A national home builder once intent on building along the shores of the Gowanus Canal is embroiled in a legal wrangle over property it may shun if the canal is named a Superfund site.
In August, Toll Brothers was slapped with a breach of contract lawsuit by the owners of 363-379 Bond Street, where the company is planning a massive 605,380-square-foot mixed use development with 477 residential units on the vast two-block site bounded by the canal.
Toll entered a contract to purchase the property from Joseph Phillips and Citibank in 2004, and made a down payment of $5.75 million on the purchase price of $21.5 million, which was since revised to $20.6 million. The imbroglio was first detailed on the blog Pardon Me for Asking.
According to the contract, the sale of the property would be contingent on the fate of a rezoning request by the developer. In March of last year, the city approved rezoning the site from manufacturing to residential use.
But when the Environmental Protection Agency announced in April that it was considering naming the canal a Superfund site, the future of Toll’s project became as murky as the canal along whose banks it might rise. Critics of the designation say it will cast a stigma on all projects near the waterway, stifling private development for years to come.
“It’s detrimental to my project, it’s detrimental to the area wide rezoning…and it’s detrimental to the community as a whole,” said David Von Spreckelsen, Toll senior vice president, said at the time.
According to the blog, by May 2009, Toll notified the seller’s attorney that it had concerns about the EPA’s announcement and sought to delay closing on the property to await the outcome of the EPA’s decision. But the seller refused to delay, and scheduled a closing on Aug. 17. Toll maintains that the EPA’s announcement renders the property unmarketable, but Phillips claims Toll should have performed its due diligence prior to entering the contract. In its countersuit, the homebuilder is asking for the return of its down payment.
Toll New York City spokesperson Ethan Geto said the company does not comment on pending litigation. In the past, the company has said it would not go forward with the project if the canal is designating a Superfund site — but at the same time has expressed continued commitment to the project, and the economics of its plan.
