Rent-to-Own

12 Steps to a Better Property Lease by Phillip M. Perry

APROfile: Amy Zeller — Generation Yes by Katie Garza

Wisconsin’s RTO Woes by Ed Winn III

 

 

 

 

 

 

A Better Property Lease

So your property lease is up for renewal. Well, polish your reading glasses and sharpen your pencils: It’s time to fine-tune the fine print to get more favorable terms. Rent, after all, is one of your biggest expenses. In these times of lower expectations for revenue increases, it makes sense to fatten your profit by paring your overhead. & “Many people believe that if their space needs are being met, come renewal time they should just sign on the bottom line,” says Myra Maher-Martin, vice president of Joe Foster Company, a Dallas-based real estate brokerage and advisory services company operating nationwide. “Strategically, that is not in their best interests.” & The problem, says Martin, is that landlords often have creative ideas about modifying lease terms. “If landlords are going to try to obtain more favorable terms, tenants should do the same,” says Martin.

HERE’S SOME GOOD NEWS:

You now have more leverage for negotiating favorable terms. That’s because more business property has come onto the market.With the current softening of the economy, more businesses have either closed shop or put expansion plans on hold. “National statistics show that there is a slightly higher vacancy rate in many markets,” says Bob Wiesner, senior partner at The Robert Thomas Group, a Chicago-based real estate lease auditing firm. “That means rents will either stabilize or come down a bit. Furthermore, tenants will have a little more negotiating power in terms beyond base rent.”

Many factors, including shocks to regional industries and commercial property overbuilding, can contribute to sudden market changes. “When the dotcoms crashed, for example, parts of San Francisco suddenly went from one of the nation’s tightest property markets to one of the softest,” says Maura Cochran, president of Bartram & Cochran, real estate and economic development consultants in Hartford. “Silicon Valley is vastly overbuilt.”

Lesson learned: Space availability will vary by city and neighborhood. Prior to developing a lease renewal strategy, find out what’s happening in your area. “You need to know if you are in a market that has become stronger or weaker,” says Cochran. “Talk with real estate brokers in your town.” (Many brokers, adds Cochran, publish current market analyses on their web sites.) “As a general rule, if a market has more than seven percent vacancy it is considered a tenant’s market,”with a requisite improvement in negotiating power.

Even if your lease has some time to run, you may want to negotiate an extension now. Given the economic storm clouds on the horizon, your landlord may jump at the chance for shelter in the form of a proven tenant. Fact is, the landlord will benefit in many ways if you continue your lease. For starters, there will be no costly unrented time while a new tenant is located, and no expensive fixing up and painting of your premises. “You don’t have to wait until your lease is up for renewal,” says Susan Hays, a principal with the Hartford-based law firm of Updike, Kelly and Spellacy. “If you are midway through your lease and you are happy, negotiate an extension now.”

In general, be smart and negotiate early. If you wait until the last minute, your landlord may try some delaying tactics, which can eventually cause you to sign a poorly examined document when moving to new quarters is no longer an option. “Some landlords will string along tenants until they don’t have time to move,” warns Mark Fajack, a vice president at Cost Analysis Management Co. (CAMCO), Cincinnati. “So start a year in advance.”

Many tenants get outside assistance from specialists who know leases inside and out. These may be brokers, attorneys, or specialized firms that do nothing but lease negotiations and audits (see sidebar Getting some help)

OK, you want to improve the terms of your lease. But there’s an awful lot of fine print to go through, and you have limited time. What areas should you target? Here are 12 steps to a better deal, as suggested by our experts:

1 Check the terms of your renewal options

Does your lease provide for a renewal option? This is the first thing to find out. If you have already renewed your lease once, there may be no additional automatic options left, which can pose problems.

“Sometimes people negotiate better renewal option terms,” says Hays. “They may say, ‘I would like a five-year lease and the option to renew for an additional two five years periods.’ If they have a really good site, this is a way to lock the landlord into allowing them to stay longer.”

Landlords would rather have a single 10-year lease than one 5-year one with an option to renew, points out Hays. However, they may agree to options if you will guarantee escalators in terms of rental amounts. As with any other lease negotiation detail, options are matters of give and take.

Pay attention to the time frame in the renewal option. Be aware of any demands that you notify your landlord of intent to renew before a certain number of months prior to lease expiration.

