ST. IGNACE — Mackinac Island Ferry Company and Shepler’s Inc. have filed a joint lawsuit against the City of Mackinac Island, alleging the city council overstepped its bounds by trying to control ferry schedules, fares, and other business operations.
The Hoffmann family, who bought MIFC in 2024, invested around $6 million in repairs and modernization of the ferry fleet. The city council rejected the proposed ticket and parking rates, citing the tumultuous 2024 season and other economic factors.
In 2022, Hoffmann Family of Companies purchased Shepler’s, creating a partnership between the Shepler family and the Hoffmann family. The Shepler family remains critically involved in the operations of the company.
According to the lawsuit, in 2024 the city initiated communications with representatives from the Hoffmann Family about a potential purchase of MIFC. The city encouraged the Hoffmann Family to invest in MIFC, thus providing Mackinac Island with two ferry companies that are capable of first-class ferry service.
Before the purchase, passengers lodged numerous complaints with the city council related to MIFC’s services, and the need to address MIFC’s lackluster operations became a continuous problem.
During the Hoffmann family’s search for a potential purchase of MIFC, it was discovered that MIFC would require a substantial capital investment because of its aging fleet and outdated operations. On June 28, 2024, the Hoffmann Family purchased MIFC.
“Shortly after its purchase, the Hoffmann Family discovered that MIFC’s assets were in a worse condition than was originally known,” the lawsuit reads. “The Hoffmann Family found that MIFC’s ferry fleet required significant repairs, many of which raised critical safety concerns.”
During the first several months of ownership, the Hoffmann Family invested approximately $6 million in MIFC, the majority of which went to repair and modernize the fleet.
The lawsuit cited the necessary repairs disrupted MIFC’s ferry services in 2024.
To help remedy the problem, the Hoffmann Family worked closely with the city council, including utilizing Shepler’s fleet to help ensure that the island had adequate ferry services during MIFC’s rehabilitation.
Shepler’s and MIFC proposed a slight increase in ticket rates for the 2025 season. Representatives cited significant capital investments, a $500,000 increase in fuel prices, a $50,000 rise in local taxes, a $1.9 million increase in payroll, and approximately $420,000 in lost ticket value given away for promotional purposes in conjunction with the city.
In addition to a slight increase in ferry rates, Shepler’s and MIFC’s submission also included certain ancillary costs, allowing customers to choose between different services based on the customer’s specific needs. On Sept. 11, 2024, the city council passed a resolution that rejected Shepler’s and MIFC’s proposed rate increase for ferry boat services and their proposal for additional ancillary costs.
The lawsuit disputes that the Franchise Agreement provides the city with unilateral authority to declare a “monopoly,” or specifically the existence of “no competition,” for purposes of regulating the rates for ferry services under that Franchise Agreement. The lawsuit also disputes that the Franchise Agreement provides the city with authority to reject their proposed ancillary costs.
During the winter of 2024-2025, representatives from the Hoffmann Family, on behalf of Shepler’s and MIFC, sought to work with the city council, including an explanation regarding why a ferry rate increase for 2025, with some additional ancillary costs, is important because of increased expenses. The lawsuit claims the city has no right under the Franchise Agreements to approve the schedule and parking rates after the city council unanimously passed a motion that rejected both Shepler’s and MIFC’s proposed parking rates on Feb. 19, 2025.
The city council’s Feb. 19 motion also demanded that the companies both “remove all reference to the unapproved parking rates from their websites, other distributions, and advertisements and demanded that they provide the city with information regarding their parking rates from 2023 and 2024, including information on lot locations and capacities.
The following week, on Feb. 26, 2025, the city unanimously passed another motion related to parking, which restated its prior motion, and gave Shepler’s and MIFC’s until March 3, 2025 to comply. The lawsuit disputes that the Franchise Agreement provides the city with any authority, whether direct or implied, to regulate Plaintiffs’ parking businesses in either Mackinaw City or St. Ignace.
In the filing, the companies unilaterally declared that a monopoly exists for ferry services to and from Mackinac Island and thus Defendant can establish its own fares for these services and that it can regulate the parking businesses in Mackinaw City and St. Ignace, including requesting that Plaintiffs cease advertising and compelling the production of financial documents.
The lawsuit requested that the court:
- Enter a declaratory judgment declaring that the “no competition is found to exist” clause under Section 9 of the subject contracts does not permit the city to unilaterally declare the existence of a monopoly for purposes of regulating schedules and fares for ferry services.
- Enter a declaratory judgment declaring that the “schedules and fares” clause under Section 9 of the subject contracts does not include ancillary costs that the companies may choose to charge customers that are not traditional schedules or fares related to ferry services.
- A declaratory judgment declaring that the “schedules and fares” clause under Section 9 of the subject contracts is specifically limited to schedules and fares for the operation of companies’ ferry business and not for other businesses.
“This is a matter between the city and Hoffmann Marine, and the outcome remains uncertain,” Executive Director with Mackinac Island Tourism Bureau Tim Hygh said. “What we do know is that it will not impact ferry service this season. A robust schedule has been agreed upon by both parties, and we’ll be welcoming guests starting in April.”