Commercial Record

Would LHD single out owner’s land?

By Scott Sullivan
Editor
The Saugatuck Township Planning Commission, wary of history repeating, May 23 declined activists’ urging to establish a Local Historic District at and around the Kalamazoo River mouth by a 2-2 vote.
Saugatuck Dunes Coastal Alliance members and other neighbors of Northshore of Saugatuck LLC’s proposed 304-acre development north of where the river empties in Lake Michigan have asked Saugatuck, Douglas and township governments to create such a district.
Restrictions it would place on new building in it would have conservation benefits fitting with Tri-Community Master Plan and other long-expressed local goals.
Not so fast, wrote NorthShore attorney Carl Gabrielse before last week’s planning meeting. “Before doing so,” he said, “I would strongly suggest you review the 2011 consent judgment and final order entered in the case of Singapore Dunes LLC (which NorthShore bought in 2016) vs. Saugatuck Township.”
After a costly legal battle over new zoning passed three weeks before Aubrey McClendon’s Singapore Dunes completed buying the expansive former Denison family land in June 2006, U.S. District Judge Paul Maloney permanently enjoined the township from “discriminating against the property by treating it differently than similarly-situated properties without a rational basis for doing so.”
LHD advocates claim there is a rational basis, the proposal encompasses more than NorthShores’ land and this is different from the restrictive R-4 zoning overturned by the court with parties’ consenting 11 years ago.
NorthShore claims not. “The new restrictions,” wrote Gabrielse, “would once again only apply to the NorthShore property, or property on which NorthShore has a right of first refusal, and the Tallmadge Woods nature preserve (already under a permanent conservation easement).
“All other parcels along the Kalamazoo River would be exempted from the stringent restrictions of this new district,” he continued. “There is no legitimate justification for the imposition of these new restrictions on the NorthShore property when similarly-situated riverfront parcels up and down the river are exempt.”
“Several people supporting this district already have homes within it they could rebuild,” NorthShore builder Scott Bosgraaf told planners.
“As noted above,” Gabrielse’s letter went on, “NorthShore has the express right to enforce the provisions of the consent judgment against the township.
“If the proposed zoning restrictions are passed, NorthShore fully intends to do so in federal court,” the lawyer said.
“I disagree with the notion we are picking on him (NorthShore owner Jeff Padnos), ,” said commission member Ken Butler, “if we pick up more property on the way.” Neither neighbor city to date has voted on the proposed measure.
“I’m concerned,” said peer Denise Webster, “this is premature. I’m not opposed per se. I just think we should bring in our lawyer sooner instead of later.”
With a bare four- (of 7-) person quorum that night, a motion that planners recommendt the township board adopt such rezoning failed by the aforesaid tie vote lacking a majority. Planners Jackie Ground and Butler voted yes, Webster and chair Becky Israels no. David Ihle, Michael Wurth and township board liaison Jon Helmrich were not present.
The outcome — if “send it to our attorney for more review” can be said to be one — does not lack precedent given the parcel’s convoluted, contested past.

