Deutsche Bank Litigation Could Cut Funding to East River Waterfront
By Julie Shapiro
LOWER MANHATTAN — The curse of the Deutsche Bank building continues.
Litigation related to the recently demolished tower could cut into the budget for several long-awaited downtown projects, including the East River Waterfront, a state official said this week.
The Lower Manhattan Development Corp. has set aside about $25 million to cover the possible verdict in a lawsuit against them by criminally-charged Deutsche Bank contractors Bovis Lend Lease.
But if the agency is required to pay more than that, the money may have to come from funds set aside for other projects, said David Emil, LMDC's president.
"It would be a very unhappy result," Emil said at a meeting Monday night "[It would be] subject to a lot of political discussion and litigation."
The LMDC is defending itself against an $80 million lawsuit, filed by Bovis Lend Lease on the grounds that the scandal-scarred agency did not make enough of a profit on the troubled demolition job, the LMDC said.
A 2007 blaze on the worksite killed two firefighters.
Bovis is currently fighting off criminal charges at trial on the grounds that their contractors caused the conditions that led to the firefighters' deaths.
In response, the LMDC sued Bovis for about $100 million, for extra costs based on the contractor's negligence and delays.
If the LMDC wins, the agency could receive a windfall of new funds to distribute to downtown community projects.
However, if the LMDC loses, Emil warned Monday that Bovis may try to go after all of the LMDC's unspent funds, even if the money is already earmarked for another project.
For example, the LMDC has set aside about $167 million for the East River Waterfront, but only a small portion has been spent so far, which means Bovis could try to take it, Emil said.
In that situation, Emil hopes that the state agency the Empire State Development Corp. would refill the LMDC's coffers and allow the East River Waterfront and other projects to go forward.
The ESDC declined to comment.
Emil spoke at a Community Board 1 meeting Monday night, where he also updated the board on the $2.78 billion of federal money the LMDC has been dispersing after 9/11.
The LMDC has allocated nearly all of the money to specific projects, though some of it has sat unused for years, including a $12 million affordable housing fund and $3 million for the city's schools. Emil said it is up to the city to spend those funds.
The LMDC is also still weighing applications for $17 million in community and cultural grants. The LMDC hopes to announce which groups will receive the grants by the end of the summer, Emil said.