Petoskey seeks 12-year tax abatement for deteriorating building renovation

The Petoskey City Council meeting on July 7, 2025, focused on a significant proposal regarding the renovation of a deteriorating 130-year-old building. The discussion highlighted the need for extensive renovations to make the building viable for occupancy and to attract stable renters.

During the meeting, a representative presented details about the building's current condition, emphasizing that it requires serious investment to address its deterioration. The representative noted that traditional financing methods are not suitable for this project due to the building's age and condition. As a result, the proposal includes a request for the establishment of an Obsolete Property Rehabilitation Act (OPRA) district, which would allow for a tax abatement of up to 12 years.

The council members discussed the financial implications of the renovation, including the necessity of a long-term tax abatement to support the investment needed for the project. The proposed rental rates for the renovated apartments were discussed, with estimates around $2,400 per month for 1,100 square feet. However, concerns were raised about the potential for these rates to be too high, which could lead to financial losses if the units do not rent as anticipated.

Additionally, the topic of rent control was addressed. It was clarified that there is no rent control agreement in place, but there is an expectation from the Michigan Economic Development Corporation (MEDC) to maintain rental rates for a period of 2 to 5 years without converting the units into short-term rentals.

The meeting concluded with a recognition of the importance of the proposed renovations for the community and the need for careful financial planning to ensure the project's success. The council will continue to evaluate the proposal and its implications for the city.