Report: The Ralph Wilson Stadium and the “I Love New York Hospitality Suite.”

I. Background

This is a report on the “I Love New York Hospitality Center” (hereinafter

“hospitality suite”) at the Ralph Wilson Stadium in Buffalo New York.

On October 12, 2012, Jeff Littmann, the Buffalo Bills Chief Financial Officer,

wrote a letter addressed to New York State Lieutenant Governor Duffy, Howard Glaser,

the New York State Director of State Operations, and Richard Tobe, Erie County Deputy

County Executive, summarizing the major terms agreed to by the State of New York to

assist with the financing of renovations to the Ralph Wilson Stadium located in Western

New York. In exchange for financial support, the Buffalo Bills agreed to remain in

Western New York for up to ten additional years.

Included in the letter was a reference to the State’s authorization and privilege to

use the hospitality suite “to promote Erie County, Western New York and New York

State interests.” See Exhibit I, October 12, 2012, Letter from Jeff Littman, page 2, bullet

point 10. The letter’s summary provided an outline of the major terms of the agreement,

which were later memorialized by the memorandum of understanding and the stadium

lease.

In December 2012, Erie County Stadium Corporation (hereinafter will refer to as

ESDC), a wholly controlled subsidiary of Empire State Development Corporation

(“ESDC”), and County of Erie signed a Memorandum of Understanding (hereinafter

“MOU”). The primary purpose and function of the MOU is to set forth the principal

understanding of the parties and the actions planned by each which will be incorporated

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in the new lease and used to renovate the Ralph Wilson Stadium. MOU page 1. On

March 28, 2013, ESDC and the Buffalo Bills, Inc. signed the 2013 Stadium Lease.

As a result, ESDC was given the right to use the hospitality suite for the purpose

“of encouraging and fostering economic development, tourism and public awareness for

the State and Western New York, and for other charitable or public functions during

events that are scheduled at the Stadium.” See Exhibit II, MOU page 4. “At all times

during the term, the I Love New York Hospitality Center shall be reserved for the

exclusive use of the State and its invitees.” See Exhibit III, Article 2.2(b) of the Bills

2013 Stadium Lease. Other than these references to the stadium and the hospitality suite,

there are no guidelines or procedures in the lease or MOU.

The 2013 Stadium Lease also contains Exhibit H, which is the “I Love New York

Hospitality Center Terms and Conditions of Use” (hereinafter “Terms and Conditions”).

The Terms and Conditions describe the scope and purpose, and access/use of the center,

among other miscellaneous provisions for the use of the hospitality suite. The State’s use

and access to the hospitality suite is defined here as being limited to “Games, Civic

Events, and Bills’ events.” See Exhibit IV,H-1. At any other time, the State may access

the hospitality suite upon three business days of advanced written notice. The number of

people allowed to use the hospitality suite “at any one time cannot exceed sixteen

persons.” Exhibit IV, H-1. There are no specific guidelines included in the 2013 Stadium

Lease or Exhibit H to direct how the use of the hospitality suite will be determined or

how the suite’s use will be monitored.

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Public Awareness of the Hospitality Suite

On December 21, 2012, Governor Cuomo publicly announced the deal to retain

the Buffalo Bills but made no mention about the State’s privilege to use the hospitality

suite. See attached Governor Cuomo’s Press Release “Governor Cuomo Announces

Agreement to Keep Bills in Buffalo.” Exhibit V. The MOU and the Stadium Lease do

reference the suite. The General Project Plan submitted to the office of the New York

State Comptroller and the Public Authorities Control Board pursuant to state law also

included a one line statement that “provides the State a luxury box to be used by the State

for purposes of encouraging and fostering economic development, tourism and public

awareness for the State …..” Exhibit VI. However, State use of the hospitality suite was

not being generally publicized.

