The Real Deal New York

Embattled Cobble Hill hospital bidder sues SUNY

“No good faith basis” to terminate negotiations, suit claims

May 01, 2014 05:25PM
By Adam Pincus

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LICH-Schexnydre-Williams

From left: Long Island College Hospital, Merrell Schexnydre and John Williams

UPDATED, 6:45 p.m., May 1: A development group fighting to hold its place as the winning bidder to redevelop the Long Island College Hospital campus in Cobble Hill filed suit today to block the State University of New York from terminating negotiations.

The Brooklyn Health Partners Development Group filed the suit in Brooklyn State Supreme Court, asking a judge to prohibit SUNY from terminating negotiations with the group. The suit also seeks to force SUNY to continue negotiations.

In addition, the lawsuit asks the court to declare that there is “no good faith basis” for SUNY to terminate the negotiations.

“SUNY has repeatedly imposed one-sided and inequitable requirement and arbitrary deadlines on [Brooklyn Health], which [Brooklyn Health] accepted, only to have SUNY then impose even harsher deadlines or more onerous deadlines,” the complaint says.

A spokesperson for SUNY rejected the suit’s assessment, and said that the school has acted in good faith as well as in accordance with other agreements regulating the process.

“We are aware of the growing concerns expressed by many stakeholders about the nature and feasibility of [Brooklyn Health's] plan for healthcare services,” SUNY said in a statement to The Real Deal. “As a matter of accountability and responsibility, SUNY expects [Brooklyn Health] to do exactly what it said it would do in its proposal.  SUNY has cooperated with [Brooklyn Health] in its plans to obtain regulatory approvals and has provided flexibility in addressing [Brooklyn Health's] needs with respect to timelines, schedules, and milestones.”

The parties are scheduled to hammer out a purchase and sale agreement Monday, which will set the terms for Brooklyn Health to buy the Cobble Hill site for $250 million. As part of the agreement, Brooklyn Health will open medical facilities as well as develop residential apartments.

Brooklyn Health Partners is led by CEO Merrell Schexnydre, and includes an investment group led by Chaim “Harry” Miller, who has investments in residential and medical properties in New York City.

The group filed the lawsuit following a flurry of negative comments from sources affiliated with SUNY as well as from Mayor Bill de Blasio. De Blasio indicated SUNY should consider other bidders. John Williams is the president of Downstate SUNY Medical Center.

Brooklyn Health Partners, which was the controversial winning bidder in a drawn-out selection process to purchase the Long Island College Hospital site in Cobble Hill and redevelop it with heath care services and new residential housing, is prepared to close the deal on Monday, sources at the firm said.

The group is prepared to wire a $25 million cash deposit and present $600 million in commitments on Monday.

The officials and groups opposed to Brooklyn Health Partners complain the firm is not prepared to carry out the terms of the agreement. De Blasio on Tuesday suggested the State University of New York, which is running the process, should pass over Brooklyn Health Partners and move on to other bidders.

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