Traverse City commission previews electric rates, DDA and city budgets ahead of public hearing

TRAVERSE CITY — Traverse City commissioners heard detailed budget overviews Monday from three city entities, Traverse City Light and Power, the Downtown Development Authority, and city management, ahead of a public hearing scheduled for May 18 and a charter-mandated adoption deadline of June 2.

Traverse City Light and Power Chief Financial Officer Karla Myers-Beman presented a proposed five percent base rate increase, citing structural changes in the wholesale energy market as the key driver, including the decommissioning of coal plants, surging electricity demand from data centers, and an accelerating transition to new energy resources.

“We are budgeting purchase power conservatively due to continued volatility in the regional energy market, which is created by weather conditions, transition to energy resources, and then significant new load additions where data centers are popping up across the nation,” Myers-Beman told commissioners.

Despite the increase, the utility projects its average rate at approximately 13 cents per kilowatt hour, below the Michigan statewide average of 14.09 cents based on 2024 data from the U.S. Energy Information Administration. The proposal drew support from at least one commissioner. Commissioner Lance Boehmer argued the five percent ask is modest given what other utilities face.

“Those who found themselves a little more liable for some of the risks, the weather events that we have seen in the last 15 months, are looking at double-digit rate increases,” Boehmer said.

Myers-Beman said the five percent increase would not fully close the utility’s current operating deficit, but is part of a longer-range plan that anticipates incremental rate adjustments in future years. She noted the TCLP board has not yet formally considered the rate proposal and said affordability factors will be part of that review.

The utility is also projecting significant growth in its fiber internet service, with Myers-Beman citing an expected 40 percent take rate by late fall or early winter of 2027.

Phase Two of the fiber buildout is expected to be complete by end of summer.

On the downtown side, DDA Deputy Director Lauren Bohac presented a combined spending plan of more than $11.7 million across the authority’s three funds, the DDA General Fund, TIF-97 and Old Town TIF.

The largest single item in TIF-97 is more than $3 million for the construction of the Sara Hardy Farmers Market Pavilion, a project years in development.

Bohac told commissioners that approximately $2.7 million in current-year funds will roll over to cover the majority of construction costs.

The DDA is also budgeting for Rotary Square, with construction expected to begin in spring 2027.

An additional $400,000 is allocated for completion of construction documents for the Boardman-Ottaway River restoration project.

In the Old Town TIF district, the single largest investment is a $700,000 contribution to the Union and Seventh Street intersection project, planned for spring 2027.

City Manager Benjamin Marentette closed the presentations with an overview of the city’s general fund, which approaches $29 million.

Personnel costs remain the city’s largest expenditure across all funds at approximately $30.5 million.

Marentette warned that succession planning is an urgent priority.

“Roughly one third of the city’s workforce is eligible to retire within the next few years — in our public safety departments, it’s about a third,” Marentette said. “That’s substantial.”

The budget makes targeted use of the city’s fund balance, including a $1.2 million pension contribution required for state compliance and a $500,000 transfer to the city’s budget stabilization fund.

An ad hoc committee will convene in September to examine fund balance policy, long-term financial trends and pension obligations.

Marentette described the budget as the first in Traverse City’s history to be substantially shaped by the city’s Strategic Action Plan, developed through a community engagement process that drew more than 1,300 survey responses.

The public hearing on all three budgets is scheduled for May 18. The commission must adopt a final budget no later than June 2 as required by the city charter.