"The Voice" March 2018

EXTRA

Community Informational Meeting on Machinery Row Where: Gateway Technical College 1001 S. Main St., Racine, WI Racine Building, Great Lakes Room 116 When: February 17, 2018 Time 10 am - 12 noon Hosted by Talking Racine

Volume 1

Number 1

March 2018

Ask Questions of Your Alderman and City Officials

An in-depth look at Racine’s Machinery Row project Racine, WI, June 10, 2014: The Machinery Row redevelopment project was announced by Mayor John Dickert and other city and county officials. A 20acre, former manufacturing site in the heart of the city was to be transformed into higher-end, market-rate apartments, as well as stores, restaurants and other commercial space. The plan for this development was credited to Financial District Properties, (FDP) a development firm based in Davenport, Iowa. The architectural elements of the project would be a mix of new and renovated buildings, and would be the initial phase of a much larger effort to redevelop 325 acres along the river as it winds through the downtown area.

Six months later December 17,2014, the Racine City Council approved a $4.5 million-dollar loan to FDP which came from the city’s intergovernmental revenue-sharing fund (IGA). That fund consists of money received by Racine each year from neighboring communities under a waste water management agreement and is earmarked to help Racine with development projects within its borders. The $4.5 million-dollar City loan was projected to be repaid by HUD funding once the HUD financing was secured.

FDP used the City loan to buy the properties of three separate owners and establish full site control. FDP needed that site control to meet a Dec. 31, 2014 deadline to qualify for and obtain $9 million in historic tax credits from the State of Wisconsin. These tax credits were an essential element in a complex financing package. FDP Properties (Blackwell) secured the three main properties for the development project with purchase options that totaled $30,000.

Back Story

The Machinery Row project apparently was conceived following the introduction of Rodney Blackwell to Mayor John Dickert by Cory Mason, Wisconsin State Assemblyman from Racine. Mason was familiar with Vandewalle and Associates (a Madison design firm) from having worked with them on other projects relating to Racine’s redevelopment vision. Vandewalle had previously worked with Blackwell on a large project in Waterloo, Iowa. Mason was instrumental in obtaining the $9 million in Wisconsin tax credits for the Machinery Row project and Vandewalle and Blackwell (FDP) seemed like a natural fit. FDP took options on the properties, anticipating that

Former Mayor John Dickert announces Machinery Row June 10, 2014 with State Rep. (now Mayor) Cory Mason, Former County Executive Jim Ladwig, Rodney Blackwell, and Jim Bowmen.

additional financing could be secured prior to the public unveiling in June 2014. Financing proved problematic however, and extensions on the options were given.

FDP was never able to secure the financing and on Sept.

25th of 2014, James Bowman (of FDP) sent an email to Rick Olsen (owner of some of the property to be included in the project) that the options to purchase, which were due to expire on Oct. 9th, would not be renewed. FDP has thus announced their intention to walk away from the project.

This meant the inevitable loss of the 9 million dollars in tax Turn to page 6

Join the conversation at www.talkingracine.com or search “Talking Racine” on YouTube.

Pictured are program director Jim Spodick, host Dr. Ken Yorgan, and panelists George Meyers and Kenneth Lumpkin.

‘Talking Racine’: Who are we?

Conceptual drawing of Machinery Row

Raw and thoughtful panel discussion of issues that confront Racine. Sometimes hard hitting, occasionally humorous, and always honest.

Talking Racine brings the perspective down to the local level to discuss issues that affect our own city of Racine, Wisconsin.

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Volume 1 Number 1

City of Racine used strawman to purchase Machinery Row What is a real estate strawman? An individual who purchases property for another for the purpose of not identifying to the seller and other interested parties the real identity of the true acquirer. The individual who makes the purchase is an agent of the true purchaser and will convey the property to him or her after the sale has been consummated.

The City officials used a strawman to purchase Machinery Row! Developer Rodney Blackwell who purchased property at the Machinery Row site along Root River for the City of Racine

Developer Rodney Blackwell officials for the purpose of not identifying to the sellers and the common council along with

taxpayers the real identity of the true acquirer. Blackwell, who makes the purchase, is acting as an agent of the true purchaser (City officials) and will convey the property to them after the sale has been consummated.

This involves a development in Racine called Machinery Row. The City of Racine used a strawman to buy property for the development, the development went bust losing 10 million to taxpayers. A kickback from sellers of $450,000 was used to cover costs. In addition, there were 9 million in Wisconsin historic tax credits lost.

Before Blackwell purchased the properties in December 2014 from the sellers, City officials obtained a Deed In lieu of Foreclosure Agreement.

They knew that Blackwell/ FDP was not going to develop the Machinery Row Project.

A deed-in-lieu of foreclosure is an arrangement where you voluntarily turn over ownership of your property to the lender (City Officials) to avoid the foreclosure process.

Blackwell had given up all rights to the property prior to purchasing the Machinery Row properties. A true strawman.

To protect Blackwell from any financial loss and to bribe him into being the Cities strawman, the City officials secured a $4.5 million-dollar City/ Taxpayer loan to Blackwell/ FDP which was not secured by any personal guarantees, bonds or other security other than a pledge of the interest in the real estate. He had nothing invested in the project. Blackwell however did receive $30,000 while his broker (Bowman) received $88,000 from the secret kickback account ($450,000) the City officials had extorted from the sellers of the Machinery Row property.

