A Wisconsin bank is seeking to foreclose on a Clinton apartment complex, saying its owners owe more than $3.5 million in mortgage payments, $382,357 in unpaid city sewer bills and housing inspection fees, $453,903 in property taxes and continues to violate numerous local fire and building codes.

Layton State Bank has filed the petition against Miller Ridge LLC, owner of Miller Ridge apartments at 2604 N. Fourth St., in Clinton, as well as other defendants that include the city of Clinton, Guardian Credit Union, the US government acting through the Internal Revenue Service, Aaron Malone and Dale Bott Trucking.

The final two are listed because they are judgment creditors of either defendant, Miller Ridge LLC or Miller Ridge Apartments.

The city of Clinton is listed because it may claim an interest in the property by reason of liens for unpaid housing inspection charges, sewer and water bill charges and assessments.

Online property tax documents reveal of the $382,357 in sewer and housing inspection bills that were certified to the county by the city for collection, $356,712 is in delinquent bills and $25,645 is in interest.

Of the $453,903 in property taxes, $25,475 is in interest. The first half of the $212,256 payment for 2010 property taxes was delinquent on Oct. 1, 2011 and the second was delinquent on April 30, 2012. A payment of $108,086 for the 2011 property taxes is due Oct. 1 of this year.

According to the lawsuit,  in late November 2007, Miller Ridge LLC executed a promissory note with a principal sum of $3.1 million at an interest rate of 7.750 percent per year, with the entire principal and interest due and payable on Nov. 19, 2010. In November 2008, the bank and Miller Ridge entered into a change of terms agreement which extended by three months the one-year interest only payments provided in the November 2007 promissory note.

In November 2010, Miller Ridge LLC executed a one-year promissory note with a principal sum of $3.379 million with an interest rate of 7.750 per year with the entire principal and interest due in November 2011. Another change in terms pushed the due and payable date to Feb. 19, 2012.

The lawsuit alleges that Miller Ridge has failed to pay the note and interest and  has failed to pay taxes and special assessments on the property as well. The lawsuit also alleges that a promissory note for $49,836 executed on Nov. 1, 2010 has yet to be paid by Miller Ridge LLC.

The bank is seeking the sale of the property to satisfy what it is owed and also an order confirming its rights to an assignments of rents, directing all tenants to forward their rent to either Layton State Bank or a court-appointed receiver and directing Miller Ridge LLC to deliver all rental deposits to either Layton State Bank, a court-appointed receiver or to be held in trust.

The next step in the legal process is a hearing set for 1:15 p.m. Aug. 24 concerning the motion to appoint a receiver to oversee the money that is collected at the complex.

The bank also wants the receiver appointed to protect, preserve and operate Miller Ridge Apartments because the subject property, the bank alleges, is not being properly managed in that there has and continues to exist a number fire code and housing code violations that may present a substantial risk to person and property and because rents have not been applied to pay what it owes the city.

The motion for appointment of receiver also alleges Miller Ridge LLC has not used all of its funds for purposes related to its indebtedness or operations at Miller Ridge Apartments but instead has used the funds for unrelated indebtedness or legal entities having common ownership with Joseph Miller.