Dorm Authority: NY’s deepest pork barrell
Dormitory Authority has grown into the top conduit of backdoor state spending
By Chris Bragg
Updated 11:01 am, Sunday, December 18, 2016 Times Union
The state Dormitory Authority, which was created by the Legislature in 1944 to build teachers’ colleges, received a letter in April from Gov. Andrew Cuomo‘s administration requesting that the quasi-governmental entity sign off on $200,000 in spending.
The money, however, was not intended to build dorms. Instead, it was to be steered to the city of Albany to build a skateboard park.
That project is just one small slice of what critics contend has quietly grown into Albany’s biggest pork barrel. Since 1998, state lawmakers have spent $1.9 billion for nearly 6,000 projects through a dozen mostly little-noticed programs financed by Dormitory Authority bonds.
Rank-and-file lawmakers, who are allowed significant influence as to where the money is steered, do not have to attach their names to the ones they push. When a project receives a grant, it is simply labeled as coming from either "Assembly" or "Senate," which makes it difficult for the public to flag any conflicts of interest.
And while the bonds are approved in the state budget, the specific projects are mostly chosen outside the normal budgetary process.
The public pays for the initiatives: The interest payments on the authority’s bonds are largely drawn from income taxes.
The programs have purchased computers, wheelchairs and snowplows. Funding has gone to nonprofits, universities, cities and even private businesses, and been earmarked for projects that include $125,000 for an "educational oyster garden" in Queens and $300,000 to relocate a barn on village land in Setauket, Suffolk County.
Before the funding goes out to a project, it must be approved by the Dormitory Authority (DASNY), which is one of the nation’s largest issuers of debt for many types of initiatives.
"Taxpayers have good cause to be concerned about state lawmakers and the governor using that borrowing power for anything besides its original purpose, especially when it’s to pay for political pet projects," said Ken Girardin, an analyst at the fiscally conservative Empire Center for Public Policy. "DASNY was created to finance dormitory construction, not to be Albany’s credit card."
Yet proponents say the programs allow the state to quickly get projects off the ground — from building a road to kick-starting the Capital Region’s nanotech empire — and permit lawmakers to address issues on a rolling basis through the year.
"Is it all perfect, neat and nice? No," said Roman Hedges, the former deputy secretary of the Assembly Ways & Means Committee. "Is it problematic? I don’t think that. But I do think it’s complicated. And that’s why people take shots at it."
In total, the Legislature has allocated more than $3 billion to a dozen pots of money, though some has been rescinded and some remains unspent.
Only one of these bond programs has been created during the tenure of Gov. Andrew Cuomo: the State and Municipal Facilities Program (SAM) in 2013. Through March 2016, lawmakers had authorized $1.54 billion in bond sales for the program.
"We finance these brick and mortar capital projects the same way as we finance other capital projects, whether it’s transportation infrastructure, an environmental facility, a prison, a dormitory or any other capital asset," Peters said.
With eight of the 12 pots of money still giving out grants, 2016 is on pace to be among the biggest-spending years on record. Through mid-June, nearly $330 million had been sent by lawmakers to DASNY for approval.
The only reason many of these broader details are known is because the Empire Center filed an open records request in June seeking information as to where all the money has gone. The think tank recently posted on its website, SeeThroughNY.net, a database of the nearly 6,000 projects.
For all the projects it approves, the Dormitory Authority requires recipients to disclose any potential conflicts of interest they may have.
Still, because lawmakers’ grants are only listed as coming from the Senate or Assembly, it’s difficult for the public to trace whether a grant recipient has, for instance, given campaign donations to their benefactor.
Consider the May 16, 2008, letter sent to DASNY by the state Senate asking it to approve $4 million for a private business, Empire Agrifuels, for acquisition and installation of equipment.
It’s not clear who was behind the grant, but one day earlier, Empire Agrifuels made its lone political donation in a New York for $200 to Republican state Sen. Tom Libous. The company never received the funds. (Libous died earlier this year.)
The bond programs are often created with broad specifications for the use of the money. The profits received by the buyers of these low-risk bonds are tax free, making them especially attractive.
