In the June 24th issue of the Journal News an article about LDC’s pointed out that State Comptroller DiNapoli wanted to gain audit authority over local development corporations (or LDC’s). He stated his office has found more “improprieties that come at great and unnecessary cost to taxpayers.”
The New Rochelle City Council voted on June 19, 2012 to create a local LDC so that a “civic facility” could obtain New York State tax-exempt bonds. They also appointed the members of the IDA to be the members of the LDC. Our Development Director, Michael Freimuth, on June 21, 2012 wrote to the IDA that he was recommending their support for this new local development corporation…to allow a “civic facility” to be able to obtain New York State tax-exempt funding.
Not only did the City Council have no hearing on creation of the LDC, it appointed its members with no official notification to the taxpayers or public hearings.
Maple Terrace (55 Maple Avenue) through its lld (limited liability corporation) according to Freimuth will be using the IDA as a “pass through” for bonds subject to state allocation rules and federal tax laws. He states affordable housing is eligible for IDA “activity.” Now he states the IDA will be able to submit an application under the State Combined Funds process and “seek financiers/bankers to purchase the bonds… Rents will pay off the bonds.” However this is a misuse of IDA funds because they are supposed to create permanent jobs in the community and this funding will only create temporary construction jobs.
However, there is more to this issue. The IDA will be meeting on Thursday June 28, 2012 to talk about another proposal for LDC participation, the proposed Sound Shore new buildings. The Journal News article explained that LDC’s have increased in number in the last few years because IDA’s can no longer offer tax exempt bonds to nonprofits, but LDC’s can do this. However, the LDC’s are not subject to the Comptroller’s auditing. So technically the LDC must be used in these instances because the IDA can not issue these bonds to non-profits.
The New Rochelle Citizens Reform Club finds this sequence of events deplorable and feels the IDA should not vote on allowing the applications for the funding for 55 Maple Avenue to proceed until a public hearing is held. Similarly, no action on the Sound Shore proposal should be approved until there is ample evidence it will benefit the people of this City.
