JOHNSTOWN - The state Appellate Division on Thursday upheld a 2011 decision by state Supreme Court requiring the Fulton County Economic Development Corp. to go through an Article 78 court proceeding before it is decided whether the organization is a private or public agency.
The EDC had sued the state Authorities Budget Office after the ABO issued a letter to the EDC saying it is a public agency and its records and meetings must be open to the public. The EDC?argues it is a private agency.
Determining whether it is private or public still needs to be worked out through state Supreme Court in Albany County.
"What this case was all about was a challenge by the EDC," ABO Director David Kidera said today.
The ABO letter came after EDC's May 2010 bonus scandal and the ABO indicated it wanted more accountability and public records from the EDC. The EDC in its original litigation alleged it was a private entity and not subject to the state Public Authorities Accountability Act of 2005.
Kidera said the EDC has been and continues to be subject to that law. What hasn't been fully determined yet, he said, is the outcome of the EDC's litigation against the ABO and the final determination of whether the EDC is a public or private entity.
Kidera said Thursday's ruling by the Appellate Division agrees with state Supreme Court's August 2011 ruling that recommended converting current litigation between the EDC and ABO to an Article 78 proceeding. The Appellate Division had heard oral arguments on the issue Oct. 10 in Albany.
Any upcoming Article 78 proceeding will determine whether the ABO exceeded its powers by writing the letter demanding the EDC comply with the state Public Authorities Accountability Act of 2005.
The EDC previously had requested a declaratory judgment in the matter from state Supreme Court Justice Richard T. Aulisi in Fulton County, asking him to decide the matter.
The EDC has the right to appeal Thursday's Appellate Division order, Kidera said.
Local economic development officials say a ruling that the agency is public would add to the cost of projects and put it at a competitive disadvantage trying to bring businesses to Fulton County. Officials also maintain the EDC was formed decades ago by a group of private business people. The agency has received public funding over the years.
Michael Reese, president and chief executive officer of the Fulton County Center for Regional Growth - parent company of the CRG - said this morning he hadn't read the ruling yet, but he said it's his understanding the recent Appellate Division decision basically maintains the status quo as the EDC's litigation goes forward against the ABO in Albany County.
"We can actually appeal their decision," Reese said. "I'm not sure we want to do that. This is just getting to the point where we can go to the court [with the Article 78 proceeding]."
The state's interest in determining if the EDC is a public agency came after a May 2010 bonus scandal. The ABO in fall 2010 began seeking more transparency in EDC and CIC records after the disclosure of $3 million in bonuses that 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 Aulisi, but by August 2011, the judge had moved the venue to Albany. He said the litigation should be moved there because the ABO, with its Attorney General's Office lawyers, is in that city.
In his ruling, Aulisi also noted the ABO is "charged with the responsibility of determining which organizations within the state of New York are subject to the provisions of the Public Authorities Accountability Act."
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 of 2005.
Michael Anich covers Johnstown and Fulton County. He can be reached at email@example.com.