Developer sues Town of Hempstead over zoning code repeal 

A developer is suing the Town of Hempstead, seeking to nullify the town's repeal last month of a transit-oriented development zoning code that would allow its planned $154 million project, years in the planning stages, to move forward.

Commack-based developer Heatherwood Communities LLC said in the lawsuit, filed last month in state Supreme Court, that the town board’s repeal of the zoning code without a grandfather clause was illegal.

The developer alleges in its lawsuit that the town acted “arbitrarily and capriciously and without any rational basis in law” in first delaying the 309-unit project and then changing the law that would have allowed it to be built.

Plans filed by the developer with the town show a five-story building, with approximately 400 ground-level parking spaces underneath residential floors, located across from the Lawrence Long Island Rail Road station. 

Representatives from the town and the developer declined to comment on the lawsuit, which is the second filed by Heatherwood Communities this year over the project.

In 2019, the town adopted three new zoning designations intended to spur multifamily housing in Inwood and North Lawrence near LIRR stations. Heatherwood Communities had begun talking to town officials about developing a project as the zoning changes were being discussed but only decided to invest millions after the town board enacted those changes, according to the lawsuit.

“Relying on the [zoning change] Ordinance and buoyed by the political support and community favoritism for the Project, [Heatherwood Communities] … made significant and aggressive financial investments to advance their development plans,” the company said in its court filing.

The rezoning was the company’s “primary catalyst” to invest in the project, which resulted “in substantial opportunity cost as [Heatherwood Communities] Petitioners forewent other potential real estate ventures,” the lawsuit alleges. 

The company assembled a site by purchasing adjacent parcels on Wanser and Bayview avenues in Inwood in 2021, paying $27.25 million plus related costs, according to the lawsuit. The developer said in court filings that it has spent more than $30 million on the project.

The Town of Hempstead Industrial Development Agency approved tax breaks in the form of a 25-year payment in lieu of taxes (PILOT) agreement in 2021.

In early 2022, the developer submitted building permit applications to the town, according to the lawsuit. Under the transit-oriented development zoning code, the town was supposed to convene a design review committee to expedite the process, but, the lawsuit alleges, the town failed to act on the application, and in September 2022, the town board enacted moratoriums on development under the code.

IDA records show that the developer began making PILOT payments in 2023, despite the project being stuck in limbo, under a schedule that began with payments during the 2022-23 school year. The developer said in court filings that it has already paid $431,040 in PILOTs. 

Newsday reported at the time that opposition to transit-oriented development in Inwood and North Lawrence was led by residents from the Five Towns who voiced concerns about traffic and overcrowding. The moratoriums were repeatedly extended.

In May, town officials announced that the Town Board would consider repealing the zoning code, but that projects that had begun the application process prior to the moratoriums would be grandfathered in and allowed to proceed.

The board held a July 2 hearing to rescind the zoning code that included a lengthy section on how to proceed with projects that were grandfathered in. In September, the developer sued the town for continued delays.

The town repealed the zoning code last month without making any exceptions.

The developer alleges in its lawsuit that the town violated state laws by failing to follow proper procedures in its repeal.