The Vanguard

Reader asks about Falls Fest 

A Vanguard reader asked if we could look into the Falls Fest matter from a historical perspective as well as some of the "deals" that Falls Fest seems to get that no other non-profit organization(s) seem to get in Menomonee Falls from the Village Board.  We will attempt to cover this issue the best we can when the local press seems to under report or not report on at all over the last few years.  Thanks for the idea.  We apologize ahead of time for the length of this posting, but it is necessary to fully appreciate the scope of all of these dealings with Falls Fest and the taxpayers over the last 13-15 years. 

Falls Fest (www.falls-fest.com) is being held at Village Park July 24-27.  Stop by over the weekend to support the event.  

We will have had over 3,500 hits on our way to 5,000 in the first nearly three weeks of this blog.  We appreciate you visiting our site and your communications to The Vanguard.  We promise to keep it fresh, new and exciting.

Celebrating Menomonee Falls

Menomonee Falls has a rich history with many wonderful generational experiences.  We are afforded many opportunities.  We have a plethora of home choices.  Many job opportunities.  Great churches to attend.  An arts and culture venue of good entertainment.  Retail, restaurant and commerce continue to improve on an annual basis.  Many school choices.  Parks and recreation programs for all ages.  Good families.  Basically a safe community.  Various citizens and community groups thought it would be a good idea to help celebrate the 100th birthday of Menomonee Falls in 1991-92. 

Falls Fest is born

To celebrate the rich history with an eye on the future, the community came together with many volunteers, donations and hours of planning to observe the first 100 years of Menomonee Falls in 1992.  Observations at the time were that everyone enjoyed the experience and were appreciative.

To keep the event going on an annual basis, Falls Fest, a federal tax exempt 501 (c) 3 non-profit corporation, was incorporated in 1993-94 with a Mission Statement that read, "The Menomonee Falls Festivals Corporation is a charitable, non-profit, volunteer organization whose mission is to sponsor events that foster community spirit.  Funds generated from such events will be used to support community activities." 

Falls Fest is not part of the Village Government.  That is a misconception although Falls Fest is provided with many free Village Services (police, parks, EMT, fire, public works, etc.) for their event at the taxpayer's expense each year.

Former Village President, Bob Steliga, is the President of Falls Fest and current Village Trustee, Jeff Steliga, is the Treasurer of Falls Fest.  Current Village Trustee and Waukesha County Supervisor, Jim Jeskewitz, has been mentioned publicly as being on the Board of Directors of the some 10-20 member board without the other names ever being released to the public.  Former Village President, Joe Greco, has also been mentioned publicly as being associated with Falls Fest along with other current and former Village/Waukesha County Officials.

Community Giving and 990 Federal Tax Returns Revealed 

A reader of The Vanguard made available the community giving of Falls Fest and their 990 Federal Tax Returns (1998-2006) at www.guidestar.org.  The Falls Fest 2007 990 Federal Tax Return has not been filed yet.  Non-profit 501 (c) 3 990 Federal Tax Returns are due May 15th each year.  According to Guidestar, Falls Fest filed their federal tax returns late for years 2002, 2004, 2006 and 2007. 

A July 2004 published report in Menomonee Falls Express News, quoted current Village Trustee and Falls Fest Treasurer Jeff Steliga as saying, "We have donated $211,000 to various community organizations over the last 11 years."  Former Village President and current Falls Fest President, Bob Steliga, was quoted in the December 2003 Menomonee Falls News as saying, "Everything we make goes right back into the community."  He also said at the time, "They can kiss my @%#.", when he was asked if he would make Falls Fest financial records available to the public which is required by federal law. 

It is true that Falls Fest has given back to the community in the form of donations and gifts over the last 10-13 years.  Their giving is deeply appreciated.  However, a closer look at their tax returns shows a quite somewhat different accounting of what has been said and believed publicly as to what has actually occurred.

