Milwaukee County faces court challenge over development deal

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By Beth Kevit

A development deal in which Milwaukee County expected to make $375,000 could end up costing it $7.4 million.

The county in July approved The Rock Sports Complex LLC’s plans to build a multisport complex at the county-owned Crystal Ridge site in Franklin.

Under the 15-year operating services agreement, RSC would pay $25,000 in annual rent and the county would recoup 5 percent of the complex’s net, pretax profits each year, said Craig Kammholz, Milwaukee County’s fiscal and budget administrator.

But Crystal Ridge’s previous tenant has sued over what it claims was an improper eviction, and the county soon could be contesting a motion for summary judgment.

Midwest Development Corp., Greendale, operated a ski hill at Crystal Ridge from 1983 to 2012. Its original contract expired in 2008 and Midwest claims it received one-year lease extensions in the time since.

Midwest filed suit in October, claiming Milwaukee County improperly terminated its lease and must pay fair market value for improvements Midwest made to the property since 1983, according to court documents.

Paul Piaskoski, Midwest’s attorney, said he estimates the county should pay $7.4 million for those improvements, which included the addition of a ski hill and chalet.

Kimberly Walker, corporation counsel for Milwaukee County, declined to comment on the lawsuit.

The first step in resolving the lawsuit, Piaskoski said, will be determining whether Midwest is a holdover tenant, which the county claims it is. That distinction could determine how much the county has to pay. A holdover tenant, he said, is one that doesn’t leave when its lease expires and continues to pay rent.

But that doesn’t describe Midwest’s situation, Piaskoski said. Rather, he said, Midwest has a verbal agreement with the county to occupy Crystal Ridge through July and paid rent to do so, which makes it a formal tenant. In Wisconsin, Piaskoski said, one-year extensions aren’t required to be set in writing so Midwest doesn’t have to leave until its lease runs out in July.

If the court determines Midwest is a holdover tenant as the county claims, however, then the county needed only give the company 90 days’ notice, per the 1983 lease, of its need to vacate the property. The county sent Midwest a letter in September giving that notice.

If the court determines Midwest is not a holdover tenant, the lease’s buy-back clause requires the county to give 12 months’ notice to use Crystal Ridge for a different use and to pay full market value for improvements made to the property. If the court decides Midwest is not a holdover tenant, the company might only be able to recoup the $4 million it spent on improvements; not the full $7.4 million Piaskoski claims is their market value.

The county denies RSC’s complex is a different use, according to court documents.

Piaskoski said he is negotiating with the county about how much of Midwest’s $10,000 rent for 2012-13 should be returned.

Midwest still believes it has a right, Piaskoski said, to use Crystal Ridge and rent out its chalet for events, but it cannot do so because of RSC’s ongoing work on the property.

Piaskoski said he is waiting for a discovery response from the county and likely will request summary judgment sometime in April. Otherwise, the lawsuit is scheduled for a pretrial conference in October.

Although Midwest seeks restitution from the county, it does not intend to draw RSC into the lawsuit, Piaskoski said.

“They were a tool that was used by the county,” he said, “and they were the trigger for Midwest’s claim, but they haven’t done anything wrong.”

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