Empire State Development Corporation

New York State Urban Development Corporation

Empire State Development logo
Public authority overview
Jurisdiction New York
Public authority executives
  • Howard Zemsky, president
  • Derrick Cephas, acting chairman
Key document
  • New York State Urban Development Corporation Act[1]
Website esd.ny.gov
Department of Economic Development
Department overview
Jurisdiction New York
Headquarters 625 Broadway,
Albany, New York[2][3]
Department executive
  • Howard Zemsky, commissioner
Key document

Empire State Development (ESD) is the umbrella organization for New York's two principal economic development public-benefit corporations, the New York State Urban Development Corporation (UDC) and the Job Development Authority (JDA).[4] The New York State Department of Economic Development (DED) is a department of the New York government that has been operationally merged into ESD.[5][6]

ESD gives its mission as promoting the state economy, encouraging business investment and job creation, and supporting local economies through loans, grants, tax credits, real estate development, marketing and other forms of assistance.[2]

Structure

Since 1995, four entities have been operationally merged and referred to as Empire State Development (ESD):[5][6]

Although ESD officials have programmatically consolidated the DED, UDC, JDA and STF, they have not legally consolidated the agencies.[11] The commissioner of the DED is the chairman of the boards of UDC, JDA and STF, but those boards continue to operate as separate bodies.[11]

The UDC is allowed to operate through subsidiaries.[12] Each subsidiary has its own board of directors.[12] As of October 2015, there were nine subsidiaries of ESD:[13]

Operations

The UDC is empowered to issue bonds and notes, grant loans and tax exemptions, acquire private property, exercise eminent domain, create subsidiaries, and exempt projects from/override local laws, ordinances, codes, charters or regulations (e.g., zoning).[6][14][15] As with all New York state public-benefit corporations, it can issue bonds without a voter referendum, bypassing the NY's state constitution limits.[16] As of May 2015 the UDC reported outstanding debts of $11 billion.[17]

As of October 2015, major projects included the:[13]

History

The state Division of Commerce was created in 1941 and subsumed several state bureaus and the Bureau of Industry.[7] It was replaced in 1944 by the state Department of Commerce.[7] The New York State Urban Development Corporation (UDC) was created in 1968 by the York State Urban Development Corporation Act.[1][7] On August 31, 1987, the Omnibus Economic Development Act created the state Department of Economic Development (DED).[7] In 1975, the UDC was reorganized and its mission expanded from developing housing to economic development.[7]

In 1995, the functions of the DED and the UDC were consolidated, along with the Job Development Authority (JDA) and the Science and Technology Foundation (STF).[7] UDC's directors decided that the corporation would do business as the Empire State Development Corporation (ESDC).[7] Some functions of JDA and STF were folded into ESDC and DED, respectively, and the collective entity was branded as Empire State Development (ESD).[7] In November 1999 the STF was abolished, and in 2011 the New York State Foundation for Science, Technology and Innovation (NYSTAR) was merged with DED.[6]

In its early years the UDC was responsible for "the last significant program of publicly assisted housing in the United States".[19] At the time it was primarily aimed at urban renewal in New York City although its bonds were to be used statewide. Virtually all state subsidized housing built since 1968 was financed through the corporation. In the first years of the UDC, its aim was to facilitate large-scale low-income housing developments in urban neighborhoods that had traditionally been white and middle-class. In 1970, Business Week claimed that the UDC was "emerging as the most powerful state agency in the country for coping with urban growth."[20]

By 1974 the investment climate had cooled and in 1975 Governor Hugh Carey asked the Legislature to appropriate $178 million for the UDC, and by 1977 the UDC was able to reenter the financial markets.[20] In 1975, the Corporation was reorganized and its mission expanded from developing housing to economic development. The finances were reorganized and the corporation assumed a less aggressive development stance, and its mission was refocused to finance other ambitious state projects and has been used frequently by governors to implement projects that circumvent formal Legislative or voter scrutiny.

The move away from a housing mission began in the late 1970s and early 1980s with such projects as the Jacob Javits Convention and improvements to the Apollo Theater. Among its projects was a doubling of the New York state prison system, improvements to Love Canal, construction of the Jacob K. Javits Convention Center, revitalization of 42nd Street (Manhattan), revitalization of Niagara Falls, New York, construction of Battery Park City, construction of Roosevelt Island, planned construction of a new Pennsylvania Station, and planned development of Governors Island. While the UDC was to have ultimately big successes with such projects as Roosevelt Island and Battery Park City[21] it was to encounter major problems in its inner city developments and its efforts to build minority low income housing in white middle-class neighborhoods. The Corporation still maintains a housing portfolio that currently includes mortgages valued at $650 million covering 20,200 housing units.

Mario Cuomo was the first to begin ambitious use of it to get around official scrutiny for public projects. In 1981 voters voted against a $500 million bond issue for expansion of the state prison system to handle increased prison populations arising from the Rockefeller drug laws. At the time New York had 32 adult prisons. Cuomo was to use the bonds to build another 38 prisons — most upstate.[22]

George Pataki used the corporation to process $20 billion in federal aid following the September 11, 2001 attacks to rebuild lower Manhattan and build a memorial. The subsidiary, Lower Manhattan Development Corporation, was set up to coordinate rebuilding and distribution of billions of dollars in federal funds following the attack, as well as establishing the World Trade Center Memorial Foundation to build the memorial. It was responsible for distributing Liberty bonds that were used to rebuild Manhattan. It remains to be seen whether the lack of public scrutiny on this has helped or hurt the development process.

