Traverse City News and Events

Developer To Sue City Over Prop 3

Jan. 5, 2017

A Traverse City developer is filing a lawsuit against the city over Proposal 3, a newly enacted charter amendment requiring a public vote on buildings over 60 feet high.

Law firm Running, Wise & Ford plans to file the complaint today (Thursday) in Thirteenth Circuit Court on behalf of developer Tom McIntyre and his LLC, 326 Land Company. McIntyre and two partners – both attorneys at Running, Wise & Ford – plan to build a 100-foot condominium development at the site of the firm’s offices at 326 East State Street next to the Park Place Hotel.

The new development, called Peninsula Place (pictured), will feature 60 condominiums, two levels of parking, and ground-floor commercial offices, including a possible national rental car franchise. According to McIntyre, the partners hope to redevelop the property – which is zoned for buildings up to 100 feet tall with a special land use permit – in conjunction with the construction of a new conference center and other hotel campus improvements at the neighboring Park Place.

The development will create 40 jobs and more than $50 million in new taxable value in the city, according to McIntyre, who says Peninsula Place has been “in the planning stages for several years” and has 12 reservations already in place for units. He says 326 Land Company invested in project plans believing “we would be working within the boundaries of the Traverse City zoning code," and that the passing of Prop 3 illegally subjects developments to a “discriminatory process” in which voters approve or disapprove projects without set guidelines or criteria.

“People can vote however they want for whatever reason they want, which is one of the reasons it’s unlawful,” he says. “There’s a total lack of discernment in the process.” Because of city staff’s confusion over how to implement Prop 3 and the “lack of clarity within the city,” says McIntyre, “we felt we had no choice but to file a lawsuit.”

The filing comes three weeks after city commissioners decided against seeking their own court review of Prop 3. Commissioners considered asking for – but ultimately declined to pursue – a declaratory judgment, a request for a judge to review the charter amendment to determine its legality. 326 Land Company’s lawsuit will seek a declaratory judgment, in addition to arguing that Peninsula Place is directly negatively impacted by Prop 3 as a form of downzoning.

Commissioners Tim Werner and Gary Howe, who supported having the city seek a declaratory judgment, say they were not surprised to hear of 326 Land Company’s lawsuit.

“It’s a totally expected and totally predictable outcome of that decision (by the commission not to pursue a court review),” says Howe. Agrees Werner: “I did feel it would happen sooner or later – it looks like sooner. To me, it sounded more cumbersome to get an understanding of how (Prop 3) squares with state law by being in the middle of a lawsuit instead of seeking a ruling. But that’s where we are.”

Werner notes the lawsuit will place the city in the position of defending Prop 3 in court. Several commissioners and city staff members – including City Attorney Lauren Trible-Laucht – have publicly stated they believe Prop 3 is illegal. Werner says “it doesn’t matter how vigorously the city defends Prop 3, if we lose, we could always be accused of not defending Prop 3 enough.”

Attorney Brenda Quick, who helped organize the Save Our Downtown (SOD) campaign that put Prop 3 on the ballot, says the city should hire outside counsel to handle the lawsuit. She says Trible-Laucht “has been very vocal and outspoken as far as her views; she doesn’t like (Prop 3) and she doesn’t support it. I think it’d be extremely difficult for her to (handle the case) effectively given how public she’s been. The city would absolutely have to hire outside counsel.”

Trible-Laucht, who declined further comment because she has not yet reviewed the lawsuit, says there are a “number of approaches” the city could take in handling the case, including hiring outside counsel. “I’m going to have to confer with my client, with the commission…it would be up to (them) to decide how to move forward,” she says.

Given the conflicting views of city officials on Prop 3 – and given that only parties who are part of the lawsuit can appeal the outcome of the Thirteenth Circuit Court case – it's likely an outside party could file to intervene, or join, in the case. Both Quick and attorney Grant Parsons, another SOD organizer, told The Ticker separately they believed the group would seek to intervene.

“I would assume we would, and we would probably be recognized as having a right to intervene,” says Parsons. “Is the city going to represent seriously the majority will of its electors? Because the majority wants Prop 3 adopted.” Quick notes the city “has a responsibility to defend (Prop 3), because anytime a part of the city charter is enacted by the people, it is valid unless and until the court says otherwise.”

“So they have a responsibility to do that, and they will do that,” Quick says. “But that doesn’t mean we wouldn’t also participate to ensure (Prop 3) is as well-defended as possible.”

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