SPECIAL MEETING OF THE COUNCIL OF THE CITY OF NOVI

 WEDNESDAY, MARCH 8, 2000, AT 6:OO PM

COUNCIL CHAMBERS-NOVI CIVIC CENTER-45175 W. TEN MILE ROAD

Mayor Clark called the meeting to order at 6:15 PM.

ROLL CALL: Mayor Clark, Mayor ProTem Lorenzo, Council Members Bononi, Crawford, Csordas, DeRoche, and Kramer

ALSO PRESENT: Craig Klaver, Tia Gronlund-Fox, and Dennis Watson

Member Crawford added Item #3 Discussion of possible appointment of Dr. Sanghvi to the Zoning Board of Appeals as Michael Meyer’s has resigned.

CM-00-03-067 Moved by Crawford; seconded by Kramer; CARRIED UNANIMOUSLY: To add, as item number 3, discussion of the possible appointment of Dr. Sanghvi to the Zoning Board of Appeals as a permanent member.

AUDIENCE PARTICIPATION - None

Ms. Tia Gronlund-Fox gave the results of the tally for the City Clerk candidates; Maryanne Cornelius received seven votes, Mary Ellen Graver received two votes, Richard Saathoff received five votes, and Cindy Stewart received one. Donald Strand withdrew. She asked if Council wished to interview all four candidates or select from this group?

CM-00-03-068 Moved by Crawford; seconded by Csordas; CARRIED UNANIMOUSLY to interview the two candidates that received seven and five votes respectively.

DeRoche, and Kramer

NAYS: None

Mayor Clark asked Ms. Gronlund-Fox to notify the parties in question to attend the March 25, 2000 Council Meeting, at Noon, for interviews.

Special Meeting of the Council of the City of Novi

Wednesday, March 8, 2000 Page 2

Ms. Gronlund-Fox asked if the proposed questions, prepared by the previous Clerk, were what Council would like to use?

Mayor Clark felt they were adequate, but if she would like to add others, please do so.

Member Kramer asked that the questions be sent out ahead of time. He would like to review the whole packet plus the additional questions. Ms. Gronlund stated they would be sent out a week before the interviews.

Mr. Klaver stated the City Attorney has reviewed the salary process. The City Attorney said it was appropriate and in compliance with all the regulations governing this type of meeting. He also reiterated Mr. Helwig’s excitement and enthusiasm for seeing this process brought to a conclusion. He has called several times with other suggestions and Mr. Helwig felt it would assist Council if he identified some issues. A memo with attachments was passed out to Council regarding the issues.

Member Crawford had no problem with the concepts of contract vacation, vehicle, and pension. He did not see a salary listed in the memo. He questioned the salary range process of plus/minus within an existing salary.

Mr. Klaver explained the plus five/minus ten was established when they created the administrative salary range and Council would have to decide if this applies to Mr. Helwig’s. This system has not been used for the City Manager; Council established his salary each year. The previous City Manager’s salary was $100,950. His suggestion to begin with would be to go 5% above that to 10% below that as a negotiating point, and no longevity. Considering his background and experience, Member Crawford feels negotiations should be in the $90,860 to $106,003.

Member Csordas stated he had done some numbers before the meeting and with his current salary of $83,000, $90,000 it would be an 8% increase and the vehicle allowance, preferred over a company vehicle, would be $500.00 per month.

Mayor Clark questioned how an insurance policy would work with the allowance and his personal vehicle being used for City business?

Member DeRoche thought it would be hired/non-owned automobile coverage that the City carries. Mr. Helwig would also be required to carry his own personal insurance for non-City business usage.

Member Csordas assumed the health insurance package would be Blue Cross/Blue Shield.

Special Meeting of the Council of the City of Novi

Wednesday, March 8, 2000 Page 3

Mr. Klaver said he had already discussed the health insurance with Mr. Helwig, and he has primary coverage available to him elsewhere and would probably take advantage of the opt-out program.

Member DeRoche mentioned Member Crawford’s idea intrigued him. The numbers he had in mind fell in the range Member Crawford spoke of. He felt Mr. Helwig should be paid for the job of City Manager, and it should not be based on what he currently earns. Member DeRoche’s opinion was that Mr. Helwig’s current job is not comparable to what Novi is hiring him for and the pay needs to be adjusted. However, the automobile allowance, vacation time allocation, and contract buyout are acceptable to him. Regarding the contract buyout, he would like to see that stair stepped up, but no more than a three-month salary buyout.

Mayor Clark asked for discussion on the vacation allocation.

Member Kramer felt that with Mr. Helwig’s experience level he deserved four weeks, but not this year. He proposes a prorated amount of vacation time this year.

