!"# %&'( )*+*" ,-.

" &/ *0" )*+*" 1&23*'&44"'

1homas . ulnapoll
ulvlslon of SLaLe CovernmenL AccounLablllLy
8eporL 2013-S-23 !une 2014
5"+4 67*+*" 8&'9&4:&
!"# %&'( 8&#"' ;<*0&':*=
!"#$%&%!$
>:?:7:&@ &/ )*+*" A&?"'@2"@* ;..&<@*+B:4:*= #
6C".<D?" )<22+'=
8<'3&7"
1o deLermlne wheLher Lhe new ?ork ower AuLhorlLy has accounLed for all of lLs real esLaLe
holdlngs, deLermlned Lhe need Lo elLher hold or dlspose of Lhose properues, and dlsposed of
properLy on Lerms beneclal Lo Lhe SLaLe. 1he audlL covers from !anuary 2010 Lhrough !uly 2013.
E+.(F'&<@G
1he new ?ork ower AuLhorlLy (n?A) ls Lhe nauon's largesL sLaLe publlc power enuLy and a
leader ln supplylng Lhe SLaLe wlLh elecLrlcal power. ubllc AuLhorlues Law Secuon 2896 requlres
each auLhorlLy Lo malnLaln adequaLe lnvenLory conLrols for lLs properLy and reporL annually on all
properLy held. lL also requlres auLhorlues Lo deLermlne whlch properLy shall be dlsposed of and
Lransfer or dlspose of such properLy as prompLly as posslble for falr markeL value. n?A reporLs
LhaL, as of uecember 31, 2012, lL owned 48,941 acres of properLy assoclaLed wlLh 12 power
generaung pro[ecLs, along wlLh an admlnlsLrauve bulldlng ln WhlLe lalns and several permanenL
easemenLs.
H"= I:@G:@F7
- n?A dld noL lnclude all of lLs properLy ln Lhe reporLs lL submlLs Lo Lhe SLaLe and posLs on lLs
webslLe. lor example, n?A dld noL updaLe Lhe lnformauon sysLems used Lo accounL for lLs real
esLaLe lnvenLory umely. ln addluon, n?A has noL been conslsLenL ln how lL reporLs dlsposals
of real properLy. n?A does noL regularly revlew lLs real esLaLe poruollo Lo ldenufy properues
lL no longer needs, as requlred.
- n?A properLy wlLh a falr markeL value of more Lhan $13,000 was leased for less Lhan falr
markeL value wlLhouL noufylng Lhe Covernor and LeglslaLure, as Lhe Law requlres.
H"= 5".&22"@G+D&@7
- Lnsure LhaL lnformauon sysLems used Lo Lrack real esLaLe holdlngs are updaLed umely Lo reecL
changes when properLy ls acqulred or dlsposed.
- LvaluaLe Lhe conunued need for properLy owned and properLy leased from oLher enuues.
- noufy Lhe Covernor and Lhe LeglslaLure when properLy ls leased for less Lhan Lhe falr markeL
value and provlde Lhe [usucauon for such acuon.
,*0"' 5"4+*"G ;<G:*7J5"3&'*7 &/ K@*"'"7*
8ochesLer-Cenesee 8eglonal 1ransporLauon AuLhorlLy: 8eal LsLaLe oruollo (2012-S-90)
CaplLal ulsLrlcL 1ransporLauon AuLhorlLy: 8eal LsLaLe oruollo (2012-S-91)
!"#$%&%!$
>:?:7:&@ &/ )*+*" A&?"'@2"@* ;..&<@*+B:4:*= !
)*+*" &/ !"# %&'(
,-." &/ *0" )*+*" 1&23*'&44"'
>:?:7:&@ &/ )*+*" A&?"'@2"@* ;..&<@*+B:4:*=
!une 20, 2014
Mr. !ohn 8. koelmel
Chalrman
new ?ork ower AuLhorlLy
123 Maln SLreeL
WhlLe lalns, n? 10601-3170
Mr. Cll Culnones
resldenL and Chlef Lxecuuve Cmcer
new ?ork ower AuLhorlLy
123 Maln SLreeL
WhlLe lalns, n? 10601-3170
uear Mr. koelmel and Mr. Culnones:
1he Cmce of Lhe SLaLe CompLroller ls commlued Lo helplng SLaLe agencles, publlc auLhorlues
and local governmenL agencles manage Lhelr resources emclenLly and eecuvely. 8y so dolng, lL
provldes accounLablllLy for Lax dollars spenL Lo supporL governmenL operauons. 1he CompLroller
oversees Lhe scal aalrs of SLaLe agencles, publlc auLhorlues and local governmenL agencles, as
well as Lhelr compllance wlLh relevanL sLaLuLes and Lhelr observance of good buslness pracuces.
1hls scal overslghL ls accompllshed, ln parL, Lhrough our audlLs, whlch ldenufy opporLunlues for
lmprovlng operauons. AudlLs can also ldenufy sLraLegles for reduclng cosLs and sLrengLhenlng
conLrols LhaL are lnLended Lo safeguard asseLs.
lollowlng ls a reporL of our audlL enuLled !"#$ &'(#(" )*+,*$-*. 1hls audlL was performed pursuanL
Lo Lhe SLaLe CompLroller's auLhorlLy under Arucle x, Secuon 3 of Lhe SLaLe ConsuLuuon and Secuon
2803 of Lhe ubllc AuLhorlues Law.
