FRIENDSHIP LAKE DISTRICT
SPECIAL MEETING SUMMARY
FRIENDSHIP, WISCONSIN
MAY 27, 2017

1. Call Special Meeting to Order:

The special meeting was called to order by Bob Berry at 9:10 am at the Adams County Community Center. In attendance were Commissioners Linda Moonan, Karen Pokorny, Ron Johnson, Deborah Parr, and Lee Parlow. Approximately 95 Friendship Lake property owners and guests were in attendance. The property owners represented the Village of Friendship, The Town of Adams, and the Town of Preston. Also in attendance was Attorney Michael Hahn from the law firm of Axley Brynelson.

Bob Berry began with his introduction and then each board member introduced themselves to the members in attendance with their specified titles. Bob also explained that the purpose of this meeting is to present the findings of the appraisal of the Friendship Dam and the Resolution to proceed with Condemnation or Eminent Domain of the Friendship Lake Dam. Bob then introduced the districts Attorney, Michael Hahn, to begin his presentation.

2. Presentation by Attorney Michael Hahn regarding the Resolution of

Condemnation Proceedings:

Attorney Michael Hahn began his presentation reminding everyone that at the annual meeting of the Friendship Lake District on September 3, 2016, it was decided by the property owners through a vote, that his firm Axley Brynelson would represent the district to obtain a narrative certified appraisal and then pursue Condemnation to acquire the Friendship Lake Dam through Eminent Domain.

Mike presented the completed narrative appraisal prepared by Mr. William Steigerwaldt of Compass Land Consultants. This report is very detailed and gives a fair market value of the Friendship Lake Dam of $110,000.00. This value includes the powerhouse, the power generating equipment, the impoundment, and the flowage rights. This value was determined by a sales comparison approach. Mike explained that in order to proceed with Condemnation or Eminent Domain, a condemning authority, in this case the Friendship Lake District has to pay fair market value or Just Compensation for the property that is being condemned.

The best way that fair market value is determined and Constitutionally required by the Wisconsin Supreme Court is by comparable sales. In this case the appraiser was able to identify three comparable sales of power generating dams the first from 2007 for $120,000, the second in 2008 for $65,000, and this year, 2017 for $104,000. This appraisal shows that they are comparable dams with regard to size and power generation.

Mike stated that the fair market value is what is offered to proceed with the Condemnation process. This is based on actual data verified by a certified narrative appraisal and required by the State of Wisconsin and our Constitution for the proper use of Eminent Domain.

Mike explained that the next step is to formally begin the Condemnation process. Mike handed out a copy of his memorandum detailing an abbreviated outline of how this process works going forward and a timeline. Mike said that today if the property owners vote to authorize the Board to proceed with Condemnation and make an initial offer of $110,000.00, the Board will then vote to issue what is called a Relocation Order. This is the first step in formally condemning and taking ownership of the Friendship Lake Dam.

The Relocation order basically puts the dam owner, in this case Mr. Pheiffer, on notice that the Lake District is proceeding under section 32.05 of Wisconsin Statutes and intends to condemn the property in order to maintain the Friendship Lake levels, improve the environmental habitat, and preserve the lake for the property owners enjoyment as well as the public’s use and enjoyment.

Mike explained that after a vote to authorize the Relocation Order by District Board, Mr. Pheiffer will be served that order, a map of the area that is to be condemned, a copy of the certified narrative appraisal, and a copy of his rights under section 32.05 of the State of Wisconsin Statutes. After Mr. Pheiffer has received a copy of the Relocation Order, he has 60 days to obtain his own appraisal and submit those expenses to the Lake District for reimbursement. When a municipality or in this case the Lake District is exercising Eminent Domain the land owner always has the right to obtain another appraisal at the condemning authority’s expense. It does have to be performed within 60 days of the day he is served if he wants reimbursement. He can obtain his own appraisal and pay for it. He doesn’t have to submit a bill if he doesn’t want to. If he obtains an appraisal after the 60 days, the district does not have to pay for it, however, in negotiations, the district has to consider that value in settlement of the claim.

Mike stated that once Mr. Pheiffer obtains a second appraisal we would then attempt to negotiate an agreed upon price. The negotiations would be with Mr. Pheiffer, or if he chooses with an attorney representing him. If that price is fair to both party’s we would then bring that number back to the Lake District property owners for their approval. If we cannot negotiate an agreed upon price, then the Lake District issues a Jurisdictional Offer, or our final offer.

That offer can be based upon our appraisal or it can be based upon any appraisal Mr. Pheiffer obtains and turns over. After the last offer, or the Jurisdictional Offer has been given, Mr. Pheiffer has 20 days to accept that offer.

If he does not accept that offer, then the Lake District issues what is called an Award of Damages. The money in a form of a check is paid into the Clerk of Courts of Adams County and the Award of Damages is made. Once the Award is paid and recorded with the Register of Deeds, the Title of the Friendship Lake Dam transfers to the Friendship Lake District. At that point the Lake District is the owner of the Friendship Lake Dam.

After the Award of Damages is issued, Mr. Pheiffer has the right to challenge the Lake District’s actions in two ways. First, within 40 days of the Jurisdictional Offer, he can file what is called a Right to Take Action. He would be challenging the Lake District’s authority to condemn under Wisconsin law, but Mike stated that Mr. Pheiffer could try, but he would loose.

