Liu Takes on the EDC, Again
April 28th, 2010

Comptroller John Liu took another swipe at the city’s Economic Development Corp. today, accusing the agency of hoarding away $125 million in profits from so-called public deals.

In an audit released this morning, the comptroller alleges the corporation collected funds from the sale of city assets and lease payments and held onto the cash for its own purposes.

Officials at EDC say its well within their rights to collect and keep the funding — and they have an opinion from the city’s Law Department (seen below) to prove it.

“There are plenty of questions and even concern about what exactly the EDC does, as it deals with substantial amounts of City funds and publicly subsidized economic development,” Liu said in a prepared statement. “This episode only accentuates the need to reign in the EDC.”

This is not the first time the comptroller has gone after the EDC in his relatively short tenure. He has established a task force to look into the distribution of public subsides — including deals at the IDA (which we report on extensively here) — as well as community benefit agreements.

In his latest criticism, the comptroller’s office contends that the corporation inconsistency deals with the sale of city assets and does not verify certain subsidized tax payments to make sure the company is paying enough. The audit says the corporation does not double-check job figures from companies that receive public subsidies and it improperly calculates its energy discounts.

In the audit, the comptroller urges the EDC to reform its practices and give the cash back.

EDC, on the other hand, says its within its city contract, which has been signed by the comptroller for nearly two decades, to hold onto the $125 million, which goes toward the agency’s operation. The vast majority of that figure is from lease payments for a project in Times Square collected over many years.

“On an annual basis, NYCEDC returns to the City far more than the average amounts the Comptrollers Office improperly identified, helping to pay for vital services and keep taxes down,” according to the agency’s rebuttal. “In fact, during the same period examined by the Comptrollers Office, NYCEDC has remitted more than $400 million to the City.”

For more on the back and forth, see the documents below.

Audit Responses – Press 2-Pager-final

42nd St Memo

By on April 28, 2010, 3:17 pm
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