A legal dispute between Traverse City Tourism and a local property management company will likely have ramifications for other convention and visitors bureaus and scores of other management companies across the state.

The Michigan Court of Appeals in a recent ruling sided with TCT in its long-running lawsuit against Golden Swan Management, a Traverse City company that manages a variety of vacation properties throughout northern Michigan.

The court of appeals (COA) upheld a local court’s decision that operations with 10 or more rooms under common management are subject to an assessment levied by TCT, regardless of where those rooms are located within the assessment district.

Under state law, TCT and other convention and visitors bureaus (CVBs) throughout the state can levy an assessment of up to five percent on all rooms within their district to raise money for marketing and promoting the district. This arrangement has been in place for decades and is a major funding source for CVBs (it represents 90 percent of TCT’s budget), and until a sharp increase in short-term rentals, applied mostly to hotels and motels.

The threshold for this assessment is 10 units, and the COA ruling makes it clear that these units do not have to be in the same building to be subject to the assessment. As long as they are managed by a common entity, TCT is entitled to the assessment, the court says. 

“This ruling has tremendous positive implications for Michigan’s CVBs, as there is now legal precedent that allows (them to) capture assessment revenue from commonly managed or operated short-term rentals and lodging facilities,” reads a statement from Steinhoff Law, an Upper Peninsula firm that specializes in tourism and that supported TCT in the case.

TCT in 2021 reached out to Golden Swan when it became aware the company was managing approximately 30 short-term rental units. Founder and manager Katy Bertodatto responded that the properties Golden Swan managed were individually owned and spread across multiple locations and should not be subject to the assessment. 

TCT then filed a lawsuit that eventually wound its way up to the COA, culminating in the recent ruling. TCT president and CEO Trevor Tkach tells The Ticker that TCT – and by extension, other CVBs – are “reassured” by the COA’s ruling.

“This is affirmation…for the 50 or so assessment districts out there in our state,” he says. “I hate that it got to the point that it did, but hopefully we've all learned from this exercise and other short-term property managers will understand the law more clearly now and be able to activate their assessment when appropriate.”

Anca Pop, an attorney representing TCT, said the COA’s ruling was the “correct and just outcome.”

“This was a classic issue of statutory interpretation,” she tells The Ticker. “The act was never intended to exempt managers of properties whose business primarily relies on tourism.”

Bertodatto and Golden Swan’s attorney, Ashley Chrysler, declined to speak about case.

“We are unable to comment on this since this is an ongoing legal matter,” Chrysler wrote in an email to The Ticker.

It’s still possible that Golden Swan could appeal the case to the Michigan Supreme Court, though that body decides what it will hear (as opposed to the COA, which by law automatically handles every case sent to it). The Michigan Supreme Court hears only 2-3 percent of applications to appeal each year.

Tkach said the case should not be interpreted as TCT being hostile towards short-term rentals or the companies that manage them.

“I see short-term rental management firms as value-added,” he says. “They’re part of the tourism economy, and they allow us to elevate our game because it’s a more sophisticated way of providing product to our customers.”