Mr. Klaver reminded Council that vacation time is a calendar year benefit unlike everything else being fiscal. He than gave an example of prorating the vacation.

Mayor Clark asked if there was a consensus on the salary ranges?

Member Crawford said what if they insisted on the lower end of the range and built into the contract a six-month review with a possible wage increase?

Mayor Clark did not have a problem with a six-month performance review then again at the end of his first year and annually thereafter.

Member Crawford stated this might be protection for both the City and Mr. Helwig plus an incentive for him.

Mayor ProTem Lorenzo felt with his level of experience and education, he should not be offered any less than the previous City Manager and the range should be from $101,000 to $106,000.

Mr. Klaver reminded Council that they would be considering an across the board increase July 1. He said hiring a position this time of year they needed to negotiate where he would be eventually. It becomes a question if they want to focus on next year, to include that with no review, or negotiate for the next three months. Council appoints the City Manager position and they are free to devise any system they like.

Member DeRoche thought the City should pay him what he will be worth for the twelve months.

Mayor Clark asked for discussion on the vehicle allowance of $500 a month.

Special Meeting of the Council of the City of Novi

Wednesday, March 8, 2000 Page 4

Member Crawford asked if this was an appropriate number?

Mr. Klaver stated a small sampling was done and there was only one that had an allowance and it was $425. He did not know how current the number was.

Member Kramer asked if he could bring in more for the Saturday meeting? Mayor Clark stated everyone agreed it is a good number to work with.

Mayor Clark reiterated the $130 opt-out on the health insurance.

Member Crawford had no problem with the opt-out. He assumed that the City Manager would receive the health insurance options available to the other administrative employees.

Mr. Klaver mentioned that they need to be careful because there is a provision in the tax code that deals with highly compensated employees in the public sector and they could get into some type of difficulties. His recommendation was to offer him the standard benefit package for health care and insurance. Council may want to incorporate in the contract wording such as "all normal and customary administrative packages".

Member Crawford asked the Mayor if they need a motion for each one of the items or is the general consensus sufficient for action?

Mr. Watson stated it can be done either way and suggested they go with general consensus with each item and make a motion at the conclusion.

Member Csordas asked Mr. Watson if it could be construed as discriminatory if a separate vacation schedule is set up for one employee and is not offered to others? Mr. Watson stated he did not think so but would verify it.

Member Bononi stated she has found that many communities have an unspoken policy that in summers certain employees only work four days a week. She wanted to make sure that was not the case here regarding department heads on Fridays. She asked what the policy is, written or unwritten?

Mr. Klaver stated the City does not have any policy that specifies people change days. Member Bononi thought three weeks of vacation was sufficient.

Member DeRoche commented it was his understanding that it is standard business practice that vacations are negotiated with anyone who is a desirable candidate.

Mr. Klaver said the issue has been raised previously with the labor attorney. The attorney said it is common practice and perfectly legal.

Member Kramer wished to discuss pension.

Special Meeting of the Council of the City of Novi

Wednesday, March 8, 2000 Page 5

Mr. Klaver gave a description as follows: administrative employees have a defined benefit based on the years of service, a multiplier and a final average compensation. The simplest example is if you have a 2% multiplier, with 25 years service, they would receive 50% of their final average compensation. This is based on an average of the last three years of employment, referred to as FAC3. Also in Novi, a contribution is made into a program administered by MERS. The calculations are done on an annual basis each year and MERS employs an actuary on groups. There was a change in the pension for the appointed officials, the City Manager, City Clerk and Assessor, several years ago. They were split into a separate group for pension purposes. The actuary is based on a 30-year period, from this point forward. We provide information to MERS on people in a group, such as years of service, age, eligibility for retirement, they run the numbers through a process and come up with our percentage of contribution necessary to fund it.

Member Kramer asked what type of pension Mr. Helwig was asking for?

Mr. Klaver stated that Mr. Helwig preferred a deferred compensation. This is not an uncommon arrangement and the City Managers Association administers the program Novi participates in. The association was created for City Managers because their career path tends to be a series of short tenure. Some Managers tend to move every five years and with the ten year vesting, which used to be the standard, you potentially could have a Manager with 35 or 40 years of service and no pension benefits. Mr. Helwig has requested to be excluded from MERS and in return he would like a contribution into a deferred compensation. The IRS limit was a maximum of $8000. Council could say in lieu of any pension benefit they would contribute $8000 into the 457. The money is his to invest in mutual funds, stocks, etc. When he left the City he would take the value of the portfolio. Several Council Members asked what the City would contribute to MERS if he were in the program? Mr. Klaver stated it is based on a formula, there is not a simple answer.