2 Find a “walk-away alternative” before negotiating

If you are going to negotiate from a position of strength, you need to know you can walk away from your current position because you have an alternative location to fall back on. “Few tenants take time to get a walk away alternative,” says Martin.“But it’s crucial.” Besides leverage, there’s another benefit to having an alternative location: you can visualize your negotiation as an entirely new piece of business rather than an alteration of a previous agreement. “You want to consider every critical term of your lease a negotiable item,” says Martin.

One final point: Don’t try to fake your walk-away alternative. You must always have a real one for it to work, or otherwise you will pull your punches during negotiations, says Martin.

3 Watch for unfair escalation clauses

Outside of the base rental rate, the stickiest part of a lease is the operating expense escalation clause. Sometimes called “pass through clauses,”these call for your rent to increase according to a formula that determines your pro-rated share of the actual rises in a building’s operating expenses.

Unfortunately, such clauses often include so many types of operating expenses that they result in unexpected liabilities for tenants. Many landlords view these clauses as profit centers while tenants see them as methods used by landlords to stay even. In your negotiations, attempt to eliminate expenses that relate to the risks of ownership rather than of leasing. These include marketing costs for the building, and amortization of maintenance and energy conservation and cleaning equipment. Capital improvements to the elevators and other building systems should be amortized rather than expensed directly. Also watch for landlords who manage more than one building but assess all of their overhead expenses to the tenants of one building.

Back in the days of high inflation, the escalation rate was tied to the consumer price index (CPI). In those days, tenants would attempt to put a “cap” on the increases to lessen risk. While we don’t see such rapid price hikes anymore, sometimes rent increases are still tied to a CPI escalator formula. “You should examine the terms that apply in your lease,” says Hays. “Many leases will simply say that the rent will increase by a certain amount each year, say five percent.”

Whatever the escalation terms, both sides are attempting to limit risk. If your lease calls for five percent increases during renewals, you may end up paying more or less than the going rate for similar properties, depending on what conditions are affecting your market.

4 Obtain “finish allowances”

Your property has undergone some wear and tear over the years and could use a face lift. What kind of money will the landlord devote to this purpose? “The landlord will have budgeted some money to fix up your space in the event you decided to leave,” says Martin. “How much of that money can you obtain for repainting and refinishing?” Says Fajack: “Try to get some repair and maintenance of your interior space, including paint and carpeting and ceiling tiles.”

5 Change base year to the current year

Here’s another tip that relates to operating expenses. Operating expense escalation rates replicate the increases in such costs over a “base year,” which is generally the year your lease began. “When you do renew, make sure the base year is adjusted to the current year, rather than to some former date,” says Fajack.

6 Beware a change from gross lease to net lease

In a “gross lease,” the landlord bears all of the risk for repairs and maintenance. In a “net lease,” the tenant pays for a portion. Know which kind of lease you have. And beware an unannounced change in the lease that can leave you liable for thousands of dollars in additional expense.

“One Michigan business signed a lease renewal that provided for a modest rental increase to $17,000 a year,” says Fajack. “But the landlord didn’t mention the contract was changing to a net lease. As a result, the business is paying $5,000 more than anticipated.” You can avoid similar bad news by making sure you are not switched out of a gross lease unannounced.

7 Assure your right to audit operating expenses

So you’ve agreed to pay a portion of the operating expenses for your property. But how can you make sure the numbers from your landlord are accurate? Answer: Make sure your lease contains language that allows you to audit bills in a timely fashion.

You want to be able to audit these expenses, because in some cases they can add up to 30 to 40 percent of your total rent. Such expenses may include janitorial expenses, insurance, administrative costs to run the building, electricity and other utilities, real estate taxes and a host of other line items. “Given the variety of what may be included, it’s important to negotiate a lease that itemizes exactly what you will be paying for,” says Wiesner. “And many leases will contain explicit language that permits the tenant to audit the operating expenses. Sometimes leases are silent on the subject, and in those cases we believe enough case law has developed over the years that a tenant has a right to see what they are paying for.”

Wiesner advises against signing leases that are overly restrictive in terms of audit rights. “A lease may state that operating expenses must be audited within 10 days of the issuance of a statement,” he says. “We find this is impractical for most tenants.”What time frame should you negotiate? “I wouldn’t sign anything for under three months, and I think three years is reasonable,” says Wiesner.

8 Don’t waive your right to obtain money due

As part of your renewal, you may be asked to sign an attachment to the effect that the landlord does not owe you any money. “If signed improperly, this can hurt you,” warns Wiesner. “I’ve seen cases where landlords have owed tenants money that has been waived away.”

