In November 1998, the City Council designated the Superblock a blighted area in order to move forward with an urban renewal project. In 2001, the council contracted with Philips International, owned by developer Philip Pilevsky, to build three 10-story buildings, one of which would have included a hotel. After several years of litigation with the former owners of the property, who contested its monetary value, the city acquired the land through eminent domain and transferred ownership to Janow Associates, a subsidiary of Philips International, in 2006.

At that point, the project was scaled back to two towers with 425 condominium units as well as hotel units.

According to court documents, to finance the project, the developers, several subsidiaries of Philips International, borrowed $51 million from Fremont Investment & Loan and secured a mortgage on the property. Fremont apparently went out of business in 2007, and its assets were acquired by iStar. Shortly afterward, the developers defaulted on the loan, and the city held iStar responsible for final condemnation costs that have yet to be determined, officials said.

“So now iStar owns the defunct bank’s assets,” an official said.

The city claimed that millions of dollars in condemnation costs and legal fees still needed to be paid as part of an agreement with Pilevsky, and in 2011, the city filed suit against iStar, Pilevsky and Philips International’s subsidiaries. Last April, State Supreme Court Judge Timothy Driscoll denied parts of the city’s claim and pushed the city to settle with Pilevsky and iStar. Both sides are appealing the decision, an official said.

“This has been an albatross for the city for many years,” another official said. “It’s in everybody’s interest to settle — iStar doesn’t want to be litigating, they want to develop.”

A call to Phillips International was not returned.