iStar Drops $100 Million Suit In New Settlement Agreement

LONG BEACH, NY — A settlement agreement between Long Beach and iStar Financial will drop the company's $100 million lawsuit against the city and pave the way for construction to begin on the Superblock.

In 2018, iStar filed a $100 million lawsuit against the city claiming that it was in breach of contract for not supporting iStar's planned Superblock development with the county. But two measures the City Council approved at its meeting on Tuesday would drop the lawsuit against the city, and in exchange give new developers Engel Burman $2.5 million in building permit fees that iStar already paid.

Despite the filing of the lawsuit, city counsel said that it had been working with iStar to settle the matter out of court.

Engel Burman will be able to use the $2.5 million credit against any feels the city would normally levy for building permits and other expenses. If the fees exceed the $2.5 million, Engel Burman will pay the difference. The money was part of $5 million iStar set aside with the city years ago as part of its initial development, but only half was ever used.

If the sale of the property to Engel Burman does not go through, the agreement allows iStar to transfer the credit to whatever company eventually purchases the Superblock property.

The measures also cover more than the lawsuit and the building fee credit. In addition, Engel Burman has agreed to conduct about $3 million worth of off-site repairs to the city's water and sewer system as a condition of receiving its building permit for the Superblock. The company will also pay the city $425,000 for relief from the Nassau County code requirement to have 8 inch stormwater lines. According to city officials, their engineers say that the smaller stormwater lines Engel Burman has proposed will be sufficient.

Engel Burman is proposing to build 238 apartments and 200 condominiums on the six-acre site, which fronts the ocean on Shore Road, between Long Beach Boulevard and Riverside Boulevard. The project would also include retail space.

An economic impact study on the project by the IDA said that it would create 883 jobs and bring about $21.5 million in spending to the area each year from new residents. It also estimates the developers would pay more than $100 million in Payments In Lieu Of Taxes (PILOTs) over 25 years.