Job Development Authority
Management of Loan Portfolio
The Job Development Authority tries to create or retain jobs in New York
State by issuing loans to certain types of companies. The loans are intended to help the
companies buy machinery and finance the construction, acquisition and rehabilitation of
plants. The loans are funded by bonds that are sold by the Authority and guaranteed by New
York State. We found that, because many of these loans have not been repaid, the
Authority's financial condition has deteriorated dramatically. During the five years ended
March 31, 1995, Authority expenses exceeded revenues by $66.4 million. With a reported
fund deficit of $42.7 million, the Authority may soon be unable to repay its bondholders. We
identified significant weaknesses in the Authority's procedures for reviewing and approving
loan applications, and noted that many of the loans that were approved appeared very risky.
In some cases, borrowers defaulted before making even a single repayment. We concluded
that some of the loans may have been subject to negligence, fraud, abuse or other
irregularities, and we referred such matters to the appropriate investigatory officials.
For a complete copy of 95-S-13 click here.
For a copy of the 90-day response click here.