REGULAR MEETING OF THE COUNCIL OF THE CITY OF NOVI
MONDAY, AUGUST 22, 2005 AT 7:00 P.M.
COUNCIL CHAMBERS-NOVI CIVIC CENTER-45175 W. TEN MILE ROAD

Mayor Csordas called the meeting to order at 7:00 P.M.

ROLL CALL: Mayor Csordas, Mayor Pro Tem Landry, Council Members Capello-absent, Gatt, Lorenzo, Nagy, Paul-absent

Member Paul arrived at 7:04 P.M.

ALSO PRESENT: Richard Helwig, City Manager

Clay Pearson, Assistant City Manager

Kathy Smith-Roy, Finance Director

Jenny Walewski, Human Resources

Barbara McBeth, Director of Planning

David Gillam, City Attorney

Rob Hayes, City Engineer

Lance Shipman, Landscape Architect

Steve Printz, Director of Forestry

Benny McCusker, Director of the Department of Public Works

Mayor Pro Tem Landry added Item #1, the Status of the Consulting Contract for Engineering Services to Mayor and Council Issues.

Member Nagy added Item #2 Zoning Map Update with regard to the Master Plan and #3 Up lighting.

Mr. Heffernan said about two or three years ago statements changed drastically with GASB 34. He said in their eyes, there has always been a flaw in the financial statements because the question your statements answered was not sufficient. The question from 1978 through now has been what was done with money received from residents, and your General Fund accounting basis answered that well, as well as individual funds.

He said the change of two years ago was a second set of statements that answered a different question, asking if today’s taxpayers paid the full cost of the services they received. Mr. Heffernan said they’ve been in that mode for two years trying to answer that question. However, one piece of the answer has been missing. The piece is, when saying what is the cost of providing services, the cost of offering retiree health care or health care to our employees when they retire is a cost of their employment period, and not a cost of after they’ve retired. He said the rules had not been written because they are so complex that communities were not allowed to start counting that. Now, they are and the rule will take effect in about three years.

Scott Janssen said the GASB recognized that a majority of State and local governments did provide post retirement health care benefits, which are an obligation of the City and similar to a pension plan. The overall intent was to recognize that the cost of providing these benefits is earned over the working life of the employee, and not just at the time the premiums for the health care are paid. Another reason the rules were adopted was that it recognized that only a minority of the governments had actually felt that pre-funding for post retirement health care was a benefit. The City of Novi was an exception, as it was very proactive and in 1993 had set up a retiree health care fund, and has been progressively putting money aside for retirement benefits. As of June 30, 2004, the date of the last audited financial statement, there was approximately $3.5 million set aside for the post retirement benefits. He said based on their understanding of the contribution made for the fiscal year 2005, there might be in the neighborhood of approximately $4 million as of today.

Mr. Janssen said they would try to answer three main questions. First, will these new pronouncements have any effect on the General Fund Budget? Secondly, do the new rules force or require the City to make any contributions into this retiree health care fund and lastly, if the City chooses to set money aside what types of avenues can they chose or have chosen.

He said the effective dates for the GASB 43 and 45 is going to be June 30, 2008, which will be the first year of the financial statements where the required disclosures under the new accounting pronouncements will be seen and will go into effect.

Mr. Heffernan said he would first talk about the post employment benefits being measured. He said for the most part it’s the health care to retirees, but the fact is they have made it much broader than that. Any kind of a benefit, life insurance, anything other than pensions that is being given to people after termination of employment is considered within the scope of the statement. Clearly the one everyone is concerned about is the health care to retirees, because that’s the one that is so broad and the one whose costs are close to being out of control. Health care costs for all employees, retired or not, have been increasing significantly faster than inflation for several years now. It is the combination of those two that the costs are rising so quickly, and it is such a broad benefit that in the public sector it is given to most employees, and it has become quite a concern and is what everyone is focused on.

Mr. Heffernan said in terms of the overall impact, one of the misunderstandings is that this new rule change will force municipalities to start funding this liability. It will not, and it is still the City Council’s decision. He said the Council has been funding it, they’ve had actuarial evaluations since 1993 and has been reading them, and funding as much as was affordable. This will not change that. Communities that have not been funding it will be under significantly more pressure to fund it, but it is not a requirement. The accounting rules cannot tell public entities that they must set money aside. However, if it is not funded, they will be presenting in their financial statements a schedule telling residents whether or not they are funding it, and it will show a six year history of how the liability has grown, and how the assets have grown. It will also tell what the funding percentage is. He said in theory it is not a requirement to set money aside, but it will be a very strong motivator, which was their intent and what the GASB was trying to do. It is a cost that has already occurred so they are trying to make the cash flow follow the costs.

Mr. Heffernan said GASB uses the term Annual Required Contribution or Actuarially Required Contribution but it is not required, and he and Mr. Janssen are trying to change the language and call it Actuarially Recommended Contribution. It is a recommended computer calculation that Council can chose whether to make or not.

Mr. Janssen said the accounting pronouncements also create actuarial requirements. An actuarial evaluation is now going to be required every two to three years. This isn’t going to be much different for the City, because the City has had actuarial evaluations performed every couple of years or so. The actuarial evaluation will determine a projected obligation for the benefits to be paid. The annual required contribution is based on the normal cost of health care plus it will go back and try to identify the cost of the prior year’s service cost. This goes back to the GASB 34 item regarding are today’s taxpayers paying for today’s services, and this pronouncement will help cover that, and identify this annual required or recommended contribution.

Another result of the accounting pronouncement is the OPEB, Other Post Employment Benefits Liability, which will identify a potential liability provided that the City does not make the contribution equal to the recommended contribution. To the extent that the City does make that payment there is no liability to be recorded and it is business as usual, and that expenditure will be recorded in the General Fund with no liability to identify or disclose. Mr. Janssen said cumulatively from the effective date that this pronouncement starts they will track, and if there is any under funding they will cumulatively keep track of that and report it in the financial statements.

Mr. Janssen noted the City had set up a retirement health fund in 1993 and has been putting money aside. Public Act 149 was adopted and that allowed the City to invest in accordance with the pension act. This gives the City the opportunity to invest greater amounts of money into stocks and mutual funds therefore, potentially earning higher rates of interest. This is important because it provides the ability to earn higher rates of interest, and over the long term, would reduce the present value cost because the City is doing this pre-funding.

Mr. Janssen said the City actually was very proactive years ago and is doing many of these things. He urged that the City continue to have actuarial evaluations done, make sure that all the plan provisions are clearly documented, and make sure there is a clear understanding of the health care plan in terms of flexibility. As things change with retiree health care make sure that the plan addresses this, and how it affects retirees and current employees.

Mr. Heffernan said regarding managing the costs, one of the things that these two statements has done is to cause a lot of communities to talk about why the liability is as large as it is. When the liability is measured the magnitude of it becomes obvious. A lot of communities are looking at whether there is a way to turn retirees more into consumers, which would cause them to have the same incentives to control costs that you’d see as a consumer. This is very difficult to do, but it is clearly the trend. Mr. Heffernan said he knew Council was working with J.S. Clark on the health care benefit package, but that is the trend that the private sector started going to a couple of years ago.

Mr. Heffernan said funding this now would mean the compounded interest would be there for a longer period of time, and because State law in Michigan says that your money, that is not put aside for pension, can only be invested in accordance with Public Act 20 in a very limited set of investments. He said over a 30 year period they are seeing 8% returns. There is a gigantic difference when you take that 8% and add it to the compounding that happens. The motivation to put the money aside sooner instead of later reduces the City’s long run cost a lot.

It also assigns the cost to the taxpayers that are getting the benefit. He commented that he was glad to see the City has been funding this for 12 years.

Mr. Heffernan noted there is a 30 year amortization here that is intended to allow communities a little bit of flexibility to grow into this. Twenty years from now there will be only 10 years left, and as new employees come in we will be up at a true normal cost of contribution to be making then. The amount that we are at now, about $750,000, will be higher on an inflation adjusted figure in the future. He said eight of ten communities find this isn’t affordable, and that’s why it is such a difficult issue state wide. He said the majority of communities haven’t measured it yet, and the ones that have many are trying to put 20% to 40% of the actuary recommendation and can’t come close to the total recommended. Novi is in a fortunate situation as you have measured it and it is difficult but doable.

Member Lorenzo said she appreciated their presentation. In the past year or two Council has been driving the point home regarding funding issues for the future. She noted she was pleased that the Administration and Finance Director had done such a superb job getting Novi ready for the future. She also thanked Council for adding $268,000 to the contribution this year, and she thought that would go a long way towards funding this. She asked what happened to communities who haven’t funded it.

Mr. Heffernan said there are some older communities. However, if you were to look at a growth curve Novi is still on the up tick of the curve. Novi would be a teenager in community or city terms. He said there are some communities that have more retirees receiving health care than current employees receiving health care. It is a bigger check they are writing for retirees than they are writing for current employees.

Member Lorenzo asked if these were communities who go to the taxpayers for millage increases because they can’t afford their basic city services, because they are required and obligated to take a large chunk of their General Fund expenditures and give it to their retiree health care.

Mr. Heffernan said it is in the union contracts and it is a first obligation right behind bonded debt service. One community tried to ask a judge to force them to levy a millage to pay for it and they were not successful.

Member Lorenzo asked Ms. Smith-Roy to advise Council on what their liability is at this point, how they have been achieving the actuarial recommended number and what she foresees should be done in the future.

Ms. Smith-Roy said the City’s estimated liability based on the last actuary report was around $18 million, which means we are approximately 15% funded. Member Lorenzo said $18 million is more than half of the City’s budget. Ms. Smith-Roy said that report was based on 2002. We have made greater contributions than we have had reductions in the last couple of years. She thought they would actually see the percentage that’s covered of the unfunded liability is higher today. She said when the actuary report was done, just as in the previous report, they proposed and put in the budget recommended increases each year. So over a five year period 20% more would be contributed as a percentage of payroll to help increase the contribution to get to 80% of the actuary recommended rate. This would be well within the amount needed to contribute to match contributions similar to what is done in our pension plan. She thought it would be fair to say if 75% to 80% funded, the City would be in very good shape.

Member Lorenzo asked if the last actuarial study was done in 1993. Ms. Smith-Roy said another was done in 2002. Member Lorenzo asked if that was where the 9.42% came from. Ms. Smith-Roy said that was the average computed employer rate by the actuary. Member Lorenzo said that was the goal for the City at that point from the actuarial perspective and Ms. Smith-Roy agreed. Member Lorenzo asked how they had been meeting that goal in terms of percentages each year. Ms. Smith-Roy said for the fiscal year 2004-2005 we are at 5.15%, for 2005-2006 we are at 6.62%. Then each of the years thereafter, the increase is spread out so we wouldn’t take all the hit in one year. We are working towards 80% of the recommended rate, which is 7.28%. Member Lorenzo said then we don’t expect to get to the recommended 9.42%, but do expect to get 80% towards that. Ms. Smith-Roy said yes, and that is the average. It is just an average based on the employees in total and it is different based on the different groups. Ms. Smith-Roy said each percentage is based on the group and the benefits they are entitled to. Member Lorenzo asked when the next actuarial study would be completed. Ms. Smith-Roy thought it would be done in 2006 or 2007 to meet the requirements for reporting. She would not recommend doing one before it was needed because of the cost involved. When the last report was done it was in excess of $10,000, and that comes off the amounts contributed to that fund. Member Lorenzo said when the actuarial study is done, is there a possibility that the 9.42% is going to increase to a higher number in terms of the recommended range. Ms. Smith-Roy said it would difficult for her to say at this point. Member Lorenzo asked Mr. Heffernan. Mr. Heffernan said the trend has been for those communities who have received multiple actuary reports to have higher percentage increases, because the cost of health care has been going up more than the actuary would have originally estimated.

