Garrett Neese/Daily Mining Gazette Houghton City Council approved a commercial rehabilitation district for the building at 109 Shelden Ave., where owners plan to turn it into a mixed-use property with apartments.

HOUGHTON — The Houghton City Council voted Wednesday to establish a commercial rehabilitation district to redevelop a downtown building.

Owner L&Z Rentals, which purchased 109 Shelden Ave. last year, plans to redevelop it into a mixed-use property with nine apartments. The site was formerly used by Kirkish Furniture and Backroom Books.

“This property has been basically vacant and unused for nearly a decade, having been through lots of starts and stops with a partial collapse in the middle of it all,” City Manager Eric Waara said.

The state created the districts in 2005 to incentive rehabilitating commercial properties for a commercial business or multi-family residential facility. Creating the district allows the owner to apply for a tax abatement that would freeze the building’s taxable value at current levels for up to 10 years. The city council and state Department of Treasury would still need to approve the application.

Other collaborators over the two years of the project have been the Keweenaw Economic Development Alliance, Small Business Development Center, InvestUP, the Houghton County Brownfield Authority, Michigan Economic Development Corp., and a local bank, Waara said.

“A once-empty building receives a major investment and becomes an active part of our downtown,” Waara said. “The building adds to our available housing opportunities and will bring new residents. An existing business can expand and new shop space is created. A blighted building gets cleaned up. The lights are on. And at the end of the plan period, the taxable value of our (Downtown Development Authority) increases.”

In other action, the council:

• Approved a $143,580 quote to Kleiman Pump & Well Drilling to build a replacement for a city well and abandon the old one with cement grout. Drilled in the 1990s, the well is one of three near the city’s water plant that draw on an aquifer below the bottom of Portage Lake. Mineral build-up over the years has reduced the existing well’s capacity, requiring periodic cleanings that buy progressively less time.

The vote was 5-1, with Mayor Pro Tem Joan Suits questioning the need to skip a competitive bid process. The city charter allows exceptions to the bidding requirement “where competitive bidding is clearly not practical or where no advantage would result in the city.” Waara pointed to the company’s longtime experience doing well work for the city, and said opening it to a bid process might result in higher estimates from Kleiman and other companies.

• Approved a resolution to start the process to incorporate Lots 16 and 17 of the Naumkeg Plats — where the city’s RV Park is located — into the city. Houghton bought the property in 1987 at the same time as the land for the Kestner Waterfront Park. However, in the case of the RV park lots, the annexation was not completed. The issue was discovered recently in Lansing, as old records were being computerized.

Wednesday’s vote triggers a 90-day notice and public hearing, after which the council would formally approve the annexation. Portage Township is following the same process.

• Approved executing a $250,000 grant from the Department of Environment, Great Lakes and Energy to document the materials and construction of the remaining 284 service lines in the city that have not been verified. The grant does not require a local match.

The EGLE plan requires verifying material in at least two places: At the street level where the pipe enters the home, and then inside the house. If the lead and copper levels at either location trigger concern, there would be additional testing at the shutoff point. The city would then proceed to a replacement plan for the lines. People would also have the right to refuse the testing.