Caring for the historic Carnegie Building continues to be a costly endeavor for the City of Traverse City – but one city leaders seem committed to, citing few alternatives short of selling the beloved property.

Assistant City Manager Penny Hill appeared before city commissioners this week to give an update on finances and improvement projects at the Carnegie Building. The building, which has been under city ownership since it opened in 1905 – save a 20-year period from 1983 to 2003 when it was operated by the Traverse Area District Library – has housed a number of nonprofits, community organizations, and high-profile events over the decades. Today, the city leases most of the building space to Crooked Tree Arts Center, the Grand Traverse Rock & Mineral Club, and the Festival of Trains.

While rent from those three groups helps offset some building costs, it’s not enough to cover the total annual operating budget – nor the special repair projects that frequently arise in a 114-year-old building. Lease agreements total $43,500 for the property: $39,300 for Crooked Tree, $1,200 for the GT Rock & Mineral Club, and $3,000 for the Festival of Trains. While Crooked Tree’s lease will increase to $46,000 in 2020, the $50,200 total is still short of the annual operating budget of $62,000.

The three tenants occupy the majority of usable building space, limiting options to rent out the property to other users or events. The building also serves as a city polling precinct. Because of those usage constraints, there are few paths for increasing revenues other than raising the existing rents or reducing energy usage or other costs, according to Hill. The city went through renegotiations with Crooked Tree last year and now has a lease agreement in place through 2025; rents will therefore remain stable until then.

Hill told commissioners that a 2014 building inspection report by Doug Regan Inspection Service outlined $89,000 in necessary repairs to the property, while a 2018 energy audit conducted by SEEDS recommended more than $115,000 in improvements. Some of those projects could save the city money in the long run, but require an upfront investment. Expenses in 2018-19 were closer to $100,000 instead of the usual $62,000 because of nearly $40,000 in planned repair projects, including upgrading light fixtures to LED lights, replacing a sanitary sewer line, replacing hot water heaters with on-demand hot water, installing gutters on the rear of the building, and retrofitting incandescent lighting, among other projects. The city needs to replace windows throughout the building – what Hill says will likely be a multi-year project – as well as replace the boiler and chiller in the HVAC system in 2021, a project that could cost close to $50,000.

“We’re operating at a loss (already), so you can see a little quandary” with the budget, Hill told commissioners.

For several years, the city has shored up the funding gap with sources including the city general fund, tax increment financing (TIF) dollars from the Downtown Development Authority – which most recently paid more than $324,000 to replace the Carnegie Building’s elevator to meet ADA requirements – and the McCauley Trust Fund. That fund has $110,000 remaining in it and can continue to help cover the Carnegie Building’s funding gap until it’s depleted, though Hill notes that at the rate repairs are mounting, it could be gone “very quickly.” At that point, commissioners will need to approve dipping into the city’s general fund again to make up the annual difference.

Commissioners seemed willing to do so Monday, citing the historical importance of the property. “Just like other buildings we have in town that we own…like the Opera House, we have to treat it like we’re the landlords,” said Commissioner Richard Lewis. “There’s certain things that we’ve got to make sure stay repaired, stay fixed, and well, or else we don’t have a building. And they do belong to us. It’s not like we have an option.” Lewis then corrected himself that the city did have one option: selling the Carnegie Building. Ad hoc committees have considered that scenario in both 2004 and 2014, according to Hill, and came back with decisive recommendations to keep the building. Lewis agreed. “I don’t think (selling) it would fly very well,” he said. “I don’t think that’s an option we want to pursue at all.”

Commissioner Roger Putman pointed out that in addition to the Carnegie Building’s historical significance and current active community use, the property houses many of the artifacts in the city-owned Con Foster collection. “So it’s serving a very useful purpose in that regard,” he said. Hill confirms a portion of the collection is cared for in the building, though some artifacts are being stored elsewhere (she declined to identify the location for security reasons). Approximately 3,000 items in the collection are of Native American origin, with the city required to go through a deaccessioning process to comply with the federal Native American Graves and Repatriation Act. That process is ongoing and could continue for quite some time, Hill says.

When it’s completed, Traverse City commissioners will have another decision to make, in addition to determining how best to maintain the Carnegie Building: figuring what to do with the remainder of the Con Foster collection. “We need to address exactly what (the collection) is and get a good inventory,” says Hill. “We would then work with the city commission to look at what should we do with the objects.” Some artifacts could be commonplace and not of historic import or significant value; those items could potentially be sold or donated to other parties. For more valuable pieces, city officials could consider putting the items on display somewhere – or helping other organizations to do so.

“If the city’s not interested in operating a museum, they may be interested in having long-term loans to other museums,” Hill says.