Call Us: (248) 480-8704

      
 

Wineries of The Old Mission Peninsula Association v. Township of Peninsula: How to Challenge Illegal Zoning Laws

Zoning laws serve the important function of regulating the use of land in a particular municipality.  Despite this important function, many laws, codes, and ordinances governing zoning can be difficult to understand or interpret municipal officials. Further, despite the best intentions of the persons who drafted or amended the zoning laws, they may have the exact opposite effect on landowners and businesses than intended. For example, one of the most commonly stated reasons for passing zoning regulations is that it protects the value of the properties within the municipality covered by the regulations.  However, if zoning ordinances are too restrictive, it could make it difficult to sell properties, thereby reducing the value of certain properties. Because of this, there can be a gray area between an enforceable and unenforceable zoning law, and zoning laws may be subject to attack.

 

What are Zoning Laws and Why Have a Zoning Code?

Michigan zoning laws are made up of two distinct components which generally are codified into a zoning ordinance.  The first component is a zoning map that divides properties into different zones or districts.  A zoning map allows parties to not only see the zoning classification for the property that it owns, rents or is interested in owning or renting, but also the zoning classification for nearby properties. The second is a set of zoning regulations that govern what structures can, and cannot, be built, what uses are allowed or prohibited, and provisions for enforcement of the zoning laws.

Zoning was originally allowed in Michigan cities, townships, and counties by way of three different acts passed between 1921 and 1943. Then, in 2006, Michigan enacted the Michigan Zoning Enabling Act (MCL 125.3101, et seq.) which combined the three prior laws.  Section 201 of the Michigan Zoning Enabling Act provides the various reasons why a local unit of government is given the authority to regulate land with its jurisdiction:

A local unit of government may provide by zoning ordinance for the regulation of land development and the establishment of 1 or more districts within its zoning jurisdiction which regulate the use of land and structures to meet the needs of the state’s citizens for food, fiber, energy, and other natural resources, places of residence, recreation, industry, trade, service, and other uses of land, to ensure that use of the land is situated in appropriate locations and relationships, to limit the inappropriate overcrowding of land and congestion of population, transportation systems, and other public facilities, to facilitate adequate and efficient provision for transportation systems, sewage disposal, water, energy, education, recreation, and other public service and facility requirements, and to promote public health, safety, and welfare.

As this section provides, the local unit of government has the authority in Michigan to regulate land development and the use of land and structures for any one of a handful of different reasons.

Some of the other stated reasons for zoning laws are: (1) maintaining property values on existing properties by ensuring that buildings are consistent and that there are no incompatible uses in the same area; (2) allowing for consistency in building and a standard for obtaining approvals thereby avoiding land use conflicts between neighbors; and (3) allowing for infrastructure to be developed in a consistent manner and promoting the welfare of the community by guiding orderly growth.

 

How Can Zoning Laws Be Challenged?

Even the most well-crafting zoning law is subject to challenge, especially if there is a perceived constitutional issue involved.  Six of the most common lawsuits that challenge  zoning ordinances are as follows: (1) does the zoning ordinance constitute  an unconstitutional taking; (2) does the zoning ordinance violates due process; (3) is the zoning ordinance too vague; (4) is the zoning ordinance not enforced correctly or uniformly, and therefore, violates equal protection rights; (5) is the zoning ordinance preempted by state or federal law; or (6) does the zoning ordinance create an unconstitutional burden on interstate commerce. The chart below provides a brief overview of each of these arguments:

