Board of Legislators Will Need to Approve Westchester’s LDC and All of Its Tax Exempt Bond Financing

FOR IMMEDIATE RELEASE: October 5, 2012

Contact: Tom Staudter | ThomasS@westchesterlegislators.com | 914-995-2819 (office) | 914-815-4462 (cell)

Board of Legislators Will Need to Approve Westchester’s LDC and All of Its Tax-Exempt Bond Financing

White Plains, NY – The Westchester County Board of Legislators (BOL) will need to approve the formation of the county’s Local Development Corporation (LDC) and any of the tax exempt bonds that are issued on behalf of the County, as suggested by the actions of New York’s four other large suburban counties, including Nassau and Suffolk, both of which expressed reliance on Internal Revenue Service guidance in this regard.

Also, Astorino’s own legislation and memorandum that he forwarded to the BOL last month said the BOL approval was necessary prior to the issuance of any tax exempt bonds by the LDC.
This calls into question several assertions from Westchester County Executive Robert P. Astorino this week that BOL approval is not necessary for his unauthorized LDC, and that it can, according to the Administration, “immediately give not-for-profit organizations access to low-cost borrowing for capital projects,” such as $36 million to Northern Westchester Hospital for new operating rooms and modernized patient care units.
“In LDCs approved by other nearby counties, IRS guidance that is referenced indicates the Astorino Administration should have presented legislation to the Westchester Board of Legislators for consideration prior to incorporating an LDC or authorizing bonds for any projects,” said BOL Chairman Ken Jenkins (D-Yonkers). “Since County Executive Astorino proposed the formulation of an LDC in January, our open and transparent legislative process could have allowed for a reasonable and thoughtful debate on the creation of an LDC that will be responsive to the needs of Westchester’s residents and business owners while also following a prudent financial path that protects our taxpayers.”
Jenkins noted that the Astorino LDC will operate under the aegis of the County’s Industrial Development Agency (IDA), which, by law, no longer has authority to issue bonds for non-profit entities. Over the past three years, Westchester’s IDA has made a number of decisions regarding tax breaks for big businesses and corporations in executive session and away from public scrutiny.
“And that’s a problem,” Jenkins added, pointing to New York State Comptroller Thomas DiNapoli’s criticism of LDCs and his claims that too often the LDCs are improperly used by local government officials to overstep state laws and avoid public attention, and that abuses have cost taxpayers millions of dollars.
When the county legislatures of Nassau and Suffolk counties approved their respective LDCs, both authorizations stated that “under Internal Revenue Service (“IRS”) guidance, the Corporation must meet certain requirements in order for it to qualify as an entity eligible to issue tax-exempt bonds on behalf of the County which include: (1) the Corporation is formed only after the governing body of the County has given its formal approval to the creation of the Corporation and to the form of certificate of incorporation; (2) the board of directors of the Corporation is elected by the governing body of the County and serves without compensation; (3) the Corporation’s corporate powers include the power to acquire, improve, maintain, equip and furnish projects, to lease such projects and collect rent; to sell and convey any and all of its property whenever the board of directors shall find such action to be in furtherance of the purposes for which it was organized; and to issue bonds for the purpose of carrying out any of its powers…”

Moreover, the bond counsel opinions included in other bonds issued by LDCs reference legislative approval.

“It is very important that the Administration work with the Board of Legislators to consider an LDC that’s right for Westchester,” said Legislator Catherine Borgia (D-Ossining), chair of the BOL’s Government Operations Committee. “With so much controversy surrounding LDCs, it makes sense to take the time to do whatever is necessary to come out of the gate with an entity that is transparent and trustworthy.”

The Astorino administration continues to oppose the addition of a non-voting member representing the BOL to the IDA Board; and the Administration continues to eschew good government and transparency by prohibiting the IDA Director from presenting updates to the BOL’s Government Operations Committee.

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Bazzo 10/0712

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