Gotham Gazette

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Bills Stadium Deal Tests Hochul's Ethics Promises and Legislature's Oversight Role

Gov. Hochul at a Bills game (photo: @GovKathyHochul)

Last week Governor Kathy Hochul announced a deal to build a new stadium for the Buffalo Bills with hundreds of millions of dollars in state subsidies, and that she was planning to push it through the state budget with little time for scrutiny by the Legislature or public. It was the exact type of Albany politics many feared of the secretive negotiations with Hochul’s hometown team – and the type she promised to leave behind when she took office last year.

The new stadium deal is also the first major test of a non-binding conflicts-of-interest policy the governor signed shortly after taking office last summer. Under the policy she promised to recuse herself from state business involving the work of her husband, an executive at the company that has held the concessions contract of the Bill's current stadium for the past 30 years. But the governor did not recuse herself, instead negotiating the deal between the Bill's owner, billionaire Terry Pegula, the NFL, and the office of Erie County Executive Mark Poloncarz.

Hochul and legislative leaders are in the throes of negotiating a roughly $220 billion, late state budget for the current fiscal year, which began Friday, April 1. The announcement last week of the $1.4 billion Bills stadium deal, which includes $880 million in state funding and another $250 million from Erie County, has been one of several major last-minute additions to Hochul's proposed budget that have caught legislators off guard. If approved, it would be the highest direct public subsidy for a football stadium in recent history, possibly ever.

"I went into these negotiations trying to answer three questions - how long can we keep the Bills in Buffalo, how can we make sure this project benefits the hard-working men and women of Western New York and how can we get the best deal for taxpayers?" Hochul said in a statement last week announcing the deal.

The governor’s gambits on the stadium deal and a 10-point public safety plan have been decried as a “Cuomo move” that the disgraced former governor’s replacement had said were ending in a new era of transparency, ethics, and collaboration.

Few details have been released about the deal itself but the governor's office estimates the new stadium will generate $1.6 billion in tax revenue over thirty years, stimulate the local economy, and create 10,000 union jobs, which are part of a project-labor agreement the state is subsidizing. New York State Building and Construction Trades Council President Gary LaBarbera called the deal "exactly what's needed for hard working families in Western New York."

A memorandum of understanding (MOU) among the Bills, New York's Empire State Development, and Erie County includes broad strokes of contributions to be made by the parties, with significant governmental investments made in exchange for an agreement by the Bills to remain in New York for the next 30 years. It doesn't say where the public funding will come from and leaves other elements, like the terms of a community benefits agreement, to be determined. It remains unclear how the deal will fit into the adopted state budget. Other than in a small number of limited circumstances, Hochul has declined to discuss either the stadium deal or the public safety plan in public, instead opting for closed-door negotiations.

"The logic here again and again is that the deal is way more important than public transparency or public understanding or even approval," said John Kaehny, executive director of the good government group Reinvent Albany, which closely tracks state business subsidies.

Each year, governors pack the budget with unrelated policy matters and big spending plans that get decided at late-hours with little review from the legislators who vote on them. Former Governor Andrew Cuomo was notorious for this and lawmakers roundly hailed Hochul's early management style as "a breath of fresh air" when she took office last August.

"Even Cuomo didn't actually do something that Hochul did with this deal, which is to drop it right into the budget in the last week of the budget negotiation," Kaehny said.

Over $418 million of the state's contribution would come from Seneca Nation casino revenue the state has been seeking in court for the last five years. The settlement on the revenue ($564 million, in total) came after significant legal pressure from the Hochul administration and a day after the stadium deal was announced, something Hochul celebrated and appeared to tout as the largest part of how the stadium subsidy would be funded.

Hochul's first state budget will measure her skills as a powerbroker as much as her commitments to "a new era of transparency" and "a fresh and collaborative approach." With the budget now late, in large part because of her last-minute machinations, even some lawmakers who have praised her early tenure are balking.

Hochul may stand to gain personally from the potential deal. Her husband, William Hochul, is a senior executive at Delaware North, the international entertainment corporation that holds the concession rights at the Bill's current home, Highmark Stadium.

The MOU includes an agreement that the Bills' current Highmark contract – expiring in July 2023 – will be renewed on a year-to-year basis until the new stadium is completed.

Given the ongoing Bills-Delaware North relationship and potential for the company to benefit from the new stadium, there are questions as to why Hochul did not recuse herself from the negotiations between her office, Erie County, the Bills, and the NFL.

"As Governor you will recuse yourself from any and all matters relating to Delaware North," states the recusal policy Hochul signed last August, just after becoming governor. Hochul said the policy, which her office only released after Gotham Gazette inquiries and a report on its absence in October, would be "ironclad."

"As Governor, you will not intentionally take any action, formal or informal, that would in [sic] benefit Delaware North in any direct, foreseeable, and proximate way," it reads. The policy designates the Secretary to the Governor to make decisions on Hochul's behalf when she is recused. That position is currently held by Karen Persichilli Keogh, who is married to Mike Keogh, a partner at Bolton-St. Johns, the lobbying firm that represents Delaware North in Albany.

According to the governor’s office, there is no guarantee Delaware North will get the concessions contract at the new stadium and the company was not at the negotiating table. The governor’s office and Delaware North both said William Hochul has recused himself from any dealings with the state.

“Governor Hochul is committed to the strictest ethical standards and restoring trust in government. Delaware North is not a party to the negotiations and any future decisions about vendors at the new stadium would be made by the Bills alone,” wrote Hazel Crampton-Hays, a spokesperson for the governor, in an email.

