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What you need to know for 01/21/2018

FEDC : Compliance better than defiance

FEDC : Compliance better than defiance

Economic development corporation has all the characteristics of a public authority

The Fulton County Economic Development Corp. may be discredited, but it isn't dissuaded. It continues to claim -- notwithstanding a determination by the state Authorities Budget Office, and the evidence -- that it's a private entity and thus not subject to the state's Public Authorities Act. Last week it lost another round in its running battle with the ABO when the state Appellate Division, like a lower court last year, refused its request for a declaratory judgment that it is a private entity.

This sounds technical, but it is hardly academic. Public authorities are quasi-government bodies that can do a lot of good, but for too long operated in the shadows. The Public Authorities Act, passed by the state Legislature in 2005 and updated in 2009 with the creation of the Authorities Budget Office, was an attempt to increase oversight and accountability by, among other things, requiring financial disclosure.

And the Fulton County Economic Development Corp. is a poster child for what happens when such scrutiny is lacking. In 2010 it was revealed that two executives had given themselves $3 million in bonuses, apparently without notifying or seeking approval from the board. The scandal came to light only through reporting by this newspaper because, at the time, the FEDC was not considered a public authority and thus did not have to make its financial records public.

The FEDC may, in fact, have been a private entity when it was started by a group of businessmen in the 1950s. But after it was reconstituted in the mid-1980s, it started looking much more like a public entity, with regular government funding, and government authority to make loans, issue bonds and grant tax breaks. Its official mission was to bring economic development to, and create jobs, in Fulton County.

Last week's Appellate Division ruling wasn't necessarily the end of the matter. The FEDC can still proceed with an Article 78, the standard lawsuit challenging a government decision, and try to show that the ABO misintepreted the law or acted arbitrarily in determining that it is a public organization.

The trouble for the FEDC is, a judge has already noted that the ABO is charged with the responsibility for making such determinations. And in 2009 the state Supreme Court sided with the ABO in a similar involving the Griffiss Local Development Corp. in Oneida County.

Especially given its history, the right thing for the FEDC to do at this point would be to drop its lawsuit and comply. And its now-parent and eventually successor agency, which has an even closer relationship with Fulton County, should also start complying.

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