Empire State Development official quits
Dennis Mehiel has resigned from Empire State Development just eight months after his appointment by Gov. Andrew Cuomo.
By Jeremy Smerd @smerd, March 2, 2012 3:44 p.m.
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Dennis Mehiel, a major Democratic donor and former candidate for lieutenant governor, has resigned as vice chairman of the Empire State Development Corp. eight months after his appointment by Gov. Andrew Cuomo.

The circumstances of his departure remain unclear and political insiders called the move odd. Mr. Mehiel, who is the chairman of cardboard company U.S. Corrugated, had wanted the prestigious state post, a source said.

His departure came as a surprise to the Cuomo administration. Mr. Mehiel and his wife Karen, who live on the Upper East Side, have donated nearly $100,000 to the governor's campaign fund in the past two years.
Mr. Mehiel spoke with Empire State Development President Kenneth Adams Friday morning to tell him he was leaving.

As early as last year, Mr. Mehiel told a senior Cuomo administration official that he might leave, explaining that he did not have time for the job because "things changed with his business," said a spokesman for Empire State Development.

"He left to pursue other business interests," the spokesman said.
Empire State Development is a quasi-state agency that each year awards subsidies worth hundreds of millions of dollars.

In addition to giving nearly $1 million to Democrats over the last decade, Mr. Mehiel was a political candidate in 2002 when he was the running mate of former comptroller H. Carl McCall, who lost to Gov. George Pataki. Mr. Cuomo opposed Mr. McCall in the Democratic primary.

The McCall-Mehiel ticket drew unwanted attention when it was discovered that Mr. Mehiel fathered two children with two women while married to his first wife, whom he divorced in 1999.

Wednesday, February 15, 2012
ESDC asks appellate court to deny full study of 25-year Atlantic Yards impacts (and alternatives); some judges skeptical, others wonder what harm it would do
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It was a somewhat uphill battle yesterday for the Empire State Development Corporation (ESDC) and developer Forest City Ratner (FCR), asking a state appellate court panel to overturn a lower court’s order that the agency study the impact of a 25-year Atlantic Yards buildout, solicit public comment, and conduct a public hearing.

A couple of the five judges were clearly skeptical of the state, with one citing the ESDC's "obstinate adherence" to the long-professed ten-year buildout.

Others, taking in the objections from the defendants, questioned whether a Supplemental Environmental Impact Statement (SEIS)--which would analyze those extended impacts and even consider alternatives to Phase 2, since as revising the project to diminish impacts or welcoming new developers--would really cause any harm.

Then again, questions from the bench do not necessarily indicate how a court will rule after analyzing the legal papers.

Atlantic Yards was approved in 2006, with a ten-year buildout, then revised in 2009, as Forest City reopened settled deals with the ESDC (regarding the timing of condemnations) and the Metropolitan Transportation Authority (regarding the payment of railyard development rights and the configuration of a replacement railyard), in order to save money.

As part of the 2009 approval, as the defendants stressed, the state did analyze the impacts of 15-year buildout (in the 2009 Technical Memorandum). In response to a lower court ruling by Supreme Court Justice Marcy Friedman, the state produced a document (the 2010 Technical Analysis) arguing that a 25-year buildout would not create any impacts not previously disclosed.

But that document was inadequate, argued the lawyers for the petitioners, community coalitions led by Develop Don’t Destroy Brooklyn and BrooklynSpeaks.

At the heart of the 35-minute argument before the Appellate Division, First Department, in Manhattan was whether an intense buildout of the 17-building project over a decade would be worse than an extended, if less intense, buildout over 25 years. The state says yes, the petitioners say no.

The legal dispute does not affect the building of the arena, nor the towers around it, but does address plans for and impacts of Phase Two of the project: the eleven towers east of Sixth Avenue, including those to be built on a platform over the Vanderbilt Yard.

A decision is expected in about two months. An appeal is not automatic unless two of the five justices dissent.

(The Local, edited by ex-Brooklyn Paper editor Gersh Kuntzman, called it a "bombshell that "[t]he lawyers don’t know when Bruce Ratner’s Atlantic Yards project will be completed — if it will be completed at all." I think everyone, from Bruce Ratner on down, has acknowledged continuing uncertainty about the project timetable.)

SEIS happening, but order unwelcome

While fighting the lower court's decision to order an SEIS, the ESDC has nonetheless begun conducting one, with a $1.7 million budget, as a spokeswoman explained last September, "to ensure that the impacts to the surrounding community are minimized to the maximum practicable extent."

Perhaps, the agency is hedging its bets; if the appellate court does not overturn the lower court's decision, at least an SEIS will be in place.

