This commentary I wrote, Marlin: New York’s financial treadmill to oblivion, appears on the Long Island Business News web site.
Archive for June 2009
Notes and Asides
Did Richie Kessel Violate State Law and NIFA’s Code of Ethics by Making Local Campaign Contributions?
Sections 73 and 74 of State Public Officers Law as well as the Code of Ethics of the Nassau Interim Finance Authority require minimum standards of conduct by appointed public officers, such as Richie Kessel. The law proscribes the actions of public officers to avoid actual and perceived conflicts of interest. Richie’s NYPA resume boasts that he served as Chairman for a number of years and a Board Member of NIFA from 2000 until his resignation from NIFA on December 31, 2007. Over that period, Kessel was responsible for the State agency that was charged with overseeing Nassau County’s budgets, taxes, finances, borrowing and financial plans. So, one would expect that Richie would avoid political entanglements in the County during service on the NIFA Board. In fact, contrary to sound practice, good public policy and perhaps State law and NIFA’s Code of Ethics—that he himself voted to approve—Kessel made multiple political contributions during his NIFA service to Democratic members of the County Legislature, the very body charged with approving the County budget that NIFA would annually review, critique and possibly reject.
The facts are these: Kessel made eight separate contributions to six Democratic members of the majority party in Nassau County Legislature while serving on the NIFA Board, in each case in the months leading up to the election of the County Legislature. Legislators Roger Corbin, David Denenberg (one contribution while Richie was at NIFA and another weeks later), Judy Jacobs, former Presiding Officer (three contributions). Joe Scannell, Wayne Wink and Diane Yaturo (the current Presiding Officer) were also beneficiaries of Richie’s political largesse. Inappropriate and unseemly? Definitely. Illegal? Street Corner Conservative will leave that determination to the appropriate authorities. Violative of NIFA’s Code of Ethics? Street Corner Conservative’s read of the Code suggests that there is a real question as to whether Kessel’s multiple political contributions directed solely to majority members of the County Legislature in an election year was permissible under the NIFA Code.
But these questionable political contributions raise many questions: Did Kessel exert pressure on these Legislators? Did the past Chairman of NIFA and LIPA extract any concessions with respect to NIFA business and perhaps other matters, public or private? What message did Kessel’s contributions, including to the current and past Presiding Officer of the Legislature, send to other Democratic members of the Legislature who were not similarly funded by Richie? What message did Kessel intend to send to minority members of the Legislature? Ultimately, was the County’s relationship with NIFA on budgetary and the County’s sky-high taxes affected by these contributions? These questions demand investigation.
NOTE TO READERS: Starting this week, The Kessel NYPA Watch will be on a fortnightly summer schedule.
THE KESSEL COUNTDOWN: 559 DAYS UNTIL RICHIE KESSEL IS FIRED BY THE NEW GOVERNOR OF NEW YORK.
This article I wrote appears in Newsday on June 18, 2009.
This article I wrote appears on The Catholic Thing web site on June 17, 2009.
This commentary I wrote, Marlin: Whither the Nassau County Conservative Party?, appears on the Long Island Business News web site.
This article I wrote appeared on The Catholic Thing web site on June 5, 2009.
Notes and Asides
“Numbers matter less than jobs. We’ve just got to create jobs in Western New York.”
– Richie Kessel
Late last month, Richie Kessel announced a typically cocked up subsidy deal with Yahoo! Here’s the background on the richest subsidy deal ever offered by NYPA: Since David Paterson has been absent from pursuing economic development in the State, Kessel has tried to fill the gap in order to generate precious press coverage for himself. As reported by Jonathan Epstein in The Buffalo News, our accidental Governor and his accidental appointee, Richie Kessel, announced that Yahoo! would spend $150 million to set up a new regional data center in Western New York with about 125 new jobs in return for low cost hydropower from NYPA, specifically 15 megawatts of New York hydropower. Except that’s not true.
The problems with Richie’s deal are many. First, as befits Richie’s focus on press over substance, Yahoo! hasn’t agreed to locate the new data center in New York. Indeed, Yahoo! said that it wouldn’t comment on “ongoing discussions” and Paterson and Richie conceded that the company was looking at Southern States, including North Carolina. So, Richie and his patron, the unpopular Paterson, have compromised Yahoo’s request for confidentiality, announced prematurely a deal that may never happen and by pursuing premature press rather than substance empowered Yahoo! if it wishes to come to New York to demand additional cheap hydropower or other state financial assistance. North Carolina economic development officials were too smart and experienced to make such rookie mistakes.
Worse, as reported by Jim Heaney in The Buffalo News, is that despite Kessel’s claims to the contrary, data centers, which are voracious consumers of electricity to power large and numerous data servers, don’t create tech clusters. Data centers for companies like Google, Yahoo!, E-bay and other consumers of cheap power are usually stand-alone centers in remote areas supported by cheap, subsidized power. Heaney’s piece quoted a tech expert who refuted Kessel’s unsupported assertion that Yahoo! (which remember hasn’t agreed to move to New York) would be a magnet for other high tech businesses. As Heaney reported “Data centers usually don’t act as a catalyst to other high-tech development, however, said Rob Atkinson, president of the Information Technology Innovation Foundation, a technology policy think tank in Washington, D.C. ‘They tend to be relative stand-along entities,’ he said. ‘They don’t generally have a lot of spinoff.'”
Even worse is that Richie’s own words expose his innumeracy and why he shouldn’t be running anything involving public money. Richie is wrong, the “numbers” do matter; in fact, they matter more than these 125 jobs which are not yet in hand. Here’s why: State money is limited; NYPA funds are limited. God knows that the ability of State taxpayers to fund Kessel’s Follies is limited. Since State resources are finite, serious policymakers and decision makers are required to invest in projects that generate the greatest benefit to the State, in this case the greatest job creation and wealth creation upstate. The megawatts that Kessel blithely committed to a company that hasn’t itself committed to Western New York could have been used to cut NYPA rates generally, to support 1,000 jobs somewhere in upstate New York or in some other smart, accretive, wealth-creating manner. Heaney analyzed the cost of the possible Yahoo! deal and concluded that it is one of the richest ever offered by NYPA. In fact, Richie “Numbers Don’t Matter” Kessel has offered Yahoo! over $800,000 in hydropower discounts for every $50,000 job created or four times the average NYPA subsidy in recent years. Thus, had Richie maintained that average, NYPA would have offered not 15 megawatts but only 3.75 MW and saved the rest for the next deal. But his primal impulse to get cheap and easy press coverage was irresistible and if the deal comes to pass NYPA and the State will pay the price for such waste for years to come.
Finally, history tells us that the next corporation looking for cheap NYPA hydropower will cite the Yahoo! precedent in its negotiations. For Richie has established a new floor for the grant of cheap hydropower, a floor that will last only until the next rent-seeker sweet talks Kessel. You see, the “numbers” mean a lot.