Increased Flow of Council Grants to Private Groups Leads to a Backlog
Speaker Christine C. Quinn said, “It’s fair criticism to say there wasn’t enough vetting of capital budget allocations” in the past.
The Northeast Bronx Development Corporation received City Council grants of $4.7 million despite a troubled financial history.
Increased Flow of Council Grants to Private Groups Leads to a Backlog
An Orthodox Jewish school in Queens was to get $500,000 for a swimming pool. A social service agency in Queens plagued by financial mismanagement was set to receive $100,000 for a shelter and a van.
A nonprofit corporation in the Bronx that has filed only one tax return in nine years was to be granted more than $4.7 million for a housing complex, a community center and a hip-hop museum.
Every year, the City Council receives a huge wish list of requests for capital project money for local organizations. And in recent years the Council leadership has deemed some $500 million in projects worthy of public finance, even projects that are sometimes parochial, overly ambitious or sponsored by organizations with spotty financial histories.
Investigators reviewing Council spending have focused on grants that community groups receive to offset their operating expenses. But the capital budget that legislators use to finance big-ticket items like new buildings or buses is a larger pot of money: a half-billion dollars versus $360 million. And for years it has been shrouded in bureaucratic secrecy.
Once, council members rarely used their capital money to do more than finance a pet project within a city agency, perhaps road repaving in their districts. But increasingly, larger amounts of taxpayer dollars have been set aside for church groups, nonprofit groups and other private organizations, earmarked by council members to buy these groups equipment or renovations, or sometimes new buildings.
The practice has grown so expansive that the city has hired extra staff to shepherd the projects, which are often fraught with legal complications. Hundreds of groups approved for the money, meanwhile, have never received it. Some requests have been stalled because of constitutional questions over the separation of church and state, others because the groups did not have the financial or technical means to carry out the project — even with city aid. Many simply languished, yet remained on the books, year after year.
In fact, the backlog has grown so big that last year the Council and the Bloomberg administration stopped financing any new capital projects for private groups until they could develop a better way to choose which programs deserve the money.
“We really had to find a way to get this under control,” said Speaker Christine C. Quinn. “What was happening is the money was getting put in the budget and then it wasn’t moving, which is really a waste.”
The unspent money could have gone to schools or libraries or health clinics, Ms. Quinn said.
Advocates say it would be wrong, however, to view the broad expanse of capital spending on nonprofits as wasteful.
“Without city assistance, the not-for-profit sector would not be able to maintain the quality of facilities that are necessary to meet the needs of the poor and vulnerable citizens of New York,” said Ronald Soloway, director of governmental relations for the UJA-Federation of Jewish Philanthropies.
The city’s capital budget is meant to finance permanent improvements to its infrastructure, like new buildings or bridges, or expensive equipment like buses. As with the operating budget, the mayor’s office sets aside a portion of the capital budget for the Council to spend as it deems fit.
The Council spends most of its money on public schools, libraries and parks. But increasingly over the last five years, resources have been directed to outside nonprofit groups. The current capital budget shows at least 570 projects totaling more than $490 million, though the city no longer supports many of the projects.
Many of those projects that never came to fruition had sailed through a review process that required only minimal vetting and that the City Council used for many years to set spending priorities, according to city records and interviews. Only after the money was allocated and on the books did the vetting process really begin.
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