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Traverse City — Downtown buildings are typically built with commercial space on the ground floor and apartments in the upper stories.

But Revitalize LLC owner Bruce Johnston said that for whatever reason, use of those residential spaces dropped off over the years.

Traverse City is taking part in a state program that could change vacant upper-story rooms in buildings citywide back into apartments, and ones available at rents below the market rate, Johnston told the Traverse City Record-Eagle. He’ll help property owners downtown and along the city’s main corridors see if their projects are fit for the Michigan Economic Development Corp.’s program that helps finance such projects.

Reviving the living spaces to their former use benefits prospective renters and building owners alike, Johnston said. His business specializes in facilitating the projects, so he’s seen how the program has worked in other Michigan cities.

“Not only is the building healthier, but the building owner has another source of income and people in Traverse City have other options for living arrangements,” he said.

Building owners would work with Johnston to identify what their property needs to create apartments in existing space, he said. He’ll help them formulate a business plan and pitch the idea to the MEDC. Owners have to chip in their own capital, and the state agency could provide a loan, grant or both, depending on the project’s size and community impact.

Apartments that rent below market rate are harder to finance, and funds from the MEDC serve to fill that gap, Johnston said. Property owners in return would negotiate a deal with state and city officials to rent the apartments for a period of time at 10 percent to 30 percent below what a typical Traverse City apartment would fetch. Those rental rates and lifespan of the deal would vary from project to project.

The MEDC is granting Traverse City $25,000 for Johnston’s assistance, city manager Marty Colburn said. It’s a project he began pursuing in 2017, and several downtown building owners signaled their interest.

“This would help create that density downtown, which is beneficial to the business community, and has the business community invest into their properties,” Colburn said.

Colburn hopes enough owners take advantage of the program to have a noticeable impact in the city, but he acknowledged the lack of affordable housing throughout Grand Traverse County is significant.

“This will fit one niche, but there’s a great opportunity for numerous property owners to be engaged,” he said.

It’s not the only development-focused MEDC program for which the city is signed up. The state agency has certified Traverse City as a Redevelopment Ready Community. State officials will recognize the achievement at city commissioners’ Monday meeting.

That designation means the city is ready to meet half way with the developers looking to invest in Traverse City, MEDC Redevelopment Ready Communities director Michelle Parkkonen said. Local governments look at 41 criteria across six categories meant to ensure they’re meeting best practices for working with developers.

“So when we are looking at a community’s plans, policies and practices, the communities that are certified have their plans up-to-date, they’re coordinated, they’re innovative, their zoning is clear, it’s streamlined, it’s user-friendly,” she said. “That goes for whether you’re a resident looking to expand a business in the downtown or if you’re a developer looking to put in a larger project.”

City planner Russ Soyring said the MEDC also will help the city spread the word about its master plan, zoning rules and project approval process. Those will be part of a statewide database available around the clock.

The MEDC also will market three redevelopment-ready properties for the city, Soyring said. Tentative plans call for marketing Traverse City Area Public Schools’ administration building on Boardman Avenue and a soon-to-be-vacant pharmacy on Garfield Avenue – the third hasn’t been confirmed.

Traverse City is one of 18 municipalities statewide to meet the certification requirements, Parkkonen said. Many more could join, as 201 are currently working through the review process.

Parkkonen said the practices these communities follow could save their planning department employees some time, and Soyring said it could save developers some time as well. The designation opens up the city to grants to prep sites for redevelopment, like investigating environmental contamination. That could shave a few months off the time it takes to break ground.

“Time is really of great importance to a developer,” he said. “If they can get a project in the ground faster, that’s a very attractive aspect to any developer.”

It’s all good news to Jean Derenzy, Traverse City Downtown Development Authority CEO. Being a Redevelopment Ready Community shows the city knows how to work with builders and state granting agencies alike. And turning empty space into cozy digs is a smart use of space.

“From my perspective, it’s just using the space to the best and best use,” she said.

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