City Of Milwaukee Post No

2874 VETERANS OF FOREIGN WARS V. REDEVELOPMENT AUTHORITY OF THE CITY OF MILWAUKE 768 N.W.2d 749 (2009)

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Nature of the Case

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Facts

P commenced an action in February 2001 challenging D's right to condemn the property at issue in this case. P owned a parcel of real property. In 1961, P conveyed the real estate (land and improvements) to Towne Metropolitan, Inc., which built an 11-story, 113,000-square-foot hotel on the land. In exchange, P obtained a 99-year lease for 5,250 square feet on the hotel's ground floor, was amounting to 4.6 percent of the building. The lease provided that P's space in the hotel would be designed for P's purposes and that all leasehold improvements and equipment would be furnished by the lessor. The lease obligated P to pay an annual rent of only $1 and was renewable for a second 99-year term at P's option. The lease was subordinate to any mortgage against the building, allowing a lender to foreclose and wipe out the lease. P's interest reverted to the lessor when P ceased to occupy the building. The lessor had no duty to assure that in the event of eminent domain, the building would have adequate value to compensate P for the value of its lease. The lease was silent regarding allocation of the proceeds of condemnation. Towne Metropolitan sold the real estate to Marquette University, which used the hotel as a dormitory. Marquette University sold the real estate to Maharishi Vedic University for $600,000. By the 1990s the hotel as a whole had deteriorated, along with the surrounding neighborhood. D created a redevelopment district and issued a relocation order. D made a jurisdictional offer in the amount of $440,000 as compensation for (1) land and improvements (with the P and Maharishi Vedic University as owners), (2) personal property in the hotel owned by Maharishi Vedic University, and (3) an adjoining parking lot owned solely by Maharishi Vedic University. P remained in the building after condemnation until April 9, 2003, when it was evicted and the building razed. D filed a $440,000 award of damages with the clerk of courts. The Judge divided the $440,000 award between the P and Maharishi Vedic University. The VFW received $300,000, less taxes owing. Maharishi Vedic University received $140,000, less taxes owing. P appealed to the Condemnation Commission. The Judge ordered the Condemnation Commission to determine the value of the property for just compensation according to the unit rule. The Commission determined that the Redevelopment Authority was obligated to pay $425,000 in compensation--$ 15,000 less than P had provided in its award. P appealed to the Circuit Court. P argued the application of the unit rule would violate Article I, Section 13 of the Wisconsin Constitution. P's appraiser estimated the fair market value of the P's leasehold interest at the date of taking, reduced to present value, as approximately $1,200,000. The court held that just compensation would be under the unit rule. The jury found that the property had no market value in that the cost of razing and renovating exceeded the cost of undeveloped land. The court ordered P to return the $300,000. P appealed; the lease had a value independent of the property value. P appealed, and the court of appeals used a fairness standard where the condemnor must pay more than the property’s value if the condemnation value is insufficient to pay the lessee. D appealed.