Long Beach Superblock deal sealed with plan for larger development

A Manhattan developer pitched a proposal to turn

A Manhattan developer pitched a proposal to turn one of Long Beach's long-vacant parcels into the city's tallest buildings.The 6-acre site, known locally as the Superblock, has been a target of city revitalization efforts since the 1970s, and developer iStar wants to turn it into two 15-story luxury apartment towers. (Credit: Handout )

Long Beach brokered the deal to turn the long-derelict Superblock into two apartment towers after the project's Manhattan developer crafted a plan it believes will make money.

The city had been locked in litigation about the property -- a vacant eyesore near the Long Beach boardwalk for decades -- since 2011, when the city sued the developer, iStar, and a former developer, alleging the two owed Long Beach millions of dollars in condemnation costs and legal fees.

IStar had approval to build two 110-foot towers with 425 units on the property, but feared that project was too small to make money, company officials said. The developer and the city began talking about a new, taller and denser plan for the 6-acre property within the last two months, said officials for both. City officials and iStar representatives said they believe the new plan can rise -- and profit.


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The developer has proposed two 160-foot towers with 522 units, which would be the tallest buildings in Long Beach.

The new proposal cleared the way for iStar and the city to announce a settlement on Wednesday.

"We knew if we could settle the litigation and have a project that was economically viable, we could move forward," iStar executive vice president Karl Frey said. "Within these last two months, we realized we had a project."

City Manager Jack Schnirman said the city settled in part because Long Beach officials recognized the chance to see development between Long Beach and Riverside boulevards -- something it has sought since the 1970s.

"The City Council sent a clear message to me as city manager and to our attorneys to get something positive done," Schnirman said.

The 522-unit project needs zoning board approval and is expected to be up for a vote at that board's Feb. 27 meeting. If approved, the project could break ground in June and be completed in the summer of 2016, iStar representatives said.

IStar made its pitch to the board and city residents at a Thursday night public hearing.

The development plan includes 11,000 square feet of commercial space that would front the boardwalk, which was recently repaired after being destroyed by superstorm Sandy. It would be a luxury complex, with monthly rents ranging from $2,275 to $3,575, iStar officials said.

The Superblock has always been the "missing part, to complete the development of the city in Long Beach," said Larry Levy, executive dean of the National Center for Suburban Studies at Hofstra University. The project could be the "last, best chance for the city to do something really special" and deserves scrutiny, he said.

"It has always been a gaping hole in trying to tie together the waterfront," Levy said.

Thursday's public hearing attracted a mix of supporters and detractors. Supporters said the project would revitalize a neglected piece of the city's oceanfront, while several opponents said they feared parking congestion.

"If we don't have the infrastructure to deal with it, who's going to deal with it? Who's going to pay for that?" resident John Ashmead said.

The project would include more than 900 parking spaces, iStar representatives said.

Other detractors said they were skeptical that there is enough demand for rental apartments in Long Beach. But Jay Parsons, an independent market analyst for Texas-based MPF Research, said Long Island's three-year apartment occupancy rate of 96.6 percent indicates those concerns are unfounded. "That's a strong rate and suggests the market can stomach some new supply," Parsons said.

The Superblock, a term that has existed since about 1979, was originally 13 separate lots with various owners. In 2006, former lead developer Philip Pilevsky acquired the lots for $42 million.

Pilevsky intended to build two shorter towers on the property, but defaulted on a mortgage, and the Superblock became iStar's property. The city sued Pilevsky and iStar in 2011, and those suits are now settled, city officials said.

Pilevsky and iStar must give the city $5.25 million under the settlement, among other concessions, city records state.

If the project gets the final go-ahead, it would signal the end to a decades-long struggle by the city to develop the property.

"The Superblock has been vacant for too long," said Michael J. Kerr, president of the Long Beach Chamber of Commerce. "The time is now to show everyone Long Beach is open for business and on the move."

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