Kips Bay Science Campus Sues City For ‘Fraudulent Scheme' Behind Floodwall

By Katie Honan, The City

August 9, 2024

The developers of a major life sciences campus along the East River in Manhattan sued the city on Tuesday for a “fraudulent scheme” to include a floodwall in its planned construction of a third tower, alleging the city misrepresented who would foot the cost for the protective levee — leaving future protection in limbo.

Alexandria Real Estate Equities (ARE) has two office towers at the site near Bellevue Hospital known as The Alexandria Center for Life Science in Kips Bay.

In the lawsuit filed in Manhattan federal court, the firm alleges that the New York City Health and Hospitals Corporation and the Economic Development Corporation waged a “coordinated campaign” to get it to sign an “extortionary” agreement for its next building.

Both of the public-benefit corporations assured Alexandria a floodwall — based on protections needed after 2012 Superstorm Sandy caused the East River to flood hospitals including Bellevue — wouldn’t delay their project and would be funded through federal grants, the suit alleges.

The developers claim in their lengthy 54-page suit that they were assured any money they spent on a levee would be paid back, which they later found was false.

Because of their “fraudulent scheme, [Alexandria] is left with a severely impaired contractual option it spent enormous resources pursuing but cannot implement in the face of Defendants’ floodwall demands, which are impossible to satisfy,” the suit reads.

The city’s “egregious misconduct has also jeopardized tens of millions of dollars ARE has already invested in the project.”

Health and Hospitals “deliberately concealed the truth and failed to correct their prior misrepresentations” about the floodwall plans, which changed after Alexandria had already begun scoping and other work for its third tower, according to the lawsuit.

There’s now a delay in the completion of that building, which was set to be Alexandria’s anchor tower at the life sciences campus, as well as also a pause in construction of the much-needed seawall, the suit says.

Joel Marcus, the founder and executive chairman of Alexandria, told THE CITY in a statement that they’ve invested more than $1.5 billion in their campus and startups on it over 15 years — but HHC and EDC “have fraudulently strung us along for years with false assurances, concealed essential facts as part of an insidious scheme to offload the costs of a critically needed and long-delayed Kips Bay flood wall, and intentionally blocked us from timely developing our commercial life science campus’ third tower.”

The result, he continued, is that “More than a decade after the city secured significant federal recovery funding due to Superstorm Sandy, the floodwall is still not completed, and the community and Bellevue Hospital remain vulnerable to storm surges as they were a decade ago.”

Representatives for the EDC, HHC, and the mayor’s office did not respond to multiple messages seeking comment.

Long After Sandy

Plans to build the expansive life sciences research and development campus along the East River began in November 2004, when the former Mayor Michael Bloomberg’s administration, through the EDC and Health and Hospitals, released a request for proposals to develop the site along the East River.

Alexandria was approved as the developer in 2005, and they entered a ground lease on Dec. 29, 2006 to build a bioscience and scientific research and development site, according to the lawsuit.

The firm’s plan was to build and own two towers and it was given an option to build a third tower on a different development site.

The two towers that are currently open and leased — known as the West and East towers — remained operational after Superstorm Sandy. —This was due to the building’s strong design, the lawsuit claims.

Tenants at the two existing towers include Eli Lilly, Eikon Therapeutics, BlueRock, Stablix, and Osmo, developers said, all science and medicine related companies.

The developers first began to express concerns about possible flooding in 2016, and asked about the plans for a seawall, according to the court filing.

FEMA committed $1.6 billion to repair the city’s public hospitals damaged during Sandy two years after the storm, including Bellevue, which was set to get $376 million to make repairs and build a flood wall.

But there’s still no flood wall protecting one of the city’s largest public hospitals.

“It’s unfortunate that we have to be in conflict between a desperately needed flood protection and the essentially important life sciences industry that we’ve been trying to promote here in the city,” area Councilmember Keith Powers (D-Manhattan), told THE CITY.

This press release was produced by The City. The views expressed here are the author’s own.