Milwaukee Aims ‘Howitzer’ At Lawsuit

The City of Milwaukee is poised to spend $125,000 on outside counsel to defend itself against a federal lawsuit that accuses the city of creating near-lawless “containment zones” by misappropriating federal funding to concentrate poverty and create “second-class citizens” The suit is being brought by two real estate agents that own property on the city’s near west side, which they argue is subject to such a policy.

Calling it a “bogus lawsuit,” area Alderman Robert Bauman said Monday that the city’s strategy is “literally getting out a howitzer to kill a fly.” The city would hire former U.S. Attorney Matthew D. Krueger, now at Foley & Lardner, to defend itself.

The stakes on the case at one point seemed much more significant, as the U.S. Department of Justice was originally a plaintiff. The council, with virtually no comment on the record, called a special meeting in July to consider spending $250,000 to defend the city against a sealed complaint, then canceled the meeting as the DOJ backed off.

The lawsuit is now being brought forward by James Dieter and Karen Schwenke. The former lives in a historic mansion on W. Kilbourn Ave. in the alleged zone, while the latter is a Shorewood resident who owns three rental properties on N. 23rd St.

The since-unsealed complaint alleges that the two purchased their properties based in part on the city’s 2004 Near West Side Comprehensive Plan. The area plan, similar to those covering the rest of the city, is intended to guide future land use strategies. But the complaint says that the city instead created a containment zone to concentrate poverty in the area, misusing federal funds in the process.

“Within the containment zones, zoning ordinances and building codes are ignored, development is discouraged, densification is compounded rather than reduced, community involvement is disregarded, crime is permitted, and community plans are overlooked,” says the 46-page complaint, originally filed in February and unsealed in August. “Containment zones were and are the City’s answer to housing its disabled, minority, and low-income population.”

The complaint centers on the Clark House, a series of five rooming houses on the 900 block of N. 24th St. Dieter lives just west of the house and alleges the city has ignored several violations, including the transfer of the property from owner Anthony Katchever to ProBuColls Association without immediately securing new licenses.

Dieter and Schwenke are represented by attorney Shannon D. McDonald of McDonald & Kloth. McDonald’s law partner, Christopher M. Kloth, represents the Chinese ownership group of the former Northridge Mall in that lawsuit.

Bauman made his remarks Monday before the Judiciary & Legislation Committee went into closed session to review the case and other litigation with which the city is involved. The alderman, who represents the area and lives five blocks to the west of Clark House, said citizens were owed some discussion of the matter in public. “[The City Attorney’s Office] wants money at this point [to hire outside counsel]. I think we owe the public an explanation as to why,” said the alderman. “I can tell you the allegations that have been made are totally bogus.”

But deputy city attorney Robin A. Pederson said discussing why the city should hire outside counsel would veer into legal strategy, which should be discussed in private. While both committee chair Mark Borkowski and council president Jose G. Perez agreed with Bauman that the matter had already been discussed at length in closed session, they backed Pederson’s move to again enter closed session.

After discussing several cases in closed session, the committee re-entered public session to unanimously approve the spending plan with no public comment other than Borkowski noting it was another “lengthy discussion.”

The Milwaukee County Department of Health and Human Services is also named as a defendant in the lawsuit. The complaint cites the fact the department’s housing division received approximately $25 million in federal rental assistance funds in the past six years. Identifying several funding sources, the complaint says the city received hundreds of millions in funding over the same time period and was improperly stating it was in compliance with funding requirements.

Bauman faces a separate lawsuit for his critical comments in 2007 about another housing facility in the neighborhood. The troubled facility was ultimately closed after an individual was found to have died four days prior in their room. A judge sided with Bauman and the city that his comments criticizing the operator of the facility, were not made with “actual malice” and were substantially truthful. But the decision may be appealed.

The Clark House includes five contiguous properties, 933 N. 24th St., 939 N. 24th St., 943 N. 24th St., 947 N. 24th St. and 2424 W. Kilbourn Ave.

A copy of the complaint is available on Urban Milwaukee.

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