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LICH Rejects Winning Developer, Gets Hit With New Lawsuit

The never-ending saga to determine the future of Cobble Hill's Long Island College Hospital continues. After selecting a development team at the beginning of April, LICH operator the State University of New York announced late yesterday that they were ending negotiations with Brooklyn Health Partners (BHP), an entity that was formed by Californian Merrell Schexnydre specifically for the bidding process. The Brooklyn Eagle reports that SUNY invited the second place bidder, the Peebles Corporation, to begin negotiations today to take over the complex. But BHP is not having it. The team is suing SUNY (again) in an attempt to stop the university from selling the hospital to a different bidder, arguing that SUNY "did not negotiate in good faith" over the last 30 days.

BHP's $250 million bid included plans to keep a full-service 300- to 400-bed hospital, and convert remaining hospital buildings to residential (and possibly build two 50-story towers). But a lot of concerns were raised about the proposal over the last month, calling into question whether or not BHP could actually finance a hospital or even if they really planned to create one. An attorney for BHP says that the group delivered the required $25 million deposit and financial documents by the end of the day yesterday, but SUNY says the opposite. According to the Brooklyn Eagle, SUNY reps said BHP could not "provide documentation proving they have access to $600 million worth of financing" for the development. After they pulled the plug, SUNY released a statement saying they were "unable to execute a satisfactory contract agreement with Brooklyn Health Partners."

The proposal from the Peebles Corporation did not include a full-service hospital, but rather a free-standing emergency department, an urgent care center, and a primary care facility. They would also redevelop the bulk of the property as residential, making 35 percent of the units affordable housing.

When the bidding process first started, extra consideration was going to be given to proposal that included a full-service hospital, like that from Brooklyn Health Partners. But it's been pointed out that BHP has never developed anything in New York City, let alone something as huge as a medical complex. The Peebles Corporation, on the other hand, has experience in NYC and partnered with the Witkoff Group, which has a lot of experience in NYC. Peebles' proposal also includes health partners that are based in the New York area.

So what's next? SUNY and Brooklyn Health Partners go to court today, and supposedly SUNY will begin negotiations with the Peebles Corporation. Undoubtedly, there will be another turn of events by the morning.
· Rejected LICH bidder to sue SUNY on Tuesday in Brooklyn [BK Eagle, photo source]
· Another Hitch In Effort to Save Brooklyn's LICH [WSJ]
· All LICH coverage [Curbed]