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Village Breaks Its Silence on Radisson Hotel

Attorney for Menomonee Falls sheds some light into the financial details behind the troubled hotel project.

It wasn’t a full house at the Menomonee Falls Village Falls Board meeting Monday night, but there are still more questions than answers in the continuing saga of the village’s loan to the owners of the troubled Radisson Hotel.

Attorney Randall Crocker, representing the village in the foreclosure lawsuit against Lodging Investors of Menomonee Falls, answered some of the questions residents had raised during recent meetings involving the use of public funds to finance the troubled project.

Crocker presented a number of facts taken from the court records in the foreclosure suit the village has filed against the owners. He acknowledged the village agreed to provide up to $17.65 million for the redevelopment of the hotel, but as the lender the village is not the owner of the hotel.

“It is not correct to state that the village borrowed $18 million to purchase a hotel worth $8 million,” Crocker said. “The village made a loan. The current outstanding indebtedness is approximately $14.5 million and the value of the hotel, the tax increment and the projected revenue stream should service
this debt.”

However, the loan is secured by a first mortgage on the hotel, so if there is a default the village would own the Radisson, he said.

He said the funds came from a bond anticipation note that included capitalized interest for a portion of the term of the note. But he failed to say to say the village had made the $1 million-plus interest payments to date.

The village has also advanced $176,292 to the Investor Group to purchase a computer and reservation system, pay Radisson franchise fees and $60,000 for employee payroll. The hotel’s court-appointed receiver, Seth Dizard, said the payroll funds will be repaid to the village by the end of August.

Crocker said the village has no contract obligations to the general contractor or subcontractors and under the terms of the loan agreement, the village doesn’t have to provide additional funds to the hotel owners to pay the contractor liens. He added there was no escrow account set aside for the payment of
contractors.

However, former Village President Jefferson Davis showed a village-produced document that showed when contractors sought draws during the building process, more than $1 million was set aside from the draws for an escrow. There was no explanation as to where that money went.

Crocker explained that due to the foreclosure action, there were now negotiations for the “review and possible payment of outstanding contractor invoices assuming various terms” that would protect “the rights and interest of the Village.”

And Crocker said despite the troubles at the hotel, the assessed value of the property has increased from $1.8 million to $8.9 million since 2009, and that the full true value has yet to be achieved.

Dizard added that the he oversees all of the hotels accounts, that all payrolls, taxes, franchise fees and other obligations are paid in accordance with their terms and that the hotel is profitable.

Following the meeting, Dizard clarified to a member of the public that the hotel is “paying its day to day obligations,” which led the unnamed citizen to say the hotel has positive cash flow, but not truly profitable.

Mark Mouradian, a subcontractor employed with Edward Don, is hopeful that he will see all of the $80,000 owed his firm will be recovered. He is optimistic now that information is being made public because until now there has been no conversation between any of the parties.

Davis was not convinced by village's presentation. He claimed that members of the investor group overstated their personal financial statuses, had bogus phone and addresses and moved assets to Nevada to avoid losing them in any
foreclosure actions.

Village President Randy Newman said he didn’t know how deep the board went into vetting the investor’s financials, instead directing questions to Village Manager Mark Fitzgerald.

Newman said he was happy to finally get some of the information out to the public and hoped that some of the financial information involved in the deal could be shared with the public. However, due to the proprietary nature of the business, much of that information may remain private due to competitive concerns.

