Turmoil At Empire State Development Revealed In State Comptroller’s Audit

By Mike Hudson;

State Comptroller Thomas DiNapoli’s scathing audit report of the Empire State Development Corp. reveals an agency in crisis, one all but unaccountable to the people of New York or anyone else.

Many here have long suspected that Empire State Development, headed up locally by former state assemblyman Sam Hoyt, and its’ subsidiary, USA Niagara Development Corp., run by former state assemblywoman Francine DelMonte, exist largely to benefit campaign contributors and provide jobs for political hacks.

In Niagara Falls, the agencies have been involved in such dubious projects as the Hamister hotel, Wonderfalls, the NCCC Culinary Institute, Gov. Andrew Cuomo’s scandal plagued Buffalo Billion initative  and Mayor Paul Dyster’s massively overbuilt North End train station.

DiNapoli’s audit found that Empire State Development often does not bother to check whether projections of jobs created in various projects have been met, blasted the agency for failing to meet reporting requirements after handing out tax credits, low interest loans and outright grants like candy at Halloween, and charged that the agency has become less transparent and accountable with each passing year.

“Too often Empire State Development Corporation is either late or not reporting on the results of economic development programs,” DiNapoli said in a statement.

“We need better reporting to ensure transparency in economic development spending and to promote an informed analysis on the return of the investments state taxpayers make in these programs,” he added.

Under various state laws and regulations, ESD is mandated to report on the outcomes of many of the programs it supervises. Reporting requirements for specific programs vary and some of the requirements are specified in the legislation that established each program.

Reporting requirements for specific programs vary and some of the requirements are specified in the legislation that established each program.

Instead, auditors found:

  • Empire State Development failed to produce many of the statutorily-required performance and outcome reports that were due between April 2012 and September 2016. Auditors found 27 of 57 of general outcome reports, or 47 percent, were not finished.
  • 17 programs requiring independently prepared evaluations were not evaluated; and
  • 93 of 152 program-specific reports, or 61 percent, were not completed.

In most cases, auditors were not provided an explanation by Empire State officials for why they had not completed required reports. Auditors also had difficulty obtaining information and feedback from uncooperative agency officials during fieldwork.

Auditors found that the required general summary reports, which are supposed to account for all programs, actually accounted for less than half of the programs that provide financial assistance to participants. For example, 12 programs with appropriations during the period totaling over $500 million were not reported on at all.

For the reports Empire State Development prepared, auditors often could not determine whether they were done on time because there was no evidence when they were published. For 27 reports with evidence of when they were completed, auditors found that generally the agency submitted them late.

Among DiNapoli’s recommendations:

  • The agency develop and adhere to procedures for meeting statutory outcome reporting requirements;
  • Review information contained in summary outcome reports to ensure all active programs are included;
  • Ensure that all existing subsidiary corporations meet Public Authority Law reporting requirements; and
  • Ensure required reports are issued in a timely manner to provide decision makers with relevant information to evaluate the various economic development programs.

Empire State Development spokesman Jason Conwall said agency officials mostly disagreed with the audit’s findings. Officials did say they are adopting new controls to make sure they comply with reporting requirements.

“This report is yet another example of a politically motivated ‘independent audit’ that cherry-picks information and profoundly misrepresents our efforts,” Conwall said in a statement. “

“While this might be a convenient way to distract from what the comptroller has not done to clean up his own house following a massive fraud within the $178 billion state pension system, we encourage OSC to be more objective in their review of our efforts,” he added.

Despite the massive amounts of taxpayer’s money spent by Empire State Development and USA Niagara over the past 17 years, Niagara Falls still wallows in poverty and few here — aside from those who actually work for the agencies — would say they owe whatever jobs they have to the agencies.

DiNapoli has always been known as a straight shooter, and — to paraphrase Shakespeare — we think Jason Conwall doth protest too much.


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