N.Y. Racing, Pari-Mutuel Wagering and Breeding Law § 212: Franchise oversight board

* § 212. Franchise oversight board. 1. There is hereby created a

franchise oversight board which shall consist of five members. Of the

five members, three shall be appointed by the governor, one shall be

appointed by the temporary president of the senate and one shall be

appointed by the speaker of the assembly. Of the initially appointed

board, one member appointed by the governor shall serve for a one year

term, one member appointed by the governor shall serve for a two year

term, and one member appointed by the governor shall serve for a three

year term. The members appointed by the temporary president of the

senate and the speaker of the assembly shall serve for a four year term.

All successors shall serve for a term of four years. All members shall

continue in office until their successors have been appointed and

qualified. The governor shall designate the chair from among the sitting

members who shall serve as such at the pleasure of the governor.

2. The members shall serve without compensation for their services as

members, but shall be entitled to reimbursement for actual and necessary

expenses incurred in the performance of their duties. The state shall

save harmless and indemnify members of the board and any officer,

employee, agent or other person or persons pursuant to section seventeen

of the public officers law against any claim, demand, suit or judgment

arising by reason of any act or omission to act by such member, officer,

employee, agent or person occurring in the discharge of his or her

duties and within the scope of his or her service on behalf of the

franchise oversight board.

3. Such members, except as otherwise provided by law, may engage in

private or public employment, or in a profession or business. The board,

its members, officers and employees shall be subject to the provisions

of sections seventy-three and seventy-four of the public officers law.

No former trustee or officer of a non-profit racing association known as

The New York Racing Association, Inc. or its predecessor, no current

director or officer of a franchised corporation or any individual

registered with the New York commission on public integrity shall be

appointed as members to the board nor shall any member of the board have

any direct or indirect interest in any racehorse, thoroughbred racing or

pari-mutuel wagering business, video lottery terminal facility or any

development at any racing facility.

4. Notwithstanding any inconsistent provisions of law, general,

special or local, no officer or employee of the state or of any civil

division thereof shall be deemed to have forfeited or shall forfeit

their office or employment by reason of their acceptance of membership

on the board created by this section.

5. The affirmative vote of three members shall be necessary for the

transaction of any business or the exercise of any power or function of

the franchise oversight board except as otherwise provided here in this

article.

6. Within thirty days following the appointment of the members of the

franchise oversight board, the members of the oversight board shall

establish a local advisory board for each racing operation comprising

the following members to meet at least twice yearly:

a. The local advisory board for the Saratoga racetrack facility shall

comprise fifteen members and include five designees from each of the

following: the board of supervisors, the mayor of the city of Saratoga

and the franchised corporation.

b. (i) The local advisory board for the Aqueduct racetrack facility

shall comprise of fifteen members, nine of whom shall be designees of

New York City Queens Community Board Ten, three designees of the

franchised corporation and three designees of the video lottery gaming

operator. At substantial completion of the Belmont project, as

determined by the gaming commission, this board shall be dissolved.

(ii) (A) Notwithstanding subparagraph (i) of this paragraph, within

thirty days after the substantial completion of the Belmont project, as

determined by the gaming commission, an Aqueduct Redevelopment Community

Advisory Board shall be formed to assess all bids made in response to

the request for proposals on developing the Aqueduct property and is

required to hold a public hearing and adopt and submit a written

recommendation on each bid to the franchise oversight board within sixty

days of receiving such bid. The adoption of such recommendation shall be

by a public vote which results in approval by a majority of the

appointed members present during the presence of a quorum. The board

recommendation shall be in writing via a form provided by the franchise

oversight board and shall include a description of the application, the

time and place of the public hearing on the application, the time and

place of the meeting at which the recommendation was adopted and the

vote by which the recommendation was adopted. The community board may

include in its submission the reasons for the vote and any conditions

attached to its vote.

