Important Update On Haberman Lawsuit In Long Beach

Long Beach NY

19 January, 2022

6:32 AM

Description

Press release from the City of Long Beach: January 18, 2022 The City of Long Beach has reached a tentative agreement with the plaintiffs in the ongoing legal matter of Haberman v. Zoning Board of Appeals of City of Long Beach. On Tuesday, December 28th, the City Council will vote to ratify a non-binding Letter of Intent (LOI) that spells out the points of agreement between the parties and establishes a date of no later than August 15, 2022, to document a formal agreement. This settlement will conclude the decades-old litigation that resulted in a judgment against the City that totals almost $149 million as of today, and is still accumulating more than $1 million per month in interest costs. The LOI calls for a cash payment to the plaintiff of $75 million. This represents a 50% reduction in the judgment, avoids the time and massive cost of further litigation, and cuts off the aforementioned interest payment that is currently accruing at approximately $1.1 million for every month the issue goes unresolved. The settlement is contingent upon the City enacting certain zoning modifications that would allow Haberman to construct two taller beachfront buildings, instead of the three lower-height buildings that were previously planned; however, density of the two new structures would actually be less than the previously proposed three structures. The City intends to fund the settlement through the issuance of long-term bonds. "This issue has weighed on the City for more than 34 years," said City Council President John Bendo. "It posed a catastrophic impact to the City's finances, its services, and its residents. Our prospects for appeal were costly and risky. In sum, we have made this agreement with the plaintiff to work toward an end to an ugly chapter in the City's history that was dropped in the lap of the current City Council. Like the recent iStar settlement, which ended a $100 million lawsuit against the City, we wholeheartedly believe that this LOI represents the best outcome to the City's current predicament and our collective future." City Council Vice President Karen McInnis, a Chief Financial Officer in her professional life, concurred. "The numbers will be a near-term challenge for the City going forward, but this deal stops the bleeding, gives us the best chance to recalibrate ourselves, improve our bond rating, and preserve the staff and services that our residents count on," she said. "I'm proud to say that this Council has put an end to the years of cronyism and mismanagement that created outcomes like this, which will never again be tolerated by our residents." Outside financial and legal consultants (M3 Partners and O'Melveny & Meyers, LLP), funded by the NYS Financial Restructuring Board, along with the City Manager and the City's Corporation Counsel, have worked for months with the assistance of the City Council to negotiate an agreement with the plaintiffs to resolve the outstanding issues. "This situation that was inherited by the Council and my administration had the potential to simply bankrupt the City," said Ms. Donna Gayden, Long Beach City Manager. "That's not an acceptable outcome. Now, the properties can be developed, new tax revenue streams can flow, and this City will finally correct years and years of self-inflicted financial abuse." The judgment against the City dates to 1987 and involved revocation of previously approved building permits to construct condominium towers on property owned by Belair Building LLC (owned by Haberman) at 350 Shore Road in Long Beach. The Plaintiffs eventually successfully challenged the City in court and a hearing on damages in 2020 resulted in the $140.8 million judgment, plus interest, against the City that is addressed (and reduced by half) with the adoption of the terms set forth in the LOI. Over the next several months, the financial and legal consultants to the City, along with the City Manager and Corporation Counsel, will work with representatives of the plaintiffs to finalize all formal agreements. City representatives will further analyze and refine budgetary impacts so that residents have a clear understanding of the near-term impacts of the agreement. This press release was produced by the City of Long Beach. The views expressed here are the author's own.