PETOSKEY – Like a mature marriage reinventing itself to meet new challenges, Larry Rochon and downtown Petoskey are going through some big changes lately.

After more than 25 years selling music downtown here, Mr. Rochon succumbed to competition from Internet downloads, CD “burners,” and discount chains, and pulled the plug in February on his Record World store.

Meanwhile, Petoskey’s downtown, much of it a national historic district and host to one of the last downtown J.C. Penney stores in the nation, also is contending with a potentially transforming makeover prompted by the region’s rapid growth and modernization. Detroit-area developers plan a $50 million project – a hotel, restaurant, conference center, condominiums, shops, a drive-through bank, and a parking structure – that would span all four sides of a city block and serve as Petoskey’s new gateway along U.S. 31.

For his part, Mr. Rochon saw the day coming when people would use their fingers and not their feet to tap into new music. He secured a realtor’s license and has set up shop at Boyne Realty across the street from the old music store. He markets properties in Petoskey’s historic gaslight district, and in a very real sense is doing what he loves – keeping downtown occupied.

If only the potential renewal of the community’s commercial center were as easy. It’s not. Like so many beautiful small towns in northern Michigan and in other states, Petoskey has come of age. Evolutionary trends in economics, demographics, transportation, and technology have made Petoskey a hot destination not only for vacationers, which has long been its hallmark, but also year-round residents and the attendant growth in housing, business, and traffic.

The scale of the proposed development – its average building height of about 70 feet is nearly twice what’s allowed now in the central business district – reflects the nation’s, and now the region’s economic momentum toward consolidation and supersizing. Still the development's design, as depicted in drawings provided by the builder, indicates a fealty to traditional urban design. There's no argument, though, that the project has stirred an important debate broadly about how the 21^st century meshes with Petoskey’s 19^th and early 20^th century Victorian storefronts, and narrowly about how the developer and city officials negotiated the necessary permits.

The conversation, sometimes fierce, about what Petoskey will be, and how the new development fits, already played a role in electing a new mayor and city council last November who oppose the project. Just days before they took office on January 1, however, the lame-duck city council approved the project, prompting frustrated residents to collect signatures and put it on the ballot. On May 3, in the latest of a series of important growth and development referendums in this region, voters here will have the chance to decide whether to allow construction.

The developers of the Lake Street Petoskey Associates project, as it’s called, declined to comment for this article. They said they preferred that their Web site, color newspaper ads, and a rally planned for April 26 speak for them, said James Wilson, a partner, in a short telephone call.

Opponents are not as reticent. Their campaign, they said, will include parking a crane on the construction site the week before the election to show voters just how tall the new project could be.

Divergent views
To some extent the boundaries of the debate are familiar. Mr. Rochon and other supporters see the proposed development as a rare opportunity to ramp up the tax base and the number of people visiting, working, and living downtown.If voters uphold the rezoning approved by the city council in December, the project would be fully built in just two years.

“Is the project too big? Probably. That said, how is Petoskey to grow?” said Mr. Rochon, who gained a reputation as a significant conservationist in the 1990s when he helped organize Friends of the Cedar River Watershed in nearby Antrim County. “You can’t grow out into the neighborhoods or the bay. You have to grow up.”

That thought, though, has many permutations, expressed here by residents who support redevelopment but raise questions about the project’s scale, approval process, market demand, and potential to set a precedent that undermines zoning in other downtown blocks. “My feeling is that part of the reason that this is such a desirable downtown, and so attractive to so many people downstate, is that it is a bit quirky and quaint. And to my way of thinking, that’s our biggest asset,” said Bill Cutler, who’s owned Cutler’s Clothing, a major downtown presence, since 1978. “So, I think this may backfire on us and keep people away. My fear is that it would ruin our town.”

Development Dilemma Across Region, State
With the election nearing, citizens here understand that no matter which way they lean, they will help call the tune for a region that banks so much on yesteryear charm and a natural landscape, but also seeks new steps to prosperity in the 21^st century. Along the sweeping Lake Michigan shore from Manistee roughly 180 miles north to the Mackinac Bridge, clashes between development and community character have grown epic and commonplace (please see sidebar).

