The developer iStar Financial has abandoned plans to build two luxury apartment towers on the Superblock after its applications for tax breaks were rejected twice by the Nassau County Industrial Development Agency, and it is now in negotiations to sell the long-vacant oceanfront property to a Garden City-based developer.
The Engel Burman Group said it is in contract to purchase the six-acre property, and is exploring a “visually appealing” development that may include a mix of apartments and condos with retail space.
An attorney for Engel Burman, Dan Deegan, declined to disclose the terms of the deal. “Engel Burman . . . is in a due diligence period right now, basically exploring the viability of the project,” he said. “Engel Burman is a Long Island developer with a great track record in Long Beach and across Long Island, and they’re looking to meet with local community members and leaders to get local input.”
Deegan said that unlike iStar’s proposal — which called for two 15-story apartment buildings — any project that Engel Burman moves forward with would conform to the city’s zoning codes and not require any variances. He said it was too early to say whether the developer intended to seek tax incentives, adding that Engel Burman is still looking into the financial feasibility of developing the property.
“While there are few details as of yet, based on the limited information there seem to be positive signs regarding the new developer’s plans for the Superblock,” City Council Vice President John Bendo said. “I’m encouraged to hear they’ll be staying within existing zoning — not seeking variances — and that they’re interested in seeking input from the community. As things progress, hopefully we will find out that Engel Burman will be a good neighbor.”
The Superblock property has remained in limbo since iStar began pursuing tax breaks, after the city’s Zoning Board of Appeals granted the company a height and density variance in 2014 to develop a mixed residential and commercial development on the parcel, between Riverside and Long Beach boulevards, East Broadway and the boardwalk. The developer said it would revitalize the property, which has remained vacant for 30 years.
The $400 million iStar project included two buildings atop a two-level parking garage, 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 along the boardwalk. IStar representatives initially said the company had the financial wherewithal to move forward with the project, but later said it required tax incentives.
It applied for tax breaks of up to $129 million, in the form of payments in lieu of taxes, but was rejected twice by the Nassau IDA amid an outcry from residents and officials, including County Legislator Denise Ford and former U.S. Sen. Alfonse D’Amato, who maintained that the city would lose out on the full tax benefits of the development.
The developer’s efforts to move forward with the project were further derailed last year when the zoning board revoked iStar’s building permit, saying that it had failed to obtain all necessary permits after the ZBA gave it the go-ahead in 2014, and did not begin construction within a year. In December, Nassau County State Supreme Court Judge Stephen Bucaria denied an appeal filed by iStar to reverse the zoning board’s decision.
IStar filed a $100 million lawsuit against the city last year, claiming that the city reneged on an agreement in which it would support the developer’s request for tax breaks. The city filed a motion to dismiss the suit, which is still pending.
An iStar representative did not immediately respond to a request for comment. The city said it could not comment on how a new developer might impact the lawsuit, citing the ongoing litigation.
In May, iStar issued its financial results for the first quarter of 2019, and said that it would “de-emphasize” development as part of a strategic shift in the company.
Former school board president Roy Lester, who opposed iStar’s request for tax breaks and the planned height of the buildings, said he believed the company didn’t have any other choice but to abandon the project. “I think they poisoned the well,” Lester said. “They used the lawsuit to threaten the public.”
Still, he added, he supports development on the property that conforms to zoning codes and generates tax revenue. “Would I like to see a park? Yes,” Lester said. “But fair is fair, and if they abide by the rules, they’re entitled to it,” he added, referring to Engel Burman. “And everything that they’ve said so far, they seem to be abiding by the rules and they’re not asking for a variance.”
Some residents said that while a new developer has a right to build on the property, it must address how a potential project might impact parking, schools, the environment, the city’s tax base and aging infrastructure.
“I would like to see that a true discussion is had with the residents of Long Beach about what is financially a smart move that addresses our infrastructure and that will not burden the taxpayers,” said Dina Fiore, president of the Westholme and Walks Civic Association. “You’re talking about prime oceanfront real estate — there’s no need to give anybody tax breaks on the backs of our residents.”