And if the decision is overturned, there may be no need to hold the public hearings associated with it (though attorneys for the petitioners said yesterday that they would).

So why have the state and FCR appealed, especially since a SEIS conducted by the ubiquitous environmental consultant AKRF would likely return results the ESDC wants?

Maybe it's precedent, maybe it's pride; they don't want to let stand Justice Friedman's series of decisions questioning the agency's transparency and candor.

And they also fear additional litigation that would cause further delays.

In the room

In the handsome courtroom at Madison Avenue and 26th Street, with elegant chandeliers, marble walls, rich wood fixtures, and wall paintings illustrating such concepts as "Justice," several veteran Atlantic Yards combatants were in the audience, in their respective clusters.

Among those backing the defendants were ESDC officials Arana Hankin, Rachel Shatz, and Robin Stout, and Forest City executive Jane Marshall. Among those backing the petitioners were Daniel Goldstein and Candace Carponter of DDDB, and Jo Anne Simon and Danae Oratowski of BrooklynSpeaks.

Opening flurry, and a questionable claim

No sooner did ESDC lawyer Philip Karmel begin his argument than he was interrupted by Justice Rolando Acosta.

“Can you explain what is the reason for your client’s obstinate adherence to this ten-year plan when evidence on the ground is different?” asked Acosta, pointing to the 2009 agreement Forest City signed with the Metropolitan Transportation Authority, allowing for 22 years to pay for development rights over the Vanderbilt Yard, casting doubt on the likelihood the project would be done in a decade.

“Yes, Your Honor,” replied Karmel, forced to dial back his usually hard-charging style. “We were not obstinately insistent on that schedule. What we did in 2006 was recognize considerable uncertainty....”

Justice Helen Freedman interjected to point out that the original EIS covered ten years.

“The original EIS recognized uncertainty in the construction schedule but identified ten years as a reasonable worst-case scenario” for the environmental review, asserted Karmel.

That sounded like a novel theory, since the Executive Summary of the Final EIS is pretty clear:
All construction is expected to be completed over a 10-year period; the number of construction activities would vary over time, and are divided, for purposes of the analysis, into two phases.
“The original EIS said there was uncertainty in the construction schedule,” Karmel repeated a few moments later. “There continues to be uncertainty.”

Practical impacts

What would be the practical impacts of doing an SEIS, asked Freedman.

The issue, said Karmel is whether new information would be developed that would determine that an extended construction schedule would identify new impacts--and ESDC has already done so.

Justice David Friedman pointed out that there were much less diminished penalties for Phase 2:

“There are significant penalties,” maintained Karmel, though that’s doubtful.

The “hard look”

Karmel tried to steer the argument back to his essential point: the issue is not whether the project timetable may have changed, it’s “whether ESD took a ‘hard look” at impacts, as required by state law.

“What is your empirical evidence," asked the skeptical Acosta, "to conclude that a buildout over a longer period of time results in less intense impacts?”

Karmel explained that the worst impacts would concentrate impacts like construction noise and traffic over a decade--and that they’d be attenuated if the project took 25 years.

“That sounds like a logical argument, but I’m not an expert,” Acosta followed up. “Did you do any empirical analysis?”

Karmel again pointed out that the agency looked at the duration of several impacts--though his adversaries contend that was not done in a holistic, cumulative way.

Practical impact

Friedman asked if the project would be delayed if the court does not overturn the decision, as requested by the state and FCR.

Karmel said no.

What about doing an SEIS, asked his colleague Freedman. What would be the cost?

“Certainly in excess of $1 million,” Karmel said.

Would there be any other consequences, asked Acosta.

“It introduces a degree of uncertainty about the project,” responded Karmel.

“Wouldn't it depend on the result?” chimed in Justice Angela Mazzarelli, the presiding justice.

Karmel indicated that it likely would prompt additional litigation.

Freedman asked about the Technical Analysis the ESDC conducted in 2010, in response to the lower court’s order.

“It’s a very high-quality analysis,” Karmel said, noting it was about 100 pages.

How big was the Final EIS?

Some 2000 pages, said Karmel, but it covered much more ground.

FCR case

After Karmel’s eleven minutes, Forest City Ratner attorney Jeffrey Braun took the podium. Braun can be bombastic, but in this case he was modulated, apparently having taken the temperature of the bench.

The lower court’s decision, he argued, can’t be reconciled with a case called Wilder, “one of several appellate decisions that have shown great skepticism about efforts to reopen environmental reviews.”

There have been no material changes in the physical components of the project, Braun said. The petitioners used business changes to force reconsideration of environmental impacts, he added.

Acosta queried him: doesn’t he think the increased time to obtain MTA air rights changes anything?

