The Adams administration’s botched plan to build a seawall along the shoreline of the East River cost the city a valuable and much-needed life sciences facility and cost a potential developer at least $50 million, a stunning lawsuit alleges.
New York Stock Exchange-listed real estate developer Alexandria Real Estate Equities (ARE) alleges in a lawsuit filed Tuesday in Manhattan federal court that it has been trying for years to build a third tower to complete a life sciences campus on First Avenue between East 28th and East 30th Streets, adjacent to Bellevue Hospital.
The company has already constructed two Alexandria Life Sciences buildings on the south side of the site, with 1 million square feet of laboratory and research space that is 95 percent occupied and leased by major pharmaceutical and biotech companies, and the east tower is also home to RiverPark, a popular waterfront restaurant.
But the Economic Development Corporation and the Health and Hospitals Corporation have repeatedly blocked ARE’s efforts to build the North Tower between East 29th and East 30th Streets, even though ARE had the right to build there by exercising a binding option in 2019, according to the lawsuit.
Alexandria founder and chairman Joel Marcus said in a statement to The Washington Post that his company has invested more than $1.5 billion in the project and “grown the city’s commercial life sciences sector from two commercial companies in 2010 to more than 100 local biotech companies today.”
But he said EDC and H+H “misled us for years with false assurances, concealed material facts as part of a sinister scheme and deliberately prevented the third tower from being developed on schedule” in order to get ARE to pay for the breakwater.
The “fraudulent scheme” caused ARE to “severely impair and render infeasible its contractual options by making it unable to meet Defendants’ Breakwater Demands,” according to the lawsuit.
Officials at EDC and H+H could not immediately be reached.
The story begins in 2007, when the Michael Bloomberg administration hired ARE-East River Science Park, a subsidiary of ARE, to develop New York’s first commercial life sciences campus under a ground lease agreement with the City of New York.
ARE quickly developed the first two towers, and when superstorm Hurricane Sandy struck in 2012, the city recognized the need to build a seawall at the site.
According to the just-filed complaint, the agency assured ARE in 2015 that FEMA would pay for the wall in full and that it would “not materially affect the development, construction, or operation of the North Tower.”
But EDC and H+H allegedly never came up with a final design for the wall. In 2019, the two companies told ARE they wanted to integrate part of the wall into the North Tower’s foundation. The developers say they agreed to cooperate, but were not obligated to, after officials reassured them that the flood protection plan would not affect the construction of the new building.
But the city has continued to make multiple changes to the design, hindering ARE’s construction efforts, and is now trying to make ARE pay for future design changes even though ARE is not obligated to pay for them, the lawsuit states.
ARE said the city knew since 2020 that plans were in flux and that FEMA approval could take years.
The delay, according to the lawsuit, “caused Alexandria to miss out on the life sciences bull market…Currently, the life sciences bull market has weakened significantly nationwide.”
“At the same time, EDC encouraged and induced other developers to build life sciences projects based on false and inflated information about demand,” the complaint states.
Though not mentioned in the lawsuit, the city is planning two major life sciences projects near the ARE site: A so-called Science Park and Research Campus spanning 2 million square feet in the Kips Bay area that is currently going through the city’s Uniform Land Use Review process.
