Empire State Development Corporation
Encyclopedia
New York State public benefit corporations
New York State public benefit corporations and authorities operate like quasi-private corporations, with boards of directors appointed by elected officials. Public authorities share characteristics with government agencies, but they are exempt from many state and local regulations...
of the state of New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
that has financed and operated several ambitious state projects by issuing tax exempt bonds.
Overview
The New York State Urban Development Corporation was conceived in 1968 primarily to build state-subsidized housing projects to stem the tide of urban decayUrban decay
Urban decay is the process whereby a previously functioning city, or part of a city, falls into disrepair and decrepitude...
. As with all New York State public benefit corporations
New York State public benefit corporations
New York State public benefit corporations and authorities operate like quasi-private corporations, with boards of directors appointed by elected officials. Public authorities share characteristics with government agencies, but they are exempt from many state and local regulations...
it is exempt from many of the restrictions that apply to regular government agencies and can issue bonds without voter referendum approval bypassing the NY's State Constitution limits, and it has the power of eminent domain
Eminent domain
Eminent domain , compulsory purchase , resumption/compulsory acquisition , or expropriation is an action of the state to seize a citizen's private property, expropriate property, or seize a citizen's rights in property with due monetary compensation, but without the owner's consent...
.
Virtually all state subsidized housing built since 1968 was financed through the corporation. After flirting with bankruptcy
Bankruptcy
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
in 1975 due to various housing project missteps its mission was refocused to finance other ambitious state projects and has been used frequently by governors to implement projects that circumvent formal Legislative or voter scrutiny. Among its projects was a doubling of the New York state prison system, improvements to Love Canal
Love Canal
Love Canal was a neighborhood in Niagara Falls, New York, located in the white collar LaSalle section of the city. It officially covers 36 square blocks in the far southeastern corner of the city, along 99th Street and Read Avenue...
, construction of the Jacob K. Javits Convention Center
Jacob K. Javits Convention Center
Jacob K. Javits Convention Center is a large convention center located on Eleventh Avenue, between 34th and 38th streets, on the West side of Manhattan in New York City. It was designed by architects I. M. Pei and partners. The revolutionary space frame structure was undertaken in 1979 and...
, revitalization of 42nd Street (Manhattan)
42nd Street (Manhattan)
42nd Street is a major crosstown street in the New York City borough of Manhattan, known for its theaters, especially near the intersection with Broadway at Times Square. It is also the name of the region of the theater district near that intersection...
, revitalization of Niagara Falls, New York
Niagara Falls, New York
Niagara Falls is a city in Niagara County, New York, United States. As of the 2010 census, the city had a total population of 50,193, down from the 55,593 recorded in the 2000 census. It is across the Niagara River from Niagara Falls, Ontario , both named after the famed Niagara Falls which they...
, construction of Battery Park City, construction of Roosevelt Island
Roosevelt Island
Roosevelt Island, known as Welfare Island from 1921 to 1973, and before that Blackwell's Island, is a narrow island in the East River of New York City. It lies between the island of Manhattan to its west and the borough of Queens to its east...
, planned construction of a new Pennsylvania Station
Pennsylvania Station (New York City)
Pennsylvania Station—commonly known as Penn Station—is the major intercity train station and a major commuter rail hub in New York City. It is one of the busiest rail stations in the world, and a hub for inbound and outbound railroad traffic in New York City. The New York City Subway system also...
, and planned development of Governors Island
Governors Island
Governors Island is a island in Upper New York Bay, approximately one-half mile from the southern tip of Manhattan Island and separated from Brooklyn by Buttermilk Channel. It is legally part of the borough of Manhattan in New York City...
.
Since the September 11, 2001 attacks
September 11, 2001 attacks
The September 11 attacks The September 11 attacks The September 11 attacks (also referred to as September 11, September 11th or 9/119/11 is pronounced "nine eleven". The slash is not part of the pronunciation...
, a subsidiary (Lower Manhattan Development Corporation
Lower Manhattan Development Corporation
The Lower Manhattan Development Corporation was formed in July 2002, after the September 11 attacks to plan the reconstruction of Lower Manhattan and distribute nearly $10 billion in federal funds aimed at rebuilding downtown Manhattan....
) was set up to coordinate rebuilding and distribution of billions of dollars in federal funds following the attack, as well as establishing the World Trade Center Memorial Foundation to build the memorial. It was responsible for distributing Liberty bonds that were used to rebuild Manhattan
Manhattan
Manhattan is the oldest and the most densely populated of the five boroughs of New York City. Located primarily on the island of Manhattan at the mouth of the Hudson River, the boundaries of the borough are identical to those of New York County, an original county of the state of New York...
.
Each subsidiary has its own board of directors.
In its early years the UDC was responsible for "the last significant program of publicly assisted housing in the United States". Its "Empire State" web pages now emphasize its role in providing services and incentives to promote the growth of the private sector in New York State's economy. Its current operations are far too diverse and complex to summarize concisely here. There were at least 107 subsidiaries of the UDC as of March 2006. Also in March 2006, the UDC reported outstanding debts of $6.5 billion, about half being for prison construction bonds.
History
The UDC was created in 1968 by the New York State Urban Development Corporation Act. At the time it was primarily aimed at urban renewal in New York City although its bonds were to be used state wide. State control over projects in the city from the start (and continues to) pose turf conflicts between the New York Mayor and New York Governor (including the fact that the state authority is immune to city zoning).In order to overcome all obstacles without delay, the UDC was created with (or soon was granted) an extraordinary and unprecedented combination of legal and economic powers. These included the ability (a) to finance its projects by issuing its own bonds (both taxable and tax-free); (b) to condemn land and seize property by eminent domain
Eminent domain
Eminent domain , compulsory purchase , resumption/compulsory acquisition , or expropriation is an action of the state to seize a citizen's private property, expropriate property, or seize a citizen's rights in property with due monetary compensation, but without the owner's consent...
