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Astoria leaders file lawsuit to halt power plant funding

By Matthew Monks

Astoria Energy LLC, which is moving forward with plans to build a 1,000-megawatt plant at 17-10 Steinway St. despite the lawsuit, got preliminary approval to use Liberty Bonds in March for the second phase of the $983 million project from the New York Liberty Development Corporation, the entity that issues the bonds.

That approval was illegal and contrary to the spirit of Sept. 11 recovery efforts, said state Assemblyman Michael Gianaris, (D-Astoria), a plaintiff in the case.

The “improper use of hard-fought 9/11 aid as a slush fund for this project is a disgrace to the efforts of all New Yorkers to rebuild our city after the terrorist attacks,” Gianaris said during a press conference Monday on the steps of City Hall to announce the lawsuit.

Gianaris was joined by co-plaintiffs U.S. Reps. Carolyn Maloney (D-Astoria) and Jerrold Nadler (D-Manhattan), City Councilmen Peter Vallone Jr (D-Astoria) and Alan Gerson (D-Manhattan), and Jean Grillo of the Thomas Neighborhood Committee. Michael Zarin, whose law firm Zarin & Steinmetz is handling the case pro-bono, also attended.

The suit, which was filed in federal court in Manhattan, is seeking an injunction against the development corporation on the grounds that the Astoria plant fails to meet the criteria for which Liberty Bonds may be issued.

Gov. George Pataki, and Astoria Energy are also named as defendants.

The Liberty Bond program was created in March 2002 after Congress authorized New York to issue $8 billion in tax-free, private activity bonds for residential and commercial construction projects that would benefit lower Manhattan, which was designated the “Liberty Zone.” So far, the city and state have allocated roughly $2 billion in bonds, according to the U.S. Treasury's Web site.

Zarin said the Astoria plant falls short of two criteria for issuance outside the Liberty Zone: it does not provide 100,000 square feet of commercial office space and it does not follow a formal determination from Pataki that there are more projects in the Liberty Zone to qualify for funds.

“This is just plain wrong,” Maloney said. “It's against the law, it's against the spirit of 9/11 and it's just plain bad policy.”

      Nadler said his district is still reeling from Sept. 11, with 100,000 fewer jobs than before the attacks. Diverting liberty funds to an outer borough robs lower Manhattan, he said.

“It is a slap in the face to all the business and residents of lower Manhattan who have not gotten all the help they need,” Nadler said.

But development corporation officials called the lawsuit “frivolous” and “without merit,” saying the Liberty Bond program permits up to $2 billion in funds for projects outside the Liberty Zone that benefit lower Manhattan and the entire city.

“This project meets that criteria,” said New York Liberty Development Corporation spokeswoman Deborah Wetzel, reading from a statement.

“When fully complete, the facility will be the cleanest and most environmentally friendly facility ever in New York City and provide up to 10 percent of the city's energy supply in the wake of a pressing need for additional energy. It's unfortunate that this group would put partisan politics before the city's best interest.”

Financed completely by private investments, preliminary construction has begun on the new Astoria plant's first phase: a 500- megawatt facility on 23 acres in northwest Queens, said Kendall Christiansen, a spokesman for Astoria Energy.

The lawsuit in no way affects the first phase of the plant, he said. If the Liberty Bonds fail to come through, he said the company will seek other revenue sources to complete phase two, a 500-megawatt extension slated for completion by 2010.

Reach reporter Matthew Monks by e-mail at news@timesledger.com or call 718-229-0300, Ext. 156.