Both the mayor of Edgewater and Mr. Daibes vehemently denied the claims.
In an interview in October, Mr. Daibes said that for the past two decades he has built or been a partner in every project in Edgewater, a 3.5-mile-long borough that is only two blocks wide.
The town’s main street, River Road, is often clogged with traffic.
“Daibes and Edgewater have engaged for decades in an unlawful conspiracy through which Daibes entities and Edgewater municipal officials profit at the expense of lawfully competing real estate developers, low income residents and the public trust,” the lawsuit says.
Although Edgewater officials said that the proposal from EnviroFinance was “too dense,” the borough has rezoned a six-acre site owned by Mr. Daibes at the south end of town for even more apartments per acre.
Four members of the borough council, the town’s zoning attorney and a building inspector obtained loans from a bank owned by Mr. Daibes, Mariner’s, according to the suit. And several officials have had business or family relationships with Mr. Daibes “that rendered them reliable supporters of Daibes’ development project,” the suit contends. Jeffrey Mathieu, a former vice president of a company owned by Mr. Daibes, is a member of Edgewater’s zoning board. And government officials routinely use Mr. Daibes’s restaurant, Le Jardin, for meetings and get free meals, alcohol and guest suites.
“It’s a bunch of lies,” Mr. Daibes said on Thursday. “There’s not one true statement in the whole thing.”
He added that he never hid his opposition to the other developers’ project.
The mayor of Edgewater, Michael McPartland, said the lawsuit was only the latest attempt by the EnviroFinance partners “to force their development down the throats of the people of Edgewater.” A month ago, he said, the developers tried to get the town to back off by showing the borough attorney an earlier version of the lawsuit.
Contrary to the lawsuit, Mr. McPartland said he lives in a two-bedroom apartment in a project of Mr. Daibes’s, the Alexander; the lawsuit says it is a three-bedroom. Mr. McPartland insisted that he is not paying a “below market rent” as the lawsuit claims.
“I pay market rent,” he said in an interview. “I made sure of that when I moved in. I actually pay $50 more than the guy next to me.”
There is little question that the project is controversial in this community wedged between the Hudson River and the Palisades, where congestion is a major issue. But the building boom along River Road, with many of the projects built by Mr. Daibes, is also evident.
On Wednesday night, more than two dozen residents opposed to the EnviroFinance proposal attended a meeting at borough hall, but the developers failed to show up.
Teresa Norton-Fisher, a resident who started a group called Save Edgewater, said she is against the project, as well as Mr. Daibes’s project at the south end of town. Some residents fear that borough officials may be trying to steer the Hess site to Mr. Daibes through condemnation.
“I”m not in support of any of these developments,” she said. “The town has one main road. But from what I gather, the town is fine with any Daibes site, but not the Hess site.”
EnviroFinance outbid Mr. Daibes and other developers for the land in 2014, paying $25 million for the former Hess Corp. oil tank farm. Hess was required to cleanse the site of toxic materials. But developing what is known as a “brownfield” is always a risky proposition.
According to the lawsuit, Mr. Daibes told a Hess representative that he would ensure that the land would “never be built on,” and threatened an executive working for the developers, saying: “I own and built this town. Now it will be condemned; I am your neighbor on all sides.”
But Mr. Daibes denied saying anything like that. “I’d have to be a moron to say something like that,” he said.
The developers forged ahead, looking to build a luxury residential complex, but packing it with enough amenities — 375 units for low- and moderate-income tenants; a park and esplanade; a ferry landing; and a bus stop that would allow drivers to pull off, rather than blocking the flow of traffic on River Road — to entice town officials.
But they never warmed up to the project.
Mr. Daibes, who has built about 3,000 market-rate apartments in Edgewater, controls the development rights to 90 percent of the sites zoned for high density development in Edgewater today. He and the town have been criticized for failing to comply with the state-mandated affordable housing obligations in this once-blue-collar borough.
The complaint cites Mr. Daibes’s “Honeywell site” at the south end of town, which was rezoned in 2015 for high-density residential development. In September, Edgewater officials designated the site, as well as two others, for additional density. Contaminated by arsenic, the site is currently undergoing a $78 million remediation.
For his part, Mayor McPartland takes solace in a year-end citation from Politifax, an electronic newsletter that covers New Jersey politics, which lauded the mayor and the Edgewater borough council for the “best land use decision of the year,” for rejecting the Hess project.