auth L
Prohibits the formation of a subsidiary of a public authority without prior approval of the legislature.
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A04078 Actions:

02/01/2021referred to consumer affairs and protection
05/14/2021reference changed to corporations, authorities and commissions
01/05/2022referred to corporations, authorities and commissions
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A04078 Memo:

submitted in accordance with Assembly Rule III, Sec 1(f)
  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 accom- plish 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 chal- lenging, 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 where 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, capi- tal 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 situ- ation, and remain true to the spirit of § 5 of Article 10 of the State Constitution which requires that only the stale 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: 2013-14: A.1599/Corps;S.1443/Corps/Passed 2005-06: S.5102-A/A.6757- Veto 369 2007: Passed Senate/Assembly Corps Authorities 2008: Passed Senate/ Assembly Ways & Means 2009-10: A.4298/Corps & Authorities; S.3919/Corps & Authorities 2011: Senate Rules/Assembly Corps & Authorities 2012: A.3228-A/Corps & Authorities; S.4690-A/Passed   FISCAL IMPLICATIONS: None noted.   EFFECTIVE DATE: This act shall take effect immediately.
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A04078 Text:

                STATE OF NEW YORK
                               2021-2022 Regular Sessions
                   IN ASSEMBLY
                                    February 1, 2021
        Introduced  by  M.  of  A.  COLTON, ZEBROWSKI, ABINANTI, BRONSON, REYES,
          NORRIS -- Multi-Sponsored by -- M. of A. McDONOUGH --  read  once  and
          referred to the Committee on Consumer Affairs and Protection
        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:
     1    Section 1. Subdivision 1 of section 2827-a of the  public  authorities
     2  law,  as added by chapter 506 of the laws of 2009, is amended to read as
     3  follows:
     4    1. Notwithstanding any law to the contrary, no state  authority  shall
     5  hereafter  have  the power to organize any subsidiary corporation unless
     6  the legislature shall have enacted a law granting such  state  authority
     7  such  power  for  the organization of a specific corporation[, provided,
     8  however, that a state authority may organize  a  subsidiary  corporation
     9  pursuant to the following requirements:
    10    a. the purpose for which the subsidiary corporation shall be organized
    11  shall  be  for  a  project or projects which the state authority has the
    12  power to pursue pursuant to its corporate purposes;
    13    b. the primary reason for which the subsidiary  corporation  shall  be
    14  organized  shall  be  to  limit  the  potential  liability impact of the
    15  subsidiary's project or projects on the authority or  because  state  or
    16  federal  law  requires  that  the  purpose of a subsidiary be undertaken
    17  through a specific corporate structure; and
    18    c. the]. Any subsidiary corporation shall make the reports  and  other
    19  disclosures  as are required of state authorities, unless the subsidiary
    20  corporation's operations and finances are consolidated with those of the
    21  authority of which it is a subsidiary.
    22    § 2. This act shall take effect immediately.

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
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