Prior to signing, perform due diligence to make sure you are not owed anything Some categories to watch, says Wiesner: overpayments on prior leases, tenant improvement allowances, and rebates or free rent with your previous lease. The “free rent” amounts can be easy to overlook if the specified months are staggered. For example, suppose your landlord had originally sweetened a five-year lease offer by specifying two months free of charge. At the same time, though, the landlord assured that you would stay for the long term by assigning those rent-free periods as months 36 and 37. It’s up to you to make sure you do not pay for those months, or, if you mistakenly do so, do not waive your right for reimbursement later.

9 Restrictive sublease clauses

Try to preserve your right to sublease space without your landlord’s written consent. If your landlord insists on the right to approve sub-tenants, try to limit the time allowed to reach a decision to 30 days or so. Some leases allow the landlord 90 days to approve a sublease. In that time, the sublessor will have long since decided to rent some other space.

10 Beware holdover clauses

Suppose that you are unable to move to your new location smoothly and on time. This condition, called a “holdover,” may have come about through no fault of your own. All of the moving companies, for example, could go on strike before moving day. If your lease calls for onerous payments to the landlord in such a case, your profits could be hit hard.

Some contracts go so far as to stipulate that the tenant pay double the monthly rent, as well as damages to the landlord. Suppose another tenant cannot move in on time because you have not moved out, and that as a result the tenant cancels the lease. Damages to the landlord could be deemed to be very high and you will be liable if the contract so states. Get any such clause out of the contract. Alternatively, you may be able to get the penalty reduced to 125 percent of the monthly rent.

“Don’t let the landlord get the upper hand on holdovers,” says Martin. “You may be held liable for the landlord’s loss of another tenant. Make sure you use a broker who is knowledgeable about the correct lease language.”

11 Original condition clauses

Some leases contain language that requires you to leave the premises in their “original condition” when you depart. Try to get this term defined specifically so you are not penalized for normal wear and tear. And have a dollar limit placed on the value of any required restoration. Another smart move is to take some photos of the premises when you move in, so you have evidence of any pre-existing conditions that were not of your making.

12 Eliminate personal guarantees

Maybe when your business was young, your landlord would not offer a lease without a personal guarantee. Times have changed, now that you have proven yourself. “It’s easy to forget the existence of these guarantees, and that you are now exposed for more money because the rent has gone up,” says Martin. “Negotiate out the clause.”

The tips in this article will help you negotiate more profitable conditions come lease renewal time. Plan ahead. Thoroughly analyze your contract, and don’t sign on the bottom line until you get the best deal possible. The net result of all this negotiation will more profit for you, since excess rent and expense payments will not erode your bottom line. Your landlord, too, will be better off with a happy tenant who decides to stay for the long term rather than look for better conditions elsewhere.

“The best lease,” concludes Martin, “is win-win for everyone.”

Phillip M. Perry is a free-lance business writer based in New York City.

 

GENERATION YES

Do you remember what your priorities were at the tender age of 19? My guess is that, for many of you, cramming for mid-term exams and hanging out with friends continuously jostled for first place. But for Amy Zeller of Ohio-based City Rentals Inc., taking on the rental-purchase industry was priority No. 1.
“When I was 19 years old, I opened my first [RTO] store,” says Zeller, who’s now approaching her 30th birthday. “I was home on a school break, working in my parents’ retail store when my mom told me that she was thinking about getting into rent-to-own. She said she wanted me to open the store and I said, ‘Are you kidding me?’”

But her mother, Jane Zeller, meant business. Because her husband wasn’t completely sold on the idea of rent-to-own, Jane Zeller took out a $50,000 bank loan in her own name.With those funds, she planned to purchase the vacant storefront across the street from the family’s retail store in the aptly named town of Defiance, OH. The irony was not lost on her daughter; Zeller saw her mother’s offer as a challenge worth accepting.

“I remember the first rental I had—even the customer’s name and what they got,” Zeller says. “And the next thing I knew, I had 70 accounts in that store, then 400, and then we opened more stores and branched out.” Today, as coowner and vice president of operations at City Rentals Inc., Zeller oversees all seven stores in six Ohio cities. “She caught on quickly how to make money,” says Jane Zeller. “That [first RTO venture] became my No. 1 store.

People loved her and I’m not just saying that because she’s my daughter. I’ve never been sorry that I made that initial business proposition; in fact, I now depend on her quite a bit.”

