MINUTES OF THE MEETING
THE GOVERNANCE COMMITTEE
A meeting of the Governance Committee was held via videoconference at the Authority’s offices at 501 Seventh Avenue, New York, New York, 123 Main Street, White Plains, New York and 95 Perry Street, Buffalo, New York at approximately 8:39 a.m.
The following Members of the Governance Committee were present:
Gil Quiniones Chief Operating Officer
Terryl Brown Executive Vice President and General Counsel
Joan Tursi Senior Vice President – Enterprise Shared Services
Joseph Gryzlo Vice President of Labor Relations and Chief Ethics and
Patricia Leto Vice President - Procurement
Lesly Pardo Vice President – Internal Audit
Karen Delince Corporate Secretary
Angela Graves Deputy Corporate Secretary
Dennis Eccleston Chief Information Officer
Rob Mullin Director – Fuel Planning and Operations
Mark O’Connor Director – Real Estate
Shannon Sramek Senior Treasury Analyst
Mary Jean Frank Associate Corporate Secretary
1. Minutes of the Regular Meeting of November 12, 2009
The minutes of the Committee’s meeting of November 12, 2009 were adopted.
2. Review and Recommendation of Guidelines and Procedures
Pursuant to the Authority’s implementation of the Public Authorities Accountability Act of 2005 (“PAAA”), the Authority’s Governance Committee reviews the Guidelines for Procurement Contracts, the Guidelines and Procedures for Disposal of Personal Property, the Guidelines and Procedures for Disposal of Real Property and the Guidelines and Procedures for Acquisition of Real Property annually, and approves any changes to such Guidelines. In addition, Annual Reports of Procurement Contracts with a value of $5,000 or greater; Disposal of Personal Property with a value of $5,000 or greater and Disposal of Real Property with a value of $15,000 or greater are required to be reviewed by the Authority’s Trustees.
The Authorities Budget Office (“ABO”)
and the Office of the State Comptroller (“OSC”) have an online electronic data
entry, collection and reporting system, known as the Public Authorities
Reporting Information System (“PARIS”).
They have designed electronic templates to capture the additional
The Authority’s PARIS reports for the Authority’s Guidelines for Procurement Contracts, Guidelines and Procedures for the Disposal of Personal Property, Guidelines and Procedures for the Disposal of Real Property and Guidelines and Procedures for the Acquisition of Real Property were completed and submitted by the March 31, 2009 deadline and were certified by the Authority’s Chief Financial Officer.
Chapter 506 of the Laws of 2009 (“Chapter 506”) made substantial amendments to the Public Authorities Law (“PAL”), with two changes in the procurement area, effective as of March 1, 2010. First, Section 14 of Chapter 506 adds a new PAL §2879-a, making certain public authority contracts potentially subject to the review and approval of the State Comptroller. It also directs the State Comptroller to promulgate rules and regulations in connection with this review. Staff anticipates further revisions to the Guidelines once those regulations are published.
In addition, Section 21-a of Chapter 506 amends Executive Law §313(13) to clarify that contracts for legal, financial and other professional services, as well as banking relationships, the issuance of insurance policies or contracts and contracts with a contracting agency for the sale of bonds, notes or other securities come within Executive Law § 310(13)’s definition of “state contracts,” and therefore are subject to the provisions of Executive Law Article 15-A relating to participation by minority group members and women with respect to State contracts.
2.1 Guidelines for Procurement Contracts
In compliance with the applicable provisions of Section 2879 of the Public Authorities Law, as amended, the Authority has established comprehensive guidelines detailing its operative policy and instructions concerning the use, awarding, monitoring and reporting of procurement contracts.
The Guidelines describe the Authority's process for soliciting proposals and awarding contracts. Topics detailed in the Guidelines include solicitation requirements, evaluation criteria, contract award process, contract provisions, change orders, Minority/Women Business Enterprise (“M/WBE”) requirements, employment of former officers and reporting requirements. The Guidelines have been designed to be self-explanatory.
These Guidelines, approved by the Authority's Trustees, were initially implemented on January 1, 1990, and have been reviewed and amended annually as deemed advisable and necessary since then.
The previous revised Guidelines for Procurement Contracts, as presented to the Governance Committee on February 22, 2009, were reviewed and approved by the Trustees at their meeting of March 31, 2009.
