WEST HARLEM — The chairman of the board of the group charged with distributing $150 million in community benefit funds from Columbia University's Manhattanville campus expansion resigned on Tuesday — just hours before his board chose the nonprofit where his sister is executive vice president to administer half of the group's $20 million affordable housing fund.
Longtime West Harlem Development Corporation board chair Donald Notice sent an email to the board at 1:30 p.m. Tuesday saying he was stepping down immediately — three hours before the board overwhelmingly voted to pick the Local Initiatives Support Corporation to administer $10 million of the fund, said WHDC Executive Director Kofi Boateng.
Notice's sister Denise Scott is the executive vice president for programs for LISC's national office — and until January was managing director of the community development group's New York office, which will manage the fund. LISC stands to earn fees of at least $600,000, at least 6 percent of the $10 million, for their services over the next three years but the total amount is unclear because a contract has not been finalized.
Boateng said Notice, executive director of West Harlem Group Assistance, Inc., had alerted the board that Scott was his sister and recused himself from the process. Sources, who asked not to be named, say it was suggested to Notice that he resign weeks ago when it became clear that LISC was likely to be awarded the contract but that he declined.
Notice "chose to resign not only as chair but from the board," Boateng said, adding that "He took the higher ground in the interests of the community to forestall all such inquiries and suspicions."
Notice did not respond to calls for comment.
A spokeswoman for LISC's national office said that Scott was not involved with the WHDC's request for proposals during her time as the New York office's managing director or in her new role.
"She recused herself from anything having to do with the decision-making process. She didn't even see the application," said the spokeswoman, adding that they were notified Wednesday morning that their proposal had been accepted. "She would not put herself in the position to raise any concerns about her role."
However, critics said the hiring appears to violate the agreement the group reached with Attorney General Eric Schneiderman in December 2012 after the state agency launched an investigation in the wake of DNAinfo reports that WHDC had spent more on politically connected consultants than on programming.
According to a consent decree signed by the WHDC, the group must have a clear conflict of interest policy that requires "all funding decisions be made objectively" and "not for the benefit" of any board member. The group remains under the decree until December 2015.
The WHDC's conflict of interest policy describes a conflict as a situation where a board member or the elected official they represent is "closely associated with a third-party individual or entity,
vendor, or grantee with whom WHDC is considering engaging in a grant making or non-grant making transaction."
"It sounds like a conflict to me," said Walter South, a development consultant whose submitted an unsuccessful application to run WHDC's affordable housing program.
The policy also describes an "apparent conflict of interest" as a "circumstance in which a reasonable person would think that the decision-maker’s judgment is likely to be compromised or his or her ability to act in the best interest of the Corporation is likely to be impaired."
Boateng said before WHDC considered LISC as a viable candidate, they asked the Attorney General's office for clearance and was advised that such a situation was covered under the group's conflict of interest policy.
He said and the AG's office told them they had the option of getting advice from an outside counsel if more guidance was needed.
The Attorney General's office declined comment.
Lawyer Dorje T. Glassman of the law firm of Cleary Gottlieb Steen & Hamilton LLP wrote in a Sept. 25 email to Boateng that it was up to the board to determine whether a conflict of interest existed, according to the email shared with DNAinfo.
"The question of whether Mr. Notice should resign as board chair or simply recuse himself from deliberations is again best addressed by the Board, but, given that Mr. Notice’s conflict was disclosed, the conflict of interest policy would at most require recusal and would not mandate resignation as board chair," Glassman wrote.
Community Board 9 Chair Rev. Georgiette Morgan-Thomas said she was concerned about the appearance of impropriety.
"If the average person heard the corporation was working with a group where the chairman's sister is a major player they might think it was unethical," said Morgan-Thomas.
But she believed that Notice stepping down as chair but remaining as a board member would have been enough to avoid those concerns. Now that Notice is not on the board, it will lose his decades of experience in affordable housing development just when it is needed most, added Morgan-Thomas.
While the Attorney General says he did not find evidence of theft in his 2012 investigation, he found that the long-troubled group "was hindered by the board of directors’ failure to develop clear policies and procedures for grant-making activities" leading to disarray.
It wasn't until the attorney general's investigation was underway that the group hired an executive director, secured a permanent office and launched a website.
The group has received $13.25 million from Columbia and has given out almost $4 million in grants to local non-profits and spent $1.8 million to provide youth and seniors with jobs. Combined with the expenses of running the group, it has spent $7.1 million and has just more than $6 million on hand.