Is there a cover-up on Machinery Row? Talking Racine

THE VOICE “Your gateway to open and honest government”

Website: www.talkingracine.com

On April 10th, 2017, a criminal complaint was filed against former Mayor John Dickert, former City Administrator Tom Friedel, City Attorney Scott Letteney for their involvement in alleged criminal activity related to the failed Machinery Row Project. The complaint has made the rounds from the District Attorney’s office, to the Racine Police Department to the Racine County Sheriff ’s Department and even the State Attorney General’s office. Inquiries have been made to these various agencies since then in regard to Complaint #17-000217 and none of them have had any substantive information regarding what stage of investigation (if any) that the complaint is in. The complaint asked that it

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Dennis Montey speaks at the Racine Common Council meeting June 20, 2017.

Montey filed a police complaint on Machinery Row on April 12, 2017.

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Mailing Address: 4601 Washington Ave. Racine, WI 53406

© 2018 Talking Racine

be taken out of Racine County as not to show conflict of interest. However, law enforcement officials assured the complaint would be treated fairly. The Attorney General’s office has only offered the response of being unable to identify “intent,” which doesn’t seem to be an imperative when busting a Black kid for a small quantity of marijuana.

Is it possible that the incentive to pursue this particular complaint may at least in part be linked to the presence of disgraced former Racine County District Attorney in the Attorney General’s office? In case you’ve forgotten Mr. Chiapete, the county’s former top law enforcement officer, crashed his car on North Main St. while driving under the influence of alcohol. The vehicle knocked over a traffic signal and a small tree before coming to a stop.

Chiapete fled on foot to his home which was nearby and lied about his whereabouts and involvement when police arrived to question him as owner of the vehicle.

Chiapete was ushered rather quickly, with minimal inconvenience, through the arrest and prosecution process and allowed to continue his life only minimally affected. His career had lasted almost exactly two years after being appointed to the position by Governor Scott Walker to replace the former DA who had been elected to a judgeship. At the time of the appointment, Walker proclaimed: “Mr.Chiapete has a proven record of making sound judgments ...” He finished his term but did not run for election and substantially disappeared from the public eye.

But that doesn’t mean that he hasn’t been employed. I doubt most people realize that he has been working as Assistant Attorney General for the State of Wisconsin for the past year.

Which means he was there when the complaint against Dickert, Friedel and Letteney arrived. While working as District Attorney, Chiapete acknowledged that not all defendants

Wisconsin Attorney General Brad Schimel

Racine County District Attorney Patricia Hanson

Racine County Sheriff Christopher Schmaling

receive equal treatment under the law. Many things are taken into consideration other than the fact of whether or not a law has been violated and those of proven good citizenship and stability are given considerations that others are denied. It takes

Racine Police Chief Art Howell

no imagination to conclude that former co-workers in local government might be considered above the law, and not deserving of criminal prosecution for crimes that they did not “intend” to commit.

CALL YOUR ALDERMAN Your alderman was given this information on Machinery Row. Ask your alderman WHY there is no accountability for your tax dollars! Ask WHY there has been no investigation into Machinery Row! #1 Jeff Coe, (262) 637-0531 #2 Mollie Jones, (262) 634-2971 #3 John Tate II, (414) 378-7710 #4 Tracey Larrin, (262) 633-9466 #5 Steve Smetana, (262) 681-0593 #6 Sandy Weidner, (262) 638-9501 #7 Raymond DeHahn, (262) 6376089 #8 Q.A. Shakoor, II, (262) 637-5421 #9 Terry McCarthy, (262) 770-7390

#10 Dennis Wiser, (262) 554-6918 #11 Mary Land, (262) 456-6585 #12 Henry Perez, (305) 989-6147 #13 Jim Morgenroth, (262) 6174982 #14 Jason Meekma, (262) 4884694 #15 Melissa Lemke, (262) 9948943

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Timeline of events in Machinery Row demise July 2, 2012

“RootsWorks” a Root River Corridor Redevelopment Plan Adopted by the City of Racine.

January 14, 2014

Rodney Blackwell meets representatives from Racine and Vanderwalle Design to inspect properties along Root River in Downtown Racine for a future development call “Machinery Row.”

April 8, 2014

Blackwell/FDP makes three $5,000-dollar option payments to each of the thee sellers Jensen, Olsen and Azarian for a 3-month period to inspect property before purchase. A total of $15,000.

June 10, 2014

The Machinery Row redevelopment project was announced. The 20-acre site in the heart of the City of Racine will be transformed into higher-end, market-rate apartments, as well as stores, restaurants and other commercial space, under the plan from Financial District Properties, a development firm based in Davenport, Iowa.

July 8, 2014

Blackwell/FDP extends the April 8th option which was to expire on July 9, 2014 another 3 months to October 8,2014 and pays the three-property owner another$5,000 each. A total of $30,000 has been paid in option monies to secure the Machinery Row development.

September 2014

The Racine City Council voted 13-0 to grant the administration’s request, approving the creation of Tax Increment Finance District 18 for Machinery Row.

September 25, 2014

James Bowman (of FDP) sent an email to Rick Olsen (owner of some of the property to be included in the project) that the options to purchase, which were due to expire on Oct. 9th, would not be renewed. The project was dead.

November 21, 2014

Six weeks after the options had expired, the options to purchase were mysteriously renewed, but with some unique clauses inserted into the language. No additional money was required of FDP to renew the options, and, “In the event the property fails to close, all option payments made ($30,000) will be returned to FDP.”

December 10, 2014

Racine Journal Times article stating Development project manager Jim Bowman requesting to borrow $4.5 million from the City and FDP would give the city a note for the loan and put at least $200,000 into a restricted escrow account to cover the city’s 1 percent interest payments on the IGA loan for up to 24 months.

