STATE OF NEW YORK

COUNTY OF MONROE
COUNTY COURT
IN TilE MATTER OF A CONI<'IDENTIAL INVESTIGATION
DA-07-012012 (A)-MDA
liON. FRANK P. GERACI, JR.
ORDER
The Monroe County Grand Jury having been empaneled by Monroe (;;ounty,Comt in the
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December 2007 Term and, by order of this Court, such term having been exitnded1mtil March
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31, 2008; and on March II, 2008, the Grand Jury having issued a report Crimin<i:l-'
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Procedure Law 190.85 (I) (c); and on October 27, 2008, this Court the 0
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transcripts of the Grand Jury proceedings conducted on December II, 2007jJ)ecimber 12,
2007, December 13,2007, December 20,2007, March 5, 2008, and March II, 2008; and this
Court, after examining the report and the minutes of the Grand Jury, having determined that the
report is based upon facts revealed in the course of an investigation authorized by CPL 190.55
and is supported by the preponderance of the credible and legally admissible evidence and,
furthermore, such report is not critical of an identified or identifiable person; and, additionally,
this Court having found that the filing of such report as a public record will not prejudice t;1ir
consideration of any pending criminal matter that would rcqLJirc the sealing of such report; and
NOW, it is hereby
ORDERED, that the report of the Monroe County Grand Jury issued on March II,
2008, In the Matter of a Confidential Investigation, DA-07-012012(A)-MDA, pursuant to
Criminal Procedure Law 190.85 (I) (c), is hereby accepted by this Court; and it is further
ORDERED, that such report be tiled as a public record ..
Dated: December 22, 2008
Rochester, New York
STATE OF NEW YORK
COUNTY OF MONROE COUNTY COURT
IN THE MATTER OF A CONFIDENTIAL
INVESTIGATION
DA -07-012012(A)-MDA
MONROE COUNTY GRAND JURY
DECEMBER 2007 TERM
Report of the Grand Jury
CPL Section 190.85(1)(c)
March 11, 2008
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MONROE COUNTY GRAND JURY
GRAND JURY REPORT
CPL SECTION 190.85 (l)(c)
PRELIMINARY STATEMENT
The Monroe County Court empaneled the Monroe County Grand Jury, December 2007
Term, and by order ofthe Honorable Frank P. Geraci, extended its term to March 31,2008.
Under this authority, the Grand Jury conducted an investigation into the Monroe County Water
Authority.
To complete this investigation, the Grand Jury heard testimony from 16 witnesses, and
considered 19 exhibits.
As a result of this investigation, the Monroe County Grand Jury, December 2007 Term,
has adopted the following report pursuant to New York State Criminal Procedure Law Section
190.85 (l)(c) and respectfully submits this report to the Monroe County Court.
FINDINGS OF FACT
I. SELECTION, DUTIES, AND PAYMENT
OF THE MONROE COUNTY WATER AUTHORITY BOARD
In 1950, Public Authorities Law Section 1095 was enacted. It directs, among other things,
how the members of the Monroe County Water Authority Board are to be selected, the length of
each term, and the compensation to be paid each member ofthe board. Under that section, the
members are appointed by the President of the Monroe County Legislature and are subject to
confirmation by a majority ofthe county Legislature of Monroe County. A full term is five years
in length and there is no limit on the number ofterms a board member may serve. The board is
comprised of a total of seven members and no more than five shall belong to the same political
party. Each board member receives a stipend of$7,500.00, and such amount is fixed by the
county legislature. The testimony of board members confirms that these laws and rules are
currently complied with.
The Public Authorities Law makes no requirement or provision for the Monroe County
Water Authority Board to be fairly representative of the geographical jurisdictions served by the
Water Authority. In the past, according to board member testimony, the counties outside of
Monroe County that receive services from the Monroe County Water Authority have not been
fairly represented. Similarly, some geographical areas within Monroe County have been well
represented, while other areas have been under represented. (See board members testimony).
