Traverse City approves $126 million budget tied to strategic plan

Traverse City commissioners approved a $126 million budget that ties a large share of city spending to a new strategic action plan, putting taxpayer dollars behind housing, infrastructure, sustainability and economic development priorities that leaders say will shape daily life in the city’s next fiscal year.

City Manager Benjamin Marentette said about $42 million of the fiscal year 2026-2027 budget is directly connected to the community-driven strategic action plan, which he described as the first budget in Traverse City history built around that framework. The city’s fiscal year runs from July 1 through June 30, and the plan was shaped by a community visioning process that ran from October 2024 through May 2025. More than $30 million in the budget is devoted to personnel costs, and 1 percent of the city’s general fund is earmarked for complete street projects while another 1 percent supports homelessness and housing initiatives.

The most closely watched spending decision involved a workforce-housing tax exemption for the Nest Apartments at the Commongrounds Cooperative building on East Eighth Street. Commissioners approved a 4 percent payment-in-lieu-of-taxes agreement for 16 workforce units that is expected to last 35 years and reduce city tax revenue by about $26,000 a year, or roughly $910,000 over the life of the deal.

The project’s affordability mix includes eight studios, four one-bedroom units, three two-bedroom units and one four-bedroom unit. Twelve of the 20 apartments in the building will remain restricted to renters earning 60 to 80 percent of area median income, four will be set at 100 percent of area median income and four will be market-rate units. Those restrictions are attached to the land for at least 35 years. The project is also tied to a $1.2 million state housing grant, and a representative for Commongrounds told commissioners the building has been operating at a loss of about $250,000 a year.

Commissioner Heather Ness supported the measure but warned against treating tax exemptions as routine, underscoring the tension between preserving public revenue and making new housing financeable. City officials have also said Traverse City’s broader housing strategy includes PILOT-backed projects, density-friendly zoning and review of city-owned property, with prior examples including Ruth Park and Annika Place.

The commission’s unanimous action went beyond the budget and housing vote. Commissioners moved to ask Grand Traverse and Leelanau counties to designate two of the Northwest Regional Airport Authority’s nine seats to city representatives, a step meant to restore Traverse City’s voice on the board that governs Cherry Capital Airport. They also backed an 11-month paramedic training partnership between the Traverse City Fire Department and West Shore Community College, set to begin in August 2026 and end in July 2027.

That public-safety work comes as the city’s Fire Department targets full EMS transport implementation for July 2026, following voter approval in November 2023 to restore up to 1 mill for emergency transportation services and facilities. Commissioners also approved water and sewer rates as proposed, even as a nearly $100,000 contract with Raftelis Financial Consultants keeps the utility rate study moving and signals that more changes may still be ahead.