December 12, 2014

The Racine Redevelopment Authority approved a loan of $4.5 million dollars to Financial District Properties/Blackwell, (FDP) for the purchase of multiple lots and building from three sellers, Azarian, Olson and Jensen, and approved the purchasing of 526 Marquette St and 615 Marquette St for $1.8 million dollars making a total withdrawal of $6.3 million dollars from the RDA intergovernmental fund.

December 17, 2014

The Racine City Council approved $4.5 million loan to FDP which will come from money in the city’s intergovernmental revenue-sharing fund.

FDP will use the money to buy the properties of three separate owners and gain full site control. FDP needs site control to meet a Dec. 31, 2104 deadline and finish its business with the state of Wisconsin to obtain $9 million in historic tax credits that are a crucial part of the complex financing package.

The council’s vote also cleared the city to borrow $1.8 million in intergovernmental revenue-sharing funds to buy two other buildings in the Machinery Row corridor: a warehouse at 526 Marquette St. and the former Case Plow Works at 615 Marquette St.

December 17, 2014

Racine Journal Times article again states Development project manager Jim Bowman said FDP would give the city a note for the loan and put at least $200,000 into a restricted escrow account to cover the city’s 1 percent interest payments on the IGA loan for up to 24 months.

December 2014

That prior to closing on the “Properties” the City negotiated a Deed In lieu of foreclosure agreement with FDP, allowing the CITY to reclaim the “Properties” when and if FDP defaulted on the LOAN. The City Loan was not secured by any personal guarantees, bonds or other se-

curity other than a pledge of the interest in the real estate.

December 31, 2014

Olsen sells his property 900 Water Street for $1.5 million to FDP. Azarian sells his property to FDP for $1,093,826.

December 31, 2014

A mortgage and development agreement in the amount of $4.5 million dollars is recorded in the Resister of Deeds in Racine County Wisconsin, naming City of Racine and FDP. # 2397475, # 2397477, #2398375

December 31, 2014

A $250,000 kickback was collected by the developer from the sellers Olsen and Azarian.

The public was told a restrictive escrow account was also set up by the developer FDP to make 1% interest payments on the 4.5 million city loan over 2 years.

Account shall allow for (i) the City to unilaterally draw up to $100,000 of the escrow funds from the Escrow Account for quarterly interest payments due on the Note as described above, as such interest payments become due: and (ii) Developer to unilaterally draw up to $350,000 for the reimbursement of development costs incurred by Developer prior to and after the Real Estate Closing adherence of the Machinery Row Redevelopment Project.

Total of properties purchased

by FDP (Olson, Azarian, Jensen) $4,493,826.00

Early 2016

The $450,000 reserve fund is down to $22,000 when city officials realize the real estate taxes have gone unpaid and liens and judgments were being attached to the real estate. They apply for a $470.000 DNR Knowles Nelson grant from the State of Wisconsin.

“I was a victim of conspiracy, collusion, and inside secret dealing just like my fellow Wisconsin taxpayers.”

—Richard Olsen, owner of 900 Water St. December 31, 2014

Blackwell draws $30,000 (options refund money) from the reserve while Bowman draws an $31,862 real estate commission. Bowman Draws monies between 1-5-15 thru 9-28-15 withdrawing a total of 88,711.00

January 14, 2014

Jensen sells her property to FDP for $1.9 million dollars.

Additional monies were added to the reserve account, making the fund $450,000.

January 2014

A development agreement drafted by Attorney Elaine Sutton Ekes which was signed and recorded states:

Developers Agreement b. LOAN. The City will loan Developer funds for the acquisition of the property in the amount of the purchase price of the property not to exceed $4.5Million, which will be used by Developer only for the acquisition of the property and to fund the Escrow Account. “City Loan.” d. At the Real Estate Closing 10% of the aggregate funds to be disbursed on a proportional basis as the separation as occur, to the sellers (approximately $450,000) shall be deposited into escrow the “Escrow Funds” with in escrow agent mutually agreed upon by the City and Developer (the “Escrow Agent”). The terms of the escrow agreement related to the Escrow

September 6, 2016

City Council approves accepting a $470,00 DNR grant, ostensibly to build a “promenade” adjacent to the riverfront within the Machinery Row project. It was to be a “matching grant” requiring the participation of both FDP and the City of Racine.

September 6, 2016

Alderwoman Sandy Weidner ask in an official Racine Common Council meeting that she just discovered that a 10% kickback (10% of the sale price of the property) was given by the sellers to form the restrictive escrow account the developers

spoke of in the Racine Journal Times article dated December 10, 2014. She also stated that the City of Racine was making the interest payments on the City loan.

September 2016

The City amends the Development agreement to set up another restrictive escrow with the DNR monies to pay the construction liens and real estate taxes due on the Machinery Row properties.

December 2016

The City of Racine declares FDP/Blackwell in default of the $4.5 million-dollar taxpayer funded loan. However, Blackwell had already signed over the deeds to the properties in December 2014 before even purchasing the properties.

June 9, 2017

The Wisconsin Department of Administration sent a clear, written directive to the City of Racine to engage in negotiations with tenants of the Machinery Row development to compensate them for damages. The letter included an offer of assistance from the DOA, and advised that the displaced persons had the right to pursue legal action if a satisfactory agreement could not be reached.

December 20, 2017

A lawsuit from a displaced tenant Patrick Fagan was filed in Racine Civil Court seeking damages from the displacement of his business.