Additionally, the Public Authorities Law does not require a candidate for board
membership to possess any particular expertise, and specifically does not require the candidate
to possess any expertise in the work performed by the Water Authority or expertise related to the
duties of a board member. Pursuant to the Public Authorities Law and the by laws and policies
adopted by the Monroe County Water Authority, the duties of a board member include:
overseeing the management of the affairs of the Authority by its Executive Director and other
employed officers, establishing, monitoring, and updating. policies necessary to promote honest
and ethical conduct by the officer's and employees; and making decisions concerning hiring and
firing of officer's and employees, financial transactions and new program initiatives. Presently,
there is nothing in the Public Authorities Law which requires a candidate to possess any
expertise that would insure that such candidate was capable of carrying out the duties required of
a board member. Moreover, under the provisions of Public Authorities Law Section 1095, the
Monroe County Water Authority is a public benefit corporation of the State of New York and
fulfills a public mission, and as such, a fiduciary duty is owed to the Authority and to the public.
Notably, the process used to select a board member, according to board member testimony, does
not involve a public posting of any board openings, and does not include an application designed
to elicit the existence of relevant experience. In fact, the process used to select the candidates for
board membership is, even in its present configuration, inconsistent.
II. ACTIONS TAKEN BY MONROE COUNTY WATER AUTHORITY BOARD
In August of2002, the Monroe County Water Authority Board deemed it proper to
delegate to one or more of its members under Public Authorities Law Section I 095 the execution
of an employment agreement with an employee who was planning to retire. As a result of that
action, at the time of the employee's retirement, that employee received compensation in excess
of $150,000.00 gross pay.(See testimony of board members who executed the agreement, and
testimony regarding payments made pursuant to the agreement). The Employment Agreement
also provided for lifetime payment ofthe employee's and the employee's spouse's health
insurance premiums, and medical reimbursement in the amount of $2,500.00 per year for life.
(See Employment Agreement). The Employment Agreement a"d its terms were never reviewed
by the full Water Authority Board, were never placed on the record at a public board meeting,
and were never voted upon by the full board, or even by a majority of the board. (See testimony
of board members). Notably, in December 2004, the Monroe County Water Authority Board
approved written policies and procedures for employee benefits. Moreover, there is also a
written policy which makes it the explicit duty ofthe Water Authority Board as a whole to make
determinations of what are fair and reasonable compensation and benefits for Department Heads
and Executive Employees. The Water Authority Board is also required to confirm that
compensation arrangements with senior management employees are consistent with Water
Authority policies. (See Corrective Action Plan Pursuant to Executive Law Section 170 and
testimony regarding the changes made since 2002). However, there is no specific requirement
that the review, confirmation and approval be both part of the public record and subject to
discussion on the record prior to approval.
After a review of the board meeting minutes in evidence, as well as from the testimony
of board members, it is apparent that there is insufficient discussion of agenda items on the
record. It appears from the board members' testimony that discussion does occur concerning
some of the agenda items, however, that discussion is not noted in the meeting minutes. At least
one board member testified that due to the department heads' and Executive Director's
knowledge of what they needed, if there was an item on the agenda, it was likely it would pass
without any discussion by the board members.
III. CONFLICTS OF INTEREST WITH VENDORS
During the course of this Grand Jury investigation, it became apparent that great strides
have been made since 2003 to institute controls and policies to require disclosure of any actual
or possible conflict of interest possessed by an employee or board member. These efforts include
a written policy which includes definitions, procedures to follow, and a requirement of annual
reporting as well as record-keeping requirements. The Water Authority has also instituted a
"whistle blower" policy to protect employees who disclose that a conflict of interest exists but
which has not been disclosed by the employee with the conflict. Additionally, the Water
Authority engages in regular training to insure that employees are aware of the conflict of
interest policies and their consequences. While all of these changes are helpful, there is one area
that has been overlooked. There is no requirement in any of the contracts with the vendors that
the vendors themselves have a duty to disclose any actual or possible conflict. The vendors have
a monetary interest in continuing to contract with the Water Authority. Therefore, if the
contracts required termination of the contract for willful failure to disclose an actual or possible
conflict of interest between a vendor and any employee or board member, it would be in the best
interest of the vendor to disclose or risk losing the contract.
Conclusions
The Grand Jury concludes that the Monroe County Water Authority Board Members are
neither historically, nor currently required to be fairly representative of the geographical areas
the Monroe County Water Authority serves. The present manner of member selection has, in the
past, resulted in some geographical areas receiving a greater amount of representations on the
Monroe County Water Authority Board, while other areas received little or no representation
whatsoever.
