Developer could face uphill battle to evict Postal Service

Complaint alleges maintenance needed on downtown Post Office building roof, ceilings and parking ramps

Last updated on May 15th, 2019 at 04:50 pm

Evicting the United States Postal Service from its building in downtown Milwaukee to make way for a multi-million redevelopment of the building won’t be easy, according to legal sources.

Matt Garrison, the Chicago-based investor and developer who purchased the 1.1 million-square-foot, four-story Post Office building at 341 W. St. Paul Ave. three years ago, filed an eviction notice in Milwaukee County small claims court on Aug. 21.

The front entrance to the downtown Milwaukee U.S. Postal Service facility.

Garrison, managing principal of R2 Companies, alleges that since April 26, the U.S. Postal Service has known about “deficiencies in maintenance of the building,” violating the lease agreement, which dates back to 1970, that requires the tenant to keep the building in acceptable condition.

On July 10, Garrison sent the Postal Service a notice of default giving them until Aug. 15 to remediate the deficiencies in breach of the lease, according to the complaint.

The Post Office did not respond, according to the complaint.

A spokesman for the United States Postal Service would not comment on the report, saying it was policy not to comment on pending litigation.

In March, the USPS renewed its lease at its downtown Milwaukee building, which was built in 1967, through April 2025.

The move by Garrison and R2 to evict the Postal Service from the building is unusual, some legal experts say. Only about five percent of evictions are related to property conditions, which can be challenging to prove because each side (tenant and landlord) brings in their own set of experts to argue about the extent of the problem(s) with the building, said John Van Lieshout, a shareholder in Reinhart Boerner Van Deuren’s environmental and real estate practice.

There is also the question of who is responsible to maintain the property, the tenant, or the owner, Van Lieshout said.

“You may end up having a trial that will weigh heavily on the testimony of the experts, pictures and even an onsite inspection,” Lieshout said. “This can all take some time, depending on the number of violations.”

The first hearing on the eviction is scheduled for 1:30 p.m. Oct. 2, in Milwaukee County small claims court.

Eric Van Schyndle, an attorney with Quarles & Brady LLP, who is representing R2 and Garrison, did not want to comment on the case.

Aerial view of the downtown Milwaukee Post Office building.

Timothy Posnanski, a partner with Husch Blackwell who focuses on real estate, said attempting to evict a commercial tenant, that is paying its rent, is difficult if there is not a glaring safety or security risk.

“Even in those circumstances, tenants are more likely to get the right to address those issues rather than eviction,” Posnanski said. “Here in particular, where it is a Post Office, there is going to be an uphill battle. They are providing a governmental function and something that is necessary and vital to the entire downtown area where businesses and individuals need timely and efficient delivery of mail. That will only heighten complications.”

According to the complaint, the USPS had a contract with EMCOR Customer Solutions Center for a landlord management program. On Sept. 13, 2017, Garrison was told maintenance was required at the property that needed to be done by Oct. 13.

When Garrison toured the property on March 9, 2018 he found the north portion of the roof was covered in moss, plants and bird droppings, maintenance was needed on the interior ceiling, and the second level concrete drive floor and east ramp were deteriorated, according to the complaint.

Under the EMCOR contract and the lease agreement, maintenance was supposed to be handled by the tenant, the Postal Service, according to the complaint.

Garrison purchased the Post Office building in October 2015. At the time, he announced a dramatic redevelopment plan for the building once the Post Office’s lease was up. The plans included 980,000 square feet of office space between renovations to the existing structure and a new office tower that would be built on its west end. A new 282,000 square-foot residential tower would be built on its east end, according to the plans. Renovations to the existing structure would also create 300,000 square feet of space to be filled by restaurants, bars and entertainment venues as well as 212,000 square feet of space for a big box retailer. A 13,000-square-foot extension of the river walk and a 14,000-square-foot pedestrian bridge connecting the building to the Harley-Davidson Museum across the Menomonee River would also be added, according to the plans.

Garrison now says he does not want to discuss his current plans for the property, saying he is focused on the eviction. However, the development website for the post office is still active.

Since the purchase, Garrison has continued to invest in Milwaukee. He was one of the non-named buyers in the ASQ Center in downtown Milwaukee in July, partnering with Minneapolis-based Hempel Cos. on the $19.9 million purchase, he said Wednesday.

If the Post Office is evicted from its downtown Milwaukee building, the USPS has land in the area to build another facility.

USPS purchased 64 acres at the southwest corner of East College and South Pennsylvania avenues in Oak Creek in 2008 with the intent to develop a new 820,000-square-foot mail processing and distribution center. At the time, the Postal Service announced it would work with Milwaukee developer Cobalt Partners to build a more efficient building on that location and vacate the downtown facility, which was said to be obsolete. But the project never moved forward.

USPS still owns the land, but has not brought forward any proposals for development at the site, said Oak Creek city planner Kari Papelbon.

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