Wednesday, August 29, 2018

Judge rules in favor of UW Oshkosh Foundation, holds state responsible for $15 million

University of Wisconsin Oshkosh photo

The UW Oshkosh Alumni Welcome and Conference Center overlooks the the Fox River.

By Miles Maguire

A federal judge has granted a $15 million judgment to the UW Oshkosh Foundation after finding the state of Wisconsin responsible for breach of contract.

In a ruling issued Wednesday, U.S. Bankruptcy Judge Susan V. Kelley said the state is liable for certain debts incurred by the foundation in connection with two biodigesters and the Alumni Welcome and Conference Center.

UW Oshkosh and the UW System declined to comment. An appeal is expected.

The University of Wisconsin System has argued that it was not responsible for these debts because the foundation is a private entity and could not obligate taxpayers to cover these costs. But this argument is not valid, Kelley said, because the debts were incurred for public purposes.

“There is no question that the construction of facilities designed to serve the university’s students and the surrounding community serves a public purpose,” Kelley said. “The biodigester facilities signified a move towards the use of renewable resources and provided educational opportunities for students, and the welcome and conference center enhanced the campus.”

In legal papers the state has argued that the foundation’s financing agreements were not enforceable because university officials did not follow proper procedures and did not meet statutory requirements for incurring a “public debt.”

But Kelley rejected these arguments as well.

She said the memoranda of understanding that UW Oshkosh issued to cover foundation costs did meet the definition of a public debt. Furthermore, there is a "savings clause" in state law that applies even when officials fail to follow relevant contracting rules to the letter.  

This clause says that public debts are valid "notwithstanding any defects, irregularities, lack of power or failure to comply with any statute."  She said this provision make sense because it would "encourage parties to make credit available to the state by assuring them that public debt will be valid even if the state fails to comply with [statutory] procedures."

Without such a provision, Kelley has said, lenders would balk at making loans to the state for fear that some technicality would allow the state to repudiate the debt or that a change in partisan control of state government would leave creditors hanging.

In granting most of the foundation's requests for repayment, Kelley also rejected claims for $3.5 million in other liabilities and professional fees.

The ruling is a "good outcome," said Timothy C. Mulloy, a retired insurance executive who chairs the foundation's board of directors.

It comes on the heels of a surprisingly high bid earlier this week for the biodigester the foundation owns in Rosendale. The bid of $8.25 million is nearly equal to the liabilities associated with the facility and represents a major step forward for the charitable organization as it attempts to resolve the financial distress that caused it to seek bankruptcy protection last summer.

If Kelley's ruling is upheld, an outcome that could be many months away, legislative leaders may have to revisit their earlier rejection of a plan to use tax dollars to satisfy foundation creditors. 

If such an arrangement were made, the university would likely end up owning facilities that, as the judge noted, had been built for the good of the school and its students in the first place.

Tuesday, August 28, 2018

UW Oshkosh Foundation fetches higher than expected price for Rosendale biodigester

Photo by Brian Kermath for the University of Wisconsin Oshkosh
Huge digestion tanks are at the heart of a system designed to turn cow manure into biogas at Rosendale Dairy.
By Miles Maguire

In a surprise development, the biodigester that the UW Oshkosh Foundation built in Rosendale attracted a flurry of bids this week and may have fetched a price close to the $8.5 million in liabilities the facility has accumulated.

Fond du Lac County Judge Richard Nuss confirmed the results Tuesday of an auction for the biodigester without entering into the record the amount of the winning bid.

It was “a very aggressive and very successful process that was undertaken” to auction the biodigester, Judge Nuss said. “My compliments.”

Assuming that the transaction closes, which is expected to happen early next month, the proceeds from the sale could go a long way toward resolving the financial difficulties of the Oshkosh foundation.

When it filed for bankruptcy last year, the foundation listed a $6.7 million guaranty on the biodigester to Madison-based First Business Bank as its largest unsecured debt. Total liabilities were put at $16 million at the time.

Friday, August 24, 2018

Oshkosh's new schools superintendent talks about her background and her approach to the job

Follow this link to hear Superintendent Vickie Cartwright's welcome message for the new school year:
Vickie Cartwright is the new superintendent for the Oshkosh Area School District, which starts its academic year Sept. 4. In this interview she describes some of the medical and economic challenges of her childhood as well as the hobby that became her ticket to a college education. She began her career as a high school and middle school band director, eventually working her way up to become the associate superintendent in Florida’s Orange County, which is the nation’s ninth largest school district. Her current position pays $195,000 a year.