Rent-to-own and retail know-how seems to run in the Zeller family. Jane Zeller, her husband, Jim Sr., and her oldest son, Jimmy, co-own the Zeller Super Warehouse, which acts as the main merchandiser for all City Rentals stores. Aside from acting as the vice president of the Super Warehouse and overseeing all merchandise deliveries to City

Rentals branch locations, Jimmy Zeller also operates a scratch-and-dent appliance repair shop.

“Working in a family business is great,” says Zeller, the youngest of five siblings. “It keeps us close throughout the years, which seem to go by so quickly. Out of the 365 days in a year, I’d say we usually agree on 362 of those. During the other three, we survive. It’s expected that we won’t always agree.”

“I love working with Amy and Jimmy,” says Jane, whose other son and two daughters followed careers outside the family business. “We laugh a lot and we hash things out together. And we don’t discuss business outside the store. That’s our rule and it works out well.”

Looking Past Defiance

Zeller’s youthful face and spunky personality make it hard to believe that she is a “veteran” in her industry, but after 10 years in the business, her contributions extend beyond her seven stores.

For three years, she served as the president of the Ohio Rental Dealers Association, traveling to Washington D.C. on four occasions to lobby for federal-level RTO legislation. In 1996, she helped to initiate a grassroots campaign with Ohio Attorney General Betty Montgomery to protect the rental-purchase industry’s public image.Under the initiative, ORDA board members and the Attorney General worked together to resolve reported customer complaints against Ohio rental dealers before the conflicts reached the courts or the media.

On the national level, Zeller served as a speaker at last August’s Association of Progressive Rental Organizations’ annual convention in Las Vegas, NV. She headed a roundtable discussion that explored ways to stay on the cutting edge of the RTO industry.

“To be successful, you really have to stay on top of the new merchandise out there,” says Zeller. “Take computers, for instance. If I hadn’t jumped on top of computers a few years ago, I wonder if my business would be doing as well as it is.” According to Zeller, computers account for approximately 8 percent to 10 percent of her business. And, in her observation, the average rental-purchase customer has become more particular about the style and quality of the merchandise. “They want a better product and you have to provide it for them,” she says.

Knowing what the customer wants and where the industry is headed are key to surviving in any market. That’s why Zeller strongly supports ORDA initiatives and is actively involved on the national APRO board of directors and on several APRO committees—from public relations and membership to nominations and communications. As president of her state association, she re-introduced a yearly golf outing to facilitate fellowship and recruit new members.

“Obviously, there are new people who come into the industry all the time. It’s important that everyone is on the same page,” says Zeller, who continues to serve as ORDA treasurer since her term as president ended last April.

A Personilized Talk

Zeller is the first to admit that she’s highly organized— maybe sometimes to a fault. “Anyone who works with me will tell you that I will not leave my desk without the right pen being in the right pen holder,” she says. “And I’m big on lists. I make to-do lists daily and check off each item as I go.”

Yet Zeller’s mom sees her daughter’s work style and initiative as one of the reasons why her employees—especially the men and those who are older—take this 29-year-old woman seriously. “Amy always has the right answers,” Jane Zeller says. “People respect her because they see her out there in the stores working hard every day. She knows this business firsthand.”

Although men historically have dominated the rentalpurchase industry, that dynamic isn’t reflected within the City Rentals chain.Many of the store managers are female. Jane Zeller says it’s no accident either. “Women are very personable and can multitask well—not that the men can’t, but women are good at managing people and juggling responsibilities. Amy treats her employees as individuals. She’s competitive but she gives everyone a chance.”<.P>

Zeller describes her management style as creative and energetic. “I like to put a carrot in front of my employees on the weekends,” she says, explaining that she’ll orchestrate contests in which the store location with the least rental deliveries has to buy pizza for the one with the most deliveries. “I’m still young and a little bit crazy, so I enjoy coming up with different ways to make sure my employees are having fun while they’re working,” she says.

The Bigger Picture

Keeping your employees motivated and happy is a full-time job, but Zeller doesn’t let that stop her from pursuing her own happiness and personal enrichment outside of work. Throughout the past 10 years, she has continued her education, attending summer business seminars through Vanderbilt and Emory universities. She also volunteers for the local animal shelter and is active with the Defiance Chamber of Commerce.

More important, by the time most of you read this article, Zeller will have tied the knot with Tyson Fankhauser, a mortgage broker. The October 6 wedding ceremony took place at the Zeller’s house on Clear Lake, a place where the family often gathers to relax. It’s also where the lovebirds first met.

“Although Tyson and I were both ‘Clear Lakers’ from diapers on and lived only 22 cottages away, we didn’t meet until seven years ago,” Zeller says.