Petoskey, too, has had its fill of land use battles: After a spirited grassroots fight in the mid-1990s to stop it, Wal-Mart took root just to the south in Bear Creek township. A tribal casino and Home Depot followed, with more large-scale development on the way.

In 2002, residents convinced the state to scuttle a long-planned highway bypass – just as Traverse City had done a year earlier – because of the haphazard rural development it would spawn while weakening the downtown and providing little congestion relief. The same year Bear Creek Township voters turned down a proposal to add another big box development near the Wal-Mart. That vote was nullified last year, though, largely through private and very controversial negotiations between the developer and the Emmet County Board of Commissioners.

Now Petoskey voters face a plan to pump millions of dollars directly into the heart of their commercial center, a proposal that seemingly would provide an effective antidote to the sprawling development many have said they do not want.

Vitality and charm
The vote has put everybody on edge. The Petoskey Regional Chamber of Commerce, numerous downtown merchants, and the developers – who are helping to finance the campaign to sway the public vote – are optimistic that city residents will back the proposal, particularly because of concerns over downtown’s eight percent commercial vacancy rate and the flagging state economy.

“If you hold the project up to our mission of strong economic vitality, then it’s a no-brainer for us,” said Carlin Smith, the chamber’s executive director. “After May 3, when I do business recruitment, I hope my opening line is: ‘We have a $50 million project coming into the downtown. Do you want to be part of that?’”

Project opponents counter that building more retail space won’t do much to fill already empty storefronts. They are buoyed by having collected 753 valid signatures of city residents during their ballot drive, a number more than triple that of total voter turnout in 2003’s off-year election, according to City Clerk Alan Terry.

“I’m concerned this project will become Petoskey’s landmark,” said Dawn Daras-Cartright, another leading critic, and a registered nurse who now stays home to raise her children in an historic house near downtown. “Petoskey is known for being a small, charming town on Lake Michigan. Do we want to be known for our condos and hotels?”

Music man changes his tune

“The present scale and design of the project will compromise the character of downtown and of the city,” was one of several sobering conclusions in the committee report, which Mr. Rochon read aloud at the planning commission’s public hearing later that month.

The planning commission, however, approved the project’s core components about a week later, rejecting their appointees’ go-slow advice, as well as the strong concerns of the city planner. They deferred a final judgment on facades and a few other elements to subsequent meetings.

By February 2004, the planning commission’s work was done, and the materials, colors, and facades improved enough that Mr. Rochon’s view changed. He grew enamored with the promise of a project with a tidy, upscale look while bringing new amenities, jobs, tax base, and people into a downtown whose fortunes rise and fall annually with the outside temperature. The non-profit Northern Lakes Economic Alliance, a unit of Michigan State University Extension, estimates the project would generate some $16 million a year in new wages, tax revenues, and customer spending; create about 200 new jobs; and attract 127,000 people annually to downtown.

The city’s permit allows for demolishing the historic but defunct Gaslight Cinema, as well as other vacant and occupied buildings lining Petoskey Street, between Lake and Mitchell streets – the main arteries into town. The rest of the block consists of paved and dirt parking where the old Petoskey Ford dealership operated until 1979, and lawn fronting U.S. 31. “This is the first time in 25 years that we’ve had a real chance to improve the gateway to downtown,” Mr. Rochon said.

Welcome Mat Or Walled Fortress?
Opponents don’t buy it. They seek to overturn the city council’s development agreement, which was completed by lame ducks on Christmas Eve and approved on December 27. That was the Monday after the holiday weekend and just five days before a new council – with a majority publicly opposed to the project – was sworn in.

“I personally pushed real hard to have this come to a conclusion in November, but we just weren’t ready – because I could very well understand the public frustration” with the late date, said Petoskey city council member Joe Baird, who made the motion in support of the project.

Knowing that some citizens would likely trigger a referendum, he said, “I believed that city residents deserved a city council that would stand up to the task and make a decision. Otherwise it’s the ‘chicken way’ out.”