1hls audlL's resulLs and recommendauons are resources for you Lo use ln eecuvely managlng
your operauons and ln meeung Lhe expecLauons of Laxpayers. lf you have any quesuons abouL
Lhls reporL, please feel free Lo conLacL us.
8especuully submlued,
/01" *2 (3" 4(#(" 5*67(+*$$"+
8-9-'-*: *2 4(#(" ;*9"+:6":( <11*=:(#>-$-(?
!"#$%&%!$
>:?:7:&@ &/ )*+*" A&?"'@2"@* ;..&<@*+B:4:*= $
)*+*" A&?"'@2"@* ;..&<@*+B:4:*= 1&@*+.* K@/&'2+D&@L
;<G:* >:'".*&'L Carmen Maldonado
80&@"L (212) 417-3200
62+:4L SLaLeCovernmenLAccounLablllLy[osc.sLaLe.ny.us
;GG'"77L
Cmce of Lhe SLaLe CompLroller
ulvlslon of SLaLe CovernmenL AccounLablllLy
110 SLaLe SLreeL, 11Lh lloor
Albany, n? 12236
1hls reporL ls also avallable on our webslLe aL: www.osc.sLaLe.ny.us
M+B4" &/ 1&@*"@*7
8ackground 4
AudlL llndlngs and 8ecommendauons 3
roperLy lnvenLory 3
8ecommendauons 6
AssessmenL of needs 7
8ecommendauons 8
ulsposal of roperLy 8
8ecommendauons 10
AudlL Scope and MeLhodology 11
AuLhorlLy 11
8eporung 8equlremenLs 11
ConLrlbuLors Lo 1hls 8eporL 13
Agency CommenLs 14
SLaLe CompLroller's CommenLs 18
!"#$%&%!$
>:?:7:&@ &/ )*+*" A&?"'@2"@* ;..&<@*+B:4:*= '
E+.(F'&<@G
1he new ?ork ower AuLhorlLy (n?A) ls Lhe nauon's largesL sLaLe publlc power enuLy and a leader
ln supplylng Lhe SLaLe wlLh elecLrlcal power. n?A's mlsslon ls Lo provlde clean, low-cosL and
rellable energy conslsLenL wlLh our commlLmenL Lo Lhe envlronmenL and safeLy, whlle promoung
economlc developmenL and [ob developmenL, energy emclency, renewables and lnnovauon,
for Lhe beneL of our cusLomers and all new ?orkers." 1o accompllsh lLs mlsslon n?A operaLes
hydroelecLrlc and gas-powered energy planLs LhroughouL Lhe SLaLe, lncludlng seven hydroelecLrlc
planLs llcensed by Lhe lederal Lnergy 8egulaLory Commlsslon (lL8C). A lL8C llcense ls for 30
years, and lncludes a land managemenL plan for properLy aecLed by Lhe hydroelecLrlc planL.
uurlng Lhe Lerm of each llcense, n?A meeLs wlLh Lhe local communlues ln Lhe area Lo dlscuss
currenL condluons. 1hese dlscusslons are generally held every Len years. lL8C usually ls noL a
parLy Lo Lhese dlscusslons. Any declslons LhaL could lmpacL Lhe land managemenL plan requlre
lL8C approval before Lhey can be lmplemenLed.
ubllc AuLhorlLy Law Secuon 2896 (Secuon 2896) requlres each publlc auLhorlLy Lo malnLaln
adequaLe lnvenLory conLrols for all of lLs properLy and Lo perlodlcally revlew Lhls lnvenLory Lo
deLermlne whlch properLy shall be dlsposed of. Secuon 2896 also requlres publlc auLhorlues Lo
publlsh, aL leasL annually, a reporL llsung all properLy held and all properLy acqulred and dlsposed
of durlng Lhe year. n?A reporLs on lLs properues by pro[ecL raLher Lhan by lndlvldual loLs and
reporLs on Lhe LoLal acreage for each pro[ecL. As of uecember 31, 2012, n?A reporLed LoLal
acreage of 48,941 for 12 dlerenL power-generaung pro[ecLs, plus Lhe admlnlsLrauve bulldlng ln
WhlLe lalns and permanenL easemenLs.
ubllc AuLhorlLy Law Secuon 2897 (Secuon 2897) allows each publlc auLhorlLy Lo dlspose of
properLy when lL ls noL needed Lo accompllsh lLs mlsslon. lurLhermore, a publlc auLhorlLy may
renL, lease or granL easemenLs or oLher rlghLs ln any land or properLy lL owns. Such arrangemenLs
and properLy dlsposals should be on Lerms beneclal Lo Lhe SLaLe. Secuon 2896 requlres publlc
auLhorlues Lo deLermlne whlch properLy shall be dlsposed of and Lransfer or dlspose of such
properLy as prompLly as posslble. Where Lhe Lerms are for less Lhan falr markeL value, Secuon
2897 requlres a publlc auLhorlLy Lo noufy Lhe Covernor and Lhe LeglslaLure of lLs lnLenuons and Lo
provlde deLalls abouL Lhe Lransacuon, lncludlng a [usucauon for accepung less Lhan falr markeL
value.
