Hundreds of people packed City Hall for a court-ordered hearing on Tuesday, in which the city’s Zoning Board of Appeals pressed attorneys for the developer iStar over why no major construction has begun on the long-vacant Superblock, four years after the board approved a variance for two luxury apartment towers.
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 it issued the developer. The suit sought to revoke a building permit, for work on the foundation, issued to Shore Road Long Beach Superblock LLC, a subsidiary of iStar, in May 2015, which the suit claimed was invalid because the variance had expired. The suit also claimed that iStar would have to go before the zoning board to obtain a new variance.
In January, Nassau County State Supreme Court Judge Stephen Bucaria ordered the zoning board to hold a public hearing to determine whether the permit and variance were still valid.
The board was expected to issue a decision in the coming weeks.
In February 2014, the zoning board voted 5-1 to grant iStar a height and density variance to develop a mixed residential and commercial development on the six-acre parcel between Riverside and Long Beach boulevards, East Broadway and the boardwalk, saying that it would revitalize property that has remained vacant for 30 years.
The proposed $400 million project includes 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 along the boardwalk.
The developer sought approval for the variance after the City Council voted to settle a city lawsuit against the developer for $5.25 million in 2014, the terms of which included the city’s support for a payment in lieu of taxes, or PILOT, program for an unspecified term.
IStar told zoning board trustees that it had the financial wherewithal to move forward with the project, which it said would generate $4.8 million in property taxes. But critics contend that the developer delayed the project after it began pursuing tax breaks from the Nassau County Industrial Development Agency, claiming it could not move forward with the project without a PILOT.
The IDA 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.
“I believe that the [zoning] board acted in good faith when they granted the variance,” D’Amato told the board, adding that the developer has yet to file any substantive building plans. “Promises were made by a so-called multi-billion-dollar developer . . . who exaggerated to an incredible extent . . . and talked about . . . the fact that they had the ability to do this project . . . within 90 days of the approval of the variance. They made no mention that they needed outside help.”
While hundreds of union workers came to the hearing to voice their support for the project, Christian Browne, an attorney for the plaintiffs, and residents in the crowd, including County Legislator Denise Ford (R-Long Beach), called on the board to revoke the building permit.
“You’ve been given a gift here to do a do-over and terminate the permit,” said former zoning board Trustee Ray Ellmer. “They kept applying for tax breaks at the expense of residents,” he added of iStar.
Under the conditions of the variance, the developer 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, city officials said, and on May 28, 2015, it received approval from Building Commissioner Scott Kemins. 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.
“This isn’t about defeating the project or depriving people of jobs, or some angry action because of the IDA,” Browne said. “What we’re really asking is that the project proceed lawfully — and that the applicant be held to some reasonable schedule regarding how the project is going to move forward.”
The Building Department issued its most recent year-long extension last year, to run through May 2018. Browne argued that iStar was not entitled to the latest extension because the variance was void. He also said that the developer failed to secure additional permits for construction.
Though the zoning board said it could not consider iStar's requests for tax breaks in its decision, Trustee Esteban Acevedo said that in 2014, the developer made no mention of a need for tax incentives. He asked whether iStar’s need for a PILOT was a main factor in delaying the project.
An attorney for iStar, Al D’Agostino, responded that the settlement agreement included the city’s support for tax abatements. “There was an awareness,” D’Agostino said. “No significant project in Nassau County today proceeds without some assistance, because of our rather unusual assessments [system].”
He added that there were a number of reasons for the construction delay, including financing, litigation, the loss of iStar’s initial development partner, AvalonBay, and other factors involved in a “complex” project.
“This is a challenging development,” Scott Mollen, an attorney for the developer, told the board. “Instead of criticizing the owner for seeking assistance from the IDA ... public officials in Long Beach should be trying to help, not criticize.”
D’Agostino said that iStar has already invested more than $80 million in the project, including $12 million since the permit was issued. He said that the developer remains committed to the project, adding that it would generate $110 million in construction jobs alone and millions of dollars in economic activity.
D'Agostino argued that the variance was still valid.
“If the variance was expired, why were the permits extended?” D’Agostino asked. “The building inspector has discretion.”
According to court documents obtained by the Herald, Kemins denied that he gave assurances to iStar Executive Director Karl Frey that only a foundation permit would be required.
Mollen said that iStar intends to seek a third request for tax abatements from the IDA.
“People know there’s been a change in [IDA] administration at the county level,” Mollen said, “and the developers are optimistic to come to a deal [with] the IDA … very quickly.”
Mollen and D’Agostino disagreed with the claim that little work had been done on the property, pointing to the excavation of the site, an environmental assessment after Hurricane Sandy, the installation of a chain link fence, the pouring of a concrete slab, and other foundation work. “This was a little more than putting a shovel in the ground,” D’Agostino said.
Trustee Michael Leonetti and other board members questioned the developer’s efforts to move the project forward, saying that little progress had been made.
“From where I’m sitting, four years later, what I’ve seen is a lot of financial gyrations,” Leonetti said. “I have not seen any positive work in getting these permits in line. That’s what disturbs me.”