Liu: EDC Owes N.Y.C. $125M

The New York City Economic Development Corp. owes the city $125 million, according an audit by city Comptroller John Liu.

Most of those funds — $98.3 million — were from several years of lease payments related to economic development projects on 42nd Street in Manhattan. Liu said that the EDC’s role was to act as conduit for the funds on behalf of the city.

“The EDC was charged with collecting this money for the city; they are not entitled to keep it,” Liu said in a press release. “Anything short of the EDC repaying the amount in full to the city is unacceptable and indefensible, especially as subways, firehouses and hospitals are threatened with closures due to deep budget deficits.”

The EDC is a public benefit corporation controlled by the mayor’s office. In a statement provided by EDC spokesman David Lombino, the corporation said it was entitled to retain the funds in question. A memorandum from the city law department stated that the city’s Office of Management and Budget had the right to transfer those funds to its general fund, but had not exercised that right.

Andrew Brent, spokesman for Mayor Michael Bloomberg, said the funds kept by the EDC serve a public purpose.

“The city takes from EDC hundreds of millions of dollars in funds it collects on the city’s behalf and leaves it an agreed-upon amount so it can do things like operate the city’s loan guarantee program for small businesses and plan for important area-wide redevelopment projects like Hunter’s Point South and Coney Island,” Brent said in a statement.

Most of the remaining funds in question in the audit were from asset sales. Liu said the audit showed that the EDC needed to be reined in. Since coming into office in January, Liu has taken a confrontational stance toward the mayor’s control of economic development policy. Revenues collected by the  EDC are used in part to plan and implement Bloomberg’s economic development initiatives. The EDC shares staff with the New York City Industrial Development Corp. and the New York City Capital Resource Corp., two tax-exempt bond issuers.

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