2017cv001703

December 27, 2017

A lawsuit filed in Federal Court Eastern District Court seeking displacement costs for Azarian wrecking/Marina and Olsen Companies. # 17-cv01802

Community ting InformationalMee on Machinery Row Where: Gateway Technical College 1001 S. Main St., Racine, WI Racine Building, Great Lakes Rm. 116 When: February 17, 2018 Time 10 am - 12 noon Hosted by Talking Racine Ask Questions of Your Alderman and City Officials

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EXCERPT FROM OLSEN AZARIAN LAWSUIT This is an excerpt from a lawsuit, Case 2:17-cv-01802-NJ Filed 12/30/17 in United States Federal Eastern District Court. To read the lawsuit in its entirely go to talkingracine.com, episode 52.

Tom Friedel

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WISCONSIN MILWAUKEE DIVISION RICHARD OLSON MARQUETTE WAREHOUSE, SAM AZARIAN & SONS MARINA, INC.

VS

CITY OF RACINE RACINE REDELOPMENT AUTHORITY JOHN DICKERT, THOMAS FRIEDEL JAMES SPANGENBERG, MATTHEW SADOWSKI

John Dickert

Matt Sadowski

James Spangenberg

FDP SALE CLOSINGS 71. That following the original Options, FDP negotiated reductions to the Option prices on all of the Subject Area Properties.

72. That after June 10, 2014, but prior to December 31, 2014, upon information and belief, FDP advised the CITY, RDA, FRIEDEL, DICKERT, SPANGENBERG, and SADOWSKI that it did not plan to proceed with the Machinery Row Project.

73. That, upon information and belief, the CITY, RDA, FRIEDEL, DICKERT, SPANGENBERG, and SADOWSKI offered to provide a loan to FDP to acquire 900 WATER ST. and the MARINA PROPERTIES and AZAR PROPERTIES in the total sum of $4,500,000.00 (hereinafter the “LOAN”).

74. That, upon information and belief, when the CITY, RDA, FRIEDEL, DICKERT, SPANGENBERG, and SADOWSKI recommended, authorized and funded the LOAN they knew, or should have known, that FDP had no intent of moving forwarding with the Machinery Row Project.

75. That, upon information and belief, the CITY, RDA, FRIEDEL, DICKERT, SPANGENBERG, and SADOWSKI elected to provide the LOAN to FDP in order to induce FDP to act as a “Straw Man” for the CITY or RDA to acquire the Subject Area Properties.

76. That the CITY, RDA, FRIEDEL, DICKERT, SPANGENBERG, and SADOWSKI additionally allowed FDP to fund an escrow account at the time of closing to pay the interest on the LOAN, pay FDP its costs and fees and allow the CITY to pay for maintenance, upkeep and taxes (hereinafter the “ESCROW”) 77. That the ESCROW was further used to induce FDP to close on the transaction and allow the CITY, RDA, FRIEDEL, DICKERT, SPANGENBERG, and SADOWSKI to locate and transfer the Machinery Row Project to a developer who was willing to move forward with the Project, or transfer ownership to the CITY or RDA. 78. That prior to closing on 900 WATER ST., the CITY, RDA, FRIEDEL, DICKERT, SPANGENBERG, and SADOWSKI negotiated a Deed in Lieu of Foreclosure Agreement with FDP, allowing the CITY to reclaim 900 WATER ST. and the MARINA PROPERTIES and

AZAR PROPERTIES when and if FDP defaulted on the LOAN. 79. That at the time the CITY, RDA, FRIEDEL, DICKERT, SPANGENBERG, and SADOWSKI obtained the Deed in Lieu of Foreclosure Agreement they knew that FDP was not going to develop the Machinery Row Project.

80. That the LOAN was not secured by any personal guarantees, bonds or other security other than a pledge of the interest in the real estate.

81. That with the LOAN provided, when reducing it by the ESCROW, FDP was unable to meet the total contract amounts for the MARINA PROPERTIES, AZAR PROPERTIES, and 900 WATER ST. as had been negotiated (hereinafter the “Shortfall”) by and between FDP, OLSON and representatives for MARINA PROPERTIES and AZAR PROPERTIES. 82. That given the Shortfall, FDP forced a negotiated reduction in the purchase price approximately 12 hours prior to closing with OLSON and representatives for MARINA PROPERTIES and AZAR PROPERTIES. 83. That the forced reduction, to fund the ESCROW, resulted in OLSON receiving $150,000 less than the sale price of 900 WATER ST. 84. That the forced reduction, to fund the ESCROW, resulted in MARINA PROPERTIES and AZAR PROPERTIES receiving $110,000 less than the sale price of the properties.

85. That the CITY, RDA, FRIEDEL, DICKERT, SPANGENBERG, and SADOWSKI knew, or should have known, that FDP, given the authorization to fund the ESCROW, utilized such shortfall in the LOAN to negotiate reductions in the purchase prices of 900 WATER ST. and MARINA PROPERTIES and AZAR PROPERTIES.

What are intergovernmental water funds, and who pays for it?

To most citizens, this is probably one of the most mysterious financial terms that gets tossed around by local officials. It’s heard frequently and seems to get mentioned whenever some big project is getting paid for that taxpayers might otherwise have some concerns about.

That’s because such spending is often accompanied by the soothing words, “This is not tax dollars.” It almost seems magical, we never pay taxes to refill the “Intergovernmental Fund” yet it seems like there’s always money in there.

Here’s where it comes from.

It’s money that is paid to the City of Racine by nearby communities such as Mt. Pleasant, Caledonia, Sturtevant, Franksville and several others. The money is paid to the Racine Wastewater Commission and represents profits on the sale of wastewater treatments provided to those communities.

