Petoskey council approves OPRA district and exemption certificate for 434 E. Mitchell St.

The Petoskey City Council voted 5-0 Aug. 4 to establish an Obsolete Property Rehabilitation Act, or OPRA, district limited to 434 East Mitchell Street and to approve an OPRA exemption certificate application that requires rehabilitation to be completed within two years of the date of the council resolution.

The action affects an application from TC 55 LLC for the property commonly discussed as the Leo's Lounge site. The council first set the district and then approved the exemption certificate after amending the draft language so the two-year “sunset” runs from the date the resolution is adopted rather than from issuance of any Petoskey zoning permit.

The OPRA process freezes assessed value for the property at its predevelopment value to incentivize redevelopment; the city will forward the approved exemption certificate application to the state tax commission for review. City staff told council that notices were posted, property owners within 300 feet were mailed, and one written comment—support from the downtown manager—was received during the public notice period.

City Attorney Laura, who reviewed the documents with staff, told the council that the OPRA statute allows the legislative body to set a time limit for completion and to revoke a certificate if the developer does not proceed in good faith. Laura said the assessor is typically the official who makes the determination of obsolescence for an OPRA application.

Tom Johnson, the project applicant, described development timing and financing steps he and his partners expect. "It'll take probably, 4 months to go through the whole historic tax credit process with MEDC," Johnson said, and he noted syndication and bank counsel work remains. He told council that an 18-month timeframe had been discussed previously and that the project team views two years as workable if approvals proceed.

Councilmembers debated whether the two-year completion requirement should be keyed to the zoning permit issuance or to the council's approval date. Concerns included the potential for delay if the permit date floats later than council action and the practicalities of construction financing and historic-tax-credit timing. Several councilmembers said extensions could be granted by council if the developer shows substantial progress or requests extra time.

After discussion, Councilmember Shields moved to establish the OPRA district limited to 434 East Mitchell St.; the motion passed 5-0 on a roll call vote. Later, Councilmember Moore moved to approve the exemption certificate application with the amendment stating rehabilitation shall be completed within two years of the date of the resolution; Councilmember Walker seconded. That motion also passed 5-0.

The council and staff noted this would be the city's fourth OPRA and described the tool as part of Petoskey's redevelopment toolbox. Staff said the application will be forwarded to the Michigan Strategic Fund / MEDC process as needed and that the city can revoke certificates under certain circumstances if projects stall.

The resolution approved by the council includes language allowing council to consider extensions and states rehabilitation must be completed within two years of the date of the resolution unless council later authorizes an extension. The city attorney confirmed that language aligns with the OPRA statute and that council may revoke a certificate if the holder does not act in good faith.

No further public testimony was offered on the item following the two council votes. The council packet for the meeting includes the application materials, the proposed resolution language, and the single written comment in support from the downtown manager.