Former Traverse City Assessor Polly Cairns has filed a lawsuit against the city in Thirteenth Circuit Court alleging she was fired for refusing to sign off on a tax abatement she believed was illegal. Cairns’ two-count complaint alleges she was wrongfully discharged and that her firing violates the Whistleblowers’ Protection Act. Cairns is seeking more than $25,000 in damages, claiming “severe emotional and economic harms” caused by her termination.

According to the lawsuit – filed through Cairns’ attorney Blake Ringsmuth – Cairns was responsible for evaluating applications from property owners seeking tax abatements as part of her job. Traverse City commissioners last October approved a payment-in-lieu-of-taxes (PILOT) agreement for the Breakwater development on Garland Street. Under a PILOT agreement, a developer pays a percentage of rental income to the city instead of traditional taxes to offset the costs associated with offering below-market housing.

Breakwater developer Innovo – listed only as the “property owner” in the lawsuit – sought a $200,000 abatement for 2023. However, Cairns said the developer had only collected one month of reduced rents in 2023 and did not qualify for 12 months of abatement. Cairns said she reported this to both Innovo and the city manager and city attorney. “For some unknown reason this did not sit well with (the) city’s administration,” the lawsuit states. Cairns was then pressured by city officials to change her calculation and sign off on the 12-month abatement, but she continued to refuse, according to the lawsuit.

After “city officials became angry with (Cairns) for refusing to go along with the illegal tax scheme” and “made it clear to (Cairns) that her job was in jeopardy” if she did not approve the abatement, she relented and signed off, according to the lawsuit. Cairns continued to express her belief that the abatement was illegal, which caused city officials to become “even more hostile and retaliatory,” according to the complaint. Officials said Cairns was being insubordinate and failing to act as a “team player,” the lawsuit states. Cairns was subsequently terminated on August 1, according to the lawsuit, which alleges that the firing was retaliatory and violated the Whistleblowers’ Protection Act.

In addition to seeking damages of more than $25,000, Cairns is seeking injunctive relief – including “striking down the tax abatement as illegal and requiring the payment of the appropriate property taxes due, along with allowable interest and penalties.” City Attorney Lauren Trible-Laucht said city staff could not comment on the case due to pending litigation.