Ms. Smith-Roy said Council has helped reduce those costs by changes in deductibles, changes in prescription drug coverage and Medicare D, which are all positive impacts that will lower the amount. Member Lorenzo asked what has been done negatively from this Council table to impact this. Ms. Smith-Roy said with the adoption of the police contract, there was an increase in the benefit in that retirees will be able to collect health care insurance at a younger age. Member Lorenzo asked if there were any others. Ms. Smith-Roy responded that it was the same with the administrative group. Member Lorenzo asked if it was eight employees that were changed from a fixed amount to an 80-20. Ms. Smith-Roy said she was correct. Member Lorenzo said that all impacted our liability negatively for health care. Ms. Smith-Roy agreed. Member Lorenzo said whether talking about this Council or future Councils, the decisions made in the future will impact this. She wished they had had this information before those decisions were made as she didn’t think anyone was aware of this except possibly Mayor Csordas, who is in the industry.

Member Lorenzo said the lesson learned is not to make decisions that affect the taxpayers in a vacuum, and that the best advice they could leave is that Council needs as much information as possible before making those kinds of financial decisions.

Member Lorenzo wanted to discuss the financial issues brought up regarding what was being done and not being done in terms of interest mechanisms available. Ms. Smith-Roy said they have taken advantage of the Public Act 149 Investment Policy and have been utilizing that opportunity. In the next couple of weeks they will present Council with a formal investment policy that will itemize what they are already doing. Hopefully, the interest rates will increase for our other governmental funds in terms of treasuries, CD’s, etc. that are getting a much lower rate. Member Lorenzo asked if there were any recommendations or opportunities that were not being taken advantage of. Ms. Smith-Roy said not that she was aware of. Member Lorenzo asked Mr. Heffernan the same question and he responded in kind. He said Council is adequately diversifying within the stocks, bonds, and things that are allowed, so they should be receiving the higher rate of return over a long period of time.

Mayor Csordas asked what the investment mix in stocks to bonds was percentage wise. Ms. Smith-Roy stated she didn’t have it specifically for today but she could report back to Council in Thursday’s packet the mix they are recommending in terms of the percentages. She said they are not recommending up to 70% in stock and stated their cap on the stock is 65% and it’s actuary ranges. She said because we are diversified with different companies it is important that we have a range so that we can rebalance our assets if we need to each year. Ms. Smith-Roy said she and Ms. Valente look at those investments each year and make sure those funds are properly balanced.

Member Nagy noted this is a really important issue and she would like to see an article written by Ms. Fleming in the Novi News about this. It is not a subject that most of us understand, and she thought it would be good to clarify for people what kinds of things the City is encountering. She thought that even though Council and administration has done some good things to reduce certain costs, health care costs keep rising. She said she was looking at the future as these costs rise, and if we can’t keep up that would mean this item would have to be funded, thereby reducing the amount of services that can be given to our taxpayers.

Member Gatt asked when the 75%-80% mark would be met? Ms. Smith-Roy said it would probably be 10 or 15 years, because even though we are increasing the percentage of payroll, each of these years there is a catch up. Member Gatt said for the citizens point of view and for their benefit, the City has great employees, and most are union employees and their benefits are union driven. He said comparatively speaking to people in the public sector our benefits are right up there. He thought some people who work for General Motors or Ford thought that their husband or wife didn’t get this or that benefit. The public employees don’t get a lot of the benefits that they get when it comes to bonuses, vacations, time off and a lot of other monetary benefits. Therefore, he thought it was important to keep it in perspective that the City of Novi employees are who make this City a great City. It’s not the land, it is the employees, and they work very hard for their benefits. The fact of the matter is this City is not in bad shape. He thought with people like Ms. Smith-Roy, Mr. Helwig, and elected Council Members making the decisions, this City has a very bright future. He said by the time Novi is an old age City, it will be the good decisions made 15 years ago with the 1993 funding, and decisions Council will continue to make that is going to keep this City great.

Member Paul thanked everyone involved for making this report available to Council, and agreed that it would have been helpful to have had it when past decisions were made. She said as more questions come up, she hoped Council would refer back to the document and maybe Council could be given a briefing of where the actuarial is at or estimated to be. She stated she was glad to hear they are diversified between stocks and bonds, because it is a varied market and it’s beneficial to have a variation in investments.

Member Paul commented she had never been an employee of a municipality. However, she could compare all the union contracts and what they have seen in investments, and know that benefits in the public sector don’t even slightly compare to a municipality benefits and felt they are far exceeding. She believed that municipalities, at one time, didn’t pay as highly as the public sector and now believed that has changed. She felt very strongly that she had to be fiscally responsible and look at what other cities are going through and learn from their errors and problems. She was thrilled that in 1993 investments were made, and happy that in the last year Mayor Csordas suggested some of the debt be paid down. She thought it was an excellent idea and hoped it would be continued.

Mayor Pro Tem Landry asked if the bottom line on GASB 43 is simply a reporting requirement. It doesn’t require any changes in the way things are funded; it is simply the government saying the City might not have been reporting this unfunded liability on their financial statement, but from now it has to be shown. Mr. Janssen said he was correct. Mayor Pro Tem Landry said it now says you have to tell everyone that we are only 15% funded on our health care retiree benefits, and the purpose for that is to put it out in the open for everyone to see so the discussion on the table tonight would be generated.

Mr. Janssen said prior to this, a Council such as Novi didn’t have the discussion they are having tonight, and that’s why they wrote the rule.

Mayor Csordas said this report came out of his request after looking at the financial audit that was done and addressing post retirement benefits, which no body had any idea of what that was. We can say that we have to report this and let everybody know about it, but that doesn’t mean that anything is being done about it. Growth and success covers a lot of things and this City is in a growth mode, and there have been no Council’s with the political will to analyze this and do what is appropriate for the future. He said there has been talk about hard decisions being made and this is an emotional issue, and he didn’t want to have this presentation tonight and then do nothing. He said growth is masking a huge potential problem coming for this City and every city. Just because this is a young City and we are not there yet, doesn’t mean we are not going there. There will come a time when the retirees of this City will out number the active people, and this will be going down in flames, because that’s what happens. Mayor Csordas said we can say 15 years is a long or short time away, but it is an eventual certainty that this is going to happen.

Mayor Csordas said we currently have a post retirement benefit for health benefits of $18 million, and we have approximately $3.5 million set aside. He asked what the employees contribute to their retirement benefits. Ms. Smith-Roy said currently the employees do not contribute anything to retiree health benefits while they are an employee. Instead the City has taken the position to have the retirees contribute to their health care benefits, which is a little different than most other communities. She said employees don’t contribute until they retire and are collecting the benefit. When employees are collecting the benefit they pay 20% of the premiums. Mayor Csordas asked what the aggregate amount was this year that the City contributed to retirement benefits. Ms. Smith-Roy said with the $268,000 Council added, it is about $775,000. Mayor Csordas asked where that money comes from. She replied that it comes from the General Fund, the Water and Sewer Fund, the Parks and Recreation Fund, etc., wherever the employee works is where that benefit is charged just like the pension. It is a percentage of payroll and is shown in the benefit section of the personal services section of the budget and charged accordingly. Mayor Csordas said so it is $700,000 minimum, plus whatever the additional contribution, with zero contribution from the employees while they are active. Ms. Smith-Roy said he was correct. Mayor Csordas said when they retire they pay 20% of the premium and asked what the escalator was on that. Ms. Smith-Roy said there is no escalator clause on that, it escalates automatically. If there is an increase in premium then they pay 20% more because they are paying 20% of that increase. It is not of a fixed amount. Mayor Csordas responded that’s good and asked if the benefits reduce at all and whether they are guaranteed benefits, policy or practice type benefits. Ms. Smith-Roy said the benefits the retiree receives at the date of their retirement are guaranteed benefits. We have different retirees at different benefit levels based on when they retired. She explained that means, for example, currently the prescription drug co-pay is at a different rate for all the groups than it was when people retired several years ago. So people who are retiring now will have a different co-pay than people who retired previously.

Mayor Csordas asked what the brand name or generic brand co-pay is. She said it varied by group so for the administrative group it is $10-$20, for all the other groups it is going to vary from a $2.00 co-pay up to the $10-$20. He asked what the cost was on the current level of benefits and monthly premium for a couple at that age bracket. Ms. Smith-Roy said about $700 to $1,000 a month and the retiree pays 20% of the premium, which goes down as Medicare kicks in.

Mayor Csordas said currently there is $750,000 from the General Fund and all of the other enterprise funds going towards this, plus the additional money that is set aside. He didn’t want Council to be disillusioned by the fact that there is not a significant amount of money going to cover these benefits right now. Ms. Smith-Roy agreed. He said he would be interested to know what the investment vehicles are and what the investment policy is. He wanted to see what the percentages are stock to bonds, and asked if that would be included in the report. Ms. Smith-Roy said the generic range will be in this report, and she would add to it the current investments so they would have that information as well. He asked if they still contribute any money into the very, very safe money market and other investment vehicles that might have been recommended. Ms. Smith-Roy said yes, our maximum is not to exceed 10% the way the investment policy is structured now. However, we keep that much available because expenditures have to be paid out every month. So every dollar that the City has is being invested everyday because it is in a money market account that is earning money everyday, and there is a minimum of 5% now with our balance being low, so retiree benefits can be paid out from the fund. Mayor Csordas asked if, in the report, she could give Council what the 5, 10 and 1 year average on investment has been.

Mayor Csordas noted he was very happy to hear there was an investment policy, and asked if she developed the investment policy with the recommendation and guidance of Plante Moran. Ms. Smith-Roy said she used the assistance of various communities that she had experience with and that have peers in her group. She felt very comfortable and had two investment firms review the policy for reasonableness, and to make sure they could meet the requirements of the policy. She felt comfortable that it was adequate and was serving the City.

Member Csordas asked how long ago she started that policy. She responded in 1999 or 2000. He said that was extremely good foresight, and he thought everybody should be thankful that she did that because this is a crisis coming down the street, but Ms. Smith-Roy really has mitigated that a little bit.

Member Csordas said Ms. Smith-Roy talked about having the retirees and members have more interest in the consumer driven health care in their benefits. He thought there should be more direction given to that and that could be done through different vehicles, which don’t change the benefits. A health savings account and a high deductible health plan that would save significant amounts in premiums could be used, and the wash could be very good as far as out of pocket expenses for the members. He hoped she would consider that regarding benefits for actives and retirees. He believed it could be negotiated without a reduction in benefits, but with maintenance of benefits with just a little more skin in the game as far as out of pocket expenses for the people in this plan. There is no doubt about it that the increases in benefits year after year are going to exceed cost of living many, many times, and much more than you will be able to keep up with with these numbers. He said these numbers are very good for now, but in two or three years it is going to be different. Over the past five years, we have had almost a 100% increase in health care benefits. Mayor Csordas noted he is in the business and that is not going to change, insurance companies can’t afford it.

