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Revived Willoughby Square Park plans prompt lawsuit from spurned developer

The developer argues that the city worked to “sabotage” its efforts

The long-stalled Downtown Brooklyn site for Willoughby Square Park.
Caroline Spivack/Curbed NY

A problem-plagued park in Downtown Brooklyn may cost the city green.

The spurned developer that was originally tasked with building a municipal park and high-tech, subterranean garage near the City Point megaproject is suing the city, arguing that officials worked to “sabotage” the project, according to court documents filed Friday.

Long Island-based American Development Group was initially set to construct a 1.15-acre green space along Willoughby Street at the behest of the NYC Economic Development Corporation (EDC). But the city says the developer failed to meet a January 27, 2019 deadline for a cadre of conditions outlined in a December 10, 2018 letter, and three days later, scrapped the deal with American Development Group after years of planning and millions in investment on the developer’s end, according to legal filings.

Now, the city plans to build Willoughby Square Park without American Development Group. Instead of the garage, it aims to erect a monument to the neighborhood’s abolitionist history. But American Development Group argues that it actually met the city’s conditions and that EDC worked to “systematically undermine” their attempts to secure the deal, according to court records.

“The January 30 Decision was arbitrary and capricious and in bad faith,” Perry Finkelman, the CEO of Willoughby Operating Company, LLC and the principal of American Development Group, wrote in a state supreme court affidavit. “Any failure to meet those terms was the product of the NYCEDC’s own efforts to undermine Willoughby’s progress towards those goals.”

Finkelman said his group was committed to building “a major amenity for a neighborhood,” which was first promised to the community as part of a 2004 Downtown Brooklyn rezoning.

The city tasked the developer with three primary conditions in order to press on with the project. First it had to obtain financing for the roughly $80 million project; second, it had to coordinate construction work with the adjacent property owner; and finally, it had to resolve certain business issues—chiefly, to secure an arrangement with non-profit Downtown Brooklyn Partnership to take control of overseeing the space once it was completed, court documents show.

To that end, American Development Group worked with Gryphon Real Estate Capital Partners to secure a $75 million loan for the project, which it closed on in December 2018. It wasn’t until January 2019, however, that the developer was told by EDC that they are also required to obtain a payment bond—a bond posted by a contractor to guarantee that its subcontractors and material suppliers will be paid, according to Finkelman.

“There was no money in the budget for another bond to NYCEDC, and NYCEDC had to have known that it would be impossible to obtain a bond on such short notice,” Finkelman wrote in his affidavit. “Willoughby did its best to satisfy NYCEDC’s eleventh-hour request for a bond, but it was simply not feasible.”

The project hit another snag when it came to removing foundational supports from the Willoughby Square Park site that were driven into the ground by JEMB, a developer erecting a neighboring 34-story office tower dubbed One Willoughby Square.

American Development Group struck a March 2018 agreement to allow JEMB access to bury pilons that support the foundation of the building as it rose, according to Finkleman. JEMB was set to remove the supports no later than February 15 and to cover the costs, according to court records. EDC pushed that deadline back to March 1, but JEMB ultimately “refused” to foot the bill to remove those supports, according to the developer. Finkleman says JEMB has still yet to remove the pilons. JEMB did not immediately return a request for comment.

That wasn’t the last of the problem-plagued project’s woes. American Development Group was required to reach an agreement with the Downtown Brooklyn Partnership (DBP) regarding “flow of funds to construct the open space, risk allocation for cost overruns, and construction specifications of the open space,” according to a December letter penned by Sunitha Amalraj, EDC’s senior vice president of real estate transactions.

A preliminary agreement was reached between the developer and DBP, which is also named in American Development Group’s suit, on January 22 and was presented to the city “as final and ‘ready for signature’” but the finalized agreement “was never sent to DBP because NYCEDC’s conduct was otherwise making a closing impossible,” according to the lawsuit. DPB declined to comment.

All told, EDC violated “lawful procedure” and acted “improperly, arbitrarily, capriciously, unreasonably, and with abuse of discretion,” the lawsuit argues. American Development Group is urging a judge to annul the city’s decision to abandon its plans and compel EDC to give the developer “a reasonable amount of time to complete negotiations.” The door for monetary damages is left open with a request for the court to grant “further relief as is just and proper in the circumstances,” the lawsuit states.

Nicholas Paolucci, a spokesperson for the city’s Law Department, said the agency has yet to review the suit and declined to comment. EDC also declined to comment, citing pending litigation.

The legal challenge is yet another obstacle for the Downtown green space that has been in the making for more than a decade. Locals who often stroll past its rubble-lined perimeter lament the loss of the space to years of difficulties. Richard Williams, a long-time Brooklyn Heights resident, says he’s not holding his breath for the park’s recently announce partial summertime opening, especially with the new suit.

“I’ll believe it when I see it,” said Williams. “This thing has turned into a saga. Who ever heard of 15 years to build a park? It’s nuts.”

Downtown resident Giovanna Moretti remembers attending a Community Board 2 meeting on the initial plan years ago when she was pregnant with her first daughter. She’s since had two other sons.

“My kids have been born and raised during all this,” said Moretti, gesturing to the barren construction site where Willoughby Square Park is planned, on a recent afternoon. “It would have been wonderful to have this space within walking distance then, and it still would be. I just hope this lawsuit doesn’t cause more problems. We just want our park.”