Owner can sue for damages

City failed to make advance payment to owner after taking property, but continued to charge interest on tax liens. The City acquired title to property through eminent domain for the New Creek Bluebelt project in Staten Island. Because the City did not issue an advance payment to the owner at the time of the taking, it began to pay out six percent interest on the advance payment. The City, meanwhile, continued to charge the owner 18 percent interest on outstanding tax liens associated with the property. The owner filed a motion, seeking an order that the City pay out 18 percent interest on the advance payment. The owner argued that the 12 percent increase was necessary in order to be fairly compensated for the taking. If the City would not issue the advance payment, the owner could at least collect enough interest on the advance payment to pay off the interest accruing from the tax liens and not lose money while waiting for the advance payment.

Justice Abraham G. Gerges denied the motion, but allowed the owner to demand damages at trial that reflected the money lost due to the City’s refusal to issue the advance payment. The six percent interest rate on an advance payment could only be adjusted upward if an owner proved the rate was unfair. Justice Gerges found that the owner had failed to do so, especially when taking into account prevailing interest rates in the current economy. The court, however, determined that the owner had suffered damages because of the City’s failure to issue the advance payment when title passed.

New Creek Bluebelt, Phase 3, 2009 N.Y. Slip Op. 29279U (Kings Cty.Sup.Ct. June 25, 2009) (Gerges, J.).

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