Cartwright was interviewed by Zack Dion. The following has been edited and condensed. 

If you had to use three words to describe yourself, what would they be? 

I’m very people-oriented, I’m purpose-driven and a strategic thinker, which would go along with forward thinker. That’s probably how I would describe myself, I’m just so passionate. I’m passionate about our community. I’m passionate about children and how we work together to ensure that we set our children up for success.

The power that teachers have to influence lives is amazing. The power that administrators have to influence lives is amazing. The power of anybody who touches a child: a custodian, a secretary, a paired professional, all of us have enormous power and can influence the lives of children. It’s so important and so valuable. There’s one thing you’ll hear from me, and you’ll hear it a lot: No one person is better than anyone else; we just have different roles and responsibilities. That’s key for me, and I’ll live my life that way. So, that’s a little about me.

How have you settled into Oshkosh so far?

I own a house. I live across the street from Menominee Park, off of Merritt Avenue. My location of my house is intentional. I’m here for a long period, as long as the board will have me and the community will have me. I’m here. This is not a short run as you might say. This is my new home and will become my home. I’m eager to meet people and to learn about the community and all that it has to offer. It’s very important.

I’m really enjoying the activities. Oh my gosh, Farmers Market! Just being able to wander around and meet people. The art, the multicultural experience that the community offers as well. The importance of the visual and performing arts here in this community is so important because that’s such a huge part of my personal life, too. 

I’ve been getting out to all the different events that I can and just becoming a part of the community. Because when we say that we’re building community through education, I’m a part of the community and education is a part of the community as well. I’m just an extension of this school district. It’s not about me; it’s about our district. So, becoming engrained is important.

Wednesday, August 22, 2018

Oshkosh arena developer pays city $260,800 to settle past-due bill, gets mortgage loan from builder

Photo by Miles Maguire
The Wisconsin Herd packed the Menominee Nation Arena on Fan Appreciation Night, March 23.

By Miles Maguire

The developer of the Menominee Nation Arena has paid a $260,800 past-due invoice from the city just days after the Oshkosh Examiner obtained a copy of the bill under the Wisconsin public records act.

The bill, dated April 11 with 30-day grace period, covered higher-than-expected construction costs for street, sidewalk and infrastructure improvements near the $17.7 million arena, the home of the Wisconsin Herd pro basketball team.

So far this year the Common Council has held two closed-door meetings to discuss its agreement with the arena developer, Fox Valley Pro Basketball Inc. The meetings were closed under a section of state law that provides for such sessions “to discuss bargaining options, strategy and parameters where competitive bargaining reasons require a closed session.”

Council members said they were unable to talk about the specifics of the discussions, but some expressed unease about the situation.

“It’s a little bit muddy right now,” said Deputy Mayor Lori Palmeri in an interview before the bill was paid. “I’m not entirely sure we know where they are in their obligations.”

But Greg Pierce, the president of Fox Valley Pro Basketball, said nothing is out of the ordinary. “We’re plugging right along,” he said. “We’ve got a big project with a lot of things moving. We continue to work through startup issues as a new business.”

One of the newest developments in the project is the emergence of the construction contractor as a major source of financing. In a mortgage recorded with the county on June 1, Fox Valley has agreed to pay $13.2 million to Bayland Buildings Inc., the Green Bay company that erected the arena.

Monday, August 13, 2018

Oshkosh elections officials say they are confident about voting security safeguards

Photo by Miles Maguire
Democratic members of Congress have criticized the way Wisconsin conducts post-election audits.

By Moira Danielson

Although Wisconsin has been described as one of the most vulnerable states when it comes to election security, the local officials who oversee voting in Oshkosh say they are confident that the necessary safeguards are in place.

Oshkosh voters will cast their votes Tuesday in partisan elections for a variety of positions, ranging from governor to clerk of the courts.

Last month the Democratic members of the congressional Committee on House Administration identified Wisconsin as one of 18 states with the biggest threats to election security. They placed Wisconsin in the third tier of their rankings, meaning that the state has significant election security vulnerabilities and needs additional assistance beyond recently appropriated federal funds to complete upgrades in their election infrastructure.

But Winnebago County Clerk Sue Ertmer, the top local elections official, said she believes local voters can have confidence in the current setup when they cast their ballot.

