iStar pushing Long Beach to back $82M tax break

Nassau IDA: letter of support not a deciding factor for 20-year Superblock PILOT

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City officials are at odds with the developer of the Superblock over a letter that the company, iStar Financial Inc., is requesting from the city showing its support for an $82 million, 20-year tax abatement to build two luxury apartment buildings on the property.

Attorneys for iStar called on the city last week to expedite a letter of support to the Republican-controlled Nassau County Industrial Development Agency after a heated public meeting earlier this month, and claimed that the IDA advised the company that it would not approve iStar’s request for a payment in lieu of taxes, or PILOT, program without the letter.

“We have been advised by the NCIDA that, unless the city provides us with the requested letter of support, the NCIDA will not approve the benefits application,” Matthew Parrott, an attorney for iStar, wrote in a May 16 letter to Long Beach Corporation Counsel Rob Agostisi that was obtained by the Herald through a Freedom of Information request.

Parrott also stated that iStar expects the city to “comply with its contractual obligation” to show its support for the PILOT at a public hearing the IDA may hold to consider the request.

For his part, however, Joseph Kearney, the IDA’s executive director, said that iStar has yet to submit its request, and reiterated that while a letter of support from the local municipality is helpful, it does not guarantee the agency’s approval of an application.

“As I said before, if the local municipality is supportive of an application, it’s helpful, but it is not dispositive,” Kearney told the Herald. “And while the IDA can consider, as part of its due diligence the support of a local municipality, it is one factor among many that the board can consider in evaluating an application.”

Asked whether Parrott’s claim was accurate, Kearney said he did not see the attorney’s letter.

“They can say what they want to say,” Kearney said. “Every application, if it is forthcoming, would be a new application that would be dealt with and treated as any other application before the IDA.”

The IDA rejected iStar’s two previous requests for tax abatements, for $129 million and $109 million in the past two years, amid an outcry from residents who claim that the city would lose out on the full tax benefits of the development. The latest request has also sparked the ire of residents, including former U.S. Sen. Al D’Amato, who maintain that the PILOT is still excessive.

Unless Long Beach shows its support for what is being called the third and final request for a PILOT, iStar has threatened to file a $105 million lawsuit against the city as early as this month for breach of contract despite the fact that the two parties reached a settlement agreement in 2014. The developer is now claiming that the city’s support for the project was insufficient, officials said.

The six-acre parcel between Riverside and Long Beach boulevards, East Broadway and the boardwalk, has remained vacant for 30 years.

In 2014, the City Council voted to settle the city’s lawsuit against iStar for $5.25 million, the terms of which included the city’s support for a PILOT, albeit for an unspecified term.  The city’s Zoning Board of Appeals subsequently gave the developer approval to move forward with the project, which includes two 15-story buildings — roughly 50 feet taller than the city’s current height limit of 110 feet — with 522 one- and two-bedroom luxury rental apartments and 11,000 square feet of retail space along the boardwalk.

Representatives of iStar said at the time that the project would generate $4.8 million per year in property tax revenue for the city and its school district, and told trustees and residents that it had the financial wherewithal to fund the project. The developer later said it could not build without tax breaks.

The council voted to approve a community host agreement in 2015, in which iStar agreed to pay the city $4.1 million to mitigate the project’s impact.

City officials faced harsh criticism, however, when residents learned about the developer’s initial request for a 25-year tax break, and who had declined to speak for or against both tax abatement proposals, citing potential litigation.

Parrott, who could not be reached for comment, wrote that iStar delayed the filing of the lawsuit at the city’s request in order to allow the city to hold an information session on May 9 to inform residents about the financial impact as well as the legal implications for the city.

“At your request, the company has delayed the filing of a lawsuit in connection with this matter based on representations by the city that, after the city’s May 10 … public information session, the city would be providing the requested letter to the NCIDA,” Parrott wrote.

Those with knowledge of the request say that iStar wants the letter signed by City Manager Jack Schnirman, a Democrat who is running for county comptroller, and members of the City Council, all Democrats. Agostisi declined to comment, citing the potential litigation.

But in a response to Parrott, Agostisi disagreed that the city had committed to sending the letter of support after the public information session, insisting it had said only that it would consider it.

“Following the public information session, the city began, and continues to consider, the company’s request,” Agostisi wrote. “As such, the city fulfilled its commitment in that regard.

He also said that city officials were “deeply troubled” by iStar’s claim that the IDA advised the company that it would not consider its application without the city’s letter of support, adding that Kearney made contradicting claims in the media.

“The city cannot understand how the NCIDA can unilaterally institute a requirement in connection with this specific application which does not otherwise exist in any law, rule or regulation,” Agostisi wrote. “We are equally concerned with the deleterious effects that such an arbitrary and capricious requirement would have on the city, and we question whether it could withstand judicial scrutiny.”

The city also requested the names of the IDA officials who advised iStar on the letter, and suggested that a meeting with those representatives “may facilitate a resolution that might help prevent this critical matter from careening out of control.”

Council President Len Torres told the Herald last October that he was disappointed with iStar for originally claiming it had the money to fund the project, and then seeking a large tax break.

“To us, it’s a very serious situation that we’ve been given an ultimatum,” Torres said on Monday, referring to the letter. “When you say to a group, either do it my way or we’re going to sue you, that’s almost like blackmail. We don’t like to be given an ultimatum — it’s very poor style.”