Peninsula Place Breaks Ground As Lawsuit Emerges Over Building Heights

A downtown Traverse City project six years in the making will break ground on State Street this week, with plans to construct a five-story, 42-unit condo development that will create a new model for downtown vacation rentals as part of a partnership with the Park Place Hotel. Peninsula Place, as the project is called, was originally intended to be 100 feet tall, but was scaled back to 59 feet after voters passed a charter amendment in 2016 requiring a public vote on buildings over 60 feet. As construction on Peninsula Place gets underway, a community group that pushed through that charter amendment is now challenging the city in court over the way building heights are measured for new developments.

Developer Tom McIntyre will hold a groundbreaking ceremony Thursday for Peninsula Place at 330 East State Street. Demolition will begin next week on an existing building on the site, followed by an estimated 18-24 month construction period – putting Peninsula Place on track for a likely mid-2023 opening. Designed in a horseshoe shape intended to look like two separate buildings from the exterior (pictured), the building will have 40 enclosed parking spaces on the ground level and 42 residential units on the upper four floors. The units will range in size from 792 square feet to 1,545 square feet and in price from $336,500 to over $1 million. The units are almost all sold, according to McIntyre, with only a handful still available.

The layout of the building mimics the geographic layout of Old Mission and Leelanau peninsulas, with units placed and named after correlating real-life locations from both peninsulas (such as the West Bay, the Neahtawanta, the Boardman, and the Glen Lake). Planned amenities include individual storage units, a courtyard, a bicycle storage room, a dog wash area, a tenant community room, and a large rooftop terrace and garden with views of Grand Traverse Bay.

An estimated 16-18 units to start will be designated as short-term rentals as part of a partnership with the Park Place Hotel next door. The Park Place will oversee renting out and cleaning the units for owners in exchange for a cut of the rental revenue. Renters will have access to Park Place amenities, including the health club, pool, and parking (part of the reason McIntyre is able to have fewer parking spots than units within Peninsula Place). The west side of Peninsula Place will abut to the east-side sidewalk and entrance of the Park Place Hotel, making it easy for guests to traverse between the two properties.

“A little under half of the buyers are investors who want to live downtown in five, ten, or fifteen years, but in the meantime will put their units into this rental management program,” McIntyre says. “The Park Place does this with other properties they have around the country.”

This week’s groundbreaking marks the end of a bumpy six-year journey for McIntyre to build Peninsula Place, which was initially designed as a 100-foot building. Though zoning on the property permitted a building that tall, a community group called Save Our Downtown successfully championed a city charter amendment in 2016 requiring a public vote on any buildings over 60 feet tall. McIntyre sought voter approval in 2018 to moved ahead with a 100-foot building; the proposal was rejected by a 60-40 margin. McIntyre also sued the City of Traverse City to try and turn over the charter amendment, called Proposal 3, but lost the case in Thirteenth Circuit Court.

Though McIntyre believed he would be successful appealing the case to the Michigan Court of Appeals, the time and cost involved in doing so convinced him to redesign the building instead. At just under 60 feet, the project is a use-by-right, meaning McIntyre didn’t have to pursue any additional special city approvals in order to build the redesigned structure. “It’s a great example of persistence paying off,” McIntyre says of the project moving forward.

Save Our Downtown, meanwhile, filed a lawsuit against the City of Traverse City last week claiming that the city is allowing buildings over 60 feet tall to be built without a public vote, violating Proposal 3. Recent approved projects including the newly constructed 4Front Credit Union headquarters on West Front Street and an 88-unit Innovo apartment complex planned for Hall Street violate the charter amendment by having certain structural features, like parapets and other rooftop and mechanical infrastructure, that extend higher than 60 feet, according to the lawsuit.

Save Our Downtown argues that Proposal 3 “does NOT include any exceptions to the sixty feet in height limitation, without a vote of approval by the electorate.” The group is seeking an injunction prohibiting the city from approving any more buildings that have any components over 60 feet, and “to reverse any prior grant of approval and/or permit for construction of a building in excess of 60 feet.” The lawsuit argues that Save Our Downtown members “have been denied their voting rights, the most fundamental right in a democracy, which must be protected and assured.”

City Attorney Lauren Trible-Laucht filed a motion Tuesday to dismiss the lawsuit, which has been assigned to Judge Thomas Power. Trible-Laucht tells The Ticker that building height has always been measured the same way in Traverse City: from the grade to the roof deck. That measurement formula doesn't include parapets, steeples, clock towers, or similar type of features, she says. “That is defined in the zoning ordinance,” she says. “There is a whole methodology (for measuring building height) which is very common to all zoning codes in Michigan. It’s what you’d see in any other zoning ordinance.”

Because Proposal 3 changed the city charter, not the zoning ordinance, and because neither the charter nor Proposal 3 ballot language include a definition on how to measure height, the city created an implementation policy shortly after Proposal 3 was passed. The city held a series of public meetings and sought public input, including from Save Our Downtown, on standards for measuring height and rules for triggering elections so there would be consistent guidelines under Proposal 3, Trible-Laucht says. The approved policy calls for using the city’s existing zoning rules as a basis for measuring height. Staff noted at the time that certain mechanical and architectural features could be higher than 60 feet under those rules.

“The city was very transparent about all of this…and (Save Our Downtown) never raised any concerns about that particular section of the implementation policy,” says Trible-Laucht. “So now after five years of implementing under that policy, they don’t think that’s how height should be measured. The city hasn’t changed the way it measures buildings. It’s the same as it was before, and the only way buildings have ever been measured.” Under the zoning rules, she says, the city has “not approved any buildings over sixty feet since Proposal 3 passed.” Save Our Downtown, meanwhile, argues in its lawsuit that Proposal 3 should be interpreted by its “plain meaning,” with no part of a building allowed to be constructed over 60 feet without a public vote.

Save Our Downtown will be able to file a response to Trible-Laucht’s motion to dismiss the case, with Power likely to set a hearing in the near future to hear the motion. Should he deny the motion and allow the case to proceed, Trible-Laucht will likely meet with city commissioners to discuss next steps. She says it’s possible other parties, such as developers of affected projects, could also file motions to intervene in the case. Though McIntyre told The Ticker Tuesday he was just learning of the lawsuit, he said he wasn't concerned about Peninsula Place or how height was calculated for the building. “I'm very comfortable with that,” he said.