What is the Public Authorities Control Board?

On Monday, the New York state Senate announced that it was appointing state Sen. Michael Gianaris to represent the legislative body on the Public Authorities Control Board, an obscure state board with three voting members, any one of whom could veto parts of the deal to bring Amazon’s new headquarters to Long Island City. Gianaris, whose Queens district includes Long Island City, has been one of HQ2’s most vocal critics, and his appointment to the PACB has been seen by some as an attempt to stop HQ2 in its tracks. But a lot is still unknown about the board’s authority, how it could affect the HQ2 deal, and whether Gov. Andrew Cuomo will confirm the appointment of Gianaris to the board.

Here’s what we do know about the PACB.

What is the Public Authorities Control Board?

The Public Authorities Control Board is empowered to authorize 11 statewide public authorities’ ability to enter into any sort of project-related financing. The board was created in the 1970s, in the aftermath of a state fiscal crisis in which the New York state Urban Development Corporation and the New York state Housing Finance Agency were thought to have overstretched themselves and incurring too much debt in building projects, according to a former member of the board. To create some regulatory oversight by state government, the PACB was introduced to give the governor, state Senate and Assembly approval authority over certain public authorities creating any indebtedness or putting state assets at risk with their project financing.

Today, the PACB still serves the same purpose. It’s made up of three voting members appointed by the governor, state Senate and Assembly, and each voting member has veto authority. The board must come to unanimous agreement on approving project financing like grants or state-supported bonds.

What authority does the PACB have to approve or disapprove Amazon’s new headquarters?

In the $3 billion deal New York offered Amazon to bring the company’s new headquarters to Long Island City, only a portion of that – up to $505 million in a state grant – is theoretically subject to approval by the board, according to experts. The nearly $2.5 billion in tax incentives that Amazon has been offered are as-of-right and not contingent on any board’s approval.

But the plan for Amazon’s new headquarters has introduced some doubts about whether any financing aspects of the General Project Plan – the broad development plan created by Empire State Development that deals with land use and environmental impact – will go before PACB. Last year, Gov. Andrew Cuomo said that the project plan would go before the board, though in an interview with Brian Lehrer on WNYC on Tuesday, Cuomo didn’t specify which aspects of the deal would require approval. “Depending on the exact design of the transaction will depend on the approvals we need,” he told Lehrer. In November the governor’s budget director and his appointee to the PACB, Robert Mujica Jr., said that the capital grant would not go before the board, and the governor has said that the grant would not require PACB approval.

“My understanding of the PACB's power is they have the power to approve project financing, and in the case of Amazon, that would be the state's discretionary construction grant for up to $500 million and change,” said John Kaehny, executive director of Reinvent Albany.

Former Assemblyman James Brennan also interprets the PACB’s powers to include approval of the state grant being offered to Amazon. “The statute kind of suggests that anything that might put the state at risk in some way directly or indirectly, also was subject to approval, so that's why grants are subject,” said Brennan, who sat on the PACB as the Assembly’s appointee from 2015 to 2016.

While the PACB would in theory seem to have the obligation to approve the grant, it’s not clear that that’s what will happen in the case of Amazon. In an interview with Alan Chartock on WAMC on Tuesday, Cuomo said that it would not have to approve the financing, but would possibly have to approve the project plan. “There’s a question about what the PACB’s role would actually be in this transaction, if any,” Cuomo told Chartock. “Because they don’t have to approve the financing. They would approve something called the project plan – it gets technical. But there are a number of actions on how the actual transaction could be consummated.” The governor’s office directed a request for comment towards the transcripts to the Lehrer and Chartock interviews.

Has the PACB blocked a major project before?

In the past, the PACB has done exactly what Amazon critics hope it will do in this case, which is to block a major development project. Former New York City Mayor Michael Bloomberg’s plans for a West Side Stadium were dashed in 2005, when then-Assembly Speaker Sheldon Silver – who sat on the PACB – voted against the project. When it was announced on Monday that the state Senate had nominated Gianaris to the PACB, opponents of HQ2 saw the news as a possible chance to recreate history.

Will Gianaris have the power to block HQ2 altogether?

A few things have to happen before Gianaris can knock down HQ2 in the way that Silver knocked down the West Side Stadium. First, the governor has to approve Gianaris’ appointment to the board. On Tuesday, Cuomo didn’t give an answer to Lehrer’s question of whether he would confirm Gianaris, other than to say that he wasn’t thinking about that yet. He told Chartock, “I wouldn’t put anybody on board who says I’m here to play politics. I can tell you that much.”

When news of Gianaris’s appointment broke on Monday, he told The New York Times that he wouldn’t use his potential seat on the PACB to hold up the HQ2 process with bargaining tactics. “I’m not looking to negotiate a better deal,” Gianaris said. “I am against the deal that has been proposed and don’t believe that it can form the foundation of a negotiation.”

Say, for argument’s sake, that Cuomo approves Gianaris and the Queens politician becomes one of the PACB’s three voting members. Say, also, that it’s decided that the $500 million state grant will have to go before PACB for approval. Even with both these assumptions, one possible barrier to Gianaris’s power to kill HQ2 remains. The $500 million state grant only represents about one-sixth of incentives that the city and state have offered Amazon. It’s entirely possible that the trillion-dollar company could do without the $500 million capital grant and still be able to build HQ2.

While there is some disagreement, it seems that the PACB would only have to approve the financial aspect of the General Project Plan, and not the plan at large. If Cuomo were to take away the capital grant, the plan for HQ2 would likely not go before the board at all. If Amazon were to insist on the capital grant as a condition of coming to New York City, however, Gianaris could hold the silver bullet. “If Amazon says we're not going ahead without the ($500 million), there wouldn't be much of a General Project Plan,” Brennan said. “PACB's approval of the money is essential, as long as Amazon says we're in it, but if we get the money.”

Brennan also pointed out that if Gianaris does join the PACB, he would not necessarily be representing his own opinions on the Amazon deal – opinions which he’s made quite clear. “He is really representing the institution, not himself,” Brennan said. “Technically speaking, the PACB is not supposed to have opinions on the political good or bad. If there’s no realistic basis to assume that the money is at risk, that there'd be a danger of default, technically, it complies with the statute.”

Cuomo spoke to that point in his interview with Chartock, criticizing the notion of playing politics by vetoing the deal. “The appointments to the Public Authorities Control Board are there for one purpose,” Cuomo said. “They’re appointed to make sure the public authority actually has the finances to do what the authority is trying to do. So the Empire State Development Corporation wants to finance a business, their job on that board, their fiduciary duty, is to make sure that entity has the financing available. They are not there to play politics. They are not there to exercise their political opinion.”