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Published in Food/Agribusiness
2 Lads Winery on Old Mission Peninsula near Traverse City. (COURTESY PHOTO) 2 Lads Winery on Old Mission Peninsula near Traverse City. (COURTESY PHOTO)

Old Mission Peninsula wineries contend zoning rewrite would edge out family farms, create ‘millionaires club’

BY Friday, October 28, 2022 03:58pm

As Michigan Agritourism Month draws to a close, a group of Northern Michigan wineries are left to wonder why the statewide recognition of the industry’s economic and social benefits continues to escape local policymakers. 

The 11-member Wineries of the Old Mission Peninsula Association is embroiled in a years-long battle with Peninsula Township in Grand Traverse County over provisions in the local zoning ordinance that they contend — and that a federal judge has agreed — are unconstitutional.

Earlier this month, the fight broadened to include a winery in planning, which alleges in a new lawsuit in the U.S. District Court for the Western District of Michigan that the township repeatedly delayed and unlawfully blocked its application for a special use permit to force it to apply under more restrictive zoning language the board is currently attempting to pass.

For Chris Baldyga, co-founder of 2 Lads Winery on Old Mission Peninsula and president of the wineries association, the ongoing legal battle and the newly proposed ordinance demonstrate the township board’s failure to grasp how the area’s agricultural industry has evolved to rely on more direct connections to consumers. 

“Some of this I think gets back to a 1950s idyllic view of farming where the wholesale style of agriculture that dominated the landscape for the last 60, 80, 100 years is still viable, and it’s not — period,” Baldyga told MiBiz

He cites the struggles of Northern Michigan’s cherry growers and apple orchards, which have had to deal with the usual seasonal conditions as well as market fluctuations for their crops and now international competition. 

“All those things create a struggle for classic wholesale farming where it’s more dependent on the farmers to sell fruit to someone else to process or someone else to sell it fresh, and they don’t rely on visitors to the farm as their primary source of income,” Baldyga said. “There are some wineries that use that same model, where distribution of their wine is the bulk of their business. But there are very few Michigan wineries that are of that model. We are more often reliant on direct-to-consumer contact at our tasting rooms as agricultural destinations, and that is different than this area has seen for years and years. 

“We want the guests to visit our farm, we want them to see our vineyards. We want them to hear it from our mouths and connect with us about why this vineyard is special, why this microclimate is important for the wine. When they have those ‘aha moments,’ they form long memories and unique connections that are different than buying an apple at your local grocery store.”

Zoning rewrite ‘out of step’ 

Burdened by what they contend are unconstitutional zoning restrictions that limited their ability to host events at their wineries, restricted the content in the products they could sell and set limits on guest activities, the Wineries of the Old Mission Peninsula (WOMP) Association attempted to work with the township to come to a resolution. After several failed attempts, the association filed a lawsuit in the U.S. District Court for the Western District of Michigan in 2020. 

Despite a favorable summary judgment ruling on many points in the association’s lawsuit this summer, the case continues to plod forward, even as the township is poised to vote on what winery owners contend is a more restrictive ordinance. The proposed ordinance also includes provisions the judge already deemed to be unconstitutional in the ongoing federal court case. 

The Peninsula Township board is considering a new zoning ordinance that removes a prior “winery-chateau” designation and instead lumps wineries in with other “farm processing facilities.” 

The proposed new ordinance includes different restrictions based on wholesale and retail activities at farm processing facilities, and whether the businesses allow indoor or outdoor seating. While the current ordinance does not address maximum facility size, the new language limits farm processing facilities to a maximum of 30,000 square feet with increased setbacks. 

In an Oct. 5 memo to township trustees, Director of Planning Jenn Cram wrote that the purpose behind the new ordinance is to make it “legally defensible based on issues raised in the WOMP lawsuit” and to ensure the farm processing use is “equitable and even-handed for all agricultural operators.”

The proposed ordinance mandates that various farm processing uses must meet parcel size restrictions, setback requirements and minimum onsite farming activity that critics like Baldyga say could effectively stymie the ability to establish future agricultural operations for all but the most well-heeled producers. 

For example, any future winery that wanted to offer indoor and outdoor seating would be required to have a minimum of 60 contiguous acres.

“It creates higher costs due to those size restrictions and the amount of farming and required agriculture on site also has increased greatly, which means that small bootstrap farmers can’t have a farm processing facility out on Old Mission. It is literally millionaires only. Small family farmers looking to get started need not apply,” Baldyga said. “A millionaires club is what they’re trying to turn it into.  

“It seems so out of step with allowing and encouraging more value-added agriculture, and I’m personally disappointed by that language.” 

‘Telling farmers how to farm’

The new language also limits farm processors to selling products with 70 percent or more of their content grown within Peninsula Township.

In a June 3 opinion in the federal court case, U.S. District Court Judge Paul Maloney ruled a similar restriction in the existing ordinance was an unconstitutional violation of the commerce clause.

While Peninsula Township argued that the restrictions help protect the local agricultural industry, Maloney cited testimony from Old Mission winery owners that the supply of grapes on the peninsula often fails to meet their demand as evidence that the provisions were having the opposite effect. 

“In essence, it appears that the Township Ordinances’ requirements regarding how much Old Mission Peninsula fruit must go into the Wineries’ wine harms the Wineries — which are local agricultural businesses,” Maloney wrote in his opinion. 

Baldyga contends the new ordinance amounts to the township “telling farmers how to farm.”

