What's happening
This bill prohibits New York state public authorities from creating subsidiary corporations without prior legislative approval.
Why it matters
Limits unchecked expansion and “shadow” operations. By requiring legislative approval for any new subsidiaries, the bill closes a loophole that allowed public authorities to create additional entities with less oversight, reducing the risk of hidden debts or off-the-books projects.
Strengthens legislative oversight and transparency. The change ensures that the creation of any new public authority subsidiaries must be debated and approved in public by elected officials, rather than left to internal decisions, making the process more transparent and accountable.
Removes broad exceptions for subsidiary creation. The bill deletes prior allowances that let authorities form subsidiaries for liability or legal reasons, meaning even in those cases, legislative approval is now needed, increasing scrutiny on every new entity.
Potentially slows down certain public projects. Because each new subsidiary would now require separate legislative action, the process for authorities to undertake complex or large-scale projects (which sometimes use subsidiaries for practical or legal reasons) may become slower or more complicated.
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Who cares
Headline styles
Legislature Must Approve Subsidiaries
Plain English, a few words. Used as the page title.
Sponsors
1 Co-sponsor
History
- Referred to corporations, authorities and commissions
- Returned to senate
- Died in assembly
- Referred to corporations, authorities and commissions
- Delivered to assembly
- Passed senateVote 62–0
- Advanced to third reading
- 2nd report cal.
- 1st report cal.777
- Referred to corporations, authorities and commissions
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Legislature Must Approve Subsidiaries
In Assembly Committee · Corporations, Authorities And Commissions · Sponsor William Colton
Full text
1 pageUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
3090
2019-2020 Regular Sessions
IN SENATE
February 1, 2019
Introduced by Sen. RANZENHOFER -- read twice and ordered printed, and when printed to be committed to the Committee on Corporations, Authorities and Commissions
AN ACT to amend the public authorities law, in relation to prohibiting the formation of a subsidiary of a public authority without prior permission of the legislature
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subdivision 1 of section 2827-a of the public authorities law, as added by chapter 506 of the laws of 2009, is amended to read as follows:
1. Notwithstanding any law to the contrary, no state authority shall hereafter have the power to organize any subsidiary corporation unless the legislature shall have enacted a law granting such state authority such power for the organization of a specific corporation[, provided, however, that a state authority may organize a subsidiary corporation pursuant to the following requirements:
a. the purpose for which the subsidiary corporation shall be organized shall be for a project or projects which the state authority has the power to pursue pursuant to its corporate purposes;
b. the primary reason for which the subsidiary corporation shall be organized shall be to limit the potential liability impact of the subsidiary's project or projects on the authority or because state or federal law requires that the purpose of a subsidiary be undertaken through a specific corporate structure; and
c. the]. Any subsidiary corporation shall make the reports and other disclosures as are required of state authorities, unless the subsidiary corporation's operations and finances are consolidated with those of the authority of which it is a subsidiary.
§ 2. This act shall take effect immediately.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD01731-01-9
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the public authorities law, in relation to prohibiting the formation of a subsidiary of a public authority without prior permission of the legislature
Purpose or general idea of bill
This bill seeks to prohibit the formation of a subsidiary of a public authority or public benefit corporation without prior permission of the legislature.
Summary of specific provisions
This bill would amend section 2827-a of the Public Authorities Law, to eliminate the exception to the general prohibition against public authorities establishing any new subsidiary corporation without prior statutory authority.
Read the full memo (741 words)
Justification
Public Authorities, the hybrid of a government agency and a private corporation, were established to perform specific, focused missions on behalf of the people of the state of New York. As finance, contracting and operating entities, they have the flexibility and power to accom- plish great tasks. From bridge, edifice, infrastructure, school and highway building, to the operation of transportation systems, convention and sports centers, economic development programs and public health and infrastructure facilities, these entities perform an indispensable role and dramatically enhance the quality of the daily lives of every New Yorker.
Due to their flexibility and efficiency of operation, their design for speed, as well as their focused mission and specific purpose, New York's public authorities have often been tasked with performing the most chal- lenging, difficult and controversial of state projects. From the time they were used by Robert Moses to build the great bridges, buildings, parks and edifices of early 20th century New York, to the present day, there have been many questions and concerns raised regarding their role and their lack of accountability. Without them, however, so many of the things that make New York the Empire State, from our Thruway, to our State University campuses, to our New York City Transit systems, to the site for the 1980 Olympics where America's famous Miracle on Ice occurred, to the very housing units millions of New Yorkers now call home, simply would not exist today.
With the immense challenges and vast revenue streams which our public authorities have been asked to oversee, there have been many amendments to the Public Authorities Law to improve public accountability without compromising their effectiveness or mission. These reforms include the establishment of the Public Authorities Control Board as well as the modernization of the state statutes governing their debt issuance, capi- tal expenditures, contracting procedures, and reporting requirements. As we step firmly into the realm of the new 21st century, we have again witnessed some problems with certain operations within select public authorities. It is therefore incumbent upon the Legislature to once again address these issues with the same determination, and in the same manner, as to promote increased accountability without diminishing the public benefit which these governmentally-created corporations provide.
Financial, budget and accounting questions involving billions of dollars of public monies, require reform. Uncertainty over the fairness and propriety of procurement contract awards must be overcome to again regain the public's confidence and trust. Accountability and opera- tional soundness must be clearly demonstrated by these entities through public disclosure and access, with the ultimate oversight, resting with the people's elected representatives in the State Senate and Assembly.
This bill seeks to accomplish an important and major reform by prohibit- ing the formation of a subsidiary of a public authority without prior permission of the Legislature. Several public authorities have gotten themselves into trouble due to lack of oversight and an express set of guidelines of their subsidiaries.
This bill seeks to correct this situation, and remain true to the spirit of § 5 of Article 10 of the State Constitution which requires that only the State Legislature may create a public authority. The formation of a subsidiary by a public authority which itself must be constitutionally created by the Legislature, should not be allowed to be created by the parent public authority. To permit otherwise not only violates the spir- it of the constitution, but also permits a questionable delegation and abrogation of state legislative authority.
Prior legislative history
2005-06: S.5102-A/A.6757 - Vetoed #369 2007: S.3847-A/A.1343-A -- PASSED SENATE/Corporations 2008: S.3847-A/A.1343-A -- PASSED SENATE/Ways and Means 2009-10: S.3919/A.4298 -- CORPORATIONS/Corporations 2011: S.4690-A/A.3228-A -RULES/Corporations 2012: S.4690-A/A.3228-A -- PASSED SENATE/Corporations 2013-14: S.1443/A.1599 -- PASSED SENATE/Corporations 2015: S.2054 - PASSED SENATE/Corporations 2016: S .6591/A.4729 - CORPORATIONS/Corporations 2017: S.4280/A.7049 - PASSED SENATE/Corporations 2018: S.4280/A.7049 - RULES/Corporations
Fiscal implications
None noted.
Effective date
Immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.