The opponents, however, think a non-vote would have been the right way out. They are a diverse mix of downtown shopkeepers, doctors, singles, parents, newcomers, and long-timers. Nearly without exception they are convinced, in the following ways, that the project could deeply wound the Petoskey they adore:

• Harm the charm – Petoskey’s downtown is historic, walkable, and small-scale, with a linear park running right through it. The development project, on the contrary, is northwest Michigan’s equivalent of the towering Renaissance Center in downtown Detroit, said resident Dean Fleury, an opponent who settled recently in Petoskey after retiring from teaching seventh grade in Fraser, north of the Motor City.
  
  “Here the rhetoric is the same. They’re going to build a fortress and save downtown,” Mr. Fleury said. He and other opposition leaders generally support redeveloping the block, but want far more public engagement in its design and uses, they said, Just before the election, from April 29-May 1, they plan to park a tall construction crane on the site to depict the project’s soaring reach.

Planning commissioner John Jorgensen rejects the critique. “To me the mass issue is a non-issue, because any complete block in the downtown is massive,” he said, adding that the project’s height, which reaches a maximum of 76 feet, is moderated by the block’s 30-foot drop in elevation toward the highway. “I think there’s a lot of enthusiasm for the project that’s not been made visible to the public yet. It’s a rare opportunity for this city to fortify itself economically for the future.”

• Drop like dominoes – Under state statute, a community should rarely rezone property, becausedoing so can undermine the predictability zoning provides to homeowners, merchants, other landowners, and developers. With the Petoskey project, opponents fear that one downtown block after another could shed its zoning restrictions on height, setbacks, and other aspects, like dominos falling one into another in a heap.
  
  “The domino effect is a very real possibility,” said new Mayor Ted Pall, a local anesthesiologist, surrounded by project documents in his home near downtown. “This is not a unique site. There is nothing undesirable about it that needs the assistance of a rezoning. This is a bigger decision than just one project; it implicates the entire downtown.”
  
  
• Parking arithmetic – Petoskey would pay about $6.3 million to purchase the basement level of the project’s two-story parking garage, with credit for about $1 million in land the city contributed to the project. The city would raise the funds by selling up to $10.6 million in bonds for it and perhaps a second parking structure elsewhere in the downtown. The bonds would be paid off, with interest, by collecting increased property taxes from the new development and dedicating them to downtown improvements.
  
  Critics object because a study found that the project needs far more parking than it is purchasing in the parking structure, cutting into the city-funded spots and ultimately creating a multimillion-dollar parking deficit. City Manager George Korthauer, with 22 years on the job, conceded that demand at times would outstrip the nearly 400 parking spaces, but “that’s the kind of problem you want to have,” he said in a city hall interview.

Ka-Boom Town
John Czarnecki, of the Michigan Economic Development Corporation, a state agency that provides tax incentives and tools for community growth, agrees that the project is an attractive “problem” for the city to face. “That would be a major, major development for a community of Petoskey’s size,” said Mr. Czarnecki, MEDC’s vice president of community services. “Personally, I think it would be wonderful for the community. A lot of the older communities are desperately trying to get new redevelopment into their downtown.”

But desperation is not the mind-set for many in Petoskey. “I think building this huge structure is not the thing to do. In fact, it’s exactly the opposite of what we should do. It destroys the historic nature of the downtown,” said Mayor Pall, who favors a development of no more than four stories. “If we allow this, I think it’s only a matter of time before more developers and attorneys push for the same scale and overwhelm our zoning. The condos will fill up only in the summer, when the restaurants and roads are already full. Where’s the benefit?”

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WHAT HAPPENED

Voters Approve New Development

PETOSKEY, May 4, 2005 – In an apparent end to a searing community debate, Petoskey voters on Tuesday approved a $50 million development at the entrance to the historic downtown overlooking Lake Michigan’s Little Traverse Bay. By an unofficial margin of 1,144 to 934, voters upheld the city’s December approval of the project, which includes a hotel, conference center, condominiums, a restaurant, retail space, a bank, and a public-private parking structure. Supporters pointed to the project’s promise of increasing tax base, parking space, and people in the downtown. Opponents feared the scale, adjacent to the downtown’s national historic register district, and chafed at how the out-going city council approved the project late last year.

Kelly Thayer, a journalist and transportation analyst at the Michigan Land Use Institute, uses his writing and planning skills to help make Michigan a model of Smart Growth. Reach him at kelly@mlui.org.