According to affidavits obtained by the Herald, Long Beach’s corporation counsel, Rob Agostisi, disputed claims made by iStar’s executive vice president, Karl Frey, that the firm had a vested right to the Superblock property as part of a 2014 settlement agreement with the city, and as a result did not need additional building permits to move forward with the project.
“Mr. Frey’s contention that a foundation-only permit somehow translates into a vested right — for an entire construction project — is utterly baffling,” Agostisi told State Supreme Court Judge Stephen Bucaria.
Bucaria on Monday ordered the city’s Zoning Board of Appeals to hold a public hearing within 90 days to determine whether a permit and variance were still valid, a decision that could potentially derail iStar's plan to build two luxury apartment towers on the Superblock.
The ruling came after a group of Long Beach residents, represented by former U.S. Sen. Alfonse D’Amato, filed a lawsuit against the zoning board last year in an attempt to overturn a variance and permit that were issued to the developer, iStar FM Loans.
In February 2014, the zoning board voted 5-1 to grant iStar a height and density variance to develop two 15-story buildings — roughly 50 feet taller than the city’s height limit of 110 feet — with 522 one- and two-bedroom luxury rental apartments and 11,000 square feet of retail space for a handful of shops on the six-acre parcel along the boardwalk.
The lawsuit — filed against the city’s Zoning Board of Appeals, its building commissioner, Scott Kemins, and Shore Road Long Beach Superblock LLC, a subsidiary of iStar — sought to revoke a building permit to begin work on the foundation that was issued to the developer in May 2015, which the suit claimed was invalid because the variance had expired. It also sought to force the zoning board to hold a public hearing.
According to the suit, iStar was required to obtain the necessary permits within nine months of the zoning board’s approval and commence construction within a year, or the variance would be revoked. In November 2014, the zoning board granted iStar an extension until the following May.
The developer filed an application that spring for a permit to begin work on the foundation only, city officials said, and on May 28, 2015, it received approval from Kemins to start that work. According to the complaint, the Building Department granted iStar at least two extensions for the foundation permit, though the lawsuit claims that no construction plans were submitted for the towers. The most recent year-long extension — issued last year — was to run through May 2018.
According to court documents, Frey argued that Shore Road began construction in August 2015 by excavating the site, pouring a concrete slab and performing other work to build the foundation. The developer argued that under the settlement agreement with the city, it had a “vested right” in exchange for the $5 million it paid to the city, and that the permit for the foundation was all that was needed.
Agostisi added that under the settlement, iStar was also required to file drawings, a storm-water pollution prevention plan, a Federal Emergency Management Agency elevation certificate, electrical and plumbing and other applications to obtain the required building permits and meet the variance deadline.
Frey did not respond to requests for comment.
In his affidavit, Frey claimed that he received assurances from Agostisi and Kemins that only a foundation permit would be necessary. Agostisi and Kemins both denied that claim in their affidavits.
Frey also maintains that iStar submitted drawings, a pre-construction elevation certificate and other materials to the city’s Building Department for the project in 2013, and that the project had also received State Environmental Quality Review Act approval.
The Nassau County Industrial Development Agency rejected two requests by iStar for tax abatements, including a 20-year, $109 million proposal in 2016, amid an outcry from D’Amato and residents who maintained that the city would lose out on the full tax benefits of the development.
Agostisi claimed that iStar did not file the necessary permits in time because the move would have hurt the developer’s chances to obtain tax breaks.
“They chose to pursue tax abatements at the possible expense of this project,” Agostisi told the court. “While it is possible that iStar simply missed a deadline, the probability of this is extremely remote. Rather, iStar’s actions are explained through the lens of their roiling quest for a tax break.”
Agostisi added that iStar did not apply for all of the required permits “for fear of fostering the impression that the project could be constructed without tax abatements, thereby jeopardizing its IDA application.”
The developer was expected to make a third request for a tax break — this time in the form of a 20-year, $82 million PILOT. IStar threatened to sue the city last year for $105 million if the city did not show its support for a Payment in Lieu of Taxes program, or PILOT, in a letter to the IDA on behalf of the developer, saying that the city’s support had been “insufficient.” Officials said that iStar has yet to file the lawsuit.
“During at least one of our conversations regarding iStar’s oft-repeated threat to sue the city, I explicitly advised Mr. Frey of the foregoing issues regarding their decision to apply for a foundation-only permit, and the obstacle this presented [via] the May 28, 2015 variance deadline,” Agostisi told the court.