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The proposed sale of Starrett City, already the subject of controversy thanks to President Donald Trump's involvement, is now under legal fire.
Two of the complex's minority owners, San Francisco-based Belveron Partners and heirs to the late Disque Deane's estate, have filed suit against Starrett City Associates, the partnership that owns the development, over breach of fiduciary duty, the New York Post reports.
The plaintiffs, who collectively own about 15% of Starrett City, allege that they were first made aware of the sale to Brooksville Co. and Rockpoint Group when the New York Times reported its existence July 14. Claiming that the sale was for below-market price and improperly disclosed, the two owners filed suit in Manhattan Supreme Court Thursday.
“[Starrett City Associates] determined this past summer to pursue an expedited sale through what they euphemistically called a ‘targeted and customized marketing process,’ directed by a conflicted broker, and entertained only a single offer,” the lawsuit states.
Trump owns 4% of Starrett City, the largest federally subsidized affordable housing development in the country, and would stand to make a $14M profit if the $855M sale goes through. The plaintiffs claim that immediately upon being made aware of the sale, minority owner Starrett City Affordable L.P. offered $900M to take over the property, but was rejected.
Investors were reportedly pressured to accept the sale to Brooksville and Rockpoint to avoid a decrease in value, but Deane's estate and Belveron Partners claim that previous purchase offers were in excess of $1B and no bidding process was initiated before the agreement.
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