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‘You can’t fight city hall’: VFW loses eminent domain battle

Milwaukee officials are discussing redevelopment options for the former hotel on the southeast corner of 27th Street and Wisconsin Avenue in Milwaukee. The site is vacant now (below) after the city in 2003 demolished the hotel that stood on the property. (Photo courtesy of Bill Koutris)

Milwaukee officials are discussing redevelopment options for the former hotel on the southeast corner of 27th Street and Wisconsin Avenue in Milwaukee. The site is vacant now (below) after the city in 2003 demolished the hotel that stood on the property. (Photo courtesy of Bill Koutris)

By Sean Ryan

A Milwaukee VFW post lost $300,000 and a chance to tilt national eminent domain law toward property owners after the U.S. Supreme Court refused to accept a case.

The lawsuit was over the Redevelopment Authority of the City of Milwaukee’s 2001 acquisition of a building in which the Veterans of Foreign Wars Post 2874 owned a long-term lease. The VFW was to receive $300,000 for the lost lease, but now will receive nothing after the Wisconsin Supreme Court in 2009 ruled the building had no value and, because of that, the lease was worthless.

The VFW post asked the U.S. Supreme Court to hear the case, but the court on Monday rejected the petition, ending the case.

(Photo by Sean Ryan)

(Photo by Sean Ryan)

“We’re sort of shot down,” said Robert Drakos, commander of Post 2874. “Our group has fought in many wars, and this is, well, you know the old expression, ‘You can’t fight city hall’? But we fought them to the end.”

The VFW bought the property on the southeast corner of 27th Street and Wisconsin Avenue in Milwaukee in 1942 for its headquarters. In 1961, the post sold it to Towne Metropolitan Inc., Milwaukee, to develop a hotel. In return, the VFW post received a 99-year lease for space on the ground floor, which the post then occupied as its headquarters.

The building fell into disrepair after Maharishi Vedic University Inc. acquired it but never occupied it. The Milwaukee redevelopment authority in 2001 condemned the building and used eminent domain to acquire it.

The city demolished the building in 2003.

The move spurred almost 10 years of lawsuits over how much the city owed the VFW for taking over the building and terminating the lease.

“The redevelopment authority is satisfied with the outcome,” authority spokesman Jeff Fleming said, “and this resolves the substantial issues that we’ve brought up in the litigation.”

The case drew the attention of attorneys at Manatt, Phelps & Phillips, Los Angeles, who represented the VFW in its appeal to the U.S. Supreme Court. Michael Berger, the attorney who represented the VFW, said a Supreme Court ruling on the case could have fixed the inconsistent way courts in different states have ruled when tenants own leases that can be more valuable than the building that a government has acquired.

Unlike Wisconsin, some state courts have ordered governments pay leaseholders when a building is condemned, sometimes resulting in payments that exceed the value of the building, Berger said. But the decision in the Wisconsin VFW case opens the door for tenants with valuable leases, such as the VFW post, to receive nothing if a municipality acquires the building, he said.

“There ought to be some federal, constitutional baseline that provides protections,” Berger said, “and there isn’t.”

Bill Koutris (left), chaplain of the Veterans of Foreign Wars Post 2874 in Milwaukee, stands in the post’s former headquarters in 1988. That night, post member Bud West, now deceased, and current post Commander Robert Drakos swore Koutris in as the post’s 1988-1989 commander. (Photo courtesy of Bill Koutris)

Bill Koutris (left), chaplain of the Veterans of Foreign Wars Post 2874 in Milwaukee, stands in the post’s former headquarters in 1988. That night, post member Bud West, now deceased, and current post Commander Robert Drakos swore Koutris in as the post’s 1988-1989 commander. (Photo courtesy of Bill Koutris)

Regardless of court decisions, the city of Milwaukee owes a debt to the VFW and should have compensated the post, said Dana Berliner, senior attorney for the Institute for Justice, a nationwide advocacy law firm that focuses on eminent domain cases.

Fleming said the redevelopment authority, which relies on public money, has an obligation to protect taxpayers.

Drakos said the post will carry on without the $300,000, but now will have less money to donate to health care and veterans organizations. The post still meets monthly in the American Red Cross building across the street from where the hotel stood.

Although the case could have set a national precedent, Drakos said, he never thought of that aspect of the dispute. His focus, he said, is on losing a place that was important to the post and represented a lot of memories.

“So many good friends I’ve met, and they’ve gone on to the war in the sky,” he said. “There is just hundreds and hundreds of people I’ve met. We used to have dances every month.”

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