If you were to read the total agreement, you would likely get to the end of it and have

nowhere near a complete understanding of it. It’s 97 pages long, written in heavy legal language and full of contingencies and mathematical formulas that could hardly be made more confusing for the average high school graduate.

The basics are as follows: those other communities are buying wastewater treatment services from Racine at a premium price in exchange for us promising to not take any of their land through annexation, which is traditionally how cities grow in size. The profits are intended to be used by Racine to offset some of the costs of the zoo, the library and the Wustum Museum as well as specific improvements to Oakes Road, Chicory Road and Three Mile Road.

Other options are available for spending under a rather vague description of economic improvement. Some of the businesses that receive “facade grants” are shops and taverns for dressing up their exterior appearance and “White Box”

grants that are intended to assist businesses with interior infrastructure improvements.

The agreement began in 2002 and runs through Dec. 31, 2032.

It has brought approximately 20 million dollars into Racine since it began and currently nets about 1.5 million dollars per year.

The money is held by the Racine Wastewater Commission, but it’s the RDA (Redevelopment Authority) that makes most of the spending decisions with token supervision by the City Council. There are five members of the RDA, appointed by the Mayor. They are unelected and control millions of dollars. It is doubtful that most council members have read the agreement or have an in depth understanding of it.

By the time all of the spending is done, and lawsuits are settled on Machinery Row, it is possible that 15 million dollars of IG funds will have been eaten up by it.

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Relocation of Machinery Row tenants and owners June 10, 2014, The Machinery Row redevelopment project was announced by Mayor John Dickert and other city and county officials. The 20-acre site in the heart of the City of Racine was to be transformed into higher-end, market-rate apartments, as well as stores, restaurants and other commercial space, under a plan from Financial District Properties (FDP), a development firm based in Davenport, Iowa.

In September 2014, the Racine City Council voted 13-0 to approve the creation of Tax Increment Finance District 18. As part of the request City Attorney Scott Letteney stated “There is no relocation required for tenants or owners for a new 20-acre development.” This was patently false.

On December 17,2014, the Racine City Council approved $4.5 million loan to FDP using money in the city’s intergovernmental revenue-sharing fund (IGA Fund). Multiple tenants were displaced at the development site including Azarian Marina, Patrick Fagan, Racine Baseball Cooperative, Jensen Metals, and multiple businesses owned by Rick Olsen.

On May 2, 2017 Patrick Fagan a tenant at 615 Marquette Street filed a relocation complaint with the Wisconsin Department of Administration. On June 9, 2017, the

Department of Administration rendered a clear directive to the City of Racine to engage in negotiations with Mr. Fagan to compensate him for damages. They went so far as to advise Mr. Fagan that, though the D.O.A. was not the agency to oversee a separate civic complaint, he is entitled to pursue one. Not only is Mr. Fagan entitled to relocation compensation, the Department of Administration determined that all the property in the Machinery Row development is a public project.

Now, due to malfeasance, misconduct and reckless irresponsibility by the city’s legal team, taxpayers are exposed to a multi-million-dollar liability. Losses due to Illegal activities are not covered by the city’s liability insurance.

Unsurprisingly, despite the clear directive from the DOA and the mass of evidence upon which it is based, the city’s legal department has chosen to continue on its established path of denial and avoidance of its legal obligations. They have now clearly established that this is willful and criminal, which creates liabilities that could far exceed what the original and just relocation expenses would have been.

In response to public exposure the city has recently hired a relocation company, Terra Ventura, at cost of $170,000, to relocate the last tenant the Baseball Cooperative and assist the others with their claims. However, there seems to be proof the City is acting as a go between with the relocation company and the displaced persons. This is inappropriate.

History of outside legal counsel

The Mayor and City attorneys hired outside counsel to handle the negotiations with the property owners and tenants of the Machinery Row development. Elaine Ekes from Pruitt, Ekes & Geary, S.C a Racine, Wisconsin law firm, was hired

in 2014 as the lead attorney.

Their law firm specializes in municipal law.

Ekes was instrumental in drafting purchase agreements, development agreements and overseeing the negotiations of the properties purchased by the City of Racine Redevelopment Authority. She also worked with Tom Friedel, City Administrator, in orchestrating the removal of tenants from the properties being purchased.

Tom Friedel and the development staff along with the Mayor of Racine, John Dickert, and the City attorneys worked together with the intent of avoiding relocation payments to the tenants and owners of the properties.

From the website of Pruitt, Ekes & Geary, S.C: “We keep abreast of the latest developments in municipal law and regularly attend seminars and conferences sponsored by the Towns Association of Wisconsin, League of Wisconsin Municipalities and the International Municipal Lawyers Association.

The duties of the city attorney in obtaining and hiring outside legal counsel is written in the city ordinance.

“The city attorney shall hire and manage all outside legal counsel engaged to represent and/or advise the city regarding all matters of any character.”

(Ch. Ord. of 9-6-27, § 3; Ch. Ord. No. 0001-08, pt. 4, 6-23-09) and State of Wisconsin statue 62.09 (12) Attorney (a) The attorney shall conduct all the law business in which the city is interested.

Elaine Sutton Ekes was hired by the Mayor and city attorney for the sole purpose of avoiding payments to tenants and property owners on the Machinery Row development.

Ekes absolutely knew that the owners and tenants were legally owed relocation compensation under Wis. Admin. Code, Chapter Adm. 92 Nicole Larsen is the Assistant city attorney for the City of Racine. Would she have us believe that a $65M development, hailed as the largest in the City’s history, was unknown to her? The relocation of tenants and owners was clearly

Assistant City Attorney Nicole Larsen being managed by the City Administrator, Alderman, outside counsel and development staff, which she works with very closely.

