Coalition of 19 Poverty Groups File Suit Against Nyc to Recover Federal Funds for Organizations

A coalition of 19 city-wide grass roots organizations for the poor, including the New York Metropolitan Coordinating Council on Jewish Poverty, filed suit today against the City of New York to recover federal funds which the coalition charged were illegally withheld from its members.

The suit was filed in New York State Supreme Court, charging that the City acted arbitrarily and capriciously in failing to allocate federal funds due the respective agencies, failing to issue new contracts and ordering that all programs be terminated as of Dec. 31, 1974. The City failed to respond to the petition today and the court set a hearing on the petition for Feb. 3.

The coalition contended that the City received in December, 1973, a check for $6.2 million from the federal Office of Economic Opportunity to organize new programs for the poor in New York City. The suit demanded that the City of New York appropriate these funds for the purposes which the coalition said were intended by the OEO grant. The suit contended that the OEO had already allocated the funds to the City’s Community Development Agency since December, 1973.

SUIT REJECTS BEAME’S CONTENTION

The suit, in effect, rejected the contention by Mayor Abraham Beame last year that the OEO funds were intended to cover an outstanding deficit incurred by the city and were not for the funding of new anti-poverty projects. The Mayor made that explanation in response to an inquiry from Sen. Jacob K. Javits (R. N.Y) who was initially involved in securing the funds for the city and asked information on their ultimate disposition.

Copies of the letters exchanged between Javits and Beame last May were released to the Jewish Telegraphic Agency last Oct. 24 by the Senator’s office in response to an inquiry by the JTA as to what happened to the funds. The Mayor said, in a letter dated May 21, that the $6.2 million OEO grant was awarded on the basis of a successful claim by the city for monies expended in previous fiscal years.

Beame wrote that “these expenditures” had been “disallowed by the OEO” resulting in a “substantial deficit for the fiscal year 1971.” The Mayor wrote that the city’s Council Against Poverty and the Community Development Agency “misinterpreted the grant as new project money and issued letters of intent to fund a variety of community organizations on that basis.”

He added that the city, “despite the most serious deficit situation,” agreed to honor most of the commitments “and distribute funds for the period covering Jan. 1, 1974 through the close of the fiscal year, June 30, 1974.” Accordingly, the Mayor said in his letter to Sen. Javits, the OEO grant “was not meant for the funding of new projects and was intended to cover an outstanding deficit” as was “clearly stated in the grant award.”

OEO DOCUMENTS AS EVIDENCE

The suit contended that the city continued to fail to authorize release of the OEO funds “despite the Federal government’s support substantiating the coalition’s position.” In support of that contention, documents filed by the suit cited written statements by Louis Smigel, OEO regional counsel, to James R. Dumpson, Administrator of the city’s Human Resources Administration, dated May 29, 1974, and from Milton Pulakos, assistant regional director of operations for OEO, to Javits, dated Nov. 4, 1974.

Smigel’s letter said that the $6.2 million grant was awarded “exclusively for the purpose of programming general community development activities and to establish projects designed to give technical assistance to these programs.” The letter added that “accordingly, these funds may not be characterized as refunds due to the HRA.” Pulakos’ letter reiterated that the $6.2 million grant was to finance several community development projects in New York City and that no other use would be permitted.