NEWS FROM THE OFFICE OF ULSTER COUNTY COMPTROLLER ELLIOTT AUERBACH ELLIOTT AUERBACH PHONE: 845: 340-3529 COUNTY COMPTROLLER ‘eaue@eoulster,ay.us 244 FAIR STREET vw co.lser ny. asresoureefeomptller KINGSTON, NEW YORK 12401 INDEPENDENCE FOR GOLDEN HILL LDC DIRECTORS Comptroller Urges Legislature and Executive to Withhold Control and Influence FOR IMMEDIATE RELEASE KINGSTON, NY (January 09, 2012)... Ulster County Comptroller Eliott Auerbach is urging the County Legislature and the County Executive to ensure that the members they appoint to the board of the Golden Hill Local Development Corporation (GHLDC) are free of direct governmental control and political influence. “Directors appointed to the GHLDC need to exercise independent judgment in their fiduciary capacity to the organization they will direct,” said Auerbach. Noting the challenges of trust that beset the creation of the GHLDC, Auerbach said “it is vital to the success of this enterprise that its board of directors be free of real or perceived conflicts of interest.” Ina letter to the Chair of the County Legislature and the County Executive, Auerbach explained that the appointment of elected legislators and staff members to the board of directors creates complications. ‘Auerbach said “consider the dilemma of allegiance when the swom obligation of a legislator is to act in the best interests of Ulster County comes into conflict with the mission and authority of the GHLDC. The legislator has a fiduciary duty to both organizations. Which duty should prevail?” ‘Auerbach explained the same dilemma of independence applies to appointments by the Executive of members of his staff, “when the professional career and personal livelinood of the staff member comes into conflict with the best interests of GHLDC whose trust does the staff member favor?” ‘As recommended by the NYS Authorities Budget Office (ABO), local development corporation board members should be free of direct governmental control and political influence. To satisfy the statutory requirements of the 2009 Public Authorities Reform Act, the ABO is directing all state and local public authorities to require their board members to sign an Acknowledgement of Fiduciary Duties and Responsibilities stating that the board member understands it is his or her obligation to act in the best of interests of the Authority and the People of the State of New York whom the Authority serves. ‘Auerbach cited Legislature's appointments to the Commission on Reapportionment as an effective example of how to select individuals to appoint to the board of the GHLDC. Eligible appointees were not public officials or employees and therefore were not confronted with a duality of purpose and confidence. The Commission's work was a model for transparency and commitment to its mission. Comptroller ‘Auerbach has previously called upon the County Legislature to establish a vigorous governance structure to assure the integrity and independence of the GHLDC board of directors. Hee ‘The mission ofthe Utster County Comptrote's Ofc is fo serve as an independent agency cf the people and to protect the pubic interest by rmoniterin County govamment and to assess and report on the degree fo which ts operation is economical, ecient and its financial condition sound.COUNTY OF ULSTER PO BOX 1800 KINGSTON, NEW YORK 12402 Office of the Comptroller (845) 340-3525, (845) 340-3697-Fax Elliott Auerbach Comptrolier aes = Laura F. Walls Deputy Compiralter January 9, 2012 Terry L. Bernardo, Chair Ulster County Legislature 244 Fair Street Kingston, NY 12401 Michael P. Hein, County Executive Ulster County 244 Fair Street Kingston, NY 12401 Dear Ms. Bernardo and Mr. Hein: | write in follow-up to my letter of November 28, 2011 wherein | offered recommendations on ‘making the Golden Hill Local Development Corporation (GHLDC) a model. Specifically | reference item B, Establish a vigorous governance structure to assure the integrity and independence of the LDC board of directors. ‘As recommended by the NYS Authorities Budget Office (ABO), LDC board members should be {free of direct governmental control and political influence; “they are intended to function as independent public corporations, governed by boards of directors and free of direct governmental control and political influence. Board members have a fiduciary duty to act in good faith in accordance with the mission and interests of the authority and the general public, to avoid conflicts of interest or the appearance of such conflicts, and to exercise independent judgment.” Legislative Resolution 287-11 which was defeated at the December 15, 2011 meeting of the Legislature sought to appoint elected members of the Legislature to the GHLDC Board of Directors. Such appointments can place legislators in a difficut and potentially irreconcilable Position of having to choose between the fiduciary duty to the authority and the public oath as a government official, At the Executive level, appointing individuals who serve at the pleasure of the Executive would likewise face potentially irreconcilable positions of having to choose between their jobs and the fiduciary duty to the authority, * Annual Report on Public Authorities in New York State, July 2, 2011, pagel. NYS Authorities Budget Office.January 9, 2012 Page two of two As a result, to satisfy the statutory requirements of the 2009 Public Authorities Reform Act, the ABO is directing all state and local public authorities to require their board members to sign the attached “Acknowledgement of Fiduciary Duties and Responsibilities.” This Acknowledgement states that the board member understands it is their obligation to act in the best of interests of the Authority and the People of the State of New York whom the Authority serves. The reforms of the Public Authorities Reform Acts of 2005 and 2009 make clear that individual board members hold in trust on behalf of others the duty to ensure the mission of the authority is achieved. Consider the dilemma of allegiance when the sworn obligation of a legislator is to act in the best interests of Ulster County and his or her constituents, or when the professional career and personal livelihood of staff members come into conflict with the best interests of GHLDC: no ‘one wins and the GHLDC is not a model of success. An effective example of how to select individuals to appoint to the board of the GHLDC, consider the Legislature's appointments to the Commission on Reapportionment. Eligible appointees were not public officials or employees and therefore were not confronted with a duality of purpose and confidence. The Commission's work was a model for transparency and commitment to its mission. Please give thoughtful consideration to the appointments you make to the GHLDC board of directors to ensure a vigorous governance structure with integrity and independence. Respectfully yours, Comptroller attachment cc: County Legislators