EDC Management of Essex Street Market and Other Properties Criticized

People alarmed at last week’s news of a 29% rent hike for merchants renewing their leases at the Essex Street Market, will no doubt be interested in this item.  Today, NYC Comptroller John Liu releases a report highly critical of the city’s management of the market and other properties.

On Friday, we were told the NYC Economic Development Corp. (EDC), which runs the market, had no choice but to increase rents — due to the city’s large budget deficit. This morning, the New York Times reports on Liu’s audit:

According to the audit, the agency approved 21 changes between July 2008 and January 2010 to a contract with Turner Construction Company, which was asked to provide facility management and construction management services at the Brooklyn Army Terminal, Essex Street Market building and other sites. As a result, the contract’s value jumped to $73.5 million, from $7.5 million. The audit says the agency authorized $3.3 million in “inappropriate and questionable payments” to Turner. They include improper reimbursements for unsubstantiated expenses and unnecessary costs for loading, storing and transporting contaminated soil from the Brooklyn Army Terminal site… Mr. Liu said, “Given the ongoing economic and budget uncertainties, we can neither tolerate nor afford business as usual at the E.D.C.”

The EDC has released an exhaustive, 30 page rebuttal of the audit. Spokesperson Julie Wood said, “We are disappointed that after a 16-month review, the comptroller’s office has issued an audit report that is flawed, misleading and draws unsupported conclusions.”

Chris McFadden, a spokesman for Turner, told the Times “the company provided ‘on-call” services as needs were identified and financing was made available. ”  He added, “this is a typical form of agreement that Turner has in place with private and public sector clients. (It’s) an efficient process that the N.Y.C.E.D.C. has in place and we look forward to continuing to work in partnership with them.”

Last week, Essex Street Market butcher Jeffrey Ruhalter spoke out about the rent hike, saying it was one factor imperiling his business. City Councilmember Margaret Chin sent a letter to EDC President Seth Pinsky, demanding the amount of the increase be reduced. She said it was unfair to balance the city’s budget on the backs of small businesses and she urged the EDC to take a hard look at its own finances.

Liu, a likely mayoral candidate, has been highly critical of the Ecoomic Development Corp. The Times called the EDC “a vital vehicle for Mayor Michael R. Bloomberg’s aggressive development agenda.” It is not only the landlord of the Essex Street Market — but also the lead agency in the redevelopment of the Seward Park Urban Renewal Area.

The EDC’s planning consultant, John Shapiro, has recommended demolishing the market and rebuilding it elsewhere on the SPURA site. Lower East Side residents have pushed back. As we reported Monday, they have launched an online petition drive to save the market. 245 people have signed the petition so far. CB3’s recently approved SPURA guidelines call on the city to keep the facility where it is, in the 1940 market building north of Delancey Street.