Missing from the AG's settlement with NYC EDC: a mention of the Downtown Brooklyn Partnership and Atlantic Yards

Update July 6: note that a Naked Capitalism commenter points out that the Downtown Brooklyn Partnership is not listed as an LDC under the jurisdiction of the Authorities Budget Office, which is true. On the other hand, the DBP does not, as the commenter suggests, present itself as a "purely private nonprofit" but rather as a "not for profit local development corporation."

There was something curious about an announcement yesterday by state Attorney General Eric Schneiderman, first reported by the Wall Street Journal in City Agency Admits Illegal Lobby Effort:

New York City's economic-development agency and two related organizations admitted in a settlement Monday that they illegally lobbied the City Council on behalf of projects at the heart of Mayor Michael Bloomberg's redevelopment agenda.

The concessions came after a three-year probe by the state attorney general's office. Investigators found that the Economic Development Corp. worked behind the scenes with the groups—called local development corporations—to nudge lawmakers to support projects in Willets Point in Queens and Coney Island in Brooklyn.

"These local development corporations flouted the law and lobbied elected officials, both directly and through third parties," Attorney General Eric Schneiderman said in a statement.

Where's the Downtown Brooklyn Partnership?

But there was no mention of seemingly similar activities by the Downtown Brooklyn Partnership, which lobbied the city for the Downtown Brooklyn rezoning and the state for approval of Atlantic Yards. As a 10/28/09 New York Times article stated:

Mr. Doctoroff was determined to do better, through a local business group, the Flushing-Willets Point Local Development Corporation, which received half its money from the city. But about half the group’s money was spent doing something not allowed under state law: lobbying city officials. The group’s lobbying, has led to an investigation by the attorney general’s office.

That investigation has expanded into the activities of the Downtown Brooklyn Partnership, which the city helped create in 2006 to help push through development plans following a broad rezoning of the area.

The city awarded the group a $6 million three-year no-bid contract. The group raised another $1.1 million in private donations, tax records show. And Mr. Doctoroff installed a top aide, Joe Chan, to run it. The partnership has become a key voice for the development of Downtown Brooklyn, inserting itself, critics say, into the debate over a plan to build a Nets area and high-rises at the Atlantic Yards. It has spent some $200,000 on lobbying expenses. Councilman Lewis A. Fidler complained last year that the partnership was using public funds to promote Bloomberg’s congestion-pricing plan.

I queried the Attorney General's office yesterday about whether the Downtown Brooklyn Partnership had been given a clean bill of health (and, if so, why), or whether an investigation was continuing. I didn't get an answer.

It's difficult to see how the DBP, which is a not-for-profit local development corporation, does not, like the other entities named, fall under section 1411(c) of the Not-for-Profit Corporation Law, says no "such corporation shall attempt to influence legislation by propaganda or otherwise."

The Downtown Brooklyn rezoning aftermath involves legislation, and the Atlantic Yards plan involved legislation, such as the city and state approvals of budgets containing subsidies. And if "legislation" is broadly seen as government approval, well, the DBP's Joe Chan, and board members, testified regularly at Atlantic Yards hearings.

It's too soon to come to firm conclusions about the AG's action, but just for the record, Atlantic Yards developer Bruce Ratner, a key player in the Downtown Brooklyn Partnership, gave $12,500 to Schneiderman's campaign in late 2010, and I later speculated whether that might stave an investigation into the DBP.

We still don't know cause and effect, but Schneiderman owes the public an explanation of why the DBP was excluded.

The announcement

A.G. SCHNEIDERMAN ENDS ILLEGAL LOBBYING OF NYC OFFICIALS BY THREE LOCAL DEVELOPMENT CORPORATIONS:

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 mention of City Council makes me wonder if Atlantic Yards was thus excluded. But the DBP lobbied in the aftermath of the City Council's rezoning of Downtown Brooklyn, such as for increased G train service.

No penalty possible

Nor is a penalty possible--the only harsh option would have been to dissolve the groups. As the WSJ reported:

The finding carries no fine or harsher penalty. The EDC, a nonprofit, must restructure and shed its status as a local development corporation. The other two groups have agreed not to lobby or encourage third parties to speak with elected officials.

"This agreement will bring transparency and accountability to these and other local development corporations operating in New York state," Mr. Schneiderman said.

The EDC said the restructuring would be "seamless" and "enable the company to operate freely and legally in areas that are necessary and appropriate for it to achieve its economic development mission."

...Irene Prestigiacomo, a member of Willets Point United, a group opposed to the city's plans for the area, said she was disappointed in the outcome.
Ms. Shulman's organization has "gotten away scot-free with breaking the law at our expense and have been rewarded with a mild tap on the wrist," Ms. Prestigiacomo said.

Criticism from Liu

Comptroller John Liu said in a statement:

“While these revelations of illegal lobbying are alarming, we cannot say that they come as a surprise. For some time, this Mayor has been using the Economic Development Corporation to create ‘Astroturf’ groups to support his agenda, reward allies and dole out welfare to wealthy corporations. While New Yorkers fund the EDC to create jobs – those jobs seldom materialize.”

But even Liu didn't mention the Downtown Brooklyn Partnership.

From Willets Point United

WPU commented, in a very Richard Lipsky-esque post:

So this entire development is a house of cards, built on dissembling and conspiracy to defraud the tax payers and the property owners. Our properties were put at risk by an illegal scheme and we were forced to spend hundreds of thousands of dollars to protect our Constitutionally protected rights against a municipality and its front group engaged in activities that were rife with fraud. We demand, and fully expect, that the Bloomberg administration will institute the proper corrective actions.