Hotel Online 
News for the Hospitality Executive


Village of Menomonee Falls, Wisconsin to Begin Foreclosure Proceedings
Against Radisson Hotel Owners, Lodging Investors of Menomonee Falls LLC

By Tom Daykin, Milwaukee Journal SentinelMcClatchy-Tribune Regional News

June 12, 2012--It looks as if the Village of Menomonee Falls could end up owning a hotel.

The village, which provided a $17.65 million loan to finance construction of the new Radisson Hotel, plans to soon begin foreclosure proceedings against the hotel's owners, according to court documents.

As a result, the village eventually could take over the property if the ownership group, Lodging Investors of Menomonee Falls LLC, is unable to make overdue payments on the loan.

The village's plan to proceed with a foreclosure suit was mentioned at a recent hearing before Waukesha County Circuit Judge Donald Hassin. That hearing also included a discussion about the Radisson's "drained" checking accounts, which took village officials by surprise.

The hearing was part of the receivership action for the hotel, which has been operated under court supervision since November. The village asked a receiver to be appointed to pre-empt a similar request from an investor who's suing Dean Grosskopf, one of Lodging Investors' partners.

Randall Crocker, the village's outside attorney on the Radisson litigation, told Hassin the village wanted 30 days to amend the receivership action. He said the village plans to proceed with foreclosure and will name additional parties to the litigation.

The transcript also provides more details on why the village asked Hassin for a temporary restraining order against James Heyden, the Radisson's principal owner.

Hassin issued the order. It temporarily bars Heyden from the hotel and from selling any of the collateral Lodging Investors used to secure the village loan. A hearing on that issue is set for Friday.

Lodging Investors has missed the first two semiannual loan payments of $700,000 each owed to the village. Those payments were due in November and May.

Also, one of Lodging Investors' officers "apparently has drained the checking accounts and there is no cash available at the hotel for ongoing operation," Crocker told Hassin, according to the transcript. Crocker didn't name the officer.

Crocker also said a franchise fee payment, which allows Lodging Investors to use the Radisson brand, had not been made -- contrary to what had been represented to village officials.

Despite those problems, Crocker said the Radisson is meeting its customer commitments, including hosting ongoing events.

"Everything is running very, very well from the standpoint of meeting the needs of the public and the hotel," he said, "but today the cash is gone . . ."

Heyden couldn't be reached for comment.

The Village Board unanimously approved the Radisson loan in 2010.

Lodging Investors started renovations on the former Falls Inn in 2008 but could not get private financing to complete the conversion during the global financial crisis that year.

Without the village loan, the project probably would not have been completed for several years, which would have left a high-profile eyesore, village officials said. They said that would hurt efforts to redevelop properties on Main St., where projects include a retail center, anchored by a Walmart Neighborhood Market, that's under construction.

The 135-room hotel on Main St., just west of U.S. Highway 45, is the target of several construction liens filed by subcontractors and suppliers with unpaid bills from the project. It opened in June 2011.

Also, Madison investor Gregg Raupp is suing Professional Hospitality LLC, a Madison-area hotel management firm led by Grosskopf.

The suit, pending in Dane County Circuit Court, claims Professional Hospitality wrongfully diverted $1.2 million from bank accounts for two Fairfield Inns, in Green Bay and Beloit.

Funds from those hotels, where Raupp is an owner and Professional Hospitality is the manager, were then used to help finance the Radisson's development, the suit contends.

Grosskopf denies those claims and said money taken from the accounts was used by Professional Hospitality, which also manages the Radisson, to reimburse it for bills it paid on behalf of the Fairfield Inns' owners.


(c)2012 the Milwaukee Journal Sentinel

Visit the Milwaukee Journal Sentinel at

Distributed by MCT Information Services

Receive Your Hospitality Industry Headlines via Email for Free! Subscribe Here

To Learn More About Your News Being Published on Hotel-Online Inquire Here

To search Hotel Online data base of News and Trends Go to Hotel.OnlineSearch

Home | Welcome | Hospitality News
| Industry Resources

Please contact Hotel.Online with your comments and suggestions.