Jeramey Jannene
Eyes on Milwaukee

City Asks Judge To Seize Northridge Mall From Chinese Owners

City of Milwaukee says it has identified funding sources to demolish mall.

By - Jan 24th, 2023 11:11 am
Northridge Mall in August 2022. Photo by Jeramey Jannene.

Northridge Mall in August 2022. Photo by Jeramey Jannene.

The City of Milwaukee wants Northridge Mall stripped from U.S. Black Spruce Enterprise Group, the mall’s Chinese ownership group.

In a motion filed following a status conference Tuesday morning, the city formally asked Judge William Sosnay to strip Black Spruce’s title to the property and grant the complex to the city. It’s the first time the city has asked to be given ownership of the blighted property.

“Despite being willing to expend a large financial commitment to fighting to maintain ownership of the properties, Black Spruce has intentionally allowed its massive space to deteriorate to the point of being almost worthless,” says the city’s motion. “It is only a matter of time before someone dies or is seriously injured because of the lack of security at the properties.”

It argues Sosnay has the legal authority to do so given the sustained noncompliance with an August ruling to secure the property. Sosnay, at multiple points, has found Black Spruce to be in contempt of court.

Black Spruce has accrued approximately $300,000 in fines for failing to secure the property and faces a city lien for tens of thousands more dollars for public safety services. It also has unpaid property taxes, but the city argues property tax foreclosure is not an option because the matter will drag on for at least a year and Black Spruce could pay the minimum to maintain ownership.

Sosnay could not immediately rule on the request Tuesday because the legal counsel for the mall’s Chinese owners, attorney Christopher M. Kloth, must first be given the opportunity to respond.

A March 17 hearing date was set to rule on the matter. “I can tell you that this is without a doubt an expedited schedule,” said Sosnay. He said the city’s request was significant.

The city, in its filing, says time is of the essence because it has identified possible, time-sensitive funding sources to complete the estimated $15 million site clearance.

“The only option to terminating the contempt of court is to award the city title to the properties,” says the motion.

The three Chinese principals that own the mall, Li Yang, Zhongzhe Zhang and Jun Lian, failed to appear in court despite a request from the judge.

“I wanted the principals here so I could address them personally,” said the judge. Only Yang has previously appeared on the matter. She requested to appear via Zoom Tuesday, but her request was denied.

The judge said it was easier to get someone to act if they were in person, versus thousands of miles away. Yang lives in Vancouver, Canada, according to her October statement. Her partners live in China.

Sosnay, based on city testimony and the Department of Neighborhood Services‘ (DNS) daily inspections, found that the property owners continue to fail to secure the buildings in accordance with an August court order. The order, based on a 2019 agreement, calls for around-the-clock security staffing, entry points to be boarded up and the property to be free of debris.

“They do board it up. Sometimes within the next day it’s unboarded,” said DNS supervisor Chris Kraco. He said several access points are routinely available, including a spot on the roof, and that security has only been seen on the property on a handful of days.

“It’s almost an invitation for some people to enter for whatever reason,” said the judge. He maintained his $2,000 per day fine for noncompliance, the balance of which now exceeds $300,000.

“They continue to flout the order of the court,” said Sosnay, who ordered them to appear at the next hearing.

Sosnay, who repeated his fall 2022 claims that he won’t let the matter languish, said his court has accomplished more on the matter in six months than anyone else in the past 15 years. “The court will continue to keep my foot on the gas,” said the judge. “This court is not posturing in any way. I just want the community assured that this matter is a priority.”

The judge also ordered Black Spruce to update its recently-provided demolition plan to include a timeline and costs related to asbestos abatement.

Kloth did not offer a rebuttal for his clients at any point in Tuesday’s hearing. “Everyone that we discussed today will be conveyed to my client,” he told the court.

“The city stands ready to take action,” said deputy city attorney Odalo J. Ohiku.

City officials previously said the city didn’t have the money to demolish the building. They estimated the cost to clear the 46.5-acre site at $15 million.

State law allows a raze order to be issued when repair costs exceed 50% of the building’s value. DNS estimates repairs would cost $6 million and the attached buildings are only assessed for $81,000. Sosnay ruled in the city’s favor in October, and state statutes allow the city to step in to perform the demolition and add the cost to the property owner’s tax bill. But the city has yet to take matters into its own hands, insisting Black Spruce perform the work. Black Spruce already owes the city more than $1 million in unpaid taxes, but has previously fought off tax foreclosure attempts by making partial payments.

Black Spruce is appealing Sosnay’s October ruling on the raze order, but the court has yet to advance the case. Sosnay’s ruling was required because of an earlier appeals court ruling that an incorrect standard was used by a prior judge.

Black Spruce acquired the approximately 900,000-square-foot complex for $6 million in 2008 and announced a plan to develop an Asian marketplace, but city officials have argued those plans have never progressed in any substantial fashion.

Northridge opened in 1972. The mall failed for a number of reasons, including a lack of direct freeway access, chain bankruptcies, the cyclical nature of malls and negative perception created following Jesse Anderson‘s murder of his wife in the mall’s parking lot and the subsequent false claim that the couple was attacked by two Black males. The mall’s competitors, including Mayfair, Brookfield Square, Southridge and Bayshore, have all received substantial public subsidies to help finance updates since Northridge closed in 2003.

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