February 15, 1997
Re: Decade Companies Income Properties ("DCIP")
Dear Limited Partner:
You have received several communications from Arnold Leas
and his company. Leas has attacked your Partnership and its
management. We are offended by Leas' attempt to disrupt the
Partnership and we resent his accusations and innuendos. Cutting
through the fine print of the Leas proxy and the rhetoric in his
letters, we ask you to consider the following:
1. What we believe to be significant misstatements of fact
and material omissions in the Leas proxy have led to substantial
litigation and legal costs. This is consistent with Leas' past
practices. Please see the enclosed newspaper article and Judge
Snyder's comments about Mr. Leas.
2. Leas' proxy solicitation states that he is not
interested in becoming the general partner of DCIP if the Fair
Price Provision remains in effect (in other words, he does not
want to pay anyone anything). The Fair Price Provision was
adopted by a majority of the Partners and all Partners (even
those who did not vote for the amendment) now have the right to
receive cash for their Interests under the terms of the Fair
Price Provision. This provision cannot be repealed without the
consent of Decade Companies (the General Partner) and Decade
Companies has no intention of consenting to such a repeal.
3. Leas has been informed that Decade Companies will not
consent to repeal of the Fair Price Provision. It was put in
place to protect Partners from being forced to accept an
unsuitable general partner. Leas claims that he will attempt to
have the Fair Price Provision deleted from your Partnership
Agreement. We have informed Leas in writing that this will not
be possible and have asked him to stop his offer and the
litigation in light of the futility of his position and in order
to save the Partnership from further needless expense. He has
refused to do so. This is consistent with his past practices, as
described above.
4. Leas does not believe that your Partnership is worth
the amount called for under the Fair Price Provision and he has
stated that he will not pay it. Decade, on the other hand, has
subordinated the receipt of its real estate commissions for the
sale of property and its profit participation upon liquidation
until after the limited partners have received the 6% per annum
return, as contemplated, under the Fair Price Provision.
5. The cost associated with removing and replacing the
General Partner would be hundreds of thousands of dollars. This
would come in the form of additional legal costs, higher interest
rates, transfer taxes, and acceleration of other payments. In
addition, Leas has stated that he will attempt to have the
Partnership pay his legal costs, which we believe will ultimately
exceed $200,000. Leas says that he believes all these costs will
be recouped from operational savings of the Partnership. We do
not agree. However, even assuming he could achieve any
operational savings, it would take years to recoup the cost
associated with the takeover. Further, if the properties were
sold relatively quickly there would never even be an opportunity
to realize the operational cost savings.
6. Leas wants his company to manage the DCIP properties.
However, Leas has never managed properties in Florida (where two
of the Partnership's three properties are located) and to our
knowledge has never seen the Partnership's Florida properties.
We believe he does not have the expertise to adequately manage
the Partnership's properties.
Currently, the only properties Leas manages are located in
Wisconsin and all of those properties amount to less than half of
the number of apartment units owned by your Partnership. In
addition, the Leas REIT, his primary real estate investment
vehicle, does not even cash flow. Your Partnership, on the other
hand, does cash flow. It is no wonder that he would like to get
control of the DCIP properties.
We believe that Leas hopes to take control of your
Partnership without paying you for it. He should not be allowed
to do so. If he wants the Partnership's properties, he should be
prepared to pay for them.
Decade Companies hopes and intends to remain the General
Partner of DCIP through its liquidation phase. We believe the
Partnership has performed well over the years, having distributed
in excess of $11 million to its Partners. DCIP's annually
audited financial statement (audited by one of the world's
largest public accounting firms) reflect these distributions and
all revenues, fees and expenses. We further believe that the
orderly liquidation of the Partnership's properties will provide
further benefits. If presently proposed capital gains tax reform
is approved, this would provide additional opportunities for the
Partners.
Finally, before you vote on the Leas take-over proposal,
please read the enclosed instructions on preserving your rights
under the Fair Price Provision. Do not give up your rights to
cash. If you have already voted, please contact our office and
we will explain how you can still preserve your rights.
If you have any questions or concerns, please contact me at
(414) 792-9200.
Very truly yours,
Michael Sweet
Partnership Manager
Enclosures
HOW TO PROTECT YOUR RIGHTS TO
RECEIVE CASH
UNDER THE FAIR PRICE PROVISION
[_] If you vote For the Leas Proposal, you will LOSE your
right to receive cash.
[_] If you vote Against the Leas Proposal, you maintain
your right to receive cash.
[_] If you Abstain from voting, you maintain your right to
receive cash.
[_] If you do not vote, you maintain your right to receive
cash.
KEEP YOUR RIGHTS TO RECEIVE CASH UNDER THE FAIR PRICE PROVISION
Vote Against, Abstain, or Do Not Vote.
A vote for Leas could allow him to take control of your
Partnership without paying you.
If you have any questions on your rights to the Fair Price
Provision, call Michael Sweet, Partnership Manager, at
(414) 792-9200 before voting.
If you have already voted For, but want to retain your rights to
receive cash, call our office.
Waukesha County Freeman - Tuesday, October 15, 1991 - Page 7-A
Battle over $535 security deposit ends in $12,000 award
by John Schroeder
Freeman Staff
WAUKESHA - An incident that could have been solved for $535 four
years ago ended in court recently at a cost of $12,677.25.
In 1984, Dr. John F. Johanson and his wife, Beth, leased a
home in Wauwatosa from Arnold L. Leas of Brookfield. When the
Johansons bought a house, they left the rental home and asked for
their security deposit of $535, plus $101.88 for unused heating
oil in the home's tank.
The law says that security deposits must be returned within
21 days, unless a reason for withholding the deposit is given.
None was.
The law also provides for double damages if the deposit is
not returned. When the Johansons informed Leas of that, the
deposit was returned, but after the 21-day deadline. Although
the Johansons had the check, they sued for double damages.
The first case went to Judge Clair H. Voss who ruled that
the money the Johansons had received from Leas was sufficient.
The Johansons appealed and the case came back to circuit court
for an order awarding them double damages and attorney fees.
Judge Willis J. Zick got the case and ordered the double
damages but refused to rule on the attorney fees. The case then
went to Judge Patrick L. Snyder.
Snyder eventually ruled that the Johansons were entitled to
$11,504.37. But in his decision, Snyder went further and
chastised those involved for carrying on the litigation until the
attorney fees went up so high.
"This is an unfortunate case," Snyder wrote. "It does not
exhibit anyone's best image. Adversary positions have been
strenuously pursued. Throughout this litigation, Leas has
accused Johanson of being unreasonable, unwilling to compromise
and interested only in seeking higher and additional fees.
"A review of the record, however, reflects that it was Leas
who pursued litigation to the maximum. It was Leas who would not
accept that Johanson was is entitled to be compensated for double
the security deposit; Leas who demanded depositions and written
interrogatories on every issue and who resisted Johanson's offers
and attempts at settlement. It was Leas who was always a day
late and a dollar short."
Snyder wrote that, except for being somewhat limited to
awarding attorney fees, he "would strongly consider an award of
attorney fees to Johanson on a finding of 'overtrial' in that the
manner in which the case was handled by the defense created
extremely high costs which under the circumstances were
unwarranted."
Snyder also chided Johanson's attorney for unnecessarily
responding to briefs from Leas' attorney on issues other than
attorney fees, in spite of being admonished by the court not to
address other issues.