Member DeRoche asked if they were going in the direction he was asking for and if it was advantageous for the City to give him what he wants?

Member Kramer proposed that because he has a vested pension from the State of Ohio he was looking for a contribution in lieu of a pension from us. He felt that no figure should be arbitrary and that there should be a system and mechanism to calculate a number for us.

Member Csordas asked if it is pre-tax? He failed to see the advantage to the City in this plan and asked if there was one?

Mr. Klaver stated the advantage was, all else being equal, the amount of contribution would be less than the amount contributed to fund the current benefit program for the Manager. The problem is that calculation is based on the group, whether current or former employees. In this instance what the City contributes for the appointed officials is going to be based on a much larger degree on our former

Special Meeting of the Council of the City of Novi

Wednesday, March 8, 2000 Page 6

City Manager than it is on our current City Manger. This is because Council changed that benefit in the last five years of Ed Kriewall’s employment. Therefore, the major part of that calculation is based on Mr. Kriewall and the calculations over the next 30 years; which are the estimates of what the actuaries think he would receive throughout his lifetime and the funding of that amount. He said he could not pull out the component contributable to a new manager.

Member Csordas asked if it would be simpler if it was 5% of their annual income?

Member Crawford did not understand why that number was not available. He said let’s say Mr. Helwig came on board and wanted to be a part of that program. There is a number the City would have to contribute so the number must be available.

Mr. Klaver said a separate actuary study would have to be ordered to identify him. Teamsters, for example, are given the individual information of all 80 employees and the only thing that ever comes back is the entire group. Again, remember it includes all retirees, which is critical in this instance.

Member Crawford said just pretend he wants that benefit and figure out what it would be.

Mr. Klaver said there are a lot of extremely speculative calculations that someone is going to need to make that the actuaries will ask about. How long is the individual going to work, etc.

Member Kramer said if he opted for this he would have to do something anyway so just do it.

Mr. Klaver said if they opted for it it would be sent in and it would be included with everyone else.

Member Kramer said then do that.

Mr. Klaver said currently the number is about 23%. It is because Council made a change right at the end of Mr. Kriewall’s career.

Member Crawford asked why does Mr. Kriewall figure into this?

Mr. Klaver said because anybody who is currently in the group is a current employee and any one who is receiving a pension from the group is a part of what the actuary considers.

Mayor Clark said if it is 23% or 21% or whatever when you figure it out he is not going to get more than the Federal cap. He asked that Mr. Klaver have the actuary looked at this as soon as possible.

Mr. Klaver said he could not get anything from MERS for eight weeks.

Special Meeting of the Council of the City of Novi

Wednesday, March 8, 2000 Page 7

Member Kramer said to tell them the numbers were needed before the 18^th of March 2000.

Mr. Klaver said they have refused. Member Kramer said let’s go to another insurance company. Mr. Klaver said there are other actuaries available.

Mayor Clark commented if MERS can not handle this then maybe we should look for someone who can.

Member Crawford said as complicated as this is becoming maybe the suggestion to offer him 4% or 5% of his base salary to be put into deferred compensation might be the way to go.

Mayor Clark said Council can not wait eight weeks for this information because Novi needs a City Manager on board now.

Member DeRoche said in the private sector a lot of times the employer will match up to 6% of the salary into a deferred compensation such as 401K.

Member Kramer said that is a good idea but Council has no idea what would normally be put away for a pension. If the pension was more than that it would be a good suggestion but if it was less why would the City put 6% in?

Member DeRoche suggested the pension would be more than that because the actuaries would look at his age and it would be a much bigger liability the City would have to fund to.

Member Csordas said most companies now have defined contribution plans.

Member Crawford said he liked Mr. Klaver’s idea which was a 6% match. He puts in 3% and the City puts in 3% up to the 6% limit of his base salary.

Member Csordas said if it was deferred pension where is the money invested?

Mr. Klaver said it is invested wherever the employee wants it invested.

Member Csordas said then it is a defined contribution? Mr. Klaver said yes. The ICMA is a 457 defined contribution and is tax exempt. This is offered to all employees but the City does not make a contribution. The limit happens to be the same for the employer and the employee. In other words, the City could match up to that $8,000 for example. The employee could not put more than $8,000 in himself so the combined limit is $16,000 and neither party could do more than $8,000.

Member Kramer asked if there was a proposal?

Special Meeting of the Council of the City of Novi

Wednesday, March 8, 2000 Page 8

Mayor Clark said there was a proposal of up to 6% with a match. Member Kramer said that is the proposal now that the City would match him up to 6% to be put in deferred. He asked for opinions from other cities on what the nominal pension contribution would be so that Council could have a better idea.