Guidestar only has Falls Fest federal tax returns from 1998-2006.  The following is a summary of those returns:

               Gross Receipts*   Expenses**  Net Rev   Gifts    Prof/Loss    Cash  Theater costs

1998           $144,789          $ 94,106        $50,683  $16,577    $34,106  $34,015

1999             126,639            93,874          32,765      8,857     23,908    52,960

2000             140,753          104,641          36,112     25,449    10,663    66,778

2001             154,551          126,079          28,472     30,490    (2,018)    58,278

2002             139,859          111,710          28,149     15,415   12,734     81,207

2003             163,434          119,903          43,531     28,080   15,541     86,438

2004             166,130          132,973          33,157     21,990  (12,975)    66,519     21,142***

2005             158,609          135,766          22,843     21,264  (30,432)    37,273     32,011

2006             176,998          132,408          44,590     13,888   30,702     32,410  not available****

Total        $1,371,762     $1,051,460       $320,302  $182,010 

*These receipts include annual revenue from the Falls Fest Event of about $130,000-$150,000, Chamber of Commerce annual rent about $15,000-$18,000 a year for the Kohler Zahn House, interest income from bank accounts of about $500-$1,000 a year.

**These expenses include the annual costs of the Falls Fest Event of about $120,000-$130,000 and the annual property taxes on the Chamber of Commerce Kohler Zahn House of about $4,000-$4,500 along with some other minor expenses for the house.

***First year of expense disclosure on tax returns for the cost of the Marcus Theater on Main Street that includes insurance, mortgage, taxes, utilities, etc. that was purchased by Falls Fest on March 13, 2003 as part of a deal with the Marcus Corporation and the Village Planning Commission and Board of Trustees in approving 4 new screens 10 days earlier at the March 3, 2003 Village Board Meeting. 

****2006 tax return discloses that Falls Fest had to "capitalize" or borrow even more money (about $56,000) to stay afloat because of the high costs of the Marcus Theater on Main Street that was purchased by Falls Fest as part of a deal with the Planning Commission and Village Board in exchange for the approval of 4 new screens for Marcus Corporation in March of 2003.   

These tax returns are very revealing and beg the following questions of Jeff and Bob Steliga:

• In 2004, Jeff Steliga stated publicly that Falls Fest had given back to the community some $211,000 over the previous 11 years.  Their 990 Federal Tax Returns ('98-'03) show that Falls Fest only gave $124,868 during that time.  Where is the other $86,132?
• In late 2003, Bob Steliga stated publicly that, "...Falls Fest gives everything back to the community that they make."  Their 990 Federal Tax Returns ('98-'06) show that Falls Fest had a net revenue of $320,302 during that time and only gave $182,010.  Where is the other $138,292 and why wasn't "everything" given back to the community that was made during this time? 
• The Journal Sentinel reported in August 2004 that Charity Navigator (www.charitynavigator.org), a well respected and independent non-profit organization evaluator, showed that Milwaukee area charities on average devoted 83.6% of their money toward their missions.  Falls Fest is way below that in their contributions to the community.  Why?  Does this possibly jeopardize the 501 (c) 3 federal tax exempt status of Falls Fest?  Falls Fest had receipts of $177,000 in 2006 and gave away $13,888 or about 8%. 
• When will Falls Fest file their 2007 990 Federal Tax Returns?
• Why does Falls Fest regularly file their 990 Federal Tax Returns late?  
• How is it possible that Falls Fest's expenses are on average about $130,000 a year when Sussex Lions Days, a much larger, expensive and more comprehensive event, are about $110,000 without all of the volunteers and donations with that of Falls Fest?  Sussex Lions file their tax returns on time each year and give away between $35,000-$40,000 a year compared to Falls Fest giving away $13,888 in 2006. 
• How did Falls Fest show a nearly ($44,000) loss for the years 2004 and 2005? 
• Why did the "doubtful accounts" reach an all time high of over $7,000 in 2006?
• Why has the "giving" been virtually cut in half since 2003 ($28,080) to 2006 ($13,888)?
• Why did Falls Fest have to borrow or capitalize $56,000 in 2006 for expenses?
• Why did the cash balance for Falls Fest go from $86,438 in 2003 to $32,410 in 2007?