The governor's office also pointed to the fact that recusal policy Hochul signed also said Delaware North had agreed to bar her husband from any "incentive-based compensation" resulting from ventures in New York State.

A spokesperson for Delaware North said neither the company nor William Hochul were involved in the stadium negotiations.

"Delaware North implemented a robust recusal process for Bill Hochul regarding our business in New York based on the advice of expert outside ethics counsel," the company said in a statement to Gotham Gazette. "Mr. Hochul is recused from all elements of our work in New York; he does not engage on any company business in the state, including with any New York State government officials, departments or agencies. Every element of his portfolio that would even potentially involve business in New York has been delegated to other leaders in the company."

The governor's office called the interests of Delaware North speculative and indirect, though critics have argued otherwise.

"Our current contract runs through the next season so we remain focused on providing an outstanding experience for Bills fans and guests in the coming year," Delaware North wrote in a statement to Gotham Gazette. "If selected by the Bills as the concessionaire at the future stadium, we would be proud to continue serving Buffalo Bills’ fans and stadium goers."

There is no external party in the room ensuring the governor's or Delaware North's recusal policies are followed. The governor's compliance is monitored by her own senior counsel, according to the policy.

For the governor's policy "to be credible it would have to be overseen by an independent third party, for instance the Comptroller or the Attorney General,” said Kaehny, of Reinvent Albany.

The Office of State Comptroller Thomas DiNapoli did not comment directly on the policy or a potential conflict of interest, but urged transparency before the stadium deal is voted on by lawmakers.

"The Bills are important to the people of western New York and it’s encouraging to hear the agreement will provide for unionized jobs in the construction of a new stadium. Nevertheless, New York state and Erie County would reportedly pay for more than half the cost, and the details of such a significant investment should be disclosed and debated publicly before the plan is approved," wrote DiNapoli spokesperson Mark Johnson in an email to Gotham Gazette.

"We’ll be reviewing the project closely as more details are made public," Johnson said.

But that review is unlikely to take place before a version of the deal struck by Hochul is approved in the new state budget, which is expected to be passed by legislators early this week. Details of the deal and Hochul’s approach to recusal could be part of a legislative oversight hearing before lawmakers agree to it, but neither house of the Legislature has insisted on such public oversight.

The deal was harshly criticized by some state lawmakers when it was announced last week and became fodder for Hochul's opponents in this year's Democratic gubernatorial primary. A letter to Hochul from 20 mostly-progressive Democratic legislators said the deal was "negotiated in secret and only announced days before the final budget is due." The lawmakers questioned the projected economic benefits of the new stadium, calling it "a billionaire giveaway."

"I'm calling on the NYS Legislature to hold public hearings regarding the secretive, backroom deal orchestrated by Kathy Hochul," wrote Rep. Tom Suozzi, a primary opponent of Hochul's, in an email to his campaign mailing list. "This is not about football, or the players, or the fans. What this is REALLY about is the people who will financially benefit from this bad deal."

"If billionaires are allowed to drive pandemic and post-pandemic policy, then the structural inequities in New York’s economy will persist," wrote New York City Public Advocate Jumaane Williams, another Democratic candidate for governor, in a recent op-ed published by the Albany Times Union, entitled, "This is not the way to spend a billion on Buffalo." (The title is an apparent allusion to Cuomo's “Buffalo Billion,” an economic revitalization program that unfolded with limited oversight and was marred by a bid-rigging scandal.)

This is "a process that does leave a lot to be desired," said Senate Minority Leader Rob Ortt, a Republican who represents part of Western New York near Buffalo, in an interview with Gotham Gazette.

"It's not done until it's voted on and I suspect there's a lot more the Legislature is going to want to see in a final budget before [Hochul] can start counting votes to approve this deal," Ortt said.

A report from the Investigative Post this week found a study commissioned by Erie County estimated renovating the current Highmark Stadium would cost around $44 million – far lower than the $862 million estimate cited by the team and state and county officials as a justification for what they claimed was a more cost-effective new stadium.

Fiscal watchdogs have questioned the pay-off for the public of large stadium subsidies in general and concerns persist about whether Hochul negotiated the best deal for taxpayers. Those have led to questions about the governor's hometown allegiances – almost as soon as she took office, the Erie County native said she, like Cuomo, was committed to ensuring the Bills remained in the Buffalo area – and how the deal could benefit her husband's company. For months Hochul has declined to provide insights into discussions, saying only that she does not “negotiate in public” and would make an announcement when she had one -- which ultimately came just a few days before the state budget deadline.

Spokespeople for Senate Majority Leader Andrea Stewart-Cousins and Assembly Speaker Carl Heastie, both downstate Democrats, did not return requests for comment on the way the deal was negotiated, whether Hochul should have recused herself, and the oversight role of the Legislature.

Hochul, Stewart-Cousins, and Heastie -- along with top aides and other legislative leadership -- are currently negotiating the final details of the new state budget.

When asked by reporters Monday how big an issue the stadium deal was to legislators and whether it would be taken out of the budget deal, Heastie said it was too early to tell. "We haven't conference the Bills stadium issue as of yet but, you know, we have to look at everything in the context of an entire budget. Finally we are now to start to concentrate on the financial side of the budget so that will be part of that discussion," he said.

by Ethan Geringer-Sameth, reporter, Gotham Gazette

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