Since these programs’ advent in 1998, new pots of money were formed on an almost annual basis in order to meet legislators’ pet needs, said ex-Assemblyman John McEneny of Albany, who retired from the Legislature after 2012.
He considered many of the programs were similar, but said new bonds were tailored to help facilitate lawmakers’ desired projects that did not meet specific requirements the prior year.
"Every year, it seemed to me, the rules needed to be changed," he said. "They’re basically the same thing."
As of four years ago, according to McEneny, each member of the Assembly majority between $500,000 and $1 million. Lawmakers would submit a list of desired projects to the Assembly Ways & Means Committee.
"Projects can be nominated by members and there is no allotment," he said. "These projects are vetted by staff to ensure that there are no conflicts of interest and (the requests are) consistent with the intent of the legislation."
On the Senate side, money goes through the Senate Finance Committee. A spokesman for the Senate Republican majority, Scott Reif, declined to answer questions, including how much money flows to Senate Democrats in the minority.
After receiving letters seeking project approval, the Dormitory Authority makes sure the grants fit in with the requirements of the bond funding it, and conducts legal and financial reviews.
Then a project can move forward with the consent of both houses of the Legislature and the Executive branch, according to Peters.
The Dormitory Authority bond spending started slowly in 1998 through a single program called Community Enhancement Facilities Assistance Program, or CEFAP. Its intent was to fund "projects that will improve communities within the State," and a total of $14.8 million was requested for initiatives its first year like construction of a tennis court and the renovation of a theater. Eighteen years later, $30 million in outstanding debt remains.
Before 2002, only the Assembly was distributing the bonded money, but then the Senate jumped into the action.
As of 2013, the executive branch has had its own program it shares with the Senate and Assembly in SAM, which has served as the major line of credit for the Cuomo administration to finance a $750 million investment in a solar panel factory in Buffalo.
Peters, the Division of Budget spokesman, said that state debt had actually decreased by $3 billion under Cuomo and the SAM program was fundamentally different from prior pots of Dormitory Authority money.
"Unlike some old member item pots, the State and Municipal Facilities program is limited in scope to bricks and mortar capital projects with the requisite useful life," Peters said. "The SAM program also has new levels of transparency, such as the posting of projects on the public website of the administrating state entity."
(Yet another, more controversial system of member items, which allowed lawmakers to directly pick projects within the state budget, was eliminated by Cuomo when he took office in 2011.)
Not all parts of the state have benefited equally from the under-the-radar bond spending. Of the 40 largest total grants, Buffalo appears to have gotten the most through Cuomo’s "Buffalo Billion" initiative. The Capital Region has also done well. Observers attribute that in part to the alliance of ex-Assembly Speaker Sheldon Silver, former Senate Majority Leader Joseph L. Bruno of Brunswick, and ex-SUNY Polytechnic Institute founder Alain Kaloyeros to build up his nanotech empire. (Kaloyeros is currently facing state and federal charges for allegedly taking part in two bid-rigging schemes involving SUNY Poly projects.)
Some of the biggest dollar grants in the Capital Region have gone to projects at Rensselaer Polytechnic Institute, the Luther Forest Technology Campus Economic Development Corp., Fuller Road Management Corp., the University at Albany Foundation and the Arsenal Business and Technology Partnership in Watervliet.
Other parts of upstate and New York City have gotten fewer of the biggest grants.
Republican Assemblyman Jim Tedisco introduced a bill this year that would require grant recipients to be clearly outlined in the state budget, with a period of at least three days for public review. It would also require the disclosure of all campaign donations for five years from the person or group getting the money.
Tedisco is set to be sworn in as a member of the state Senate in January. Asked if his soon-to-be Senate Republican colleagues — who are likely to retain the majority — would support casting more sunlight on this type of spending, Tedisco said, "You’d have to ask them that. But there shouldn’t be any reason not to do it."
cbragg • 518-454-5303 • @chrisbragg1
Since 1998, state lawmakers have made requests for $3 billion from the state Dormitory Authority outside the normal budget process to fund various economic development initiatives. About $1.9 billion has been spent. Here is a look at how much was requested. The number of projects is in parenthesis.
CLICK LINK TO SEE CHART:
*The figures for 2016 are only through mid-June.
Source: Empire Center
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