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Orange County Judge Rejects Claim That State-Appointed Monitor’s Veto Was Untimely & Unlawful
THE LEGAL BEAT
An Orange County Supreme Court judge rejected the Orange County IDA’s (OCIDA) efforts to invalidate a veto of its offer of more than $80 million dollars in tax incentives to Amazon to locate a 3.2 million square foot warehouse on an 81-acre site in the Town of Wawayanda.
The veto, by Brian Sanvidge, an independent monitor appointed by the New York State Inspector General, was issued after Sanvidge sought answers to questions about the incentives package, including the specifics of exactly what out-of-state locations Amazon was considering, absent the IDA incentives.
OCIDA filed a lawsuit in Orange County Supreme Court, arguing that veto was both untimely and the product of improper influence.
On the issue of untimeliness, OCIDA argued that the November 25 veto of the October 23 resolution granting the benefits package was late – that an agreement giving the monitor until November 10 lapsed without the monitor taking action.
Under the law establishing the monitor, Sanvidge had 72 hours after a resolution awarding benefits is passed by OCIDA to issue a veto. There is no mechanism to appeal a veto other than challenge its validity, though the law allows OCIDA to revisit the award of benefits at a future meeting.
On the issue of improper influence, OCIDA argued that interference by State Senator James Skoufis (D-Cornwall) motivated the monitor. Skoufis characterizing the Orange County IDA’s approval of benefits to Amazon as “a massive, unwarranted giveaway by any objective standard.”
OCIDA moved for declaratory relief invalidating the veto as “untimely” and “unlawful” arguing that the veto was issued after the statutory period for the monitor to issue a veto had lapsed, despite Amazon and the IDA agreeing to several extensions of time for Amazon to provide answers to Sanvidge’s questions.
The Court disagreed and dismissed the lawsuit, finding that the timeliness of the veto had not lapsed because Amazon never fully answered Sanvidge’s questions. The Court also ruled that the case was simply not “ripe” for judicial review because the legislation that established the monitor and the veto allowed OCIDA to reconsider the vetoed benefits package at a future meeting. In other words, Sanvidge’s veto was not final – there was an opportunity for OCIDA to reconsider and reissue or alter the benefits package at a future meeting.
Companies seeking tax benefits from local Industrial Development Agencies (IDAs) often represent that they will locate in other counties or out-of-state unless the IDA provides a raft of tax incentives, including sales tax exemptions, mortgage tax exemptions, and PILOT (Payments In Lieu of Taxes) agreements. These packages for larger companies can be worth tens of millions of dollars, dollars that the local governments forego in exchange for jobs and reduced property tax payments.
When Amazon came knocking at the Orange County IDA’s door for incentives, Skoufis raised questions about the benefits package. He has been a vocal opponent of giving tax breaks to wealthy corporations.
In a letter dated October 24, Skoufis urged Sanvidge to veto the approval, which if vetoed would return the proposal back to the IDA for reconsideration. Skoufis wrote that the action by the IDA Board of Directors was a violation of the Agency’s Uniform Tax Exemption Policy. Skoufis said the IDA Board failed to consider the quality and salary of jobs projected to be created, onsite childcare requirements, public support or opposition, impacts on the environment, and the need for additional municipal services to support the project.
Skoufis said that the warehouse project does not require public subsidies to move forward.
After Skoufis issued his letter, Sanvidge sought additional time to review the benefits package.
In response to the Court’s decision dismissing OCIDA’s lawsuit, Skoufis said, “The decision affirms what we already know: The monitor requested critical information from Amazon, they and the IDA refused to provide it, and he was left with no choice but to protect Orange County from what amounted to a middle-finger to taxpayers.”
The monitor was put in place in 2024, following a major corruption scandal in 2021 when three former officials of the Orange County Industrial Development Agency pleaded guilty to corruption charges, including hiding self-dealing and concealing conflicts of interest. Restitution was ordered of more than $1 million. New York State Comptroller Thomas DiNapoli published a detailed report on the defendants’ crimes and how the systemic failures and neglect of duty by the IDA board and its officials enabled the corruption scheme.
The appointment of the monitor was originally scheduled to sunset in May, but this year’s budget negotiations included a major fight to extend and expand the state monitor’s oversight at the Orange County IDA.
The recently enacted budget extends the monitor’s term for an additional three years and reauthorizes all of the monitor’s existing powers, including the ability to veto abatements that run contrary to taxpayer interests.
New powers also include the ability to claw back benefits when projects do not create the jobs that were promised. The monitor will also oversee the IDA’s non-profit arm, the Orange County Funding Corporation, which administers much of the IDA’s funding.
Skoufis has been calling for legislative and budgetary reforms concerning IDAs. He is pushing to mandate IDAs within Orange County submit proposed tax breaks for a given project to each impacted taxing jurisdiction, and that IDAs cannot proceed with awarding tax breaks unless the governing bodies of these jurisdictions approve them. Such safeguards to protect taxing jurisdictions and their taxpayers are already being successfully and voluntarily applied by the Rockland County IDA, where the IDA can authorize, but not impose a PILOT agreement on a taxing jurisdiction.
