Developer Bob Papke formally filed suit against the City of Sturgeon Bay Oct. 26 for financial costs associated with the planning of the Sawyer Hotel on the city’s west waterfront.
Papke alleges that the city never disclosed to Papke or his company, Sawyer Hotel Development, LLC, that it had been unable to gain clear title to the property for development purposes due to questions about the location of the Ordinary High Water Mark (OHWM) on the property. Papke cites correspondence between city employees and attorneys that shows that the city knew at least as early as March 19, 2013, that there were questions about whether the land it offered to Papke was developable because it was filled lakebed, making it subject to the public trust doctrine. That’s more than a year before city planners approached him in June of 2014.
Papke said his team worked diligently for three years at the city’s request, for a city plan, on city property.
“I am saddened to be forced to file a lawsuit to get paid for work that was done at the request of the city,” Papke said. “The hotel team worked hard and did what it was asked to do. Had the City of Sturgeon Bay provided the property as the city agreed to do, the hotel would have opened in 2016 and be in its second season of operation now.”
Upon signing a development contract with the city in January of 2015, Sawyer Hotel Development began advancing funds to third parties for soil studies, engineering, architectural, legal, marketing and accounting services. Papke also said he dedicated a considerable amount of his own time to the project. The contract obligated the city to provide Sawyer with a commitment from a title insurance company, but it never did.
“While the concern regarding the location of the OHWM was a subject of substantial correspondence within the city, as well as with third parties retained by the city, the city never disclosed to Sawyer or Papke the existence of this impediment to conveying the land necessary for the hotel project,” the filing states.
City records indicate city officials were notified on July 18, 2013, by First American Title Insurance Company that it could not write title insurance for the parcel.
“Because the public trust doctrine is a state constitutional concept, we cannot get a comfort level that irrespective of what the State of Wisconsin may be saying today, today’s position may not bind future state governments, executive and judicial,” wrote Don Schenker, assistant vice president of First American Title Insurance Company, in an email to city attorney Jim Smith and Community Development Director Marty Olejniczak. “We do not lightly turn down the opportunity to write title insurance on what may be a major redevelopment project, but in this case, we must do so. This proposal deserves the greatest consideration that the title industry can give it.”
Papke said he first found out that the city knew about the OHWM questions in the spring of 2017, when emails between city planners and insurers were made public in the court proceedings between the city and Friends of Sturgeon Bay Public Waterfront. He filed his claim in June, and hoped the city would approach him with a solution.
“I really have been forced to do this to get paid for the work and time that was done at the request of the city,” he said. “It’s a very sad day, I never wanted to be in position to sue.”
Papke said the city never approached him to resolve the situation, and in September the city denied his claim.