Local agencies violate law: state

JOHNSTOWN – Three local economic development agencies were cited by the state Authorities Budget Office recently as being “chronically out of compliance” with state law.

They are the Fulton County Center for Regional Growth, Fulton County Economic Development Corp. – a subsidiary of the CRG – and the Johnstown Economic Development Corp. They were cited in the ABO’s annual report for 2013, although the type of enforcement against the agencies wasn’t specified.

“Although the process the ABO has followed to encourage compliance has worked in some cases, the ABO needs stronger enforcement tools to induce recalcitrant public authorities into compliance,” the report stated.

Local officials say they are in the process of dissolving the Fulton County EDC and the Johnstown EDC anyway.

“The CRG is working very diligently on closing the EDC and the CIC [Crossroads Incubator Corp.],” CRG President and Chief Executive Officer Michael Reese said today. “I’m confident both of those agencies will be shut down by the end of the year.”

Many of the problems the ABO has had with the Fulton County CRG and its local loan-issuing agency, the EDC, have been over a dispute over whether the local agencies are public. The ABO feels the CRG and EDC are public, the CRG maintains it and the EDC are private agencies.

In light of the ABO’s findings last week, Reese said the CRG will have to “continue to work and illustrate” to the ABO it is a “private, non-profit organization.”

The ABO last week issued its 2013 annual report on the activities of 568 state and local authorities in New York state. The ABO was created as an independent state office pursuant to the 2009 Public Authorities Reform Act and its mission is to “make public authorities more accountable and transparent,” a news release issued last week indicated.

The annual report cited 151 authorities as non-compliant with the public accountability, transparency and disclosure requirements of state law. These authorities are subject to additional enforcement action should they remain delinquent filing financial and operating information with the ABO.

For 2013, the ABO officially censured the boards of directors of 13 authorities – including the three local agencies – for “chronic failure” to meet their corporate governance responsibilities.

The ABO’s disputes with local economic development agencies have been ongoing for the last several years. Much of it has been since the 2010 scandal involving Jeff Bray, the EDC’s former executive vice president, and Peter Sciocchetti, the former executive vice president of the Crossroads Incubator Corp. The pair received over $3 million in bonuses their boards said were not approved by them.

The CRG last fall dropped a civil lawsuit against the two fired executives.

Last October, the ABO announced it was censuring boards of directors of 13 public authorities, including those for CRG and EDC for “persistent failure to comply with state law.”

The city of Johnstown last November took action to assume the assets of the Johnstown EDC, which is being dissolved. City Treasurer Michael Gifford couldn’t be reached this morning for comment.

The annual report news release issued last week by the ABO indicated operating expenses of state authorities for 2013 totaled $30.3 billion, an increase of 17.6 percent from 2009. State authority operating expenses increased approximately $1.5 billion over 2012. All this happened while adjusted staffing levels at state authorities declined by more than 2,800 staff in the last five years, the release said.

Michael Anich covers Johnstown and Fulton County news. He can be reached at manich@leaderherald.com.