!"#$%&%!$
>:?:7:&@ &/ )*+*" A&?"'@2"@* ;..&<@*+B:4:*= (
;<G:* I:@G:@F7 +@G 5".&22"@G+D&@7
8'&3"'*= K@?"@*&'=
n?A uses Lwo compuLer sysLems Lo monlLor lLs properues. Cne sysLem, Ceographlc lnformauon
SysLems (ClS), ls used Lo sLore and generaLe maps for each properLy wlLh Lopographlcal and oLher
lnformauon, such as ground feaLures or anlmal hablLaLs. 1he oLher sysLem, 8eal LsLaLe and Land
ManagemenL (8LALM), was developed ln-house and ls used Lo Lrack acqulsluon and dlsposal
lnformauon, lncludlng Lhe name of Lhe oLher parLy and Lhe purchase or sale prlce of Lhe properLy.
n?A used Lhe lnformauon ln ClS Lo generaLe lLs lnlual 8eal roperLy 8eporL under Secuon 2896.
1haL reporL ls updaLed each year, by addlng acqulsluons and subLracung dlsposals as noLed ln
8LALM. 1he lnformauon ln 8LALM ls also used Lo prepare Lhe annual reporLs of acqulsluons and
dlsposals under Secuon 2896. Accordlng Lo n?A omclals, 8LALM ls supplemenLed wlLh oLher
lnformauon avallable ln-house, such as hard-copy records and dlscusslons wlLh n?A employees
knowledgeable abouL Lhe Lransacuons.
ln !une 2013, we selecLed Len properues from 8LALM LhaL were acqulred beLween March 2010
and !uly 2012. We deLermlned LhaL nlne of Lhem were noL recorded ln ClS. Accordlng Lo n?A
omclals, elghL of Lhe nlne properues were ln Lhe process of belng updaLed and would noL appear ln
ClS unul LhaL process was compleLed. 1he nlnLh properLy was updaLed buL would noL be vlewable
unul Lhe varlous modules of ClS had been synced wlLh each oLher. ln llghL of Lhese dlerences,
n?A cannoL ensure LhaL lLs lnlual reporL of all real properLy owned (whlch was generaLed from
lnformauon ln ClS) was accuraLe. n?A omclals Lold us Lhey hlred a consulLanL Lo asslsL wlLh
synced ClS modules and Lo ensure LhaL lnformauon abouL acqulsluons and dlsposals recorded ln
8LALM ls fully capLured ln ClS. ln CcLober 2013, n?A omclals lnformed us LhaL Lhe consulLanL
sLarLed worklng, and should be nlshed ln early 2014. Cnce LhaL ls done, n?A should verlfy LhaL
none of lLs properues have been excluded from lLs annual Secuon 2896 reporL.
ln AugusL 2013, we also found over 300 Lemporary easemenLs daung back Lo Lhe 1930s and 1960s
sull llsLed ln 8LALM as owned by n?A, even Lhough a Lemporary easemenL only lasLs one Lo Lhree
years. Accordlng Lo n?A omclals, Lhey need Lo malnLaln Lhe lnformauon on Lhese easemenLs
for hlsLorlcal purposes. 1hey expressed condence LhaL all of Lhe employees responslble for
preparlng Lhe annual reporLs know LhaL Lhese easemenLs have explred and so would noL lnclude
Lhem ln Lhe annual reporLs. n?A should revlse 8LALM Lo mark Lhese Lemporary easemenLs as
explred, Lo ensure LhaL none of Lhem are accldenLally lncluded ln any of Lhe Secuon 2896 reporLs.
1hls wlll also ensure LhaL fuLure 2896 reporLs are accuraLe, should dlerenL employees become
responslble for preparlng Lhem.
We also found lnconslsLencles ln how lnformauon was reporLed on Lhe real properLy dlsposal
reporLs. As parL of Lhe 2007 lL8C rellcenslng agreemenL for Lhe nlagara hydroelecLrlc planL, n?A
was dlrecLed Lo sell cerLaln parcels of land, lncludlng 24 acres sold Lo nlagara unlverslLy ln 2011
and 14 acres sold Lo Lhe Lrle Canal Parbor uevelopmenL Corporauon ln 2012. Lach of Lhese
properues was Lransferred Lo Lhe new owner aL a cosL of $1 (whlch was walved). n?A dld noL
reporL on Lhe nlagara unlverslLy sale ln lLs 2011 ulsposal of 8eal roperLy reporL, buL dld reporL
!"#$%&%!$
>:?:7:&@ &/ )*+*" A&?"'@2"@* ;..&<@*+B:4:*= )
Lhe sale Lo Lhe Lrle Canal Parbor uevelopmenL Corporauon ln 2012. 1here was no documenLauon
Lo explaln why Lhe sale Lo nlagara unlverslLy was excluded from Lhe 2011 reporL. 1he employee
who prepared Lhe 2011 reporL was no longer employed aL n?A and Lhe employee who prepared
Lhe 2012 reporL dld noL know why Lhe Lwo Lransacuons were LreaLed dlerenLly.
When we quesuoned n?A omclals, Lhey sLaLed lL was due Lo dlerenL lnLerpreLauons of Secuon
2896. Powever, Secuon 2896 sLaLes such reporL shall lnclude a llsL and full descrlpuon of all
real properLy dlsposed of durlng such perlod." n?A needs Lo provlde wrluen lnsLrucuons Lo all
employees regardlng how Lo prepare Lhe reporLs.
5".&22"@G+D&@7
1. Lnsure LhaL boLh ClS and 8LALM are correcL and updaLed umely when properLy ls acqulred or
dlsposed of.