Is Then Now?
McClendon, owner and CEO of natural gas giant Chesapeake Energy — “I’m the world’s biggest fracker” he told Rolling Stone magazine — acquired much of the subject land in his $39.5 million purchase of 403 acres north and south of the channel from Denison family estates in 2006.
The transaction ended a public effort to buy and preserve what many called “the Wild Heart of Saugatuck” and spurred years of litigation.
McClendon, also owner of the Oklahoma City Thunder basketball team, sold 173 acres south of the channel to the City of Saugatuck for $19 million, most from a $10.5-million Michigan Natural Resources Trust Fund grant — in 2009. That land, north of and adjacent to city-owned Oval Beach, now is the public Saugatuck Harbor Natural Area.
McClendon —named by Forbes magazine “Ameica’s Most Reckless Billionaire” fort his land-speculation ways — continued his plans to develop the north former Denison land plus 83 acres he’d purchased east of it. In 2010 he proposed a Singapore Dunes resort with a 66-slip marina, seven-story inn, 9-hole golf course, 100 homes and equestrian area.
Two years later he and the township settled the aforesaid lawsuit voiding the now 5-year-old R-4 zoning. McClendon then sought a variance for his resort plan but withdrew it after township officials made clear they would not support it.
He thereafter won Michigan Department of Environmental Quality approval to build a two-mile paved road and utility access through critical dunes from the parcel’s east portion to the 19 western home sites allowed there prior zoning after R-4 disappeared.
That road has since been completed and NorthShore is selling homes on there.
McClendon was killed in a single-car crash March 2, 2016, less than a day after being indicted by the U.S. Justice Department for allegedly rigging bids on oil and natural gas leases in Oklahoma.
Police said he “drove straight into” an overpass wall at about 80 mph. “There was plenty of opportunity for him to correct and get back on the road,” said Oklahoma City Police Capt. Paco Balderrama. “But that didn’t happen.”
His estate relisted north river holdings here with Sotheby’s soon after for $40 million. Holland recycling firm heir and head Padnos agreed to acquire that land — less a luxury beach home built by Ken Denison on 5 acres listed at one time separately for $10 million — for a private price in December that year.
NorthShore in 2017 won township and Michigan Department of Environmental Quality (now Environment, Great approvals to add a 6.5-acre boat basin ringed by 23 homes on 6.5 acres once occupied by Singapore, a lumber settlement drifted over by sand in the 1870s.
In return it agreed to place most of its parcel, whose development is restricted anyway by state Critical Dunes laws, into a conservation easement.
Not so fast, it turns out again. The U.S. Army Corps of Engineers, responsible for how such an excavation and development’s hydrology would affect the river and nearby groundwater, has for five years sat on the basin application.
Meanwhile, the 501c3 nonprofit SDCA, which since 2007 has contested any “Wild Heart” proposed development, has appealed past state and township permits among legal steps.
The River Mouth Historic District proposal has been brought to the three neighbor governments in one form or other since late last year. On Jan. 12 this year Daniel DeFranco, then a township planning commissioner and rural character committee chair since named township manager, reported to the township board on its status.
Advantages, said his committee’s 28-page document, of doing so include:
• Michigan PA 169 of 1970 provides for municipalities to establish such districts, recognizing historic preservation to be a public purpose local governments may by ordinance “regulate the construction addition, alteration, repair, moving excavation and demolition of resources” within them.
• Its creation would require appointing a study committee to prepare a report recommending boundaries for such a district. The township already has a Battaglia and Hawkins Ethnographic Study that satisfies initial PA 169 requirements.
• It would establish standards and guidelines for the treatment of cultural landscapes.
• It is supported by goals of the Tri-Community Master Plan.
• It would be consistent with local, regional and state preservation, conservation and recreational efforts for the Kalamazoo River.
• The Saugatuck-Douglas History Center and state groups could be potential partners.
• It might create federal grant funding opportunities via the State Historic Preservation Office (SHPO) forwarded to the National Park Service.
Disadvantages:
• It would be controversial due to its close association with the North Shore development. Some, the report noted, may recall how the township’s 2006 passage of restrictive R-4 zoning was tested by past owner Aubrey McClendon, resulting in lawsuits claiming it unconstitutionally singled out just his parcels.
The federal court settlement allowed McClendon and his successors to create and sell lot splits on its land north of the Kalamazoo River mouth and pursue further development on remaining downzoned from R-4 land.
• The report cited potential opposition by property owners within it, the well-heeled Padnos in particular.
• Substantial staff and financial commitments. Does the township have human, time and fiscal resources to fulfill still more bureaucratic requirements? The report asked.
• Need for resident volunteers. A Historic District Commission requires at least five members, one of whom must be a Michigan-licensed architect, plus a separate study committee.
• Lengthy process. First the study committee would need to prepare a preliminary report including photographic inventory and information, plus evaluate resources using National Register of Historic Places criteria.
Once submitted to the planning commission, SHPO, the Michigan Historical Commission and state review board, the committee must wait at least 60 days to hold a public hearing.
It would then have up to one year to submit a final report to the township board, which could vote to approve or reject the proposed local district.
The property identified by the ethnographic study as the Kalamazoo River Mouth Traditional Cultural Property encompasses an extensive area that includes both sides of the river from Lake Michigan to beyond the swing bridge in New Richmond, though no municipalities within is potential bounds have signed onto it.
The current area being considered involves the cultural resources of the living community of the Gun Lake Tribe. “The board may want to consider whether the township has any special responsibility to preserving the cultural resources of the Gun Lake Tribe,” the report said.

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