iStar Files $100 Million Lawsuit Against Long Beach

iStar Financial, the development group that has been trying for years to build an apartment complex on the Superblock in Long Beach, followed through on its threat from a year ago and filed a $100 million lawsuit against the city for allegedly breaching a contract by not supporting the development.

The company is seeking restitution for damages it says it incurred due to the city not expressing support for tax breaks for its proposed 15-story, 522-unit apartment towers on the boardwalk. Two appeals iStar made to the Nassau County IDA for tax breaks were rejected, and the developer said it couldn't complete the project without them.

Last May, it was revealed in a special meeting that the developer threatened to sue the city if it didn't express its support for a third attempt at getting a Payment In Lieu Of Taxes (PILOT) agreement from the county. At that meeting, city officials said that, if the lot stayed vacant, it would generate $5.4 million in taxes over the next 20 years. But the iStar PILOT would generate $15.9 million, as well as $18.4 million in other expenses, for a total of about $34.7 million, the city said.

“It is with a great deal of reluctance that iStar filed this suit today,” said Karl Frey, executive vice president of iStar, in a release. “For nearly a decade, we’ve worked closely with the City of Long Beach to create a development plan that would be both economically viable and provide extraordinary benefits to the city and its residents.”

The suit alleges that the city reneged on a 2014 agreement it made with iStar to support its PILOT applications. The company claims the city breached a contract multiple times by not supporting the PILOT applications.

iStar claims that, despite the massive public outcry against the development, that the Nassau County IDA would have granted it the PILOT if the city had expressed its support for the project. But it didn't.

“It is our greatest hope that the parties can amicably come to terms such that the city and its residents won’t be denied the unique benefits of the Superblock project,” said Frey. “We have been, and will continue to be, active in this community. The residents who have been accurately educated about the project are excited to see it move forward. And we plan to do just that.”

Photo: Patch