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Developer has Long Island town on cusp of bankruptcy as lawsuit nears end

A decades-old legal battle over development rights has moved the City of Long Beach one step closer to what might be a bankruptcy-inducing judgment.

The New York State Appellate Division denied the city’s appeal of a prior ruling that it failed to properly answer a $50 million lawsuit filed against it by Manhattan developer Sinclair Haberman.

The city has one final chance to dissuade the court, but if it fails, it loses the ability to deny liability at trial, meaning it won’t be a matter of if it pays, but rather how much.

“The Habermans had been hoping to reach an amicable resolution through dialogue, however people understand it takes two to reach an agreement and the record establishes that the Habermans acted in good faith but the city did not,” Scott Mollen, an attorney representing the Haberman Group. “At this point, the Habermans expect to recover in excess of $50 million in damage including interest and legal fees.”

During 30 years of enduring “government at its worst,” Mollen said his clients have faced obstruction and evasion while continuing to pay property taxes and other costs associated with clearing and maintaining the undeveloped land. He added that the case is unprecedented because of its longevity.

“I believe this is probably one of the longest-running land use disputes in the country and the Haberman Group, fortunately, has the resources to stand up for their property rights,” he said. “A less financially sound developer would lack the resources to defend their rights.

“The record shows there’s no question as to who is the victim in this dispute,” he added.

Haberman filed suit against Long Beach after its zoning appeals board revoked three variance permits for a cluster of beach-front apartments in 2003, but the developer has been at odds with the city since the 1980s, when Mollen said the city encouraged Haberman’s company, Belair Building LLC, to develop their beachfront land to help jumpstart the municipality’s struggling economy.

Haberman’s company was given permission to build more than 400 condos and rental apartments throughout four high-rise buildings along Shore Road. Shortly after the first 10-story building went up, Mollen said the city began obstructing the development in various ways, such as requiring Belair to pay $200,000 for municipally-provided, underground utilities then refusing to build them and, later, changing the zoning code to reduce the maximum building height.

In 2003, the project’s approval lapsed and the city did not renew it, claiming that it didn’t have the legal authority to do so, Mollen said, though he believes government officials were merely giving into demands from residents who didn’t want new buildings would obstruct their ocean vistas and share their amenities.

Since then, the developer and the city have been engaged in a lengthy legal volley. Six years after he filed, Haberman saw his case dismissed in 2010, only to have it reinstated a year and a half later.

In 2015, the court ruled that the city had defaulted by not responding to the lawsuit in a timely fashion. The city appealed that decision to the New York Supreme Court Appellate division in July and lost. It went back again this month asking for a chance to re-argue its case, but that request, too, was denied.

Long Beach City officials did not immediately return a call seeking comments and Robert A. Spolzino, the attorney representing them in the appeal, could not be reached.

If Long Beach is found liable, it faces a potential penalty of up to $50 million in damages plus interest and legal fees, a massive sum that represents more than half the of the city’s budget, which is set at roughly $81.8 million for 2017-18.

Last year, the city was forced to raise taxes by 4.3 percent to absorb a $19 million judgment levied against it for a different lawsuit filed against it for a separate beachfront development.

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