Paradise Lost

A $500-million resort planned for the shorelines of Trenton and Gibraltar was well on its way to being approved until U.S. Rep. John Dingell, key federal regulators, environmental groups, and others drove the development team into bankruptcy.


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(page 4 of 6)

Copies of Manny’s emails were among the documents attorney Reynolds submitted to the court.

At the same time, Reynolds filed documents showing that Dingell had personally written at least seven letters to regulatory officials opposing the Gibraltar Bay project, and even wrote one to Made In Detroit’s lender, then Standard Federal Bank in Troy, as part of the effort to bring the property under federal control.

On May 28, 1998, Dingell wrote a letter to the leaders of four different federal agencies and MDEQ, urging them to give the project a thorough review for any and all regulatory issues, and encouraging them not to worry about how long the effort might take. Dingell even acknowledged in the letters that the agencies may not have authority to deal in every aspect of the matter, but urged them to do so anyway: “I realize that your agencies do not have or share responsibility for each of these issues I am raising in this letter,” Dingell wrote. “However, given the uniqueness of the habitat in question, I believe it is imperative that your staffs conduct a coordinated and thorough inquiry into the various regulatory questions which will lead to the best decisions for the shoreline properties.”

And with that, Dingell proceeded to list a litany of issues he wanted the regulators to explore, including a controversial conservation easement, a spawning ground for walleye and other fish, staging areas for migratory ducks, and the potential environmental impact of dredging in connection with the development.

Overzealous exercise of governmental authority complicated the issue. For example, the U.S. Army Corps of Engineers typically does not have authority over the development of bridges, as that oversight belongs to the Coast Guard. Nevertheless, the Army Corps informed Made In Detroit that it would hold up the development over a proposed bridge from the mainland to the island, where 25 luxury homes were to be built.

Dingell followed up three months later with another letter reiterating his concerns about the environmental issues and instructing all the agency heads to keep him informed about progress on the matter, as well as any forums planned for public comment.

Dingell even took a personal interest in the details. When the Army Corps of Engineers announced the expiration of a public comment period, Dingell wrote to demand that the period be extended. When MDEQ began considering the developer’s wetland permit, Dingell sent a letter demanding the answers to 14 questions, including details about drainage and the locations of possible wetland mitigation. He also challenged the MDEQ’s authority, demanding of then-director Russ Harding: “Please explain to me where the department derives its regulatory authority.”

Nor was Dingell shy about broadcasting his agenda. On March 24, 2002, he told the Monroe Evening News he was trying to block the Gibraltar Bay development as part of a larger effort to help the federal government acquire the property for the establishment of a wildlife refuge. “We have blocked development of this resource ...” Dingell told the newspaper. “Ultimately, we need to buy that marsh and make it part of the refuge.”

Despite approval of a wetland permit from the state of Michigan, the Army Corps of Engineers threatened to sue Made In Detroit to seek the imposition of $70,000 a day in fines if the company proceeded with the development.

Realizing the issue might invite further delays, Merriweather and his team made a more expensive choice to bridge over the wetlands so that a permit wasn’t needed. “We went back to the court for a declaratory judgment to proceed forward, but the court told us it didn’t have jurisdiction because, until the Army Corps of Engineers sticks you in jail or fines you $70,000 a day, you don’t have a case,” Merriweather says. “In other words, come back when they shoot you.”

As several years passed and all the necessary permits were still not in hand, Made In Detroit began to fall behind on its bills, and the project’s financial stability began to weaken. Entering bankruptcy court in 2002, Made In Detroit attempted a financial restructuring that depended on financing from a so-called hard moneylender based in New York. That wasn’t Made In Detroit’s preferred strategy, but there were no better options. The bankruptcy court rejected the restructuring proposal — an outcome Johnson believes was pre-ordained.

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