To the Editor:
This letter was sent to Frances Walton, Vice President/CFO of the Roosevelt Island Operating Corporation (RIOC) and CC’d to Charlene Indelicato, RIOC President/CEO; Michael Kendall, NYS Department of Budget; Mary Labate, Director, NYS Department of Budget; RIOC Board Members Margie Smith, David Kraut, Dr. Katherine Teets Grimm, Howard Polivy, Michael Shinozaki, and Fay Christian; James S. Rubin, RIOC Board Chairman; Dick Lutz, Editor-in-Chief, The Main Street WIRE; Rick O’Conor, Roosevelt Islander Blogger; Jeffrey Escobar, President, Roosevelt Island Residents Association; Congresswoman Carolyn B. Maloney; Ben Kallos, NYC Council Member; Rebecca Seawright, NY State Assembly Member; Jose M. Serrano, NY State Senator; Joe Klimek, Partner, Toski & Company, CPAs.
I have (4) questions concerning the RIOC 2016/2017 Proposed Budget – listed on your website – under RIOC Board Meeting Materials – September 10, 2015 – new business item 1;
1. Authorized Salaries per the Approved 2015/2016 RIOC Budget – As per RIOC’s” By-Laws” and “Policies,” compensation for executives and all employees requires Board authorization (see attached). The Board-authorized salaries for 2015/2016 do not match the current salaries as of 7-1-15 in the 2016/2017 proposed budget presented to the Board on September 10, 2015 (see attached). In many cases they are more, for example, yours, Ms. Walton, by $13,338 ($151,935 as compared to $138,555) and President’s Indelicato’s, which is $3,206 more ($163,485 as compared to $160,279). Why do the approved authorized salaries for 2015/2016 not match the current salaries listed as of 7-1-15?
2. Cornell Land Transfer Fee – NYS of $1,000,000 per year. Why was the State’s commitment of $1,000,000 omitted from this year’s budget? It was included last year. Has there been a change in the State’s desire to supplement Cornell’s ground rent? More importantly, why wasn’t it disclosed in RIOC’s certified financial statements as of 3-31-15? The transaction took place, the property was transferred and the fee was earned. Even if the State is planning on making a future payment, RIOC, being on the accrual basis of accounting, should have booked the fee or at the very least a disclosure detailing the transaction in the notes to the financial statements. It was briefly mentioned in the Management’s Discussion narrative, however we both know that the narrative is not part of the certified statements and the auditors do not opine on its content. Is it possible [to obtain] a letter of explanation, preferably from Toski & Company CPA’s (RIOC’s Outside Independent Auditor), explaining why the $1,000,000 fee was not booked or disclosed in RIOC’s audited financials?
Post-Employment Benefits (“OPEB”) of $6,833,798 – Why has RIOC decided to fully fund this benefit now (see attached)? As you must be aware, most, if not all, State agencies are deferring to fully fund this benefit until it has been determined that this commitment is sustainable by the State. As this benefit now stands, non-union State employees would be eligible for retirement medical coverage after ONLY 5 years of service. 90% of the employee’s premium and 75% of the spouse’s premium would be paid by the State. This is an enormous burden for the NYS taxpayer that most within NY State government know is most likely not sustainable and foresee the benefit being drastically scaled back. It is also not available anywhere in the private sector after only 5 years of service. Is it prudent to fully fund a liability that has a very high probability of being drastically reduced? How many other State agencies have fully funded this liability? As per the RIOC audited financials 3-31-15, this benefit cost of $6,833,798 is only for 51 non-union employees, including executive management, approximately $130,000 per employee. Why hasn’t this planned payment been discussed at a Board meeting? Have Board members been fully informed? I hope that you would agree a payment of this magnitude should be fully transparent! Can a report be prepared explaining exactly what the payment is for, why it is being fully funded now, where the funds will be maintained, and how many other State agencies have fully funded this liability? If possible, can the report be signed off by the RIOC DOB Board representative? After payment of said expense, as per the RIOC 2016/2017 budget, RIOC is projected to be left with cash on hand in 2019 of only $9,551,000. I believe you would agree, hardly enough to maintain the infrastructure of an Island with over 14,000 residents! To summarize, RIOC is preparing to payout $6,833,798 for the benefit of 51 employees/former employees and leaving only $9,551,000 cash on hand for infrastructure for over 14,000 residents, residents that generate income for RIOC through their ground rent. Isn’t it more prudent to continue the present policy of setting aside funds annually for this liability (see attached)? Please note that ESDC, the State Agency where you were CFO prior to RIOC, has elected to set aside funds annually and NOT to fully fund this liability as per ESDC’s Budget & Financial Plan 2014 – 2019 (see attached).
4. Signing of Budget – I noticed last year’s and the proposed budget for this year were not signed by a Corporate Officer which management typically provides as a courtesy to its Board. If I was a Board Member I would not be comfortable to vote on a budget not signed by a Corporate Officer and would have serious concerns authorizing it. Why hasn’t a Corporate Officer signed the budget?
former RIOC V.P./CFO
Attachments at mainstreetwire.com: RIOC By-Laws – page 8; RIOC Staffing Plan 2016/2017 page 1; RIOC Staffing Plan 2015/2016 page 1; RIOC Proposed Budget 2016/2017 Revenues, page 10, RIOC Approved Budget 2015/2016 Revenues, page 11; RIOC Proposed Budget 2016/2017 Narrative page 4; RIOC 2014/2015 Notes to Financial Statements pages 17, 28-30; ESDC Budget & Financial Plan Report 2014 – 2019, page 4.
To The Editor:
It’s great that you made the playground issue the lead story in the October 10 issue of The WIRE. Kudos!
Ms. [Erica] Spencer-El is misleading you. RIOC is not responsive if we call to notify them about a problem.
As for the age-inappropriate equipment at Blackwell Park, we were promised almost two years ago that RIOC would bring back the old piece of equipment that was in the tot lot (which was torn down to make room for 480 Main Street). So, no, they’re not “working on it.” In fact, I went to a RIOC Board of Directors meeting, while Ellen Polivy was still RIRA president, and spoke about the potential liability to RIOC if a 3-year-old is injured on playground equipment that the manufacturer clearly labels for 5-12 years of age. RIOC at one point wanted to change the labels that were affixed by the manufacturer (but leave the equipment the same). We argued, and the Board (including an officer who is an attorney) agreed, that anyone with a diligent lawyer would sue the manufacturer who would then say the child shouldn’t have been on that piece of equipment.
Anyway, I hope that you will keep this issue going until maybe, just maybe, RIOC does what it should.
To the Editor:
With the continued growth and development on Roosevelt Island, I was wondering if a case has been made to change the name of Main Street to a more upbeat identifier. January 7, 2016, will mark the 75th anniversary of FDR’s Four Freedoms speech. Perhaps a tie-in might be appropriate.