A motion to grant the City of Milwaukee the title to the former Northridge Mall property has been put on hold as the property’s owner, China-based U.S. Black Spruce Enterprise Group, Inc.
, has entered into an agreement to sell the property to Milwaukee-based real estate firm Phoenix Investors LLC
News of the purchase agreement came as a surprise to both the city and Judge William Sosnay
, who is presiding over the case. Attorney Mark Foley
, representing Phoenix Investors LLC, said the firm and Black Spruce have been in negotiations since January, yet no one else was informed of those negotiations until this week.
“The court was notified 24 hours ago, even less than that, in a significant change in posture in this case,” said Sosnay.
He expressed several concerns with the sale agreement, which was submitted as a sealed document and will remain that way for at least the next several weeks.
Sosnay said the agreement made no mention of how Phoenix Investors would address the current raze order on the property and that it does not meet a current order for 24/7, in-person security to be placed at the former mall site.
Foley said Friday it was his understanding that under the purchase agreement, Phoenix would seek to maintain the current mall structure and renovate it. He added that if the raze order were not eventually reversed following negotiations on the agreement involving all parties, he believes Phoenix will not move forward with the purchase.
The sale agreement includes a 45-day period for Phoenix to complete due diligence and work with both the city and Black Spruce to address the ongoing concerns at the property. If a deal is struck within that time, the deal to purchase the property must close within another 10 days.
“We don’t want anyone on the outside of this deal to either use it to create a competing bid or to interfere with the process that we think is going to solve this project, for whatever motivations they may have,” said Foley.
As has become the norm, representatives from Black Spruce failed to appear in court on Friday, even with an order from the court that was issued earlier this year. Sosnay has fined Black Spruce leadership once again for being in contempt of court. For every day that each of the firm’s two directors does not appear in court, a fine of $1,000 per person will be added to the company’s growing debts. Since this case was last in court at the start of the year, Black Spruce has been fined another $261,532.
Sosnay, while clearly dissatisfied with how the sale agreement came to light, decided to give all parties involved additional time to negotiate. He said the fact that a firm with actual ties to the City of Milwaukee could buy the property was a deciding factor in this move.
“I’m advised that the principal is a local person, which interests the court,” said Sosnay. “The fact that there would be ownership here, I think, would be a positive thing. In any event, the court needs more information.”
The next hearing in this case has been set for April 14. The proposed sale agreement will once again be considered at that time.
A called placed with Phoenix Investors was not immediately responded to Friday afternoon.