Our review indicated that the first press coverage on the use the hospitality suite

was a story published on March 22, 2013 in the New York Times. Exhibit VII. On

March 25, 2013, Assembly Member Brennan wrote a letter to Kenneth Adams, ESDC’s

Chief Executive Officer, requesting information surrounding the transaction. Exhibit

VIII. ESDC failed to respond to the March 25, 2013 letter.

On April 22, 2013 Andrew Kennedy, Governor Cuomo’s Assistant Secretary for

Economic Development and Betsy Ball, from the Executive Chamber of the Governor’s

office, met with Assembly Member Brennan and his Albany staff to discuss the

transaction. A Power Point presentation, entitled “Keeping the Bills in WNY,” was

provided and a discussion held in regards to official Guidelines being created for the use

of the hospitality suite by the State. Exhibit IX. During the meeting, terms on the use of

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the hospitality suite were both discussed and some were included in the written Power

Point presentation.

Mr. Kennedy also indicated that the following two terms were under

consideration. One was the public posting of the names of the attendees on ESDC’s

website within one week of use. The other term involved the State’s submission of the

Guidelines to the Joint Commission On Public Ethics (“JCOPE”) for their review before

finalizing them.

On April 30, 2013, Assembly Member Brennan sent Mr. Kennedy, a letter

requesting confirmation on several points discussed during the meeting. Exhibit X.

However despite a subsequent email promise to respond, no written response was

received.

II. Freedom of Information Law Requests

On April 30, 2013, Assembly Member Brennan submitted requests for documents

pursuant to the Public Officers Law, also known as the Freedom of Information Law

(hereinafter “FOIL”) to the Executive Chamber and ESDC and Erie County. Exhibit XI.

Copies of these requests were re-sent by certified mail on May 2, 2013. The FOIL

requests sought various records from the Executive Chamber, Erie County, and ESDC

pertaining to the hospitality suite correspondence either written or by email and other

documents relating there to.

A. Erie County’s FOIL Response

On May 3, 2013, Erie County responded to the FOIL request by email and

provided the following documents; the August 1, 1998, Master Lease between Erie

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County and ESDC and various financial records. Erie County’s May 3, 2013, response

also included a request for clarification on the types of materials originally requested.

On June 26, 2013, Assembly Member Brennan’s office sent an email to Erie

County clarifying the type of documents requested by FOIL. On July 8, 2013, Erie

County sent an email response to Assembly Member Brennan’s office, stating that they

had located and provided what they believed to be the definitive document related to the

hospitality suite which came from a mid-October meeting in Detroit. That document

was the October 12, 2012 letter addressed to New York State Lieutenant Governor Duffy,

Howard Glaser, the New York State Director of State Operations, and Richard Tobe, Erie

County Deputy County Executive, from Jeff Littmann, the Buffalo Bills Chief Financial

Officer that summarized the agreement reached for an extension of the lease between the

Buffalo Bills and ESDC.

B. ESDC’s FOIL Response

Under Public Officers Law §89 4(a), a party submitting a request has the right to

appeal when a request is deemed denied for failure to respond within 30 days of its

receipt. On June 13, 2013 an appeal was issued. Exhibit XII.

ESDC responded on approximately July 11th or 12th of 2013, by supplying a hard

copy of the “Guidelines for Use of the I Love NY Hospitality Center” (hereinafter “Use

Guidelines”). Exhibit XIII. ESDC also produced the following documents by compact

disc: the 1998 & 2013 Buffalo Bills Master Leases, the 1998 & 2013 Buffalo Bills

Stadium Leases, ESDC’s Directors Materials from 1998-2012, Expense Reports from

2001-2012, and the MOU.

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The original FOIL request also asked questions that were not answered by the

materials submitted, including; whether ESDC had any similar arrangements to the Suite

at other facilities or whether the Buffalo Sabres were providing seats to ESDC at the First

Niagara Stadium.

i. Guidelines For the Use of the Hospitality Suite.

