By Joe Anuta
The city Economic Development Corp. is poised to morph into a new entity with legal lobbying powers after joining former Borough President Claire Shulman in admitting that they both used their influence to push city officials to approve the $3 billion Willets Point project.
The Flushing-Willets Point-Corona Local Development Corp., run by Shulman, and the EDC signed an agreement with state Attorney General Eric Schneiderman last week that outlines their guilt and binds them to a promise not to illegally lobby again.
“These local development corporations flouted the law by lobbying elected officials, both directly and through third parties, to win approval of their favored projects. As a result of today’s agreement, these organizations will reform their practices to comply with the law and end lobbying through proxies in the communities they serve,” Schneiderman said in a statement issued July 3.
As a result of the investigation, the EDC will reorganize itself into an agency that can continue to influence legislation, albeit legally, according to the agreement, a point that was not lost on city Comptroller John Liu.
“The legal restructuring of the EDC, which appears to have been undertaken so that the impermissible lobbying can continue, is clearly insufficient,” he said in a letter Monday to Mayor Michael Bloomberg, who declined to comment.
Many in the Willets Point community thought the agreement was a slap on the wrist for Shulman, but the attorney general contends he did not have the power to do anything further.
The law in question is a state statue that stipulates “no such corporation shall attempt to influence legislation by propaganda or otherwise.”
But breaking it is not tied to any penal code that would declare it a misdemeanor or felony, for example, leaving the AG with little prosecutorial options about this specific statue, he said.
The group Willets Point United, however, wondered if the AG could have done more and dissolved the groups or forced Shulman’s group to give back a $500,000 grant she used to influence city legislators to support the Willets Point project in 2008.
But on a larger scale, the group is calling for the dissolution of the entire Willets Point redevelopment project, since illegal lobbying was used to curry favor and aid in its passage, Willets Point United said.
State Sen. Joseph Addabbo (D-Howard Beach) was on the City Council when it voted in favor of the project. In light of Schneiderman’s ruling and other revelations surrounding the Willets Point project, he believes the Council should at least hold a public hearing to determine if the project needs to go back to the drawing board.
“There are a lot of pieces here,” he said. “Maybe that’s an issue for the City Council to at least have a hearing.”
City Councilman Peter Vallone Jr. (D-Astoria) was also in the Council at the time and voted in favor of the project. He supported Schneiderman’s investigation, but said the group did not have any influence over his decision at the time and that the project should not be derailed for that reason.
As for the EDC, part of the agreement states that a new nonprofit called the New York City Economic Growth Corp. will be created and merged with EDC. The new entity will not be beholden to the same prohibitions against lobbying as the EDC was.
“The New York City Economic Development Corp. intends to undertake a restructuring, the primary effect of which will be to allow the company to remain a not-for-profit corporation, but to cease to be a local development corporation,” the agency said in a statement. “This restructuring should be seamless from the perspective of third parties and should have little to no impact on the day-to-day operations of the company. It will, however, enable the company to operate freely and legally in areas that are necessary and appropriate for it to achieve its economic development mission.”
But Liu wants the reform to go further and urged the mayor to make EDC disclose the way it spends money like other city agencies are required to do.
“Installing new leadership and opening the books would help change the EDC’s law-breaking culture, which as documented in the settlement with the attorney general, used the agency’s budget as a political slush fund for illegal lobbying,” he said.
The EDC is now currently in charge of overseeing the massive Willets Point project.
Shulman’s development corporation, however, is required to cease lobbying as part of the agreement. She could not be reached for comment, but has maintained on past occasions that she did nothing wrong.
Reach reporter Joe Anuta by e-mail at email@example.com or by phone at 718-260-4566.