With Minimal Public Oversight and Skewed Benefit

Cites the Lower Manhattan Development Corporation’s Mysterious Process for Allocating Funds and Domination of Well-Heeled Business Interests as Detriment to Lower Manhattan’s Economic Revitalization

New York, NY, August 12, 2004, - The Lower Manhattan Development Corporation (LMDC) has skewed its award of 9/11 recovery funds toward big business and high-income neighborhoods while ignoring urgent community priorities such as housing, job creation and local transportation, according to a report released today by Good Jobs New York (GJNY).

The report, titled THE LMDC--THEY'RE IN THE MONEY; WE'RE IN THE DARK, also raises questions about the lack of transparency in LMDC decision making. "The LMDC is supposed to help those most seriously affected by the 9/11 attacks," said GJNY Project Director Bettina Damiani. "Instead, it favors wealthy businesses and neighborhoods and creates obstacles to full participation by community groups representing low- and middle-income New Yorkers."

The report states the LMDC is spending Federal cash grants without a standard application or official method of measuring a project’s success. The report does not claim any mismanagement of these funds, but raises questions as to how the Corporation, Governor George Pataki and Mayor Michael Bloomberg - who appoint the board – assess the public benefit of allocations.

This lack of transparency comes as little surprise since the LMDC’s parent, the Empire State Development Corporation, and other New York State public authorities, have long been known to conduct much of their business with minimal public oversight.

In preparation for the report, GJNY reviewed copies of board meeting minutes, LMDC’s reports to the U.S. Department of Housing and Urban Development, Partial Action Plan (proposals for the use of funds) and other publicly available information.

“Even though the LMDC claims that low and moderate-income residents have benefited from its programs, nowhere in our research could we find how the Corporation measures these improvements,” said Stephanie Greenwood, Research Analyst for Good Jobs New York. “In fact most of the discretionary grants have gone to projects in the higher-income neighborhoods.”

The report claims the LMDC board is dominated by business interests that fund a narrow

slice of activities rather than the broader economic needs of Lower Manhattan.

Highlights of the report include:

Big Business Prioritized Over Community Input – Despite numerous polls citing concerns for affordable housing and economic development, LMDC has not made these issues a priority in its funding. For example the majority of the $117 million in capital grants have gone to Tribeca and the Financial District neighborhoods whose median family income is $110,000, compared to the Lower East Side and Chinatown, which has a median family income of $28,500.
LMDC Board Members Influential – The mysterious decision-making process for funding allocations and assessments of project success leave those who don’t have access to the LMDC out of the loop.

Congress waived requirements for public hearings and the mandate that grants must be predominantly spent in moderate and low-income communities, in theory, to allow the state and city the greatest possible flexibility during a time of crisis. Disappointingly, the waivers have reduced opportunities for New Yorkers to participate meaningfully in the economic development decision-making process, and left much of the power in the hands of the Governor and the business-dominated board.

Lack of Accountability and Transparency - The LMDC has commissioned ten studies worth $14 million in the areas of economic development, housing, local retail and transportation, (a list of commissioned studies is included in the report). Yet, only two have been released (the Chinatown Access and Circulation Study and an Economic Impact Report on rebuilding activities), making it unclear how the studies influence the Corporation’s expenditure of funds.

The most expensive study to date, $3 million to analyze access alternatives between Lower Manhattan and JFK Airport and Long Island, has apparently not been completed, even though the July 2003 Request for Proposal states the study is to be completed in six to nine months. Despite the lack of analysis of the proposal Governor Pataki and Mayor Bloomberg have thrown their support behind this project.

The report lists recommendations to improve the use of the nearly $1 billion remaining:

Fill the four current board vacancies with Lower Manhattan residents that can advocate for broad employment, housing and economic development needs;
Mandate public hearings, with LMDC board members present, before the LMDC allocates Community Development Block Grant funds;
Create a transparent application process and improve reporting to establish a standard of success for how funding allocations benefit low and moderate-income residents and the Lower Manhattan economy as a whole.

They’re in the Money; We’re in the Dark is the most recent in GJNY’s “Reconstruction Watch” report series that evaluates the allocation of Federal economic development resources in the aftermath of the attacks on the World Trade Center. Copies of previous reports and up to date information on allocations are available at www.goodjobsny.org

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