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What you need to know for 01/20/2017

Power Authority criticized in audit for low-rent leases

Power Authority criticized in audit for low-rent leases

The New York Power Authority has been leasing some properties for less than fair market value, accor

The New York Power Authority has been leasing some properties for less than fair market value, according to an audit released Tuesday by the office of state Comptroller Thomas P. DiNapoli.

NYPA is the nation’s largest state public power provider, operating hydroelectric and gas-powered energy plants throughout the state, including the Blenheim-Gilboa Pumped Storage Power Project in Schoharie County.

As of 2012, NYPA owned 48,941 acres of property associated with 12 power-generating projects, an administrative building and several permanent easements. The audit done by the comptroller’s office covered the period of January 2010 through July 2013, and included testing NYPA’s two information systems used to track real estate holdings, interviewing NYPA officials and reviewing records at clerk’s offices for New York City and Westchester, St. Lawrence and Niagara counties.

Auditors found properties the Massena Country Club in St. Lawrence County was leasing land from NYPA for an annual rent of $2,000 instead of the fair market rent of $180,000. The St. Lawrence Yacht Club had leased property for an annual rent of $2,700 instead of the fair market rent of $18,000. St. Lawrence University is leasing a boat house from NYPA for an annual rent of $1 (which according to the report NYPA waived), instead of paying the fair market rent of $10,000.

Also according to the report, NYPA failed to follow state law and notify the governor and state Legislature about renting properties below market value, did not accurately account for all of its real estate holdings, did not update information systems used to account for its real estate inventory in a timely manner and does not regularly review its real estate portfolio to find properties it no longer needs.

DiNapoli recommended NYPA notify the governor and the Legislature when property is leased for less than fair market value, make sure its information systems that track real estate holdings are in fact updated and evaluate the property it owns and leases.

In a letter written by the NYPA to the Office of State Comptroller, NYPA said it “believes it already has procedures that sufficiently address many of these recommendations,” such as strengthening its real estate management systems. However, NYPA said it “will enhance its practices/procedures for its real estate portfolio management to ensure compliance with the Public Authorities Law.”

NYPA has 90 days to report to the governor, the state comptroller and leaders of the Legislature and fiscal committees to explain what sort of reforms they have implemented.

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