Toll Brothers Sued Over Gowanus Acquisition
In September 2004, Toll Brothers went into contract to purchase 365-379 Bond Street, a square block fronting on the Gowanus Canal; the company hoped to develop this and two adjacent sites into a one mega residential project. Since such a plan was predicated on the city rezoning the area from manufacturing to residential, the developer…
In September 2004, Toll Brothers went into contract to purchase 365-379 Bond Street, a square block fronting on the Gowanus Canal; the company hoped to develop this and two adjacent sites into a one mega residential project. Since such a plan was predicated on the city rezoning the area from manufacturing to residential, the developer included a zoning contingency in the $21,500,000 contract and ponied up a down payment of $5,750,000 to secure the property. When the ULURP process concluded in March of last year, it should have cleared the way for the parties to close the transaction. But not so fast: In April the EPA announced that it was considering adding the canal to its Superfund list. Then in May, reports the blog Pardon Me For Asking, the developer, citing the potential for “a monumentally costly and lengthy process,” notified the seller that it wanted to delay closing until a final decision had been made regarding Superfund status. The seller responded by filing a suit on August 19th in U.S. District Court seeking to compel Toll to make good on the contract. Toll Brothers filed a counterclaim in October, according to PMFA.
Toxic Towers on the Gowanus: Deal or No Deal? [PMFA] GMAP
It is a spot re-zoning approved by the entire city council with the exception of Tony Avella and with strong support from Bill de Blasio. It is not a variance.
Toll Brothers just want to slither out of this… even though they knew from the start that the Gowanus was a nasty nasty cesspool. They just thought they’d be able to sell their “luxury” by covering up the liquid death with marketing. That didn’t work out.
I’m curious though — was the zoning a “variance” or did the area get rezoned? i.e., Can Toll Brothers just recoup some of their investment and keep it industrial? Or does it have to stay residential now… with awesome vapor barriers and biosafety level 4 laboratory seals on the windows?
I guess you guys are right. I didn’t see that part about the zoning actually changing.
But Dave, What about the blurb about “When the ULURP process concluded in March of last year, it should have cleared the way for the parties to close the transaction”
Doesnt that mean the contigency is satisfied? At least doesnt that give some legal standing to compel closing?
DIBS,
The re-zoning was specific to the Toll site. Toll got the re-zoning in March 2009 and could have closed then. The larger Gowanus re-zoning is irrelevant. I say the seller wins.
DIBS – the zoning was approved. It’s residential. Just no one would want to live there.
There’s a zoning contingency that was apparently agrred to in the contract. Seller loses.
Hmmm – $21.5 Mil for a potentially toxic site. Yeah, I would sue to make the buyer close as soon as possible…