Mayor Csordas said the report said "as things change in the future adjustments can be made", and he asked what kind of things she was talking about. Mr. Janssen said they were talking about increases in retiree health care and offering the flexibility to be able to change the plans, have higher co-pays and things of that nature. Mayor Csordas said he was hoping that was what he was talking about because that made good business sense. He said this GASB rule is very good because it brings this out into the open, and there is no question that it doesn’t require funding, but if action isn’t taken when this is exposed shame on you. He said growth has significantly masked this issue in this City, and there has been no prior political will to address this and it has to be done now. Mayor Csordas said it has been a very good presentation, and said when an actuarial study was done he hoped that they get with Ms. Smith-Roy. He would also like to know what their recommendations are in the future to hold this extraordinarily expensive program down.

Mayor Csordas congratulated Ms. Smith-Roy for her prudent financial decisions that would benefit the City. He said she would have to make harder decisions in the future but this is a nice start.

Member Lorenzo asked if Council would mind addressing presentation 3 and then presentation 2 since they are related. Council agreed.

Jenny Walewski, Human Resource Specialist, was present representing the Human Resource Director Tia Gronland-Fox and introduced Paul Kahler, Benefits Consultant.

Ms. Walewski said they had begun the application process for the Medicare Part D Retiree Drug Subsidy and it has also been the City’s recommendation to file for the extension on the application process, which will also be done. Mr. Kahler was present to explain the Medicare Part D program in detail and how the City is planning on communicating that to the retirees.

Mr. Kahler said he would run through the Medicare Prescription Drug Improvement and Modernization Act of 2003. He said this legislation simply created a Medicare prescription drug benefit referred to as Medicare Part D. Historically, people over age 65 have never had access to prescription drug coverage on an outpatient basis. He said that is all changing January 1, 2006 and some 40 to 43 million Americans will be affected by this new law. He said for many of them it will be a wonderful thing because they don’t have access to it today, and though there are still many things to be ironed out there are many things that are certain. This is a tiered benefit and the cost to participate will be about $37.00 a month, and it is a voluntary program. He said it is not the standard $5.00 and $10.00 co-pay and there is a lot more cost from the participant, the Medicare recipient’s perspective, but it is better than zero. Today they have no coverage and at least this is something.

Mr. Kahler began to explain what this would mean to the City and to current retirees. He said presently at the City there are 22 retirees and dependents over the age 65. The City has more retirees than that, but over 65 is the key point here. In 2006 there are 8 more new retirees so there will be about 30 people.

Mr. Kahler explained the subsidy and the affect on the City of Novi. Medicare says if you as an employer, private non-profit municipality, continue your retiree coverage the retiree’s have a choice. They can enroll in Medicare Part D or they can maintain the coverage that the City provides for them. He said after they meet with the retirees, he believed that the conclusion would be they are better off where they are today. As a result, the government will provide the City a subsidy for continuing those benefits. The application process for the subsidy has been started by the City and can only be done on line. The website just became available August 15^th and is incredibly crowded. Mr. Kahler said he confirmed with Ms. Walewski that she has started the process to register for the subsidy. In addition, to apply for the subsidy the application must be in by September 30^th and they are allowing for a 30 day extension. He verified that they are working on the extension also and hoped they wouldn’t need the extension, but were applying as a fail safe.

Mr. Kahler explained what the subsidy meant and how the process moved. He said the City must get an attestation from an actuary indicating that the City’s plan is equivalent to or better than the Medicare Part D program. This attestation could be obtained through a creditable, experienced actuary such as Gabriel, Roeder, et al, Consultants & Actuaries. Mr. Kahler said there are other organizations that could probably do this at a lower fee, and Human Resources will shop to get some bids and quotes for a more aggressive price. Once that attestation, which is part of the application process is done the application can move to the next stage. It will be submitted, and there is data that needs to be sent to Medicare. The way Medicare is calculating an average subsidy Mr. Kahler believes that the average subsidy is about $668.00 per person. It could go to a cap of $1,330.00. As an example using the $668.00 on the 30 retirees projected this year and next we are looking at a $20,000 subsidy given back to the City. This number could be low or high, but those are the numbers that Medicare is saying an organization can look to receive on an average.

Mr. Kahler said it is the Human Resources Department’s role to send the retirees a letter indicating to them that they will probably be inundated with mail about Medicare Part D. He said some of the retirees will probably be confused as to whether they should enroll or not. The letter will advise them to attend one of the informational meetings that will be held here at the Civic Center. Mr. Kahler’s company, J.S. Clark Agency, Inc., and Human Resources are

going to put together a presentation to show the retirees what the Medicare Part D benefits are, and hopefully they will decide they are better off with the City. Mr. Kahler said the retirees don’t have to stay with the City and if some chose Medicare Part D that would lessen the subsidy. He said they will try to contact retirees who no longer live in the area through a conference phone call and will send them additional information. Mr. Kahler said they would also inform them of the importance of not making any decision on enrolling in Part D until they fully understand the implications.

Mr. Kahler said lastly, it is mandated that retirees must all receive a Certificate of Credible Coverage and that tells the retirees that an actuarial study was done and their benefits at the City are equal or better than Medicare Part D. The letter will also explain again what Medicare Part D is all about. The municipality is required to send the Certificate of Credible Coverage out by November 15^th to all employees and retirees over the age of 65. He said he would assist the City and Human Resources in this process. However, the critical component is the actuarial study and getting it done in a timely manner.

Mayor Csordas asked how far they had gotten with the process on line. Ms. Walewski said they developed the account information, received a confirmation e-mail stating they had been accepted, and could now access the site to retrieve the application and the request for extension. She said the website came up at 8:00 A.M. this morning.

Mayor Csordas said he spoke to Mr. Kahler regarding this and was very confident that he is an agent that is doing a good job. He suggested a cover letter be sent with the Certificate of Credible Coverage because it looked as if it was printed off the website. He asked that they look at the certificate because there are things missing that the website recommended. He was very happy to hear that informational meetings would be held.

Mayor Csordas said if a retiree went to Medicare Part D it would penalize the City and made no financial sense for the retirees. As far as the subsidy’s that come back to the City, it is significant and it is going to get bigger as more retirees get there. This money needs to come back and be used on something else. He didn’t want to hear anyone say in the future that the money was saved so it was decided to negotiate and get something else going on.

Mayor Csordas said he appreciated the presentation and to absolutely get prices on this because the entity they had was completely overpriced. He asked that Council be kept up to date and when the informational meetings would begin. Ms. Walewski said as soon as the actuarial attestation was received. Mayor Csordas said they need to get a vendor to do that and asked Mr. Kahler if he was confident that these retiree benefits are as good as or better than the Medicare D. Mr. Kahler said absolutely, and he would recommend to Ms. Gronlund-Fox that the meetings be held in the middle of September and to get the word out.

Member Gatt advised that the retirees of this City meet every second Monday of the month at a local restaurant, and suggested that they might want to go there for the retirees who live in the area. He asked Ms. Smith-Roy what it cost the City in medical benefits today for a retiree 65 years of age or older. Ms. Smith-Roy said she would have to look it up because the premium comes with prescription drug and medical together. She offered to put the information in the Thursday packet. Member Gatt said he would like that because they too pay the 20% that all retirees have to pay, so the City is only liable for 80% of that cost. If we are only going to get $668.00 a year back per retiree, it seemed to him it would cost the City more to keep them than not. Ms. Smith-Roy explained the City would have to pay the 80% regardless and the $668.00 comes back like a reimbursement to the City. She would recommend that it be put back into the retiree health care fund where the expense came out of, but she would look for Council’s direction. Member Gatt said even if a retiree opts to sign up for this, and the City won’t get the money back, the City still has to pay the 80%. Ms. Smith-Roy said what would happen is the City’s mix, because we have over 100 people in our Blue Cross Plan we are essentially self insured, it would come back to us through our rate calculation.

Mr. Kahler said it is in the best interest of the City of Novi to apply for the subsidy for the retirees to maintain their benefits as they are. The City wins by recouping some subsidy for providing the benefit, and the retiree maintains their richer benefit level as opposed to the Part D benefits. He said as an example, for anybody who takes Part D retiree benefit prescription drugs, they are going to be responsible for the first $250.00 of prescription drug costs. Whereas today the retiree might make a $10 or $20 co-pay so for the retirees benefit it is in their best interest. Member Gatt said the retirees understood that too. It has been talked about at several meetings, and they are all aware of what their benefits are, what the governments going to offer them, and they are going to stay where they’re at. Member Gatt said he didn’t understand how it benefited the City to get $668.00 if they opted to leave the City and go with Medicare Part D. Mr. Kahler said if they leave the City’s plan then the City doesn’t get any money. Member Gatt said but they will still be liable for 80% of their medical coverage.

Mayor Csordas said there is no change in benefits for the retirees, there’s no change in their contributions, and the City will probably get more than the $668.00 because the retiree population is a high drug spend entity. It is free money from the government and if they are going to give us $21,000 a year let’s take it.

Member Paul said Medicare does not pay well, they have so many bills and difficulties, and their drugs aren’t covered so initially they might think $37.00 is a good deal. However, in actuality if it only cost them $10.00 for a co-pay with the City it is not a good deal, and she hoped they understood that. She requested a little bit more of a timeline from Mr. Kahler.

Member Paul said if they shop for a bid for the attestation would they risk not having this done on time. Mr. Kahler didn’t envision that. Ms. Gronlund-Fox has been out of town this week but perhaps Ms. Walewski could contact other organizations to get some quotes and bids. He said he has been talking with Novi and other communities on a daily basis to push this through as quickly as possible. Member Paul encouraged them to get some bids so that when Ms. Gronlund-Fox returned it could be done. She didn’t want to miss that window, and she noted she liked Ms. Smith-Roy’s idea of using whatever money the City got back to pay down the debt. She asked how long it would take to discuss this with each person. Mr. Kahler said it would depend on their own situation, and without violating any HIPPA requirements in terms of not getting into their drug spend personal use. Health insurance is a very personal thing but they are going to ask the retirees to come with an idea of what their drug spend is. He thought they would spend about 20 to 30 minutes each. Mr. Kahler said they are willing to do whatever it takes with Human Resources to communicate that.

Member Paul thought when the employees discussed it with Mr. Kahler it would be easy for them to understand, and she hoped they could move swiftly and that administration would keep Council abreast of how many are signing on, how many are contacted, and if there are any problems.

Mayor Csordas said they would understand immediately if they took the chart and showed it to them. If they want to go to Medicare Part D and stay on the plan they would now be responsible for 100% of the first $250.00 and 25% of their true out of pocket expense between $250.00 and $2250.00. Mr. Kahler said they would use the chart in their presentation. Mayor Csordas said it is a big deal and $21,000 the first year is big and that is indexed every year. The retiree population is going to grow every year, and that means that money is going to grow every year.

Member Lorenzo thought this was a very timely discussion and she asked who administered the employee’s health care and prescription benefits now. Mr. Kahler said it depends because some of the retirees are with Blue Cross and some are with HAP, so it depends on the carrier. Member Lorenzo said this will be the choice of the individual employees and retirees, but from experience with her mother and her in-laws dealing with Medicare and their statements, the confusion, and how many times statements were received, etc., she didn’t see why anyone would want to join that unless there was a significant monetary benefit to them. Medicare is so frustrating.

Mr. Kahler said he has met with the retirees at the local establishment and went through a Medicare session with them understanding Part A and Part B. He said a lot of questions were answered, and he would continue to do that.

