CHEBOYGAN — A lawsuit filed over the hydroelectric power plant at a now closed paper mill no longer includes the city of Cheboygan and Cheboygan Commons as defendants.
Kyle Konwinski of Grand Rapids-based Varnum LLP said Hom Paper XI, LLC, controlled by Thomas Homco, is now the only defendant in the lawsuit that he filed in March in Cheboygan County’s 53rd Circuit Court on behalf of Cheboygan Hydro Services LLC (CHS), which is owned by Great Lakes Tissue Group (GLT) and its president Kip Boie.
GLT acquired the mill in 2022 from Clarence Roznowski. In early 2023, the Boie group sold the facility to Patriot Advanced Environmental Technologies (PAET).
Cheboygan Hydro claims in the lawsuit that an eviction initiated by Homco was unlawful and asserts ownership of the hydro equipment. The lawsuit had accused the city of Cheboygan of unlawfully rezoning the property.
In September 2023, a fire destroyed a warehouse across the street from the paper mill. Although the building housing the paper operations wasn’t damaged, the mill never resumed operations after the blaze. Developer Bob Pulte has proposed transitioning the 14-acre site into a mixed-use development featuring housing, a riverfront restaurant, a boutique style hotel, commercial space for retail or offices and a small special events center called Cheboygan Commons.
“After filing the lawsuit, we learned that Cheboygan Commons terminated its purchase agreement with Hom Paper XI because Hom Paper XI could not deliver clean title to Cheboygan Commons. Consequently, Cheboygan Commons is no longer a proper defendant. The city was a defendant only because it was plaintiff’s understanding that the city issued a PUD (planned unit development designation) to Cheboygan Commons, but that does not apply anymore since Cheboygan Commons is not purchasing the property,” Konwinski said in an email.
Konwinski listed other allegations against Homco, whose company is now the sole defendant.
“For the record, Thomas Homco was a shareholder and the chairman of the board of PAET when Great Lakes Tissue Group sold its stock to PAET, which was effective Jan. 12, 2023,” Konwinski said. “As part of that sale, PAET gave Great Lakes Tissue a $15 million promissory note and 10% ownership in PAET. Great Lakes Tissue has not received a penny of that $15 million, despite PAET representing that the promissory note was secured.
“Importantly, at the time of the sale, Great Lakes Tissue Company was current on all payments and was in good standing with all creditors,” Konwinski added. “PAET and Homco have tried to create a false narrative otherwise. Now, Hom Paper XI, controlled by the same person who was the chairman of the board for PAET, is apparently trying to claim that Cheboygan Hydro Services has no rights to the hydroelectric equipment and plant to which it has contractual rights. Having been shorted $15 million by Homco entities already, Great Lakes Tissue is trying to salvage a few of its remaining rights, all for the benefit of having clean energy to the community.”
The functionality of the hydroelectric equipment and plant, however, remains in question.
In August 2024, an inspection revealed “red flags” regarding the health and viability of the hydro unit.
According to Cheboygan Commons officials, their assessment showed that to repair and update the generator would cost close to $1 million.
Homco did not respond to a request for comment about the lawsuit and Cheboygan City Manager Dan Sabolsky declined to comment.
Sharen Lange, project manager for Cheboygan Commons, issued the following statement:
“Cheboygan Commons was not aware that any lease agreements were in place for the property following a class-action eviction by the seller. The vision has been consistent, this project was a mixed-use real estate development to eliminate and remediate a Brownfield site in rapid decline mere blocks from downtown and convert it into something positive for the community. There was no interest, either actively or passively, in the production of energy. Claims regarding PUD approvals were completely inaccurate. No applications were processed nor approved by the city for the Cheboygan Commons project,” Lange said.
— Contact Paul Welitzkin at pwelitzkin@gaylordheraldtimes.com.
This article originally appeared on Cheboygan Daily Tribune: Cheboygan Commons, city removed as defendants in hydro plant lawsuit
Reporting by Paul Welitzkin, Cheboygan Daily Tribune / Cheboygan Daily Tribune
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