Preferential Real Estate Transactions Take Place

The Vanguard has reviewed many documents from the last 10 years or so that paint a very troubling pattern of Falls Fest acquiring chunks of real estate which is not mentioned as part of their Mission Statement (see above).

Falls Fest owns two major properties in Menomonee Falls.  The Kohler Zahn House, which is occupied by the Menomonee Falls Chamber of Commerce and Senator Alberta Darling's Senate District Office, on Appleton Avenue near North Middle School and the former Marcus Theater on Main Street near Pilgrim Road in the Pilgrim Village Shopping Center.

The Kohler Zahn House was a historic home of which the estate was desperate to sell because of rapidly deteriorating conditions in the late 1980's.  The following time line will show how Falls Fest, because of their directors being Village Board Members as well, came to own the Kohler Zahn House:

1. The taxpayers, through the Village Board, purchase the Kohler Zahn House for $82,500 in April of 1989 with Joe Greco and Bob Steliga voting yes.
2. The house continues to deteriorate for the next 4-5 years without any work being done on the home while the Village Board tries to sell the property.
3. Falls Fest is incorporated as a 501 (c) 3 federal tax exempt private non-profit corporation with Jeff and Bob Steliga as Directors on May 1, 1993.  Bob Steliga is no longer Village President as Joe Greco has taken over that office.
4. Village Board approves a $100,000 loan with interest to Falls Fest for the renovation of the Kohler Zahn House on April 18, 1994 one day before Jeff Steliga becomes a Village Trustee and Village President Joe Greco votes yes to approve along with Trustee Mike McDonald.
5. The Village Board, including Village President Greco and current Trustees Steliga and McDonald, vote yes on June 20, 1994 for Resolution 1076-94 requiring Falls Fest to enter into a $182,5000 loan with the Village to pay back the taxpayers for the purchase and renovation of the home as part of the official record for the Village.
6. Four newspaper articles from that time, 2 from Menomonee Falls News and 2 from The Milwaukee Journal, clearly state that Falls Fest was required to take the rent from the building to repay the loan to the taxpayers or the Village would take the property back.  The articles clearly state that Falls Fest would oversee the project renovation with volunteers, donations and fund raising to pay for the project.                                          
7. An additional $195,000 of the taxpayer's money, a $125,000 bond issue on 10-31-95 and a $70,000 transfer from the General Fund on 12-31-95, was approved by the Village Board to Falls Fest with Village President Greco and current Trustees Steliga and McDonald voting yes for the continued renovation of the Kohler Zahn House. 
8. Village Board, with Greco, Steliga and McDonald voting yes, approve an addition to the Kohler Zahn House for Falls Fest on 9-19-96.  
9. Checks in the amount of $66,795 were issued to Falls Fest from the Village between January 1996 and June 1997 for expenses that aren't clearly defined.
10. Village Board, with Greco, Steliga and McDonald voting yes, approve the deed transfer and lease agreement of the Kohler Zahn House from the Village to Falls Fest and Chamber of Commerce on 1-6-97 with Attorney Mike Morse, von Briesen & Purtel, s.c., who later became the full time Village Attorney, doing all of the Falls Fest legal work at the taxpayer's expense.  Cost to the taxpayers for the legal work is not disclosed by the Village.
11. Falls Fest enters into a rental lease agreement, prepared by the Village Attorney at the taxpayer's expense, with the Chamber of Commerce on 4-1-97 at $15,000 a year (that is currently $18,000) with the Chamber agreeing to pay for almost all of the costs to occupy the building. 
12. Since 1-1-98, the Village Board, with Greco, Steliga, Jeskewitz and McDonald voting yes, allocate approximately $16,000 a year to the Chamber for "tourism".  Some have suggested to The Vanguard that this money is really used by the Chamber to pay the $18,000 rent bill from Falls Fest.                 
13. The Kohler Zahn House is now assessed at $229,600 as a result of the 2005 village wide reassessment when it had been assessed at less than $200,000 for the longest time after sticking apparently some $400,000 - $450,000 of the taxpayer's money into the purchase and renovation of the house.
14. According to various Village Hall Staff Members in 2004 and 2005, Falls Fest has not repaid the taxpayers $1 for the debt that is owed on the Kohler Zahn House.  One staff member from the Financial Services Department was quoted in Menomonee Falls News in August of 2005 as saying, "I'm having real difficulty tracking the renovation funds.  I'm hitting a real blind spot here."
15. The Journal Sentinel repeatedly reported in a March 2004 article on Falls Fest that an "audit" had been done of their finances by the Village's Accounting Firm, Reilly, Penner & Benton.  In a March 15, 2004 letter released to the public by Reilly, Penner & Benton, the Village's Accounting Firm specifically states, "We were not engaged to, and did not, conduct an audit, the objective of which would be the expression of an opinion, on the accounting records.  Accordingly, we do not express such an opinion."  
16. The Village Clerk's Office released a letter to the public in July of 2005 explaining that there were no minutes of the Committee of the Whole for this loan and transfer transaction between the Village and Falls Fest even though Village Attorney Mike Morse sent a June 22, 1994 letter to the Clerk's Office disclosing these very transactions that were approved by the Village Board on June 20, 1994.
17. The Village Clerk's Office also produced another version of Resolution 1076-94 that mysteriously was not part of the Village's Official Record and did not include the language of having Falls Fest repaying the taxpayers the some $400,000 - $450,000 that it took to purchase and renovate the Kohler Zahn House.
18. It is estimated that Falls Fest has taken some $600,000 - $650,000 from the taxpayers for the purchase, renovation and rental payments of the Kohler Zahn House.     

