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After a summer of seeing the city raid his bank accounts and intercept his tenants' rent payments, Elmer A. Granchelli sent the city a big check Thursday to complete his payment of damages in the South Block lawsuit.

Corporation Counsel John J. Ottaviano said the city received a $379,878 check, which he said completed the city's collection of $529,912 in damages.

The Appellate Division of State Supreme Court ruled unanimously Feb. 7 that Granchelli had breached his contract with the city to build something on the downtown vacant lot.

The city had previously won title to the property, but the sides are still battling in court over a mortgage lien a Granchelli-controlled company holds on a 43,319-square-foot vacant lot on Main Street between Pine and Locust streets in the heart of the downtown business district.

While the city tries to clear that lien, Ottaviano said the damage payments will be held by the city as a security against any title trouble a developer might encounter.

The city hasn't decided what to do with the property, which is officially called 80 Main St. A Common Council meeting in August revealed a consensus in favor of a mixed-use building with retail stores on the first floor and offices and apartments above.

Ottaviano said the Greater Lockport Development Corp., a city agency headed by Mayor Thomas C. Sullivan, is expected to take charge of seeking a developer. "I've talked to the Council about that, and it will be official in the next three weeks," he said.

Ottaviano said the city took a number of steps to collect money from Granchelli when he didn't come across with the cash right after losing in court.

In May, the city seized some of Granchelli's bank accounts. It also pocketed a $113,000 bond Granchelli had to post when he took the case to the Appellate Division.

Also, the city compiled a list of the properties owned by Granchelli, who is one of the city's two largest commercial landlords and also owns properties in outlying towns. Ottaviano said the city asked the Sheriff's Department to take legal steps to intercept several tenants' monthly rent checks.

Though the struggle over the South Block dates to the demolition of the buildings that once stood there in the early 1970s, the case that eventually cost Granchelli damages had its origin in 1989, when he signed a contract with the city, pledging to begin constructing something on the site by May 1, 1995.

Granchelli, who envisioned a shopping complex, eventually decided the parcel was too small to be commercially viable. He asked the city to buy two adjoining stores he owned for $255,000, raze them and give the land back to him to enlarge the lot.

The city made the deal in 1994, and absorbed more than $89,000 in demolition, asbestos removal and site preparation costs before giving the land back to Granchelli. When he still didn't build anything, the city sued him to take title and recover its costs.

The damage award covered the purchase and demolition costs plus seven years of interest.


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