(8espondlng Lo our dra audlL reporL, n?A omclals lndlcaLed LhaL lL ls sLrengLhenlng lLs real
esLaLe managemenL sysLems and conunues Lo lmprove lLs sysLem capablllues. 1hey added
LhaL Lhey Lake lssue wlLh Lhe CSC audlL ndlng LhaL n?A cannoL ensure Lhe accuracy of lLs
lnlual reporL of all real properLy owned. n?A's knowledgeable real esLaLe personnel prepared
and revlewed Lhe lnlual AL Secuon 2896 reporL, whlch used daLa from ClS, 8LALM and oLher
records Lo ensure Lhe reporL was accuraLe.)
;<G:*&'N7 1&22"@*7: We are pleased LhaL n?A omclals are Laklng sLeps Lo lmprove Lhe
real esLaLe managemenL sysLems. Powever, n?A's real esLaLe personnel cannoL rely on Lhe
accuracy of reporLs from Lhese sysLems. lnsLead, Lhey musL manually ad[usL Lhose reporLs
uslng lnformauon from oLher sources and fully documenung Lhe changes made Lo Lhe sysLem.
1hey should also Lake sLeps Lo lmprove Lhe umellness of Lhe updaLes Lo Lhe acqulsluons. As
lndlcaLed ln Lhe reporL, ln !une 2013 we selecLed 10 properues from Lhe 8LALM reporL and
nlne of Lhose properues were noL ln ClS even Lhough Lhey were acqulred from 11 monLhs Lo
39 monLhs earller.
2. Lnsure LhaL 8LALM correcLly reecLs Lhe sLaLus of Lemporary easemenLs LhaL have explred.
(ln response Lo our dra audlL reporL, n?A omclals lndlcaLed Lhere were no reporung
lnaccuracles LhaL resulLed from Lhe lncorrecL sLaLus of Lhe Lemporary easemenLs on 8LALM.
1hey clalmed Lhe lnformauon ls malnLalned on 8LALM for hlsLorlcal purposes.)
;<G:*&'N7 1&22"@*7: n?A's response does noL address Lhe recommendauon whlch calls for
Lhem Lo ensure LhaL 8LALM correcLly shows LhaL 300 Lemporary easemenLs daung back Lo Lhe
1930s and 1960s are noL owned by n?A. ln addluon, n?A should noL rely on Lhe knowledge
of Lhe employees responslble for preparlng Lhe reporLs because Lhere ls no assurance LhaL all
of Lhe knowledge wlll be passed on Lo fuLure employees.
3. Comply wlLh Secuon 2896 regardlng Lhe reporung of all properLy dlsposed of durlng each year.
!"#$%&%!$
>:?:7:&@ &/ )*+*" A&?"'@2"@* ;..&<@*+B:4:*= *
(n?A omclals replled Lo our dra audlL reporL LhaL Lhey are ln compllance wlLh AL Secuon
2896 and LhaL Lhe omlsslon was due Lo a mlslnLerpreLauon of Lhe requlremenL.)
;<G:*&'N7 1&22"@*7: n?A was noL ln compllance wlLh AL Secuon 2896 when lL omlued
Lhe parcel sold Lo nlagara unlverslLy ln lLs 2011 reporL. As a resulL, n?A omclals need Lo
Lake correcuve acuon Lo provlde employees wrluen lnsLrucuons regardlng how Lo prepare
Lhe reporLs.
;77"772"@* &/ !""G7
n?A does noL regularly revlew each properLy lL owns Lo deLermlne wheLher Lo hold or dlspose
of each parcel because a loL of Lhe properLy n?A owns ls assoclaLed wlLh one of lLs seven lL8C
llcensed power planLs, and so ls aecLed by lL8C's resLrlcuons on Lhe use and dlsposal of LhaL
properLy. As a resulL, n?A reLalns lLs properLy unul Lhere ls an operauonal change (such as
shumng down a faclllLy) or a change ln lLs lL8C llcense land managemenL plan. Also, almosL 20
percenL of lLs properLy (8,331 of Lhe 48,941 acres) conslsLs of easemenLs raLher Lhan properLy
owned ouLrlghL. n?A should develop a formal schedule for revlewlng lLs properLy, lncludlng
parcels covered by a lL8C llcense and Lhose LhaL are noL.

lor example, we vlslLed Lhree properues ln Lhe SL. Lawrence reglon owned by n?A buL leased Lo
oLher enuues. Cne of Lhe properues ls leased Lo a golf course LhaL ls open Lo Lhe publlc. 1he oLher
Lwo properues are leased Lo a prlvaLe college and Lo a prlvaLe yachL club, nelLher of whlch ls open
Lo Lhe publlc. n?A does noL need Lhese properues for lLs own operauons needs, buL lnsLead
leases Lhem as parL of Lhe recreauonal use requlremenLs of Lhe land managemenL plan poruon of
lLs 2003 lL8C llcense. Powever, ln Lhe pasL, n?A has been permlued Lo dlspose of properLy lL no
longer needs, even Lhough lL was covered by a lL8C llcense. As parL of lLs compllance wlLh Secuon
2896 requlremenLs, n?A should revlew Lhese parcels, and oLher leased properLy covered by
lL8C llcenses, Lo deLermlne wheLher lL musL keep and conunue Lo lease Lhem or lf lL could sell or
oLherwlse Lransfer Lhem Lo oLher enuues.
