Watchdogs call on Zemsky / ESD to stop using state affiliated non-profits and SUNY to award economic development contracts

October 26, 2016

Howard Zemsky
President, Empire State Development Corporation
625 Broadway
Albany, New York 12245

Re: Restore public confidence by ending the use of state affiliated non-profits and SUNY in awarding economic development contracts.

Dear President Zemsky,

We read your October 20th, 2016 comments in the Democrat and Chronicle about reforming Fort Schuyler and Fuller Road Management Corporations with a great deal of interest. On September 30, in the wake of the massive $750 million plus bid-rigging scandal engulfing those state controlled non-profits and SUNY Polytechnic, our groups wrote state leaders and called on them to undertake major reforms. (See attached.)

Among our short list of recommendations we called on the state to:

Transfer responsibility for awarding all business subsidy awards to the Empire State Development Corporation, and end the use of state non-profits and SUNY in awarding these subsidies.

We believe that the state’s use of state-affiliated non-profits and the SUNY system to award state economic development contracts is inherently prone to corruption and abuse. State-affiliated non-profits exist in a legal grey area. They are not state agencies subject to the procurement requirements within the Finance Law – nor are they state authorities subject to the Public Authority Reporting Act or Public Authority Law.

The Finance Law and Public Authority Law have detailed requirements to ensure clean and fair contracting, public accountability, and independent oversight of the public’s money. These laws exist for good reasons – to protect public funds from misuse and abuse. Creating a shadow government of state non-profits and SUNY organizations outside of these laws has proved to be a recipe for disaster, and it has to stop.

In order to restore the public’s faith in state economic development contracting, end the role of state-affiliated non-profits and SUNY in awarding those contracts, and transfer all economic development procurement, contract awards, and management to ESDC.

Thank you,

David Friedfel
Director of State Studies
Citizens Budget Commission