The city of La Crosse has started evictions proceedings against the La Crosse Municipal Boat Harbor; however, the proceedings were stayed Friday after the corporation filed Chapter 11 bankruptcy.
Longtime harbor operator Steve Mills, the president of the company that has operated the marina on Isle la Plume since 1977, is accused of defaulting on the terms of his lease agreement with the city by failing to pay a nonresident surcharge, noncompliance with Wisconsin Department of Natural Resources orders and failure to have a valid seller’s permit.
According to court documents filed by attorney Phillip Addis, representing the city, Mills’ company had its seller’s permit revoked in April by the Wisconsin Department of Revenue after failing to pay thousands of dollars in sales tax to the state. The Department of Revenue issued tax warrants adding up to $6,600 against the company.
The agreement with the city called for the company to pay tax liens in full by July 11 and for the company to have a valid seller’s permit.
The city also claims Mills failed to make corrections to the docks required by the DNR. The lease agreement puts sole responsibility for compliance with federal, state and municipal requirements on the corporation.
According to a May 12 DNR letter to Mills and the city’s Parks and Recreation Department — which took on oversight of the marina last year — the harbor has a long history of noncompliance with state laws and failed to meet environmental standards and acquire the proper permits.
The DNR noncompliance notice said the Styrofoam used in the dock construction is not an appropriate material and called for the docks to be reconstructed out of material designed to resist deterioration after the Styrofoam broke apart into the Mississippi River. The state agency also called for the removal of grills, tables, chairs, storage units and other items placed on decks attached to the docks. The state requires deck-like structures to be located upland.
The city also claims the harbor company owes it $6,500 in nonresident surcharges and penalties from 2015. According to court documents, the city and Mills came to an agreement in July, with Mills agreeing to pay $3,400 in fees, plus a penalty of 10 percent and 10 percent interest, bringing the total owed to the city to $4,080.
Due to the alleged violations, the city filed eviction proceedings Aug. 17, and a hearing was scheduled for Friday morning. Had the eviction been granted, Mills would have immediately been removed from the property; however, immediately prior to the hearing, Mills filed paperwork seeking Chapter 11 protection, starting a restructuring process through federal bankruptcy court. La Crosse County Circuit Court Judge Elliot Levine stayed the alcourt proceedings until the Chapter 11 restructuring is complete.
La Crosse Municipal Boat Harbor’s attorney Galen Pittman of La Crosse denied the allegations, adding that the details of the disagreement with the city will now be worked out in federal court, trumping municipal and state concerns.
“It holds this case in limbo while we cure the provisions of the alleged default, because there’s no proof of any items yet,” Pittman said. “There may be some questions in the lease as to the aspects of it, but those will be handled in the bankruptcy court.”
The city’s attorneys in the matter, Addis and Stephen Matty, say the outcome of the hearing does not change the city’s position.
“He has the right to try to reorganize and work this out with the city,” Addis said. “The city’s position is still that he is in default on his lease, that he’s got violations that have not been cured, and the city will now work with the bankruptcy court to move forward.”
Mills has operated the 184-slip marina at 1500 Joseph Houska Drive for almost 40 years. He signed a 25-year lease in 2002, which extends to 2027.
The proceedings mark the sixth time the city has found Mills in default of the lease since 2013, for reasons ranging from unlicensed or inoperable boats and unpaid bills to insufficient insurance and subleasing space to other businesses without first obtaining city approval.
The city has not yet made plans for the operation of the marina if Mills is removed.