State Comptroller Thomas DiNapoli made a case in the Rochester Democrat & Chronicle today for allowing his office to audit local development corporations, writing that they are a “shadow government” that “uses billions of local taxpayer dollars with little oversight, and too often for questionable purposes.” LDCs are private, not-for-profit corporations that are often created by, or for the benefit, of local governments for economic development or other public purposes.
DiNapoli has been trying to get the state Legislature to adopt legislation that would allow his office to audit local development corporations. LDCs “were originally created to help New York’s counties, cities, towns and villages with economic development, but their purpose has run amok in several communities,” he wrote in the op-ed.
He places Ramapo along with Monroe County in the “run amok” category.
DiNapoli and Attorney General Eric Schneiderman last month announced four individuals were indicted in Monroe County. The two former public officials — one of whom is the husband of the county executive — and two business executives were charged with dozens of felonies in connection with rigging the bidding process for several county contracts. Hundreds of millions of dollars allegedly were steered and laundered illegally, the comptroller said.
Monroe County officials wasted almost $40 million in taxpayer money in creating Upstate Telecommunications Corp., an LDC, a 2012 audit by DiNapoli’s office found.
The op-ed mentions the comptroller’s 2012 audit of the stadium for the Rockland Boulders, which found that taxpayers could be responsible for up to $60 million in costs related to the stadium because the town “inappropriately mingled its activities” with the Ramapo Local Development Corp., which allowed officials to circumvent laws. The LDC was created to finance the stadium.
Under current law, DiNapoli’s office can’t directly audit the roughly 270 LDCs in New York, even when they are controlled by a local government. It can indirectly audit them if auditors conducting a local government audit examine the relationship between the LDC and municipality.
“Even then, it is hard for us to look beyond the financial or business relationship to examine the overall finances and operations of the LDC. This is a major loophole in state law that needs to be closed,” he wrote.
Expanding the authority of DiNapoli’s audit would help the state “keep an eye on shadowy financing,” DiNapoli said. Taxpayers have a right to see where their tax dollars are going, he said.