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Empire State Development Scoffing at Freedom of Information Law

By Tony Farina

Sam Hoyt(above), regional director of Empire State Development, and Erie Canal Harbor Development Corporation project managers Tom Dee (below) and Mark Smith, are being defended in Dipizio lawsuits by Phillips Lytle. Empire State Development has so far refused to release information about how much taxpayers are forking over in legal fees.
Mark Smith

Empire State Development (ESD) is the state’s chief economic development agency and it uses loans, grants, tax credits and other forms of financial assistance to enhance private business investment and growth to spur job creation and support prosperous communities across the state. In short, that’s the mission statement.

In Western New York, ESD is the parent to subsidiary state entities like Buffalo’s Erie Canal Harbor Development Corporation (ECHDC) and USA Niagara in Niagara Falls, two politically-stuffed agencies that have been in the news quite a bit lately.

ESD is often referred to as the governor’s chief economic development agency and serves statewide under President and CEO Kenneth Adams, and locally under former Assemblyman Sam Hoyt. It is the prime state money machine for businesses that want some taxpayer money to enhance their investments, if you will.

But while ESD may be seen as a positive development force, it appears to fall short when it comes to public accountability. And so do the politically-connected operatives who staff the corporation and its sub-entities.

Despite the state’s Freedom of Information Law (FOIL), designed to provide access to government decision-making and records, trying to get information from ESD about its decision-making and how it is spending taxpayer money is sometimes very, very difficult, and in at least one local case, almost impossible.

Let’s start in Niagara Falls with super-secretive USA Niagara. Over the last several months, several Niagara Falls lawmakers had questions about a major downtown development project promoted by USA Niagara along with the administration of Mayor Paul Dyster.

Try as they might, the lawmakers were stymied in their bid for more detail on the state-sponsored Hamister hotel project which was finally approved after Hamister threatened to pull out and the governor came to town to make a final pitch. Guess what, details on the deal were fuzzy before it was finally approved and the agreement that supposedly has now been signed has yet to see the light of day. So much for the public’s right to know. FOIL requests for information provided little relief during the bitter months leading up to last September’s primary and it came down to a “do it, or else” ultimatum from the supporters.

Now, Empire State Development, USA Niagara’s parent, is keeping mum on what it is paying Buffalo’s second biggest law firm, Phillips Lytle LLP, a firm noted for its support of state-level political campaigns, for its legal work in defending ESD and Erie Canal Harbor Development Corporation against a wrongful termination suit by the Dipizio Construction Company.

Now in the interest of full disclosure, I have been retained as a part-time consultant by the Dipizio firm, a company with a 37-year history of finishing the work it started. It didn’t get that chance to finish the job when ECHDC, supported by ESD, terminated the company last May, blaming Dipizio for delays in completing the replica canal project.

While the ECHDC board never voted to terminate Dipizio even though it voted to retain the firm for the job as the $20 million low bidder, a final court ruling has still not come down on the validity of that termination and it is the subject of several lawsuits, including a defamation claim brought by the construction company.

However, the state’s case took a big hit last month when a judge ruled in favor of Dipizio on two very important issues: that the company was within the contract on its plans to use a DEC-approved site to dispose of contaminated soil and also to use a different brand of granite than what ECHDC was insisting on.

The state says it will appeal the rulings by State Supreme Court Judge Timothy Walker, and despite Dipizio’s requests for a fair settlement, no talks are currently on the horizon.

Meanwhile, as the legal battle rages on over the signature harbor project, Phillips Lytle is continuing to rake in the cash in defending ECHDC project managers Mark Smith and Tom Dee as well as Sam Hoyt himself, the governor’s point man on economic development.

Now according to Robert Freeman, executive director of the state’s Committee on Open Government, the taxpayer money being used to defend the Hoyt, Dee, and Smith should be a matter of public record. But so far, Empire State is not complying.

My first request for records related to this case was Oct. 15, and so far all I have received are short responses from Lisa Lim, senior counsel to Empire State Development, saying they are working on my FOILs and would have a further response shortly.

It is now Dec. 17, and still no numbers on what taxpayers are forking over to the Buffalo law firm for defending the state against a case that could take a very long and expensive trip through the legal system now that ESD has lost a major decision. Meanwhile, Dipizio is paying its own mounting legal bills, the harbor project is in a kind of limbo, and the only winner are the lawyers at Phillips Lytle who are continuing to rack up the hours on the state’s (read that taxpayers) checkbook.

So much for the state’s FOIL law designed to insure public accountability to help promote an open government. Empire State Development will continue to work on helping businesses make more money, but don’t try to find out any state secrets on what they are doing because ESD is literally scoffing at the idea that it is accountable for the money it spends to the taxpayers who supply it.



Niagara Falls Reporter - Publisher Frank Parlato Jr. www.niagarafallsreporter.com

Dec 17, 2013