AG: Development Corporations lobbied illegally for projects

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Three city development corporations have admitted to illegally lobbying the City Council to win approval of their favored projects, including a much-contested plan to revamp Willets Point, the state attorney general said.

The city’s Economic Development Corporation (EDC), the Flushing Willets Point Corona Local Development Corporation (FWCLDC) — headed by former borough president Claire Shulman — and the Coney Island Development Corporation (CIDC) settled charges of attempting to influence legislation in connection with development projects in Willets Point in 2008 and Coney Island in 2009, according to a three-year investigation by Attorney General Eric Schneiderman.

The projects require City Council approvals pursuant to the state’s Uniform Land Use Review Procedure (ULURP). But local development corporations (LDCs) are barred by statute from influencing legislation.

“These local development corporations flouted the law by lobbying elected officials, both directly and through third parties,” Schneiderman said.

According to probe findings, the three agencies attempted to create the appearance of independent grassroots support for the projects by concealing their participation in community organizing efforts. This included ghostwriting letters and op-eds and preparing testimony for unaffiliated community members, Schneiderman said.

The EDC — the city’s economic development arm — also played a behind-the-scenes role in the lobbying activities of the other LDCs, he said.

The nonprofit organizations will now have to reform their practices to comply with the law and end lobbying for development projects. They will also have to comply with mandatory training, and the EDC will have to publicaly disclose any funding provided to other LDCs.

The EDC intends to restructure, according to spokesperson Jennifer Friedberg, and cease to be considered an LDC. Doing so, she said, would allow the company to legally influence legislation and “operate freely in areas that are necessary and appropriate for it to achieve its economic development mission.”

The agency, which formerly claimed to not have known a “clear definition” of influencing legislation, will not be subjected to fines or penalties as part of the settlement.

Robert Bishop, a lawyer representing FWCLDC, said the group also plans to comply with the new agreement.

“The LDC is a great organization that does great things, and we will continue to do great things,” he said.

Shulman declined to comment.

Meanwhile, the mild rebuke from the state is drawing heat from the city comptroller, who said the restructuring alone is insufficient and pushed for organization officials to be held accountable.

“While these revelations of illegal lobbying are alarming, we cannot say that they come as a surprise,” said Comptroller John Liu. “For some time, this mayor has been using the EDC to create ‘astroturf’ groups to support his agenda, reward allies and dole out welfare to wealthy corporations.”

Willets Point United members said the investigation confirms their original suspicions that the entire land use review process was based on fraudulent and illegal behavior. They urged the city to end all recent and future actions regarding the area’s development.

“Our properties were put at risk by an illegal scheme, and we were forced to spend hundreds of thousands of dollars to protect our constitutionally protected rights against a municipality and its front group engaged in activities that were rife with fraud,” the group said in a statement.