The Reserve in Brighton has a new owner.
Public records detail Reserve Interests LLC’s recent $7.2 million purchase from Anthony J. Costello & Son (Joseph) Development LLC of the exclusive but long-troubled Brighton development.
Based in Henrietta, Reserve Interests is headed by FSI General Contractors president Frank Imburgia Jr., who could not immediately be reached for comment.
Publicly filed documents also show that terms of a $2 million construction loan Reserve Interests inked with Five Star Bank call for Imburgia’s company to make unspecified improvements to the long-neglected development within three years.
The ill-starred project had been on the block for more than five years.
Developer Anthony Costello initially intended the 63-acre upscale development bordering the Erie Canal to be a gated community totaling more than 300 homes. He dropped the gated-community idea after running into fierce opposition from neighborhood activists but still billed the development as a uniquely upscale Rochester-area project.
Though ungated when it opened, the less than half-finished Reserve did include a lavish $7 million clubhouse. The clubhouse’s pool, spa, private wine lockers, meeting rooms and movie theater were supposed to be exclusive perks that Reserve residents’ $450 month homeowners association fee entitled them to.
Home buyers started to move into the project’s high-end residences in 2014.
After Costello’s death in 2016, conditions at the Reserve quickly started to deteriorate. Residents found themselves locked out of the clubhouse and complained that Costello & Son was not maintaining common public areas and the project’s infrastructure as had been promised.
A 2018 lawsuit against Costello & Son filed by a group calling itself the Reserve Homeowners Association Working Group describes an arrangement under which Anthony Costello was supposed to head and run a master homeowners association responsible for maintenance and financially contribute to the cost of upkeep of common areas and the clubhouse.
Court records show that the homeowners group agreed to drop their complaint in late August, only days after Imburgia’s company acquired the Reserve.
Still, the four-year court battle paints a picture of woes the Reserve’s homeowners suffered in the six years since Costello’s unexpected death.
According to the homeowners’ court complaint, after Costello died, responsibility for managing the reserve fell to the executor of his personal estate, Costello’s son, Brett Costello. As of 2018, only 127 of the development’s promised 347 homes had been built and only 49 of those had been sold, the complaint states. How many homeowners currently reside in the development is not clear.
Brett Costello “has lacked for an extended period of time funds” to pay for the development’s upkeep,” the homeowners group alleged.
In a January 2019 answer to the homeowners’ complaint, Brett Costello denied responsibility for the ills the homeowners listed.
On purchasing their properties, each of the complaining Reserve homeowners “was informed that there were significant risks in connection with the purchase of their respective units (and) thus were aware of the risks and various complaints they now assert against (Brett Costello),” the filing asserts.
A later answer to the homeowner group’s complaint filed in April 2019 also denies any responsibility on Brett Costello’s part but asks that should a court find against him, the homeowners’ damages be reduced in proportion to the risk they allegedly assumed.
While the Reserve’s homeowners appear to be within sight of an end to their woes, others are still pursuing Reserve-related court battles.
Among several still-active complaints and mechanics liens filed by vendors and contractors seeking payment from firms linked to Costello & Son is a 2021 state-court filing by Pooler Enterprises Inc.
The Pooler filing, styled as a petition seeking to “pierce (the Costello enterprises’) corporate veil,” purports to chronicle a quick collapse after Anthony Costello’s death of a real estate empire Costello had built and single-handedly run. Costello’s heirs were almost completely unequipped to grapple with the realities of managing Costello & Son’s projects, the petition asserts.
The Reserve and other projects fell under Anthony J. Costello & Son (Joseph) Development, but “Costello-Joseph” was only a so-called alter ego of Anthony J. Costello & Son Development, an entity solely controlled by Anthony Costello, the Pooler petition alleges. It describes Costello-Joseph as a house of cards whose “balance sheets and other financial records contain(ed) gross discrepancies that Brett (Costello) could not explain.”
Costello-Joseph hired Pooler in 2014 to do more than $1 million worth of construction work on the Reserve. That work was completed in 2017 and mostly paid for, the filing states.
After Anthony Costello’s death, it adds, two invoices totaling some $250,000 remained unpaid, despite Brett Costello’s repeated promises to satisfy the debt. Finally, after Pooler obtained a judgment in 2019, Brett Costello told Pooler that Costello-Joseph/Costello & Son was insolvent and could not pay.
According to Pooler’s court filing, Brett Costello had testified in an unidentified previous proceeding that chaos followed Anthony Costello’s death because his father was “a capable driver” of Costello & Son’s projects “and I was not.”
As of the Reserve homeowner group’s December 2018 complaint, the Costello-controlled master HOA had failed to make more than $100,000 in payments needed for the project’s upkeep and payment deficiencies were piling up at the rate of $25,000 a month, the homeowner group’s complaint states.
Among Costello & Son’s other projects is CityGate, a shopping center off Westfall Road in Rochester that is anchored by the city’s only Costco Wholesale center. CityGate sits adjacent to the Reserve and rose as the Reserve was being built. Several tenants have moved out, leaving vacant stores.
A court document filed last month shows that the city of Rochester is currently trying to claw back more than $300,000 in CityGate-related tax breaks from Costello & Son. The city alleges that Costello & Son over the last seven years has failed to meet conditions it agreed to in a 2015 payment-in-lieu-of-taxes pact.
Will Astor is Rochester Beacon senior writer. The Beacon welcomes comments from readers who adhere to our comment policy including use of their full, real name.
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