A court ruling will allow the cash-strapped developers behind the ailing Domino Sugar project to renegotiate with a lender — quashing a lawsuit by project co-owner Isaac Katan.
The appellate court’s decision last Friday affirmed a Manhattan Supreme Court judge’s ruling against Katan, nixing his request to halt Domino partner Community Preservation Corporation Resources from hammering out a new deal on its mortgage with its backer.
Community Preservation Corporation Resources saluted the court’s decision and promised to get financing and begin the long-stalled residential conversion of the Williamsburg plant, which calls for bringing 2,200 units of housing — 660 of them priced below market rate — to the sugar factory.
“Katan’s allegations had absolutely no merit so we are pleased that the judge agreed that Katan has no right to restrain us from making decisions on behalf of the project,” said Community Preservation vice president Susan Pollock, who filed a motion to dismiss Katan’s suit outright. “We will continue to make decisions for Domino’s future and remain committed to our vision for a vibrant, mixed-income, Williamsburg community.”
The city approved the controversial proposal to turn the massive Southside factory into apartments two years ago, but developers have not broken ground on the site and a rift grew between the owners when Community Preservation Corporation Resources defaulted on a $120-million loan and quietly put the property on sale.
Community Preservation Corporation sought to refinance its mortgage while maintaining a smaller stake in the property, but Katan filed suit and implored the court to consider his own secret “white knight” investor — a backer he claimed could save the debt-ridden Domino project last month.
Pollock told this newspaper in March that her company will continue looking for new investors with experience building affordable housing and developing waterfront properties. A Katan spokesman said he is mulling legal options and declined further comment.
Reach reporter Aaron Short at [email protected] or by calling (718) 260-2547.