AN OPEN LETTER TO NEW YORK POWER AUTHORITY TRUSTEES

Street Corner Conservative respectfully requests that the NYPA Board of Trustees review the following issues relating to what appears to be abuse of State FOIL law based on much delayed and recently released FOIL request information:

1)  Showing Love to Long Island entities. In January, 2011—five months after the request, the NYPA Corporate Secretary responded to a August 22, 2010 FOIL requesting among other items, “information and records as to contributions and payments to not-for-profit entities from NYPA or any subsidiary or affiliate including purchase of tickets or sponsorships to events conducted by any such not-for-profit for the period January 1, 2009 through and including July 31, 2010.”

The recipient list certified by the Corporate Secretary included approximately 187 not-for-profit entities with contributions totaling approximately $808,289.  A significant number of recipients were Long Island entities including Mr. Kessel’s hometown Merrick Chamber of Commerce and the neighboring Bellmore Chamber of Commerce.

On April 18, 2011, in response to FOIL requests dated February 20, 2011 and April 3, 2011, the NYPA Corporate Secretary, included a revised list of contributions for the period January 1, 2009-July 31, 2010.

The revised list contained the following contributions not listed on the original list released in January, 2011: 

Research Foundation of SUNY Stony Brook

$500,000

Stony Brook Foundation

50,000

N.Y.S. Energy Research & Development Authority

486,124

 The revised contributions for the period January 1, 2009-July 31, 2010 totaled $1,844,413.  Of the amounts omitted from the prior list, at least half and perhaps 100% went to Long Island recipients.  Why?

• Who is responsible for the omissions?  Was that person ordered by the NYPA CEO or members of his cohort to violate the law and suppress information embarrassing to the NYPA CEO?
• Was any staff memo ordered to omit the contributions?  If so, who gave the order?
• Should the deliberate withholding of information from a FOIL request, a violation of State law, be ignored?
• If there are violations, will proper authorities be notified?
• Were the three omitted contributions totaling $1,036,124 approved by the board?  Were the hundreds of thousands of dollars of other donations approved by the board?
• If not, should they have been approved by the board?
• What was the purpose of the $486,124 contribution to the N.Y.S. Energy Research Development Authority?  Was it a vehicle to fund additional money to Long Island entities favored by the CEO?
• The Long Island Pine Barrens, which honored Mr. Kessel and Governor Paterson at their 2010 gala dinner, received from NYPA $29,850 in contribution/grants.  Because Mr. Kessel was honored, was this an appropriate gift?  Did the board approve this gift?  Was it an appropriate use of public money for NYPA to pay the Pine Barrens entity tens of thousands of dollars for Kessel to appear on public access TV programs unwatched by millions of people and to appear in the Pine Barrens newsletter?  Is such an expenditure of money consistent with NYPA’s marketing plan?
• According to NYPA FOIL released contribution lists covering the period January 1, 2009 to March 31, 2011, NYPA contributions/grants to not-for-profits totaled approximately $2,271,000.  Contributions to Nassau and Suffolk County not-for-profits totaled $663,931 or 29% of total gifts.  If the NYPA grant to NYS Energy Research and Dev. Authority of $486,124 is added to Long Island’s gift list, total contributions for the period would be $1,150,055 or 50.6% of total NYPA gifts.
• Since NYPA’s total portion of electrical power generated on Long Island is less than 5%, what is the possible business justification for NYPA allocating anywhere from 29% to 50% of its not-for-profits contributions to Long Island?  Is it fair for upstate ratepayers to contribute to Long Island not-for-profits favored by the CEO?
• Was the board aware of the amount of contributions to Long Island not-for-profits?  If so, did the board approve these contributions?
• There are numerous dubious contributions that appear to be unrelated to NYPA’s mission (i.e., West Side Cultural Center – $10,000).  Why were these dubious contributions permitted?

2)  Health Insurance. Did Kessel violate State law as set forth in letters from at least two Attorneys General of the State?  The response to the FOIL request released on April 18, 2011 suggests that a former NYPA trustee did receive free health care benefits paid for by NYPA.  According to the Attorney General, it is illegal to give health care benefits to N.Y. Agency board members.  Who authorized the NYPA trustee to receive this illegal benefit?  Has the Inspector General’s office been notified of this violation?