“It never goes well when you tell a farmer how to farm from an office in a nice cozy building,” he said.

Ryan Coffey Hoag, who deals with government and public policy and community and economic development for the Michigan State University Extension, said the state Right to Farm Act has broad protections for farmers so long as they are following the Generally Accepted Agricultural and Management Practices (GAAMPs). In the case of wineries, those protections would cover growing grapes and selling wine at the farm, but not processing-related activities or renting rooms at the winery, for example. 

“Under Right to Farm, you can have a wine tasting room and sell that wine. You can have farm-to-table meals where you sell tickets 10 times a year, so long as it’s incidental to farm operations,” Coffey Hoag told MiBiz. “But where the line gets drawn is for the certain activities not protected under Right to Farm. For processing, local zoning can apply.” 

Coffey Hoag chairs the Michigan Department of Agriculture and Rural Development’s advisory committee that developed the GAAMPs for farm markets. He said the committee has fielded questions about extending Right to Farm protections to agritourism activities — including but not specific to wineries — but has opted not to take up the issue, which could be viewed as “artificially extending the Right to Farm Act.” 

The township board has scheduled a special meeting to consider the proposed ordinance on Nov. 1, according to its website. A township official did not respond to a request to comment at the time this report was published. 

Alleged retaliation against wineries

As the WOMP case plays out in federal court, the township board hit pause earlier this year on considering any new special use permits for wineries, which has drawn scrutiny from a land owner who wants to start a new winery on the peninsula. 

Family Orchards LLC, which has amassed 85 acres of agricultural land in Peninsula Township, filed a separate lawsuit in federal court this month alleging that the local government has hid behind unlawful measures and refused to consider its request for a special use permit.

The company, owned by Walter Knysz, alleges that because of the prior WOMP case, “the Township Board began a concerted effort to retaliate against existing and planned wineries in Peninsula Township.” 

“(T)he Township Board arbitrarily refused to consider Family Orchards’ multiple applications for a special use permit through a combination of illegal moratoria, constant delay, and changing requirements,” Family Orchards said in its complaint. 

Traverse City-based law firm Parker Harvey PLC is representing the company in the case. 

The township passed a series of moratoria on special use permits in agricultural districts starting in January 2022, but Family Orchards alleges the first two resolutions did not have the force of law because the township bungled the process, including not publishing notice of the zoning change in the local newspaper. 

Family Orchards submitted an application for a special use permit for its winery in April that the township refused to accept. The company resubmitted the application in July, but the township told Knysz that he would first have to apply for a waiver from the moratorium. 

In court filings, Family Orchards alleges the township keeps stalling to force the company to apply for a special use permit under the “re-written and more restrictive winery designations contemplated by the Township.” 

The township has filed public notice that it intends to extend the current moratorium to the beginning of 2023, according to court documents.

“Peninsula Township’s refusal to accept applications under the existing ordinance is part of this concerted effort to target and harm current and proposed wineries in Peninsula Township,” the company said in its complaint. 

Family Orchards is suing Peninsula Township for violation of the Michigan Zoning Enabling Act and violations of its 14th Amendment rights to due process. The company is asking the court to compel the township to accept its special use permit under the existing ordinance, hold a public hearing and issue a determination, as well as pay for attorney fees and costs and “any other relief the Court deems necessary and appropriate.” 

‘Hopeful’ for a conclusion

Meanwhile, WOMP’s federal court case took a turn over the summer after a U.S. Sixth Circuit Court of Appeals ruling “changed the landscape of this litigation,” as Judge Maloney wrote in an Oct. 21 order.  

On June 3, Maloney granted summary judgment on several key elements of the wineries’ case, namely that elements of the ordinance made unconstitutional restrictions to free speech and commerce or were preempted by state law, and enjoined the township from enforcing the unlawful restrictions. The judge scheduled the remaining considerations of the case for a bench trial in August.

However, the Sixth Circuit ruled in July that the District Court should have allowed a landowner group, Protect the Peninsula Inc. (PTP), to intervene in the case and remanded the case to the lower court. The Sixth Circuit also vacated a lower court injunction that barred the township from enforcing the parts of the ordinance ruled to be unlawful.

Maloney adjourned the bench trial that had been scheduled for Aug. 16 to give Protect the Peninsula (PTP) “the chance to participate in this litigation to the extent that the Court deems necessary.” 

The Sixth Circuit did not weigh in on Maloney’s summary judgment opinion. However, attorneys for Protect the Peninsula on Tuesday filed a motion to set aside the summary judgment order to “prevent manifest injustice to PTP” and give the group “the opportunity to rebut the evidence presented by the Wineries … and to present arguments addressing the merits of Wineries’ claims.” 

The court will hear oral arguments on the extent of Protect the Peninsula’s involvement in the case, which issues it “may have to reconsider” because of the Appeals Court ruling and on the motion to set aside the summary judgment order as part of a hearing scheduled for Nov. 17. 

Despite the contentious litigation, Baldyga said he’s still “hopeful” for a settlement in the case. 

“At the end of the day, we should want the same thing: continued farming and to protect the rural character of this peninsula,” he said. “We don’t always agree on the exact way to get that done, but I think we’re closer together than we are farther apart. I hope we get there sooner than later.”

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EDITOR’S NOTE: This story has been updated to note that Peninsula Township has scheduled a special meeting on Nov. 1 to consider the proposed ordinance. 

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Read 6492 times Last modified on Friday, 28 October 2022 17:05
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