Empire State Development Corporation
Oversight of Subsidiary Operations (Follow-Up Report)
The Empire State Development Corporation (ESDC) – formerly the Urban Development Corporation – 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.
In audit 2004-S-6, we examined ESDC’s oversight of its subsidiary operations. We found that ESDC actively monitored subsidiaries that were responsible for managing ongoing large-scale economic development projects. However, ESDC did not adequately oversee the status of many of its other subsidiaries, and rarely dissolved subsidiaries once their purpose had been achieved and they were no longer needed. We identified almost 100 subsidiaries that were probably inactive and should probably be dissolved because there no longer appeared to be any reason for them to exist. We recommended that significant improvements be made in ESDC’s recordkeeping for and control over subsidiary operations. We further recommended that unneeded subsidiaries be dissolved on an ongoing basis, and the large backlog of unneeded subsidiaries be dissolved at once. When we followed up on these matters with ESDC officials, we found that they had made some progress in implementing our audit recommendations, but additional progress was still needed.
For a complete copy of Report 2007-F-51 click here.