News Saugatuck/Douglas Commercial Record

Floating homes flap: City may be liable



Editor’s Note – This story contains inaccuracies and a correction has been written.

An Allegan County Circuit Court judge weighed in Thursday on the long-brewing Saugatuck vs. Dune Ridge floating homes lawsuits, indicating the city and past council members may be liable for damages.

Judge Roberts Kengis made his preliminary views known on seven cross motions for summary dispositon, denying some, accepting others and continuing hearings on still others.

Dune Ridge, owner of the 130-acre former Presbyterian Camps ranging from Lake Michigan east to it 0.8-acre marina at 443 Park St. south of the city’s west Kalamazoo River chain ferry landing, sued Sept. 10, 2021 after Saugatuck cited it two weeks earlier for code violations regarding fencing, an electric meter, boat hoists and commercial advertising there.

The suit also contested the city June 26, 2021 passing a floating homes ordinance allowing such structures only in its Neighborhood Marina District.

The firm’s marina, which now houses four such structures, still unoccupied, towed there in September 2022 from Tower Marine in Douglas, is in the C-4 Resort District and would not qualify.

Dune Ridge, whose principal is Paul Heule, claimed Saugatuck had breached terms of a July 18, 2019 land-swap agreement plus past representations allowing it to place bathrooms, privacy screens/fencing and houseboats there.

That year the now-litigants exchanged 20-foot-wide parcels extending from Park Street to both sides of the river, with Dune Ridge acquiring land next to the chain ferry landing and the city adding a strip next to what was then Casa Loma.

The developer also Sept. 10, 2021 appealed April Zoning Board of Appeals denials of its variance requests for the fencing, meters and a bathhouse/utility building at its marina site.

Firm attorney Steve Afendoulis said his client had invested $1- to $2-million in the project to design and build the “five-star floating hotel rooms” banned after the fact by newly-passed code. 

“After all of this, we had neighbors who didn’t like it and complained,” Heule’s lawyer said. 

Most neighbors, as witness to almost 900 signers of a petition calling for the city to take actions against an 8-foot fence Dune Ridge erected between the marina and chain ferry landing, saw the project as an eyesore and traffic hazard near the Park and Perryman streets intersection. Both two-lane roads lead to popular Oval Beach and Mt. Baldhead parks.

Not all objected. Some city residents liked the structures’ looks and styling and said rentals stand to boost the tourist economy.

Suits, countersuits and attendant cross-motions to dismiss ensued. City council and staff turned over; recent public meetings have included closed sessions, citing lawyer-client privilege, to hash things out.

Kengis, says last week’s hearing summary, first indicated ruling in favor of Dune Ridge based on land-swap terms. Council at that point OK’d infrastructure on the .8-acre, 125×20-foot parcel including an 8-foot wall, 3-inch fence, fence weave and gravel area, using language “that manifested intention of a promise by city to permit such uses.”

The judge cited the 1996 U.S. Supreme Court United States v. Winstar Corp. ruling, holding the fed had breached contract obligations, rejecting the governments’ “unmistakability defense” that surrender of sovereign authority, such as the promise to refrain from regulatory changes, must appear in unmistakable terms in a contract in order to be enforceable.

Based on this, reads the summary, Kengis also made clear he believed Dune Ridge was entitled to damages against the city because its floating homes ordinance, passed almost two years after the land-swap deal, harmed the developer.

As such, with the city on the hook plus council members at the time of the land swap Mark Bekken, Barry Johnson, Jeff Spangler, Jane Verplank, Bill Hess, Chris Peterson and Ken Trester personally for damages.

All since that time are gone from city hall, as are 14-year city manager Kirk Harrier, 13-year clerk Monica Nagel and 6-year zoning and planning administrator Cindy Osman, who now serves Saugatuck Township in that post.

Kengis, per the summary, also March 23:

• Dismissed the neighboring Prokopeak family’s trespass and nuisance claims against Dune Ridge, as their 40-year easement “is only a possessory interest, not one for the underlying property,” adding the decision will turn on questions of fact for a jury to decide;

• Threw out four city claims council members who approved the floating homes ordinance were protected from government immunity and their testimony required at subsequent trial due to questions of fact and liability;

• Dismissed Dune Ridge’s claim state and federal laws pre-empted the city’s right to regulate docks;

• Took the city’s claim against Dune Ridge for promissory estoppel (breach of contract reliance on promises) under advisement; and

• Continued to the next court hearing (date not yet set) the city’s motion for summary disposition based on its affirmative defenses.

Heule — head of Eenhoorn, Inc., a privately-owned international real estate investor and management firm — acquired the former camps south of Saugatuck’s Oval Beach from the Presbytery of Chicago, which for 115 years had run them largely for inner-city children there.

The $10 million deal, brokered by developer David Barker, was finalized on Valentine’s Day 2014 over a competing offer from the local Oval Beach Preservation Society, which hoped to save the camps.

The Presbytery, $7.9 in arrears from an $11-million loan taken to pay off victims of a sex scandal, told members it had little choice but unload the land.

Southside Ministry director Rev. George Mason was exposed in 2002 for having sex with four minor boys over nine years, much of it saved on video. Having escaped ecclesiastical and criminal prosecution in Chicago, Mason headed for Miami, Fla., where he found work as an interim associate pastor for a year, followed by short-term employment with a South Florida academy, where he taught learning-disabled teenagers.

Mason died in Florida at age 46 for unknown reasons, police said. But that didn’t take his ex-employer off its fiscal hook.

Dune Ridge since has developed 21 high-end Dunegrass homes including a Lake Michigan-fronting one owned by Heule. The marina is a separate, though not entirely unrelated, matter.

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