Grand Jury Report - MCWA

8/4/2019 Grand Jury Report - MCWA

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STATE OF NEW YORKCOUNTY OF MONROE COUNTY COURT

IN TilE MATTER OF A CONI rriProcedure Law 190.85 (I) (c); and on October 27, 2008, this Court h a v i n ~ - r e c e ! ~ e d the 0,--...... \.---

i7 l , ntranscripts of the Grand Jury proceedings conducted on December II, 2007jJ)ecimber 12,2007, December 13,2007, December 20,2007, March 5, 2008, and March II, 2008; and thisCourt, after examining the report and the minutes of the Grand Jury, having determined that thereport is based upon facts revealed in the course of an investigation authorized by CPL 190.55and is supported by the preponderance of the credible and legally admissible evidence and,furthermore, such report is not critical of an identified or identifiable person; and, additionally,this Court having found that the filing of such report as a public record will not prejudice t;1irconsideration of any pending criminal matter that would rcqLJirc the sealing of such report; and

NOW, it is herebyORDERED, that the report of the Monroe County Grand Jury issued on March II,

2008, In the Matter of a Confidential Investigation, DA-07-012012(A)-MDA, pursuant toCriminal Procedure Law 190.85 (I) (c), is hereby accepted by this Court; and it is further

ORDERED, that such report be tiled as a public record .Dated: December 22, 2008

Rochester, New York


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STATE OF NEW YORKCOUNTY OF MONROE COUNTY COURT

IN THE MATTER OF A CONFIDENTIALINVESTIGATIONDA -07-012012(A)-MDA

MONROE COUNTY GRAND JURYDECEMBER 2007 TERM

Report of the Grand JuryCPL Section 190.85(1)(c)

March 11, 2008

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MONROE COUNTY GRAND JURY

GRAND JURY REPORTCPL SECTION 190.85 (l)(c)

PRELIMINARY STATEMENT

The Monroe County Court empaneled the Monroe County Grand Jury, December 2007Term, and by order ofthe Honorable Frank P. Geraci, extended its term to March 31,2008.Under this authority, the Grand Jury conducted an investigation into the Monroe County WaterAuthority.

To complete this investigation, the Grand Jury heard testimony from 16 witnesses, andconsidered 19 exhibits.As a result of this investigation, the Monroe County Grand Jury, December 2007 Term,has adopted the following report pursuant to New York State Criminal Procedure Law Section

190.85 (l)(c) and respectfully submits this report to the Monroe County Court.


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FINDINGS OF FACT

I. SELECTION, DUTIES, AND PAYMENTOF THE MONROE COUNTY WATER AUTHORITY BOARDIn 1950, Public Authorities Law Section 1095 was enacted. It directs, among other things,how the members of the Monroe County Water Authority Board are to be selected, the length ofeach term, and the compensation to be paid each member ofthe board. Under that section, themembers are appointed by the President of the Monroe County Legislature and are subject toconfirmation by a majority ofthe county Legislature ofMonroe County. A full term is five yearsin length and there is no limit on the number ofterms a board member may serve. The board iscomprised of a total of seven members and no more than five shall belong to the same politicalparty. Each board member receives a stipend of$7,500.00, and such amount is fixed by thecounty legislature. The testimony of board members confirms that these laws and rules arecurrently complied with.The Public Authorities Law makes no requirement or provision for the Monroe CountyWater Authority Board to be fairly representative of the geographical jurisdictions served by theWater Authority. In the past, according to board member testimony, the counties outside ofMonroe County that receive services from the Monroe County Water Authority have not beenfairly represented. Similarly, some geographical areas within Monroe County have been wellrepresented, while other areas have been under represented. (See board members testimony).Additionally, the Public Authorities Law does not require a candidate for boardmembership to possess any particular expertise, and specifically does not require the candidateto possess any expertise in the work performed by the Water Authority or expertise related to the

duties of a board member. Pursuant to the Public Authorities Law and the by laws and policiesadopted by the Monroe County Water Authority, the duties of a board member include:overseeing the management of the affairs of the Authority by its Executive Director and otheremployed officers, establishing, monitoring, and updating. policies necessary to promote honestand ethical conduct by the officer's and employees; and making decisions concerning hiring andfiring of officer's and employees, financial transactions and new program initiatives. Presently,there is nothing in the Public Authorities Law which requires a candidate to possess anyexpertise that would insure that such candidate was capable of carrying out the duties required ofa board member. Moreover, under the provisions of Public Authorities Law Section 1095, theMonroe County Water Authority is a public benefit corporation of the State ofNew York andfulfills a public mission, and as such, a fiduciary duty is owed to the Authority and to the public.Notably, the process used to select a board member, according to board member testimony, doesnot involve a public posting of any board openings, and does not include an application designedto elicit the existence of relevant experience. In fact, the process used to select the candidates forboard membership is, even in its present configuration, inconsistent.


