A.G. Schneiderman Ends Illegal Lobbying Of NYC Officials By Three Local Development Corporations

 

NEW YORK– Attorney General Eric T. Schneiderman today announced an agreement that reforms practices at three not-for-profit organizations that illegally lobbied New York City officials in connection with development projects in the Willets Point section of Queens and the Coney Island area in Brooklyn. The Attorney General’s investigation found that, although local development corporations (LDCs) are barred by statute from any lobbying, the New York City Economic Development Corporation (EDC), Flushing-Willets Point-Corona Local Development Corporation (FWPC) and the Coney Island Development Corporation (CIDC) had lobbied the New York City Council to win approval of their favored projects.  The investigation also found that EDC, which serves as the economic development arm of the City of New York, played a behind-the-scenes role in the lobbying activities of the other LDCs.

“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,” said Attorney General Schneiderman. “This agreement will bring greater transparency, and ensure accountability for these and other local development corporations operating in New York State.” 

Among the terms of today’s agreement are:

  • A ban on lobbying the City Council in connection with development projects;
  • A ban on employing lobbyists or government relations consultants, participating in the development of third-party communications with the City Council, using others LDCs to lobby, or otherwise lobbying indirectly;
  • Mandatory compliance training for directors, officers and employees; and
  • Public disclosure by EDC of any funding provided to other LDCs or personnel overlap with other LDCs.

The Attorney General’s investigation determined that EDC, FWPC and CIDC lobbied the New York City Council in connection with development projects in Willets Point in 2008 and Coney Island in 2009. These projects required City Council approvals pursuant to New York’s Uniform Land Use Review Procedure (“ULURP”). EDC, FWPC and CIDC took steps to create the appearance of independent “grassroots” support for the projects by concealing their participation in community organizing efforts. These steps included ghost-writing letters and op-eds and preparing testimony for unaffiliated community members. EDC orchestrated lobbying activities by the other LDCs:  for example, EDC instructed FWPC to use its fax machine to transmit a letter prepared by EDC to the City Council.

Under New York law, LDCs have unique powers to receive real property from municipalities without appraisal or public bidding, in order to facilitate local development projects.  While many types of not-for-profit corporations are subject to some form of lobbying restrictions, LDCs are subject to a total ban on lobbying under Section 1411(c) of the Not-for-Profit Corporation Law.

Attorney General Schneiderman’s settlement with EDC, FWPC and CIDC ensures that these illegal practices do not reoccur, and increases transparency regarding EDC’s relationships with other LDCs.

The matter was handled by Executive Deputy Attorney General for Social Justice Janet Sabel and Senior Advisor and Special Counsel to the Attorney General Scott Wilson. 

A copy of today's agreement is available online at: www.ag.ny.gov/sites/default/files/press-releases/2012/AOD-No-12-068.pdf

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