The Redevelopment Authority of the City of Milwaukee acquired the property in 2001 from Maharishi Vedic University Inc. by declaring the land blighted. The authority paid $140,000 to the university and $300,000 to the City of Milwaukee Veterans of Foreign Wars Post No. 2874, which held a long-term lease for space in a vacant hotel on the site.
In 2003, the authority demolished the hotel. And since 2003, the VFW has been in court with the city over the amount the VFW received when the authority bought the property. The VFW wants more money from the authority for the lease.
Los Angeles law firm Gideon Kanner Manatt, Phelps & Phillips this year took the case and petitioned for a Supreme Court review.
The case is getting nationwide attention because it is an example of a legal dispute that has come up in other U.S. lawsuits, said Dana Berliner, senior attorney for the Institute for Justice, an Arlington, Va.-based law firm that takes on cases that affect eminent domain law. In the Milwaukee case, the VFW stands to get no compensation for its lease, based on a 2009 Wisconsin Supreme Court ruling.
“This situation showed so clearly the results of the rule that the Wisconsin Supreme Court applied,” Berliner said. “The result was so extreme.”
The origin of the case dates to 1961, when the VFW, which owned the site, agreed to sell it to Towne Metropolitan Inc., Milwaukee, to develop a hotel. In exchange for the land, the VFW received a 99-year lease to use space in the building as a VFW hall. In 2003, the VFW had 67 years left on its lease with the option to extend the lease another 99 years.
“It is completely impossible that just compensation for a 50-year or 60-year lease is zero,” Berliner said.
The core question is whether governments, when using eminent domain, base their payments to the owner on the value of the land acquired or the value of the assets lost, such as the VFW’s long-term lease.
This month, the Institute for Justice and National Association of Home Builders asked the U.S. Supreme Court to accept the case and reverse the Wisconsin court’s decision.
The case does not affect the city’s ability to redevelop the property, said Gregg Hagopian, Milwaukee attorney representing the redevelopment authority in the case.