City Settles with Hotel Developer, Hires Waterfront Consultant

In a 5-2 vote that echoed a similar vote on Dec. 4, the Sturgeon Bay Common Council overrode Mayor Thad Birmingham’s veto of a $360,000 payment to developer Bob Papke for his “good faith” effort to build a hotel on the west side waterfront.

“In 2014 the City of Sturgeon Bay asked me to build a hotel on city property for a city plan,” Papke said in a statement released after the council approved the payment at its Dec. 18 meeting. “At the city’s request a professional team was assembled to work and create that hotel on the west side waterfront, at a great deal of expense. It is now time to turn the page and move on. I thank the city council for the Resolution of Appreciation acknowledging that the city did request me to build this hotel.”

Before the mayoral override vote – which required two-thirds of the seven-member council – the board voted unanimously to approve a resolution acknowledging the good faith efforts of Papke’s Sawyer Hotel Development.

Voting against the payment were Aldermen Seth Wiederanders and David Ward. Both had voted against it on Dec. 4 as well.

“I think that it’s not a wise move to settle this at that price. The price is $360,000,” Ward said. “That would likely come out of TIF #4 funds, which is already pretty stressed because we can’t move forward on development of the primary parcel there.”

Ward said in his research on the subject of municipal liability, he believed the limit on tort claims to be $50,000.

“This is seven times that amount,” he said. “I recognize that Mr. Papke took some risk moving forward, but I think that is the risk developers take. We have a strong case and statute is in our favor in terms of damages.”

“People are ready for us to move forward and something to happen on that property,” said Alderwoman Laurel Hauser.

Alderwoman Kelly Catarozoli concurred with that assessment.

“Literally the entire development has been hijacked,” she said. “We have a community that’s ready to move forward, but literally cannot move forward on this property, not just the footprint of the hotel but the entire area. We can’t even reach out and attract development. Our hands our tied and our community wanted to move forward. It’s your money and we don’t want to spend it foolishly. This is the best outcome for us to go forward.”

Alderman David Hayes said the issue has been discussed at almost every council meeting he has attended since being elected last April. “I’m going to vote that we get this closed and move forward,” he said.

Alderwoman Barbara Allmann said settling with Papke would “let the world know we’re open for business. We don’t want to set the precedent that we’re going to take everything to court.”

Ward argued that “the city didn’t take Papke to court. Papke took the city to court.”

Ward also pointed out that Papke’s agreement with the city was extended for two years in 2017, meaning it would expire June 2019.

“He signed it knowing full well there are lawsuits involved,” Ward said. “While I appreciate his development commitment, it just didn’t work out. Again, I would point out, either the development agreement expires in June, or we go to trial for a $50,000 cap. For those reasons, I think it’s unwise to settle for this much money.”

“If we happen to win in court and it’s past June 2019 and he appeals that, that land is still tied up in litigation,” countered Alderwoman Kelly Avenson. “We can’t start doing anything with it until this litigation is done. We can’t afford to continue this fight anymore. Our community can’t afford this anymore.”

After passing the measure to pay Papke, Community Development Director Marty Olejniczak said the ad hoc west waterfront planning committee wants to take a fresh look at the seven-year-old waterfront development with the help of a seasoned waterfront development expert. He said the committee had set its sights on hiring Ed Freer, a senior landscape architect with the firm Short Elliott Hendrickson (SEH), adding that Freer’s specialty is waterfront development. He added that they hope to move ahead quickly and have something to present in February. The council approved hiring SEH and Freer.