“I believe the public has a heightened sense of awareness because of recent events, but those of us involved in elections have always been concerned about security,” she said. Oshkosh City Clerk Pamela Ubrig echoed many of Ertmer’s comments about voting security.

According to Ertmer, “the Wisconsin Elections Commission has developed tabletop training exercises for county and municipal clerks that addresses election security.” She said the county has developed contingency plans in case of election-day emergencies.

“The county has a new cyber security employee that is involved with election and cyber security organizations at the county, state and national level,” Ertmer added.

Lowe's on track to get $130,000 property tax refund from city of Oshkosh

Photo by Miles Maguire
The city and Lowe's have agreed that the property on Washburn Avenue is worth $6.3 million.

By Miles Maguire

The Common Council is getting ready to approve a big property tax refund for Lowe’s Inc., the home improvement retailer that has been contesting the value of its store on Washburn Avenue.

The chain would get a $130,000 cut on its 2018 tax bill under the proposed agreement, which the council will review at its meeting on Wednesday. The refund would be for overpayments in 2016 and 2017.

The city would absorb the biggest hit, about $53,000, while the Oshkosh Area School District would be expected to give back almost $42,000.

The proposed settlement is the latest turn in the “dark store” dispute between local governments in Wisconsin and national retail chains.

The debate is over the proper method for setting property values. Rather than using construction costs or operating results, the retailers say their stores should be assessed based on comparisons to the value of similar structures, even ones that are vacant and not generating any income.

The retailers’ preferred approach is allowed under state law and has led to a wave of tax refunds to the companies.

While business interests say the tax reductions are a way of keeping consumer prices down, the cuts also mean a shift of costs to residential property owners and to owners of small businesses.

The Lowe’s property was previously assessed at $11.4 million, which prompted the company to sue the city. Under the agreement the company and the city will agree that the store is worth $6.3 million.

The company’s property tax bill for 2017 was $239,000.

Thursday, August 9, 2018

Rosendale biodigester goes up for auction this month, expected to draw fraction of original cost

University of Wisconsin Oshkosh photo
Huge digestion tanks are at the heart of a system designed to turn cow manure into biogas at Rosendale Dairy. 
By Miles Maguire

The UW Oshkosh Foundation is prepared to sell its Rosendale biodigester for just $2.1 million but has scheduled an auction for later this month to see if other offers come forward.

The foundation affiliate that built the biodigester owes $8.5 million to 14 creditors, according to documents filed in Fond du Lac County Circuit Court. The largest creditor is First Business Bank, a Madison-based lender that is owed $7 million. The second largest is the foundation itself, which is owed $1.2 million.

The sale would represent a big loss on the biodigester, which cost at least $6.7 million to build and has also been described as a $10 million project. But a successful auction would mark a critical step in resolving the foundation’s bankruptcy case and possibly mending relations with the university.

“It moves things along,” said Tim Mulloy, the foundation’s chairman of the board. At one point the foundation was criticized for getting involved in a range of real estate projects, but most of those would be off its books after the Rosendale sale.

Wednesday, August 8, 2018

Oshkosh woman wins claim after Delta misses court appearance

Delta Air Lines photo
Bad weather and miscommunication turned a two-day trip into an ordeal for a student returning to school.
By Zack Dion

An Oshkosh woman won a $3,200 claim against Delta Air Lines after a planned one-stop trip to the Caribbean turned into a series of canceled flights and reroutings that took her son from Chicago to Philadelphia to New York back to Philadelphia and then to Toronto; Christ Church, Barbados; Piarco, Trinidad and Tobago; and finally St. George’s, Grenada.

Patricia Hallquist filed her claim against Delta Air Lines in March after her son, Eric, experienced multiple cancelations of his flights to return to school in Grenada earlier this year.

Initially the airline said it had no liability because the cancelations were weather-related, but then it sent no one to attend a mediation orientation. Commissioner Bryan D. Keberlein entered a default judgment against Delta on May 22 to pay the claim when the airline didn’t appear in court.

Using a joint credit card, the family bought two Delta flights for Jan. 3 and 4, one from O’Hare International Airport in Chicago to John F. Kennedy International Airport in New York and another from New York to Maurice Bishop International Airport in Grenada. When the flight to JFK was canceled, the airline booked Eric a flight to Philadelphia International Airport.

