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Gilded Gems: Comptroller Finds Fiscal Mismanagement Shines Bright at Diamond District BID

NYPD security services for an office that's not even in the Diamond District. Non-competitive bidding of over $438,000 in vendor contracts. And other allegations of city-funded misadventures.

(Hell Gate)

Almost $400,000 spent on NYPD security services for an office that's not even in the Diamond District. Over $30,000 handed over to an executive director for time not worked while on unauthorized leave. Non-competitive bidding of over $438,000 in vendor contracts. And shaking Netflix down for over $100,000 to film a show—without the approval of the City. 

Those are among the allegations of fiscal mismanagement included in a new audit of the Diamond District's business improvement district by Comptroller Brad Lander's office, obtained exclusively by Hell Gate. Lander's audit followed up on a 2019 audit by his predecessor, Scott Stringer, which found much of the same behavior by the 47th Street Business Improvement District, a City-sanctioned merchants group that is funded through a property tax assessment to promote the commercial activities of the Diamond District, located on West 47th Street between Fifth and Sixth Avenues.

The latest audit also found that fewer than three percent of businesses in the area are members of the BID.

Lander is calling on the City's Department of Small Business Services (SBS) to withhold tax revenue from the BID until changes are made to its administration. 

"The 47th Street BID's funds are collected by the City and delivered to the BID to enhance safety, security, and vibrancy for the 3,000 businesses, workers, and customers of the district—not for the benefit of its Board Chair and Executive Director. The City should withhold future funds until fundamental changes are made," Lander said in a statement. 

A spokesperson for the 47th Street BID disputed the findings made by the comptroller's office, claiming that the BID has "cooperated fully" during the audit. The BID claims that the money spent on hiring off-duty NYPD officers as security guards was for an office just outside the district, which housed the BID's headquarters and other important local businesses. On top of that, the spokesperson said, the payments made to the BID's executive director, Avi Fertig, while he was on "unauthorized leave" were for medical leave, and the money paid by Netflix to the BID for a documentary series was done properly. 

"The errors and omissions in their report, whether by accident or intentional, raise questions about the fairness of those auditors," wrote the spokesperson in a statement. 

The spokesperson conceded that while yes, less than three percent of the district's businesses were members of the BID, tax revenues sent to the BID are only paid by property owners in the area, so that percentage doesn't really matter. The spokesperson also said that changes have already been made to how the BID awards vendor contracts. According to the audit, the BID's executive director was paid around $152,000 last year for responsibilities including writing the "Diamond District Monthly newsletter."

The comptroller has given the BID a year to clean up its act. The SBS has said it will now consult with both the City’s Law Department and Department of Finance on whether it can move to withhold the tax funds until it does. 

Just another brilliant day in the Diamond District!

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