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CITY NOT GETTING NAVY YARD RENT, AN AUDIT FINDS

CITY NOT GETTING NAVY YARD RENT, AN AUDIT FINDS
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May 9, 1985, Section B, Page 11Buy Reprints
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The industrial park at the Brooklyn Navy Yard is poorly managed and is staying in business only by withholding payment of millions of dollars in rent and water charges it owes the city, Comptroller Harrison J. Goldin charged yesterday.

He said an audit showed that the park owed the city $8.4 million in rent and water charges and that many of its industrial tenants did not pay security deposits, did not sign leases and occupied more space than they paid for.

''The management practices of the Navy Yard Corporation could be a case study in how not to run a company,'' he said. ''The result of those practices is a company barely keeping itself from drowning in red ink.''

But David Lenefsky, the chairman of the Brooklyn Navy Yard Development Corporation, said the audit was ''incompetently prepared.'' He acknowledged that the corporation had not paid the rent and water charges, but he said the money had instead been used for vital improvements.

'Hundreds of New Jobs'

He said that in four years the corporation had turned around the project, bringing many new jobs to Brooklyn.

''We have not focused on paper work,'' he said. ''We have focused on results and actions, on building new buildings, on repairing the Navy yard and bringing hundreds of new jobs.''

The audit is the latest in a series of critical audits over the years that have followed the corporation and its efforts to develop the 261-acre complex snce the Navy left the yard 19 years ago.

The corporation and the City Comptroller presented vastly different perspectives on the project.

Mr. Lenefsky, who was brought into the project in 1981 when it was on the verge of bankruptcy, said it was now turning a profit and bolstering the city economy.

He said it would earn $200,000 this year, has brought in 22 new companies since 1981, has a 95 percent occupancy rate and has created 400 to 500 jobs and helped keep 300 other jobs in the city.

'Hand to Mouth' Existence

Mr. Goldin's audit said lax, inefficient leasing practices were contributing to a ''tenuous financial condition'' and a ''hand to mouth'' existence. He said that because of below-market leases signed in the past, the city would be unable to collect the rent and recover some of its $24 million investment in the Navy yard ''anytime in the near future.''

The audit noted that the corporation, which said it was making capital improvements with funds that would have gone for rent payments, spent $20,000 of those funds on two $10,000 automobiles and $48,000 for office equipment.

Claire Tallarico, a spokesman for the city's General Services Department, said, ''The city understands the reasons why the rent was not paid.'' She said rental payments to the city would be renegotiated in the next six months.

A $500,000 Credit

The audit said the Navy Yard Corporation agreed to give a major tenant, the Coastal Dry Dock and Repair Corporation, a $500,000 credit without adequate documentation at a time when the yard had run out of cash.

In exchange for the credit, the audit said, Coastal Dry Dock agreed to pay $752,000 in back bills in order to enable the yard to pay a $2.4 million bill to Consolidated Edison.

Mr. Lenefsky, the chairman of the Navy Yard Corporation, acknowleged that 17 of the 55 tenants did not hold leases, but he said this was done at a time when the yard was desperate for tenants.

A version of this article appears in print on  , Section B, Page 11 of the National edition with the headline: CITY NOT GETTING NAVY YARD RENT, AN AUDIT FINDS. Order Reprints | Today’s Paper | Subscribe

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