After arriving in Philadelphia, Eric thought he was booked on a flight from New York to St. George’s on what was described as a Delta partner, Caribbean Airlines. Eric took a ground shuttle to New York, where he was told that he was not on the passenger list for the flight.

Delta offered to let Eric be put on standby, but he declined because of weather conditions and took a shuttle back to Philadelphia, costing the family almost $900 for the two shuttle trips, according to court papers.

The family said it then spent over $1,300 in plane tickets to get Eric to Grenada as he traveled a circuitous route through Canada and two island nations before his arrival in Grenada on Jan. 8. Eric’s luggage didn’t arrive in Grenada until Jan. 21, according to court documents. Patricia also sent a box of clothes and supplies to Eric which cost over $300 to ship, court papers state.

A Delta representative contacted Patricia Hallquist the week of July 23 and settled the claim, which came to almost $3,300 including filing costs. A contempt hearing scheduled for Aug. 22 against a registered agent at Delta was dismissed after the court was notified that the claim had been paid. 

Friday, August 3, 2018

Oshkosh woman accused of stealing over $300,000 from campus food service provider Sodexo

Photo by Miles Maguire
A teller at the downtown office of U.S. Bank cashed checks marked for deposit only, court papers state.
By Miles Maguire

An Oshkosh woman who handled payments for dining hall meals at UW Oshkosh has been accused of duping the school’s food service provider out of at least $300,000 and perhaps as much as $500,000.

Karen M. Anderson, 51, faces up to 10 years in jail and a $25,000 fine if convicted in the case. She worked for 13 years at Sodexo, a French company that operates in 80 countries and has long held the food service contract with UW Oshkosh.

According to court papers, Anderson made off with the money after convincing a teller at the U.S. Bank office on Main Street that it would be OK to cash checks that were marked “for deposit only.” Anderson told the teller that the money “had to go two different places,” court papers show.

A “customer paid Sodexo for the catering services and paid the university for room rental,” according to an affidavit filed in support of the criminal charges. Anderson “was allowed to cash the deposit only check and apply it to the Sodexo account and then forward the rest to the university,” the affidavit states.

“After the first one or two occasions she kept all the money she cashed from deposit only checks,” the affidavit says.

But the only money that is alleged to be missing is from Sodexo. “No university funds were involved,” said Mandy Potts, the university’s director of communications.

Wednesday, August 1, 2018

Sale of historic Oshkosh home OK'd in bankruptcy court

Photo by Miles Maguire
The UW Oshkosh Foundation said the Alberta Kimball House got five offers, including the top one of $340,000.
By Miles Maguire

The UW Oshkosh Foundation has been given the go-ahead to sell the historic home at 1423 Congress Ave. that was built for businesswoman and philanthropist Alberta Kimball and later was acquired as a residence for the university’s top official.

The 1969 structure, described as a “classic example of American Mid-Century Modernism,” will fetch just $340,000. This amount is below its listing price of $399,900 and below the $450,000 the foundation paid in 2013 to the former owners, then-Chancellor Richard H. Wells and his wife, Christie Charbonneau Wells.

This rendering is taken from a brochure printed when the house was owned by former Chancellor Wells. 

U.S. Bankruptcy Judge Susan V. Kelley approved the sale in an order dated July 24.

The buyers are Oshkosh residents Matthew Stromske and Michelle Depa, who currently own a nearby house on New York Avenue, according to city property records.

Court documents show that the proceeds of the sale will cover a $20,400 commission to real estate agent Megan Lang and pay off a mortgage of about $310,000 held by Verve credit union. The buyers will get a $10,000 credit to deal with a leaky roof, the foundation’s lawyer said in a filing.

The property was shown 30 times and attracted five offers, the filing says.

The house was put up for sale as part of the foundation’s bankruptcy proceedings, which began last year in the wake of an investigation by the state of Wisconsin. A key aspect of the foundation’s financial problems has been its investments in real estate.

When the Congress Avenue structure was built, Kimball was serving as president of the Miles Kimball Co., the mail-order business she took over after her husband’s untimely death. An immigrant from Germany, she ran the operation for 30 years and remained active in the community after the company was sold in 1980. She died in 1996.

In addition to her residence, Kimball left her mark on the city by investing in or helping to fund numerous projects, including the Park Plaza Mall, the adjacent waterfront hotel, the Chamber of Commerce Building, the Oshkosh Civic Auditorium (now named for her) and the expansion of the Oshkosh Public Library.