Mayor Csordas said the carrier of choice around the City is Blue Cross/Blue Shield and asked what are they doing for this. Mr. Kahler answered they were doing nothing. He suggested getting out of this Blue Cross/Blue Shield thing around here, because you can get equal benefits somewhere else. He said the purpose of this program as defined by the website "to provide prescription drug coverage for retirees and their beneficiaries through private insurance plans, Medicare advantage or a state licensed program". The premise is that individual Medicare beneficiaries should have a choice of private drug plans in order to select a

drug benefit that meets their needs. He said the reason is that many companies are eliminating prescription drug benefits for retirees.

Member Nagy suggested that Novi News reporter Ms. Fleming interview the Mayor and have a discussion regarding this because he is so knowledgeable. Mayor Csordas said this agent is a very good agent, is assigned to the company he works for, and he is familiar with his activities and what he does. He was confident that Mr. Kahler was doing the right thing.

Matt Quinn was present representing Triangle Development, noted the first time they appeared before Council they presented a $120,000,000 proposal for Main Street with the City participating with the Downtown Development Authority for some parking structures. He said they took Council’s comments and were to have a meeting August 1^st to try to convince Council about how a DDA would benefit the City and the redevelopment of Grand River along with this project.

Mr. Quinn said Dave and Pierre Nona gave that some thought, and decided not to bring back Plan B but to bring back another plan they thought would work for themselves and for the City. Today they would present a concept plan of a $90,000,000 project along Main Street with the various buildings and improvements, and perhaps the taxes the $90,000,000 would bring in might help the City’s deferred retirement program over the years. Mr. Quinn said he would highlight the project and then answer any questions that Council might have.

Mr. Quinn said besides Dave and Pierre Nona representing Triangle Development they had their planner from McKenna, John Jackson and architect Mark Abanatha, from Alexander Bogart Co. who helped develop the plans and would be involved in the facades, etc. The reason for the parking structures in the DDA was for more density of office use and the proposed hotel, but some of those things have been removed. The plan is down 300 parking places and the existing parking places have been moved around. They felt they still had a great project and a great mixed use program for the City. Mr. Quinn said it would be a good mixture of downtown residential development on the upper floors, first floor retail, and a 70,000 sq. ft. medical office building that will be built as part of first phase. There will be an active community park downtown. The developers know that in order to make a downtown viable, there must be a drawing point such as a park. It will be a year around park and there will be events there as many weekends as possible.

Mr. Quinn said the idea of this project is that the City should not have to fund any of the development. Therefore, Triangle will put in all of the streets, the park, and the parking. He reoriented Council on the plan, and said there is Grand River with Market Street coming in and Main Street, which is the main east west street. Main Street will be improved and enhanced at the intersections with brick pavers and landscaping in the center. Along Main Street is the existing building and to the west there will be a first floor retail with a rooftop amenity such as a restaurant. Going west on the north side of Main Street is the typical building that has retail on the first floor and loft apartments above on the three or four floors. Immediately to the west is the 70,000 sq. ft. medical office building that is ready to go now. Further to the west along Novi Road, which was proposed to be a hotel, is now being proposed as first floor retail with loft apartments on the second floor. On the south side of Main Street from the west there will be a building with first floor retail and apartment lofts above. The second and third buildings will be the same. Mr. Quinn said the park that is now a wetland of low quality will be made to be the amenity that draws people to the entire area. To the south along the new street will be two buildings of loft apartments and in the rear, to act as a buffer to the industrial, will be 46 brownstone condominiums.

Mr. Quinn said the retail would now be approximately 101,000 sq. ft., less than what was proposed previously, the medical office building was 80,000 sq. ft. but will now be 70, 000 sq. ft., and without the hotel there is the opportunity for an additional 50,000 sq. ft of office within this entire area. The residential units stay about the same at 382 units, 328 loft type apartments and 46 brownstone condominiums.

The parking will have 1504 rather than 1834 spaces. They decreased some of the retail, the parking for residential has been moved to some of the green spaces. The road system improvement of the right of way, that the City has now on the north that is

more of an alley, will be improved by north south roadway linkages to give the downtown the usual block pattern. The landscaping will be as required by the City ordinance and possibly a little better than that. He said they would like to have Council consensus that they like this plan tonight so they can proceed and have meetings with the planning department to find out what the best way is to move the entire project forward. They would like to know what amenities, buildings, etc. Council wants in the first phase. There are a lot of decisions still to be made, and Council is the consensus makers who will tell them to move forward. This is a very big undertaking with a build out over 5 to 7 years, and with the road improvements and park coming in the first phase, it is a large expenditure for a development to put up front. Mr. Quinn said they were confident that with the product mix that, in the long term, they will be paid back for their investment and the City will profit from the tax base. Presently the City is getting almost nothing off of this land because it is all vacant.

Member Nagy asked how many curb cuts there are east of Novi Road on Grand River. She was wondering if the new road was necessary. Mr. Quinn explained it would be enhancements to the existing road and is an actual City right of way. Member Nagy asked about the urban park and asked if they would be filling that in themselves, because it is a private area. Mr. Quinn said yes, and they would follow all the rules on mitigation, and if MDEQ certified, they would follow their rules.

Member Nagy asked if they would want financial assistance from the City regarding the acquisition of additional right of ways. Mr. Quinn said they would not. Member Nagy asked if liquor licenses would be purchased outside the City. Mr. Quinn said yes, they would purchase them outside the City following the usual ordinance requirements. Member Nagy said she had been looking at a two story building and Mr. Quinn’s client wants to go to five stories. She said our height limitation is 65 feet and asked if they wanted to go up to 75 feet, and Mr. Quinn said yes, and the reason for that is the first floor retail required higher ceilings. Member Nagy asked about the different levels of the proposed buildings, was concerned with how it would look, and that it would dwarf the other buildings. She was concerned that if a height variance was granted it would set a precedent, and asked if they could accomplish the same thing with 65 feet?

Mark Abanatha, the project architect, said the height proposed in terms of expanding the height of the retail is what will drive the overall height of the building. He said regarding her concern about how it would relate to the existing buildings, if looking at towns across the country there’s a layering of massing that goes on. Member Nagy said that’s true but that’s not Novi. Mr. Abanatha said right, but that’s architecture and how architecture develops. He said they just did a project in Birmingham where the same issue came up, where there was a two story next to a four story, and that is how villages, towns and cities evolve. Small buildings transition into medium buildings, then to large, and it creates more variety and interest. There will be more than one architect on this project to get diversity, there will be layering and massing and it will create a more interesting Main Street than there would be otherwise. He said aesthetically, it will be much more appealing.

Member Nagy said he did have a point and asked how they know that is what the retailer would need or want. Mr. Abanatha replied that a lot of retail spaces are going to taller ceilings, and also going with false second floors to create what is seen in small

town America. He said that give windows above the first floor, which gives height and mass rather than the standard strip mall that is one level with no interest to it, and a flat façade. Member Nagy said she had looked at this for a long time and had a problem with the height, but also agreed with what he was saying in terms of the interest and how cities are. The loft idea is much more urbane than an apartment complex and she felt it would attract certain kinds of people. Her biggest problem is giving the additional height and making everyone else meet the ordinance. She asked what difference it would make if the first floor is 16-18 ft. and add only 3 floors instead of four. Mr. Abanatha said there is critical mass to the project meaning the number of units on the site, and how those dollars and all of that economy works in terms of making the project feasible. Member Nagy stated so it is a financial thing for the developers and Mr. Abanatha said that was one thing and the other was massing. He said for the retail to be successful you want to have people living there and for the office, retail and the residential to all be viable, you need that certain critical mass. The park is the key component. Member Nagy said they could create the same thing by varying heights of the floors. She asked if they were looking for 75 feet for every building they were putting in. Mr. Abanatha said no. She asked what the difference was between the retail building and the residential building. Mr. Abanatha said the existing building has a two story façade and the next building is going to be a one and a half story with roof top, the mixed use medical building will be four stories and other buildings will be of similar height. He said as you transition, the brownstone condominiums will be a two and a half story front and a three story rear.

Member Nagy asked why they couldn’t make the variations in height with the two and three stories versus four stories and meet ordinance requirements. Mr. Abanatha said they are here to discuss the entire project and to get Council’s blessing for

something unique to the City. He said there are a variety of architectural issues going on here. This is a special place and special things can be done without setting precedent for some other site in the City. Main Street and Town Center is something very unique to the City, and was set up that way. The City gets denser and goes from outlying single family to the new Gateway District and on to the Town Center. He thought they could avoid that scenario and yes, there is critical massing as far as density, and financial aspects as to the number of units involved in this project. He said if she was saying they could only go two or three stories then the Nona’s would have to evaluate that. The ordinance allows 65 feet and five stories and all they are asking for is to be allowed to go with the trends of retail and go 10 more feet. He thought that was a reasonable request.

Member Lorenzo shared Member Nagy’s concerns, and in speaking with Mr. Nona today, this is a residential driven project. She said she would not approve the extra 10 feet. She told them her recommendation was to work with what they have and with what everybody else has had to live with. This is not downtown, it is a unique different type of mixed use project, but there are other different types of mixed use projects in the City as well, and they have all had to comply. She didn’t want to set a precedent and didn’t want the buildings any higher than they needed to be. She said she would not move on the ten feet.

Member Lorenzo said overall she appreciated what they had done coming back with this design as it was exactly what she was looking for four months ago; she thought it would

have been much further ahead if it had been presented at that time. Member Lorenzo said In terms of the park and "filling in the wetland", she would be looking for justification for it, and if it is justified mitigation should be two to one. Also, she was very concerned about activities and accidents that could occur on this piece of property and the liability especially with skating. We have to remember the proximity to bars and restaurants that serve alcohol. Unfortunately, not everyone consumes alcohol responsibly. She would rather this piece of property remain private. If they want to allow the public to use their private property, she thought that could be arranged. She understood the idea of a focal point and that they would like the park to be a draw to the area, but she didn’t want any liability or maintenance costs to the City.

Member Lorenzo said in approving the concept, it would be a leap of faith as she is concerned with revolving retail and what that means long term for the developer and the City. We all know that Novi has the biggest concentration of retail in Oakland County, and she was concerned about duplication of businesses throughout the City. She is concerned with what that means in terms of empty store fronts, revolving store fronts, unstable tax base and development. She felt it would be very challenging to retain and maintain small quality business. She mentioned Northville because it is so historic and has been there for such a long time, and they are having difficulty retaining the specialty shops. She felt they were getting mixed messages from the consumers and the residents as they take their dollars elsewhere but like the look of the little downtown. The biggest thing she is looking for is sustainability and tax base. As her previous colleague, Bob Schmidt would say, "it needs to stand the test of time and we need to be able to pay for ourselves at the end of the day". Member Lorenzo asked the developer, first and foremost to make this project as sustainable as possible for the long term. She said she sometimes had these intuitions and knew that Fountain Walk, as a concept, would be a failure in this City and it wasn’t what this City needed. Unfortunately, she has been proven right and she didn’t want that to happen here.

Member Lorenzo asked that Mr. Quinn clarify what he meant when he said they would like "assistance to facilitate the acquisition of additional right of way". She said from the City’s experience in the last several years with 12 Mile, Grand River, Novi Road and Ten Mile and Adell, the last thing this City wanted to get involved in is negotiating for right of way or condemnation.

Mr. Quinn said they were not looking for monetary assistance, however, if the City has right of way, like the dirt road area, they would work with them so they could make it a fit road, and so that it meets City standards, and also the entranceway that comes behind the old Marcus Glass, Sixth Gate St. He said just those types of things that the City has control over. Member Lorenzo said to allow the developer to improve those areas, and Mr. Quinn agreed and she asked that that be very clearly stated and written.

