Tentative deal: Long Beach would pay developer $75M on high-rise plan
Long Beach has reached a tentative settlement to pay developers $75 million and allow them to build two oceanfront high-rise apartments facing the boardwalk.
City Council members are set to vote in a virtual meeting Tuesday on the settlement with Manhattan developer Sinclair Haberman, which would cut the court-ordered $150 million judgment in half. The settlement would end more than 30 years of dispute over the property on Shore Road, between Monroe and Lincoln boulevards.
The 13-1/2 story high-rises would be the tallest buildings in Long Beach.
The city plans to pay the settlement by issuing long-term debt bonds, which attorneys for Long Beach expect will to lead to tax increases as it is absorbed in the city’s budget.
"We would look at other revenue streams and can’t say what the tax increase would be," City Manager Donna Gayden said. "We will look at the budget and there may be some revenue streams coming in. The whole point was to avoid having to do that."
Attorneys for Haberman declined to comment Wednesday.
A Nassau County Supreme Court Judge ordered the city in January to pay Haberman $131 million in the case, which had been locked in litigation since 1987. The city revoked Haberman's building permit in 2003.
The judgment has also been collecting $1.1 million in interest for every month the city didn’t pay and totaled nearly $150 million with accrued interest and lost value on the vacant property.
The settlement would halt interest on the judgment and give the city three months to finalize the agreement. If the city cannot reach an agreement, the original judgment would remain and interest would continue, officials said.
The settlement calls on the City Council to draft zoning legislation that would permit Haberman to construct the two 13 buildings with 266 apartments and a parking lot across the street on Shore Road.
Haberman had originally sought to build two 10-story buildings facing the beach next to one Seapointe Towers building, which it completed in 1984. Developers had also planned a seven-story building, which will now be replaced with parking.
The city hired a team of bankruptcy restructuring attorneys and financial consultants to negotiate the settlement. Their fees were covered using $4.9 million in state restructuring funding
Attorneys said the city could not afford to absorb a $150 million judgment, said Maria DiConza, a bankruptcy and restructuring attorney and partner with O’Melveny and Myers in Manhattan.
"We explored all options relative of this judgment and this settlement is the right path moving forward," DiConza said. "This goes a long way to putting the city on a path to long-term financial health. The city manager and the council have focused on putting it in the past and not have this 30-year-old litigation hanging over the city. It puts the city on a path to brighter things in the future."
The city also faces a $2 million deferred payment to developers that may be forgiven or go toward building costs, DiConza said. The city also faces a $25 million penalty if zoning for the project is ever revoked.
Both the city and Haberman have appealed the judgment but are expected to file a joint motion to stop it once the City Council approves the settlement.