BILL NUMBER: S520A

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.

Section 2b has been added to carve out trade workers.

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

Section 2 sets forth the effective date which is immediately.

 
JUSTIFICATION:

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

Unfortunately, toe 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 integrity of the IDA system.

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's 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, the 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-whi-
le 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.

 
PRIOR LEGISLATIVE HISTORY:

2022: S7445B; Vetoed, 183.

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

None.

 
EFFECTIVE DATE:
This act shall take effect immediately.