Mayor's Economic Group Admits It Broke Laws, Agrees to Reforms

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The nonprofit that has spearheaded many of Mayor Michael Bloomberg's biggest economic development initiatives over the past decade conceded in a settlement Monday that it illegally lobbied the City Council for projects, and has pledged to restructure to avoid further violations.

The Economic Development Corporation (EDC) violated New York's Not-for-Profit Corporations Law by urging the City Council to make zoning changes in Willets Point, Queens in 2008, and Coney Island, Brooklyn, in 2009, a three-year investigation by the office of the New York Attorney General concluded.

The EDC and two smaller neighborhood groups, the Flushing-Willets Point-Corona Local Development Corporation and the Coney Island Development Corporation also "took steps to create the appearance of independent 'grassroots' support for the projects by concealing their participation in community organizing efforts," according to a statement from the office of Attorney General Eric Schneiderman.

It is not clear how much money the three groups spent on lobbying.

Although it functions much like a city agency, the EDC is in fact a Type-C not-for-profit corporation, and is not a part of the government. The EDC's leaders are, however, appointed by the mayor. As a local development corporation, it is prohibited from all lobbying.

Under the terms of the settlement, the EDC will pay no penalty, but has agreed to restructure itself as two separate entities, one of which will continue to be called the EDC, with the other New York City Land Development Corporation ("NYCLDC").  

The EDC, as a not-for-profit, will be permitted to lobby on certain matters, including zoning changes.

The NYCLDC, which is classified as a local development corporation, will be authorized to receive property seized by the government, but cannot lobby under any circumstances.

A spokesman for the EDC said no staff has been let go as a result of the settlement.

The Bloomberg administration declined to comment.

“While these revelations of illegal lobbying are alarming, we cannot say that they come as a surprise," said City Comptroller John Liu, who has long been critical of the mayor's economic development policies.

Liu accused the EDC of creating "astroturf" groups to support its initiatives, while creating fewer jobs than promised.