The Mackinaw City Village Council held its final debate on the re-zoning of two waterfront properties owned by Shepler's Mackinac Island Ferry at its Thursday, September 18 meeting, after which it voted 6-1 to place the parcels in the B2 business district, which allows a full range of commercial uses.

It was the second reading and adoption of a zoning ordinance change needed to complete the village zoning map and master plan.

The B2 district allows hotels and motels. Some village residents wanted zoning that would prohibit hotels on the site, because they are concerned the B2 zoning change will lead to building projects that will block the view of the Straits of Mackinac and damage tourism.

Company representatives have insisted that Shepler's needed to be placed in a general business district to maintain property values that allow the company to secure loans required to stay in business.

Village President Ron Wallin voted against the idea and shifted the focus of his debate from maintaining a clear view of the Straits of Mackinac to his concern that a hotel project could eliminate a key departure point for a ferry company to Mackinac Island, which he cited as a critical need for the village.

Nearby Arnold Transit Company property and Star Line Mackinac Island Ferry property are in the B2 district. If those businesses are sold, hotels could be built, eliminating departure points to Mackinac Island, he said.

He spoke of the Shepler company's repeated references to a longstanding partnership between the village government and Shepler's.

Shepler's Mackinac Island Ferry has leased the village dock for decades and has collaborated with the village on several projects.

Mr. Wallin suggested that, given the long-standing partnership, if the property is sold, the village should have a pre-arranged agreement with the company to buy the parcels. He referenced his push earlier this year to set up a municipal fund to purchase waterfront property if the opportunity arises.

Although the village owns the pier Shepler's uses to run its business, if hotels are built adjacent to it, there will be no parking for a ferry boat operation, which is critical to maintaining that kind of business, Mr. Wallin said.

At the last village council meeting, owner Bill Shepler said a ferry boat business without on-site parking would not be viable.

Having all three ferry company properties zoned B2 puts the island departure points in jeopardy, if any are sold, Mr. Wallin said, and further, B2 zoning encourages the Shepler family to go into another business.

Trustee Matthew Yoder said that if the village dock becomes the only departure point to Mackinac Island, a ferry boat operation with parking elsewhere in town would be viable.

Audit Report

The village council accepted a positive audit report, summarized by Mike Konicki of Cheboyganbased Rehmann Robson Certified Public Accountants. The audit covered the last fiscal year, which ended February 29, 2008.

The village is in exceptionally good financial shape, compared to many other northern Michigan municipalities, Mr. Konicki said.

Mackinaw City ended the year with $666,954 in its general fund, an increase of $148,430 over last fiscal year.

All village funds, such as street and ambulance funds, have savings accounts, and none are in debt. These are signs that the village is in good financial shape, he added.

The water and sewer system increased in value by $257,237. The increase in value is largely a combination of increased revenue and investments in the system, Mr. Lawson explained.

One of the few negative aspects of the audit was the village marina's decrease in value by $62,751. Much of this is owing to the aging of the facility, and the amount of the depreciation, about $55,000, is being invested in improvements such as new floating docks, Mr. Lawson said.

Some of the loss in the marina's total value last year included a decrease in revenue of about $8,000. Mr. Konicki speculated that the marina has lost money to the St. Ignace Marina, and he expects the Mackinaw City facility to lose more revenue when the nearby state marina goes into operation.

Mackinaw City may be able to compensate for state marina competition by adding seasonal slips, he said.

That village has asked the state to specify 50 of its 104 slips as seasonal slips, enabling local boaters to keep their vessels in the harbor all summer. If the Michigan State Waterways Commission approves, the move will enable the village to access a different boating market than the state facility. The state marina will rely exclusively on transient boating traffic.

It is easier for the village to forecast its finances and plan staffing around the more-fixed income provided by seasonal slips, Mr. Lawson added. Despite possible competition from the state marina, the re-vamping of the state dock will have a positive effect on Mackinaw City, he noted. The state dock had not been upgraded since the 1960s.

Mackinaw City owes much of its good financial health to its low debt compared to the State Equalized Value (SEV) of its properties. Total property value is approximately $101 million, Mr. Konicki said, and the total debt is approximately $1.6 million, so it should be able to weather the state and national credit turmoil easily.

Trustee James Alford, chairman of the village finance committee, asked how the village was doing on a scale of one to 10. Ten is the best financial shape possible.

Mr. Konicki said the village is at six or seven.

Questioned on how the village can improve, he said paying off all existing debt would be the best way for the village to achieve a higher rating.