Traverse City commissioners this week approved a settlement agreement with 326 Land Company – the development group behind the Peninsula Place project on State Street next to the Park Place Hotel – that will allow construction to continue on the building with certain architectural features over 60 feet. Meanwhile, the charter amendment requiring a public vote on buildings taller than 60 feet, Proposition 3, could be repealed under a ballot petition circulated by a group of citizens and local leaders.
The settlement agreement is the latest chapter in a years-long effort by developer Tom McIntyre of 326 Land Company to build Peninsula Place, a project originally conceived as a 100-foot building before Proposition 3 was passed in 2016. After putting his unsuccessful project to voters, who rejected the building, McIntyre sued the city, challenging the legality of Proposition 3. The case went to Thirteenth Circuit Judge Thomas Power, who ruled against McIntyre in 2019. McIntyre said The ticker at the time he was considering appealing, thinking he would win in the Michigan Court of Appeals, but ultimately decided to go ahead with a redesigned building just under 60ft (pictured , rendered).
McIntyre opened its five-story, 42-unit condo development last summer. In November, Power ruled in a separate case – this one involving a project on Hall Street – that all components of a building must be less than 60 feet or else trigger a vote under Proposition 3. That ruling contrasted with how height had historically been measured in Traverse City, with features such as parapets, steeples, clock towers, and other mechanical and architectural features that traditionally do not count toward building height.
Changes to the law, as in a decision like Power’s, are generally applicable to ongoing developments. However, if a development is sufficiently advanced in construction, a developer is considered “invested” and has the right to complete the project. McIntyre believed he was invested, having obtained the appropriate municipal permits, begun extensive site preparation and foundation work, and invested more than $1.8 million in Peninsula Place by the time Power issued its decision. McIntyre estimated potential losses at $7 million if forced to redesign the building to meet new height guidelines. After the city issued a cease and desist order to McIntyre following Power’s decision, he filed a lawsuit against the city – this time in federal court, challenging not only the order but the legality of proposal 3.
According to city attorney Lauren Trible-Laucht, city staff believed McIntyre had not made enough headway on Peninsula Place to grandfather. But through the discovery process in McIntyre’s lawsuit, the city got more information about the project and made the decision to allow 326 Land Company to sue, she said. “The City has determined that in order to protect ratepayers from the possibility of potential monetary damages, in light of additional information that calls into question the outcome of this lawsuit, it is in the City’s interest to settle this matter. “, she says. . “In addition to exposing ratepayers to damages, an adverse ruling on the grandfathering issue also had the potential to set a complicated legal precedent that planning administrators and zoning administrators across the state would have hard to apply.”
In exchange for the city’s agreement this week to allow Peninsula Place to proceed as planned, 326 Land Company is denying all of its claims and forgoing the ability to resubmit them in the future, including challenging the legality of Proposition 3. However, another group takes the defense against proposal 3, circulating petitions this month to put a repeal of the charter amendment on the November ballot. City Commissioner Tim Werner is involved in the effort, saying Proposition 3 — especially under Power’s ruling — is an obstacle to building much-needed housing in Traverse City.
“There is no silver bullet (to solving the housing crisis), and repealing Proposition 3 is not a silver bullet, but we need everything and every effort on the table” , he said. Werner points to an affordable housing project proposed by the nonprofit HomeStretch in Parking Lot O at the corner of Cass and State streets as an example of a project hampered by Proposition 3. This project was ready to go but had architectural features over 60 feet, forcing developers to delay their plans while they redesigned the building, ultimately eliminating several apartments. “(Power’s decision) eliminates a whole story of what could have been residencies,” Werner says.
Lawyers Brenda Quick and Jay Zelenock of Save Our Downtown, a group that defended the Proposition 3 death and were plaintiffs in last year’s lawsuit that changed the way building height is measured, say repeal of Proposition 3 would deprive residents of their constitutional right to vote and have a say in city decision-making. “Public suffrage has served TC very well since 2016, as it serves as an essential check and balance to the power of the city to give too much to financiers and developers at the expense of our quality of life,” says Zelenock. Quick says she is “disappointed” and “perplexed” that “there are members of our community who want to deprive the people of our city by taking away our right to vote.” She adds, “If a project provides the housing that people are looking for, and at an affordable price, voters have every right to vote for the project and encourage their neighbors, friends and others to do the same. Save Our Downtown never suggested how people should vote. We have only fought for our right to have a say in matters that may affect us personally and directly.
Developer Raymond Minervini, who also works on the petition campaign, says he thinks people “had good intentions” when they put Proposition 3 on the ballot and voted for it. However, he believes the charter amendment has had “unintended consequences” since its adoption, particularly as a result of Power’s decision. “It’s much harder for anyone to build accessible and affordable housing in the city,” he says. “Any obstacles to building more housing do not serve the public interest.” In response to Save Our Downtown’s comments, Minervini notes that the public has representative government, with municipal commissioners elected by voters and obligated to consider the merits of development proposals submitted to them. “There is no obligation for the electorate to consider the merits of a proposal…and sometimes it can just become a popularity contest, with no regard for the merits or the rights of the owner,” he says.
Petition distributors face an uphill battle to collect the 700 signatures needed in time to put the repeal of Proposition 3 on the November ballot. City Clerk Benjamin Marentette says petitions should be submitted to his office by Aug. 2 and then certified by the city commission, which the commission is obligated to do if the petitions have been certified by Marentette. However, the office of the governor and state attorney general must also review petitions and recently recommended that proposals be submitted to them at least 60 days before the filing deadline (June 2, in this case) to allow time to review them.
“That said, if the petitions were submitted very soon, there is a chance that the reviews would be completed in time for the proposal to appear on the November 2022 ballot, although it may be too late,” says Marentette. . After November, petitioners could ask the city to consider holding a special election in May or August 2023 or wait until the next regular election scheduled for November 2023. Werner says the group continues to push for this fall; if they miss this year’s deadline, Minervini says they will likely target the next election. “(Proposal 3) is going nowhere without the grassroots efforts of the people of Traverse City,” he says.