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Watchdog group contemplates suing Lake Geneva over zoning

LAKE GENEVA — A local government watchdog group is considering a lawsuit against Lake Geneva over zoning related to a proposed development.

A founding member of Care for Lake Geneva claims a memorandum of understanding between the city and the developer shows the city provided $3.9 million and zoning favorable to the developer in exchange for the developer dropping a federal suit against the city.

"I believe this is clearly a case of contract zoning," said Dick Malmin, the founding member of Care for Lake Geneva. "We are waiting to see if the law firm we hired agrees."

Malmin is relying on a June 13, 2011, memorandum of understanding between the city and Geneva Ridge Joint Venture, the development company owned by Robert Hummel and Mirbeau, a resort company in New York state.

Geneva Ridge in 2008 intended to develop 718 acres of land near Big Foot State Park with 2,000 homes, a golf course and a hotel. The memorandum of understanding reads, in part:

"The City's Plan Commission and the City's Common Council will consider and initiate, during the ‘Smart Growth' Comprehensive Master Plan amendment process, such steps as may be necessary to amend the land use designations for the Geneva Ridge Properties, as contemplated by the MOU."

A $2.1 million payment for dropping the suit is contained in the following portion of the MOU:

"This payment is being made by the City's insurers in consideration for the agreement by Geneva Ridge to provide appropriate releases to all defendants and to dismiss (the suit) with prejudice and without costs."

Dismissing with prejudice means the issue is over with no further litigation.

An additional $1.8 million was awarded to Mirbeau, Malmin said.

The memorandum of understanding was the subject of a suit brought by Care of Lake Geneva against the city. That suit was resolved when the city agreed to release the document to the organization.

Dan Draper, Lake Geneva attorney, interprets the memo and the reason for the payments differently.

"First of all, this is not a contract zoning issue," Draper said. "No zoning was changed."

Changes were made to a planning document, but the developer still would have been required to come before the city for zoning changes regardless of the memo, Draper said.

"I know what contract zoning is, and this was not contract zoning," Draper said. "If they (Care for Lake Geneva) want to create new law about contract planning, they can file their suit. That's up to them."

Draper points out a difference between the city and the city's insurer when explaining the payments to the developer.

"The difference is that no taxpayer money was used to end this suit," he said. "We make no apologies for ending this suit and others. We did the right thing, and there's as much as $22 million in potential losses off my desk."

Malmin said the next step is up to his organization's law firm, Foley & Lardner.

"We are not opposed to development, but this proposed project threatens the lake and the city," Malmin said. "We want to see 200 acres set aside near the state park."