Mike stated again that the Lake District has the right to take the Friendship Lake Dam through Condemnation. His firm has extensive years of experience in representing business and municipalities in the process of Condemnation. His firm has done extensive research and again reinforced that this Lake District has the power and authority to pursue this legal action. Acquiring the dam to save the lake for not only the property owners but for the public’s use is the quintessential public purpose.

Mike explained that Mr. Pheiffer also has the right to challenge the amount of compensation. If he doesn’t agree with the Jurisdictional Offer he has up to two years to challenge the amount of just compensation. It doesn’t affect whether the Lake District has the authority to condemn, or if it has the legal ownership of the dam, it simply is the Just Compensation for the Dam. Generally speaking this would go before a jury as to what is Just Compensation. The jury would have no idea what the district offered. The jury would only be shown what the appraisal values are and then the legal arguments regarding that value.

Mike stated that we could be offering a Jurisdictional Offer by the end of August 2017. There will most likely be a Jurisdictional Offer or an agreed upon price by September of 2017. Mr. Hahn was finished with his presentation and returned the floor to Chairman Bob Berry.

Bob Berry asked everyone in attendance to please make sure they had copies of the Resolution and the excel spreadsheet detailing the cost projections.

Linda Moonan made a motion to approve the Resolution authorizing the Friendship Lake District Board to proceed with Condemnation of the Friendship Lake Dam, authorizing an initial offer of the appraised value of $110,000.00, and authorizing the Board to negotiate, through counsel, an agreed upon price for the Friendship Lake Dam. Karen Pokorny seconded this motion. Bob Berry then opened the floor for discussion and questions and recommendations.

Many district property owners engaged in questions and answers with Attorney Michael Hahn over the course of the next hour. Questions were raised regarding attorney fees, the Resolution to proceed with Condemnation with an offer of $110,000.00, as well as the second appraisal requirements. A member asked what would happen if the power equipment inside of the dam was removed. Mr. Hahn responded that the equipment must remain. The appraised value is based on a power-generating dam used to produce electricity. If the power generation would be removed it would no longer have that value.

Mr. Hahn clarified his statements during his presentation today regarding Condemnation and the Wisconsin Statutes that demand Just Compensation based on the certified narrative appraisal with documented fair market values.

A member questioned when would the Lake District be responsible for the dam owner’s attorney fees. Mike clarified that if Mr. Pheiffer challenges Just Compensation in court in order to recover his attorney fees, he would have to substantiate his value and that has to be at least 15% more than the Jurisdictional Offer.

A questions was asked about the DNR and the rules regarding our lake level and environmental habitats. Many members spoke about how frustrated they are with their property values, shorelines, lake levels, and the inability to use their boats and other watercrafts. Mr. Hahn responded that he has spoken with the DNR a number of times and has shared the concerns of the property owners especially with the most recent draw down of the lake level. There were reports of dead fish and dead turtles. Mike said in his conversation with the DNR he was told that this information has now been forwarded to the Environmental Enforcement Division of the DNR.

Mike stated that the DNR is very concerned and is taking the situation on Friendship Lake very seriously. Mike stated that he has had conversations with Bill Sturtevant and Meg Galloway at the DNR. They are aware of our situation and of the special meeting being held today of the property owners.

They are two of the top dam safety specialists working at the DNR. He was told by them that they are now in the process of putting more pressure on Mr. Pheiffer to have the Dam Failure Analysis completed, and to address other demanded benchmarks currently not in place. Mike stated that he was informed by the DNR that Mr. Pheiffer currently may have control over the lake level, but he cannot do anything drastic that would cause a fish kill, or anything that will adversely damage the Friendship Lake environment or habitats.

Bob Berry next explained the excel spreadsheet detailing the projected costs to the property owners. He went over the sheet in detail describing each expenditure, loan data, revenue from the dam and finally estimated the additional operating costs to the annual budget. Bob explained that these costs reflect the “worse case scenario”. The spreadsheet does not reflect the exact costs to repair the dam or any grants available towards the repair. The property owners on the lake would be looking at approximately an extra $196.94 in special charges per year. The data is based on a 20-year loan. Bob is also recommending that we add a sunset clause with the possibility of paying this loan off sooner. After the loan is paid we would reduce the special charges to the more normal cost. This is based on the 112 property owners that have property with lake frontage.

A questions were asked for clarification if an owner owns multiple parcels. Linda Moonan clarified for the members the description of special charges and properties if improved or unimproved. She confirmed that there are not individual tax bills per property and there is one special charge per property tax bill from your village or township. She recommended that the property owners should review their previous property tax bill to verify that information.

A general request from many of the property owners was verbally made that they were ready to vote. Bob stated that the vote is to approve the motion on the Resolution authorizing the Friendship Lake District Board to proceed with Condemnation of the Friendship Lake Dam, authorize initial offer of the appraised value of $110,000.00 and authorize the Friendship Lake District Board to negotiate through our attorney an agreed upon price for the Friendship Lake Dam.

Ballots were handed out to verified property owners in attendance. A special ballot committee was created to tabulate the vote count and comprised of Bill Graf, Dan Meinen, and Steve Pokorny. The vote count resulted with 82 votes in favor of the Resolution and two opposed. The motion carried

Adjournment:

The special meeting adjourned at 10:25am.

Respectfully Submitted
Karen Pokorny
Commissioner Secretary
June 1, 2017