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29 April 2004 - The city bar association is the latest opponent of plans by Gov. Pataki and Mayor Bloomberg to sell $600m of Liberty Bonds to help finance the construction of an electricity-generating facility in Astoria.
"A review of the federal legislation governing the Liberty Bonds indicates that the use of the bond program to assist with the financing of this plant is unlawful," the Association of the Bar of the City of New York states in a letter sent to the two by the group's Special Committee on Downtown Redevelopment.
Astoria Energy, meanwhile, has said that it plans to go forward with or without the Liberty Bonds, and already has arranged private financing.
The suit contends that Pataki and Bloomberg improperly approved the use of the bonds for construction of the $983m private Astoria Energy power plant.
"While government assistance with financing energy facilities in this difficult market may be a laudable goal, it is ... contrary to the legislative intent to divert funds from a program that was earmarked for the losses experienced by the city because of the Sept. 11 tragedy," says the association's letter, signed by Philip Weinberg, chairman of the association's Downtown Redevelopment Task Force.
In March 2002, Congress passed the Job Creation and Worker Assistance Act, which authorized the governor and mayor to issue $8bn of low-cost, tax-exempt, private activity bonds to revitalize lower Manhattan and help the city recover from 9/11.
The act provides for the financing of qualifying commercial, residential, and utility projects within New York's Liberty Zone -- which covers lower Manhattan south of Canal St. and for limited financing of certain projects outside of the Liberty Zone but within the city.
Up to $2bn may be used for projects outside of the Liberty Zone, and only for "nonresidential real property," as defined by the legislation.
The association determined that the Astoria Energy plant does not qualify as nonresidential real property under the legislation's definition.
While fully supporting the project, the city has not yet made a final decision on the use of Liberty Bonds to help finance the 1000 MW plant, said Michael Sherman, a spokesman for the city's Economic Development Corp.
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