W . Benz July 17, 2012 at 01:31 PM
BLAH BLAH BLAH : So the village loaned 18 MILLION and did a property loan and not a bussiness loan, Atty Crocker " Village is not the owner " they why are you paying the Hotels wages , signage, Computer, resv systems, "Positive cash flow" just as long as you don't pay the Mortage. Village Prez Newman says board didn't fully vetted !!!! ...Talk to Fitz . .. "However Due to Proprietary business " of which the Village DOESN'T own !! .........NO MORE PUBLIC INFORMATION !!!! These People need to be replace and stop the bleeding of taxpayer monies - stop paying the Hotel bills and let it stand or fail on it's own. Stop more RINO damage. Ps. Taxes due 8-1-12 --- $$ 23 k .
Steve ® July 17, 2012 at 02:34 PM
Stealing is a crime. Embezzlement on this scale is a felony. You can only hide behind your free lawyer provided by the taxpayer for so long
Jefferson E. Davis July 17, 2012 at 02:54 PM
Citizen's Public Forum on the Radisson Hotel Tuesday, July 24th, 7-9 P.M. Menomonee Falls Library No 180 second time limit on length of questions. No hiding behind false application of State Open Meetings Law. All Village Officials who made the decision on the hotel have been invited to attend. All documents on hotel that have been obtained to date will be presented. Contact information for Village Officials who made the hotel decision will be available. The hotel owners have not made any principal payments on the $18,000,000 taxpayer funded loan since it was approved in April of 2010. Annual interest payments (approx. $730,000) are being made by taxpayers of Menomonee Falls not the hotel owners. The Public Forum will be taped and broadcast on the Falls Cable Access Channel in spite of the efforts of the nearly $92,000 a year part-time salaried director to block the broadcast. Refreshments and cookies will be served.
Mike Knight July 17, 2012 at 03:22 PM
$92,000 part time? I hear about these huge incomes for little local government lackeys all over the nation. Government should be a volunteer type of thing, and not a full super income, and benefits package deal. That way you might actually get people who want to serve the people. All government posts should be that way. There's really no reason why a person can't volunteer as a government official, and have a real job at the same time. They shouldn't be doing much to begin with. Certainly not enough to fill eight hours a day-five days a week. Government should only exist to protect our basic rights, and provide basic emergency services.
W . Benz July 17, 2012 at 08:26 PM
Hey that looks like me sitting in the back .
dave July 18, 2012 at 12:27 AM
wow, did you listen to the load of crapola presented by the shill for the Village. Hold on to your wallets, because this thing is going to a loser for years, and it is going to mean nothing but higher taxes and blood letting from every taxpayer in the Village. And great news- all the idiots who who thought this was a great idea are still on the Village Board and acting as Village Administrator!
Jefferson E. Davis July 18, 2012 at 03:08 AM
Dave: Thank you for being engaged. Your point is one of many that will be examined at the Citizen's Public Forum on the Radisson Hotel Tuesday, July 24th from 7-9 P.M. Hope you can make it with as many of your friends and neighbors that you can pack into a car. It will be well worth your while. Attorneys Randy Crocker and Seth Dizard, whom charged the taxpayers thousands of dollars for their appearance at the Village Board Meeting on July 16th, along with the Village Manager, Village Attorney and Village Board must not have given District Attorney Brad Schimel the "We Don't Have Any Money for the Subcontractors" memo because the DA met with Village Officials on Friday, June 15th to examine the books and verify that the Village does indeed have retainage funds to make the final payments to the subcontractors (click here for the article on the DA's verification (http://menomoneefalls.patch.com/articles/village-files-foreclosure-suit-on-radisson-hotel). Oops, they did it again!!!!! The old saying, "When you tell the truth you don't have to remember what you said." When you don't tell the truth, it's always hard to remember what you said to whom. We're all hotel owners now and we need to do whatever we can to get the best deal we can to recover as much of the $18,000,000 loan to the hotel.
Jeff Christensen July 18, 2012 at 03:15 PM
I've been reading a lot about this issue, so I attended Monday's meeting. Here were my takeaways: 1. I'm still not sure if the Village Board made a good or a bad decision regarding the Radisson. I would still like to here about the deciding factors as to why they made the decision to secure that investment. 2. I feel awful for the contractors and subcontractors. They are in a terrible spot, and don't deserve to get caught in this fiscal mess. 3. There were four people who testified in the public portion of the meeting (I was the fourth). I was amazed by the gentleman who took the opportunity to essentially threaten the board (electorally not physically) and chide public employees (which has nothing to do with this topic). I'm not sure how this tone helps move the discussion forward. 4. After hearing the attorney and the court-appointed receiver, I have little doubt that the Village (and taxpayers) will not be adversely affected by this situation. That doesn't however make this less of a mess. 5. A little communication from the board on the process could have gone a long way in clarifying what was going on throughout this ordeal. However we also need to respect the fact that there are legal proceedings going on and the board has to respect that boundary as well. 6. I don't enjoy the obvious Pridemore/Jeskewitz civil war that is playing out. Its in the assembly race & within the taxpayers group. This is not helping our village.
