New York Times
Javier C. Hernandez
The group, the Economic Development Corporation, had previously resisted giving up the money, which it earns by leasing space in Times Square. But after Comptroller John C. Liu released a stinging audit of the corporation’s financial methods in April, officials re-examined the practice.
In explaining the reversal, the corporation said it was responding to Mr. Liu’s report — one of the first major salvos of his tenure as comptroller — as well as the dire economic circumstances facing the city.
David Lombino, a spokesman for the corporation, said the group had determined it would be “optimal” to cede the money so the city could “balance its budget and continue to provide valuable services to its people.”
Under Mayor Michael R. Bloomberg, the Economic Development Corporation has emerged as one of the city’s most powerful agencies. It is a nonprofit group that contracts with the city to manage a variety of projects in places like Coney Island and Willets Point, Queens. It earns most of its money by selling and renting property for the city. Its president is appointed by the mayor.
According to budget documents, the corporation will contribute $20.3 million in rental payments from the Times Square project to the city this fiscal year, $27.7 million in 2012, $32.5 million in 2013, and $39.9 million in 2014.
Mr. Liu, who took office in January, welcomed the decision, saying it was a victory for his office. He said the money should be subject to public scrutiny as part of the general budget.
“This is good news for our taxpayers,” he said. “The bottom line is that we just can’t afford for any city agency or entity to be holding onto these funds.”
But Mr. Liu, whose office must approve the corporation’s contract each year, also said the group had not gone far enough. In his audit, he argued that the corporation had improperly hoarded more than $125 million over a decade in payments, taxes and fees that were meant for the city.
“Those amounts should be repaid as well,” Mr. Liu said Monday.
The corporation, backed by the city’s Law Department, has said it has a legal right to keep that money under its contract with the city.
Andrew Brent, a spokesman for Mayor Bloomberg, said the city supported the corporation’s practice of using the money from the Times Square project to pay for its own operations.
“We allowed E.D.C. to retain previous years’ funds to help finance its economic development and job creation programs,” Mr. Brent said. Those programs include efforts to nurture emerging industries like biological sciences by providing tax incentives to companies.
The bulk of the $125 million — some $98 million — was tied to rental payments involving the project in Times Square, where the corporation’s tenants include Condé Nast and Reuters, collected from 1999 to 2007.
In his report, Mr. Liu argued that the corporation improperly held $10.6 million in a dormant account, and that it owed the city $16 million in proceeds from the sale of city-owned property.
Mr. Liu accused officials of collecting inadequate rent from landlords, overpaying a contractor and approving dubious payroll records. He faulted officials at the corporation for a lack of transparency and sloppy internal controls.
City officials disputed the comptroller’s findings, saying the corporation was bound by contractual obligations to hold onto certain money. The corporation defended its disclosure efforts, though it pledged to work with the city to refine its reporting procedures.