With the introduction of draft legislation in the New York State Senate and Assembly to amend the current laws governing Roosevelt Island, residents, elected and appointed officials and other interested parties will be studying how the proposed self-governance differs from existing law and regulation. Set forth below is a brief description of some of the more important changes proposed, an analysis of some of the implications involved and some questions that remain to be resolved.

• First, instead of 9 directors all appointed by the Governor, three of whom must be Island residents, the Board of the Roosevelt Island Operating Corporation (RIOC) would consist of 7 residents, of whom 5 would be elected by residents and 2 appointed by the Mayor. [Any person resident on the Island for more than one year, including non-citizens, would be eligible]. Note that instead of 6 of the 9 directors being non-residents as under present law, all 7 directors would be Island residents. As a result of these changes, the Governor would have no say in the governing process; nor would the State government have any say in how the Island is run [e.g., the State Division of the Budget would not oversee the Island's budget]. As for the Mayor, while under present law he can recommend two of the 9 directors for appointment by the Governor, under the proposed legislation the Mayor would actually appoint the two.

• Second, the 7 resident directors would no longer enjoy "indemnification" from financial liability by the State as do the 9 directors under current law. Thus, any negligence in running the Island (e.g. a Tram accident) that results in a judgment would not be paid for by the State as under current law. Of course, officers and directors liability insurance can be purchased for the residents running the Island, an added cost.

• Third, contracts [perhaps above a certain low amount] would be awarded to responsible bidders by lowest price in sealed bids rather than as present awarded in the discretion and judgment of the directors. This process poses the risk that the lowest bids may not result in the best work and materials over the long term.

Some of the questions raised by the proposed self-governance legislation are:

• How would UDC's investment in constructing all of the roads, AVAC system, garage and other "public facilities" be repaid? The "public facilities debt" amounted to $117 million back in 1987, when UDC and RIOC entered into a "Revenue Allocation Agreement" by which RIOC agreed that UDC receives all rents, tax equivalent payments and other revenues from Island housing and commercial tenants (with RIOC only allowed to keep "increases" in rents it may be able to negotiate over then existing levels). According to the Rent Payment Statement submitted by UDC to the City [under the 99-year lease of the Island from the City to UDC], for the fiscal year ended March 31, 1998, the accumulated debt amounts to something like $235 million (which includes "Normal Allowances" by which UDC may deduct certain Island-related expenses from rent owed to the City). The proposed legislation is silent about the Revenue Allocation Agreement; it remains in effect, but will UDC and the State be comfortable about their investment in Roosevelt Island and the accumulated debt incurred without any input on how the Island is governed?

• How would the accumulated "operating" deficits of Roosevelt Island be paid off? Back in 1987, when UDC and RIOC signed the Revenue Allocation Agreement, these deficits amounted to over $52 million. ccording to the Rent Payment Statement for the fiscal year ended March 31, 1998, the accumulated "deferred loss" in running Roosevelt Island was $239 million (which includes the $235 million of Debt Service and Normal Allowances discussed above).

• How would UDC's outstanding bonds sold to investors to pay for the construction and development of Roosevelt Island be paid off? Currently, payments to cover the interest on outstanding bond obligations are made from monies RIOC agreed belongs to UDC under the Revenue Allocation Agreement discussed above, together with appropriations by the Legislature to make up the balance. Presumably the State would have to protect itself from defaulting on these general obligations, but again will the Governor and Legislature be comfortable in doing so without any input on how Roosevelt Island is governed?

• Would the Island be required to purchase from UDC or the State the existing "public facilities" constructed by UDC if the State no longer controls the Island's governance? In considering the independence of Staten Island from the rest of the City, the issue of paying back the City for roads, schools, hospitals, fire and police stations, etc., has been raised as one condition to allowing that Island to "secede" and rule itself.

• Would self-governance result in greater efficiency in the running of the Island? In the fiscal year ended March 31, 1998, RIOC collected about $12.5 million in revenue from Island buildings, commercial tenants and other sources. Without "one-shot" budget gymnastics (such as using insurance settlement proceeds to pay operating costs, using capital reserve funds and stretching out capital improvements to meet operating expenses), this was not sufficient to cover the operational costs of running the Island and capital project needs to maintain existing facilities. How would the shortfall be paid for in the future? Nor does the $12.5 million allow for payment of any infrastructure costs (such as those to extend Main Street and the AVAC system to new housing to be built) that the Island may be required to expend to obtain new development. How would the Island raise funds for these development costs if self-governed?

• Will the City be comfortable with legislation requiring the Mayor to appoint two Island residents to the RIOC Board? Since the City leased Roosevelt Island to UDC for 99 years (until 2068), would the City want to be involved in RIOC as a minority (having 2 votes out of 7) in running the Island? Would the City's involvement imply that it will be asked to make up the operational and capital budget deficits of the Island or contribute to future development costs for new housing?

One can speculate about the political motivations of the parties supporting the proposed legislation. For Governor Pataki (who appears to be supportive), it may help position him for selection as Vice President if George W. Bush of Texas is the Republican nominee. The Governor can point to his efforts on Roosevelt Island to create local rule rather than continuing with "big" government; he also does not have to act on current proposals to allow developers to use Roosevelt Island parkland and thus can appear environmentally sound. The State would still be involved with Roosevelt Island because UDC's consent is required for any changes to the General Development Plan, but it would not be required to spend further money on Roosevelt Island other than to finance the outstanding UDC bond obligations. These actions by Governor Pataki might help position him as a moderate Republican from the Northeast with appeal to the conservative Texan as a running mate.

Presumably the Republican-controlled State Senate would go along with the Governor; as for the Democratic-controlled Assembly, it should be in favor of local self-rule, since the idea was generated by Island residents and is popular.

As for Island residents, local self-rule will not only be a challenge, but may be a way for increases in user fees and ground rents to be imposed on Island buildings, commercial tenants and others without as muh opposition as if coming from a RIOC controlled by the State. Such sums, together with greater efficiencies due to resident governance, may help the Island meet its operating needs. As for its capital projects, it is hard to see how Island self-rule will result in sufficient additional revenues to meet those needs. Requests by RIOC to the legislature to maintain the Island's facilities, as well as monies to pay for infrastructure and other costs to complete its development, will still be required no matter how the Island is governed.

The legislation has been undergoing changes from the version published in The WIRE on June 12, and is expected to undergo further changes, and thus it is not clear at the time of this writing what the final legislation may look like, if indeed agreement is reached on it. Since the "devil is in the details," any final bill will have to be examined carefully to understand its provisions and implications. However, discussing, debating and resolving the issues raised by the originally-proposed legislation may be useful for the effort toward self-governance to be understood and promoted.