The lawsuit, filed in U.S. District Court in Newark, contends that town government is “beholden” to the local builder, Fred A. Daibes, as demonstrated by a series of what the 53-page complaint described as corrupt transactions.

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.