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II. ACTIONS TAKEN BY MONROE COUNTY WATER AUTHORITY BOARD

In August of2002, the Monroe County Water Authority Board deemed it proper todelegate to one or more of its members under Public Authorities Law Section I 095 the executionof an employment agreement with an employee who was planning to retire. As a result of thataction, at the time of the employee's retirement, that employee received compensation in excessof $150,000.00 gross pay.(See testimony of board members who executed the agreement, andtestimony regarding payments made pursuant to the agreement). The Employment Agreementalso provided for lifetime payment ofthe employee's and the employee's spouse's healthinsurance premiums, and medical reimbursement in the amount of $2,500.00 per year for life.(See Employment Agreement). The Employment Agreement a"d its terms were never reviewedby the full Water Authority Board, were never placed on the record at a public board meeting,and were never voted upon by the full board, or even by a majority of the board. (See testimonyof board members). Notably, in December 2004, the Monroe County Water Authority Boardapproved written policies and procedures for employee benefits. Moreover, there is also awritten policy which makes it the explicit duty ofthe Water Authority Board as a whole to makedeterminations of what are fair and reasonable compensation and benefits for Department Headsand Executive Employees. The Water Authority Board is also required to confirm thatcompensation arrangements with senior management employees are consistent with WaterAuthority policies. (See Corrective Action Plan Pursuant to Executive Law Section 170 andtestimony regarding the changes made since 2002). However, there is no specific requirementthat the review, confirmation and approval be both part of the public record and subject todiscussion on the record prior to approval.

After a review of the board meeting minutes in evidence, as well as from the testimonyof board members, it is apparent that there is insufficient discussion of agenda items on therecord. It appears from the board members' testimony that discussion does occur concerningsome of the agenda items, however, that discussion is not noted in the meeting minutes. At leastone board member testified that due to the department heads' and Executive Director'sknowledge of what they needed, if there was an item on the agenda, it was likely it would passwithout any discussion by the board members.


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III. CONFLICTS OF INTEREST WITH VENDORS

During the course of this Grand Jury investigation, it became apparent that great strideshave been made since 2003 to institute controls and policies to require disclosure of any actualor possible conflict of interest possessed by an employee or board member. These efforts includea written policy which includes definitions, procedures to follow, and a requirement of annualreporting as well as record-keeping requirements. The Water Authority has also instituted a"whistle blower" policy to protect employees who disclose that a conflict of interest exists butwhich has not been disclosed by the employee with the conflict. Additionally, the WaterAuthority engages in regular training to insure that employees are aware of the conflict ofinterest policies and their consequences. While all of these changes are helpful, there is one areathat has been overlooked. There is no requirement in any of the contracts with the vendors thatthe vendors themselves have a duty to disclose any actual or possible conflict. The vendors havea monetary interest in continuing to contract with the Water Authority. Therefore, if thecontracts required termination of the contract for willful failure to disclose an actual or possibleconflict of interest between a vendor and any employee or board member, it would be in the bestinterest of the vendor to disclose or risk losing the contract.

ConclusionsThe Grand Jury concludes that the Monroe County Water Authority Board Members areneither historically, nor currently required to be fairly representative of the geographical areasthe Monroe County Water Authority serves. The present manner ofmember selection has, in thepast, resulted in some geographical areas receiving a greater amount of representations on theMonroe County Water Authority Board, while other areas received little or no representation

