Council OKs zoning change to allow below-grade residential and commercial uses with building-code safeguards

The Petoskey City Council voted unanimously (5-0) on July 7 to adopt an amendment to the Central Business District zoning ordinance that allows certain below-average-grade (basement-level) residential and commercial uses, subject to building- and life-safety standards.

The ordinance change was intended to make existing below-grade commercial spaces legal and to give other property owners the option to repurpose underused below-grade areas in the downtown core. Councilmembers and staff stressed that the key condition of the approval is strict compliance with state and local construction and safety codes.

Councilmember Walker moved the final amendment to add the phrase, in short: “Construction and maintenance shall comply with the most recently adopted Michigan building, electrical, mechanical, plumbing and fire codes for the City of Petoskey and Emmet County and any other applicable codes or laws.” Councilmember Moore seconded the motion; the amendment and the ordinance passed on a 5-0 vote.

During discussion planning staff and the county building official warned that converting below-grade spaces for human occupancy is typically complex and costly. Staff noted the primary regulatory hurdles will be meeting building-code requirements for ventilation, egress, fire suppression and accessibility. The planning commission and downtown stakeholders had recommended excluding short-term rentals from permitted below-grade residential uses so workforce housing stock is prioritized. The adopted language retains that exclusion.

The council and staff said existing legally nonconforming below-grade uses (for example, some current lodging or dining spaces) will be brought into compliance when they seek a new permit or if an owner proposes substantial alterations. Staff also said the county building office will enforce applicable codes; contractors and designers must meet all inspection and permitting requirements.

What the ordinance allows: below-grade retail, restaurant, lodging and residential uses in the Central Business District when they meet technical building-safety standards and receive any required special-use review. Short-term rental (STR) uses were explicitly excluded from below-grade residential allowances.

Vote: mover — Councilmember Walker (amendment and adoption); second — Councilmember Moore; tally — 5 yes, 0 no. Outcome: approved.