Eviction notices for the baseball cooperative and Azarian Marina were published in the local newspaper and it’s inconceivable that the process was unknown to Larsen. Amy Connolly (Director of City Development) and Larsen visited the baseball cooperative after public outcry about them being evicted arose, only to ask when they would be leaving.

Director of City Development Amy Connolly Larsen’s duty as an attorney representing the taxpayers of Racine is to maintain the rectitude of official action, it is also a lawyer’s duty to uphold legal process. Larsen woefully failed at the protecting the taxpayers and instead displayed inefficiency, misconduct and malfeasance in office.

Larson had multiple opportunities to protect the taxpayers but failed to do so. Her feigned appearance of not being involved is an amateurish and embarrassing charade.

Scott Letteney, the Racine City Attorney’s duties pertaining to city ordinances and state law are clear. “The city attorney shall hire and manage all outside legal counsel engaged to represent and/or advise the city regarding all matters of any character.” Letteney was responsible for Interpreting laws, rulings and regulations for the outside council and protecting taxpayers from liability claims.

The City of Racine and the RDA callously and intentionally shirked their legal responsibility to inform and assist those

City Attorney Scott Letteney citizens who were displaced by the Machinery Row project.

Multiple tenants, who were renting business space in the sprawling 20-acre site, have been determined by the Wisconsin Department of Administration to have clear rights to relocation monies from the City of Racine. The taxpayers are now exposed to potentially millions of additional dollars in relocation compensation, loss of livelihood, and punitive damage lawsuits. Letteney’s claim that he was not the city attorney when Ekes was hired may be true, but that doesn’t mean he was uninvolved and his performance since taking that office has been a financial disaster for the city taxpayers.

Note: City Attorney Scott Letteney and Attorney Nicole Larsen have claimed that they knew nothing of the need to relocate the owners or tenants, having hired outside counsel (Ekes) to manage the purchases, but in May of 2017 Letteney and Larson were keynote speakers at the Cities and Municipalities Convention, as experts in the relocation of persons in public projects.

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An in-depth look at Racine’s Machinery Row project (continued from front page) credits from the state, and essentially the death of the project. Subsequently, all of the options FDP had on project properties were allowed to expire.

Dickert and his team were unwilling to allow this to happen, however, they hatched an illegal conspiracy to prevent it. On November 21, 2014 six weeks after the options had expired, the options to purchase were mysteriously renewed, but with some unique clauses inserted into the language. No additional money was required of FDP to renew the options, and, “In the event the property fails to close, all option payments made ($30,000) will be returned to FDP.” So, not only was FDP not paying any money for the renewals, they were promised to be repaid all money they had paid previously if the property purchases did not get made. In retrospect, this seems an obvious bribe from the city agents, to Blackwell, to reassure observers that the project would continue to move forward. Of course, among those “observers” were the Racine Redevelopment Authority (RDA), the Racine City Council, the citizen/taxpayers, the Sate of WI and HUD.

The City Loans Blackwell the Money

• On December 10, 2014, a Racine Journal Times article reported that FDP project manager Jim Bowman was asking the City of Racine to lend $4.5 million to FDP for the purchase of the three properties central to the development. Bowman pledged that FDP would give the city a note for the loan and put at least $200,000 into a restricted escrow account to cover the 1 percent interest payments to the city on the loan, for up to 24 months. That was untrue.

• December 17, 2014, The Racine Common Council approves the recommendation of the Racine RDA to lend $4.5 million dollars to FDP/Blackwell, using money from the Intergovernmental Fund.

• On December 31, 2014 two of the properties are sold to FDP. • In January the last property is sold.

• The total purchase price comes to $4,493,826,00.

• At the time of the property sale closings, the Attorney hired by the City of Racine (Elaine Ekes) insisted the sellers kick back 10% of the selling price to the City of Racine. This is found in an email pertaining to one of the transactions wherein it is stated: “We will need to speak to Elaine to see if the City is comfortable with lowering the purchase price to $1.35M but keeping the loan amount at $1.5M to fund the reserve.” (This kick back is not revealed to the RDA, the City Council nor the public.)

• Yielding to pressure, the sellers unhappily agree, and a $450,000 reserve is set up for the City of Racine and Blackwell to draw from, but the actual source of the money is not revealed. It is commonly believed that FDP was using its own money to establish this account.

• Blackwell draws $30,000 (options refund money) from the reserve while Bowman draws an $88,000 real estate commission.

• Other draws from the account are made or authorized by FDP/Blackwell for various property related expenses.

• The City of Racine draws payments from the reserve for interest on the $4.5 million loan it gave to FDP properties, the city council is assuring that all is well.

• The reserve fund is down to $22,000 when city officials realize the real estate taxes have gone unpaid and liens and judgments were being attached to the real estate.

• In September 2015, prior to suspicions being aroused within the city council or the public, city officials develop a scheme to apply for a $470,00 DNR grant, ostensibly to build a “promenade” adjacent to the riverfront within the Machinery Row project. It was to be a “matching grant” requiring the participation of both FDP and the City of Racine. An acceptable piece of property was selected, and the city “bought” half of it from Blackwell to act as its contribution necessary to receive the DNR grant. In essence buying back its own property using Blackwell as a strawman to acquire more money once the $450,000 kickback monies from the sellers was gone.