“I really don’t, Your Honor,” Braun replied.

Back to impacts

Friedman returned to the question of the impact of an SEIS.

A required SEIS, he said, would be “a distraction, it’s very expensive. It creates a cloud: ‘what’s the back end of the project?’”

Friedman countered the project has already been uncertain.

“There’s always an element of uncertainty,” Braun allowed, noting that case law does not require certainty by the state, just a “hard look.”

Petitioners’ case

As BrooklynSpeaks attorney Al Butzel, a wiry veteran of the Westway wars, took the podium, Friedman followed up: did ESDC take that required “hard look”?

No, replied Butzel in his low voice, citing the failure to analyze “long-term cumulative impacts of a construction process.”

Butzel cited affidavits from experts--derided by the opposition--about the impact of delays surrounding other projects in New York and Boston.

If construction continues, asked Mazzarelli, what would be the benefit of an SEIS?

“We expect that ESDC, properly directed by this court, will act in good faith” and mitigate the impacts of the rest of the project, Butzel said.

Freedman again pressed for details. It could identify new mitigation, Butzel repeated, or could find ways to accelerate construction.

“Your claiming they didn’t take a ‘hard look,’” Friedman asked.

“I certainly am,” Butzel responded. “They stuck to the ten-year schedule because they had financing coming up. If they agreed to do an SEIS, that opportunity might well have been lost.”

His point, as argued in legal papers: the state wanted to make sure the project was approved in 2009 to ensure the arena’s eligibility for tax-exempt bonds. An SEIS would have taken too long.

DDDB case

“There was no ‘hard look,’” added Butzel's co-counsel Jeff Baker, projecting at another level beyond Butzel. “There was a charade created.”

In 2009, he said, “on its own, Forest City Ratner decided to make a major change” in the project.

“But it’s not material, I heard them argue, to the environmental consequences,” responded Acosta.

“It was material enough for them to go through” the Urban Development Corporation (UDC) Act and produce the Technical Memorandum, Baker said.

Justice Sheila Abdus-Salaam asked Baker to again identify impacts not addressed if an SEIS were not granted.

“It’s multiple,” Baker said. “It goes under the rubric of community character.” He cited issues like noise and dust.

He reminded the court that the project was justified as eliminating the blight caused by the Vanderbilt Yard, but it was instead prolonging it.

Freedman asked about the remedies.

“The heart of an EIS is an alternatives analysis,” said Baker. He noted that the state had chosen a single developer but had never considered the consequences if FCR doesn’t have the wherewithal to go forward.

“Maybe it should be divided up,” he said.

It hearkened back to a claim parent company Forest City Enterprises made in November 2008, counting Atlantic Yards as among "Active Large Scale Projects Where We Control the Pace."

“They can’t get the benefit of misrepresentation,” Baker said in closing, referring to the discrepancy between the Development Agreement and the ten-year timetable.

In rebuttal

Karmel got a few minutes for rebuttal, but as he began to cite the 2009 Technical Memorandum, Freedman interrupted him twice, suggesting at one point, “Maybe the project should be changed.”

“We made a discretionary decision” that no more study was necessary, Karmel maintained.

“We already have taken a 'hard look' at neighborhood character,” he insisted.

Doesn’t a switch from ten to 25 years, asked Mazzarelli, have an impact on such things as neighborhood investment, whether people decide to buy or sell next to a project.

Karmel said the agency had proceeded thoroughly: “The type of issue that is being presented is not amenable to further analysis."

Acosta suggested that the 2006 FEIS and the 2010 Technical Analysis were “worlds apart.”

Karmel, a bit exasperated, replied, “We are not required to do an SEIS-level analysis to determine whether to prepare an SEIS.”

He acknowledged that impacts would be significant, but said the state agency had decided that a project of greater duration and less intensity would not be the worst case.

“That discretionary decision,” he declared in closing, “is entitled to deference by this court.”

Comments afterward

If they're obligated to do a Supplemental Environmental Impact Statement, Butzel said, they'd have to examine modular construction. "You'd probably see a very significant Supplemental EIS." (His statement that $4 million had been appropriated was in error.)

Baker noted that there was no opportunity for public comment on the 2010 Technical Analysis, while there would be such comments in the case of a SEIS.

Is the Wilder case different? Butzel said yes, as "people weren't arguing about the length of the construction... We have a much stronger argument: the elongation of construction itself has very significant impacts."

If the state does an SEIS, said Baker, and change Phase 2, then that should invalidate the parts of the Development Agreement regarding Phase 2.

