A War of Addition

A legal battle between developer Ron Bloomberg and Beach officials over the fate of the city's cultural campus has both sides fuming

"That's when I ran out and hired my eminent domain lawyer," he adds.

Bloomberg describes the first few months of 1998 as a "time of panic" for him. The city's two eminent domain suits brought forth two more legal actions against him. First, Ablon sued to get out of their contract. Second, as a cross-claim filed in response to the city's eminent domain suit against the Chevron property, the heirs of Bloomberg's landlord, Patricia Bush, alleged that he hadn't included them in his transaction with Chevron, and that he had defrauded Bush in their negotiations over the years.

Adding to the confusion, the city's parking department approached him and asked him to respond to a request for proposals (RFP) to build a public-private parking garage on the Chevron property -- at the same time the city was suing him to acquire the Chevron property, so it could build a parking garage there. In effect the city was hedging its bets, giving itself two possible avenues to reach its ultimate goal: the 400-space parking garage north of the ballet.

Despite all of this swirling litigation, Bloomberg went ahead and responded to the parking RFP. Bloomberg portrays his offer, which he brought before an evaluation committee in June 1998, as a win-win arrangement. "The city would buy [the Chevron parcel], we would lease that land back, we would build the parking garage, and once it was complete, we would lease back a portion of the spaces at some return. It was a beautiful situation. The city didn't have to come out of pocket one dime."

Bloomberg also noted that, if the city agreed to this partnership, he'd drop his appeal of the ballet project.

The parking board didn't see the beauty of it. One sticking point was Bloomberg's proposed "one-time development fee" of $1.3 million -- more than twice the city's appraised value of the Chevron property. Another was his proposal to charge the city $450,000 per year for leasing the parking spaces from him. In fact under Bloomberg's plan, he would control not just the Chevron parcel, but its neighbor to the east, the fruit stand; he had the city buying that land through eminent domain, then leasing it to him.

This plan dashed Bloomberg's dream of constructing an office building on the Chevron site. But it also provided a payday far greater than the $600,000 or so the city was offering for the Chevron lot through eminent domain.

Of the ten applicants for the RFP, Bloomberg's was the only one rejected out of hand. "He proposed a deal where he would partner with the city to develop parking, but in reality, the proposal was outrageously lopsided in his favor financially," Mayor Kasdin says.

"We didn't want to go into partnership with him under his terms," Susan Gottlieb says. "It seemed like once he knew the city was interested, he just chose to escalate the cost way beyond what was reasonable."

Once the city rejected Bloomberg's proposed partnership, however, eminent domain was its only avenue left to secure a garage on the Chevron parcel. Curiously, though, the city dropped its eminent domain suit this past December.

Why? According to sources at city hall, because it would cost too much. The city inferred that Bloomberg's asking price for the parcel might well approach the $1.3 million figure he floated as his "development fee" for his jilted garage. Bloomberg's eminent domain attorney, Mark Tobin, is a specialist in the field. He might well have been able to convince a jury to award Bloomberg something close to that amount. Also, a lengthy trial would become a further financial hit for the city, as the city would be paying Bloomberg's legal fees.

"[Bloomberg] has just offended every city official he's dealt with," Kasdin notes. "The things he's asked for have been outrageous, plus he's challenging the design-review approval for the ballet project. I, and I think most people, view his tactics as sort of obstructionist. Maybe he thought the city would knuckle under, but the reality is, the [cultural campus] project can be done quite well without his property."

The same can't be said, however, of the Ablon parcel, which Bloomberg now owns outright, having settled his differences with Ablon. This land sits squarely in the middle of the proposed site for the regional library. And the city has no intention of dropping this eminent domain suit against Bloomberg. It's set for a hearing by June 1999.

In the midst of these legal maneuvers, Bloomberg's Palm Court renovation proceeded apace. It wound up in November as a refurbished office space that various city commissioners and staffers have lauded.

"It's ironic that the one who's stopping [the cultural campus parking garage] is the guy who just renovated a gorgeous building across the street," Gottlieb muses. She notes additional irony: "[The cultural campus] has to make his property more valuable, but he is the one making the parking garage impossible, and we are all being impacted by his stance. I think he's just being greedy, trying to jack up the price. It's unconscionable, because this is for a cultural institution, something to benefit every citizen. I mean, how much of a piggy-wiggy could he possibly be?"

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