EDC ends legal fight against state

JOHNSTOWN – The Fulton County Economic Development Corp. last week gave up a legal battle against the state over whether the EDC is a private agency.

The EDC had sued the Authorities Budget Office after the office told the EDC it is a public agency and its records and meetings must be open to the public. The EDC claimed it is a private entity and not subject to the state Public Authorities Accountability Act of 2005.

But the EDC – an agency under the umbrella of the Fulton County Center for Regional Growth – last week withdrew an Article 78 petition against the ABO. The Article 78 was designed to determine whether the ABO exceeded its powers by writing a letter demanding the EDC comply with the Public Authorities Accountability Act.

Corporation attorney Michelle L. Merola of the Buffalo law firm of Hodgson Russ sent a March 18 letter to state Supreme Court in Albany County stating the EDC is withdrawing the petition. Merola gave no reason for the withdrawal. She didn’t return a phone call Wednesday seeking comment.

ABO Director David Kidera said Wednesday the EDC has now effectively given up its fight in court that it is a private corporation.

“They may dispute that, but they have no way of [legally] challenging that in court,” Kidera said.

Kidera said when the EDC took the ABO to court, it had to file the Article 78 proceeding. But he said the EDC went “well past” a 45-day statute of limitations to file the petition.

He said the EDC is now subject to any “sanctions” the ABO wants to impose against it if it continues to maintain it is a private agency and withhold certain information from the state agency.

Kidera said the EDC is a local authority and subject to the accountability, transparency and governance requirements of the state Public Authorities Law. He said the ABO will notify the EDC it is expected to comply with the law or face enforcement action.

The state says the EDC, as a public authority, will have to be more accountable by doing such things as providing the state with a financial plan, releasing salaries and complying with the state Open Meetings Law.

CRG President Michael Reese said Wednesday the CRG board will have to decide how in the future it will respond if the ABO “incorrectly” maintains the EDC is a public agency.

CRG Board of Directors Chairman Dustin Swanger said Wednesday he hasn’t seen Merola’s letter.

However, he said the EDC soon will be dormant anyway, as its assets will be turned over to the CRG as part of a process to dissolve the EDC and the Crossroads Incubator Corp.

“Today, the CRG maintains we are still a private organization,” Swanger said.

He said these issues may be discussed at a CRG board meeting today.

The state Appellate Division in November upheld a 2011 decision by state Supreme Court requiring the Fulton County EDC to go through the Article 78 court proceeding before it is decided whether the organization is a private or public agency.

The ABO in fall 2010 began seeking more transparency in EDC and CIC records after finding out $3 million in bonuses were paid to former EDC and CRG executives Jeff Bray and Peter Sciocchetti. The CRG is still trying to recover the bonus money.

The original litigation was filed in 2010 in state Supreme Court before Justice Richard T. Aulisi, but by August 2011, the judge had moved the venue to Albany.

Kidera has said a precedent was set in a December 2009 case in which the Griffiss Local Development Corp. of Rome, Oneida County, sued the ABO. The state Supreme Court in Albany County in that case ruled the not-for-profit development corporation was subject to the provisions of the Public Authorities Accountability Act.

Michael Anich can be reached at johnstown@leaderherald.com.