Two lawsuits against the City of Traverse City could have significant impact on the future of recreational marijuana and the allowable heights of new buildings in the city. The Ticker has the latest updates on both cases, including recent rulings that could clear the way for the city to finally begin issuing permits for recreational marijuana retail stores and potential implications for development that could result from a citizen lawsuit against the city over the way it measures building heights.

Recreational Marijuana
Traverse City commissioners could soon vote to adopt new rules regulating recreational marijuana retail stores, allowing such stores to finally operate in Traverse City. The city was previously barred by the court from adopting any form of adult-use ordinance, thanks to a pending lawsuit brought by multiple dispensaries over the initial recreational marijuana plan created by commissioners last year. That plan would have allowed four adult-use dispensaries to operate within city limits – a rule medical dispensaries argued would doom those not lucky enough to score one of the four recreational licenses.

Judge Thomas Power recently sided with the city on part of the lawsuit, saying the city has the right to limit the number of recreational permits it issues (the dispensaries have indicated they plan to appeal that decision). At another hearing Monday, Power clarified that the scoring rubric the city had planned to use to rate applications needs to be thrown out. The judge previously stated some scoring metrics the city planned to use were overreaching and had nothing to do with complying with state law.

Mayor Pro Tem Amy Shamroe sits on an ad hoc committee of city commissioners who’ve been working on new ordinance language and says the group is drafting a new scoring rubric that will reflect Power’s feedback.

“The impression was some of our potential points would be too far-reaching, and that’s been heard loud and clear,” says Shamroe. She notes that state law requires recreational permits to be distributed on a competitive basis, so some sort of scoring rubric or evaluative metric is necessary, but says the committee has noted the sections Power objected to and will reflect that in the new rubric. The ad hoc is still determining how many retail permits should be allowed under the ordinance, but Shamroe says it will likely be higher than four: Some committee members like 8-10, while others prefer a range of 15-16, Shamroe says.

A final consideration is where stores will be allowed to operate. The ad hoc committee is considering using overlay districts – or a special kind of zoning district applied on top of other zoning districts – to designate where in the city recreational stores can operate. Shamroe notes stores must be at least 1,000 feet from schools and meet other state and federal requirements, which can be a limiting factor in some areas. However, all existing medical dispensaries “legally operating in the city right now” are in areas where recreational stores would also be permitted, Shamroe says, making it possible for those locations to go into recreational sales if owners obtain a permit. The ad hoc committee is hopeful the proposed ordinance can come before city commissioners for approval prior to the November 2 election, which is expected to generate significant turnover on the board. However, Shamroe says her top priority is making sure the city has the “best quality product” in its ordinance and not meeting an artificial deadline imposed by the election.

Building Height
In another lawsuit against the city, citizen group Save Our Downtown is challenging the way building height is measured for new developments. Proposal 3, a charter amendment passed in 2016, prohibits buildings over 60 feet from being constructed in Traverse City without the approval of voters. Save Our Downtown believes that a handful of recent projects, including the new 4Front Credit Union headquarters on West Front Street and a planned mixed-use development called The Godfrey on Hall Street (pictured), were wrongfully approved by the city because they have architectural features that go above 60 feet.

The city contends building height has always been measured the same way – from the grade to the roof deck – and that the formula has never included parapets, steeples, clock towers, or other mechanical or architectural features. When the city adopted an implementation policy for Proposal 3 in 2017, it specified that some architectural features on buildings could be over 60 feet and not trigger a public vote. However, Save Our Downtown attorney Jay Zelenock argued in a recent hearing before Power that having any part of the building go higher than 60 feet without a public vote is “completely inconsistent” with the city charter. The “plain language” of Proposal 3 should be applied to mean the entire structure must stay under that threshold to avoid triggering a vote, Zelenock said.

City Attorney Lauren Trible-Laucht countered that “the way that buildings are measured is consistent across zoning districts,” noting that other buildings in the city – ranging from the 101 North Park building to the new Honor Bank building on East Front Street – all have features that go above 60 feet. Those sections of the building don’t have occupiable space but instead typically include mechanical or engineering features, some of which are required to meet building and safety codes. Power questioned whether buildings could be designed in such a way as to contain some of those features, like air conditioning units, in lower sections of the building to avoid going over 60 feet. The judge said that was an aspect he’d likely look at as the case proceeds.

At a recent hearing, Power made his first ruling in the case, determining that Innovo – the development group that is building The Godfrey on Hall Street and was granted the right to intervene in the lawsuit – didn’t have a vested right to build the project. Innovo attempted to make the case that because the group had already begun earth work on the site and had applied for (but not yet received) a building permit, it had a vested right in the property. Power rejected that argument, pointing to past Michigan Court of Appeals decisions determining that site preparation work doesn’t “constitute substantial construction” on a property.

More hearings are likely to come later this month on other aspects of the case. The city has asked Power to throw the case out, a motion the judge has hinted he will likely deny but has yet to formally rule on. Determining whether Save Our Downtown and citizen Albert Quick, a co-plaintiff in the case, have standing to sue the city could be another issue raised before the court. Save Our Downtown, meanwhile, 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 group has also filed a motion asking the court to rule on the case without a trial.

If Save Our Downtown is successful in its lawsuit, it’s unclear how development would be impacted across Traverse City. Both Trible-Laucht and Innovo attorney John Lynch argued that it’s not clear-cut how to measure buildings even under a “plain language” approach advocated by Save Our Downtown, as properties can be uneven and generate different building heights depending on where measurements are taken on the site. Measuring from the grade to the roof deck is a solution adopted by communities across Michigan and elsewhere to solve that consistency problem, Lynch said. Trible-Laucht agrees, telling The Ticker the city uses its current system “so you don’t have to run to a judge every time the building is on a hill.”

Lynch argued voters who supported Proposal 3 would likely have understood a 60-foot building to be a “six-story building,” not a four-story building, which he said Save Our Downtown’s definition would essentially require to keep rooftop features from going above 60 feet. Trible-Laucht says that developments in districts where 60-foot buildings aren’t even allowed – such as the C-1 office service district, which has a maximum building height of 45 feet – could now have to go to an election if portions of the building are over 60 feet. “That would trigger an election even though it’s in a district where the maximum height of a building is only 45 feet,” she says.

The city would also either need to use two different methods for measuring building height – one when an election could potentially be triggered, and one for all other projects – or apply the same measurement method consistently to all buildings. In the latter scenario, buildings in districts with a maximum height of 30 or 45 feet, for example, would also have to change their design to avoid having any features above the height maximum for that district. That could effectively reduce the height of buildings across the city by at least a floor.

“If you’re looking for consistency in how to measure a building, that’s what’s found in the zoning ordinance,” says Trible-Laucht. “There’s absolutely no standard for how it’s measured (in the lawsuit). Where do you start, and where do you end? It invites inconsistency.” Attorney Brenda Quick, who is also working on behalf of Save Our Downtown, reiterated Zelenock’s argument in court that a literal approach to measuring height is best, saying height should be interpreted by the “ordinary and customary meaning as it would be understood by the voters.”