(B) The Aqueduct Redevelopment Community Advisory Board shall consist

of six members, one to be appointed by the governor, one to be appointed

by the mayor of the city of New York, one to be appointed by the senator

representing the senate district where the Aqueduct property is located,

one to be appointed by the assemblymember representing the assembly

district where the Aqueduct property is located, one to be appointed by

the city councilmember representing the district where the Aqueduct

property is located, and one to be appointed by the borough president

where the Aqueduct property is located.

c. The local advisory board for the Belmont racetrack facility shall

comprise fifteen members, to be appointed as follows:

(i) five members from Nassau county to be appointed by the Nassau

county executive. Four of such members must reside in the hamlet of

Elmont;

(ii) two members from the town of Hempstead to be appointed by the

supervisor of the town of Hempstead. Both members must reside in the

hamlet of Elmont;

(iii) two members to be appointed by the mayor of the village of

Floral Park, subject to village board approval;

(iv) one member to be appointed by the mayor of the village of South

Floral Park, subject to village board approval;

(v) three members to be appointed by the New York Racing Association,

Inc.; and

(vi) two members to be appointed by the New York City Queens Community

Board 13.

The members of the local advisory boards shall serve for a period of

two years. In the event of a vacancy occurring during a term of

appointment by reason of death, resignation, disqualification or

otherwise such vacancy shall be filled for the unexpired term in the

same manner as the original appointment. The members of the local

advisory board shall serve without compensation, except that each member

shall be allowed the necessary and actual expenses incurred in the

performance of his or her duties pursuant to this section.

7. The Saratoga local advisory boards in cooperation with the state

historic preservation office and the franchise oversight board shall

compile a complete, updated historic resources inventory identifying all

buildings and landscape features and their current condition at the

Saratoga Racecourse. The local advisory board may, at its discretion, in

the performance of its responsibilities, seek advice from groups or

individuals with relevant expertise.

All buildings and landscaped features of historic, architectural or

cultural significance at the Saratoga Racecourse may be advanced by the

local advisory board for consideration for inclusion in the National and

State Registers of Historic Places and in local historic districts.

8. a. The duties and responsibilities of the franchise oversight board

shall include, but not be limited to, the following:

(i) represent the interests of the state in all real estate

development proposed for Aqueduct racetrack or real estate development

at Belmont Park racetrack. Any such real estate development shall only

be undertaken pursuant to a competitive process approved by the board,

after consultation with the applicable local advisory boards and

consideration of local zoning and planning regulation, and in a manner

that will not adversely impact any historic structure that is included

in or eligible for inclusion in the National or the State Register of

Historic Places, be consistent with any plan approved for such

community, and shall be subject to unanimous approval of the franchise

oversight board and all statutory and regulatory requirements; provided,

however, that, subject to approval of the franchise oversight board and

subject to all statutory and regulatory requirements, the franchised

corporation shall have full powers and rights to develop, redevelop,

refurbish, renovate or make such other improvements, capital

expenditures or otherwise, to the racetracks and the fixtures and

improvements thereon consistent with projects specifically identified in

the franchised corporation's approved track facility improvement plan.

The franchise oversight board shall be guided by the goals of ensuring

the continuation of high quality thoroughbred racing at the thoroughbred

racing facilities located within the state, raising revenue for or in

aid or support of education in this state from video lottery gaming at

facilities of the state racing franchise, and maximizing revenue for

governments from pari-mutuel wagering on racing at facilities of the

state racing franchise. In consideration of capital expenditure

approval, the board shall ensure adequate funds are dedicated for

maintenance and repair of existing structures at Saratoga racetrack and

Belmont Park racetrack and for the improvement of onsite backstretch

personnel housing and quality of life.

(ii) monitor and enforce compliance with definitive documents that

comprise the franchise agreement between the franchised corporation and

the state of New York governing the franchised corporation's operation

of thoroughbred racing and pari-mutuel wagering at the racetracks. The

franchise agreement shall contain objective performance standards that

shall allow contract review in a manner consistent with this chapter.

The franchise oversight board shall notify the franchised corporation

authorized by this chapter in writing of any material breach of the

performance standards or repeated non-material breaches which the

franchise oversight board may determine collectively constitute a

material breach of the performance standards. Prior to taking any action

against such franchised corporation, the franchise oversight board shall

provide the franchised corporation with the reasonable opportunity to

cure any material breach of the performance standards or repeated

non-material breaches which the franchise oversight board may determine

collectively constitute a material breach of the performance standards.