ln SepLember 2013, n?A omclals expecLed Lo begln dlscusslons wlLh Lhe local communlues on
Lhe lL8C llcense for Lhe SL. Lawrence reglon. n?A omclals have Lold us LhaL Lhey do noL belleve lL
would be approprlaLe Lo dlscuss land lssues durlng Lhose dlscusslons because lL8C ls noL a parLy
Lo Lhem. Powever, Lhese dlscusslons oer an opporLunlLy Lo meeL Lhe Secuon 2896 requlremenLs
and revlew Lhe properLy holdlngs covered by Lhls parucular lL8C llcense. lor oLher properues,
n?A should deLermlne Lhe approprlaLe umeframe for revlew.
n?A also leases 13 properues from oLhers aL an annual cosL of abouL $660,000 lncludlng ve
warehouses, ve omces, Lhree radlo anLennae slLes, one waLer gauglng sLauon and a hangar for an
alrplane. We vlslLed slx of Lhese properues, and quesuon Lhe need for Lwo of Lhem: a warehouse
and omce space aL an alrporL. n?A has pald $2,883 per monLh for Lhe warehouse space slnce
!uly 2002. 1he warehouse ls used Lo sLore omce furnlLure and oLher bulldlng maLerlals from a
n?A omce LhaL was closed ln AugusL 2012. Accordlng Lo n?A omclals, Lhey lnLend Lo dlspose
of all Lhe conLenLs of Lhe warehouse and sLop uslng Lhe faclllLy. 1hey renewed Lhe lease ln AugusL
2013 for an addluonal slx monLhs, whlch Lhey Lold us should be sumclenL ume Lo arrange for
!"#$%&%!$
>:?:7:&@ &/ )*+*" A&?"'@2"@* ;..&<@*+B:4:*= +
Lhe nal dlsposluon of Lhe conLenLs. 1o help move Lhls process along, we provlded n?A omclals
wlLh lnformauon on how Lhey could go Lhrough Lhe new ?ork SLaLe Cmce of Ceneral Servlces Lo
sell or scrap lLems from Lhe warehouse. n?A also pays $1,240 per monLh for Lhe omce space
aL Lhe WesLchesLer CounLy AlrporL, even Lhough lL ls wlLhln a half-hour drlve of lLs omce bulldlng
ln WhlLe lalns, whlch has vacanL space. 1hls arrangemenL has been ln place slnce Lhe hangar
faclllLy was rsL leased over 30 years ago. Accordlng Lo n?A omclals, lL ls more emclenL for Lhe
plloLs Lo have an omce aL Lhe alrporL Lhan aL Lhe maln headquarLers. Powever, n?A has noL
provlded us wlLh any cosL-beneL analysls or oLher evldence Lo supporL Lhls conLenuon.
5".&22"@G+D&@7
4. uevelop a formal schedule for revlewlng properues and deLermlnlng wheLher n?A conunues
Lo need Lo reLaln Lhem, as requlred.
3. ConducL a formal needs assessmenL and deLermlne Lhe exLenL Lo whlch Lhese needs can be
addressed by n?A-owned properLy.
6. erlodlcally evaluaLe Lhe need Lo conunue leaslng space and documenL Lhe resulLs lncludlng,
buL noL llmlLed Lo, omce space aL Lhe WesLchesLer CounLy AlrporL.
(8espondlng Lo our dra audlL reporL, n?A omclals lndlcaLed Lhey regularly revlew real properLy
poruollo Lo deLermlne whlch properues, lf any, are no longer requlred for n?A purposes.
1hey also lndlcaLed LhaL Lhe lL8C has pro[ecL boundarles LhaL are narrowly drawn Lo meeL
n?A's operauonal needs and lL8C's recreauonal and oLher uses under Lhe land managemenL
plan. ln addluon, Lhey wlll conunue Lhls process and perlodlcally revlew, evaluaLe ongolng
properLy needs, and lmprove lLs documenLauon.)
;<G:*&'N7 1&22"@*7: uurlng our audlL, n?A omclals Lold us on several occaslons LhaL Lhey
revlew properLy relaLed Lo lL8C llcenses only durlng Lhe rellcenslng process, whlch occurs
once every 30 years, and LhaL Lhey revlew oLher properLy only when slgnlcanL changes occur.
Powever, Lhere was no documenLauon Lo demonsLraLe such assessmenLs of need were done.
1herefore, n?A needs a formal revlew process for Lhelr properLy holdlngs LhaL occurs more
frequenLly, Lhough n?A omclals may choose Lo revlew lL8C properues on a dlerenL schedule
from Lhelr oLher properLy.
>:73&7+4 &/ 8'&3"'*=
n?A owns a bulldlng ln WhlLe lalns LhaL ls used as lLs maln admlnlsLrauve bulldlng. Powever, lL
does noL need all of Lhe space ln Lhe bulldlng, and leases ouL space Lo oLher enuues. n?A has a
conLracL wlLh a real esLaLe broker Lo adveruse and markeL Lhe space. MlnuLes from a SepLember
2011 8oard of 1rusLees Covernance Commluee meeung lndlcaLe LhaL Lhe average renLal for Lhls
space was $26 per square fooL, and LhaL n?A endeavors Lo keep Lhe cosLs conslsLenL for all
LenanLs ln Lhe bulldlng. We revlewed seven of 12 leases ln Lhls bulldlng, and found Lwo LenanLs
are paylng slgnlcanLly less Lhan falr markeL value. Cne lease (for 3,227 square feeL) explred ln
!"#$%&%!$
>:?:7:&@ &/ )*+*" A&?"'@2"@* ;..&<@*+B:4:*= ,
uecember 2012, and n?A ls allowlng Lhe LenanL Lo use Lhe space whlle Lhe Lerms of a new lease
agreemenL are negouaLed. As of AugusL 2013, Lhose negouauons were sull underway and Lhe
LenanL was only paylng $1,000 per monLh, or less Lhan $4 per square fooL per year. 1he oLher
lease (for 870 square feeL) was sull ln eecL, and n?A had agreed Lo a renL of only $12.30 per
square fooL per year. n?A dld noL noufy Lhe Covernor or Lhe LeglslaLure abouL Lhese leases or
provlde [usucauon for below-markeL raLes, as requlred under Secuon 2897.
