Sturgeon Bay Council Approves Next Step Toward West Side Hotel

Sturgeon Bay Alderwoman Kelly Catarozoli asks that the investors in the westside hotel project be revealed. Next to her are Aldermen Ron Vandertie and Ed Ireland. Photo by Jim Lundstrom.

Despite pleas from its two newest members to slow down and allegations that something shady is taking place, the Sturgeon Bay Common Council voted 5-2 on Oct. 6 to accept the letter of financing for the proposed westside hotel and to sell the city property the hotel will sit on to the Sawyer Hotel Development, LLC.

Both Kelly Catarozoli and Will Gregory, who were elected to the Common Council in April, voted against the proposals to move the hotel forward as part of the city’s westside redevelopment project.

The city had previously called a special meeting of the Common Council to vote on the hotel financing and land sale, but Mayor Thad Birmingham announced just after the meeting was to start that a new development forced the postponement of the meeting.

In a background letter accompanying the lengthy agenda packet for the Oct. 6 meeting, it was explained that although Baylake Bank had issued the required letter of intent to finance the project, the bank informed City Attorney Randy Nesbitt that it was attaching conditions to the financing, which is why the Sept. 22 meeting was canceled.

The city then learned that Baylake Bank was not attaching conditions, but that it would not close on the property until there is a satisfactory resolution to the federal lawsuit filed on Sept. 17 by the Friends of the Sturgeon Bay Waterfront. That lawsuit contends that the proposed hotel would sit partially on public land.

Catarozoli moved to table the hotel development proposals until council members hear from the insurance company attorney who is handling the federal lawsuit for the city.

A rendering of the hotel with the planned public space along the waterfront.

Gregory seconded the motion, and said, “Why are we moving forward on this, gentlemen? Why are we moving forward on this? This is a mess.”

“We’re bound by the development agreement,” Birmingham responded.

“Do we know about the financing, dollar amounts?” Gregory asked.

“We’re not financing anything,” Birmingham said. “This is the bank’s commitment to finance the hotel.”

He added that the financing includes construction and furnishing the completed building.

“We are not building a hotel,”said Alderman Ron Vandertie. “We’re just fulfilling our agreement with the developer.”

Catarozoli said the city required extensive financing information from the three groups that pitched ideas for the old granary, so why not have that same sort of fiscal oversight for the hotel project?

Birmingham said after conferring with legal counsel, it was decided that the city could be put in default mode if it did not act on the financing and land sale components of the proposal.

“By not acting today, that doesn’t put us in default,” Catarozoli countered.

Nesbitt said the city could be accused of holding up the development because the city council has not followed through.

“I’m talking about waiting until we have correspondence from the insurance company attorney,” Catarozoli said. “That could be next week. Why don’t we just wait for that?”

Nesbitt said the city has an obligation under the contract with the developer to complete certain obligations, and added that the insurance company attorney probably would not make recommendations on what the city should do. “He’s been hired to deal with the lawsuit,” he said.

“I would feel much better if we had some correspondence from the other counsel,” Catarozoli said. “We don’t have to jump on this the second it comes in the door.”

“For me, that property is the center point of our westside,” Gregory said. “We have to get it right and so far we haven’t. There are so many issues over there. Nothing has gone right so far. It just hasn’t.”

“I would not agree that everything hasn’t gone right,” Birmingham said. “Give me some evidence. I would like to see some evidence where the city has been in error.”

“You know a federal lawsuit has been filed?” Gregory said.

“We’re not guilty until proven so,”Birmingham said to groans from the audience. That’s a major premise of this country.”

“My point is, we go back to Miss Catarozoli,” Gregory said. “There’s no rush here. Let’s get this right.”

“If the city hasn’t followed proper procedure, let me know what that is so the city administrator and city attorney can follow up,” Birmingham said.

Vandertie pointed out that this $7.8 million project will result in an annual tax increment of at least $162,000 for the city, and that money can be used for all the other improvements wanted for the westside waterfront.

“Are we in a rush?” Vandertie said. “I don’t think we’re rushing it. We’re just acknowledging that the bank and developer are able to put up $7.8 million.”

Catarozoli said the Baylake Bank letter is too vague, and that she would like to see more evidence of financing, specifically revealing investors in Papke’s project.

“I find that strange, this huge project we don’t expect that of Mr. Papke,” Catarozoli said. “There’s something very suspicious about that. If this letter is satisfactory to all of you gentlemen, I am suspect of all of you. There needs to be numbers in there. We need to see them. And I would argue that we need to see who those investors are. What if I’m an investor? What if Thad Birmingham is an investor? What if any of us have thrown money at this and have made votes….We need to make sure people on any committee anywhere are not benefitting from this by their votes, by their influence or by the positions that they hold. If you wrote a contract in the best interests of the city, that should be in there, and we should all demand that is in there. If we need to keep it confidential, that is fine, but it needs to be revealed so we can make clear-conscience votes on this financing to make sure this is done right.”

Birmingham took umbrage with the suggestion that he might be an investor.

“I am not an investor in the hotel and I never have been,” he said. “You may find it humorous, but I’ve been attacked personally a number of times. I don’t take kindly to being attacked personally.”

The mayor called for a vote on the motion to table, which failed 5-2, and Alderman Rick Wiesner moved to accept the letter of financing.

“Talking about the future of the westside, this is a large bonus for the westside,” Wiesner said, adding that it will make the westside of the city “relevant.”

“To deny the westside this opportunity is foolish,” Wiesner said.

“I’m not trying to deny the westside development,” Gregory said. “We’re trying to deny a foolish mistake….I think this is a bad plan. I think it’s a disaster.”

Birmingham asked the council in general, “What about the letter? Is it bad or good?”

The council voted 5-2 to accept the letter of financing and then moved on to the land sale, which prompted Catarozoli to say she could not in good conscience approve the sale of the land with a pending lawsuit about a piece of land that is possibly in the public trust.

“The city council has already contracted and agreed to convey this land,” Nesbitt explained. “That’s all done.”

He said this motion is simply to provide a short, separate resolution for the title company, rather than a 30-page document.

A motion to table the sale failed 5-2. Wiesner moved to approve the sale, which passed by the same margin.