The Division of Commerce was created in 1941 and incorporated several state bureaus and the Bureau of Industry. It was replaced in 1944 by the Department of Commerce. At the time it was primarily aimed at urban renewal in New York City, although its bonds were to be used statewide. Virtually all state subsidized housing built since 1968 was financed through the corporation. In the first years of the UDC, its aim was to facilitate large-scale low-income housing developments in urban neighborhoods that had traditionally been white and middle-class. In 1970,
Business Week claimed that the UDC was "emerging as the most powerful state agency in the country for coping with urban growth." By 1974 the investment climate had cooled and in 1975
Governor Hugh Carey asked the Legislature to appropriate $178 million for the UDC, and by 1977 the UDC was able to reenter the financial markets. it was to encounter major problems in its
inner city developments and its efforts to build minority low-income housing in white middle-class neighborhoods. The Corporation still maintains a housing portfolio that currently includes mortgages for 20,200 housing units valued at $650 million in total.
Mario Cuomo was the first to begin ambitious use of it to get around official scrutiny for public projects. In 1981 voters voted against a $500 million bond issue for expansion of the state prison system to handle increased prison populations arising from the
Rockefeller drug laws. At the time New York had 32 adult prisons. Cuomo was to use the bonds to build another 38 prisons — most upstate.
George Pataki used the corporation to distribute $20 billion in federal aid following the
September 11, 2001 attacks to help rebuild lower Manhattan and build the 9/11 memorial. A subsidiary,
Lower Manhattan Development Corporation, and the
World Trade Center Memorial Foundation were set up for those purposes. Rebuilding was financed by
Liberty bonds. Whether the lack of public scrutiny has helped or hurt the development process can be debated. An audit released in May 2006 by New York comptroller
Alan Hevesi reported that the Corporation loses track of its subsidiaries. At the time the corporation reported 70 active subsidiaries, but the audit showed there were 202 subsidiaries still legally on the books (98 of which were definitely inactive). The audit did not consider this a serious oversight but the corporation stated that it intended to dissolve the inactive corporations. In 2007, under Governor
Eliot Spitzer, an Upstate ESD headquarters opened in
Buffalo in recognition of the different economic challenges posed in the upper and lower (NYC region) parts of the State. Two chairs were appointed, one for ESD Downstate and the other for ESD Upstate. The ESD board also authorized the creation of another subsidiary, Upstate Empire State Development Corporation, to concentrate on Upstate issues. In 2008, Governor
David A. Paterson brought the two components of ESD back together again, emphasizing that New York is truly "One State". The former Upstate and Downstate offices now work together to ensure that New York's economic development strategy benefits the entire State, while being mindful of the specific resources and special challenges of each region. In January 2011, Governor
Andrew M. Cuomo appointed
Kenneth Adams as ESD President & CEO and DED Commissioner. Mr. Adams was confirmed by the Legislature on April 5, 2011. In May 2011, Governor Cuomo appointed
Julie Shimer as Chair of ESD. She was confirmed by the
New York State Senate in June 2011. State control over projects in
New York City has often involved turf conflicts between the New York City mayor and the governor (including the fact that the state authority is exempted from city zoning rules). Many of the projects have had significant impacts on neighborhoods and resulted in
white flight and charges of
reverse discrimination. As an example, the UDC's construction of the
Harlem State Office Building in 1969 aroused intense opposition from the neighborhood which wanted the resources applied in other ways.
Ada Louise Huxtable called the fight "Rockefeller's Vietnam". The term "urban development" took on a negative connotation and in 1995 UDC was renamed the Empire State Development. During the
coronavirus pandemic, ESD was accorded a leading role in delineating what businesses would be considered
essential in New York State. In a late 2020
per curiam decision of the Supreme Court,
Roman Catholic Diocese of Brooklyn v. Cuomo, ESD categorizations of essential services were noted for excluding religious services while, at the same time, not being limited to services which can be considered as essential. Avi Schick, former President of ESDC (2007–2009), criticized the corporation as acting beyond its purview in determining what constitutes essential activities, particularly as it relates to religious practice. == Structure ==