Falls Fest also acquired the Marcus Theater on Main Street in 2003 under very questionable terms because of their director's position on the Village Board.   

The Vanguard has again reviewed many documents and have been approached by citizens on the condition of anonymity that put this transaction in a totally different perspective when looked at more closely and in an objective manner without the concern of protecting anyone involved.

The following time line will show how some of the Falls Fest Directors used their positions on the Village Board to purchase the Marcus Theater:

1. Marcus Corporation vacates their theater on Main Street in 1999-2000 shortly after they open their new complex at Appleton Avenue and County Line Road after very heated exchanges with the neighbors who did not want the new theater built in their backyard, but eventually agreed after a very strict conditional use permit was implemented limiting the number of screens to 12.
2. The theater sits empty for Marcus Corporation a few years while being assessed at $950,000 and paying just under $20,000 a year in property taxes in 2002.
3. Two prospective buyers separately approach Marcus Corporation in 2002 to purchase the old theater on Main Street.
4. The first buyer thought they had an agreement with Marcus in 2002 on the purchase price (approx. $300,000-$350,000) with Marcus taking a charitable deduction because the buyer was a tax exempt organization.  Apparently, Marcus approached the Village in an informal and preliminary way to see what the Village would think and the idea was immediately shot down by the Village because of the buyer's charitable affiliation.  Naturally, the buyer was extremely disappointed but moved on to find another location.
5. The second buyer was the shopping mall owner of which the theater was attached to.  The shopping mall owner wanted to buy the theater and convert it into retail/commerce as an extension of his 2003 renovation project of the mall.  As a matter of fact, his renovation sign on Main Street at the time had the theater as part of his mall because he thought he had had an agreement with Marcus Corporation for the purchase of the empty theater in 2002.
6. Unbeknownst to the buyers, Marcus Corporation, at about the same time in 2002, was again approaching the Village to expand their new complex which had been turned down by the Village once before during 2000 because of a strict conditional use permit limiting the number of screens to 12.
7. About 15 hours before the shopping mall owner was to turn over his $565,000 (approx.) cashier check/money order to Marcus Corporation to get the keys to the building, he receives a call from Marcus Corporation calling the deal off sometime in late 2002 without any explanation.  
8. Marcus Corporation begins formal approach to the Village for the expansion of their new complex sometime in late 2002.
9. Falls Fest drafts an Offer to Purchase on 12-10-02 for the purchase ($250,000) of the old theater on Main Street from Marcus Corporation and Falls Fest President Bob Steliga signs the offer on 1-9-03.
10. Planning Commission approves the theater expansion for Marcus Corporation on February 19, 2003 with Village President Joe Greco abstaining.
11. Village Board approves the theater expansion for Marcus Corporation on March 3, 2003 with Village President Greco and Trustees Steliga and Jeskewitz abstaining.
