Petoskey ZBA upholds denial of first-floor short-term rental at 215 W. Mitchell

The Petoskey City Zoning Board of Appeals on Tuesday, July 1, approved a resolution affirming the zoning administrator''s Jan. 31, 2024, denial of a short-term rental license for the first floor of 215 West Mitchell Street.

The board''s motion, adopted after a public hearing and supplemental filings, said the Powells'' renovations were substantial but unlawful because they were performed without required building permits and therefore could not establish the lawful prior use necessary for a vested right.

The action came after the 57th Circuit Court for Emmet County remanded the case to the ZBA on April 7, 2025, directing the board to determine whether John and Mallory Powell (and the related business) had established a vested right to operate a first-floor short-term rental before the city''s December 2023 ordinance change (Ordinance No. 794). The Powells submitted photographs, expense records, floor plans and a timeline to the ZBA; the board reviewed those materials and the prior record.

Laura, a city staff member who read the resolution into the record, summarized the board''s factual findings, including that the Powells'' renovations involved demolition, reframing and installation of four bedrooms, two bathrooms and a kitchenette at an asserted total cost of $46,925, with about 90% of that cost allocated to the first floor. She read: "the ZBA hereby affirms the zoning administrator's decision" as part of the formal resolution.

Board members debated two legal standards that the circuit court''s remand required them to apply: (1) whether the applicants had performed work of a "substantial character" that materially and objectively changed the interior, and (2) whether the applicants had obtained a permit (or the legal equivalent) before the ordinance change. Several members said substantial physical work had occurred and cost money, but the board concluded the absence of required building permits was dispositive under the cited case law.

In its written reasoning, the ZBA referenced governing authority cited in the packet and read into the record, including the Michigan Zoning Enabling Act and case law the board considered relevant (as listed in the resolution). The resolution notes prior proceedings: the ZBA''s June 4, 2024 hearing that affirmed the earlier administrative denial; the Powells'' appeal to circuit court on July 12, 2024; and the court''s April 7, 2025 remand narrowing the issue to whether a vested right existed before the ordinance change.

The resolution states that, although the renovations were substantial, they were performed without required building permits; under the cases cited in the record, work performed without permits cannot establish the lawful prior use needed to create a vested right. The resolution also finds that reliance on the contractor's assurances did not excuse the applicants' failure to secure permits and that no permit applications were submitted that would have allowed the city to determine whether permits would have been granted.

The board voted to adopt the resolution affirming the zoning administrator's determination; the board recorded affirmative votes in favor when the roll call was taken and the resolution was entered into the minutes.

The written resolution (entered into the record at the meeting) directs that any conflicting resolutions be appealed to the extent necessary to give this resolution full force and effect.

The ZBA noted that the court remand limited its review to the narrow legal question of vested rights as of the date the ordinance changed and that the board was bound to apply the controlling case law and evidence in the record rather than broader equitable considerations.

The board did not decide any appeals or permit applications beyond the remand question; the administrative denial remains affirmed, and the Powells may pursue any appellate options indicated by the circuit court record.