Chapter 506 of the Laws of 2009 made substantial amendments to the Public Authorities Law (“PAL”), with several changes governing procurement contracts. In order to make the Procurement Guidelines compliant with the law, staff recommended a number of changes, the most significant of which is highlighted below:
Additionally, the more significant changes not related to Chapter 506 are highlighted below:
These Guidelines will become effective as of March 1, 2010 and will be posted on the Authority’s website. On or before the 31st day of March, as approved by the Trustees, these Guidelines will be filed with the Division of the Budget, the Department of Audit and Control, the Department of Economic Development, the Senate Finance Committee, the Assembly Ways and Means Committee and the Authorities Budget Office.
2.2 Guidelines and Procedures for the Disposal of Personal Property
In compliance with the Public Authorities Accountability Act (“PAAA”), the Authority established and is required to annually review and approve Guidelines for the Disposal of Personal Property. Personal Property is defined to include, but is not limited to, material, tools, equipment or vehicles. Disposal of such Property will be performed in accordance with these Guidelines. The Guidelines were initially approved by the Trustees in March 2006 and have been reviewed annually and amended as necessary since then. Chapter 506 of the Laws of 2009, effective as of March 1, 2010, made substantial amendments to the Public Authorities Law (“PAL”), including changes to certain procedures governing the disposal of Personal Property. The most significant of the statutory changes are highlighted below:
2.3 Real Property Disposal Guidelines
In compliance with the PAAA, the Authority established and is required to annually review and approve Real Property Disposal Guidelines. The Real Property Disposal Guidelines set forth the methodology the Authority uses in the following areas:
· Maintaining an inventory of real property interests owned or under the jurisdiction of the Authority;
· Disposal of such interests when they become surplus to the Authority’s needs;
· Making annual reports of such transactions; and
· Designating a Contracting Officer responsible for implementing such Guidelines.
Chapter 506 of the Laws of 2009 made substantial amendments to the Public Authorities Law (“PAL”), including changes to certain procedures governing the disposal of Real Property. In order to make the Real Property Disposal Guidelines compliant with the law, staff recommends changes, the most significant of which are highlighted below:
2.4 Real Property Acquisition Guidelines
In compliance with the PAAA, the Authority established and annually reviews Real Property Acquisition Guidelines. The Real Property Acquisition Guidelines set forth the methodology the Authority will use in the following specific areas:
· Acquisition and evaluation of real property;
· Duties of the Director of Real Estate;
· Environmental compliance;
· Ethical considerations; and
· Annual reporting.
Chapter 506 of the Laws of 2009 made substantial amendments to the Public Authorities Law (“PAL”), including changes to certain procedures governing the acquisition of Real Property. In order to make the Real Property Acquisition Guidelines compliant with the law, staff recommended changes, the most significant of which is highlighted below:
3. Procurement, Fleet, Fuels, Real Estate and Corporate Finance
Divisions’ 2009 Annual Reports__________________________
Ms. Patricia Leto presented an overview of the Authority’s Procurement activities, with Mr. Rod Mullin, Ms. Shannon Sramek and Mr. Mark O’Connor reporting on fossil fuel purchases, corporate finance activity and acquisition and disposal of real property, respectively.
3.1 Procurement Contracts
· During 2009, 2,159 contracts (excluding fossil fuel) greater than $5,000 in value were active.
· The overall value of these contracts was more than $1.3 billion, with $313 million in contract expenditures for 2009.
· More than 45% of the contracts were for the purchase of equipment and commodities.
· Services such as technician work and contracted personnel accounted for 33% of the contracts.
· More than 13% of the contracts were for consulting services (e.g., engineering, design, and specialized analysis).
· Approximately 9% of the contracts are for construction work.
· Based on the total value of the contracts included in the summary, approximately 94% of the total dollars expended (excluding fuels and corporate finances) were for contracts that were competitively bid
· In terms of the number of contracts processed, approximately 68% of the contracts were competitively bid, while 32% were sole-awards, including the purchase of highly specialized spare parts and services from original equipment manufacturers and procurement of services on an emergency basis and from proprietary sources.
In response to a question from Trustee Cusack, Ms. Leto said that the percentage of sole-source contracts does not vary much from year to year.
3.2 Disposal of Personal Property
In 2009, the Authority received $852,612 for all reportable personal property disposed of that had a value of more than $5,000.
There were $300,171 in non-fleet personal property disposal transactions over $5,000 in value and $552,441 (net after commission and transportation costs were deducted) in fleet-related disposal transactions over $5,000 in 2009, for a total of $852,612 in reportable personal property disposals. (In addition, an additional $137,011 was received for the sale of fleet units with a value of less than $5,000.
Responding to a question from Governance Committee Chairman Nicandri, Ms. Leto said that the selection of fleet auctioneers is subject to the Trustees’ approval.
