Opinion ID: 1726781
Heading Depth: 4
Heading Rank: 3

Heading: City of Franklin v. Crystal Ridge, Inc.

Text: ¶ 46 Finally, in Crystal Ridge, we held that Milwaukee County was the owner of a ski chalet and a rental building that it leased to Midwest Development Corporation [12] as part of a plan to construct and operate a down hill facility with restaurant/chalet and parking lot and other sports activities for all seasons. Crystal Ridge, 180 Wis.2d at 564, 509 N.W.2d 730. The lease was for 10 years with three 5-year renewal options. Id. Midwest built a ski hill along with buildings and other improvements to the land, as required by the lease, and it paid Milwaukee County rent of the greater of three percent of gross profits or $10,000 per year. Id. at 564-65, 509 N.W.2d 730. Midwest used landfill material dumped at the site to construct the ski hill. Id. at 565, 509 N.W.2d 730. The lease required that Milwaukee County and Midwest share the revenue from the dumping fees to improve the facility. Id. Between the dumping fees and rent, Milwaukee County earned $744,569 for a 5-year period, whereas Midwest operated the ski hill at a loss of $83,694 for the same 5-year period. Id. ¶ 47 We noted the following indicia of Midwest's ownership in the buildings: (1) Midwest constructed the buildings at its own expense; (2) Midwest and Crystal Ridge enjoy the use and profits from the ski facility for three and one-half months each year; (3) Midwest carries fire and liability insurance on the buildings; (4) Midwest is responsible for repairs and maintenance on the buildings; and (5) Midwest agreed to pay all licenses, fees and taxes on the property. Id. at 568-69, 509 N.W.2d 730. ¶ 48 In holding that Midwest was not the beneficial owner, we recognized that Midwest's indicia of ownership deviated from Mitchell Aero's indicia of ownership in three important ways. Midwest paid Milwaukee County rent, whereas Mitchell Aero did not. Id. at 569, 509 N.W.2d 730. Milwaukee County exercised significant control over the daily operation of the Crystal Ridge buildings, including activities, fees, restaurant menu and hours of operation of the buildings, whereas Milwaukee County did not exercise control over the daily operation of Mitchell Aero's hangars. Id. Finally, Milwaukee County was required to pay Midwest for the buildings only if it terminated the lease and did not use the premises as a ski hill. By contrast, there were several circumstances in which Milwaukee County would be required to pay Mitchell Aero for the hangars, such as if the county condemned the leased land, the county abandoned the land as an air terminal, or the county breached a provision in the lease. Id. ¶ 49 We then noted that Milwaukee County had many indicia of ownership in the buildings. These included: (1) [Milwaukee County] must approve the plans and location of the buildings; (2) [Midwest] can only use the land for one purpose . . . skiing . . . unless [Milwaukee County] gives permission to conduct other activities on the land; (3) [Milwaukee County] enjoys exclusive use of the land for other purposes for a significant length of time each year; (4) [Milwaukee County] may enter and leave the buildings at any reasonable time; (5) [Midwest] may not sublet the buildings or any portion of the buildings without [Milwaukee County's] prior approval; (6) [Midwest] must maintain insurance on the buildings naming [Milwaukee County] as an additional insured; and (7) upon expiration of the lease, [Milwaukee County] acquires a full possessory interest in the buildings. Id. at 570, 509 N.W.2d 730. ¶ 50 We described two additional factors that indicated Milwaukee County was the beneficial owner of the buildings. Financial institutions did not recognize Midwest as the owner, and Milwaukee County received the majority of the profits from the ski hill. Id. at 571, 509 N.W.2d 730. ¶ 51 After balancing the county's indicia of ownership against Midwest's indicia of ownership, we held that the county was the beneficial owner of the ski chalet and the rental building. Id.