n?A omclals acknowledge LhaL Secuon 2897 requlres Lhem Lo reporL on any dlsposal aL less Lhan
falr markeL value, lncludlng leases. Powever, Lhey belleve LhaL Lhe clrcumsLances surroundlng
Lhese Lwo leases resulL ln Lhe lower lease amounL belng Lhe falr markeL value, noL Lhe $26 per
square fooL amounL. Secuon 2897 does noL glve publlc auLhorlues Lhe dlscreuon Lo seL falr markeL
value. n?A omclals should have reporLed Lhese Lwo leases Lo Lhe Covernor and Lhe LeglslaLure,
along wlLh Lhe rauonale for charglng below-markeL raLes.
lor properLy covered by a lL8C llcense, Lhe land managemenL plan may someumes requlre n?A
Lo reLaln ownershlp of land lL does noL need for operauonal purposes. 1hese properues are Lhen
leased by n?A Lo oLher enuues. 1he land managemenL plan may speclfy who n?A musL lease
Lhe properLy Lo or lL may slmply sLaLe Lhe lease musL be for recreauonal purposes.
Accordlng Lo n?A omclals, lL ls dlmculL Lo deLermlne Lhe falr markeL value for leased land, Lhough
10 percenL of Lhe LoLal assessed value ls a good rule of Lhumb. lor some properues, Lhls amounL
may be furLher reduced lf lL ls only usable parL of Lhe year. We ldenued Lhe followlng four leases
ln Lhe SL. Lawrence reglon LhaL were for slgnlcanLly less Lhan 10 percenL of Lhe assessed falr
markeL value.
- A golf course ls leaslng properLy LhaL was assessed ln 1990 aL $1.8 mllllon for an annual
renL of only $2,000, raLher Lhan $180,000.
- A prlvaLe yachL club ls leaslng properLy LhaL was assessed ln 2012 aL $180,000 for an
annual renL of only $2,700, raLher Lhan $18,000. Slnce 2010, Lhe LenanL was allowed Lo
make lmprovemenLs ln lleu of paylng renL. n?A records show LhaL Lhe yachL club replaced
a dock and a shed and purchased a woodsLove.
- A prlvaLe unlverslLy ls leaslng properLy LhaL was assessed ln 2012 aL $100,000 for an annual
renL of only $1 (whlch n?A walves), raLher Lhan $10,000.
- A golf course ls leaslng properLy LhaL was assessed ln 2012 aL $123,000 for an annual renL
of only $200, raLher Lhan $6,130 (reduced from $12,300 because Lhe properLy ls only
usable for slx monLhs of Lhe year). n?A has walved Lhe renL on Lhls properLy slnce Lhe
1990s.
Cur revlew showed Lhree of Lhe four LenanLs had noL acLually pald renL, alLhough one of Lhem
has made some slLe lmprovemenLs. n?A omclals Lold us Lhey conslder all four LenanLs Lo be
essenual Lo meeung Lhe land managemenL plan, as requlred by lLs lL8C llcenslng agreemenLs. As
a resulL, Lhey are relucLanL Lo ralse Lhe renLs Lo falr markeL value, whlch mlghL puL Lhese LenanLs
ouL of buslness. lurLher, for LenanLs ln nanclal dlmculues, n?A prefers Lo walve Lhe renLs raLher
Lhan add Lo Lhelr economlc hardshlp.
!"#$%&%!$
>:?:7:&@ &/ )*+*" A&?"'@2"@* ;..&<@*+B:4:*= #"
Powever, Lhe unusual naLure of Lhese arrangemenLs makes lL crlucal LhaL n?A fully documenL
and dlsclose Lhe naLure and [usucauon for Lhese leases. n?A has noL demonsLraLed LhaL
Lhese parucular LenanLs are Lhe only ones LhaL could provlde requlred recreauonal use of Lhese
properues. n?A needs Lo Lake umely acuon when a lease ls abouL Lo explre Lo deLermlne
wheLher Lhe space could be leased Lo anoLher enuLy. Such acuons could lnclude adveruslng
ln newspapers and real esLaLe llsungs, and placlng lnformauon on lLs webslLe. 1hese acuvlues
should be documenLed and used Lo deLermlne how n?A wlll lease Lhe space.
ln addluon, lf Lhe properLy has a falr markeL value of more Lhan $13,000 and n?A decldes
Lo accepL a reduced renL, or walve Lhe renL enurely, lL should comply wlLh Secuon 2897. We
found n?A has noL reporLed Lhree of Lhe four leases Lo Lhe Covernor and LeglslaLure, nor has lL
provlded an explanauon for accepung less Lhan falr markeL value, as requlred by Secuon 2897.
1he remalnlng lease runs Lhrough 2013 and predaLes Secuon 2897.
5".&22"@G+D&@7
7. lnform Lhe publlc of n?A properLy avallable for lease and documenL Lhe resulLs.
(n?A omclals replled Lo our dra reporL LhaL Lhey provlde lnformauon Lo Lhe publlc Lhrough
lLs webslLe and llsung brokers.)