12. Marcus Corporation and Falls Fest President Bob Steliga sign a counteroffer on March 13, 2003 to the Falls Fest Offer to Purchase with an addendum from Marcus Corporation that specifically states, "It is expressly understood that the Seller, or an agent, servant or employee of the Seller, or a related legal entity, intends to seek permission from the Village of Menomonee Falls to add additional movie screens to a property currently in existence in the Village of Menomonee Falls and operating as a movie theater.  But for the Seller's ability to obtain permission to add four screens to that theater it would not consider or accept Buyer's Offer to Purchase the building formerly used as a theater in Menomonee Falls which is the subject of this Offer to Purchase."
13. Falls Fest now owns the building and gets financing from a local bank under questionable circumstances for reasons that can't be disclosed yet. 
14. When Menomonee Falls News confronted the Steligas and Joe Greco about this transaction with Marcus Corporation in December of 2003, they all had very conflicting stories about their recollection of the purchase of the theater.  Marcus Corporation said that Greco wanted the theater for free which he denies knowing anything about even though he abstained from voting on the proposal because, according to Village Minutes, of his affiliation with Falls Fest .  Bob Steliga said he didn't know anything about the purchase of the theater in exchange for the approval of the additional 4 new screens for Marcus Corporation even though his signature appears on the Counteroffer to Purchase from Marcus Corporation.  Jeff Steliga said there was no "quid pro quo" with Marcus for the purchase of the theater even though his dad signed the counteroffer that included the contingency of the sale to Falls Fest based on Marcus getting the approval of the additional 4 new screens by the Village Board. 
15. The Vanguard  has also spoken to a former Village Official and reviewed confidential communications between the parties that put this issue in a very different light.  For obvious reasons, The Vanguard can not disclose the details of those communications yet.  Safe to say, Falls Fest never had any intention of turning the old theater into a performing arts center contrary to what has been reported in the press for years.
16. A member of a very well known and widely respected local non-profit organization contacted The Vanguard to disclose that Falls Fest took $500 from them for the promotion of the so called performing arts center and never saw the money again or how it was even used.  If the money was not used for its intended purpose, it should have been returned to the non-profit organization. 
17. The local press has reported the theater being sold with big plans for office and retail development and then that deal mysteriously fell through in 2007.  The theater has been used for indoor baseball practice for the last several years.

Wisconsin State Statutes Strictly Prohibit These Types of Apparent Transactions             

State statutes that govern local elected officials make it very clear that these officials can not engage in any type of voting or transactions that could be interpreted to benefit themselves, an immediate family member or an organization that they are affiliated with because of their public office position. 

The Vanguard will let you decide what to believe with these transactions involving Falls Fest and the Village Board now that more of the story has been revealed. 

Tell us what you think

Use the comment section below to answer this week's questions.

Question 1

Should Falls Fest pay the taxpayers back the some $600,000-$650,000 that they have taken so far for the Kohler Zahn House?

_____yes

_____no

Question 2

Should Falls Fest Directors who are also Village Trustees avoid any appearance of deals between the two parties?

_____yes

_____no

Question 3

Should Falls Fest file their 990 Federal Tax Returns on time and make their financial records available to the public which is required by federal law?

_____yes

_____no

Next week's blog...Whatever happened regarding Falls Cable Access?