Detroit Media Grp., LLC v. Detroit Bd. of Zoning Appeals

339 Mich.App. 38

981 N.W.2d 88

DETROIT MEDIA GROUP, LLC, Appellee/Cross-Appellant,

v.DETROIT BOARD OF ZONING APPEALS and City of Detroit, Appellants/Cross-Appellees.

No. 352452

Court of Appeals of Michigan.

Submitted September 15, 2021, at Detroit.

Decided September 23, 2021, 9:00 a.m.

Dickinson Wright PLLC (by Timothy A. Stoepker, Grand Rapids, Jeffery V. Stuckey, Lansing, and Ariana F. Pellegrino, Detroit) for The Detroit Media Group LLC.

Charles N. Raimi for the Detroit Board of Zoning Appeals and the city of Detroit.

Before: Cavanagh, P.J., and K. F. Kelly and Redford, JJ.

Redford, J. Appellants/cross-appellees, the Detroit Board of Zoning Appeals (ZBA) and the city of Detroit (the City), appeal by leave granted¹ the circuit court's December 18, 2019 order that reversed the ZBA's ruling that an advertising use had been abandoned. Appellee/cross-appellant, The Detroit Media Group LLC (DMG), cross-appeals the circuit court's decisions that the ZBA did not violate its procedure or DMG's right to due process, that the City was not estopped from claiming a presumption of abandonment, and that the ZBA's decision did not unconstitutionally interfere with DMG's right to free speech.

The central issue before the Court is whether, when determining if a variance that applies to a leased portion of a freehold has been abandoned, the ZBA must base its determination on the conduct of the leaseholder or the freeholder? Because, like the circuit court, we conclude it is the conduct and actions of the leaseholder that are critical to the analysis, we affirm.

I. FACTUAL BACKGROUND

Around 1997, the owner of the Witherell Building in downtown Detroit (now known as the Broderick Tower) had a large mural painted onto the east face of the building which has been called the "Whaling Wall." In 2004, U.S. Outdoor Advertising, Inc., an affiliate of DMG, leased from the building owner the right to place advertising signage over the Whaling Wall mural. U.S. Outdoor Advertising petitioned the City for permission to place an illuminated changeable advertising sign, measuring 75 feet by 185 feet (13,875 square feet), on the east face of the Witherell Building that featured the Whaling Wall. The Detroit Buildings and Safety Engineering Department denied the petition and U.S. Outdoor Advertising appealed in the ZBA. On December 17, 2004, the ZBA found, among other things, that the request met the City's zoning-use variance provisions and noted that the building already had an advertising sign, the Whaling Wall, on the building, and that the limits of the wall sign would remain the same. The ZBA found that the proposed signage would beneficially serve the area. The ZBA granted the appeal and entered a final order that required U.S. Outdoor Advertising to comply with all applicable ordinances, regulations, and laws, and authorized a variance to regulations of the City's zoning ordinance. Additionally, the ZBA ordered U.S. Outdoor Advertising to secure its permit by July 1, 2005, and record the ZBA's order in the Wayne County Register of Deeds.² In 2005, the City's Downtown Development Authority appealed the ZBA's decision in the circuit court. The circuit court affirmed the ZBA's order.

Meanwhile, in November 2005, the building's owner submitted an application to the National Park Service (NPS) for federal historic-preservation tax credits as part of its plan to finance the renovation of the building in 2006. It is unclear whether the owner informed the NPS of advertising signage on the building as an existing condition.

Following the circuit court's affirmance of the ZBA's final order, U.S. Outdoor Advertising's affiliate, DMG, applied for a permit to change the advertising copy, but the Detroit Buildings and Safety Engineering Department declined to issue a permit on the ground that the Detroit Historic District Commission (DHDC) had to review and approve the sign before a permit could be issued. The DHDC ultimately voted not to approve, and the Detroit Buildings and Safety Engineering Department refused to issue DMG a permit, leading to a dispute between the building owner, DMG, the City, and the DHDC which was ultimately resolved by settlement. The settlement was entered into on December 14, 2005, and provided in relevant part that: (a) the Whaling Wall constituted an advertising graphic; (b) the DMG and the building owner had the right to place an advertising graphic on the building face over the Whaling Wall; (c) the Detroit Buildings and Safety Engineering Department were obligated to issue a sign-erection permit to DMG; (d) if the Detroit Buildings and Safety Engineering Department failed to issue the permit, the settlement agreement served as the permit; (e) for a period of five years, the City and the DHDC would refrain from interfering with or preventing the change of advertising on the building; and (f) if the City and the DHDC did not take action after five years and three months from the date of the settlement, they would be deemed to have irrevocably waived any right to challenge the rights of DMG or the building owner.