The Use Guidelines provided by ESDC offer the most detailed information

available in regards to the planned use of the hospitality suite. Included in the two-page

document are details on the background, purpose, procedure, review of request and report

of use for the hospitality suite. The background describes efforts by ESDC, Erie County

and the Buffalo Bills to provide a lease for the stadium while also providing ESDC with

“control over a suite known as the I Love New York Hospitality Center” for the

“purposes of encouraging and fostering economic development, tourism, and public

awareness for the State and Western New York, and for other charitable or public

functions during events” at the Stadium. See Exhibit XIII, Use Guidelines page 1. In the

document, it states that ESDC authorized the Buffalo Niagara Enterprise (“BNE”), a local

nonprofit, to manage the hospitality suite.

Use of the hospitality suite is to be limited to no more than 16 tickets per event

and approval for use of the hospitality suite is dependent upon a demonstration that its

“use will encourage and foster economic development, tourism and public awareness for

the State and Western New York, and for other charitable or public functions during

events.” See Exhibit XIII, Use Guidelines page 1. The Use Guidelines specifically

prevent the hospitality suite from being used for “political fundraising activities” and all

use must be in accordance with Public Officers Law § 73, subd. 1., which provides

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definitions used in this section of the law, for the business or professional activities by

state officers, employees and party officers. See Exhibit XIII, Use Guidelines page 1.

To achieve compliance with the Public Officers Law, the Use Guidelines require

all public officials who use the hospitality suite to “be charged and shall pay the value of

the cost of attending any event in the Center at the rate charged to the general public for

attending such event.” See Exhibit XIII, Use Guidelines page 1.

The procedure for using the hospitality suite requires making a request to Thomas

A. Kucharski, President and CEO of BNE. BNE is a regional nonprofit that supports

economic development and marketing, with a Board of Directors with over 25 members,

including Russel Brandon, CEO of the Buffalo Bills, Inc., and Appointed Director

Christina Orsi, Regional Director of ESDC for Western N.Y.

Requests are to be submitted to BNE two weeks prior to the event and should

include “at a minimum” information such as:

-name and contact information of the person requesting use-name/employer/job title of each guest the number of tickets requested -detailed description of the purpose for use-a statement verifying the use will be in accordance with the purpose of the hospitality suite-a statement agreeing to pay for all food/beverages/other costs incurred during use-for each guest and employer: (i) a description of any contracts/other business

dealings they have with ESDC or other State agencies; (ii) list of any litigation currently involved with where the State is an adversary; (iii) whether the guest/employer is regulated by or appears before the State; (iv) whether the guest/employer is a registered lobbyist/lobbies/otherwise attempts to influence action or positions on legislation/rules/ regulations/ rate-making before the State.

BNE is the entity that will review requests and determine whether the proposed

use satisfies the Use Guidelines before authorizing use of the hospitality suite. If

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approved by BNE, ESDC will provide a final review of the proposed use to confirm that

it is consistent with the Use Guidelines. See, Exhibit XIII, Use Guidelines page 2.

C. Governor Cuomo’s FOIL Response

The April 30, 2013, FOIL submitted to the Governor’s office was not responded

too. On June 13, 2013, an appeal was filed. Exhibit XIV. As of August 19, 2013, no

formal written response has been received from the Executive Chamber of the

Governor’s Office.

III. Review of FOIL Documents

Following the review of Erie County and ESDC’s produced materials, the State’s

purpose for using the hospitality suite to promote economic growth in Western New York

is within the scope and purpose of the State’s original lease with Erie County. Pursuant

to the August 1, 1998, Master Lease between Erie County and ESDC, Erie County’s

agreement to lease the Stadium to ESDC, was for the purpose to “facilitate such

refurbishing, renovation, and improvement and the subletting thereof to the Bills.” See

Exhibit XV, 1998 Master Lease, page 2.

ESDC leases the Stadium to the Bills with the purpose of facilitating

improvements and general public benefits. Therefore, as part of the facilitation for public

benefit, the State has the right to determine the use of the stadium with the Bills,

including provisions for the use of part of the stadium for promoting economic benefits.

IV. Potential Risks Related to ESDC’s Use of the Hospitality Suite

The following analysis raises concerns about the genuine potential for misuse of

the stadium. Due to these concerns, the recommendation is being made that the Use

Guidelines be submitted to JCOPE prior to their finalization.

