A federal complaint accuses Milwaukee of creating 'containment zones' where low-income people are concentrated

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In a newly unsealed federal complaint, two Milwaukee property owners accuse the city of creating "containment zones" of people living in poverty and with disabilities — but the local alderman framed the case as part of a longstanding feud involving the plaintiffs, the city and a local rooming house.

The case prompted Milwaukee City Hall's recent scramble to hire outside attorneys for $250,000 before leaders abruptly reversed course and dropped the plan, according to Ald. Robert Bauman. Officials at the time declined to say much of anything about the circumstances that led to the significant spending proposal.

In the complaint filed under seal in February, and unsealed in recent days, property owners James Dieter and Karen Schwenke argue the city has created "containment zones" on the near west side and other areas of the city where people of color, people with disabilities and those with low incomes are purposely concentrated in poor living conditions. That has been done by consolidating rooming houses within those areas, the complaint states.

"Within these containment zones, building codes and zoning ordinances are not enforced, blight and slums are the norm, and crime is permitted. Law enforcement contains the crime rather than stops the crime," the complaint states.

They accuse the city and Milwaukee County of violating federal anti-discrimination laws in addition to state and local safe housing laws while claiming to be in compliance in order to receive federal funds.

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In particular, their complaint focuses on the city's handling of a rooming house known as The Clark House near Dieter's 10,000-square-foot home on the near west side.

Bauman, who represents the area, framed the complaint as the result of Dieter's personal grievances against The Clark House.

And he said the challenges associated with the rooming house properties were the result of concentrated poverty that dates back to policies such as redlining and that the city is trying to address.

"Containment zone is certainly a nice, menacing term ... except the reverse of that, the other side of that coin, is gentrification," Bauman said. "Let's move the poor people out and move who in? Who replaces them? Middle class folks? People that want to live in big mansions?"

U.S. Attorney's Office declines to intervene

Despite the stir at City Hall over an apparent federal investigation stemming from the complaint, ultimately prosecutors decided not to intervene in the case.

Dieter and Schwenke had filed the complaint on behalf of the United States government, naming as defendants the City of Milwaukee, Milwaukee County, the city's Housing Authority and other local government agencies.

Attorneys for the city and county did not respond to requests for comment.

The apparent federal investigation led the city's Common Council to hastily plan a meeting to take up a proposal to spend $250,000 on outside attorneys in late July only to cancel the meeting less than 24 hours from when it was first floated.

City Hall officials were largely silent on the details of the then-sealed case.

Then on Aug. 1, prosecutors in the office of the United States Attorney for the Eastern District of Wisconsin notified U.S. District Judge J.P. Stadtmueller that they would not intervene in the case. However, they asked that their consent be sought to settle, dismiss or otherwise discontinue the litigation.

The prosecutors' filing also asked that the complaint and some other documents be unsealed.

The case remains open, and Dieter and Schwenke are free to pursue legal action.

Their attorney, Shannon D. McDonald, declined to comment on the case.

It was not clear from the prosecutors' filing why they declined to take it up.

Bauman said he thought they "came to the conclusion that Mr. Dieter is not promoting fair housing, he was actually opposed to fair housing," noting that he lives in a "magnificent mansion" near the rooming houses at issue in the complaint.

"These people are advocating for gentrification, they want to reduce the concentration of poor people, not enhance their quality of life," he said.

Schwenke owns rental property on the near west side, the complaint states.

Dieter and Schwenke argue that when deciding to invest, they relied on a comprehensive plan under which the city would focus on the area when allocating federal funds "to improve housing conditions, decrease densification, eliminate blight and slums, reduce discriminatory practices, and fund redevelopment projects in the area."

Complaint focuses on Clark House

A series of code violations have gone unaddressed by the city at The Clark House rooming house in the area of North 24th Street and West Kilbourn Avenue, the complaint states.

The issues it cites include chimneys without liners in the five buildings, exposed wires creating electrical hazards, and a "severe structural issue" in a stone wall that was bowing and "created a high probability for a building collapse."

Dieter and Schwenke also accused the city of treating residents in "containment zones" less favorably than residents in other parts of the city and ignoring building codes "for the purpose of maintaining a containment zone for the city's low income, minority and disabled residents."

The Clark is owned by ProBuColls.

The organization's attorney, James McAlister, said a portion of the federal complaint restates arguments Dieter made in a 2020 state court lawsuit that was largely dismissed last year. Dieter is appealing.

Due to the state court case, McAlister said he could not respond to the specific allegations of violations cited in the federal complaint.

Contact Alison Dirr at 414-224-2383 or adirr@jrn.com. Follow her on Twitter @AlisonDirr.

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This article originally appeared on Milwaukee Journal Sentinel: Milwaukee accused of creating 'containment zones' in federal complaint