Traverse City’s new attainable housing district offers small landlords about half the building tax for income-qualified renters

TRAVERSE CITY, Mich. — Traverse City landlords with four or fewer rental units can apply to pay roughly half the usual tax rate on their buildings if they rent to income-qualified tenants. City commissioners voted unanimously late Monday, Oct. 19, to set up the attainable housing district that makes it possible, 9&10 News reported.

The district covers the city’s R-1a, R-1b and R-2 residential zones, which take in most neighborhoods. It does not change zoning or what can be built. “That all stays the same absolutely everywhere with the city, no exceptions whatsoever,” City Manager Benjamin Marentette said, according to 9&10 News.

How the break works. Under the state’s 2022 Attainable Housing Facilities Act, the owner of a rental with up to four units can apply for a certificate that cuts the tax rate on the building, the city says. The land is still taxed normally. A July memo from City Assessor Amy Robbins put the reduced rate at about 27 mills for 2026, compared with the city’s rate of just over 55, and estimated a rehabilitated rental could save about $3,500 a year, 9&10 News reported.

Who qualifies. The building must be new since Dec. 13, 2022, or renovated since then with at least $5,000 invested. At least one unit, or 30% of units if that is more, must go to a household earning no more than 120% of the area median income, with rent capped at 30% of that household’s income. The city’s September agenda packet put that income limit at $95,760 for one person and $136,680 for a family of four. Short-term vacation rentals don’t qualify, and an owner’s own unit doesn’t get the break.

Guardrails. State law allows certificates of one to 12 years. Commissioners largely agreed on a starting cap of 15 certificates, to be reviewed after a year, and five-year terms in most cases, plus an application fee and year-round leases. Each application needs its own public hearing, a commission resolution and State Tax Commission approval, and owners must certify tenant incomes and rents every year.

Split opinions. Most speakers at a September public hearing opposed the idea. Commissioner Ken Funk, who had pulled his support after that hearing, backed the district Monday and said the cap is what makes it work: “This has to work well and be successful before we start talking about extending the cap.” Resident Mary Mills asked the commission to “reject a city wide designation and pursue a more targeted approach.” Commissioner Jackie Anderson called it “the equivalent of a PILOT, but for the little guy, the mom and pop operator.”

Still open. Commissioners have not settled whether owners can rent to relatives or what happens to a tenant if a property sells mid-lease. Marentette said staff will bring back a proposed fee and revised policy “within the next month or so.” Under state law, no new certificates can be granted after Dec. 31, 2027, unless the Legislature extends the program.

Sources:
9&10 News, “Traverse City creates tax break district for small landlords who rent to income-qualified tenants” (vote, zones, rates, savings estimate, eligibility, income limits, cap, quotes, open questions), https://www.9and10news.com/2026/10/20/traverse-city-creates-tax-break-district-for-small-landlords-who-rent-to-income-qualified-tenants/
City of Traverse City Assessor, “Attainable Housing Facilities Act” (2022 PA 236, up to four units, one- to 12-year terms, local and State Tax Commission approval), https://www.traversecitymi.gov/government/city-departments/assessor/attainable-housing-facilities-act.html
Photo: Andrew Jameson, “CentralNeighborhoodHistoricDistrictATraverseCityMI.JPG,” Wikimedia Commons, CC BY-SA 3.0, cropped and color-adjusted, https://commons.wikimedia.org/wiki/File:CentralNeighborhoodHistoricDistrictATraverseCityMI.JPG

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Tags: Traverse City · Housing · Property Taxes · City Commission · Rentals