Unconstitutional Taking This argument focuses on an argument that the law is both a detriment and not substantially related to the public health, welfare, or safety. As such, it violates the Amendment V to the United States Constitution, and, in Michigan, Article 10, Section 2 of the Michigan Constitution which prohibit takings of property by the government without just compensation.
Due Process Violation There are both procedural and substantive due process arguments.  Procedural due process is typically only an appropriate objection when a property is rezoned from a prior use and the aggrieved party is not given appropriate notice and an opportunity to be heard. Substantive due process arguments focus on whether the subject matter of the zoning regulation is within the purview of what is appropriate for the government to regulate.  The substantive due process analysis is similar to the analysis performed as to whether there is an unconstitutional taking.
Unconstitutional due to Vagueness In order for a zoning law, or a distinct part of a zoning law, to be enforceable, it must not violate the First Amendment, it must be clear enough for people to be able to know what is being regulated, and it must be clear enough for the entities or individuals who are enforcing the regulations to not have unlimited discretion.  If any of these exist, the zoning law (or a portion of the law) can be voided due to its vagueness.
Equal Protection Violation Equal protection arguments focus on the way zoning laws are enforced.  Zoning laws must be enforced in a reasonable and nondiscriminatory manner, and when they are not, an equal protection attack may be viable.
Preemption Preemption is a detailed, and somewhat difficult, analysis.  In its simplest form, if the particular zoning provision deals with an area that the Michigan Supreme Court has said would be handled on a statewide level (utility lines, Right to Farm Act issues, e.g.,) the local municipality cannot regulate that land use.  Along those same lines, if a particular area is regulated on a statewide basis, then the local municipality cannot pass restrictions that are more restrictive than the statewide restrictions. If the municipality does either of these things, then the regulation is preempted by the statewide regulation and cannot be enforced.
Unconstitutional Burden on Interstate Commerce In analyzing whether a zoning law is an unconstitutional burden on interstate commerce, a two-step analysis must be performed.  First, a threshold determination must be made as to whether there is differential treatment that benefits in-state economic interests to the detriment of out-of-state interests.  Second, if differential treatment is shown, the only way that the law can be upheld is if the municipality can show that it has no other mechanism to advance an appropriate local interest.  An interstate commerce attack is brought under what is called the dormant Commerce Clause.

 

 

The Peninsula Township Zoning Decision

For those that have ever visited the Traverse City region, two crops dominate the landscape: cherries and grapes.  With vineyards spanning acres upon acres, it only makes sense that there would also be wineries in the area. These wineries have become a large part of the economy in the region. As of 2017, Leelanau and Grand Traverse counties had over 420 employees working in winery jobs, generating $20 million in wages.[i]  Many of the wineries in Grand Traverse County are located on the Old Mission Peninsula (which is also referred to as Peninsula Township).

For years, the wineries in Peninsula Township have complained about the local zoning ordinance. More specifically, the provisions of the zoning ordinance that the wineries complained about were ones that:  (1) allowed for individual towns to set hours of operation for “Guest Activity Uses” but set 9:30 p.m. as the latest that any such “uses” could take place; (2) banned all “amplified instrumental music,” but allowed for “amplified voice and background music” as long as the level is no greater than normal conversation at the edge of the area designed for guest purposes; (3) banned off-site catering during “Guest Activity Uses”; (4) required 85% of the “produce” sold to be grown on the Old Mission Peninsula, which also meant that wineries could not process or sell wine that contained juice from grapes outside Peninsula Township unless less than 15% of the juice was from these other locations; (5) precluded wineries from selling alcohol that was not produced on-site.

In October of 2020, a group of wineries located in Peninsula Township filed a lawsuit seeking the invalidation of certain provisions of the zoning ordinance. The arguments made by the wineries were focused, in part, on the fact that these regulations improperly limited the ability of these wineries to have events, including weddings, and improperly regulated food service and hours. An expert retained by the wineries estimated a loss of $200 million in the last five years alone due to these restrictions.

In the lawsuit, the wineries attacked provisions of the above-referenced ordinance on a combination of preemption and constitutionality arguments. On June 3, 2022, a judge in the Western District of Michigan ruled that many of the provisions within the ordinance related to winery operations were not enforceable.  More specifically, the judge ruled that Peninsula Township, cannot, through its zoning ordinance:

    1. Preclude all amplified instrumental music, because under the Michigan Liquor Control Code of 1998, instrumental music is allowed at establishments selling alcohol (preemption argument);
    2. Ban off-site catering because that also is preempted by the Liquor Control Code;
    3. Require 85% of produce sold at wineries to be grown on the Old Mission Peninsula, including that 85% or more of the juice used in wine consist of grapes grown on the peninsula, because that violates the dormant Commerce Clause and is unconstitutional; and
    4. As for “Winery-Chateaus,” ban the sale of wine by the glass or bottles of wine for on-site consumption or ban all alcohol not produced on site during “Guest Activities” because both provisions violated the dormant Commerce Clause.

