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Long Beach developer may sue city for $105M over tax breaks

The Superblock property at the boardwalk between Riverside

The Superblock property at the boardwalk between Riverside Boulevard and Long Beach Boulevard in Long Beach on Sept. 9, 2015. Photo Credit: Steve Pfost

The developer and owner of the Long Beach Superblock property has threatened to sue the city for $105 million if officials do not support the latest application for tax breaks to build a pair of luxury apartment towers.

City officials said Friday that Manhattan-based iStar Financial plans to submit its third application to the Nassau County Industrial Development Agency, seeking $82 million in tax breaks to develop the oceanfront property between Riverside and Long Beach boulevards. The site has been vacant for decades.

Developers are seeking to build two 15-floor towers with 522 apartments. The proposal includes 11,500 square feet of retail space on the boardwalk.

Officials with iStar have said they can’t pursue the project without tax breaks.

Company representatives did not respond to requests for comment.

No application had been submitted to the IDA by the close of business last week.

Nassau IDA executive director Joseph J. Kearney said last week that his agency would conduct a new economic analysis of the project and hold a new public hearing for residents once an application was submitted. No hearing date has been set.

IDA members rejected two previous iStar applications seeking tax breaks in a PILOT, or payment in lieu of taxes — one for $129 million and the other for $109 million — over 20 years. IDA officials cited widespread public opposition to the requested tax breaks.

Long Beach officials have not taken a position on a third application, but they supported the previous plans to develop the Superblock.

City officials and council members are weighing whether to support the latest application or face potential litigation, which the city’s attorneys say could cost more to challenge in court than the $2.5 million in taxes the land would generate if it’s left vacant for 10 years.

Long Beach officials have hired Yonkers-based attorney Robert Spolzino to handle all business with iStar.

“IStar has shown us a lengthy complaint seeking damages of $105 million,” Spolzino said. “It puts the city in a position to defend the lawsuit, and a project not going forward that has financial benefits.”

IDA officials said they would consider any city endorsement of the project, but it would not lead to an automatic approval of the tax breaks.

“The fact that a municipality is supportive does give some weight, but it’s not dispositive as to whether or not an application is approved by this board,” Kearney said.

IStar has not made its new application public, but Long Beach officials said the city would receive $15.9 million in PILOT payments, besides $18.4 million in additional revenue including payments for infrastructure.

Developers could save $41 million in Long Beach property taxes under the PILOT, but the $18.4 million in additional revenue would reduce the tax abatement, city officials said.

The city reached a settlement with the developer in 2014 in which Long Beach officials would “agree to support iStar in its applications.”

Developers with iStar have said they would cap their profits from the project at 8 percent with additional payments possibly going to the city, Long Beach officials said.

The city’s analysis does not include what payments would be made to Nassau County or the Long Beach school district.

Spolzino last week hosted a meeting with residents and city officials to discuss the new application and potential litigation, but residents and officials said they felt dissatisfied with the presentation.

Long Beach City Councilwoman Anissa Moore wrote in a Facebook post that the presentation should have been more transparent for residents to ask questions. She called the tone of the meeting “condescending and demeaning.”

Legis. Denise Ford (R-Long Beach) and former U.S. Sen. Alfonse D’Amato criticized city officials and iStar.

“The city chose to support this project and as a result may have exposed residents to a $105 million lawsuit,” Ford said in an interview.

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