When the Petoskey community began to grow in the 1870's, its residents decided to establish a municipal government. They incorporated the Village of Petoskey in 1879, as was then permitted by State law. Village voters later changed their local government structure by reincorporating it as the City of Petoskey in 1895. Today, all cities in Michigan are considered "home rule" units of local government, meaning that voters are permitted to decide upon provisions and details of their own unique State-approved charters. City charters serve as these local government's constitutions. Michigan cities also act under provisions of the State's Constitution and various State statutes and regulations.
Since authorizing its incorporation as a City more than 110 years ago, Petoskey voters have approved several versions of a City Charter. The City's current Charter was adopted on August 7, 1984, became effective on January 1, 1985, and has been amended only once, in 1988. This lates City Charter reaffirmed the City's "council-manager" government structure. Petoskey has operated under the council-manager plan since 1916, making it one of the first communities in both Michigan and the nation to choose this type of local government - a form that separates policy making roles from administrative functions and that generally was modeled after structures and operations of corporations in the private sector.