Member Lorenzo said in terms of assistance and approval of liquor licenses, you are just looking for the normal process. Mr. Quinn said she was correct, but there is only one liquor license and he was sure some of the prospective businesses might apply for that, they might also apply to bring available transferred licenses in. Mr. Quinn said the secret to retail is getting the leases signed, getting them to make investments, and time is key to everything along that line. They are just asking the City to be quick in assisting them in those types of things as they have been in the past.

Member Lorenzo advised her preference would be medical offices because they would be beneficial to residents as well as the tax base. Other than that, the things that would provide the highest tax base and most stable use. Member Lorenzo said she would be willing to approve the site plan with all of the provisions and comments placed on the record.

Mayor Pro Tem Landry thanked Triangle Development for coming back with this proposal after not getting a ringing approval of the first proposal with the DDA. The Main Street project was a daring move when proposed a decade ago, and it hit a wall. There was a grand plan to complete it but it didn’t come to fruition, so now we are left with this gaping hole. He said every time a newspaper does an article on downtowns Novi is the poster child for what you shouldn’t do. He said he was getting sick of it. Mayor Pro Tem Landry said they have come with a plan to finish it and he thanked them for doing that. He said he liked the plan and personally liked what they had done with it. He thought they had made it a downtown with the side streets, with the buildings near the road, the amenities that have been put in the plan and he would support the plan. He said he liked the plan very much.

Mayor Pro Tem Landry asked the administration when a site plan comes through, whose call is it on the height, is it Council’s or the Planning Commissions.

Barbara McBeth, Director of the Planning Department, said the ordinance provides the height limitation at 65 feet, five stories. She said Providence Hospital came in and requested a text amendment to allow for additional height and went through the process. The Planning Commission made a recommendation to City Council and Council ultimately made that change just for hospitals. Mayor Pro Tem Landry said it was a text amendment to the ordinance. Ms. McBeth said it was. Mayor Pro Tem Landry said if they are not asking for a text amendment they would have to go to the ZBA for a height variance, and so the ten feet really isn’t even Council’s call. Ms. McBeth believed he was correct.

Mayor Pro Tem Landry commented that the ten feet didn’t bother him because he would like to see this project finished. He thought it was an ambitious project and for him standing at ground level looking up he didn’t know that he could discern a ten foot difference. He didn’t think that ten feet made that much difference. He understood his colleagues concern about precedent and it was a valid concern. However, he thought this was a special project and the circumstances around Main Street would warrant going another ten feet. He felt it wouldn’t be Council’s call but it would be the ZBA’s call. Mayor Pro Tem Landry thought Member Lorenzo’s comments about sustainability were well taken, but thought the residential was what was driving this. He didn’t see a big box store, so they weren’t trying to draw people in from five miles away. The kind of retail they are envisioning is the kind that would be used by all those people living in those loft apartments. They are looking to fill the retail with residential that’s there, which would be sustainability presuming you’re filling the residential. He thought the concept of the skating rink and band shell were wonderful amenities, would draw people in, and didn’t want to see this project without them. He wasn’t concerned about the liability as governmental immunity and insurance policies would take care of that. It is one of the aspects of this that would really make it a downtown, it would be a destination. He encouraged Triangle Development to press on and said he thought it would be a positive thing.

Member Gatt commented he concurred with Mayor Pro Tem Landry’s comments. He said he had been on record many times saying it would never be a downtown and he didn’t think it would, but if this plan comes to fruition it would come very close to being a downtown. Member Gatt applauded their efforts and thought it was wonderful. He asked if the brownstone condominiums would be for purchase or for rent. Mr. Quinn said there may be some mixture of rental and condominium, but the basic intent is for the vast majority to be condominiums for purchase. Member Gatt stated he would support this 100%.

Member Paul stated it was on record that she would be a little more flexible if they got rid of the DDA and is very happy they did. She also didn’t want the liability of parking garages and was glad they were gone. Member Paul asked if the fountain skating rink and band shell would be turned over to the City. Mr. Quinn replied they preferred that it be taken over by the City, but it was open for discussion. She said she was looking at the band shell as a cost measure, and Council has talked about saving $20,000 for the retirees, and that is a cost we will have to pay out in the future. She liked the idea of having it there, but was not sure she wanted the City to own it. She said she liked the decrease in residential and wanted to see the mitigation two to one for the wetland. There was wetland behind the Fire Station and it is gone and it was done for a very small amount and we gave that land to the previous owner of Main Street. She didn’t want to see the same thing happen here and not have the mitigation taken care of, because then it usually causes problems downstream and she didn’t want residents in Novi or elsewhere to have more problems. She asked where the retention basin would be on the site. Mr. Nona stated they didn’t believe a retention basin was needed, because this entire area was originally planned for storm water management without a retention basin, but if needed they will engineer for and provide it. Member Paul asked where the water would be going. Ms. McBeth stated they had not studied this in detail as they received the plans when Council did, but they would get back to Council with the answer. Member Paul wanted to make sure this isn’t going into Village Oaks where we are having all the problems now with dredging Meadowbrook Lake. We have put a lot of money into the dredging, and if the two projects are added together it is over $1.5 million. Member Paul said she is on record saying she also had a problem with the height of the building. She said her flexibility was spacing of the buildings and that type of thing. She noted she was not willing to give on the DDA, parking garages, water and the building height. There are a lot of vacancies and a lot of people are bringing condominiums into this area, and that’s great because that is what the market is driving. She was glad they were bringing residents to the area to help it be sustainable.

However, she didn’t want to see the height. She noted there was an issue near Larsen Jewelry that at the furthest west point of that building there is a temporary wall, because there was going to be another building attached. She asked if that was why building 300 would be additional retail, to take care of that temporary façade wall. Mr. Nona said yes, part of it is to frame that building, and also to frame the street they are planning to put in there. Member Paul asked if this would be one of the first things they would do and Mr. Nona replied it would be. Member Paul stated she appreciated that because the temporary façade is not keeping the water out during storms. She said there’s going to be a lot of residential and restaurants. She had talked with people in their mid twenties

and they were saying this is the new Royal Oak. She said she is looking forward to seeing the amenities of the plan and she liked the turnarounds, monuments and those types of things. She was pleased they were not looking at the Fire Station property. Member Paul said they have done a lot of things very well. She said her last issues were where the water would go and the building height.

Mayor Csordas thanked Triangle Development for taking the comments from the prior meeting and putting the property up for sale. It is a very important part of the City, and Council appreciated the fact they are willing to invest in that area. He stated he liked this project and that it reminded him of Brighton, Dearborn along Michigan Avenue, Ann Arbor and Baltimore areas with people living over retail space. As far as height variations, he understood Council’s concerns, but felt possibly the ordinance should be re-written, because maybe the height restriction made a lot of sense at one time, but may be it doesn’t anymore. However, he also agreed that this is an area that has had duress and he thought some flexibility would be worthwhile, and thought it was a reasonable request. He liked the layout and the way it transitioned. He assumed it would be sewer and gutter and he knew that the wetland was of very low quality. He thanked them for their interest in the City and for their time and hard efforts into this project. Mayor Csordas felt It made a lot of sense having residential over the retail use.

Member Nagy asked Dave Gillam, City Attorney, if there could be an amendment to the ordinance, regarding the height, and that only this area could be 75 feet. Mr. Gillam said that was definitely an option if Council wanted to make a change in the language of the ordinance for the TC-2 District. Council would have to follow the process through a public hearing at the Planning Commission with a recommendation, and then ultimately that decision would be Council’s.

Member Nagy commented she would be willing to go with the height and her concern wasn’t the height. It was for everyone they already said no to before and those who might come in with the same request, but this would be only for the TC-2 area. She was looking for an amendment to the ordinance for the TC-2 area alone, and only for that height. She said that was her suggestion, she liked the concept plan, but thought a special consideration should be made for only this area.

Mr. Nona stated he wanted to emphasize that this is primarily a residential development and the residential component drives the project first, then the medical office building and lastly the retail. He said they are looking at the retail as a bonus component. As a result, he believes they can bring in the retail at affordable rates. Mr. Nona said they plan to have a retail manager/event manager that will identify certain users and specialty retailers they can attract to this area. Since they began working on this project over a year ago, they have developers contacting them for many different things. Some want to buy all or a portion of the land, co-develop it with them, and to do the residential component, and that is why they are a lot more optimistic about this project. The only variances they are asking for is the height and the filling of the pond, which will make a nice amenity. Mr. Nona said they are not asking for any financial assistance from the City to build the roads or the pond. All they are asking is that the City work with them by cooperating on the road improvements.

Mr. Nona said they are not calling this a downtown. They will call it Town Center or Main Street, however they would like it to be a downtown in the future. He said they would like the park to be public, but if that is not what the City wants they will keep it as part of the condominium. He said they looked into the retention basin and it is an engineering issue, and the City can rest assured they will do everything in accordance with engineering standards. He felt this would be a project that would fulfill the City’s vision.

Member Paul commented she appreciated Member Nagy’s comments regarding an amendment to the ordinance for the building height and felt more comfortable that a precedent would not be set. She said when walking in front of the current buildings it is very difficult for wheelchairs to pass. The box that encompasses the trees is huge and she asked if there was some way they could still have their trees, and leave more space for wheelchairs. She felt it would be very helpful and she thought it would save them some money, because it is a lot to put 6 by 6 brick pavers versus 2 by 3 or 3 by 4.

Mr. Helwig said it is timely to seek Council’s authorization to lift the hold on the improvements that were authorized in the budget for Fire Station #1. Council had placed a hold on proceeding with the improvements until matters regarding the Triangle Development proposal and the future use of Fire Station #1 property would be determined. Now that that is no longer being considered for relocation or part of this development they would like to do the improvements this construction season.

Mr. Helwig said Rob Hayes, City Engineer, provided the interim report tonight, administration provided the background, and he asked for Council direction before coming back with a financial plan.

Mr. Hayes was present with Design Engineer Dave Eno, of Fishbeck, Thompson, Carr and Huber. Mr. Hayes said when the project was scoped the concept was to take the two existing lanes and rehabilitate them and add a third lane, which would be a center lane. Mr. Eno has done a geotechnical report and found that the pavement is extremely thin in a lot of areas, the base is very thin or non-existent, and in some areas it is paved directly on expansive clay soils. As a result of that, he said they could not proceed with what they had in mind and the design needed to be altered.

Mr. Hayes stated they are recommending a full reconstruction of the road between Eight and Nine Mile Roads. Mayor Csordas asked if the City was doing business with the people that researched and approved the road back when it was done like that. Mr. Hayes said he didn’t know who did the road originally. Mr. Hayes said the full reconstruction would include undercutting the poor clay soils as needed, adding a good base, and adding an adequate thickness of asphalt. They had priced two different options, one being a two lane full reconstruction or a three lane. The cost difference is about $200,000 to do the third lane and that is what he was recommending. He said this is a significant change in our scope, and there is not enough time to build either of those two options so his plan was to proceed with the design, bid it in the winter and then start as early as possible in the spring.

Mr. Eno said the geotechnical investigation was not shocking in that they found a lot of clay under the pavement, and that the existing pavement was much thinner than they would have expected. There is no rehabilitation to the existing road that he thought would last more than five or ten years.

Member Paul asked if this included catch basins and Mr. Hayes said it included curb and gutter and storm system. She said she appreciated his suggested timing of this project.

