The Niles city manager says there are some difficult, but important decisions to be made regarding the future of the property at 322 Main St., also known as the former post office building.

Ric Huff said the city is currently entertaining three options for the city-owned property:

• It can continue owning, maintaining and renting out office space in the building as it has been doing. Huff said this option has “more than taken care of the operational costs of the building.”

• It can market the building to a potential buyer. Huff said recent attempts to do so have been unsuccessful.

• It can reach an agreement to lease the first floor of the building to the State of Michigan for the next 10 to 15 years. Huff declined to say which state office is interested.

The third option comes with a catch. The state is requesting major renovations be done to the building before it moves in.

“It will require pretty extensive remodeling of the building,” Huff said, adding that estimates for the work fall between $650,000 and $850,000.

If the renovations are done and the new tenant moves in, Huff said the city would essentially break even moneywise by the end of the lease, but also have a newly renovated building.

The renovations, he said, would be done in way to restore some of the building’s historic interior features, such as ceilings and skylights. Huff said he believes such a renovation project would make it easier for the city to market the building to the right buyer in the future.

So who will pay for the renovations?

Huff said while the details need to be worked out, the city and the state would likely share the cost.

Huff said there is approximately $200,000 in an account that has been set aside for renovations to the building. The money, he said, has been building up over time with rent paid on the building.

“The remaining amount of money we are in negotiations with the state for sharing that cost,” Huff said. “We don’t know what that is going to look like right now.”

Huff said the two tenants currently in the building have already agreed to relocate to a different portion of the building if the state office moves in.

“We will still have a three or four additional office spaces to lease in that building (post renovation),” he said.

Huff said the city council would need to move quickly on this.

“We would’ve liked an answer a couple months ago,” he said.

On Monday, the council directed Huff to get more details about the lease and potential contributions from the state for the renovations.

“We’ve posed those questions to the state and are waiting for a response,” Huff said, adding that any official action by the council would depend on how quickly the state responds to the questions.