8. noufy Lhe Covernor and Lhe LeglslaLure when leaslng properLy for less Lhan Lhe falr markeL
value, as requlred by law.
(n?A omclals replled Lo our dra audlL reporL LhaL lL wlll noufy Lhe Covernor and Lhe
LeglslaLure when leaslng properLy for less Lhan Lhe falr markeL value, as requlred by law. 1hey
add LhaL Lhe leases ldenued ln our reporL predaLe Lhe law and dld noL requlre noucauon Lo
Lhe Covernor and Lhe LeglslaLure. 1hey clalm LhaL when Lhese leases were negouaLed Lhey
Look lnLo conslderauon facLors such as lL8C llcenslng obllgauons and lLs economlc role ln Lhe
SL. Lawrence reglon. 1hey also lndlcaLed LhaL Lhe renL lL recelves from Lwo LenanLs ln lLs WhlLe
lalns bulldlng ls aL falr markeL value.)
;<G:*&'N7 1&22"@*7: 1hree of Lhe four leases ln our reporL have explred and n?A should
have noued Lhe Covernor and Lhe LeglslaLure. ln addluon, Lhe lnformauon ln Lhe mlnuLes
from a SepLember 2011 8oard of 1rusLees Covernance Commluee meeung does noL supporL
n?A's response. 1herefore, Lhe leaslng of space Lo Lhe Lwo LenanLs aL less Lhan falr markeL
value should have been reporLed Lo Lhe Covernor and Lhe LeglslaLure for revlew and approval.
9. CollecL renLal revenue from all leases.
(n?A omclals replled Lo our dra audlL reporL LhaL WhlLe lalns renLals are currenL and
LhaL n?A conslders Lhree of Lhe four SL. Lawrence leases Lo be compllanL wlLh Lhelr lease
obllgauons.)
;<G:*&'N7 1&22"@*7: We deLermlned LhaL Lhree of Lhe four LenanLs have noL pald renL slnce
!"#$%&%!$
>:?:7:&@ &/ )*+*" A&?"'@2"@* ;..&<@*+B:4:*= ##
aL leasL !anuary 2010. Cne LenanL made cerLaln slLe lmprovemenLs ln lleu of renL and for Lhe
oLher Lwo, n?A walved Lhe renL. lurLhermore, one of Lhe LenanLs ls a prlvaLe yachL club and
noL open Lo Lhe publlc.
;<G:* ).&3" +@G O"*0&G&4&F=
Cur audlL deLermlned wheLher n?A has accounLed for all of lLs real esLaLe holdlngs, deLermlned
Lhe need Lo elLher hold or dlspose of properues, and dlsposed of properLy on Lerms beneclal Lo
Lhe SLaLe. 1he audlL covers Lhe perlod !anuary 2010 Lhrough !uly 2013.
1o accompllsh our ob[ecuve, we revlewed relevanL guldellnes relaLed Lo n?A's acqulsluons and
dlsposals of real properLy, lnLervlewed n?A omclals, LesLed n?A's Lwo lnformauon sysLems
used Lo Lrack real esLaLe holdlngs, revlewed leases, and revlewed llcenslng agreemenLs lssued by
Lhe lederal Lnergy 8egulaLory Commlsslon for n?A's hydroelecLrlc planLs ln SL. Lawrence and
nlagara. We also revlewed records aL Lhe counLy clerk's omces for new ?ork ClLy, WesLchesLer,
SL. Lawrence and nlagara. We also vlslLed Lhree n?A properues leased Lo oLhers, and elghL
properues leased by n?A for lLs own purposes, Lo deLermlne how Lhe properLy was belng used.
We conducLed our performance audlL ln accordance wlLh generally accepLed governmenL audlung
sLandards. 1hose sLandards requlre LhaL we plan and perform Lhe audlL Lo obLaln sumclenL,
approprlaLe evldence Lo provlde a reasonable basls for our ndlngs and concluslons based on
our audlL ob[ecuves. We belleve LhaL Lhe evldence obLalned provldes a reasonable basls for our
ndlngs and concluslons based on our audlL ob[ecuve.
ln addluon Lo belng Lhe SLaLe AudlLor, Lhe CompLroller performs cerLaln oLher consuLuuonally and
sLaLuLorlly mandaLed duues as Lhe chlef scal omcer of new ?ork SLaLe. 1hese lnclude operaung
Lhe SLaLe's accounung sysLem, preparlng Lhe SLaLe's nanclal sLaLemenLs, and approvlng SLaLe
conLracLs, refunds, and oLher paymenLs. ln addluon, Lhe CompLroller appolnLs members Lo
cerLaln boards, commlsslons and publlc auLhorlues, some of whom have mlnorlLy voung rlghLs.
1hese duues may be consldered managemenL funcuons for purposes of evaluaung organlzauonal
lndependence under generally accepLed governmenL audlung sLandards. ln our oplnlon, Lhese
funcuons do noL aecL our ablllLy Lo conducL lndependenL audlLs of program performance.
;<*0&':*=
Cur audlL was performed pursuanL Lo Lhe SLaLe CompLroller's auLhorlLy as seL forLh ln Arucle x,
Secuon 3 of Lhe SLaLe ConsuLuuon and Secuon 2803 of Lhe ubllc AuLhorlues Law.
