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Developer loses money in eminent domain lawsuit

A developer who sued the state to get more money for property taken through eminent domain now must return some of the original payment.

The Wisconsin Department of Transportation paid Winterberry of Lake Delton LLC $421,700 in March 2005 when the agency took a 0.61-acre parcel from the developer for a new frontage road. But the District IV Court of Appeals affirmed a ruling Thursday that the state only should have paid $400,000 and that Winterberry must return the difference.

Winterberry, according to court records, wanted more than $2.2 million for the land.

The company, which Florida-based developer Leon Agami owns, in January 2004 bought more than 3 acres in Lake Delton near the intersection of Interstate 90/94 and Highway 12, according to court records. That was nearly two years after WisDOT reached an agreement with the village of Lake Delton to limit development on the 0.61-acre portion of the property for the frontage road, according to records.

After buying the land, Winterberry tried for a year to negotiate a land swap or lease with WisDOT for an adjacent frontage road to provide enough parking at the development for a planned Famous Dave’s restaurant, according to court records. Winterberry leases to an M&I Bank and owns a gas station on the property.

But in February 2005, WisDOT took the 0.61-acre parcel, and a month later paid Winterberry the $421,700.

John Kassner, Agami’s attorney, said the difference between what the state paid and what Winterberry wanted is based on how the land was valued. Winterberry used a sales comparison, which analyzes the prices for similar properties, to arrive at $2.2 million.

The state, Kassner said, based its number on the agreement it had with the village and a cost approach, which focuses on the cost to replace the land.

James McCambridge, an attorney for the state Department of Justice, which represented WisDOT in the case, was not immediately available for comment Friday.

When Winterberry sued, a jury found the company’s $3 million property only lost $400,000 in value after WisDOT used eminent domain, according to court records. Winterberry, as a result, was ordered to return $21,700 plus interest.

Kassner, who works for the Madison-based law firm Murphy Desmond SC, said the ruling sets a precedent that lets state agencies reach agreements with local municipalities to restrict future development without buying the land.

“They are essentially condemning the use of this property in advance without paying for it,” he said, “and then using the fact that you can’t do anything with it as an argument that it has no value.”

Kassner said the loss of land has limited parking on the property, shrinking Famous Dave’s from a planned 350-seat restaurant to fewer than 200 seats.

“Everything has gone to hell in a handbasket,” he said.

Agami has not yet decided if he wants to petition the state Supreme Court to take the case, Kassner said, adding that the court probably would accept it.

“They’re not supposed to be able to take away the value of the property by prohibiting you from using it,” Kassner said, “and then come in and say, ‘Well, you can’t do anything with it, so we’re not going to pay you for it.'”

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