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i. Proper Standard for Ticket Prices.

The first consideration involves how the value and cost of attending the

hospitality suite is determined. The Use Guidelines state that the individual ticket price

will be at the same rate of that of the general public. See, Exhibit XIII, Use Guidelines,

page 1. However, my office obtained information that the price for the use of a season

luxury box at the Stadium in the recent past was $125,000.00 for nine games (including

two pre-season games). This indicates that the pro-rata rate for nine games would be

approximately $500.00 per ticket per game. There is a disparity between the price of a

pro-rata luxury box suite seat and the cost of a standard ticket to a game. As a result, this

issue should be submitted to JCOPE to clarify the proper price standard.

ii. Use by Private Parties

The Empire State Development Corporation has acquired a State resource, the I

Love New York Hospitality Suite, through its agreement with the Bills.

Use of the suite by private parties must conform to the public purpose of

promoting economic development, tourism, and other benefits to the Western New York

economy. Private parties who were not using the resource for a public purpose would be

receiving a gift of State resources.

Appropriate purposes for using the box might include a discussion of potential

private investment in the region or in State assets.

It could also be used as a recruitment device, similar to the way a business firm

takes promising job applicants to local events to sell them on the region as well as on the

firm. However, if the private person is not a potential investor, or merely a friend or

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family member of an investor, and there is no benefit to the state in hosting this person at

an event, it could be a gift of State resources to a private party and a violation of the

Public Officers Law on the part of the person authorizing the invitation. Entangling

ESDC in distributing a privilege to business executives or other persons of attending pro

football games on Sunday afternoon at a State resource to “benefit” the State could invite

constant questions as to the authenticity of the benefit to the State. These scenarios

would be difficult for the Corporation to guard against, because, while the concept might

be clear, the actual analysis will depend on the facts, and the line between a legitimate

recruitment activity and a favor to somebody who no longer needs persuasion, either

because the investment has been rejected, could in fact be unclear.

A further risk is the temptation to misuse if the process is not monitored.

Attendance at a professional football game can be acknowledged as being highly

desirable. The individuals attending the game may have little or no relationship that will

spur investments in the upstate economy. They may also want to bring friends and

family members with them who have no connection to economic development activities.

Social pressure to obtain tickets inappropriately could be considerable. The Use

Guidelines do not clarify how to evaluate these issues. Therefore, these types of

problems should be clarifies by JCOPE.

V. Recommendations

Actual use and monitoring of the hospitality suite will be a good measure of

whether the suite is in fact being used for a proper purpose. This is why the public

posting of the attendees names on ESDC’s website within one week event would be an

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important safeguard. The posting will provide transparency and the opportunity to

monitor who will be using the suite and for what purpose.

The Use Guidelines should be submitted to JCOPE prior to the State’s use of the

hospitality suite. This measure could not be found in the written Guidelines nor any other

document provided by ESDC. JCOPE has the ability to issues advisory opinions on the

interpretation of Public Officers Law sections 73, 73-a, and 74. Upon request, the

Commission can issue formal opinions, which in this case, would be valuable.

Submitting the formal Guidelines to JCOPE for their review would be an appropriate

measure for ensuring that the hospitality suite’s use will be conducted in an ethical

manner.

VI. Conclusion

ESDC has the ability to use the hospitality suite for the purpose of encouraging

economic development in Western New York. However, the State could become

entangled in permitting the use of the hospitality suite by private parties whose use may

be primarily or solely for entertainment purposes with little or no relationship to

economic development. Therefore, it is especially important that the hospitality suite’s

use be properly monitored and protected by strong guidelines. This is why measures

including the posting of the attendees names on ESDC’s website prior to the event are

important. It provides a means for tracking who is using the hospitality suite while

protecting the suite’s purpose.

Constant questioning of legitimacy of use of the suite could be a problem. The

State should also consider relinquishing their right to use the hospitality suite.

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