The Grand Jury concludes that the Monroe County Water Authority Board Members
have never been required, as a pre-condition to confirmation, to have any expertise relevant to
the work of the Monroe County Water Authority. Similarly, the Grand Jury concludes that the
Monroe County Water Authority Board Members have never been required, as a pre-condition to
confirmation, to have any expertise relevant to the nature and scope of the issues the members of
the Monroe County Water Authority Board must decide in orc!er to carry out their
responsibilities for managing the Authority, and fulfilling its fiduciary duties to the Authority
and the public it serves.
The Grand Jury concludes that the current stipend of $7500.00 per year paid to board
members of the Monroe County Water Authority is in all respects reasonable and warranted by
their service, however, medical; dental and retirement benefits are excessive for part time
service.
The Grand Jury concludes that current provisions of law allow a member to serve on the
board ofthe Monroe County Water Authority with no term limits. Board members, as a result,
have been able to continue to serve, even when their service no longer meets the degree of
diligence, care and skill which prudent people would use in similar positions and under similar
circumstances.
The Grand Jury concludes that Public Authorities Law Section I 095 does not require the
president of the County Legislature who is responsible for the appointment of Monroe County
Water Authority Board Members, subject to the confirmation of the majority of the County
Legislature, to follow a procedure which insures an open and public application process,
designed to elicit the strongest and most qualified candidates for membership on the board.
The Grand Jury concludes that there is insufficient discussion of agenda items on the
record, prior to voting at Monroe County Water Authority BoarJ Meetings. At times, discussion
has occurred outside of regular board meetings and without all members present. According to
some board members, the actual votes are often predetermined.
The Grand Jury concludes that all contracts between the Monroe County Water Authority
and its vendors, should include a requirement that the vendor disclose any and all relationships
with Monroe County Water Authority employees, including all executive staff and department
heads, and board members. Failure to do so, allows a vendor to continue to benefit in spite of
any past or present conflicts of interest with employees or members.
Recommendations
Based upon the stated findings of fact and all the evidence heretofore had before this
Grand Jury and to propose legislative, executive or administrative action in the public interest;
now therefore, by the authority vested in the Grand Jury by Criminal Procedure Law Section
190.85 (!)(c) the Grand Jury recommends the following:
A. Legislative Change
I. That the manner of selection of members of the Monroe County Water Authority
should be amended to allow (3) members to be selected by the majority leader of the
County Legislature, (2) members to be selected by t))e minority leader of the County
Legislature, ( 1) member to be selected by the Mayor of the City of Rochester and (I)
member to be selected by the County Executive of Monroe County.
2. That a procedure be instituted and followed whereby a pool of qualified applicants
for Board membership would be developed pursuant to an open and public
application process designed to elicit strong, qualified candidates for board
membership, fairly representing all geographic jurisdictions the Monroe County
Water Authority serves.
3. That, to the extent possible, the members selected be chosen with expertise relevant
to the work the Momoe County Water Authority does, and that members be selected
with expertise relevant to the nature and scope of the issues they will decide in order to carry out
the responsibility of managing the Momoe County Water Authority and to fulfill the fiduciary
duty to the Authority, and to the public the Authority serves.
4. That the current stipend paid to Momoe County Water Authority Board Members of
$7500.00 per year is in all respects reasonable and warranted. However, the
provision for medical, dental and retirement benefits is excessive for part time service
and should be discontinued. To provide for inflation, it would be advisable to
provide for regular review to establish a reasonable inflation index consistent with
public standards.
5. That the Legislature should consider amending Public Authorities Law Section 1095
(!)to include a term limit which allows Momoe County Water Authority Board
Members to serve a maximum of two five year terms.
B Administrative Change
1. That all discussion amongst any and all board members relevant to a vote on any
agenda item, be placed on the record, in public, at a regular board meeting, prior to
the vote on that agenda item.
2. That all contracts with vendors of the Momoe County Water Authority include a
clause requiring disclosure of any and all relationships between the vendor and the
vendor's employees and the Momoe County Water Authority and its employees,
including, but not limited to, executive staff and department heads, and board
members. That said contracts should include a provision for termil)ation upon failure
to so disclose.
Dated: March 11, 2008
Rochester, New York
Sworn to before me this 11th day of
March, 2008
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