By PAUL POST
SARATOGA SPRINGS — New York Racing Association has two weeks to turn over financial records and agree to an audit or face legal consequences, state officials said Tuesday.
The confrontation represents a low point in relations between NYRA and the state since it was awarded a new 25-year contract to run Saratoga Race Course, Belmont Park and Aqueduct Race Track in September 2008.
NYRA has criticized Gov. David Paterson and legislative leaders for failing to name an Aqueduct gaming operator, which would generate much-needed capital for NYRA and state coffers. On Monday, three days after Christmas, state Comptroller Thomas DiNapoli subpoenaed NYRA’s financial records, after NYRA refused to turn them over.
"The purpose of this audit is to determine if NYRA applied state payments to their intended purposes and properly calculated and remitted to the state statutorily required taxes, fees and payments for each calendar years 2008 and 2009," spokes-person Jennifer Freeman said.
She said a planned audit has nothing to do with NYRA’s recent criticism of state leaders.
Last year, the state gave NYRA $30 million to keep operating until Aqueduct’s 4,500 video lottery terminals come online. NYRA says that money will run out in June, threatening both the spring Belmont Park meet, including the Belmont Stakes, and the 2010 Saratoga Race Course season. DiNapoli wants to know where the money has gone, because NYRA said previously that it planned to end 2009 in the black.
"NYRA has two weeks to turn over its financial records and four weeks to make its officials available to us for interviews," Freeman said. "If NYRA does not comply, then our office will take legal action. NYRA could also take legal action in the coming days. Hopefully, given NYRA’s limited financial resources, it won’t waste too much money on what is clearly our authority to audit their records."
She said the state constitution and NYRA’s franchise agreement give the comptroller’s office authority to audit NYRA. Appendix A of the franchise agreement says, "The state comptroller … shall have access to the (NYRA) records … for the purposes of inspection, auditing and copying."
DiNapoli’s office last audited NYRA in December 2007, before its new franchise took effect. NYRA says it’s no longer subject to such audits, because a Court of Appeals decision prohibits the comptroller from auditing not-for-profit associations. Under its new franchise, NYRA went from being a non-profit to a not-for-profit, a subtle legal technicality that might have major legal ramifications.
"The law is clear," NYRA said in a prepared statement. "If NYRA and the comptroller cannot agree amicably on the clear meaning of the Court of Appeals decision, we should agree to immediately seek a declaratory judgment from the judiciary to quickly resolve this matter."
DiNapoli’s office first contacted NYRA on Oct. 20 saying it planned to conduct an audit. Six days later NYRA replied and refused to comply with the request.
Freeman said DiNapoli’s office periodically audits all quasi-state entities such as the New York State Thruway Authority.
"We have no reason to think there’s been any impropriety," she said. "We’re just doing a standard audit. We look at organizations that have a history of financial problems."
However, NYRA is a private firm that contracts to run the state’s racetracks.
"As the holder of the state thoroughbred racing franchise, NYRA is one of the most pervasively regulated private companies operating in New York state," NYRA said. "NYRA cooperates fully with those state agencies that have actual legal authority to regulate and audit its operations. Any suggestion that the taxpayers are placed at risk by the constitutional prohibition on comptroller audits of NYRA is misleading."