I appreciate your consideration of these serious matters. I understand how unpleasant it must be to spend your time cleaning up the mess left by your soon to be former CEO.

The following appears in the  May 6-12, 2011 issue of the Long Island Business News:

A month ago former Gov. George Pataki hosted a “secret” dinner with his few remaining loyalists to discuss his presidential prospects. To make sure everyone in the political world learned of the gathering, the “secret” was leaked to the New York Post, whose editors had the good sense to treat it merely as a Page 6 gossip piece. The result: not a ripple on the political Richter scale.

On April 22, Pataki’s PR flacks earned their keep by placing a Page 1 story in The Wall Street Journal’s “Greater New York” section titled “Pataki Enters Debate over National Debt.” Pataki announced he is forming yet another advocacy group called No American Debt dedicated to pressuring GOP presidential candidates to tackle the national debt.

Expect No American Debt to have as much impact on the national political conversation as the Paul Revere advocacy group he headed in 2010 – none. As many political wags have noted, the primary purpose for Pataki raising money for these causes is to help defray travel and dining costs and to retain his long-time political consulting firm, Mercury Public Affairs.

When asked why he is devoting his energies to the debt issue, Pataki replied that the national debt “is just a looming disaster forAmerica, for my kids, for the next generation of Americans.” Too bad Pataki did not consider the debt burdens on future taxpayers during his 12 years as New York’s governor.

Here are the facts:

During Pataki’s tenure, the state’s debt almost doubled to over $50 billion. This caused annual debt service payments to be one of the state’s fastest-growing budget expenditures. Debt service payments, which stood at $2.5 billion in fiscal 1994-1995, had climbed to $4.3 billion by 2006 and were projected to be $6.4 billion by 2011. “One reason that state debt … continued to rise under Mr. Pataki,” reported The New York Times, “is that his administration has not followed a common principle of paying for capital improvements – everything from maintaining roads to building college dormitories to buying railroad cars. The rule, followed by most states, is that in times of plenty, government pays cash for capital needs, and relies mostly on borrowing in hard times.”

To make matters worse, only half of the new debt was actually dedicated to capital projects. The rest was used for one-shot “noncapital” assets and to fund state budget deficits. Even during the boom years when the state enjoyed record surpluses, Pataki paid for spending schemes with borrowed money.

Reviewing this Red Sea of debt, a New York Observer editorial remarked: “Mr. Pataki may have gotten himself re-elected twice by ignoring reality and throwing money at voters, but he is bound to leave a legacy as a fiscal dunce, a legacy that will surely supersede his desire to be known as a tax-cutting governor with a case to be made for higher office.”

When the Journal asked Pataki aides to explain New York’s debt explosion between 1995 and 2006, they replied Pataki “kept state debt in line with the rate of inflation.” Wrong! According to the New York State Division of the Budget, inflation during the Pataki era was up only 39 percent. However, state-funded debt, which grew from $28 billion to $51 billion during that period, was actually up a whopping 82 percent – over twice the inflation rate.

Pataki and his hired minions governed by press release and now they are trying to rewrite history via press release. The fact is that by abandoning his professed conservative principles, Pataki did enormous fiscal and economic damage to his state. And all the Orwellian new-speak from his flacks will not change the facts.

The following appears in the April 22-28, 2011 issue of the Long Island Business News:

As a Conservative, I did not have high expectations that the final budget hammered out in Albany by the “three men in the room” (the governor, Assembly speaker and Senate majority leader) would come to terms with the state’s fiscal plight. Because I’ve witnessed so many pols who promised fiscal reform sell taxpayers down the river, I can’t help being cynical.

Take Gov. George Pataki, whom I enthusiastically supported in 1994.

In Pataki’s first term he engineered significant reductions in spending and unprecedented tax cuts. These actions contributed to New York’s economic rebound in the 1990s.

Unfortunately, the will to permanently change Albany’s tax-and-spend mentality dissipated in 1997 as Pataki and his staff concluded betraying Conservatives and the fiscal responsibility entrusted to him in 1994 was OK in order to hold onto power.

