New oversight could make scandal-plagued SUNY Poly projects more transparent. But at what cost?

University at Buffalo's New Medical School under construction last year at the Buffalo Niagra Medical campus. (Brendan Bannon)

When news broke last month that some of Gov. Andrew Cuomo’s closest associates were being charged with bid rigging, bribery and fraud, allegedly exploiting the very programs used to carry out Cuomo’s signature economic development initiatives, the governor began the work of shifting oversight and separating the programs from the alleged crimes.

A day after the charges were formally brought by the U.S. attorney’s office, Cuomo announced in Buffalo that Howard Zemsky and his team at Empire State Development would take control of all the economic development projects run through the SUNY Polytechnic Institute and its quasi-governmental subsidiaries.

“Howard's first mission is to learn from what happened and to see how we improve the system to make sure this never happens again," Cuomo said. "I want the taxpayers of New York to know that every dollar is guarded and guarded professionally.”

But so far details on how the transition will work have been scant.

Zemsky recently said that the transition has become a top priority for his team. Neither Zemsky nor Chris Schoepflin, ESD’s Western New York regional director, agreed to be interviewed for this article, but an ESD spokesperson provided a statement on behalf of the agency.

“We (ESD) are currently in the process of identifying and assessing the steps necessary to establish ESD’s oversight of projects within SUNY Polytechnic Institute’s economic development portfolio,” the spokesperson said. “During this transitionary period, ESD will conduct our standard due diligence on all projects with the goal of continuing to foster economic development and job growth throughout the state.”

Many things remain unclear, including whether SUNY employees will now be under the direction of Zemsky, or whether the administration even has the legal authority to transfer oversight of the projects midstream.

But many observers see this as a potentially positive development.

Michael Elmendorf, president and CEO of the Associated General Contractors of New York, said his organization and contractors around the state have long sought changes that could come with the shift in oversight, including more open reporting in the bidding process and more transparency from state agencies that administer the projects throughout the construction process.

Elmendorf said such changes would make for a more level playing field for everyone involved, including the public.

“We need to try to make sure that this really ugly situation is an opportunity to make some real improvements,” he said. “We’ve got some really specific ideas on how to do that, and it all comes down to one thing, and that’s increased transparency.”

However, with that transparency could come further delays. State leaders often argued that by having government-associated nonprofits like Fort Schuyler Management Corp. and Fuller Road Management Corp. administer projects, they were able to move with the speed that the modern construction industry demands.

Even under the SUNY Poly system, the state often struggled to keep up on payments to contractors. In Buffalo, Syracuse and Albany, subcontractors have walked off the job at state run projects, or threatened to.

“We need to try to make sure that this really ugly situation is an opportunity to make some real improvements.” 

– Michael Elmendorf, Associated General Contractors of New York.

Delayed payments even showed up in the criminal complaint from the U.S. attorney's office. Officials at COR Development, a Fayetteville-based developer at the center of one of the alleged schemes, sent emails pressuring pressuring Todd Howe, a lobbyist who was also working for SUNY Poly at the time, and Joseph Percoco, one of Cuomo’s top aides and close friends, to get the funds disbursed to their company.

“He built one building on time and completed it and can’t get final payment and he’s halfway done on a second building and hasn’t gotten paid a penny, we constantly ask him to help us,” Howe wrote to Percoco and another state official in response to complaints from COR Development president Steve Aiello.

Reporting from state agencies on their payment of vendors and contractors would hold them accountable and cut down on delays like those COR executives were experiencing, Elmendorf said.

“You shouldn’t have to call in political favors to get paid in a timely manner,” he said.

Assemblywoman Crystal Peoples-Stokes, who has praised Cuomo’s focus on upstate New York, said the expected shift in oversight does raise some concerns about the expediency with which construction projects will be completed. The additional scrutiny and requirements that will come under ESD’s supervision could create greater obstacles for builders.

“Not only can it slow things down, but it can make things not happen at all,” Peoples-Stokes said. “That is a possibility.”

Constuction occurs in the shadow of One Seneca Tower, Buffalo's tallest building. (Brendan Bannon)

However, state leaders need a system that can both provide transparency and deliver efficiently for contractors, Peoples-Stokes said, while adding that she believes Zemsky is capable of achieving the right balance.

“In many ways you can’t really control how people are going to deal with whatever their respective responsibility is,” she said. “What you can do is put all the things in place that will have the ability to look at those things, should anyone want to look, and hopefully it won’t be one of those things that will slow down the process.”

In this uncertain situation, there is one matter of widespread agreement: Zemsky, Cuomo's top economic development official, is the right man to clean up the mess allegedly made by other former aides to the governor.

“We have a lot of faith and trust in Howard Zemsky and his staff’s ability to handle the increased workload that they’re going to have,” said Zack Hutchins, communications director for the Business Council of New York State. “While it’s probably natural to assume that there will be some hiccups as the process is changed, we take Howard Zemsky at his word that he would expect nothing less.”