The Wisconsin Veterans Museum has occupied the lower floors of this 10-story building on Capitol Square for three decades. The state is moving forward with plans to replace it with a new, bigger museum, but the current owner has a different vision for the site.
When officials announced earlier this month that the state had approved $9 million to replace the deteriorating Capitol Square building that houses the Wisconsin Veterans Museum, the owners of the building said the state left out one important detail: The building isn’t for sale.
The property’s four owners maintain the state lost its option to purchase the building after it was late in making a rent payment last fall.
Instead, the owners say, they are moving ahead with plans to replace the building themselves with a 12-story, 97-apartment building after the state’s lease expires in late 2025. If the state wishes to keep the Veterans Museum where it is today, they say, it can make use of the first few floors.
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“The museum can either lease or purchase the box that will house the museum, with the museum occupying the first three floors with their own separate entrance,” Greg Rice, CEO of Executive Management Inc., the company that manages the property, said in a statement last week.
A preliminary rendering of the proposed Wisconsin Veterans Museum on Capitol Square. The building’s current owners say the state has forfeited its right to buy and redevelop the property.
The Wisconsin Department of Veterans Affairs wants to demolish the existing structure at 22 and 30 W. Mifflin St. and build a striking new museum at the site. A preliminary five-story, $140 million design released more than a year ago would allow the museum to feature much more than the 3% of its collection on display today.
The Department of Veterans Affairs has leased space in the building for more than three decades. In 2005, the Department of Administration entered into a lease amendment with the then-owner on behalf of the Department of Veterans Affairs that gave the state the option to buy the building, according to filings with the State Building Commission, which voted Aug. 7 to approve the acquisition.
Under the terms of that amendment, which the DOA shared with the Wisconsin State Journal, the state has the right to buy the building at least six months before the end of the lease, as long as it “is not in default.” The amendment also outlines a process for determining a fair purchase price, including up to three appraisals.
The state’s appraisal came in at $9.1 million.
But the property owners — Madison Real Estate Properties, Madison East Shopping Center LLP, 30 West Mifflin LLC and Mainsail Development LLC — maintain that the option to purchase became void when the state was late on rent in November and December of last year and the owners declared the state in default.
According to letters that the DOA sent to the property owners, the state didn’t pay its November rent on time because the check request “had not been fully processed” by its internal payment system.
The state mailed the check on Nov. 7. It sent December’s rent at the same time “as a showing of good faith,” Sanjay Olson, an agency administrator, said in one of the letters.
One day later, on Nov. 8, the DOA received a “notice to terminate” from the property owners that declared the state was in default on the lease and ordered the state to vacate the premises.
The state received its November and December rent checks back from the property owners, uncashed, on Nov. 21. In a letter dated Nov. 29, Olson told the property owners that the state was resending both checks prior to the Dec. 1 deadline for December’s rent. That payment was ultimately accepted.
Terrence Wall, who is president and CEO of development firm T. Wall Enterprises and who owns a stake in the Veterans Museum property through his company 30 West Mifflin LLC, said the checks were returned because the owners had already declared the state in default on the lease.
The property owners are now waiting for the lease to expire before they proceed with redevelopment, Wall said.
The owners “have no intention of selling the property, and certainly not for $9 million, and have expressly communicated that to the State and the Department of Veterans Affairs,” they said in their statement.
A rendering of a proposed 12-story development the owners of the site say they intend to build where the Wisconsin Veterans Museum stands today. The owners say they’re willing to reserve the first three floors for the museum.
The state’s announcement that it had authorized the purchase of the building “was premature and an attempt to take the property without appropriate compensation,” they said.
The state contends it paid the overdue rent promptly enough that the lease cannot be legally terminated.
“The fact that you chose to return those payments does not change the fact that these leases are currently in good standing,” Olson said in the Nov. 29 letter.
“We plan to move forward with exercising the purchase option for the future construction of a new Wisconsin Veterans Museum,” DOA spokesperson Tatyana Warrick said in an email to the State Journal last week.
The agency “disputes any claims by the lessor that suggest there has been any default of the lease agreements,” Warrick said, “and we further believe the lessor has no legal basis to terminate these leases at this time.”