5"3&'D@F 5"P<:'"2"@*7
A dra copy of Lhls reporL was provlded Lo n?A omclals for Lhelr revlew and commenL. 1helr
commenLs were consldered ln Lhe preparauon of Lhls nal reporL and are lncluded ln Lhelr enureLy
!"#$%&%!$
>:?:7:&@ &/ )*+*" A&?"'@2"@* ;..&<@*+B:4:*= #!
aL Lhe end of Lhls reporL. Cur re[olnders Lo cerLaln n?A commenLs are lncluded ln Lhe reporL's
SLaLe CompLroller's CommenLs.
WlLhln 90 days aer nal release of Lhls reporL, as requlred by Secuon 170 of Lhe Lxecuuve
Law, Lhe Chalrman of Lhe new ?ork ower AuLhorlLy shall reporL Lo Lhe Covernor, Lhe SLaLe
CompLroller, and Lhe leaders of Lhe LeglslaLure and scal commluees advlslng whaL sLeps were
Laken Lo lmplemenL Lhe recommendauons conLalned hereln, and where recommendauons were
noL lmplemenLed, Lhe reasons why.
!"#$%&%!$
>:?:7:&@ &/ )*+*" A&?"'@2"@* ;..&<@*+B:4:*= #$
>:?:7:&@ &/ )*+*" A&?"'@2"@* ;..&<@*+B:4:*=
Andrew A. Sanllllppo, Lxecuuve uepuLy CompLroller
318-474-4393, asanllppo[osc.sLaLe.ny.us
1lna klm, uepuLy CompLroller
318-473-3396, Lklm[osc.sLaLe.ny.us
8rlan Mason, AsslsLanL CompLroller
318-473-0334, bmason[osc.sLaLe.ny.us
Q:7:&@
A Leam of accounLablllLy experLs respecLed for provldlng lnformauon LhaL declslon makers value.
O:77:&@
1o lmprove governmenL operauons by conducung lndependenL audlLs, revlews and evaluauons
of new ?ork SLaLe and new ?ork ClLy Laxpayer nanced programs.
1&@*':B<*&'7 *& M0:7 5"3&'*
1+'2"@ O+4G&@+G&R AudlL ulrecLor
5&B"'* O"0'0&SR AudlL Manager
T"@@:/"' 8+3"'2+@R AudlL Supervlsor
H+*04""@ U&*+4:@FR Lxamlner-ln-Charge
8"*"' 1+''&44R SLa Lxamlner
1&@7*+@." V+4("'R SLa Lxamlner
!"#$%&%!$
>:?:7:&@ &/ )*+*" A&?"'@2"@* ;..&<@*+B:4:*= #'
;F"@.= 1&22"@*7
*
CommenL
1
* See SLaLe CompLroller's CommenLs on page 18.
!"#$%&%!$
>:?:7:&@ &/ )*+*" A&?"'@2"@* ;..&<@*+B:4:*= #(
!"#$%&%!$
>:?:7:&@ &/ )*+*" A&?"'@2"@* ;..&<@*+B:4:*= #)
*
CommenL
2
*
CommenL
3
!"#$%&%!$
>:?:7:&@ &/ )*+*" A&?"'@2"@* ;..&<@*+B:4:*= #*
*
CommenL
4
!"#$%&%!$
>:?:7:&@ &/ )*+*" A&?"'@2"@* ;..&<@*+B:4:*= #+
)*+*" 1&23*'&44"'N7 1&22"@*7
1. uurlng our audlL, n?A omclals Lold us on several occaslons LhaL Lhey revlew properLy
relaLed Lo lL8C llcenses only durlng Lhe rellcenslng process, whlch occurs once every 30
years, and LhaL Lhey revlew oLher properLy only when slgnlcanL changes occur. Powever,
n?A needs Lo adopL a formal revlew process for Lhelr properLy holdlngs LhaL occurs more
frequenLly, Lhough n?A omclals may choose Lo revlew lL8C properues on a dlerenL
schedule from Lhelr oLher properLy.
2. ConLrary Lo n?A's response, Lhree of Lhe four leases ln our reporL have explred (one
ln 1999, one ln 2008 and one ln 2012), and n?A has allowed Lhe LenanLs Lo conunue
uslng Lhe properLy on a monLh-by-monLh basls. 1hese Lhree are noL exempL from AL
Secuon 2897, and n?A should have noued Lhe Covernor and Lhe LeglslaLure abouL
Lhese arrangemenLs.
3. AL Lhe SepLember 27, 2011 Covernance Commluee meeung, 8oard members were
lnformed LhaL n?A's pollcy was Lo have all of lLs LenanLs aL 123 Maln SLreeL pay abouL
Lhe same amounL and LhaL Lhe falr markeL value aL LhaL ume was $26 per square fooL.
n?A omclals elLher need Lo obLaln documenLauon from Lhe broker showlng LhaL Lhe Lwo
spaces ln quesuon have a lower markeL value Lhan oLher space ln Lhe bulldlng or noufy
Lhe Covernor and Lhe LeglslaLure of Lhe rauonale for enLerlng lnLo a lease for less Lhan Lhe
falr markeL value.
4. 1hree of Lhe four LenanLs have pald no renL slnce aL leasL !anuary 2010, Lhe sLarL of our
audlL perlod. Cne of Lhese Lhree has made slLe lmprovemenLs ln lleu of renL, n?A omclals
have chosen Lo walve Lhe renL for Lhe oLher Lwo. lL ls unclear Lo us how n?A omclals can
sLaLe Lhese LenanLs are compllanL wlLh Lhelr lease obllgauons."