A Comptroller’s audit found the Diamond District to be just as full of unfollowed city recommendations as uncut gems. City Comptroller Brad Lander published a report Tuesday detailing dozens of items of fiscal mismanagement by the 47th Street Business Improvement District.
The report revealed that in recent years the nonprofit group supporting the district’s jewelry vendors improperly spent nearly $400,000 on security for a building outside of the district that houses its board chairman’s business, paid its executive director over $32,000 for medical leave that flouted city regulations and failed to address various other problems the city agency had previously flagged.
Lander’s audit followed up on a 2019 audit by his predecessor, Scott Stringer, which raised red flags over similar behavior by the BID, a group of local merchants defined by a spatial boundary running along the “Diamond District” of 47th Street goes from Sixth Avenue but stops short of the business abutting 5th Avenue.
“The leadership of the 47th Street BID is misusing City property tax assessment for its own benefit, and repeatedly violating laws and policies to improperly maintain its control. Meanwhile, fewer than 3% of the businesses in the district are participating members,” said Lander in a statement.
Given its non-compliance over the last 5 years, the Comptroller recommended that the City’s Department of Small Business Services place the 47th Street BID’s tax assessment funding in escrow until it makes changes in its leadership, by-laws and policies to address ongoing mismanagement.
The BID disputed the findings. It said it “cooperated fully” in response to the auditors’ findings and claimed that the report “omits virtually all of our detailed responses to issues they raised, and misinterpreted some of our responses to fit what appears to be a preconceived conclusion.”
A central conclusion of the report was that the BID used its tax-payer funded budget to pay $390,968 in the 2022 fiscal year alone for a 24-hour NYPD security detail in the building that’s outside the district but contains the Board Chair Steven Grauer’s BID office as well as his jewelry business, Gold Art 18 KT.
The 30-floor building houses around a thousand diamond and jewelry stalls, much like those portrayed in the buzzy 2019 nail-biter film “Uncut Gems.” It’s located just outside the district at the northwestern corner of Fifth Avenue and 47th Street. The 2019 audit also found that the BID had spent $210,835 on security for that building as well.
Unlike the building in question, the location of which the BID asked the Comptroller not to disclose, no other building in the actual designation of the BID has its own 24-hour security detail, a BID spokesperson clarified. The BID does pay for several patrolling security guards, but they roam around the entirety of the district.
In its statement on the audit, the BID attacked the Comptroller’s auditors for raising “doubts about whether they understand the security needs of the Diamond District including the building on the corner of Fifth Avenue and West 47th Street which is fully integrated into the business of the Diamond District.”
Asked how the security guard in the building outside BID would help the businesses that are within the bounds of the district, the spokesperson said that the security could potentially run over to other buildings in the event of an emergency.
On top of the security issues, the audit tackles a myriad of other issues, which include payments made to the BID’s executive director, Avi Fertig, while he was recovering from surgery which amount to “unauthorized leave” for medical leave. The BID contests that the board approved the leave in accordance with the law.
The audit also alleges that the BID repeatedly failed to follow safeguard policies that are in place to balance the executive power of its leadership and that it charged Netflix ove $100,00 for filming permissions, without getting approval of the city. The BID maintains that Netflix volunteered its contribution to the BID, and so it didn’t need approval.