• The grant monies collected from the DNR were placed in a restricted account and used by the City to pay off the judgments and real estate taxes accrued by FDP/Blackwell on the Machinery Row properties. This was done in deception of the DNR, the Racine Common Council and local and state taxpayers.

City officials, which had to at least include Mayor

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John Dickert, City Administrator Tom Friedel, members of the city’s Legal Department, and State Assemblyman Cory Mason were the driving force behind Machinery Row. It is suspected that Blackwell/FDP’s failure to secure financing for the project was due to lawsuits revolving around other large development projects which made lenders uneasy. But whatever the reasons, once he realized he would not be able to obtain financing for this project and made clear his intention to withdraw from it, the development team attempted to salvage the project through unlawful and deceptive schemes. City officials enticed him with the return of option monies and the assurance of no future costs to him if he would remain in the project. By using Blackwell, the City officials could retain the 9 million in tax credits and shop for financing, anchor tenants or another developer. Blackwell became the city’s strawman in the Machinery Row development.

In December 2016 the City of Racine declared FDP/Blackwell in default of the $4.5 million-dollar taxpayer funded loan. However, Blackwell had already signed over the deeds to the properties in December 2014 before even purchasing the properties. The City of Racine has now taken ownership and has approved the removal of the properties at an additional cost to taxpayers of $6.5 million-dollars.

Displaced Tenants

Wisconsin law, as embodied in WI. Admn. Code 92.12, clearly states that tenants who are displaced by public projects such as the Machinery Row development, are entitled to relocation costs. In fact, there are very specific responsibilities that must be fulfilled by the purchaser prior to transfer of ownership negotiations even beginning. The City of Racine was legally obliged to inform the tenants of their rights to relocation compensation and it is specified in the code that tenants cannot even voluntarily waive those rights. The city not only failed to notify the tenants of their rights, but it seems to have intentionally refrained from revealing them.

Upon discovering their rights independently, more than a year after dislocation, the tenants began to question city officials who then denied that they had such rights. An appeal to the Dept. of Administration was made by one displaced tenant. The Department of Administration determined that all the property in the Machinery Row development, and even some parcels that are not, is part of a public project. On June 9, 2017 the DOA sent a clear, written directive to the City of Racine to engage in negotiations with tenants of the Machinery Row development to compensate them for damages. The letter included an offer of assistance from the DOA, and advised that the displaced persons had the right to pursue legal action if a satisfactory agreement could not be reached.

Thus far, city officials have not negotiated, but rather have continued with the past strategy of attempting to unilaterally impose their will on the displaced persons.

This will inevitably result in additional expense that could end up on the backs of City of Racine taxpayers.

This willful, cynical and even antagonistic position is the type of behavior that creates distrust of government and it must be corrected. The city officials responsible for this are fully aware of their statutory obligations, having managed other land purchases of this type. In fact, they have gone beyond requirements in a compensation package given to a “connected” individual as part of another purchase on the river corridor.

Conclusion Excerpt from Racine Journal Times reporting on purchase of the “Promenade” with a DNR grant.

It is obvious that Blackwell/FDP lost any interest in moving the Machinery Row project forward by at least Sept. 25, 2014, and probably earlier. However, some-

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time between September 25th, 2014 and November 21st, 2014 a deal was hatched with Mayor Dickert, City Administrator Friedel, State Representative Cory Mason and City’s Legal Department to give a “Redevelopment Loan” to Blackwell/FDP ($4.5m) with a secret escrow account that would pay for the interest on the loan and forward monies to the developer to make it appear that activity was on track at Machinery Row. This fraudulent activity was deliberately kept from the taxpayers and their elected officials and has exposed them to significant financial liabilities.

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Racine Redevelopment Authority (RDA) is a private company working within City government 1. Racine Redevelopment Authority (RDA) members are nonelected officials but oversee millions of taxpayer’s monies.

2. The Intergovernmental Fund (IGA) as of January 2017 has collected $19.1 million and RDA has spent $15.6 million.

3. IGA collects between $1.2 million and $1.6 million each year.

4. The intergovernmental fund will end in 2032.

5. A misconception is the fund must be used for development.

6. RDA is a private company with its own Tax ID number 7. RDA has legal right to these properties. Legal possession, not the taxpayer.

8. RDA members are appointed by the Mayor.

RDA members

Remedies Called For

• A full investigation on the actions taken in the purchase of private property by the City of Racine regarding Machinery Row. Including the actions taken by the Mayor, City Administrator and City Attorney and others in the negotiations with Rodney Blackwell/FDP. • An additional investigation on the loaning of $4.5 million Dollars to Blackwell to purchase private property.

• An investigation into who hired outside council “Elaine Ekes” to negotiate and draw up contracts with Blackwell at the City’s request.

• A lawsuit naming “Pruitt, Ekes & Geary, S.C.” for negligence in the relocation of tenants at Machinery Row. • A state DNR audit on the use of grant funds given for development of the “promenade” • Lawyer regulation complaints and an ethics complaint on City Attorney Scott Letteney and Nicole Larson.

An Existing Complaint

A criminal complaint on the Machinery Row project was filed and given to law enforcement on April 12, 2017. Complaint # 17-00217. The complaint was directed to the District Attorney’s office, which directed it to the Racine Police Department, who passed it on to the Sheriff ’s department. Following this merry-go-round of evaluation, it appears it is under some investigation. However, the complaint asks that it be taken out of Racine County jurisdiction and investigated in another county, that has not happened.

We are asking for a complete and non-biased investigation. The taxpayers have been manipulated, deceived and fleeced at every turn of the Machinery Row development and they deserve answers.