An audit released in May 2006 by New York comptroller Alan Hevesi reported that the Corporation loses track of its subsidiaries. At the time the corporation reported 70 active subsidiaries but the audit showed there were 202 subsidiaries still on the books (98 of which were definitely inactive). The audit did not consider this a serious oversight but the corporation is moving to dissolve the inactive corporations.

In 2007, under Governor Eliot Spitzer, an Upstate ESD headquarters opened in Buffalo in recognition of the different economic challenges posed in the two parts of the State. Two chairs were appointed, one for ESD Downstate and the other for ESD Upstate. The ESD board also authorized the creation of a subsidiary, Upstate Empire State Development Corporation, to concentrate on Upstate issues. In 2008, Governor David A. Paterson brought the two components of ESD back together again, emphasizing that New York is truly “One State.” The former Upstate and Downstate offices now work together seamlessly to ensure that New York’s economic development strategy benefits the entire State while being mindful of the specific resources and special challenges of each region.

In January 2011, Governor Andrew M. Cuomo appointed Kenneth Adams as ESD President & CEO and DED Commissioner. Mr. Adams was confirmed by the Legislature on April 5, 2011. In May 2011, Governor Andrew M. Cuomo appointed Julie Shimer as Chair of ESD. She was confirmed by the New York State Senate in June 2011.

State control over projects in the city from the start (and continues to) pose turf conflicts between the New York Mayor and New York Governor (including the fact that the state authority is immune to city zoning). Many of the projects had devastating impacts on neighborhoods and resulted in white flight and charges of reverse discrimination. Conversely inner city activists also complained that the projects sometimes damaged inner city neighborhoods. As an example, the UDC's construction of the Harlem State Office Building in 1969 aroused intense opposition from the neighborhood which wanted the resources applied in other ways. Ada Louise Huxtable called the fight "Rockefeller's Vietnam".[23] "Urban development" took on an adverse reputation and it was renamed in 1995 the Empire State Development Corporation.

See also

References

  1. 1 2 3 New York State Urban Development Corporation Act, Chapter 174 of the Laws of 1968
  2. 1 2 "About Us". Empire State Development. Retrieved October 18, 2015.
  3. ↑ Economic Development Law; "[...] The principal office of the department shall be in the city of Albany. [...]"
  4. ↑ "Corporate Information". Empire State Development. Retrieved October 18, 2015.
  5. 1 2 OSC 1997, Executive Summary.
  6. 1 2 3 4 Public Authorities by the Numbers: Empire State Development Corporation (PDF). Office of the New York State Comptroller. February 2015. p. 3.
  7. 1 2 3 4 5 6 7 8 9 "History of Empire State Development". Empire State Development. Retrieved October 18, 2015.
  8. ↑ Economic Development Law; "There shall be in the state government a department of economic development. The head of the department shall be the commissioner of economic development [...]"
  9. ↑ Public Authorities Law § 3105
  10. ↑ New York Job Development Authority Act; Public Authorities Law article 8, title 8, § 1800 et seq.
  11. 1 2 OSC 1997, p. 7.
  12. 1 2 New York State Urban Development Corporation Act (L. 1968, ch. 174) § 12
  13. 1 2 "Subsidiaries & Development Projects". Empire State Development. Retrieved October 18, 2015.
  14. ↑ New York State Urban Development Corporation Act § 16(3). Floyd v. New York State Urban Development Corp., 33 N.Y.2d 1.
  15. ↑ Galie, Peter J.; Bopst, Christopher (2011). The New York State Constitution (1st ed.). Oxford University Press. p. 297. ISBN 978-0-19-977897-3. LCCN 2011002388.
  16. ↑ Zimmerman, Joseph F. (2008). The Government and Politics of New York State (2nd ed.). SUNY Press. p. 175. ISBN 978-0-7914-7435-8.
  17. ↑ "Bond Issues". Empire State Development Corporation. Retrieved 19 October 2015.
  18. ↑ Craig, Susanne; Rashbaum, William K.; Kaplan, Thomas (September 27, 2015). "U.S. Investigating Contract Awards in Buffalo Turnaround Project". The New York Times.
  19. ↑ http://www.arch.columbia.edu/index.php?pageData=8882/23/4/1652
  20. 1 2 Zimmerman, Joseph F. (2012). State-Local Governmental Interactions. SUNY Press. p. 127. ISBN 978-1-4384-4169-6. OCLC 2011018383.
  21. ↑ Goldberger, Paul (August 19, 1981). "6 Builders Chosen for Housing at Battery Park City". New York Times.
  22. ↑ King, Ryan S.; Mauer, Marc; Huling, Tracy (February 2003). "Big Prisons, Small Towns: Prison Economics in Rural America" (pdf). The Sentencing Project.
  23. ↑ Siskind, Peter (October 6, 2001). "'Rockefeller's Vietnam'?: Black Politics and Urban Development in Harlem, 1969-1974". Gotham History Festival.
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