Once the couple has settled down, Zeller plans to pursue yet another love in her life: aviation. She’s already taken the initial steps toward obtaining her pilot’s license.

“Flying is definitely a great escape from all else,” she says. “It forces me to really focus on that one thing. Challenge is awesome!”

Zeller is right. Challenges are awesome. But there’s much more to be said about the individuals who tackle them head on without fear.

“Sure. It was hard when I first started out in this business, but it was fun too,” Zeller says. “I like trying to make a difference in the industry, both in the State of Ohio and on the national level.

“But the most important and the most fun thing about getting involved is meeting a lot of new people and fighting the good fight to keep this industry where it needs to be.Without teamwork in those organizations, we would be nowhere.”

The rental-purchase business is definitely fortunate to have this product of Generation “Yes” on its side.

Katie Garza is a free-lance writer.

 

WISCONSIN’S RTO WOES

Another near miss makes Wisconsin a continuing sore spot on the otherwise healthy corpus of rental-purchase statutes in the states. In Greek mythology, Sisyphus was condemned for eternity to push a great round rock slowly up a steep hill only to find at the crest some mysterious force driving the stone back down the hill, whereupon Sisyphus had to begin his ordeal anew each time. Wisconsin rental dealers are feeling a bit like Sisyphus after this summer. >>> Wisconsin dealers have been toiling with their political rental-purchase ball for nearly 20 years now. This summer they thought for a brief moment that they had finally reached the summit, when the state assembly and senate chambers both passed the state’s budget bill with comprehensive rental-purchase legislation included in it. >>> After years of near misses and over the protestations of the judiciary and an attorney general rabidly antirental purchase, the legislative branch of Wisconsin government had finally recognized rental-purchase transactions as leases and aligned the state with its 47 sister states who had already done the same thing. >>> These near unanimous legislative votes were cause for celebration among the hearty, long-suffering band of Wisconsin rental dealers who had persevered against long odds, repeated adverse court decisions, a biased and antagonistic press and the active, belligerent opposition of an attorney general sworn to decimating the rental-purchase industry in his state. >>> Oh, but the taste of victory was going to be sweet. What more awaited the ultimate success but the governor’s signature? And a Republican governor, at that, who is brand new on the job and who in the spring had assured the industry of his support. Every single time that a state legislative body had passed rental-purchase legislation, the governor had signed the bill into law. How could it be any different in Wisconsin? >>> Wisconsin rental dealers were giddy with joy and relief. The sense of accomplishment was delicious, the feeling, finally, of victory, palpable.

But all of those good feelings were short-lived. In a press conference held a few days after the legislature had sent the governor the budget package, the governor began waffling on the rental-purchase issue. In response to a question about this aspect of the bill, the governor seemed surprised that rental-purchase was part of the budget package and told reporters that the industry had a heavy burden to meet in order to persuade him not to use his line-item veto power to excise all rental-purchase language from the budget bill.

The governor’s turnabout opened the liberal press floodgates in Milwaukee and Madison. Editorials pleaded with the governor to veto the rental-purchase bill and protect the Wisconsin citizenry from rental-purchase predators. The vitriol spewing almost daily from Wisconsin newspapers in July and August was unfair and unbalanced:

“They [rental-purchase companies] are poverty pimps who prey on impoverished people. They cause a lot of harm,” according to Milwaukee alderman, Terrance Herron. Eugene Kane, writing for the Milwaukee Journal Sentinel on August 4 went on, “We put labels on tobacco and alcohol so people can be informed about the danger of using the product. Seems to me, the same thing ought to apply for rent-to-own stores. Otherwise, it’s no better than borrowing money from the mob.” Suddenly, even though there has been no interest rate ceiling in Wisconsin since 1984 and, therefore, no usury limits, renting televisions in Wisconsin was portrayed as the equivalent of mafioso extortion.

The unrelenting hyperbole finally took its toll and in late August, Governor Scott McCallum, after hedging his bets for a month and trying to see which move would most benefit him politically in his race for re-election in November 2002, announced his intention to veto the rental-purchase bill.

Thus, were dashed once again the hopes of the dwindling number of Wisconsin rental dealers.

RTO AS “CREDIT SALES”

The industry has been involved with the legislative process in Wisconsin longer than any other state. APRO representatives were invited to attend meetings of the ad hoc negotiating committee on the Wisconsin Consumer Act in 1982. Its supporters hailed this law in 1973 as “the most sweeping consumer credit legislation enacted in any state.” It was passed during the heyday of consumer activism and based loosely on the Uniform Consumer Credit Code, which was enacted in 10 states before the movement lost steam. The WCA is comprehensive and far-reaching. It has been a thorn for banks, retailers, lessors and others who fall within its coverage.

