Milwaukee officials accused of racketeering

Daily Reporter (Milwaukee), Sep 16, 2005 by Sean Ryan

An East Side Milwaukee developer Tuesday filed a federal lawsuit accusing the city of making sweetheart deals on two property sales with two of his competitors.

Joe Kaye, a starting developer who built a four-unit housing development in the 1800 block of Pulaski Street, said city officials rejected other developers' higher offers to purchase two East Side properties. Instead, the city struck deals with Julilly Kohler and Lincoln Fowler.

Kohler has developed projects on Brady Street and formerly served as a member of the Milwaukee Plan Commission. Fowler is one of three partners in Milwaukee-based Alterra Coffee Roasters and is a member of the city's Redevelopment Authority.

Kaye's suit alleges the two developers worked with local alderman Michael D'Amato in an ongoing scheme to use their positions with the city for personal gain. Kaye said that beyond the two property sales, the partnership also affected the creation of a Conservation Overlay District in the neighborhood that requires new developments to match the existing character of the area.

Kaye's suit levies racketeering charges against the city, D'Amato, the Redevelopment Authority of the City of Milwaukee, Milwaukee Plan Commission, Fowler, Kohler and three Department of City Development agents.

The first parts of it happened in March of '04; I didn't realize how big and crazy it was going to get, Kaye said. I opened a huge can of worms. This is a monster lawsuit. I couldn't find a lawyer in town to take it.

The CRG Network, a local political organization of which Kaye is a member, is promoting his effort to represent himself in court.

'Unfortunate and baseless'

Mayor Tom Barrett's office and the DCD had no comment.

Fowler, speaking for himself and not the Redevelopment Authority, denied any wrongdoing.

The whole lawsuit I would characterize in two words, which are unfortunate and baseless, he said. If anybody who has a command of the facts looks at the facts in a dispassionate way, this whole suit is a waste of time.

The charges focus on two properties on Milwaukee's East Side that the city formerly owned. The first, a residential property on Kane Place overlooking the Milwaukee River, was sold this summer to a limited liability company owned by Kohler. Kohler is planning to combine the 11,261-square-foot site with a neighboring property she owns to build a 13-unit condominium complex with a courtyard.

The second site is a former manufacturing building on Humboldt Boulevard that the city sold to Alterra in September 2004 after choosing its development plan. Alterra's proposal, the only one submitted to the city, calls for a new headquarters with bean roasting, bakery and commissary, offices, a new cafe and two locations for retail tenants.

Plans started in 2002

Kaye's lawsuit cites e-mails between Kohler, D'Amato and DCD agents from 2002 discussing the Kane Place property. The correspondence starts in January 2002 with Kohler asking D'Amato and former City Planner Peter Park for help in getting DCD to issue a request for proposals for the property. Two days later, D'Amato sent an e-mail to DCD saying an RFP might not be necessary.

There are many precedents of the City working solely with an adjacent buyer on a sale at fair market value, according to the e- mail. Let's get an independent appraisal on this and sell to Ms. Kohler asap.

Same-day e-mail responses show DCD agents agreeing with D'Amato about selling the land directly to Kohler at market value so she could combine the city property with hers for a larger project.

Kaye said he called the city about the Kane Place property in March 2004 with a plan to build two nice little houses that match the layout and design of the neighborhood. He said he was told that Kohler had a deal to develop it. He offered $500 more than the $72,000 Kohler proposed, and a year later offered $115,000 to Kohler's $110,000.

In a July 15 letter, Joel Brennan, the Redevelopment Authority's assistant executive director-secretary, said the city recently signed an option to purchase with Kohler's Kane Place LLC for the property. Compared to the two houses in Kaye's proposed development, Brennan wrote, Kohler's ability to combine her lot with the city's would contribute more to the city's tax base than if our lots had been sold on their own - likely in excess of $4.0 million.

It's an argument Fowler made also - the city chose Alterra's proposal because it would contribute more to the city through property taxes.

People need to understand that from all the factors that the city figures, the purchasing price is only one, Fowler said. The purchasing price, no matter what it is, will become irrelevant as the income from the property tax begins to flow.

Although nobody submitted a development proposal to compete with Alterra's, the Common Council approved selling the property to Rainmaker Enterprises Inc. in 2001. Kaye cited Rainmaker owner Andy Busalacchi as one of the competing developers for the site. According to the city resolution approving the property sale to Alterra, Rainmaker failed to close the transaction.