This attitude, plus Pataki’s increasingly disengaged, uninterested approach to governing, led to the discarding of his pledges to cut Medicaid spending, to avoid one-shot fiscal gimmicks, to stop back-door borrowing, to impose no new taxes or fees, and so on.

Pataki’s lackadaisical governing style also encouraged the Legislature to thumb its nose at him. The Legislature added billions to his budgets, overrode his vetoes and imposed on New Yorkers the biggest single tax hike in the state’s history. The size of the state budget during his tenure increased 83 percent – 2.12 times the inflation rate – and is a big cause of the fiscal mess the state faces today.

In the Spitzer-Paterson years, the spending spree continued. Expenditures swelled over three times the rate of inflation.

Enter Andrew Cuomo who promised in his new New York agenda to get the state’s fiscal house in order without raising taxes and fees, or issuing long-term debt.

Conservatives were floored when Cuomo unveiled on Feb. 1 a budget that kept his pledges and eliminated a projected $10 billion deficit. But the question skeptical Conservatives throughout the state asked one another was, Will Cuomo blink? Will he surrender to Speaker Sheldon Silver and his tax-happy conference to get a budget passed on time?

To our surprise, Cuomo’s hard-nosed negotiating and his threat to use his immense executive powers to the fullest if there was no budget on April 1 – including a “take it or leave it” one-week budget extender that would include his full-year cuts – prevailed.

The governor’s 2011-2012 budget deal includes real spending cuts of about 2 percent ($3.5 billion); caps on Medicaid and education spending, which were statutorily slated to increase 13 percent, at 4 percent; and no tax or fee increases. Also, by closing six prisons and cutting and consolidating agencies, the govenor will reduce their operating costs by 20 percent.

Cuomo didn’t get everything he wanted. He gave up the $250,000 cap on malpractice suits to Silver and threw Sen. Dean Skelos a bone by restoring $250 million in education funding. Overall, the deal complied with the Ronald Reagan negotiating rule of settling for at least 80 percent of the loaf.

Despite its imperfections, enacting the first flat budget in 15 years in a state as politically “blue” as New York is a remarkable achievement and should be applauded by all Conservatives. Cuomo obviously wants to distinguish himself from typical tax-and-spend Democrats like the governor of Illinois, who increased his state’s income tax by 60 percent to balance his budget.

Since taking office in January, Cuomo has proven he possess excellent political skills. New York Conservatives now hope the governor’s skills to manage the implementation of his fiscal blueprint are just as sharp. There may be hope for the Empire State after all.

THE KESSEL MEDIA BLACK OUT

At a Western New York event on Wednesday, April 13, 2011, Governor Cuomo signed into law one of his leading energy initiatives, “Recharge New York” legislation which passed with bipartisan support and will reduce the utility bills of companies, hospitals and other not-for-profits.  According to Newsday, “The new program cuts an employer’s bill over the life of the seven-year contract with the state-run New York Power Authority.”

Since Kessel considered “Recharge New York” a pet project, his absence from the bill-signing event was most conspicuous.  In fact, Kessel and NYPA were not even mentioned or quoted in the governor’s press release.  All calls to NYPA’s press office were directed to the governor’s communications office.  One Street Corner correspondent reported that Kessel’s self-aggrandizement “Recharge New York” extravaganza was shelved.

A review of the governor’s website reveals no mention of Kessel’s name in any press release this year although other agency heads and commissioners are named in various announcements.  This Kessel media blackout was in effect even before word of the state Inspector General’s investigation of Richie was publicly reported.

At the last NYPA public board meeting on April 4, 2011, uncharacter-istically, Kessel did not say a word but listened chastened to new trustee John Dyson and the other NYPA trustees and NYPA senior staff discuss projects.  Following the meeting, Richie declined to answer media questions.  This behavior is bizarre for a person who has devoted his public career to governing by press release, blabbing to reporters and creating and attending public events where he can be the center of attention.