A unique quirk in how the definition of “credit sale” reads in the WCA and the state’s long history of liberal judicial activism have allowed three different state appellate courts—beginning in 1984—to conclude that rental-purchase transactions are credit sales under the WCA. Even with such a strong consumer protection statute, the state rescinded its finance charge limits in 1984. Sellers can charge any interest rate they want, but they must disclose it. The three rental-purchase cases stand for the proposition that rental-purchase dealers can charge any amount that they want, but they must disclose an APR and they cannot attempt self-help repossessions except under the most limited of circumstances.

DWINDLING OPTIONS

In addition to the spate of private lawsuits, Wisconsin Attorney General Jim Doyle has attacked the industry repeatedly, securing civil penalties against rental companies and causing two mid-sized multi-store chains to leave the state altogether at a cost of hundreds of thousands of dollars. Other companies have made multi-million dollar settlements with private lawyers on behalf of the classes of customers they represent. While the remaining companies have written big checks to settle suits, they have not gotten any kind of safe harbor in which to do business in the future.

In the 1980s, mindful of early court decisions,Wisconsin rental dealers added bona fide balloon purchase options to their rental agreements, assuming that a pure rental transaction coupled with a separate sales transaction at a bona fide price could not be artificially lumped together to create a disguised credit sale. But they were wrong. That is exactly what Wisconsin State court judges did with these transactions in a pair of cases in the ’90s. The last court, in a 1998 decision, effectively ruled that there was no balloon option large enough for the rental dealers to escape coverage of the WCA. If a customer rents something in Wisconsin and can ever own it, regardless of how the transaction is structured, there is a substantial risk that courts there are going to call it a credit sale.

THE DAVIDS VS. GOLIATH

Alongside this never-ending litigation, the industry has also been deeply involved in state politics, attempting at different times to amend the WCA to accommodate rental-purchase transactions or to bring Wis-consin into the legislative mainstream with stand-alone rental-purchase legislation similar to what most other states have adopted by now. Year after year, rental dealers—and there have never been very many in the state—have trooped to the Capitol in Madison to petition their government to redress their grievances. They have made their case over the vigorous protests of 12-year Attorney General Doyle who has made a career out of investigating and then suing rental companies and exacting painful, expensive settlements. Attorney General Doyle is now running for governor and will likely face Governor McCallum in the 2002 elections.

Each year, the industry chipped away at the legislative stonewalls that confronted them from the beginning. Each year, rental dealers would tell the rental-purchase story again and again and pick up a supporter here, another supporter there, sometimes a Republican, sometimes a Democrat. A recent supporter has been state Senator Brian Burke who is running for General Doyle’s soon-to-be-vacated job as attorney general.

Wisconsin politics has been especially volatile in recent years with first one party and then the other holding a one-seat majority in the state senate. Politics changed early this year in February when the popular, charismatic and progressive 16-year Governor Tommy Thompson resigned his post to take a cabinet position under President Bush. Governor Thompson had long been a friend of the industry and had told rental dealers that if they could get him a bill, he would sign it into law.

When Governor Thompson resigned, the then-Lieutenant Governor McCallum took office. Governor Thompson left big shoes to fill and the 2002 elections will reveal how Wisconsin voters have measured Governor McCallum’s performance since last February. Critics are calling him ineffectual, noting that he has been disloyal to his conservative base, while at the same time failing to impress moderates or liberals.

That has certainly been the case with his decision on rental purchase. Attorney General Doyle has long owned the anti-rental-purchase position. Commentary after the Governor’s veto announcement has given all credit to killing the bill to Attorney General Doyle and none to McCallum. PICKING UP THE PIECES Although acutely disappointed in the governor’s decision, rental dealers in the state do not intend to abandon the battle. Some dealers, like the Lebakkens, have no choice but to keep fighting. Their lives and their livelihoods are tied up in their homegrown Wisconsin rental business. The Lebakkens and others, in spite of the governor, the courts and the press, believe fervently in their right to carry on this business like it is being carried on in nearly every other state and they believe in the worth and value of what they offer their customers. The rental-purchase stone is one they simply must keep pushing, not matter how many times it rolls back down the hill.

Ed Winn III is APRO’s general counsel. His e-mail address is edwinn@e-bylaw.com.