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RELEASE: Empire Center questions $1.6 billion Hochul contracts with Texas companies for housing for southern border migrants. Each contract is for the oddly exact amount of $798,717,160.97.
State tees up >$1 billion in migrant housing contracts—with little transparency or accountability
By E.J. McMahon July 24, 2023

An Albany newspaper just broke the news that New York State has contracted with two Texas companies for $800 million in temporary housing to help with New York City’s ongoing influx of undocumented migrants from the southern border.

This is just the beginning—and the Hochul administration’s response to the migrant “emergency” is already raising big questions surrounded by bigger dollar signs.

Specifically, Sunday’s Times Union reported:

Amid New York’s ongoing migrant crisis, state officials recently awarded a nearly $800 million contract to two Texas-based companies in order to secure temporary sheltering services.

The selection was made a week after one of the companies, Garner Environmental Services, contributed $5,000 — the calendar-year maximum — to Gov. Kathy Hochul’s campaign.

According to the state comptroller’s OpenBookNY website, the state Office of General Services (OGS) actually signed two separate contracts, one with Garner Environmental and another with the second Texas firm named in the TU story, Cotton Commercial USA Inc. Each contract, the OSC website indicates, is for the (oddly specific) sum of $798,717,160.97, or a total of just under $1.6 billion.

As the story notes, the state is highly unlikely to spend those full amounts, or perhaps even half as much. But the sums involved obviously represent a lot more than Governor Hochul’s widely and repeatedly reported state budget commitment of $1 billion in migrant relief aid to New York City, where Mayor Eric Adams’ spending on the migrant crisis is projected to exceed $4 billion.

In fact, as Hochul’s budget documents make clear, the state’s actual commitment is considerably more than $1 billion—a total of $1.46 billion in projected disbursements over the next two years, according to the Enacted Budget Financial Plan (see table, page 16).

The budget bills passed by the Legislature in late April included a $1 billion Aid to Localities bill appropriation, via the Office of Temporary and Disability Assistance (OTDA), to cover “29 percent of expenditures incurred by New York City for providing humanitarian aid, including short term shelter services to migrant individuals and families, including costs associated with humanitarian emergency response and relief centers for individuals entering short term shelter” from April 1, 2022 through April 1, 2024 (see pp 653-654). The city has until August 2024 to claim the aid, although that deadline can be extended by the state.

The contracts with Garner and Cotton Commercial appear to be drawing from a separate, additional $1 billion “emergency appropriation” in the FY 2024 State Operations budget bill (p. 826), from which spending can now be authorized under an Executive Order issued by Hochul on May 9, two weeks after the budget passed. Hochul’s order formally declared a “State Disaster Emergency” on the grounds that “the arrival of increased numbers of migrants seeking shelter in the City and State of New York is expected to exacerbate an already large-scale humanitarian crisis and create a disaster emergency to which local governments are unable to adequately respond, creating a threat to health and safety, which could result in the loss of life or property.”

Details, anyone?

Because the contracts reported in the Times Union were covered by the emergency declaration and are being financed out of the emergency appropriation, they were not subject to normal competitive bidding requirements or to pre-audit by OSC, although the comptroller is expected to process payments to the vendors.

Picking up from the Times Union report:

The Executive Chamber said in a statement it was not involved in the details of the procurement process, which it said would also include work for a third company that has not yet been identified. The five-year contract could unleash as much as $799 million in spending, though the ultimate payout could be less if the need diminishes.

“State agencies have taken steps to identify resources that state and local governments can use to provide humanitarian relief should further needs arise, including entering into contracts with three vendors whose pricing has been set through a competitive bidding process from the federal government,” Hochul spokesman Avi Small said in a statement.
The main thrust of the Times Union story is to highlight Garner Environmental’s $5,000 political contribution to the governor. This is a legitimate angle, to be sure, given the controversy previously surrounding the highly questionable circumstances surrounding Hochul’s 2021 award of a $637 million no-bid contract for 52 million rapid coronavirus tests from a company whose owner made generous (legal) contributions to her campaign. In the absence of a direct quote, it’s hard to see how the governor’s office could plausibly claim it was, in the newspaper’s paraphrase, “not involved” in the approval of contracts by OGS, an executive agency directly answerable to the governor.

But given the potentially enormous sums involved in housing migrants, not to mention the potential social and economic impacts of constructing a sizable network of temporary shelters, the contracts raise much bigger questions of just what the Hochul administration is up to here.

It’s important to note, for one thing, that expenditures funded out of the emergency appropriation will not be limited to New York City. Might Garner Environmental, Cotton Commercial, and that “third company that has not yet been identified,” if not others, be tasked with building temporary housing in suburban and Capital District communities where the city has already begin leasing entire discount hotels to house hundreds of migrants? If so, will local officials be consulted as part of the process?

High-rent temp digs

More from the Times Union report:

The Hochul administration emphasized that the rates agreed to in the contract had initially been negotiated by the federal government. That meant taxpayers got a more fair price for the potential work, the administration said.

For example, Cotton Commercial could charge the state $8,662.50 per week for a 38-foot bunkhouse trailer that includes 12 beds with privacy curtains, bedside lighting, pullout storage drawers, a single restroom with shower, toilet, sink and mirror. That pricing is marginally below the federal rate of $8,727.96 per week.

With Garner Environmental, an emergency public shelter housing 2,500 people could cost $1 million to set up, $1 million to take down, and about $671,000 per day to run.
UPDATE: Although unattributed in the story, the pricing information for the two firms was derived from contract award documents (but not the contracts themselves) filed with OGS and posted at this site, the Times Union‘s Josh Solomon now points out. Those contract documents seem to suggest that Garner and Cotton Commercial are somehow bidding in tandem under a single pact, although, as noted above, separate contract numbers, which would have originated with OGS, are posted on the OSC website. In any case, Hochul’s Financial Plan-projected disbursements for migrant assistance purposes add up to $1.5 billion over the next two years, including more than $1 billion this year.

Quest for answers

Twenty members of the state Senate Republican conference signed a May 22 letter to Comptroller Thomas DiNapoli saying they were “gravely concerned by the lack of transparency around the placement of migrants throughout our state and the public expenditures backing those actions” and asking DiNapoli to “provide more details to the public to keep New Yorkers informed about the approved payments to the City of New York and a specified list of who the payments are going to and for what purpose.”

But as noted above, DiNapoli is more or less out of the loop on this one. It’s the governor’s office that should be providing those details —and it’s the entire Legislature, including Hochul’s fellow Democrats in both houses, that should be joining the Senate Republicans in making that request.

In the absence of a fuller, ongoing accounting of just what the state is up to, this much seems clear: Hochul’s response to the migrant influx “emergency” is serving as cover for a potentially very costly mess, with no end in sight