; (c) to grant generous tax abatements to private property developments it sponsored or encouraged; and finally, (d) to unilaterally overrule local zoning
Zoning
Zoning is a device of land use planning used by local governments in most developed countries. The word is derived from the practice of designating permitted uses of land based on mapped zones which separate one set of land uses from another...
laws of cities and towns (which would otherwise require the UDC and its partners to petition for zoning variances, with the likelihood that these would be denied). All these powers are in the UDC's legal "DNA" and have grown stronger through favorable court decisions over time even while the Corporation's priorities have moved far from its original purpose.
While the UDC was to have ultimately big successes with such projects as Roosevelt Island
Roosevelt Island
Roosevelt Island, known as Welfare Island from 1921 to 1973, and before that Blackwell's Island, is a narrow island in the East River of New York City. It lies between the island of Manhattan to its west and the borough of Queens to its east...
and Battery Park City it was to encounter major problems in its inner city
Inner city
The inner city is the central area of a major city or metropolis. In the United States, Canada, United Kingdom and Ireland, the term is often applied to the lower-income residential districts in the city centre and nearby areas...
developments and its efforts to build minority low income housing in white middle-class neighborhoods.
Conversely inner city
Inner city
The inner city is the central area of a major city or metropolis. In the United States, Canada, United Kingdom and Ireland, the term is often applied to the lower-income residential districts in the city centre and nearby areas...
activists also complained that the projects sometimes damaged inner city neighborhoods. As an example, the UDC's construction of the Harlem State Office Building in 1969 aroused intense opposition from the neighborhood which wanted the resources applied in other ways. Ada Louise Huxtable
Ada Louise Huxtable
Ada Louise Huxtable is an architecture critic and writer on architecture. In 1970 she was awarded the first ever Pulitzer Prize for Criticism for "distinguished criticism during 1969."...
called the fight "Rockefeller's Vietnam".
In the first years of the UDC, its aim was to facilitate large-scale low-income housing
House
A house is a building or structure that has the ability to be occupied for dwelling by human beings or other creatures. The term house includes many kinds of different dwellings ranging from rudimentary huts of nomadic tribes to free standing individual structures...
developments in urban neighborhoods that had traditionally been white and middle-class. Many of the projects had devastating impacts on neighborhoods and resulted in white flight
White flight
White flight has been a term that originated in the United States, starting in the mid-20th century, and applied to the large-scale migration of whites of various European ancestries from racially mixed urban regions to more racially homogeneous suburban or exurban regions. It was first seen as...
and charges of reverse discrimination
Reverse discrimination
Reverse discrimination is a controversial term referring to discrimination against members of a dominant or majority group, including the city or state, or in favor of members of a minority or historically disadvantaged group such as African Americans being slaves. Groups may be defined in terms of...
.
Some of the inner city projects were unable to pay their bonds off and as a result UDC in 1975 toyed with bankruptcy and there were fears that it would bring New York State down with it. The finances were reorganized and the corporation assumed a less aggressive development stance. However "urban development" took on an adverse reputation and it was renamed in 1995 the Empire State Development Corporation.
The move away from a housing mission began in the late 1970s and early 1980s with such projects as the Jacob Javits Convention and improvements to the Apollo Theater
Apollo Theater
The Apollo Theater in New York City is one of the most famous, and older, music halls in the United States, and the most famous club associated almost exclusively with Black performers...
.
Mario Cuomo
Mario Cuomo
Mario Matthew Cuomo served as the 52nd Governor of New York from 1983 to 1994, and is the father of Andrew Cuomo, the current governor of New York.-Early life:...
was the first to begin ambitious use of it to get around official scrutiny for public projects. In 1981 voters voted against a $500 million bond issue for expansion of the state prison system to handle increased prison populations arising from the Rockefeller drug laws
Rockefeller drug laws
The Rockefeller Drug Laws is the term used to denote the statutes dealing with the sale and possession of "narcotic" drugs in the New York State Penal Law. The laws are named after Nelson Rockefeller, who was the state's governor at the time the laws were adopted...
. At the time New York had 32 adult prisons. Cuomo was to use the bonds to build another 38 prisons — most upstate.
George Pataki
George Pataki
George Elmer Pataki is an American politician who was the 53rd Governor of New York. A member of the Republican Party, Pataki served three consecutive four-year terms from January 1, 1995 until December 31, 2006.- Early life :...
used the corporation to process $20 billion in federal aid following the September 11 attacks to rebuild lower Manhattan and build a memorial. It remains to be seen whether the lack of public scrutiny on this has helped or hurt the development process.
An audit released in May 2006 by New York comptroller Alan Hevesi
Alan Hevesi
Alan G. Hevesi is a Democratic politician whoserved as a New York State Assemblyman from 1971 to 1993, as Comptroller of the City of New York from 1994 to 2001, and as State Comptroller for the State of New York from 2003 to 2006...
reported that the Corporation loses track of its subsidiaries. At the time the corporation reported 70 active subsidiaries but the audit showed there were 202 subsidiaries still on the books (98 of which were definitely inactive). The audit did not consider this a serious oversight but the corporation is moving to dissolve the inactive corporations.