Lawmakers are outraged by the approval of a $12.5 million refinancing for a nonprofit agency founded by a former Independence Party leader, Lenora Fulani.

In a vote yesterday, the city’s Industrial Development Agency approved a tax-free bond refinancing for the All Stars Project, an after-school program founded in 1981 by Dr. Fulani. The refinancing applies to IDA bonds issued in 2002 and includes a partial mortgage recording tax waiver of $112,000, the proceeds of which will finance capital improvements to its Midtown headquarters.

The vote was immediately derided by lawmakers, including some who criticized the nonprofit’s association with Dr.Fulani, known for having made anti-Semitic remarks, and another cofounder of the project, Fred Newman, whose approval of sexual psychotherapy has sparked outrage. The All Stars Project itself came under fire last year after the attorney general investigated allegations of child abuse that were not substantiated.

Following the 6-4 vote, including one abstention, the president of Manhattan, Scott Stringer, was critical of IDA’s evaluation and the timing of the vote. “You don’t give money to front groups for Lenora Fulani and Fred Newman without serious debate and serious input,” he said.

Repeatedly denied an opportunity to address board members yesterday, Mr. Stringer also criticized a lack of discussion regarding sexual harassment and child abuse complaints against All Stars. “What you really saw was them turning around and trying to ram this through when nobody was looking,” he said.

During deliberations, the Queens representative to the IDA board, Bernard Haber, raised questions about the financial merit of the refinancing. “I looked at their financial reports,” he said. “The income was going down, the cash flow was going down.”

IDA officials defended their position in the minutes before the vote.”We take these concerns very seriously,” the chairman of IDA’s board of directors, Joshua Sirefman, said, noting that two investigations of All Stars by the attorney general’s office did not substantiate allegations of misconduct. However, even as he assured board members, one audience member shouted, “Wrong.”

Lawmakers echoed that sentiment yesterday, a day after deriding All Stars and its associates in a letter to Mr. Sirefman. In a statement yesterday, the City Council speaker, Christine Quinn, said she opposed IDA’s decision, and reaffirmed her commitment to the responsible use of public funds.

Following the decision, the All Stars president, Gabrielle Kurlander, praised the IDA in a written statement. “This was a case where the politics of destruction threatened to derail sound public policy, but the IDA made its decision on the merits, not the headlines,” she said.

In an e-mail message, an All Stars spokesman, Roger Grunwald, said Dr. Newman resigned from All Stars in 2005, and Dr. Fulani resigned from a paid consultancy in 2001, although she remains a volunteer adviser. “The charges of misconduct are without foundation,” he said.

However, at least one official at the American Jewish Committee, Kenneth Stern, disagreed. “I honestly don’t have an explanation for why they would do this,” Mr. Stern, the committee’s specialist on anti-Semitism and extremism, said. “It’s the most irresponsible action I’ve ever seen by a governmental body.”