Empire State Development Corporation
Oversight of Subsidiary Operations 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. We examined ESDC’s oversight of its subsidiary operations.
We found that ESDC has an appropriate process in place to control and authorize the creation of subsidiary corporations, and actively monitors subsidiaries that are responsible for managing ongoing large-scale economic development projects. However, ESDC does not adequately oversee the status of many of its other subsidiaries, and rarely dissolves subsidiaries once their purpose has been achieved and they are no longer needed. For example, ESDC reported that 70 subsidiary corporations were in existence as of March 31, 2004. However, we determined that 202 subsidiaries were legally in existence at that time, and almost 100 of these subsidiaries were probably inactive and should probably be dissolved because there no longer appeared to be any reason for them to exist. We recommend that significant improvements be made in ESDC’s recordkeeping for and control over subsidiary operations. We further recommend that unneeded subsidiaries be dissolved on an ongoing basis, and the large backlog of unneeded subsidiaries be dissolved at once.
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