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Town to pay $30M to settle lawsuit over Syosset property

The Town of Oyster will not relocate its

The Town of Oyster will not relocate its DPW workers from the Miller Place facility.  Credit: Newsday/John Paraskevas

The Town of Oyster Bay plans to borrow $30.4 million to cancel the sale to a developer of its department of public works facility in Syosset, town officials said Monday.

The town board is expected to approve the settlement with developer Syosset Park Development LLC Tuesday night that an official said would resolve a lawsuit the company brought against the town last year.

Pending board approval, “we will make the payment by the end of the week and that will settle the litigation,” Deputy Town Supervisor Gregory Carman Jr. said in an interview. Once that happens, “the lawsuit’s over. The contract is canceled,” he said.

Syosset Park Development, a partnership between Indianapolis-based Simon Property Group and Manhasset-based Castagna Realty Co., had begun seeking approvals from the town to develop a mixed-use community with 625 townhouses and condominiums on a site that included the town property and the adjacent former Cerro Wire property.

The developer last year sued Oyster Bay for $31.2 million plus interest and legal fees alleging the town had breached its contract with the company by failing to pay rental fees and cellphone tower revenue as the town continued to use the property.

A lawyer for the developer did not return a request for comment Monday.

When the town sold its property at 150 Miller Place in 2013, it structured the sale so that it could take up to eight years to relocate its facilities where about half the town’s employees worked. The developer paid the town $30 million in 2013, but the sale would not close until a final payment of $2.5 million was made to the town. 

The Syosset Park development proposal met with pushback during a public hearing in May 2018, at which opponents raised questions about increased enrollment in area schools and concerns over environmental contamination from disturbing a capped landfill on the site.

Even before that hearing, town officials informed the developer that the town didn’t want to move because it wasn’t feasible to relocate its facilities, according to town records.

“We had discussions about still trying to work something out with the developer where they might retain part of the property and we would keep other parts of the property,” Carman said.

Under the terms of the sale, the town was supposed to pay $900,000 a year to stay on the property beginning in the sixth year following the sale and to pay cell phone tower revenue from the site. When the town failed to make those payments, the developer terminated the sale and sued the town.

Carman said Monday this settlement would also resolve an issue with an unorthodox way the town had recorded the sale in its audited financial statements. At the 2018 federal corruption trial of former Supervisor John Venditto and former Nassau executive and his wife, Edward and Linda Mangano, the town’s independent auditor testified that the way the sale had been reported masked a $22 million operating deficit.

The town plans to pay the developer from its reserves and then issue taxable bonds for $30 million in March. The town will pay an estimated $8.6 million to $10.1 million in interest during the 15-year life of the bonds, according to figures provided by the town.

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