Downtown Strip Club Approved
Lawsuit settled. "Everyone and their brother" can now open a club.
Downtown is getting a high-end strip club. After more than an hour-and-a-half debate The Milwaukee Common Council today approved a license for The Executive Lounge at 730 N. Old World Third St. In exchange for approving the license, the strip club applicants will drop a number of lawsuits against the city as part of a wide-reaching settlement.
The approval ends, at least for now, a years-long debate that has included six different applications for strip clubs Downtown and in the surrounding area. The lawsuits have been filed by the Silk Group, the Buzdum family and by John Urban and Roaring 20’s Management, LLC. The Silk Group has already won a lawsuit against the city for nearly a million dollars.
Leading opposition to the matter was area alderman Robert Bauman. He blasted the deal, saying “in effect we are being asked to trade a license for the settlement of a lawsuit.”
Why is the deal being approved after years of opposition? As alderman and Licenses Committee chair Tony Zielinski put it, “we’re running the risk here of losing eight to many more million dollars” on the suits. Zielinski went on to note “we need to get this approved today and not support any of these dilatory efforts.” Ald. Jim Bohl later estimated the price tag for the lawsuits could run as high as $29 million.
A confidential memorandum distributed to the Common Council by the City Attorney Grant Langley‘s office details the potential damages on a case-by-base basis, with one case alone totaling $8.5 million. A cover letter notes that “a number for collective potential loss is probably in the low-teens ($13-$14 million).”
The final vote came after a series of votes leading up to it that included amending the club’s plan of operation, forming a committee of the whole to hear from the city attorney’s office on the potential of a lawsuit from amending the operating plan and attempting to refer it back to committee.
After the application was approved, the council still needed to approve the settlement. The proposal, which never had a public hearing, was approved after a failed measure to send it back to committee and grant it a hearing. Ald. Lewis switched sides on the measure, joining the opponents in a failed bid to send it back to committee. The settlement prevents those affiliated with the club from opening another club in the city for a period of ten years and prevents the city from enacting legislation hampering strip clubs for a period of six years.
Mayor Tom Barrett still needs to sign the legislation into law. Bauman stated during the meeting that the mayor had yet to make a comment on the legislation on the record, but was pushing hard behind the scenes for its passing.
Third Strip Club Coming? Process Still Flawed
The Executive Lounge would join the longtime Art’s Performing Center (144 E. Juneau Ave.) as the second downtown strip club, but is a third strip club coming? An application is pending for a strip club at the 618 Live bar, commonly known as the Ladybug Club, at 618 N. Water St. That application is expected to be reviewed at the next meeting of the Licenses Committee.
Bauman has indicated he would support a club at that location. Ironically, Bauman has in the past vigorously pursued revoking the license of the tavern.
The fact that the whole deal leaves the existing process unchanged makes it a possibility that these lengthy fights will continue arise. Bauman implored the council to address this, saying: “we’re not fixing the process. We’re not doing anything about the process.” Hamilton agreed with this assessment, noting “alderman Bauman is right, it doesn’t fix the process.” One proposed bill would have established permissible strip club zones, restricting strip clubs only to areas with a particular zoning status, but this was opposed by many council members who feared their districts would become a target. And any such legislation is now prevented: As part of the settlement the city is unable to enact any restrictions for a period of six years.
All of which left Bauman to complain: “this is an invitation for everyone and their brother with an existing club to come in and apply to open a new one. What do they have to lose?” The council veteran went on to note that “if you have a legislative process that is susceptible to court challenge, fix the process. We’re not fixing the process.”
Downtown Opposition and Another Lawsuit Looms
We had previously reported the deal appeared dead, at least for the location at 730 N. Old World Third St. At an April hearing on the proposed license, the measure was held to allow Milwaukee Downtown Business Improvement District #21 and others to attempt to identify another location for the club.
But after the applicant’s attorneys stated in a letter that they would only consider a location within the borders of Milwaukee Downtown, the business improvement district responded it could not in good faith identify a location. It had previously suggested locations outside of Downtown in the Menomonee Valley on W. St. Paul Ave., which was of no interest to the applicants.
At a meeting held yesterday, the Licenses Committee voted to deny the license. That move, led by its committee chair Zielinski, was made in order to allow the measure to advance to the full council. Attorney Brian Randall of Friebert, Finerty and St. John represented the applicants at Monday’s hearing and at the full council meeting today.
At today’s council meeting Zielinski attempted to smooth over a potential problem introduced at committee. An amended plan of operation was introduced at committee and approved at council without a public hearing. Assistant City Attorney Adam Stephens, in response to a question by Zielinski, stated that he wasn’t able to advise if the measure exposed the city to legal action by strip club opponents.
Zielinski, who motioned to approve the strip club, voted against amending the plan on the council floor stating that he believed the operators would be responsible operators without the adjustments. That potential legal issue apparently wasn’t a concern for, or possibly wasn’t understood by other council members, as the amended plan was approved.
A Lot of Campaign Cash
It’s taken a lot of time, a number of lawsuits and thousands of dollars in contributions, but the applicants finally received their license. As our Political Contributions Tracker shows (detailed at the bottom of this article), numerous individuals affiliated with the application have made campaign contributions to council members voting both for and against the measure.
In last year’s Common Council and Mayoral elections, those affiliated with the strip club also supported a number of challengers to opponents of the strip club deal. Monique Kelly and Andrew J. Shaw who opposed Bauman and Shannan Hayden and Ira Robins who opposed Kovac received contributions from many affiliated with the lawsuits.
About the New Strip Club
The application for the new Old World Third St. club, to be known as the Executive Lounge Gentleman’s Club, lists ownership being divided among three different parties. Scott Krahn of Hartland serves as the agent and sole proprietor, owning 38 percent of the business, Joseph Modl of Germantown is listed as owning 38 percent and Radomir Buzdum of Watertown is the smallest partner with 24 percent.
According to the application those three collectively own shares in Silk Exotic Milwaukee, Silk Exotic Madison (Middleton), Silk Exotic Juneau, Dew Drop In (Watertown), Buzdum’s Pub (Germantown), TNT (Watertown), Hideaway Bar & Grill (Okauchee Lake), and Lucky Joe’s Alchemy and Eatery (Wauwatosa).
According to the application, the Executive Lounge would derive 45 percent of its revenue from alcohol sales, 45 percent from entertainment and 10 percent from cover charges. The cover charges are anticipated to be between $10 and $15 per person. The legal capacity of the club would be 216.
The club would pay building owner David Weir base rent of $2,500 per month, plus a “prorata share of taxes + CAM.”
Jon Ferraro, who has long been at the center of the issue, having applied (and been rejected) for a number downtown licenses, is nowhere to be found on the documents for the new club. In August 2016 the Milwaukee Journal Sentinel reported that Ferraro was indicted in a racketeering case in California with seven other men. Ferraro has previously won a lawsuit against the city for $970,000 regarding a 2013 application for a strip club in the Rusty’s Old 50 space.
At an April hearing on the application, Radomir Buzdum’s prior testimony before the Licenses Committee came under fire. When previously applying for a license at the location Buzdum referred to the area as “all homeless people” and noted “this would be a perfect gentlemen’s club [location], it’s in the middle of a toilet.” Buzdum apologized for those comments at April’s hearing.
Rusty’s Old 50 was operated by siblings Diane, Boro and Radomir Buzdum. A police report from January 2015 notes that Rusty’s was found to have vertical poles for dancing and female dancers wearing just “pasties,” underwear and high heels.
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