3.3 Acquisition and Disposal of Real Property
· The Authority acquired four danger-tree easements off its existing Niagara-Adirondack Tie Line rights-of-way for vegetation management and removed dangerous vegetation on the land owned by two other individuals through negotiated settlements. In 2008, the Authority acquired 135 danger-tree permits to eliminate dangerous vegetation near the Willis-Plattsburgh, Niagara-Adirondack, Moses-Adirondack, Fitzpatrick-Edic and Moses-Willis-Plattsburgh lines. The Authority also issued 37 land-use permits for the Authority’s easement areas. In response to a question from Committee Chairman Nicandri, Mr. O’Connor said that the land-use permits were primarily for roads, driveways and connecting utility distribution lines to houses.
The available space in the Authority’s Clarence D. Rappleyea
headquarters office building in
· The Authority entered into a lease amendment for its Albany office that cut the amount of space it uses on the 10th floor of 30 South Pearl Street by nearly half (from 169,234 rentable square feet (“rsf”) to 8,760 rsf. The amended lease terminates on February 28, 2014.
The Authority’s lease of space at 1633 Broadway,
As part of the St. Lawrence Project relicensing Settlement
Agreement in 2003, the Authority agreed to several changes in the Project
boundary that would remove approximately 1,340 acres from the Project. The Authority intends to transfer
jurisdiction over approximately 741 acres at
As part of the Niagara Relicensing Settlement Agreement, the
Authority was obligated to convey certain properties to various entities. During 2008, the Authority conveyed
approximately 42 acres to the
3.4 Supplier Diversity Program
· In 2009, the Authority awarded $29.1 million (or 36.4% of its reportable expenditures) on contracts with certified M/WBEs, representing both direct contracts and subcontracts and including construction and energy efficiency-related work.
· The Authority’s annual goal for the use of New York State Certified Minority/Women-Owned Businesses (“M/WBEs”) is 6% of its non-specialty procurements. The Authority does not include specialty procurements such as turbine runners, transformers, circuit breakers, other large electrical equipment, natural gas and other specialized goods and services since there are no M/WBEs available to provide these goods and services.
· The Authority continues an active outreach program with various M/WBE organizations and trade associations. The Authority hosted its 19th Annual Purchasing Exchange in June 2009 in the White Plains Office and a second (in conjunction with National Grid and Empire State Development Corp.) to support the Authority’s Environmental Justice initiatives in October 2009 in Buffalo. Nearly 500 representatives of M/WBEs attended and met with representatives of more than 50 New York State, federal, New York City and local government entities, as well as private companies.
· Recently enacted legislation requires State agencies and authorities to post M/WBE contractor utilization plans on their websites. Staff is developing an implementation system to ensure the Authority’s continued compliance with New York State law.
Ms. Leto said that it had been a great year for the Authority’s supplier diversity efforts, thanking Ms. Debra White and Mr. Yves Valbrun for their hard work. Governance Committee Chairman Nicandri and Trustee Cusack congratulated staff on a job well done.
3.5 Inventory Statistics
As of December 31, 2009, overall inventory levels at all of the Authority’s operating facilities totaled $86.29 million, compared to a year-end total in 2008 of $87.87 million. The 2009 year-end total includes a $1.7 million reduction for field poles issued to the Niagara Rotor Poles Replacement Project in 2009.
An award for the construction of the new Niagara Warehouse and Office Facility has been issued. The Warehouse will be designed to optimize the use of volume with modern racking and storage systems whenever possible. Construction is scheduled for completion by July 2011.
3.6 Fossil Fuels Activity
· In 2009, a total of $252 million was spent on fuel purchases -- $243 million for natural gas and related costs and $9 million for fuel oil. These fuel purchases were carried out through 47 contracts for natural gas and fuel oil, as well as pipeline transportation and related services.
· The price of natural gas is about $5.50 per dekatherm (the equivalent of 1 million Btus).
· Crude oil is currently trading at $78 a barrel, with the price of the oil used at Flynn at $87 a barrel and the jet/kero used at the 500 MW plant at $94 a barrel.
· A $4.7 million contract with Allied Energy Resources, a New York State-certified M/WBE, was no included in the report.
3.7 Corporate Finance Activity
The “Corporate Finance Addendum” for the Annual Report of Procurement Contracts identifies non-procurement items paid during the year for unique and specialized services requiring a broad depth of knowledge and expertise that are provided by a limited group of firms. In 2009, the total amount for these items was $2.8 million. The non-procurement items include trustees and paying agent services, commercial paper remarketing services, escrow agent services and fees paid for revolving credit agreements supporting the Authority’s Commercial Paper Programs and Adjustable Rate Tender (“ART”) Notes. The fees associated with the revolving credit agreements for the Commercial Paper Programs accounted for $2.1 million of the total spent in 2009
In response to a question from Governance Committee Chairman Nicandri, Ms. Leto said that the Authority is waiting for guidance from the Office of the State Comptroller (“OSC”) about whether these contracts will be subject to OSC review in accordance with the recently enacted amendments to the Public Authorities Law.
