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The city comptroller’s office’s audit of the city Economic Development Corp. revealed the agency has been holding on to more than $9 million in public purpose funds, $344,659 of which is in an untouched fund that dates back to 1982 and was intended to be used to rehabilitate an area around Astoria Studios.
The inquiry also found the EDC did not collect $725,720 from KeySpan, onetime owners of the Ravenswood Power Plant Big Allis, which was meant to benefit the surrounding neighborhood. In addition, the audit said the corporation improperly dispersed $247,800 for Astoria’s Queens Independent Living Center to install air conditioners. It also incurred audit fees of $28,934 for independent audits of multiple, barely active funds, including its fund for the Astoria Studios rehabilitation. The office characterized these funds as unnecessary.
“It makes little sense that millions intended for economic development remain unused for so long,” Comptroller John Liu said in a statement. “If the EDC can’t figure out how to put the capital to work, then at least return the money to the city treasury.”
EDC is a nonprofit tasked by the city with fostering economic growth and creating jobs.
The audit was released Sept. 21 and covers the time period from July 1, 2008, to June 30, 2010, in accordance with fiscal years 2009 and 2010. Most of the more than $9 million in public purpose funds the EDC is holding onto is meant to benefit the Harlem River Rail Yards facility in the Bronx. These funds were not missing, but the office found they had not been used.
EDC’s Aug. 26 response to the audit report said it disagreed with most of the findings. The corporation said to put the studios’ fund toward the city treasury would violate the federal deed, which is from the U.S. Department of the Interior to the city for Kaufman Astoria Studios, which says the funds must be used for the rehabilitation.
“The fact that funds in this account have not yet been spent is not an indicator that the funds should have been spent,” the EDC said.
EDC also said the remainder of the funds Keyspan owed will be paid out by the current owner of the plant, TransCanada, and both entities are looking for how to use the money for the community’s benefit. It denied it had improperly dispersed funds for the air conditioners and in response to the audit’s claim that the EDC incurred unnecessary audit fees, the corporation said it partially disagreed, characterizing its audits as overly diligent.
“The comptroller’s recommendation to discontinue voluntary audits contradicts its general finding that NYCEDC does not properly administer the public purpose funds,” EDC said.
Liu’s office said in response the point was not that money meant to rehabilitate the area around the studios must be spent, but the needs of the community must be identified so the money can be used. The comptroller said EDC worked to negotiate with TransCanada after an earlier draft of the audit was sent to them, did not properly document the funds for the air conditioners and said that to audit a fund without activity through a certified public accountant wastes money.
The office recommended that EDC reconsider the viability of the unused funds, collect the remaining funds for the power plant, more closely ensure future payments have been met and no longer incur unnecessary audit fees.
EDC said in response that it had distributed more than 80 percent of its public purpose funds for community benefit.
“The comptroller’s suggestions for the remaining funds may be well-intentioned, but they ignore the disbursement restrictions EDC is legally bound to follow, and many are infeasible or simply not in the best interest of the city’s taxpayers,” EDC spokesman Patrick Muncie said in a statement.
Reach reporter Rebecca Henely by e-mail at firstname.lastname@example.org or by phone at 718-260-4564.
©2011 Community Newspaper Group
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