Empire State Development Corporation - History

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; (c) to grant generous tax abatements to private property developments it sponsored or encouraged; and finally, (d) to unilaterally overrule local zoning 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 and Battery Park City it was to encounter major problems in its inner city developments and its efforts to build minority low income housing in white middle-class neighborhoods.

Conversely inner city 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 called the fight "Rockefeller's Vietnam".

In the first years of the UDC, its aim was to facilitate large-scale low-income housing 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 and charges of reverse discrimination.

In 1975, the Corporation was reorganized and its mission expanded from developing housing to economic development. The Corporation still maintains a housing portfolio that currently includes mortgages valued at $650 million covering 20,200 housing units.

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.

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.

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.

In 2007, an Upstate ESD headquarters opened in Buffalo in recognition of the different economic challenges posed in the two parts of the State. Two chairs were appointed, one for ESDC Downstate and the other for ESDC Upstate. The ESDC board also authorized the creation of a subsidiary, Upstate Empire State Development Corporation, to concentrate on Upstate issues.

In 2008, Governor David A. Paterson brought the two components of ESDC back together again, emphasizing that New York is truly “One State.” The former Upstate and Downstate offices now work together seamlessly to ensure that New York’s economic development strategy benefits the entire State while being mindful of the specific resources and special challenges of each region.

In January 2011, Governor Andrew M. Cuomo appointed Kenneth Adams as ESD President & CEO and DED Commissioner. Mr. Adams was confirmed by the Legislature on April 5, 2011.

In May 2011, Governor Andrew M. Cuomo appointed Julie Shimer as Chair of ESD. She was confirmed by the New York State Senate in June 2011.