City Contends RV Park Leasee in Default
La Crosse, Wis., officials have released results of a lengthy audit of Pettibone Park Resort that likely will be used to leverage the business into paying more rent for the city park land.
The financial audit showed the business – which includes the campground, banquet hall, RV sales lot and repair shop – generates more than $1.9 million in gross revenue and $300,000 in profits annually, according to the La Crosse Tribune.
The audit shows Pettibone's operators are doing better financially than they claimed, along with violating terms of the lease, said attorney Phil Addis, hired by the city to do an operations audit on the business.
"It is my opinion that there are numerous defaults under the lease which have been ongoing for several years and continue to this day. Viewed as a collective series of actions, it appears that either this was a deliberate attempt not to follow the lease or perhaps to push the envelope, or that the city was too lax in follow-up and enforcement or a combination of the two," Addis told the city council.
Pettibone attorney Brent Smith said he disagrees with many of the report's conclusions, particularly that owner Mark Pretasky is collecting windfall profits.
"I don't want to be contentious, given that we're going to be sitting down with the city," Smith said, "but it left the picture, in my view, of a business making all this money. Mark Pretasky is a man of modest means."
Central to those lease negotiations will be rent and whether an RV sales business can continue at the site without giving the city a share of its revenue.
The fair rent for a campground is different than the fair rent for an RV park, camp, repair shop and food and beverage operation, Addis said.
The RV sales business subleasing space from Pettibone — both are owned by Pretasky — netted nearly $104,000 in 2006, down from $172,000 in 2005 but double profits in 2004.
The sublease states Advanced Recreation will pay Pettibone $3,600 a year in rent. But Pettibone actually collected $55,000 to $82,000 a year from 2004 to 2006, according to the Wipfli financial audit.
They're making an "extensive" sum of money by leasing out the park to the retail business, but telling the city they can't afford to pay $25,000 a year in rent, Addis said.
"It's a question of the accuracy of the financial info and how they're dealing with the city," he added. "There's no financial suffering going on."
Smith countered the company took that request for rent reduction, which sparked the financial and operational audits, off the table years ago.
A presentation of the audit's findings came just days before legislation was introduced designating a new committee to oversee lease negotiations for the public parkland.
The negotiating group likely would replace a recently created lease oversight committee, which has never met, depending on what the council decides.
That committee was expected to work with Pettibone to resolve the violations spelled out in a May letter of default, but most of those could be handled in lease renegotiations, Addis said.