In the comments to a recent diary I wrote about the cronyism behind Ratner's plan for Atlantic Yards, someone asked a great question in the comments regarding the Empire State Development Coproration. I realized that we need a diary that will cover a little bit about the ESDC.

What is the ESDC, and how are its members chosen and what recourse do people have regarding their decisions?

From Wikipidia:

The Empire State Development Corporation is a public authority of the state of New York in the United States that has financed and operated several ambitious state projects by issuing tax exempt bonds.

It is the umbrella organization for Urban Development Corporation (which handles mostly public oriented corporations), Job Development Authority (which provides loans to private corporations), and the Science and Technology Foundation (which was abolished in 2000)...

The Urban Development Corporation, its biggest component was conceived in 1968 primarily to build state-subsidized housing projects to stem the tide of urban decay, it has the power of eminent domain, is exempt from many of the restrictions that apply to regular government agencies and can issue bonds without formal Legislature or voter approval.

Virtually all state subsidized housing built since 1968 was financed through the corporation...

Each subsidiary has its own board of directors.

Since corporation and its subsidiaries are not under direct public scrutiny there has been controversy over the handling of many of its projects...

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.

Mario Cuomo 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. At the time New York had 32 adult prisons. Cuomo was to use the bonds to build another 38 prisons -- most upstate.[6]

George Pataki 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 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.

The ESDC website has little actual information about how it works. Mainly it has information on doing business in NY State, which is a fine and helpful thing but seems to have gotten away from its main mission of dealing with subsidized housing. It says nothing about how the people who review things are chosen.

I finally dug up a PDF talking about the state budget that gives more info. It largely confirms the simple answer I was ready to give the person who asked the question in my previous diary: blame the Governor and Republican-led State Senate. Here are some excerpts:

The Empire State Development Corporation (ESDC) — formerly the Urban Development Corporation (UDC) — is a New York State public benefit corporation. It engages in four principal activities: economic and real estate development; State facility financing; housing
portfolio maintenance; and privatization initiatives.

ECONOMIC AND REAL ESTATE DEVELOPMENT
The Corporation provides financial and technical assistance to businesses, local governments and community-based not-for-profit corporations for economic development and large-scale real estateprojects that create and/or retain jobs and reinvigoratedistressed areas...

The Corporation is governed by a nine-member Board of Directors comprising two ex-officio members and seven members appointed by the Governor with the consent of the
Senate. The Chair of the Empire State Development Corporation Board is selected by the Governor and also serves as the Commissioner of EconomicDevelopment. Boardmembers serve without compensation.

So the ESDC is largely appointed by Pataki who is a law school buddy of Ratner's. For citzens to have any say they need to focus on the Governor and State Senate in particular for both lobbying and when supporting candidates for office.

I also looked at Alan Hevesi's audit from this year which indicates the ESDC is not that careful and needs more oversight. From Alan Hevesi's Audit (PDF):

The Empire State Development Corporation (ESDC) - formerly the Urban Development Corporation (UDC) - is a public benefit corporation that engages in various types of economic development activities. It is authorized by law to issue bonds to finance these activities; it is also authorized to create subsidiary corporations to oversee and perform specific economic development activities. As of March 31, 2004, ESDC reported that there were 70 of these subsidiary corporations in existence. The most active of these subsidiaries oversee the financing, planning, construction and/or management of large-scale economic development projects, such as planning and coordinating the redevelopment of areas affected by the September 11th attacks on the World Trade Center. Other less active subsidiaries oversee smaller economic development projects and maintain an interest in completed housing projects that were financed in the 1970s and 1980s.

Each subsidiary corporation is to be governed by its own Board of Directors. However, most subsidiaries do not have staff of their own and use ESDC staff. In the 2005-06 fiscal year, ESDC, which is governed by its own Board of Directors, had a total workforce of about 260...

And here is the summary of Hevesi's audit:

We found that ESDC has an appropriate process in place to control and authorize the creation of subsidiary corporations, and actively monitors subsidiaries that are responsible for managing ongoing large-scale economic development projects. However, ESDC does not adequately oversee the status of many of its other subsidiaries, and rarely dissolves subsidiaries once their purpose has been achieved and they are no longer needed. As a result, ESDC lost track of the status, and even existence, of many of its subsidiaries and failed to move in a timely manner to dissolve subsidiaries whose functions have concluded.

ESDC reported that 70 subsidiary corporations were in existence as of March 31, 2004. However, when we reviewed ESDC’s records and the Department of State’s records of corporate registrations, we found that 202 subsidiaries were legally in existence at that time. ESDC also reported that only 1 of the 70 subsidiaries was inactive. However, we determined that more than 50 of these 70 subsidiaries were probably inactive, including one that had already been formally dissolved and two that had been dissolved between September and November 2004 by ESDC. We also determined that almost 100 of the 202 subsidiaries are probably inactive and should probably be dissolved because there no longer appears to be any reason for them to exist.

ESDC does not accurately report on the status of its subsidiaries, because it does not maintain complete and accurate management information about subsidiary operations. In addition, ESDC does not periodically attempt to account for all of its subsidiaries and determine whether any can be dissolved. Since new subsidiaries continue to be created, the total number of subsidiaries continues to grow, making it more and more difficult for ESDC to keep track of its inactive and low-profile subsidiaries.

Inactive subsidiaries are not routinely dissolved by ESDC. ESDC officials note that it would be time-consuming to perform the complicated analyses and investigations of corporate records, financial databases and legal agreements that would be necessary to determine whether subsidiaries could safely be dissolved (the corporation may have continuing rights or obligations). In view of the low risk associated with the inactive subsidiaries, ESDC officials generally believe such time-consuming reviews are not worthwhile. We agree that a considerable effort would initially be required, but that is because the subsidiaries have been neglected for so long and so many inactive corporations have been allowed to accumulate. If all the unneeded corporations were dissolved, it would be neither difficult nor time-consuming to oversee the status of those that remain. By its inaction and neglect, ESDC has turned what should have been a small task into a large task.

We therefore recommend that significant improvements be made in ESDC’s recordkeeping for and control over subsidiary operations. We further recommend that unneeded subsidiaries be dissolved on an ongoing basis, and the large backlog of unneeded subsidiaries be dissolved at once. In Exhibits A, B and C to this report, we list all 202 subsidiary corporations that we identified. We also list the date each corporation was created, its purpose and its current status.

What first alerted me to the fact that things are not quite kosher about the ESDC, particularly in relation to their analysis of Ratner's project, was the fact that the ESDC sought to use Ratner's own lawyer at Ratner's own expense to study Ratner's own project which seems absurd at best and corrupt at worst.

I hope this serves as a good introduction to what the ESDC is, what they do and how they are chosen.