Mayor Pro Tem Landry asked where the $887,000 was coming from. Mr. Helwig said they would like to report back to Council on the financial plan. Mr. Helwig said $400,000 comes from the excellent bids received on Nine Mile between Novi Road and Meadowbrook. We are over halfway there depending on which alternative Council would select tonight. He said particularly coming up to next spring they would have more options later in the fiscal year. If needed the next fiscal year could be involved for some elements of it if the funding couldn’t be found in this fiscal year. Mr. Helwig said they didn’t want to presume anything, and they would report back to Council on those details in the next packet or two. Mayor Pro Tem Landry said if the motion was to direct the administration to come back to Council with financials on a three lane road he could support that.

Mr. Helwig said there was a second add on they would like to add at this point. He said there have been numerous e-mails and concerns about the Dunbarton Basins restoration project that was awarded a year ago. A lot of work has been recently resumed, and he asked Mr. Hayes to report on that.

Mr. Hayes said they are dealing with two main issues. First, the drainage problems they have had in the south basin and secondly, the final restoration of the overall site. As far as the first issue is concerned, the problem was they had top soil brought in that had a high content of silt and clay and was not as permeable as it should have been so standing water existed, algae bloomed, and there was noxious odors and other problems at the location. Mr. Hayes said secondly, there is a low flow channel that cuts through the basin and it was cut relatively flat so it didn’t promote positive drainage. He said our consultant, Ayres Lewis, has come up with a solution that has been implemented by now. It consisted of installing a French drain, which is a stone drain wrapped in a geo-textile fabric that follows the spine of that low flow channel to allow positive drainage to our outlet structure. It also involved removing the high organic top soil that was preventing percolation into the sand layer underneath, and then bringing in a sandy loam layer of soil to raise the floor of the basin that would also allow vegetation to grow. Mr. Hayes said all of that has been done over the last couple of weeks and he showed photos about how it looked now.

Mayor Csordas asked if there was any financial recourse because something was done inappropriately. Mr. Hayes said he didn’t believe so. There was no testing done on the top soil, and he didn’t believe there was any testing required in the specifications. It just so happened that we had other issues that compounded the problems such as warmer temperatures, and the fact that the water was allowed to stagnate for such a long period of time really caused the growth of the algae over this summer.

Mayor Csordas asked if it would be a correct assumption that they had a specification requirement for the material that was to be put in there. Mr. Hayes said yes, but normally top soil specification doesn’t tell us the percentage of clay or silt that is allowed to be in it. He said he would look into it to see what the specification called for. Mayor Csordas said he should look into it and use this as an opportunity to change future policy. He said it didn’t make any sense that sand was ordered and we got cement. Mayor Csordas asked him to check into it.

Mr. Hayes showed photos of the site and explained the changes that were made. He said other issues in the south basin that need addressing is completion of the plantings, and there are several other restoration items that need to be addressed site wide. There’s been some damage to private lawns, there are boulders that need to be moved, some reseeding that needs to be done especially on the access and recess routes, and then just general reseeding to establish turf throughout the site. The contractors are continuing to wrap up this part of the work and move on the final restoration. He said he didn’t have an estimate yet, but Ayres Lewis has assured him that the contractor would remain at the ready to complete the work. Mayor Csordas asked if the final payment had been made for that project. Mr. Hayes said no. Mayor Csordas said we don’t want to do that yet do we. Mr. Hayes said no we don’t, in fact all this work was done recently as an addition to the contract, but there has been no close out whatsoever. Mayor Csordas asked if it would be completed this year or next. Mr. Hayes said it would be completed this fall.

Mayor Pro Tem Landry asked what had been done this time to make sure that the top soil is not clay. Mr. Hayes said they have a layer of soil that is real sandy and is a mixture of sand and loam, so there is very little clay or silt content in it. It looks similar to the native sand that exists there and is beneath. Mayor Pro Tem Landry asked if he was saying they tested the soil that was ordered this time. Mr. Hayes said they didn’t perform any tests on it, but could see it coming off the truck that it had a real high sand content. Mayor Pro Tem Landry asked if he was confident they had not made the same mistake this time, and he answered yes. Mayor Pro Tem Landry asked if the French drain clogged up and who would clean it. Mr. Hayes said it is designed not to clog up, and there is various stone inside the column of stone that has been placed in the trench, it is wrapped with geo-textile fabric to prevent the fine particles from entering, but if it needed to be cleaned it would be the City’s responsibility.

Mayor Pro Tem Landry asked if the residents who had sprinklers or personal landscaping damage would be repaired this fall and Mr. Hayes said it would. Ayres Lewis has a substantial punch list of items that are going to be corrected by the contractor, and he would insure that every item gets corrected to its original condition.

Member Lorenzo asked who designed this project and Mr. Hayes responded it was Ayres Lewis. She asked who the construction engineer was that supervised this project, and Mr. Hayes responded Ayres Lewis. She asked what the construction engineer’s function was on the site. Mr. Hayes said it was to provide daily inspections and to ensure the work was constructed per the plans. She asked if that was done. Mr. Hayes said he was not sure of the quality of the top soil and whether or not it met our specifications, because he didn’t know what the specifications said. Member Lorenzo asked about the necessity of the drain and said if there was a grading issue nobody noticed that. Mr. Hayes said they had a survey crew there multiple times, they shot elevations, and the elevations they recorded showed positive drainage towards the outlet. Member Lorenzo asked how that could be; what happened between their shots and the water coming down. Mr. Hayes said a variety of things could have happened. There could have been movement of that top soil during a heavy storm event where things flattened out. She asked if it was being monitored on a daily or weekly basis in terms of environmental changes. Mr. Hayes said not necessarily, the project was substantially complete last fall. She asked what happened between then and now. Mr. Hayes said the vegetation started to take root and the spring rains caused a lot of the ponding to occur. He didn’t believe that Ayres Lewis had a survey crew out there since last fall until they saw that there was a problem with the standing water. Member Lorenzo said it appeared that that was a problem. She said regarding Mr. Hayes statement "when he said vegetation started to take" how did we leave that project. Mr. Hayes said it takes at least two seasons for the vegetation to take root and be significant enough to say it’s a basin that has grown sufficiently and as planned. She asked what type of vegetation was there. Mr. Hayes said there was some wetland plantings and a variety of grasses. Member Lorenzo asked if there were varieties that could be planted that would grow quicker and are larger when planted, and who engineered what would be planted there. Mr. Hayes said it was Ayres Lewis, but he didn’t know who their landscaping consultant was.

Member Lorenzo thought leaving something for two years to grow was a critical error in a situation like this. She said this seems to be a series of errors and she was not at all pleased about it. This is not "shoot the messenger", but she was not happy with this.

She said she would have appreciated being appraised of this situation, because the first she heard of it was an e-mail from a resident. This Council had no idea that this series of events were taking place. She asked that the administration and Mr. Hayes inform Council immediately when something like this is occurring.

Member Nagy said she concurred with Member Lorenzo’s comments and appreciated the residents who took the time to e-mail Council members to apprise them of the situation. She asked Mr. Shipman if he could answer any of the questions regarding planting and vegetation. She said she was looking at the photographs and assumed that grass would be put there. Mr. Shipman said he had not had any personal involvement in this, but in respect to similar types of basins what you are probably looking for is a vegetative blanket. He said the blanket contains seed and mulch within it as it is laid down and then as it germinates that blanket holds the seed down so that it germinates quicker, and it doesn’t run off into the center. Mr. Shipman said different environmental factors determine how fast it germinates. Member Nagy said with the dry conditions we have had, she was concerned that if the vegetation is put down would they have the ability to germinate and grow. Mr. Shipman said typically, depending on the type of fabric put down, it can have dormant seed and other seeds that germinate quickly, but you get more success out of a seed mat rather than plants themselves, because of the drought condition. If you plant plants, they will be severely affected if there is a drought, lack of water or heat right away, whereas the seed will wait to germinate when appropriate. Member Nagy asked if the seed is watered after being placed on the ground to sink it in. Mr. Shipman said it can be watered or be left to what water nature brings us. He said as we enter the fall there will be more rain and cooler temperatures, and you will see more activity.

Member Nagy asked Mr. Hayes what month they intended to do the plantings. Mr. Hayes said as soon as they are done correcting the drainage issue, and they are almost done, they are suppose to move right into restoration. Member Nagy said she would like Mr. Shipman to get a copy of what their landscaping architect is going to recommend, and asked that he take a couple of minutes to look at it to make sure it is something that will work. This needs to be done right, it has been going on for a long time, and the residents have been very patient to say the least.

Member Paul said she was very upset herself, but not at Mr. Hayes. She asked if they were going to pay Ayres Lewis at all for their inspection process. She didn’t think they should get anything for letting this project go two years. She didn’t think they had done their job, and asked that in a Thursday packet Mr. Hayes provide how much has been paid out on the project so far, and how much we have paid on the actual inspection. She asked if they should trust their design as she was not sure she trusted anything they were going to say was working. She said this French drain may or may not work, and now the DPW would have to take care of it. So, every five years they will have to go in with the MDEQ and examine this French drain, and that is what they had to do in Autumn Park at a cost to the City. She said what if this doesn’t work, and stated she would like to hold the money for at least six months or a year, because it took them two years to finish the project. She asked how do we know it won’t fail again. She did not want them to do a quick fix to get out of their own problem.

Mr. Hayes said the solution that Ayres Lewis devised, which he reviewed, attacks the problem in two ways. First, the French drain to allow positive flow towards the outlet structure and second, having a sandier soil in which to plant, which would allow percolation down. So there will be percolation down and movement of the water to the conduit, the French drain, to the outlet. Member Paul asked how thick the sand was. Mr. Hayes said they raised the base elevation about six inches with the imported sandy loam and underneath that is all native sand and is about ten feet thick. She asked if the top soil was completely gone. Mr. Hayes said it was and had been hauled off site last

week. Member Paul asked if there was any expense to the City for that. Mr. Hayes said the contractor had to get a Change Order in order for him to remobilize to the site and do this work. She asked what that meant. Mr. Hayes said in order to get that construction work done we had to amend the contractor’s contract because he wasn’t going to come on site for free and do all this rehab work. Member Paul thought that should be deducted out of Ayres Lewis’ cost because it wasn’t the City’s error. She said maybe that has to come back in the Thursday packet with a Change Order. Mr. Hayes said he would have to determine if this was an error or omission by the consulting engineer, did Mother Nature have something to do with it, and is it something that an engineer should have specified differently. He said he could not answer that at this point.

Member Nagy requested information back on that matter and Mr. Hayes agreed. She said if there is a Change Order that we had to pay for, and Ayres Lewis is supposed to be inspecting all of this, the City shouldn’t have to pay a dime, and it should come out of their contract. She is very anxious to meet with Consultant Review and talk about this. She hoped that final payment could be extended until we are sure this works for the residents, because they have had a painful imposition for two years. She asked that he keep Council abreast of what’s happening.

Member Gatt concurred with previous Council statements, and asked what our legal status is on withholding payment to Ayres Lewis, or some kind of monetary punishment for their oversight. Mr. Gillam said he would have to defer on this until he looked at the contract. In principle it sounds like a reasonable thing to do, but we do have a contract in place and he would have to review that and report back to Council.

