SPI

SUPREME COURT FOR THE STATE OF NEW YORK

COUNTY OF NEW YORK

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ATLANTIC DEVELOPMENT GROUP LLC,

Plaintiff,

Inde)( No.

- against-

99 CHURCH INESTORS LLC,COMPLAINT

Defendant.

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Atlantic Development Group LLC ("Atlantic"), by its attorneys,Golenbock Eiseman Assor Bell & Peskoe LLP and The Stolper Group LLP, onknowledge as to its own status and actions, and otherwise upon information and belief,

for its Complaint, alleges as follows:

Nature of the Action

1. This action arises from the wilful repudiation by a company

beneficially owned and controlled by Larr Silverstein -- one of the largest and most

publicized developers, owners and managers ofreal estate in New York City -- of

twoagreements to purchase negotiable ta)( certificates from plaintiff Atlantic, who relied on

the millons of dollars in revenues from the sale of such certificates in order to finance itsdevelopment of affordable housing in the South Bron).

2. Under a City program designed to promote and subsidize the

development of affordable housing, developers such as Atlantic are issued negotiable t~

certificates that can be sold to market rate developers such as Mr. Silverstein, who, in

tum, apply the certificates to reduce their real estate t~ burden on new construction of

market rate apartments. In this case, Atlantic entered into two agreements to sell

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certificates to promote and fund Atlantic's construction of low income housing onCrot?na Parkway and Jessup Avenue in the South Bron)(, to an affiiate of Mr.Silverstein, who agreed to purchase the certificates to offset ta)(es from his planed

development of an 80-story lu)(ury hotel/condominium tower in lower Manattan, known

as 99 Church Street.

3. When as a result ofthe recent credit crisis, however, Mr.

Silverstein found himself unable to finance further construction of 99 Church Street, andthus determined to put the project indefinitely on hold, his affiliate -- no longer in need of

the ta)( benefits it had agreed to purchase from Atlantic -- decided to renege on its written

agreements, thereby depriving Atlantic of a significant source of funding for itsconstruction of affordable housing in the South Bron)(. Rather than accept theconsequence of that decision -- which, under the agreements, is the forfeiture of twoletters of credit totaling 50% of the certificates' purchase price as liquidated damages --Mr. Silverstein and his company then contrived to string Atlantic along and delay the

closing of

the transactions, in an il-conceived attempt to run out the clock and use their

own delay as a prete)(t for terminating the agreements. Their transparent attempt to

manipúlate their way out of

two binding contracts is unsustainable. Mr. Silverstein's

company plainly and unequivocally repudiated its agreements with Atlantic, and no

manipulation on its par can alter that fact.

4. Atlantic is entitled to judgment declaring that Mr. Silverstein's

company has repudiated its agreements with Atlantic and that Atlantic, as liquidateddamages therefore, may direct the drawing upon of two letters of credit, totaling milionsof dollars, supplied by Mr. Silverstein's company for that very purpose.

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The Parties

5. Plaintiff Atlantic is a limited liability company organized under the

laws ofthe State ofNew York, and maintains its principal place of

business at 155

Avenue ofthe Americas, New York, New York 10013. Atlantic is one of

the leading

developers of affordable housing in New York City, having developed more than 6,500

units of such housing since 1995, including at 1926 Crotona Parkway, Bron)(, New York

("Crotona"), and at 1510-1530 Jessup Avenue, Bron)(, New York ("Jessup").

6. Defendant 99 Church Investors LLC ("99 Church") is a limited

liabilty company organized under the laws of the State of Delaware, and having itsprincipal place of business care of Silverstein Properties, Inc. ("SPI") at 7 World Trade

Center, 250 Greenwich Street, New York, New York 10007. SPI is one the largest

developers, owners and managers of

market-rate real estate in the City. 99 Church is a

special purose entity that was formed, and is beneficially owned, by SPI and its

principal owner, Larry Silverstein, to develop what they herald would be the tallestresidential building in the City, located at 95-101 Church Street, New York, New York

(and known as "99 Church Street"). As planed, 99 Church Street would house a Four

Seasons Hotel in its lower 22 floors and private lu)(ury residences in its higher 58 floors.

421-a Tax Certificates

7. This dispute arises from the sale of 421-a ta)( certificates issued by

the New York City Department of

Housing, Preservation and Development ("HPD")pursuant to the "Section 421-a Affordable Housing Program."

8. The Section 421-a Program was created in 1971 as a means of

stimulating new construction throughout the City. The certificate program effectively

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