Attorneys prep for high-speed fail
By Jack Zemlicka
Wisconsin Law Journal
If the federally financed high-speed rail project in Wisconsin dies, so too will the expected increase in work for many attorneys.
Gov.-elect Scott Walker has vowed to kill the $810 million stimulus project to build a commuter train from Milwaukee to Madison, with a series of stops in between.
The project’s uncertain future has attorneys and their clients in limbo. Most of the legal details that were agreed to or considered before Walker’s election, such as land sales or potential development, are contingent on the rail project moving forward.
In Madison, attorney Michael R. Christopher represents an eco-friendly cab company, called Green Cab, which he said would likely bid for a contract with the regional transit authority to shuttle passengers from the train station to their final destination.
The DeWitt Ross & Stevens attorney also said that his developer clients have expressed interest in enhancing commercial or residential areas that would be within walking distance of a train station.
But with the rail project in flux, Christopher said clients are wary of getting involved in a potential dead-end deal.
“I tell my clients, land is cheap, construction costs are down, interest rates are down, this is the perfect time to develop,” he said, “The answer I get is, ‘this sounds very rational, Michael, but the problem is I have five projects not moving right now and you want me to add a sixth?’”
Any plans are still in their infancy, given the uncertain status of the high-speed rail project.
“Clients are definitely looking at location, but I haven’t had any who have acted at this point,” Christopher said. “I can’t say I have anyone now who is counting on these high-speed rail stations to be built.”
Last year, Madison-based Axley Brynelson formed a Rail & Transportation Team in anticipation of the work that would be generated on the front end, such as condemnation of real estate, as well as potential litigation after the fact from alleged defects or warranty issues.
None of that has transpired yet and team member Peter J. Conrad said given the political landscape, he is skeptical that the high-speed rail project, in its current form, will advance.
“With regards to where this project is, it may no longer be viable given the current state of things,” he said.
Conrad said the firm wasn’t banking on the rail work to boost its bottom line and even if the Milwaukee to Madison line is derailed, the rail team will remain intact and explore other opportunities, such as a proposed $20 million improvement to the freight rail line connecting Madison and Watertown.
Walker has also said that reallocating rail money to upgrade existing passenger rails such as the Amtrak Hiawatha line which runs from Milwaukee to Chicago is an option, although it would take approval from Congress.
“We still have train issues out there and lines that need improvement,” Conrad said.
Milwaukee law firm Mawicke & Goisman represents about a dozen construction companies and developers who own property within a mile radius of several of the proposed rail stops, such as Brookfield and Oconomowoc.
But the land purchase agreements are contingent on the rail project staying on track, noted firm real estate attorney Luke J. Chiarelli, and clients are anxiously awaiting a decision on the fate of the project which will dictate whether they proceed or back out.
“There is a lot speculation as to where stations would be and developers have started buying up or getting contracts for property,” he said. “In the meantime as we sit, there is not a lot of work.”
Crafting purchase agreements isn’t lucrative work for law firms, but they are a precursor for more widespread attorney involvement once the train is up and running.
Bidding, zoning, and leasing issues would provide work for firms with clients ranging from small businesses to “anchor tenants” in a development complex, Chiarelli said.
“If the project falls through, those (purchase) offers are null and void and everyone goes home,” he said. “From the standpoint of work, there probably isn’t a firm in the state that wouldn’t have some hand in construction or development of where each railway stop would be.”
Even if Walker succeeds in killing the high-speed rail project, there will still be opportunities for firms to pick up work undoing or modifying some of the contracts already in place.
In July, the United States Department of Transportation released $46.7 million of the $810 million for engineering and design costs of the Milwaukee-to-Madison route. The agreement followed a $5.7 million payment for environmental studies at several of the proposed stops.
“There could be some litigation on the contracts that Gov. Doyle signed,” said Petrie & Stocking attorney Thomas L. Frenn. “It’s something that I know attorneys at our firm would be very interested in.”
Christopher said any compromise between the state and the federal government on how the stimulus money might be reallocated would require some renegotiation of contracts with business that had been hired to work on the project.
“Right now there is a lot of uncertainty,” he said. “If there is any incentive out there to develop, that is important because there is a lot of money waiting on the sidelines.”
The Associated Press also contributed to this report.