Upon a written finding of a material breach of the performance standards

or repeated non-material breaches which the franchise oversight board

may determine collectively constitute a material breach of the

performance standards, the franchise oversight board may recommend that

the franchise agreement be terminated. The franchise oversight board

shall refer such recommendation to the commission for a hearing

conducted pursuant to section two hundred forty-five of this article for

a determination of whether to terminate the franchise agreement with the

franchised corporation;

(iii) oversee, monitor and review all significant transactions and

operations of the franchised corporation authorized by this chapter;

provided, however, that nothing in this section shall be deemed to

reduce, diminish or impede the authority of the commission to, pursuant

to article one of this chapter, determine and enforce compliance by the

franchised corporation with terms of racing laws and regulations. Such

oversight shall include, but not be limited to:

(A) review and make recommendations concerning the annual operating

budgets of such franchised corporation;

(B) review and make recommendations concerning operating revenues and

the establishment of a financial plan;

(C) review and make recommendations concerning accounting, internal

control systems and security procedures;

(D) review such franchised corporation's revenue and expenditure

policies which shall include collective bargaining agreements management

and employee compensation plans, vendor contracts and capital

improvement plans;

(E) review such franchise corporation's compliance with the laws,

rules and regulations applicable to its activities;

(F) make recommendations for establishing model governance principles

to improve accountability and transparency; and

(G) receive, review, approve or disapprove capital expense plans

submitted annually by the franchised corporation.

(iv) evaluate, review and approve the racing franchisee's selection of

a vendor or vendors to contract with the franchised corporation for

provision of totalizator services, and manage, subject to the franchised

corporation's unilateral right to opt out, directly or indirectly,

integration of any offered internet wagering platform. The franchise

oversight board shall consider in its evaluation of any such proposed

vendor the ability of such vendor to reduce the totalizator expenses and

general development and production costs of any internet wagering

platform of an authorized off-track betting corporation and the state

racing franchise holder.

(v) facilitate discussions and voluntary agreements between the

franchised corporation and off-track betting corporations to streamline

operations, decrease operating costs and maximize opportunities

pertaining to costs and revenues, and encourage an exchange of views and

experiences from the franchised corporation and the off-track betting

corporations to improve the racing product in New York and to realize

efficiencies;

(vi) review and approve all purchasing policies pursuant to paragraph

(a) of subdivision six of section two hundred eight of this article;

(vii) review and provide any recommendations on all simulcasting

contracts (buy and sell) that are also subject to prior approval of the

commission;

(viii) act on behalf of the People of the State of New York to enter

into any real property transactions in furtherance of the purposes and

intent of this statute, including, without limitation, one or more

ground leases, for one dollar in consideration annually, for each of

Aqueduct racetrack, Belmont Park and Saratoga racecourse to the

franchised corporation, for a term that will extend until the racing

franchise expires, is revoked, terminated or ends by any other means

provided by law. Such leases shall be executed contemporaneously with

the conveyance of the racetracks by the franchised corporation's

predecessor to the state;

(ix) enter into on behalf of the state as licensor, a long term

license agreement with the franchised corporation for the use of the

simulcast signal and associated intellectual property rights, for

consideration of one dollar annually and for a term that will extend

until the racing franchise expires, is revoked, terminated or ends by

any other means provided by law. Such license agreement shall be

executed contemporaneously with the conveyance of the franchised

corporation's assets associated with the franchise agreement.

(x) conduct running races or steeplechases at racing facilities and

conduct pari-mutuel betting on the outcome of the same when necessary to

assure the continuation of the racing and pari-mutuel betting activities

at such racing facilities (A) in the event that the racing and/or

pari-mutuel betting franchises of the franchised corporation authorized

by this chapter then holding such franchises have either been terminated

in the manner provided by law or have been relinquished by such

corporation, or such corporation declines to continue conducting race

meetings and pari-mutuel betting on the outcome of the same as required

by such franchises unless such declination is the result of strikes,

acts of God, or other unavoidable causes not under the control of such

corporation, or the corporate existence of such corporation has been

dissolved in the manner provided by law prior to the end of the term of

any such franchise and (B) until such time as a new franchise is

granted;