Rod Harris, President of the Dunbarton Homeowners Association, was present and appreciated the concern Council expressed regarding the project. He said it has been his responsibility to work with the homeowners who surrounded that project; they originally sponsored it, and had high hopes for the project as a model for detention basins. He said it almost went to a public relations disaster. He said once they recognized there was a serious problem they brought it to the attention of Ayres Lewis and the contractors and to the City. He thanked Member Paul for response to his e-mail and Mr. Hayes who has been responsive, because he wasn’t on the original group that the project was originated under. In fact, he said,

they lost both the City engineer and the project manager for Ayres Lewis during the course of the project. He said they now believed that it was addressed. Mr. Harris had three issues he wanted to leave with Council to really express what they were concerned about as the homeowners association who ultimately have responsibility for the project, as it is on a commons area. Their concerns were: 1) Is there a budget sufficient to manage this project if there are further complications, 2) There is a punch list of items from homeowners who have been very patient not having sprinkler systems working and having damage to their homes, etc. and who are waiting to have the punch list adequately addressed and problems repaired when the project is done, 3) With respect to the project they negotiated with the City of Novi a legal arrangement, and they have terms and conditions around mutual agreement in turn for our providing access to the site. These terms and conditions they believe are now active, and wanted to bring Council’s attention to that agreement. Mr. Harris said the attorney’s office should have a copy on file, and it includes indemnification maintenance for two years as well as ownership of the project as a project manager. Mr. Harris said if needed he could supply a copy of the agreement.

Ted Sledz, homeowner in Dunbarton Pines, showed photographs of the basins from Fall 2002 and through Fall of 2004, and it was still quite green. He said the north basin was also very grassy and in the Fall of 2004, before construction began, it was quite green. The homeowners around the basins were greatly inconvenienced between the bulldozers and double tandem trucks taking out and bringing in dirt, which created a lot of vibration damage, including damage to his pool. Mr. Sledz, showed the south basin and said it was what everybody was worked up about in July 2005. It began filling up and never drained until the engineering firm came back and started removing some of the materials around the drain. He said the drain has a "T" inside of it and it is actually up above the basin level, there is a certain amount of drop to the basin floor and that has been raised a bit but it is still above that. The French drain depends on the water seeping into the sand and if it doesn’t work there will always be water there. The north basin, which used to be grassy, is now barren with significant tree damage on the easement going into there, because of construction vehicles. He showed a photo of the south basin as it appears today. A bit of a joke that goes with it is they have that matting there, and when you look at where the matting was last fall and what they have now, it is barren. He asked if the contractor was doing an adequate job, and if there was seed under the matting. He has lifted up a number of segments of it and had a hard time finding seed. He would like the resources of the City, Council, City Manager and engineering to get this project done and the homeowner’s issues resolved on a timely basis. No more delays or excuses. He said they needed Council’s commitment that this project when completed will provide Dunbarton Pines homeowners and Novi itself with detention basins that are attractive to enhance their homes.

Naimish Patel, 43016 Emerson Way, said Sandy McCarthy, Joseph Crawl and Naimish Patel were board members of Saratoga Circle Homeowner’s Association, homes located between 12 ½ Mile and 13 Mile Roads on Novi Road stated their developer notified them on August 4^th that they would no longer pursue the dedication of streets to the City. This comes after years of verbal and written promises to them and to the City of their intentions to dedicate these streets. We are now left facing a significant financial crisis. The association is not prepared to meet the maintenance needs, snow removal and other expenses of private roads. They have been subject to numerous misrepresentations and false promises for six years and have accepted them reluctantly. He said two weeks ago they crossed the line when they abruptly refused to continue with the dedication of these streets. He said they have retained legal counsel to review the facts, and to confirm their belief that they are being wronged by the builder. After reviewing numerous public documents filed with the City and documents each of them as homeowners signed when they purchased the homes, they have concluded that the builder has violated a Michigan Consumer Protection Act and misrepresented themselves in their intentions of dedicating the streets. On August 12^th their attorney issued a demand letter citing these specific violations demanding they continue the pursuit with the dedication of the streets as they had planned all along. No word has been received yet from the builder.

Sandy McCarthy, 43137 Emerson Way, said the history for the road dedication starts back in 1995, A Revised Area Plan, submitted to the City that states "the Vistas internal roads will be

constructed to the City of Novi’s standards and will be dedicated to the City upon completion." The City has actually approved that document. A 1996 JCK and Associates letter for engineering review of the final site plan for Vistas of Novi Phase II, states "sewer, street and water main must be formally accepted by the City of Novi Council according to the standard policy". A third document, a site plan of the subdivision approved by the City in 1996 states "all alleys and roads are proposed to be public". She said they had a copy of the City of Novi

invoice from May 2005 from Tadian Homes (now Newman Homes per Aaron Staup) for fees relating to the utilities and road review for acceptance of dedication, again proving they were proceeding to dedicate. The attorney has reviewed the condominium documents each of them signed when they purchased, and they believe that the homeowners should have reasonably concluded that the streets would have been dedicated. They have many other documents assuring them that the developer would apply for dedication of streets as of this April, 2005. Her personal notes reflected that they were working on the punch list, and planned to have the streets dedicated by late summer. Until this past April the developer controlled their association board and now the residents control it. Ms. McCarthy said based on these statements and documents, they are asking that the City withhold releasing both the utility and street letter of credits until the builder commits to completing the dedication at their expense. If the builder refuses to dedicate, she asked if the City would consider calling on a portion of the letter of credit to fund completion of the dedication.

Mayor Csordas asked Mr. Helwig to contact these people, do the research on the dedication of the streets, and give Council a report, hopefully, at the next Council meeting. Mr. Helwig said he would like to do that and would like to work with the City Attorney on this matter. Mayor Csordas said that was fine. Mayor Csordas commented that Council appreciated this information and City administration would work with the residents on this and report to Council on the status. Mayor Csordas said they could not comment on this, but that they would support the residents.

Jason Sprague, 29377 Whistler Drive, Vice President of the Camden Court Homeowners Association, said they have the very same issue with the developer who had made numerous representations to their association and to members of the community, that they would dedicate the roads. A couple months ago they promised Mr. Sprague that the documents were being completed and would be delivered to the City within a week, and obviously that has not occurred. He said they have the same documentation available if needed. They are working in conjunction with their sister subdivision and colleagues of Saratoga Circle, obtained legal representation, and have pursued the issue with the developer.

Mayor Csordas asked that all speakers give their contact information to the City Clerk.

Council recessed at 10:07 P.M.

Council reconvened at 10:25 P.M.

Member Gatt removed Item C.

Member Paul removed Items D, J, and L

Member Nagy removed Item O

A. Approve Minutes of:

1. July 25, 2005 – Regular Meeting

2. August 1, 2005 – Regular Meeting

B. Enter Executive Session immediately following the regular meeting of August 22, 2005 in the Council Annex for the purpose of discussing City Clerk and City Manager evaluations.

E. Approval to renew Massage Business License from Gjeto’s Salon & Spa located at 44125 Twelve Mile Road in the Fountain Walk Mall.

F. Approval of appointment of David McLeod (Employee Delegate) as the 2005 City of Novi representative to attend the Annual Michigan Employees Retirement System (MERS) Conference to be held on September 20-22, 2005.

G. Approval of Final Pay Estimate No. 2 in the amount of $2,119.50 to Marc Dutton Irrigation Inc. for the installation of the irrigation system at Community Sports Park.

H. Approval of resolution to authorize the purchase of additional service credit by a City employee.

I. Approval to award bid for ninety (90) pagers for the Fire Department to Advanced Wireless Telecom, the low qualified bidder in the amount of $32,219.10 in addition to a trade-in of $35 per current working pager.

K. Approval to award bid for liquid calcium chloride to South Huron Industrial, the low bidder, based on unit pricing.

M. Approval of request for a Fireworks Display Permit from Blair Bowman of TBON, L.L.C. to be held at 46100 Grand River for Rock Financial Showplace grand opening, on August 27, 2005.

N. Approval of final Pay Estimate No. 1 in the amount of $88,328 to Stress Con Industries, Inc. for the fabrication and delivery of pre-cast concrete box beams for the Meadowbrook Road Bridge Replacement Project.

P. Approval of Claims and Accounts – Warrant No. 703

Mr. Helwig commented that Bruce Heckman and John Eggert from the Taubman Company are present and he wanted to recognize them because they worked very hard on both these matters.

Mayor Csordas thanked Mr. Heckman and Mr. Eggert and wished them luck. Mr. Eggert said Dan Jones was also present.

Member Paul asked if it was a six month extension. Mr. Gillam commented there were a couple different extensions involved here. The three issues identified in the inspection were:

1) Landscaping issues – Those will be completed within six months of the issuance of a temporary Certificate of Occupancy for the Retail East with a no later than date of February 1, 2008.

2) Soil Erosion and Sedimentation Control Measures – Those will be installed by August 19, 2006 and there is a maintenance and repair obligation that will continue until a final Certificate of Occupancy is issued for the development.

3) As Built Construction Plans – These would have to be submitted for the City’s acceptance prior to the time that the City actually accepts the utilities with a no later than date of December 1, 2005.

Mr. Gillam said they are talking about more than a six month extension date.

Member Paul asked if this had to be specified in the motion. Mr. Gillam said it was spelled out in the agreement, and all that is needed is a motion to approve the agreement.

Member Lorenzo commented that Mr. Schultz did a very good job and she appreciated the amendments that he made. Mr. Gillam said he would pass that along to Mr. Schultz.

Member Lorenzo commented she had questions for Mr. Shipman regarding page 5, #11 that states "in situations where sidewalks are not required the trees shall be placed midway between the curb line and the right of way line where possible". She said Mr. Shipman’s memo did explain that they are not straying from the City’s policy of trying to have a canopy affect where the street trees are planted. She asked if this was to be for mainly non-residential situations. Mr. Shipman said yes, the reason for this clarification was that the language in the ordinance referenced the area between sidewalk and curb. He said in the Light Industrial complexes or Light Industrial subdivisions or developments there is no requirement for sidewalks. He said there was some confusion where somebody might come back and say the ordinance says between sidewalk and curb and they have no sidewalk, so therefore they have no requirement. This is to correct that by saying in situations where there is not requirement for a sidewalk, you are still obligated to place that street tree between the right of way and the curb as a defined area.

Member Lorenzo said her concern was more with residential neighborhoods where, for example, in the RA District sidewalks are not required. In that situation, would it be placed between the curb and right of way. If that’s the perimeter then a tree could

potentially be placed where it would never grow into a canopy affect, because the distance is too wide.

Mr. Shipman thought they could still get the same affect. There is still a street tree requirement within the Subdivision Ordinance that places trees at a rate per lot frontage without necessarily specifying the area that they are in. It would still be the same affect,

and we would still have the same street tree application that you have been seeing throughout the City. Member Lorenzo asked if it would make any sense to specify that this is for non-residential projects. Mr. Shipman replied that they could consider adding that if it would make it clearer. Member Lorenzo thought it would, and she would be more comfortable with it added. She didn’t want to confuse anyone. She said in her own subdivision she is on a collector street, and it has a large right of way and if you place the tree between the curb and the right of way you’d be halfway up her lawn. It wouldn’t be almost at curbside and also in other situations, especially RA, where sidewalks are not required. Mr. Shipman said depending on whether it is a subdivision or if it is an individual lot.

Member Lorenzo stated she could approve this if the approval was subject to #11, on page 5, being further clarified and defined. She said she trusted that between Mr. Shipman and Mr. Gillam they could come to a reasonable conclusion on this. She asked Mr. Gillam if he was satisfied with that. Mr. Gillam replied that would be fine but wanted to indicate that the language could be changed now, Subsection 11 could read "where sidewalks are not required on non-residential sites". Member Lorenzo asked if Mr. Shipman thought that could be done and he responded yes, and he would continue to work with Mr. Gillam regarding the language and whether to cite specific districts. Member Lorenzo said that’s fine. The maker of the motion agreed.