Jefferson E. Davis July 18, 2012 at 03:58 PM
Jeff: It was good to meet you at the Village Board Meeting on Monday night. Thank you for coming to the meeting and for your well thought out comments. Trust the information that you were shown on the projections of the hotel's performance, which was also reviewed by the Village Manager, Village Attorney and Village Trustees for approval, to qualify for the $18,000,000 taxpayer funded loan was helpful and answered your question as to what were the deciding factors as to the plausibility of the loan in the first place. Please come to the Citizen's Public Forum on the Radisson Hotel Tuesday night, July 24th at the Library from 7-9. There are quite a few inconsistencies that will be addressed on Tuesday night as a result of the presentations that were made at the Village Board Meeting Monday night and the Village Board's silence on the matter. The bottom line is that the taxpayers will be affected in one way or another to make up the difference for the shortfall on the $18,000,000 taxpayer funded loan to the hotel owners. The Village Board, Village Manager, Village Attorney and contractors have all been legally invited to the Citizen's Public Forum on the Radisson Hotel for Tuesday night to meet with and listen to the citizens. There will be no time limit on the length of questions and the State Open Meetings Law can not be used as an excuse for the Trustees and Village Staff not to show up. Hope to see you Tuesday night.
Jeff Christensen July 18, 2012 at 04:32 PM
@Jefferson - Actually after reviewing the documents that you had and the legal document from the attorneys that the taxpayers won't be adversely affected. At that point, nobody has answered my question. That question is simply this: What factors went into the hotel decision? And I'm not talking about only fiscal. I'm wondering why the Main Street Corridor is so important? I'm wondering if the old hotel was so blighted that it was slowing business development? I'm wondering if there are factors we don't know (transportation, demographic, development) that haven't been communicated that went into the decision. And quite frankly you appear to be part of this unnecessary civil war. Its looking like you are siding with Team Pridemore in the war against Team Jeskewitz. In my eyes, neither one of you is helping to move our village forward.
Jefferson E. Davis July 18, 2012 at 05:15 PM
Jeff: Thanks for clarifying your questions. The Village hired a firm from Dallas Texas in 2003-04, RTKL, at a rate of about $300,000 to study whether or not it was worth trying to save Main Street in Menomonee Falls and why it had been allowed to deteriorate for over 30 years by the Village Manager and Village Board. It was only under new leadership and vision in 2003-04 did the Village Board adopt a policy to look at Main Street to see if it was worth saving. RTKL's Study can be found at Village Hall if you would like to see their findings which led to the redevelopment of Main Street. I believe the study will answer your questions as to the rationale for redeveloping Main Street. There will be some documents at the Citizen's Public Forum on Tuesday showing the expenses paid to RTKL. Thank you for your gentle admonishment regarding the "civil war" you refer to with the Pridemore's/Jeskewitz's. Dan Knodl is my State Representative. I will always side with doing the right thing for Menomonee Falls. Politics, people and personalities aside, you are correct, Menomonee Falls does need to move forward and hopefully you and I can have that conversation to see how that is done.
W . Benz July 31, 2012 at 01:34 PM
Tax day for the Hotel another $ 24 k due today . So who's paying the taxes today because the Attys had said no more $$$$ from the Village .. Will the Attys again break their SILENCE ?..... More like breaking Wind !! Where's the MFTax army ?
W . Benz August 01, 2012 at 09:31 PM
Hotel $ 2.800.00 per mo intrest & penalties Taxes due 2011 --25 k ..plus 2012 taxes will be due in Jan. So taxpayers on the Hook for this too ! .........Tic toc tic toc . Just how close is RPG from closing ...
Carl Engelking August 01, 2012 at 09:41 PM
I spoke with Attorney Seth Dizard today (Wednesday), who is the receiver appointed by the village to handle finances at the hotel, and he said the tax payment was made and postmarked July 31 according to county statute. He said in the next few days that payment should be reflected on the record.
W . Benz September 05, 2012 at 06:18 PM
Sept 5 So did the Hotel pay back the $$$ as quoted by Atty Seth Dizard .............................." by the end of august " ????
Carl Engelking September 05, 2012 at 06:23 PM
Yes according to the Waukesha County Tax Register the hotel's taxes were paid on Aug. 2 in the full amount of $22,014 without penalty. http://tax.waukeshacounty.gov/DisplayTax.aspx
W . Benz September 11, 2012 at 01:56 PM
Hotel payroll funds were paid back to the County ? I don't think so ....
W . Benz February 05, 2013 at 01:42 AM
Hey Carl : Did they pay 2012 taxes or do the Taxpayers have to carry that bone too !
W . Benz March 19, 2013 at 02:55 AM
July 2012 -- Free taxpayer monies --RINOville...

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