Judge, developer help cure Aurora dispute

Parties end legal wrangling in the interest of progress

Milwaukee Journal Sentinel, Aug. 18, 2006

The costly public relations and legal sparring over Aurora Health Care's plans for a new hospital in western Waukesha County went on for five years, but in the end, it was a judge's surprising ruling and the unforeseen offer for a ritzy new shopping center in Oconomowoc that ended the stalemate.

"Those two events helped make it clear to all of us that it was time to move on," Aurora spokesman Jeff Squire said.

For years, the City of Oconomowoc remained confident it would prevail in the lawsuit Aurora filed over the city's 2001 rezoning vote that blocked a hospital in Pabst Farms, Mayor Maury Sullivan said.

Then on May 25, James Kieffer, the third Waukesha County judge to preside over the long-running case, issued the ruling that turned the tide.

Overturning the decisions of two previous judges, Kieffer ruled that Oconomowoc's 2001 rezoning was legally invalid, suddenly giving Aurora the upper hand in the dispute with a claim of $59 million in damages on the line.

Only three weeks later, the ante was upped when General Growth Properties Inc., a leading developer of retail malls that manages Mayfair, announced plans for a huge open-air upscale, $250 million shopping mall on 110 acres in Pabst Farms a plan that relied on Aurora relinquishing its 43-acre site.

Less than two months later, the deal was set: Oconomowoc would use its legal authority to pave the way for construction of the hospital in nearby Summit, and Aurora would agree to end the lawsuit.

"I think this is a good deal for the city of Oconomowoc, and it beats the hell out of litigation," Sullivan said of the agreement signed Tuesday.

The Kieffer ruling set events in motion, Sullivan said.

"We were surprised," Sullivan said. "We thought we were going to win the case."

He said he and other city officials became especially worried about a possible award for damages being granted by the court to Aurora because the city's insurance carrier would have covered only $6 million.

Almost immediately, Sullivan said that although the city would appeal Kieffer's ruling, he was interested in negotiating a settlement.

Aurora took him up on the offer.

"I got a call from (Aurora President and CEO) Ed Howe, and he said he wanted to come out for a visit," Sullivan said. "Out of that visit we decided we would talk."

Then came the General Growth announcement.

Peter Paul Bell, Pabst Farms Development president, said at the time he assumed an agreement would be reached between Aurora and Pabst Farms that would allow construction of the hospital on the 55-acre Summit site, where he, Aurora officials and the town board wanted the development to be located.

The site emerged as the preferred hospital location in 2004 but ultimately was denied in a vote by the Waukesha County Board amid intense regional debate over rising health care costs.

No other projects had been proposed for the Aurora parcel in Oconomowoc since the lawsuit began. But when "General Growth came on the scene," Sullivan said, with an estimated $250 million shopping center, it was too good a development to be sent packing by the legal stalemate between the city and Aurora, Sullivan said.

"We met with General Growth, and I explained that we want them here, we do want that development, and we will work with them," he said. "I think it's in our interest from the Oconomowoc perspective."

In the end, it might have been General Growth's timetable process for putting together its project budget for next year and a desire by that company and Pabst Farms to advance their retail center project in light of a competing one proposed by Robert Lang along I-94 in Delafield that moved negotiations to a quick conclusion.

"We're all working on our '07 budgets right now, and General Growth is moving along at a good speed from our perspective," Bell said.

He said the signing of the settlement represents significant progress for the development of Pabst Farms.

"It was good to get it done," Bell said.