whatsoever.The Grand Jury concludes that the Monroe County Water Authority Board Membershave never been required, as a pre-condition to confirmation, to have any expertise relevant tothe work of the Monroe County Water Authority. Similarly, the Grand Jury concludes that theMonroe County Water Authority Board Members have never been required, as a pre-condition toconfirmation, to have any expertise relevant to the nature and scope of the issues the members ofthe Monroe County Water Authority Board must decide in orc!er to carry out theirresponsibilities for managing the Authority, and fulfilling its fiduciary duties to the Authorityand the public it serves.The Grand Jury concludes that the current stipend of $7500.00 per year paid to boardmembers of the Monroe County Water Authority is in all respects reasonable and warranted bytheir service, however, medical; dental and retirement benefits are excessive for part timeservice.The Grand Jury concludes that current provisions of law allow a member to serve on theboard ofthe Monroe County Water Authority with no term limits. Board members, as a result,have been able to continue to serve, even when their service no longer meets the degree of


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diligence, care and skill which prudent people would use in similar positions and under similarcircumstances.The Grand Jury concludes that Public Authorities Law Section I 095 does not require thepresident of the County Legislature who is responsible for the appointment of Monroe County

Water Authority Board Members, subject to the confirmation of the majority of the CountyLegislature, to follow a procedure which insures an open and public application process,designed to elicit the strongest and most qualified candidates for membership on the board.

The Grand Jury concludes that there is insufficient discussion of agenda items on therecord, prior to voting at Monroe County Water Authority BoarJ Meetings. At times, discussionhas occurred outside of regular board meetings and without all members present. According tosome board members, the actual votes are often predetermined.

The Grand Jury concludes that all contracts between the Monroe County Water Authorityand its vendors, should include a requirement that the vendor disclose any and all relationshipswith Monroe County Water Authority employees, including all executive staff and departmentheads, and board members. Failure to do so, allows a vendor to continue to benefit in spite ofany past or present conflicts of interest with employees or members.

RecommendationsBased upon the stated findings of fact and all the evidence heretofore had before thisGrand Jury and to propose legislative, executive or administrative action in the public interest;

now therefore, by the authority vested in the Grand Jury by Criminal Procedure Law Section190.85 (!)(c) the Grand Jury recommends the following:A. Legislative ChangeI. That the manner of selection of members of the Monroe County Water Authorityshould be amended to allow (3) members to be selected by the majority leader of theCounty Legislature, (2) members to be selected by t))e minority leader of the CountyLegislature, (1) member to be selected by the Mayor of the City of Rochester and (I )member to be selected by the County Executive of Monroe County.2. That a procedure be instituted and followed whereby a pool of qualified applicantsfor Board membership would be developed pursuant to an open and publicapplication process designed to elicit strong, qualified candidates for boardmembership, fairly representing all geographic jurisdictions the Monroe County

Water Authority serves.3. That, to the extent possible, the members selected be chosen with expertise relevant


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to the work the Momoe County Water Authority does, and that members be selectedwith expertise relevant to the nature and scope of the issues they will decide in order to carry outthe responsibility ofmanaging the Momoe County Water Authority and to fulfill the fiduciaryduty to the Authority, and to the public the Authority serves.4. That the current stipend paid to Momoe County Water Authority Board Members of$7500.00 per year is in all respects reasonable and warranted. However, theprovision for medical, dental and retirement benefits is excessive for part time serviceand should be discontinued. To provide for inflation, it would be advisable toprovide for regular review to establish a reasonable inflation index consistent withpublic standards.5. That the Legislature should consider amending Public Authorities Law Section 1095

(!)to include a term limit which allows Momoe County Water Authority BoardMembers to serve a maximum of two five year terms.B Administrative Change

1. That all discussion amongst any and all board members relevant to a vote on anyagenda item, be placed on the record, in public, at a regular board meeting, prior tothe vote on that agenda item.

2. That all contracts with vendors of the Momoe County Water Authority include aclause requiring disclosure of any and all relationships between the vendor and thevendor's employees and the Momoe County Water Authority and its employees,including, but not limited to, executive staff and department heads, and boardmembers. That said contracts should include a provision for termil)ation upon failureto so disclose.

Dated: March 11, 2008Rochester, New York

Sworn to before me this 11th day ofMarch, 2008v / ~ c;;r- ( / e e L ~ Notaf)(Public '

\\!fNCY l.. F . ~ : ' : ' - ! ! _ . \ :'>:;r::, : ) ' . ~ : . : o f .'),w Y;rk

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Joanne M. WinslowSpecial Assistant District Attorney

Grand Jury Report - MCWA

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