326 Land Company Lawsuit Resolution

June 20, 2022

City of Traverse City Resolves Lawsuit with 326 Land

326 Land to dismiss all of its claims

The City of Traverse City has resolved the lawsuit with 326 Land Company. In January 2022, 326 Land filed a lawsuit challenging the issuance of a Stop Work Order which suspended construction of 326 Land’s residential condominium building located at 326 State Street following the Circuit Court’s decision regarding measurement of building height as it relates to the City Charter requirement of a vote.

A change to the law normally applies to a pending development, unless that development has progressed far enough in actual construction that the developer gains a “vested” constitutional right under due process to complete the project.  In response to a ruling that rooftop utilities on a new building must be under 60 feet, a Stop Work Order was issued.  This was based on the information known to the City at the time, suggesting that 326 Land had not yet substantially progressed in construction to gain vested rights. 326 Land challenged the Stop Work Order on constitutional and other grounds, and also challenged the validity of the “Proposition 3” charter amendment that requires any construction of a building taller than 60’ had to be approved by a majority of the City electorate.

Extensive discovery was completed in order to understand whether 326 Land had progressed far enough with its project to have vested rights in completing the project. Through the discovery process, information was revealed regarding 326 Land’s project that was not known to the City at the time of the Stop Work Order and therefore, the City has made the determination to allow 326 Land to continue with the project.

“The question of whether 326 Land had acquired vested rights to complete its project as permitted by the City was central to 326 Land’s claims. Each party has good faith arguments in support of its position on the question of detrimental reliance (that 326 was constructing their project based on the city’s previously-issued permit) and vested rights, and that therefore the outcome of this litigation uncertain,” says City Attorney Lauren Trible-Laucht.

Trible-Laucht continued, “The City has determined in order to protect the taxpayers from the possibility of potential monetary damages, in light of the additional information that puts the outcome of this lawsuit in question, it is in the City’s best interest to resolve this matter. In addition to exposing the taxpayers to damages, an adverse ruling on the vested rights question also had the potential of creating a complicated legal precedent planning directors and zoning administrators all over the state would have difficulty applying.”

326 Land will dismiss all of its claims and waive the ability to bring them again in the future in exchange for this resolution, including as to its overall challenge to the legality of Proposition 3.