Judge delays city from seizing long-vacant Lake Terrace Shopping Center

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The city of New Orleans has been halted again in its efforts to seize a shopping center in Gentilly that has languished since Hurricane Katrina despite receiving public funds to restore it.

Thursday, Civil District Judge Clare Jupiter extended a temporary restraining order issued in May that prevents the city from moving forward to seize and sell Lake Terrace Shopping Center.

She did not issue a final ruling. Instead, she said the suit should be moved to Civil District Judge Robin Giarrusso, who is overseeing a related case. Jupiter said the cases should be consolidated.

The property is owned by Kenneth Charity’s DMK Acquisitions. In 2009 and 2010, the city gave DMK $225,000 to rehabilitate the shopping center. Not only has DMK not followed through with the project, it owes the city more than $33,000 in delinquent property taxes and interest, according to city records.

The lawsuit between the city and the company revolves around two technicalities: whether each side properly served the other with legal documents.

In October, a city hearing officer ruled that the property was blighted and fined the company about $6,000. The company was required to post a $160,000 bond if it appealed the ruling. DMK took the case to Giarrusso, who reduced it to $22,000.

The company posted that bond, which should have suspended the blight judgment while the company appealed. Instead, daily penalties have brought the total fine to $645,000, according to city records.

However, the city wasn’t notified within 90 days that DMK was appealing the blight ruling.

Eric Person, DMK’s lawyer, acknowledged that in court Thursday, though he said he paid for the city to be officially served. “I worked at the city attorney’s office for years — I know the address,” he said.

Person, meanwhile, said the city failed to notify him or his client when it initiated lien foreclosure on the property, the first step in selling it at public auction.

The city likewise never notified First NBC Bank, which loaned Charity $2.5 million to buy it in 2007. An attorney for the bank sat in on the hearing but did not participate.

Tammie Jackson, an attorney for the city, said the sheriff’s office tried to serve Person and Charity several times in April and May. Person said that’s not enough.

In failing to notify his client, Person argued, the city violated his client’s property rights.

Attorney Joyce Joseph, also representing the city, said the law only requires an owner to be notified 10 days before the property is auctioned.

“It sounds like you’re saying the registered agent for DMK has not been served because you haven’t gotten to that point yet,” Jupiter said.

As neighbors awaited the judge’s ruling, they said they hoped the city would be allowed to move forward with an auction.

Constandinos Vennis noted that Charity had received the $225,000 in public funds in part because it could move quickly.

As The Lens reported in 2010, Charity’s application said the project would be complete six months after getting a city grant. It’s been six years since the city wrote the first check.

“He’s holding the neighborhood hostage,” Vennis said. “The whole neighborhood has come back, except for the property that received public funds.”

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