FCR can't rely on the Development Agreement, he said, "because that agreement was premised on a n illegal analysis that predated it." Will there be a fight about that? "I'm sure there will be."

Are there time pressures to getting the SEIS done? No, said Baker, because the Development Agreement doesn't impost such pressure on Phase 2.

"Their time pressures, which they're having trouble meeting, is their deadlines under Phase 1," he said. "Are they going to get all the infrastructure in place before the arena opens in September? It doesn't look like it, or they're only doing it by increasing the impacts on people. Are they going to get the buildings built that they have to, by the various dates."

Forest City has until the middle of next year to get the first tower started.

Gov. Cuomo delays in hiring boss of the state's economic development agencyComments (4)
BY KENNETH LOVETT / DAILY NEWS ALBANY BUREAU CHIEF
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ALBANY - Gov. Cuomo has made creating "jobs, jobs, jobs" a top priority, but he's raising eyebrows over one he hasn't filled: boss of the state's economic development agency.

Cuomo aides say they're revamping their economic development strategy and insist the vacancy is not because they can't find a qualified candidate who wants the job.

They say Lt. Gov. Robert Duffy will oversee the job creation effort, and Empire State Development Corp. will have a reduced role.

"No one has turned us down," Cuomo spokesman Josh Vlasto insisted.

"We are restructuring the agency, and that must obviously be done before we fill any positions because you can't fill a position that doesn't exist," he said.

Albany insiders aren't buying that argument. "They're trying to put their best face on it," one source said. "It's a hard environment to get people into public service."

Cuomo has reached out to several business bigwigs to gauge interest but has been rebuffed, sources said.

Capitol watchdogs note that Cuomo's elected predecessors, Democrat Eliot Spitzer and Republican George Pataki, named their chief economic guru before even taking office.

"You think you'd want to send an immediate signal to the business community by having that appointment ready to roll," said one former state economic development official.

Big-time Democratic donor Dennis Mehiel, who made his fortune in the corrugated cardboard business, is the latest name to surface as a possibility for the economic slot.

Mehiel - who once ran for lieutenant governor - and his wife donated $80,862 to Cuomo's gubernatorial campaign.

"I'm not aware of who is under consideration for that post," Mehiel said yesterday.

Cuomo aides dismiss the notion that "nobody is home" at the Empire State Development Corp. They note holdover Chairman Dennis Mullen has agreed to remain until Cuomo picks someone.

Duffy, a former mayor with a law enforcement background, has been working to create 10 regional councils to spur job creation in each part of the state.

Cuomo has argued that each region has different needs and assets, and he said they'd be better served by the councils than by one central agency.

With Glenn Blain

klovett@nydailynews.com

Personal Life Of Candidate Ignites Dispute
By RICHARD PÉREZ-PEÑA and RANDAL C. ARCHIBOLD
Published: August 26, 2002

Dennis Mehiel, a Democratic candidate for lieutenant governor, acknowledged yesterday that he had fathered two children by two women while still legally married to his first wife.

The revelation quickly turned into an exchange of accusations between the campaigns of the two Democratic candidates for governor, Andrew M. Cuomo and H. Carl McCall, over who had leaked the story to the news media.

Aides to Mr. Mehiel and Mr. McCall, who are closely allied, said it was leaked by the Cuomo campaign. Aides to Mr. Cuomo strenuously denied that, saying that the McCall camp was trying to turn the story into an unwarranted attack on Mr. Cuomo.

Mr. Mehiel separated from his first wife, Edith, in 1992, his aides said. A girl fathered by Mr. Mehiel was born to another woman later that year, and Mr. Mehiel has supported his daughter financially and been involved in her upbringing ever since, they said. They said the mother did not want her name disclosed to the news media and did not want to be interviewed.

Corruption at shadow agencies undercutting taxpayers’ trust in NYS
By SHERRY HALBROOK,
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With the deadline for filing state and federal taxes just a few weeks away, taxpayers can take some comfort in the knowledge their hard-earned dollars will be put to good use in supporting the public services they depend on every day. Or can they?

“We all want to believe the state works hard to get the maximum value for our tax dollars,” said PEF President Roger Benson, “and when it comes to the services provided directly by state employees that is generally true. In fact, the state sometimes try to stretch those dollars too far.

“But a large part of our tax dollars are funnelled to public authorities, public-benefit corporations and private contractors, and that’s a very different story. “The difference is accountability. We have laws and a system of checks and balances to keep the powerful light of public scrutiny on government and make it accountable to us.

“But when government hands off its responsibilities and billions of tax dollars to entities outside the range of public scrutiny and oversight, accountability gets lost in the shadows,” Benson said.

For instance, the heads of some state agencies, such as the state Health Department, also head the agencies’ shadow counterparts and draw large salaries from both.

