Tom McIntyre, the developer of a proposed 100-foot building in downtown Traverse City, has lost an appeal in his lawsuit attempting to overturn the city’s Proposal 3 charter amendment. But the ruling leaves the door open for McIntyre and other developers to sue the city again in the future – an option that will likely be pursued following a November ballot referendum on McIntyre’s project.

McIntyre and his development group, 326 Land Company, filed a lawsuit in Thirteenth Circuit Court last year challenging Proposal 3. The city charter amendment approved by voters in 2016 requires a public vote on any buildings over 60 feet tall in city limits. McIntyre argued Proposal 3 illegally subjects developments to a “discriminatory process” in which voters approve or disapprove projects without set criteria. He also argued the charter amendment directly financially harmed his Peninsula Place project on State Street, as he had already invested more than $100,000 into development planning. Under previous city zoning rules, buildings as high as 100 feet were allowed on McIntyre’s parcel as long as the developer obtained a special land use permit (SLUP).

Last July, Judge Thomas Power dismissed McIntyre’s lawsuit, saying the project hadn't progressed far enough through the city's approval process – or wasn’t “ripe” enough – for the developer to file a case. McIntyre appealed the ruling to the Michigan Court of Appeals. On Thursday, Court of Appeals Judges Patrick M. Meter, Kristen Frank Kelly, and Elizabeth L. Gleicher issued a ruling unanimously upholding Power’s decision. The trio agreed McIntyre had not yet suffered financial harm and thus did not have standing to pursue a lawsuit.

“326’s injury was merely hypothetical because it had no way to know whether the voters would reject its SLUP,” the judges wrote. “After all, 326’s 100-foot building would be two doors down from the 125-foot Park Place Hotel…(it) would sit three streets back from the shoreline and therefore would not necessarily block all views.” The Court of Appeals also upheld the right of Save Our Downtown (SOD), the Traverse City citizen group that helped passed Proposal 3, to be a party in the lawsuit. SOD previously expressed concerns City Attorney Lauren Trible-Laucht was opposed to Proposal 3 and would not vigorously defend the charter amendment – a position the Court of Appeals found credible.

McIntyre says he is “disappointed” in the ruling, while SOD attorney Jay Zelenock calls it yet “another case where judges have agreed with us” and “a win for Save Our Downtown.” But both McIntyre and Zelenock agree the ruling leaves the door open for the developer to refile his lawsuit – particularly if McIntyre loses an upcoming ballot referendum for his project.

“As the circuit court dismissed 326’s suit without prejudice, 326 could refile in the event the election does not go as desired,” the Court of Appeals determined.

In the event his appeal might fail, McIntyre simultaneously went through the city’s approval process this past year to obtain a SLUP for Peninsula Place. The project was approved by the city’s planning commission, and will now head to voters for approval on the November 6 ballot. If it’s approved, it will then go to the city commission for final permit approval. McIntyre says he already has over 20 reservations for the 64 condominiums planned for the development and would likely break ground next summer if the project is approved.

If the ballot proposal fails, however, McIntyre says he would “unequivocally” have standing for his lawsuit and would refile his case against Proposal 3 in Thirteenth Circuit Court. Zelenock concurs, saying McIntyre would “have a much better argument for ripeness” following an election. “Holding an election is something we’ve always encouraged him to do,” he says. “Going through that process would absolutely address some of the issues of ripeness. I think a fair reading (of the Court of Appeals ruling) is to put it to a vote first, and that’s what we’ve wanted them to do.”

The November election will be the first time a tall building heads to voters for approval since Proposal 3 passed. McIntyre plans to campaign for his project, saying promotional materials will likely start circulating in the next week. McIntyre is also fundraising to support the ballot proposal’s passage. While SOD has previously stated it is not opposed to all tall buildings in the city and advocates instead for voters to have a voice in city projects, Zelenock says several key members of SOD plan to oppose McIntyre’s project and will raise funds to oppose the ballot’s passage. “I don’t know if SOD is going to be involved as a group, but I know some of the members are certainly interested…and that people will be opposing it and forming a separate organization to pursue that,” he says. 

Even if McIntyre’s project becomes the first tall building to obtain voter approval in Traverse City, the question of Proposal 3’s legality is likely to loom over the city until a court ruling officially upholds or overturns the charter amendment. McIntyre says voter approval would mean his own project would no longer be impacted, removing his standing to sue, but adds he still believes Proposal 3 is an “illegal process the city has implemented.”

“We’d probably continue the effort on Proposal 3, but we’d look at it from the standpoint of getting some other property owners involved in the lawsuit and sharing the legal costs,” McIntyre says. Zelenock says he’s prepared for that outcome, but notes the Court of Appeals ruling sets down two important parameters for any future lawsuits.

“I think this decision is important on the point that a developer won’t have a right to pursue a lawsuit…until they put (a project) up to an election first. You can’t just file willy-nilly lawsuits against the city over Proposal 3,” Zelenock says. “I think the decision is also very strong on how weak the city was as an adversary in litigation. It’s hard for me to imagine a case where SOD would be denied an opportunity to intervene. So I’m very confident we would always be permitted to intervene in these (lawsuits) in the future.”

Pictured: Conceptual rendering of the proposed Peninsula Place next to the Park Place Hotel. Photo credit: J. Scott Smith Visual Designs, Inc.