Mayor Clark asked if there was concern about a severance package?

Mr. Klaver said no. He indicated a need for an outside limit to allow him to move to Novi in case of real estate problems and he mentioned moving expenses, which might be deferred.

Mayor Clark said they would consider a reasonable moving expense.

Member Kramer asked about severance and said he did not mind stepping it.

Mayor Clark said one year-one month, two years-two months, three years-three months and then it is capped.

Member De Roche said the best reason to offer somebody money when parting ways is that if there is no consideration, the Judge always comes back and says they were not fair to each other.

Member Crawford felt the severance was on the low end. He thought maybe one year-two months, two years-four months, three years-six months and then a cap.

Mayor Clark felt it was a little steep.

Member Crawford said considering what the person has done to take the job he was not so sure it was steep. He asked what was in other City Manager contracts.

Mr. Klaver said Council was given eight different contracts and the range was from three months to six months.

Member Crawford asked if that was flat out the first year? Mr. Klaver said it is not unheard of or unusual.

Member Kramer said this could be negotiated at 1, 2 and 3 months and if he is happy with that fine if not Council could decide if they would discuss it further.

Mayor Clark said since there is going to be a contract and in light of Michigan Law he would want the acknowledgement that he is an at will employee which means he could be discharged at the will of the Council.

Member Crawford asked if a job description is part of the contract?

Mr. Watson said the Charter defines the City Manager’s job duties.

Special Meeting of the Council of the City of Novi

Wednesday, March 8, 2000 Page 9

Member Kramer said Mr. Klaver had given Council a "mock up" from a neighboring City and he would like to have Mr. Watson go through it, based on these discussions, and give Council a better working draft so that they could go through it with Mr. Helwig.

Mayor Pro Tem Lorenzo asked about the relocation expenses.

Mr. Klaver said he was not looking for anything to move from Dublin because most of his stuff has already been moved up here.

Mayor Pro Tem Lorenzo said from Birmingham to Novi and does Council want to give him until the end of the year to relocate?

Mayor Clark said he would want to move sooner but he does have property to sell.

Member Crawford felt that was a long time frame since he was moving from Birmingham and not Dublin.

Mayor Clark said he has two places and was sure he would like the money in hand to make the move. He said six months seemed fair.

Member Crawford asked if he could be asked to reside in Novi. However, since the new State Law it would be illegal to require residency.

Mayor Clark said if he moved, the City would pay the moving expense and if he did not move there would not be much they could do about it. His impression was that Mr. Helwig wanted to move to Novi and Member Crawford said if he doesn’t he is an at will employee.

Mr. Klaver said there seemed to be consensus on the salary range. He asked if the candidate would make the first offer or would Council make an offer within the range and if so when?

Mr. Crawford said a decision had to be made in public but the negotiations did not. He said this has been discussed publicly, there are some perimeters and it would seem more appropriate for the Mayor and the City Attorney to sit down with Mr. Helwig and negotiate these items.

Mr. Watson thought what Council was talking about here was not the Council as a body deliberating towards a decision. What Council is talking about is appointing a sub committee of some sort to negotiate with Mr. Helwig and bring back the fruits of the negotiation to Council for deliberation. He thought if that is what Council was talking about doing it would probably be all right and he would check into this and get back with Council.

Special Meeting of the Council of the City of Novi

Wednesday, March 8, 2000 Page 10

NAYS: None

Mr. Klaver asked if Council wanted him to relay to Mr. Helwig the factual information of this discussion. Council said that would be fine.

Member Crawford said Mr. Myers is resigning and Dr., Sanghvi is the alternate and the Zoning Board of Appeals has asked that Dr. Sanghvi be appointed the permanent member.

Member Bononi said she had a problem voting for anyone whose credentials she did not know so she would have to vote no on this.

Member Crawford said Council did appoint him as an alternate and he has acted on several occasions as a regular member and there is a recommendation and request from his present contemporaries asking for his appointment. Member Crawford felt that spoke well of him.

Mayor Clark said he is a physician in the community, a member of the Rotary Club and the Chamber of Commerce and has had a long commitment to the community.

Special Meeting of the Council of the City of Novi

Wednesday, March 8, 2000 Page 11

Mr. Klaver reminded the Council of the Grand River Construction and Ms. Norman needed to know about the legislative dinner.

Richard J. Clark, Mayor Nancy Reutter, Deputy City Clerk

Transcribed by: _________________________

Charlene Mc Lean

Date approved: March 20, 2000