4. Recent Developments and Status of NYPA’s Ethics Programs
Mr. Joseph Gryzlo provided an overview of the Ethics Office’s key initiatives. There were 101 ethics inquiries in 2009, up from 80 in 2008. He said that the principal substantive issues arising under the ethics laws and/or the Authority’s Code of Conduct since his last report to the Governance Committee in November 2009 fall into the following categories:
Appearance of impropriety 3
Outside activities 2
Outside employment 5
Research projects 2
Unwarranted privilege 5
Mr. Gryzlo said that these categories are consistent with those in previous reports, characterizing the volume and depth of inquiries as a good thing. He said that while the bulk of inquiries still come from the White Plains Office, more inquiries were coming from the operating facilities, and attributed this to the training that had been provided on the revised Code of Conduct, which now covers bargaining unit employees for the first time. He said the Code of Conduct had been revamped to make it more efficient and user friendly. The objective is to have employees use the Code and raise ethics questions or concerns relating to their work responsibilities. Gift inquiries typically rise during the holiday season, but gifts also include such intangibles as travel, lodging and meals, which are generally off limits for employees. He said the Ethics Office strives for consistency in the way it handles each inquiry. Ms. Louise Nestler, the Assistant Ethics Officer, does an excellent job as the gatekeeper for inquiries coming into the Ethics Office.
The Ethics Office will submit the required annual Financial Disclosure report to the Commission on Public Integrity by this year’s deadline of February 28. The report will contain the Authority’s list of employees holding designated “policy-making” positions, All such employees, as well as those whose annual salaries exceed $88,256 as of April 1, 2010 are required to file an annual Financial Disclosure Form with the Commission by May 17, 2010. The Authority will apply for title exemptions for several positions filled by employees represented by the UWUA Local 1-2 in the Southeastern New York region.
The Ethics Office is working with Information Technology to customize software to track both ethics casework and compliance-related requirements in conjunction with the Enterprise Wide Risk workgroup.
In response to a question from Governance Committee Chairman Nicandri, Mr. Gryzlo said that this year’s Financial Disclosure form can be filed online by simply modifying last year’s online form.
5. Amendments to Charter
Ms. Terryl Brown presented the highlights of staff’s recommendations to the members of the Governance Committee.
Article V(3) of the NYPA By-Laws as amended on January 26, 2010 requires the Governance Committee to consist of three eligible Trustees who are independent members and who possess the necessary skills to understand the duties and functions of the Governance Committee. It charges the Committee with the responsibility of the keeping the Trustees informed of current best governance practices; reviewing corporate governance trends; recommending updates to the Authority's corporate governance principles; advising appointing authorities on the skills and experiences required of potential Trustees; examining ethical and conflict of interest issues; performing Trustee self-evaluations; recommending by-laws which include rules and procedures for conduct of Trustee business; and performing such other responsibilities as the Trustees shall from time to time assign to it.
Accordingly, amendments to the Governance Committee Charter would implement the following changes:
· The Committee must review the Code of Conduct at least annually. (The interval for this responsibility was previously unspecified.)
· Committee members are required to possess the necessary skills to understand the duties of and functions of the Committee.
· The Committee must examine ethical and conflict of interest issues.
· The Committee must perform board self-evaluations.
· The Committee may recommend by-laws which include rules and procedures for conduct of board business.
· The Committee is now responsible for the review and approval of non-statutory officers hiring.
Responding to a question from Governance Committee Chairman Nicandri, Ms. Brown said that the Governance Committee Charter was being revised in order to ensure that the Authority is functioning according to best governance practices. She said that the revisions incorporate some of what Navigant recommended, but that much of what Navigant recommended was not workable for the Authority.
In response to another question from Governance Committee Chairman Nicandri, Ms. Brown said that the newly created Finance Committee would not be responsible for any of the areas now covered by the Audit and Governance Committees. Ms. Delince said that the Finance Committee was responsible for the issuance of Authority debt and Ms. Brown added that the Finance Committee would meet once a year.
On motion made and seconded, the members of the Governance Committee voted to recommend that the revised Charter be approved by the Authority’s full Board of Trustees.
6. Next Meeting
The next regular meeting of the Governance Committee will be held on a date to be determined.