Finally, NYPA’s April 4 announcement of hydropower allocations to companies around the state, including Yahoo!, quoted Chairman Townsend and Trustee Dyson but not Kessel.  Shockingly, there was no NYPA press release on the changes approved to the controversial HTP project that Kessel has advocated for and of which the NYPA board required major reworking at the April 4 board meeting.  Things sure have changed recently at NYPA.  But there is one break in the media blackout.  Typically, Richie’s blog’s latest post is dated March 14—from Stony Brook, Long Island.

Here are some questions Street Corner has received from its correspondents:

Has Kessel been muzzled by the NYPA board?

Has Kessel been removed as a negotiator on NYPA deals?

Can he run NYPA now that he has been so publicly discredited?

Is Kessel too busy answering Inspector General inquiries to attend public events?

Is Kessel too busy emptying out his office and updating his resume?

Will Kessel’s government service, which has been marked by the wasteful expenditure of billions of dollars, soon end not with a bang but with a whimper?

Street Corner Conservative invites NYPA employees to post why they believe the once omni-present Kessel has become a recluse.

The following appears in the  April 8-14, 2011 issue of the Long Island Business News:

Assembly Speaker Sheldon Silver is revving up his minions to battle for yet another renewal of that World War II relic – rent control.

In September 1943, the federal government’s Office of Price Administration brought New York under wartime rent controls.  This interference in the real estate market, Washington promised, was to be only a temporary measure.

In 1950 federal controls were lifted, but New York – unlike all other major cities – kept the controls in place.  “As a result,” housing expert William Tucker reported, “[New York] City essentially missed the postwar boom in housing construction.  [By 1990] more than 60 percent of New York’s housing [was] more than 60 years old.”

Not only did rent control discourage entrepreneurs from investing in new multifamily housing projects, it also encouraged landlords to defer maintenance and led many to just walk away from unprofitable properties. In the 1970s, for instance, over 250,000 apartments were abandoned in New York City.  Tucker observed that “in no other city except New York has housing been lost during a housing shortage.”  By 1993, the largest owner of rundown apartment buildings was the City of New York.

This system also discouraged people from moving because they were reluctant to give up their below-market rents.  In March 1990, The Washington Times reported that the poor suffer under this program, while wealthy people take advantage of these “anti-housing regulations.”

In 1997 when there was an opportunity to abolish the control law or to significantly modify it, Gov. George Pataki – who had pledged not to give in to political pressure – disappointed Conservatives when he surrendered to leftist foes.

Commenting on the Pataki capitulation, the Daily News concluded, “the tenant side, championed by Assembly Speaker Sheldon Silver, beat back all but a few of the landlords’ demands for change.  The legislation left largely intact the protections New Yorkers have relied on since 1943.”

Since that time, the state Legislature has routinely extended rent control laws without a fuss and as a result, the government still regulates more than 1.1 million apartments in New York City and thousands of units in Nassau County including Great Neck, Long Beach and Glen Cove.

With the present law set to expire on June 15, there is talk of eliminating the vacancy decontrol mechanism which kicks in when rent exceeds $2,000 a month.

Back in 1993, liberals signed on to the $2,000 decontrol clause – which has liberated over 100,000 city apartments during the past 18 years – because they figured it would only affect rich people.  However, with that monthly nut now common to tenants across the economic spectrum, they have changed their tune.

Eliminating or increasing the ceiling will harm both tenants and the real estate industry.  At the present time, rent control regulations cause approximately 13 percent of regulated apartment buildings to incur annual financial losses.  More stringent guidelines would only exacerbate this situation and force additional cutbacks in tenant services and building maintenance.

It’s time to liberate New York housing. “In reality,” the Manhattan Institute’s Nicole Gelinas has observed, “the best thing for the vast majority of tenants would be an accelerated end to all price controls. … The end of rent laws would increase supply, pulling down prices on today’s nonregulated units.” The end of rent control would also lead to a surge in investment in housing at a time when construction labor unemployment rates are high.

Senate Majority Leader Dean Skelos has been telling Conservatives that he and his GOP conference have “found their way” and will no longer pursue Democratic-lite policies.

If Republican senators wish to be true to their word, they now have an incredible opportunity to strike a blow for freedom and to promote new investments in rental housing by either letting the rent control laws sunset or insisting on genuine free market reforms.