One of the more interesting decisions made by the Court was over the use of the term “Guest Activity” throughout Peninsula Township’s zoning ordinance.  More specifically, and as said above, as to certain winery operations, the Township restricted or limited many activities during “Guest Activities,” including food service, amplified music, and hours of operation.  “Guest Activity” was defined in the ordinance as “[a]ctivities by persons who may or may not be registered guests,” and the ordinance then went on to identify that certain Guest Activities “may” be approved by the Township Board and included a non-exclusive list of three such activities: (1) wine and food seminars; (2) cooking classes; and (3) meetings of non-profit and agriculture groups. However, when pressed during discovery, Township officials acknowledged that they had differing understandings of the term “Guest Activity”, and the Township Supervisor admitted that he did not even know what “Guest Activity” meant and opined that the entire section regarding such activity should be rewritten. The Court held that due to this confusion, and the fact that there was no mechanism to determine what constituted “Guest Activity,” all sections of the ordinance that reference that term were to be stricken as unconstitutionally vague. This, in part, allowed for wineries to host large gatherings such as weddings and prohibited the Township from enforcing a 9:30 p.m. closing time as well.

The argument furthered by the wineries regarding the interpretation of the term “Guest Activity” in the Peninsula Township ordinance is also referred to as the “void for vagueness” argument. Generally, there are three ways that a zoning ordinance will be “voided” due to its vagueness: (1) if it is overbroad and infringes on First Amendment freedoms; (2) fails to provide fair notice of what conduct is being regulated; or (3) it allows the party that is deciding whether the statute or ordinance is being violated “unstructured and unlimited” discretion when making that decision.  See, Kenefick v City of Battle Creek, 284 Mich App 653, 655; 774 NW2d 925 (2009).  Ordinances are presumed to be constitutional, and the party making a vagueness attack must prove that there are no set of circumstances where the ordinance could be valid. Houdek v Centerville Twp, 276 Mich App 568, 573; 741 NW2d 587, 592 (2007).

Although the June 3, 2022 ruling did not dispose of all of the issues in the case, and is subject to further modification or reversal, it did provide a significant ruling in favor of the wineries on the Old Mission Peninsula. As a matter of fact, in the ruling, the Court also reversed its prior decision denying injunctive relief sought by the wineries.  Peninsula Township obviously disagreed with the Court’s ruling, and, in a meeting on June 14, 2022, decided to appeal the ruling granting judgment in favor of the wineries. The impact of the Court’s rulings on wineries in Peninsula Township and on other zoning laws throughout Michigan has yet to be determined but will be very interesting to monitor moving forward.  However, this case demonstrates the importance of contacting a zoning attorney to evaluate whether a zoning ordinance is enforceable or whether it could be challenged if the ordinance has a negative impact on a business or other use of property.

Adam Toosley is a member at Hirzel Law, PLC and focuses his practice on real estate litigation, zoning and land use, construction, and financial services litigation. Over the course of his career, he has represented property owners, landlords, condominium associations, lenders, and all parties in the construction chain, handling all aspects of real estate-related disputes, including construction defect cases, payment and landlord-tenant disputes as well as real estate foreclosures, mechanic’s lien cases and fraud and business tort claims in state and federal court as well as in mediations and arbitrations throughout the United States. He is licensed in both Michigan and Illinois. He can be reached at (248) 480-8704 or at atoosley@hirzellaw.com.


[i] The Fruitful Impact Of Northern Michigan’s Wine Economy | Features | Northern Express

Share Post
Written by

atoosley@hirzellaw.com

No comments

Sorry, the comment form is closed at this time.

Hi

Ask us anything, or share you feedback