The Fulton County Economic Development Corp. is subject to the authority of a state agency whose mission is to make public authorities more accountable and transparent, according to an appellate court decision released Thursday.
The next step will be an Article 78 hearing to determine whether the state Authorities Budget Office exceeded its powers in requiring the EDC to comply with the Public Authorities Accountability Act.
The ABO in 2010 determined the EDC is a public agency subject to state oversight because it was created with public money. The EDC challenged that ruling, saying it is a private agency created by private individuals and therefore does not have to comply with transparency laws dealing with public authorities.
“The ruling means that they are a covered agency,” David Kidera, executive director of the ABO, said Thursday. “The [Article 78] hearing will determine whether we exceeded our authority — did we have right to do this, did we interpret the statute correctly?”
He said the court will rule on the merits of the case.
“The ball is in the EDC’s court,” he said, regarding whether the EDC will appeal the court ruling or take some other action.
EDC officials had no comment Thursday.
The ABO sent a letter to the EDC in 2010 saying it was subject to state oversight and must “begin complying immediately” with the Accountability Act by filing its budget and a variety of reports, including annual, procurement and investment reports, as well as a copy of its annual independent audit. The ABO also named the EDC as a covered authority on its website and listed it in a January 2011 public report of delinquent authorities.
The EDC filed a lawsuit last year in state Supreme Court in Fulton County seeking a “declaratory judgment” that it is a private entity exempt from state financial disclosure laws imposed under the Public Authorities Accountability Act. In the appeal, it further argued the ABO overstepped its regulatory authority and acted arbitrarily in applying the Accountability Act.
In its ruling, the Appellate Division of state Supreme Court upheld a state Supreme Court ruling in August that allowed the matter to go to an Article 78 hearing. An Article 78 proceeding is a standard lawsuit challenging a governmental action.
Kidera said Thursday’s ruling is following a course similar to that involving the Griffiss Local Development Corp. in Oneida County. The ABO several years ago said Griffiss was subject to state oversight. Griffiss contested the decision and the state Court of Appeals ultimately ruled in favor of the ABO, he said.
“We prevailed there, and we expect the same here,” he said.
The EDC also tried to change the venue of the proceeding from Albany County to Fulton County. It had earlier lost on that point, and the Article 78 hearing will be scheduled in Albany County, Kidera said.
Last year, the EDC and a sister agency, the Crossroads Incubator Corp., became subsidiaries of a new, nonprofit, “private” corporation called the Fulton County Center for Regional Growth. The CRG took over almost all of the EDC’s functions. It, too, maintains it is exempt from state oversight.
In October, the CRG agreed to give Fulton County supervisors more control over the direction of economic development under a new agreement. Starting Jan. 1, the county will provide the CRG with $75,000 for one year in return for the appointment of up to four supervisors to the CRG board and the requirement that the CRG file annual audited statements with the chairman of the Board of Supervisors.
Kidera said this is further proof the CRG and its subsidiaries are public agencies subject to ABO oversight.
The ABO took an interest in the EDC following revelations that two executives who once headed the EDC and CIC gave themselves bonuses of about $900,000 each in 2007-08 and $104,000 for 2009. This occurred without the awareness of the boards of the EDC and the CIC, according to lawsuits filed by the two agencies seeking to recover the money from the executives.