The Detroit Buildings and Safety Engineering Department issued an advertising sign permit, and DMG contracted for the installation of anchors and wire on the building's east wall. DMG displayed approximately 18 different advertising banners over the Whaling Wall from 2006 to 2012. In 2008, the building's owner extended DMG's lease to 2019. In 2010, Motown Construction Partners, LLC, purchased the Broderick Tower and amended and restated the lease to reflect the changed building ownership and to provide for the potential removal of DMG's advertising signage for 60 days to accommodate building renovations.

During 2010, Motown Construction Partners, a contractor, a design firm, attorneys from a local law firm, a financial and tax consulting firm, banks, and the Michigan Historic Preservation Network formed a development team to facilitate the renovation of the Broderick Tower building. As part of the team's renovation financing plan, Motown Construction Partners applied to the NPS for federal historic-preservation tax credits and informed the NPS of the existing condition of advertising signage on the building. It advised the NPS that the development team anticipated that the signage would discontinue at the end of the current lease, but also that its redevelopment financing depended on obtaining historic-preservation-tax-credit certification and, in part, on the income derived from the advertising signage to meet the ratio of commercial to residential income required for new market tax credits. The project contract amended Motown Construction Partners’ federal historic-preservation-certification application to include information regarding the advertising signage and the DMG lease that would expire in 2019. The NPS responded by informing the building owner in January 2012 that advertising-banner signage on the building was not consistent with the preliminary approval issued to the previous applicant by the NPS in 2006 and that any banner or signage placed on the building since 2006 would be subject to review regardless of who entered the lease that allowed for the erection of such banners. In July 2012, the building's owner advised DMG that it would need to remove its advertising signage in October 2012 for building renovations, but apparently made no mention of a permanent removal or termination of the lease.

The NPS issued final historic-preservation certification on February 21, 2013, approving the building for historic-preservation tax credits for a period of five years from 2012 to 2017. On September 14, 2014, the NPS responded to a postcertification amendment request made by Motown Construction Partners that proposed additional work on the building. The work would entail the installation of a commercial advertising banner measuring approximately 73 feet 6 inches wide by 130 feet tall and would cover the Whaling Wall,³ which the amendment request noted had already altered the historic character and appearance of the building. Motown Construction Partners apparently advised the NPS that the advertising signage constituted an existing condition to both the project and the original rehabilitation. NPS responded that it had not been provided a copy of the lease or with information or documentation that established the existence of an advertising banner on the building at the start of the rehabilitation project. The NPS informed Motown Construction Partners that the installation of any new advertising banners would constitute part of the project and thus was subject to review for certification purposes. Therefore, any such installation was required to meet the United States Secretary of the Interior's standards respecting historic character and appearance, but the advertising signage described in the amendment request did not meet these standards.⁴ The NPS warned that certification could be revoked if the owner undertook further unapproved project work inconsistent with the federal rehabilitation standards.

In March 2013, DMG sent correspondence to the Detroit Buildings and Safety Engineering Department stating that the removal of the advertising should not be construed as abandonment or relinquishment of DMG's variance, sign permits, or approvals. DMG later sent another letter to inform the Detroit Buildings and Safety Engineering Department that it temporarily removed the advertising banner to accommodate the historic restoration of the building and that doing so should not be construed as abandonment of the variance. DMG applied for and received a sign license from the City in 2014. In 2015, DMG again sought a license, but this time the City did not issue one. DMG met with the Detroit Buildings and Safety Engineering Department, which resulted in the issuance of a zoning verification letter by the department on January 28, 2016.

After receiving that letter, DMG obtained a 13-year extension of the lease term from...