A state senator is accusing the Bloomberg administration of "extorting" $68,000 from the owner of a popular Russian restaurant in exchange for the coveted right to operate on Brooklyn's Brighton Beach boardwalk. Tatiana Varzar, the owner of Tatiana Restaurant, is getting a new permit to retain canopy-covered boardwalk seating after reluctantly agreeing Friday to pay the city $68,000 out of pocket and another $50,000 through an insurance policy to settle a lawsuit stemming from a 2003 fire. Sen. Carl Kruger said the city "strong-armed" her into settling, "even though the fire was caused by the city's inability to deal with a homeless crisis on the boardwalk." Authorities believe homeless people living under the boardwalk caused the fire. "The city was holding her permit hostage until she agreed to a settlement," said Kruger (D-Brooklyn), who represented Varzar in the negotiations. Varzar's previous permit expired in October. The city had been holding Varzar liable for its $231,401 tab to fix the boardwalk. Rich Calder

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