Seaport developer, lender agree to mediation over troubled ‘leaning’ tower
Bank Leumi was seeking to foreclose on 161 Maiden Lane
The city halted work on the “leaning” South Street Seaport tower in April after the construction manager withdrew from the project. At the time, construction had already been stalled for months, and the project’s lender was fighting to take over the tower, attempting to foreclose on a $120 million loan.
Now, the project’s developer and lender are trying to hash out an agreement to end their months-long feud and determine the future of the beleaguered condo project.
Developer Fortis Property Group and Bank Leumi have agreed to enter mediation in an effort to resolve duelling claims, the companies both having accused each other of reneging on their contract. The bank wanted to sell the property, possibly as more than one parcel, claiming Fortis defaulted on its loan agreement by failing to obtain a temporary certificate of occupancy for a single condo unit in the tower by May 31, 2020. Fortis claimed the lender failed to provide full loan payments.
“Fortis has had a longstanding relationship with Bank Leumi that was complicated, in part, by the deficient performance of a former general contractor on the project,” the developer said in a statement. “At the suggestion of the judge, Fortis is currently working with Bank Leumi to settle the dispute through mediation. The parties have initiated mediation and we are hopeful that a mutually satisfactory resolution will be reached.”
A representative for Bank Leumi did not return requests for comment.
Construction of the 60-story condo tower has been plagued by repeated delays and disputes between the developer and its contractors. In 2017, a construction worker fell to his death while working on the project, shutting down the site for months. The project’s concrete subcontractor subsequently pleaded guilty to manslaughter for its role in the fatality. Work was halted again when a concrete bucket grazed the tower’s 34th floor, causing some of the material to pour into the street and partially lifting a section of the floor’s deck.
Fortis and its former construction manager, Pizzarotti, have traded lawsuits, blaming each other for the fact that the tower “leans” three inches to the north. Fortis replaced the contractor with Ray Builders, which subsequently also left the project and alleges that Fortis still owes it $6.8 million. As of February, all but six sales contracts had been rescinded for the project’s 99 units, according to a transcript of a Feb. 25 hearing.
In June, the court approved a temporary receiver to oversee the site, and approved the hiring of Engel Burman Construction to secure the construction site and assess its status. Mediation is expected to start in late August or early September.