(xi) on behalf of the People of the State of New York, and, acting in

such capacity as lessor of the racing facilities and real estate, be

responsible for payment of all property taxes related to such racing

facilities and real estate;

(xii) report annually to the governor and the legislature, beginning

no later than December thirty-first, two thousand eight, stating its

findings and recommendations to implement policy and legislative changes

necessary to encourage the continuation of high quality thoroughbred

racing in New York state and to protect the legitimate interests of the

state and the thoroughbred racing industry;

(xiii) require the franchised corporation to make all records and

documents pertaining to its financial practices, and other documents and

records necessary to carry out its duties, available to the franchise

oversight board within thirty days of a written request;

(xiv) examine or cause to be examined by a third party, the books,

papers, records and accounts of the franchised corporation;

(xv) sue and be sued;

(xvi) make and execute contracts and all other instruments necessary

or convenient for the exercise of its powers and functions under this

article;

(xvii) request and accept the assistance of any state agency,

including but not limited to, the commission, office of parks,

recreation and historic preservation, the department of environmental

conservation and the department of taxation and finance, in obtaining

information related to the franchised corporation's compliance with the

terms of the franchise agreement;

(xviii) when the franchise oversight board determines the financial

position of the franchised corporation has deviated materially from the

franchised corporation's financial plan, or other such related documents

provided to the franchise oversight board, and such deviation is not

mitigated by the franchised corporation within one hundred eighty days

of the franchise oversight board providing notice of such determination

to the franchised corporation, or when the implementation of such plan

would, in the opinion of the franchise oversight board, pose a

significant risk to the liquidity of the franchised corporation, in any

order or combination:

(A) hire, at the expense of the franchised corporation, an independent

financial adviser to evaluate the financial position of the franchised

corporation and report on such to the franchise oversight board; and

(B) require the franchised corporation to submit for the franchise

oversight board's approval a corrective action plan addressing any

concerns identified as risks by the franchise oversight board.

(xix) when the franchise oversight board finds the franchised

corporation has experienced two consecutive years of material losses due

to circumstances within the control of the franchised corporation, as

determined by the franchise oversight board, and when the franchised

corporation has failed to address concerns identified by the franchise

oversight board pursuant to subparagraph (xviii) of this paragraph, the

board may by unanimous vote request the director of the budget to

impound and escrow racing support payments accruing to the benefit of

the franchised corporation pursuant to paragraphs three and four of

subdivision f of section sixteen hundred twelve of the tax law. The

director of the budget shall release such impounded and escrowed racing

support payments upon notice from the franchise oversight board that the

franchised corporation has achieved the goals of a new corrective action

plan approved by the board.

The director of the budget shall, upon warrant of the franchise

oversight board, approve the use of withheld racing support payments

necessary to satisfy financial instruments used to fund board-approved

capital investments, as approved by the franchise oversight board.

(xx) do all things necessary, convenient or desirable to carry out its

purposes and for the exercise of the powers granted in this article.

b. Notwithstanding any other provision of this article, the franchised

corporation shall be entitled to make capital expenditures, except those

capital expenditures for the Saratoga Racecourse that may, on the advice

of the New York state historic preservation office, adversely impact any

historic structure that is included in or is eligible for inclusion in

the national or state register of historic places, to the physical plant

of the racetracks, grandstand, backstretch, parking and public areas set

forth in the New York Racing Association's capital expenditure plan

("capital plan") filed with the racing and wagering board in two

thousand seven. Any material modification to the capital plan as

determined by the franchise oversight board and each future capital

investment plan for the tracks, grandstand, backstretch, parking and

public areas of the racetracks operated by the franchised corporation

involving the expenditure of more than five million dollars in the

aggregate shall require the prior approval of the franchise oversight

board. Within five years from the date of commencement of the video

lottery terminal operations at Aqueduct, and every five years

thereafter, the franchised corporation shall submit to the oversight

board a capital plan for the five-year period commencing on January

first of the following year. Such plans shall contain both the intended

object of expenditure and the proposed sources of financing. The

franchised corporation shall report to the franchise oversight board

within ninety days following the end of each fiscal year as to the

amount spent pursuant to the capital plan.

* NB Repealed 30 days following the assumption of the franchise by a

successor entity.