“It’s a perfect environment for wasteful spending, poor service, sweetheart deals, nepotism, corruption and who knows what else,” Benson said, “so it’s hardly surprising when scandals erupt in the news.”

The state has become so scandal ridden, that a public-opinion poll conducted by Quinnipiac University in November found 72 percent of New Yorkers believe their state government is corrupt.

The public’s perception may not be far from the mark. Based on annual U.S. Justice Department reports on federal prosecutions, New York state ranks 10th in the nation in terms of public corruption convictions (divided by 2002 population) for the period from 1993-2002, according to an analysis by the Corporate Crime Reporter.

Giving NY a bad name

In just the last 12 months, public scandals have rocked: the Long Island Power Authority (LIPA); the NYS Racing Association; the state University of New York Construction Fund; the Metropolitan Transit Authority; the state Institute for Entrepreneurship; the Port Authority of New York and New Jersey; the state Dormitory Authority; and the School Construction Authority, among others.

For example, an investigation by the Office of the State Comptroller revealed LIPA inappropriately spent $45,000 on political polling.

Another example involved the executive director of the NYS Bridge Authority who abruptly resigned last May during an investigation into his travel expenses by the state Inspector General. The IG’s report questioned billings to the state for trips throughout the United States and as far away as Japan.

In December, officials at the Metropolitan Transit Authority were arrested on racketeering charges. The indictment listed 116 counts, including charges against the MTA’s building manager, former director of facility operations and former facilities manager. They were accused of helping a plumbing contractor bilk the MTA out of $10 million in public funds.

Only The Shadow knows

Beyond the concerns about corruption, state legislators are finally starting to listen to PEF’s warnings that allowing a kind of parallel universe of shadow government to evolve means that supposed state budget “facts and figures” are inadequate because they reflect only part of the picture.

How are your tax dollars being spent?

Only the shadow knows!

“The increasingly popular practice of shifting state work, state workers and state revenues into shadow agencies can create a false impression of efficiency and economy,” Benson said.

In fact, no one seems to know exactly how big shadow government is in New York state, how many tax dollars are flowing into it, how many employees it supports or how honestly and effectively it serves the public trust.

For instance, when PEF asked the chief fiscal and chief personnel officers of the state Department of Environmental Conservation how many non-DEC people worked at that agency, they said they didn’t know.

When PEF took a close look at a flow chart of staff at the DEC Bureau of Program Resources and Flood Protection, the union found 27 of the 37 employees actually work for shadow agencies — RACNE (Regional Applications Center for the Northeast) and NEIWPCC (New England Interstate Water Pollution Control Commission).

So many non-DEC employees work in the department, that RACNE recently hired a personnel manager of its own. That means DEC is now paying for its own personnel department and RACNE’s.

“This isn’t just shadow government, but parallel government,” Benson said, “and it’s all subsidized by tax dollars. When DEC can’t fill a vacant position because of the state hiring freeze, it asks RACNE or NEIWPCC to do it.”

Growing like weeds

Shadow agencies are supposed to exist only to supplement and support the work of government agencies. But, now, the shadow counterparts are actually growing faster and bigger than the agencies that foster them.

Health Research Inc. (HRI) now employs approximately 1,800 people, an increase of 41 percent since 1994. Meanwhile, the state Health Department’s workforce shrank. Since 2000, HRI’s workforce has grown 17 percent, while DOH has shed 4 percent of its employees.

The same holds true for dollars. While the state earmarked 16 percent more from its general fund for DOH in 2004 ($165 million) than in 1999 ($143 million), program expenses for HRI jumped 62 percent in the same time period, from $216 million to $351 million.

It hasn’t been easy to get the facts about HRI’s budget or operations.

HRI refused a 1995 request for full financial disclosure from the state comptroller. And the shadow agency stonewalled PEF’s requests under the state Freedom of Information Law (FOIL), until PEF took its case to court.

“That’s when HRI finally released some information,” Benson said, “along with its legal opinion that it’s exempt from the FOIL.”

Most of the information PEF has unearthed about HRI comes from its federal tax filings that claim tax-free, not-for-profit status.

But the shroud of shadows extends well beyond these “not-for-profits.” Most of the money they spend comes from state and federal taxes and it flows right on through their fingers to the pockets of private contractors.

HRI, for example, funnelled $83 million to the private sector last year, spending $12 million on consultants, $68 million on subcontracts and $3 million on technical services. And the shadow agency spent half a million dollars on public relations.

“Who knows how responsible these expenditures were?” Benson said. “How can anyone know, so long as they’re allowed to hide in the shadows?”