Opinion ID: 1726781
Heading Depth: 4
Heading Rank: 2

Heading: Gebhardt v. City of West Allis

Text: ¶ 41 In Gebhardt, the State of Wisconsin leased property to Richard Gebhardt and William Sommer (collectively, Gebhardt) for 10 years with an option to renew for 10 years. Gebhardt, 89 Wis.2d at 104, 278 N.W.2d 465. The property included an ice skating arena at the Wisconsin State Fair Park that Gebhardt was required to build pursuant to the lease. Id. at 104, 278 N.W.2d 465. The City of West Allis asserted that Gebhardt was the owner of the ice skating arena, while Gebhardt asserted the state was the owner for Wis. Stat. § 70.11(1) [11] property tax exemption purposes. Id. at 105, 278 N.W.2d 465. This court sided with Gebhardt. Id. at 114-15, 278 N.W.2d 465. ¶ 42 In our analysis, we observed that Gebhardt possessed the following indicia of ownership as articulated in the lease: (1) the building was constructed at [Gebhardt's] sole expense; (2) [Gebhardt] enjoyed the use and benefits of the ice arena for ten months out of every year; (3) the lease require[d Gebhardt] to maintain and keep the premises in proper repair; (4) [Gebhardt was] required to carry full fire and extended coverage on the building and its contents and (5) under the terms of the lease [Gebhardt bore] the risk of loss should the ice arena be destroyed during the lease period. Id. at 109, 278 N.W.2d 465. ¶ 43 In concluding that Gebhardt was not the beneficial owner, we noted that the benefits Gebhardt received from the property were distinctly different from the benefits Mitchell Aero received. Id. Significantly, unlike Mitchell Aero, Gebhardt was required to pay rent based upon the number of years since the commencement of the lease and a percentage of the gross receipts from the operation of the [ice arena]. Id. at 110, 278 N.W.2d 465. Also significant was the fact that, unlike Mitchell Aero's 80 percent insurable interest in the property, Gebhardt had an insurable interest in the property that diminished as the state came closer to acquiring a full and complete possessory interest in the property when the lease expired. Id. at 113, 278 N.W.2d 465. ¶ 44 In addition, the state exercised significant control over the ice arena that interfered with Gebhardt's business operation. The state's control included: (1) selection of the location for the ice arena and prior approval of the plans; (2) ownership of structural improvements if the lease was terminated because the ice arena was not completed by a specific day; (3) limitations on Gebhardt's use of the ice arena to ice skating related sports and recreation; (4) exclusive right to use the arena for two months every year without charge; (5) requirement that improvements be made to the completed structure at Gebhardt's expense for the benefit of the state; (6) sole operation of the only concession stand and prohibition of the operation of a competitive concession stand; (7) keys to all doors and the ability to enter the ice arena at any time; (8) requirement that Gebhardt post hours and fees, and cater to special groups in the neighborhood; (9) prohibition on ice arena customers entering State Fair Park during certain special events; (10) prohibition on selling, conveying, letting, or subletting any portion of the ice arena without prior consent; and (11) requirement that Gebhardt repair any damage to the building caused by removal of personal property after the termination of the lease. Id. at 110-112, 278 N.W.2d 465. ¶ 45 In light of the above factors, we held that the ownership of the ice arena rested in the state and that the indicia of ownership attributed to [Gebhardt were] not persuasive to the court to constitute true and beneficial ownership pursuant to ch. 70. Id. at 114-15, 278 N.W.2d 465.