James Spangenberg, John Crimmings chairman

Doug Nicholson

Jen Adamski Torres

Tracy Larrin, 4th District Alderman

An inventory of RDA properties and vacant land 1425 N. Memorial Drive, former Racine Steel Castings site — 10.7 acres Acquired by the RDA in 2013 the former industrial site is being slowly remediated through the use of environment cleanup grants.

1129 Michigan Blvd. — 9 acres Pointe Blue owned by the City of Racine The city purchased the property, once home to Walker Manufacturing, in 1999 for $1.7 million.

Several years ago, a Milwaukee developer had plans to construct Pointe Blue at the site — a failed development that was to have included 424 lakefront condominiums, restaurants and offices.

233 Lake Ave. — 3.0 acres The RDA purchased the property for $160,000 in December 2014. The site was previously home to a large building used by CNH Capital. The site is contaminated.

The site originally housed the Racine Gas Light Co. and was sold to the city by Wisconsin Energy Corp.’s real estate development arm, WisPark. Now vacant, the property has been eyed as a possible site for a Downtown sports arena.

Buildings Machinery Row 830-900 Water Street – Machinery Row $4.5 million loan in default. Additional 6.5 million in demolition costs.

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526 Marquette St. Expected to be demolished to clear up 4 acres of riverfront property, the blighted building was purchased by the RDA in 2015 along with 615 Marquette St., and a vacant swath of land at 922 Sixth St., for roughly $1.8 million to clear the way for the planned Machinery Row development.

615 Marquette St. Purchased by the RDA in 2015 along with 615 Marquette St. for roughly $1.8 million to clear the way for the planned Machinery Row development. City officials believe the property could easily be marketed to developers if the Machinery Row project takes off.

1520-1536 Clark Street Former Ajax manufacturing company. Multiple building in need of remediation or demolition.

2512-34 Brentwood Court, Olsen Industrial Park — 4 acres remaining Acquired by the city more than 30 years ago, the roughly 69-acre site was turned into a business park that is now largely full.

922 Sixth St. — 0.4 acres Purchased by the RDA in 2015 for $22,839 to clear the way for the planned Machinery Row development, the property was acquired as part of the $1.8 million acquisition of the buildings at 615 and 526 Marquette St.

the city initially wanted to see a town-home development there.

Today it rents the land to the Racine Urban Garden Network for $1 a year.

1350-1354 State St. — 0.1 acre The RDA acquired and demolished the vacant buildings — an old real estate office and a tavern — in 2007.

1321 State St. — 1.2 acres Located at the corner of State and Silver streets, it was once a car repair shop.

1014 Dr. Martin Luther King Jr. Blvd. — 2.3 acres Once the site of the Danish Old Folks Home and later a homeless shelter, the city bought the site for $190,000 in 2007 at a sheriff ’s auction.

3124 Washington Ave.—0.1 Once home to an auto repair shop, the site could be used for a small retail development, parking lot or green space should a larger development come to the area.

734 S. Marquette Ave. — 1.3 acres The city acquired the land, once part of the Racine Manufacturing Co., in 2004. It was already vacant at that time, and

1800 S. Memorial Drive, Southside Industrial Park — 15 acres Once home to a variety of manufacturers, the city acquired the land about 13 years

Located at 1231 Mound Ave., 1251 Mound Ave., 1269 Mound Ave., 1281 Mound Ave. and 1287 Mound Ave., the properties slated for redevelopment currently consist of a few parking lots, a former industrial building, a storage building and a house. West Bluff Overlook – Relocation of properties on Mound Ave $300.000 includes Supervisor Osterman River Council Chairman.

1423 State St. Once home to a tavern, the RDA bought the building in 2007 for $197,646.

ago, demolishing the former Jacobsen Manufacturing plant, cleaning up the soil, and installing a parking lot and other infrastructure. The salable area is 13 acres, the parking lot is 2 acres. Over $1 Million 1511 Washington Ave. and 1418 Washington Ave. The RDA acquired both buildings in 2008, initially in hopes of creating an artists’ district and later selling it to any worthwhile developer as part of its buildings-for-$1 program.

The RDA is now re-evaluating that program.

1218 West Blvd. — 0.4 acres Purchased by the RDA in 2014, the parking lot near DaVita Dialysis is considered a brownfield. It is currently used as the site of the West Racine Farmers Market.

1425 N. Memorial Ave. Although most of the structures on the Racine Steel Castings site were demolished

before the RDA purchased the property in 2013, a dilapidated 43,650-square-foot building remains.

Train Study - Under a proposal backed by the RDA, the city would spend up to $30,000 from its intergovernmental revenue-sharing fund to hire a firm to complete the study.

Funded by dollars Racine receives each year from neighboring communities via the sewer agreement, the fund is intended to help Racine spark development within its borders.

Business Incentives

Delta Hawk – Was to produce airplane engines, loaned $450,000 with another $400,00 (not loaned) upon production.

State loaned $700,000 from now famous WEDC loan fund

– now shut down.

Butter Buds – $50,000 year for tax rebate for producing jobs. No report on job creation.

Vista Dental - No information available Summit Packing – Approximately $50.000 for 10 years for adding 25 jobs. No report on job creation.

Fisher USA – Land given at Pierce Woods and $100,000 incentive to expand. 2017 Launch-box – Business incubator $200,00 for 2 years and now Gateway involved. No further information Event Center – Phase 1 $600,000 for proposed event center. Future costs $2.3 million for phase 2. If approved $800,000 will be used each year out of the IG fund until fund expires.