Mr. Helwig commented he had talked with most members of Council and they put their comments on the record when this was discussed. He said they had heard that there is strong consensus of Council that street trees shall be the City’s responsibility. He said they would like further discussion on that tonight or some direction to that effect. Member Lorenzo asked if a motion would be sufficient. Mr. Helwig said it would be very helpful to get us off of any 50-50 discussion or expectations.

Mayor Pro Tem Landry said there is an Ash tree schedule by subdivision attached to packet information, and asked if they were voting to approve that. Member

Lorenzo said that is correct; we are approving the planting plan.

Member Paul advised Council that she had an e-mail from Elizabeth Wolf-Brusher who asked for questions to be answered on the record. The first question was the budget for the tree replacement is $793,000, and she asked who is responsible for coming up with the plan and executing it. She also said the plan for the subdivision streets, in terms of the estimated cost per tree expense, is $325.00 per tree including labor. She wanted to know what types of trees, and the expense of the tree replacement for the homeowner’s association if they want to do it. Also, who would be contacted if the City is going to be working in their subdivision?

Member Paul asked Mr. Printz and Mr. Lewis who was responsible for coming up with a plan and execution to replace all these trees. Mr. Printz said the Forestry Division will be responsible for the plan and execution. He said it is fairly detailed in the outline that Council received planting 800 trees this fall and 1,600 in the spring. She asked if there was a plan of who would get the 800 trees. Mr. Printz said the plan is to go into one subdivision and complete it and to go from subdivision to subdivision. Member Paul said when they had been in the subdivisions there have been some problems. She said Christina Lane is the one that comes to mind, where they gave one tree to one person and three to another person. She said that caused great conflict and she didn’t want to pit neighbor against neighbor. She wanted a street or subdivision, and get it done and get out of there. Mr. Printz agreed and said that’s what they are proposing. She asked what types of trees they would get and who decided that. She said Member Nagy had brought up the aphids on the Locust trees. Mr. Printz said with any given species there are potential insects and diseases that might affect them. He knew there was concern about Locust trees that do succumb to aphids, leafhoppers, etc., but they are a good street tree and not overly planted in Novi, but would potentially be planted among a number of other trees. The important thing to keep in mind is that we have lost one of our greatest street trees in the Ash. Now, we are trying to diversify as much as possible, and by limiting ourselves with certain species we’d be putting ourselves in the same position we faced with the Ash. He said diversifying the trees will help eliminate that possibility. Member Paul commented she liked the diversification, and she has Locust trees that are all pretty much dead.

Member Paul said another question was what portion of the expense of the tree replacement would be covered by the City, and Member Paul stated it would be completely covered by the City. The resident also wanted to know who they would contact. Mr. Printz said he would make the initial contact with the associations and let them know when they would be in their subdivision. He would notify each individual resident with a door hanger that would advise them that within the next couple of weeks they could expect to receive a tree. Member Paul asked if there would be instructions on how to care for the tree and Mr. Printz said that information would all be on the door

hanger. Member Paul said there was conflict on Christina Lane because they were told not to water the trees and it was 90 degrees and a portion of those died.

Member Paul asked if the City would retroactively reimburse individual homeowners and subdivisions who have replaced their trees. Member Paul said her answer was no, because they chose to replace the trees before the City could get them. She asked if she was correct and Mr. Printz said she was. Member Paul asked if the plan would be communicated any other way. Mr. Printz said they would use the media, newspapers and anything that is available to us including working with Sheryl Walsh and Cindy Uglow regarding e-mailing the associations.

Member Paul asked if a company would be contracted to do this. Mr. Printz said yes.

Member Nagy stated she also received a call from this lady and asked her to e-mail everyone including Mr. Printz. She asked if he responded to her e-mail and he replied that he did. She said on Meadowbrook Road between 12 and 13 Mile Roads there are a lot of young trees and they all have Gypsy Moths on them. She said they need to be cut down because the moths destroyed the trees. She was at Lake Shore Park over the weekend, and where the plantings are along Mr. Stopinski’s property there is a completely dead evergreen there, and suggested they might want to remove it.

Member Nagy said she was on Cranbrooke and her association had hired the man that Mr. Printz suggested to inject the trees. Unfortunately, they can’t get a hold of him, and there are Ash trees that need to be removed along Village Wood and Cranbrooke. She brought up the Locust because in her court she has Locust, they are sprayed for aphids all the time, and they tend to have a lot of debris in the fall. She said that’s why she thought a substitute would be good. Member Nagy was glad to see Village Wood and Cranbrooke on the plan because the previous forester had planted Kentucky Coffee trees, which are not native to Michigan and every winter, even though the tree has grown in height, the branches break. She said before Mr. Printz became the forester there were trees due in that area. She saw that there were 30 trees for those streets, and she would like to see more, because the Kentucky Coffee trees are going to die, and some are already half dead. She asked that he check into that.

Mr. Helwig said in terms of preparations for the possibility that Council might wish to proceed with the planting of 800 trees this fall, it would be the largest seasonal planting in several years. He said they have taken the liberty of asking the Purchasing Manager Carol Kalinovik, rather than the forester, to do a wide notification of suppliers because Council was discussing this this evening. He said this put them on notice that we might be coming out to them tomorrow and the timetable, if approved tonight, is to open bids the Thursday before the September 12^th Council meeting. This also gives them the better part of two and a half months to get all this accomplished this Fall and do a first class job.

Member Paul asked if there would be a construction engineer on site.

Mr. Pearson said it will be overseen by URS and there will be construction observation, notes and daily logs to assure it is done to plan. She asked if there are hidden costs with URS, because they have had issues with hidden costs in their contracts. Mr. Pearson believed that the information was that we were concerned about the completeness of some of their other proposals. This was a complete proposal and our City engineers followed up and said, after meetings with their contacts, that their future proposals are expected to meet that same level of correctness. She asked how long the project would take and if there was an incentive to finish before that. Mr. Pearson said there are no incentives built into this contract, but one thing they did flag was possible concern about getting some availability of the chip seal that would be part of the restoration. He said they have in the contract documents that they are to complete this project by the end of the fall. Member Paul stated she didn’t like these open ended contracts and it would be an issue for her, now we have Dunbarton Pines behind us.

Member Lorenzo asked if she understood Mr. Pearson correctly with the voice mail he left her that this project’s TCO is expired. Mr. Pearson said that is true, as we noted with the sign request of the dealership that the TCO expired August 13^th. They are between either getting their full C of O or having to come before Council for a completion agreement. They’ve got to complete this acceptance of the utilities, which is a requirement before we can issue a full C of O. They also have five items, none of them life safety, but all of them need to be done ranging from some documentation, CD Roms for as-builts, which was submitted once but were incorrect, and backfill preventer on lawn sprinklers. They either need to get this done once and for all or they are going to have to come to a completion agreement like Retail East. Mr. Pearson said the Building Department can’t issue another temporary C of O under the new ordinance, and that is why they are in this no man’s land. He said they would emphasize to them again that it is their obligation to get this done and they have to get it done or come back before Council.

Member Lorenzo said they are not in no man’s land it is expired. Her concern is how Council treats people fairly and consistently, and when the T C of O is expired how can we leave them open for business.

Mr. Gillam said technically they are in violation if they don’t have a valid C of O. Member Lorenzo asked what happens when they are in violation, and are there penalties involved. Mr. Gillam said it would be a District Court action, and would be a question of enforcement at this point in time. Member Lorenzo asked what was being done to enforce this situation. Mr. Pearson said it expired August 13^th a little over a week and a half ago. They did submit the documents and they were rejected as incorrect. They have submitted plans for the rest rooms, and they do have to build a sidewalk. So either they will have to show that this is done in the next two weeks or the City will have to take them to District Court. Member Lorenzo said then we are giving them 14 days. Mr. Pearson said that has been his direction to the Building Department after talking to them. The largest time frame item they have to do is to build a sidewalk and he didn’t have an answer on when that would be done. Member Lorenzo asked why it hadn’t been done and Mr. Pearson said she would have to ask the applicant.

Member Lorenzo asked to talk to the applicant and asked him what the problem was.

The applicant, Scott Riddle asked which sidewalk they were talking about and Mr. Pearson said there is a sidewalk on the Meadowbrook side that needs 120 to 150 feet to bring it to the property line. It is on the site plan but is not constructed.

Mr. Riddle said he wasn’t aware of any sidewalk on the Meadowbrook side that is not constructed. Member Lorenzo asked who the project manager was that was supposed to oversee this. Mr. Riddle said the sidewalk would have been put in by the general contractor who is Schonsheck. Member Lorenzo suggested he get in touch with Schoensheck and address this immediately, because he can’t be treated differently than anyone else. She said

Council could give him two week to get everything straightened out, but beyond that we would have problems. Mr. Riddle said everything else that was mentioned is completed and the only question he had was the sidewalk.

Mayor Csordas said there has been some miscommunication.

Mr. Pearson said he got the information from the Building Department this afternoon. As Council knew with other dealings with this project there have been several items that needed to be done, documentation and all kinds of things. It has been a struggle. He said at the next meeting they will either be before Council with a completion agreement or it will be done.

Member Nagy said Mr. Pearson has the information from the Building Department and she was a little concerned that Mr. Riddle was not aware of these things, and that the concept plan initially brought to Council was not built. She thought Council had been very generous. She said she wanted to see Hummer comply with the requests of our City and was disappointed, because it has not been an easy road. She thought the City had been very compliant in getting their project done. Council has moved this along and now it is Hummer’s time to move it along, and get it done in the two weeks time. Let’s not have court action or anything like that.

Member Paul commented that there wasn’t a failure to communicate on the City’s end. She said they were before Council looking for a sign, and very specifically our administration said they have been very non-compliant regarding these items. She said that was more than a month ago, so she did not have the ability to be lenient at all. She thought in two weeks that sidewalk ought to be done, that is doable, and you can get your contractor there, but that is something Council counts on. She said they gave Council a site plan and some things were changed. Council even talked about possibly a sidewalk or bike path going behind the building to the rear where the conservation easement is, and that was changed, and the concept plan was changed. She asked Mr. Riddle to please do what he is supposed to.

Member Gatt commented that he pulled this because he wanted a report from the Police Department. He said every month Council gets a report on the activity at the Post Bar, and they are getting numbers there that he was concerned about and he’d like to talk about them tonight. Member Gatt asked what kind of report is the Police Department getting from O’Tooles. Deputy Chief Molloy said since their last arcade renewal in 2004, recently

some decoy inspections were done and they passed. They also passed their quarterly liquor inspections throughout the year. They did have one complaint in February where it was

alleged that one of their waitresses was topless, and covered with latex paint with tens of strands of beads covering her breast area. He said they did cite a Liquor Control Commission violation with the State of Michigan, and unfortunately they denied it for lack of evidence. He

said that was the only thing they have had since the last time their license was up for renewal. In terms of the O.W.I. tracking he believed they had 13 this year, but typically come in around one or two O.W.I.’s per month.

Member Gatt asked about the Post Bar activities. Deputy Chief Molloy asked not to be quoted, but he knew earlier in the year they were high, but as far as having 10 or 11 in January and February he said he thought they had been down in the 4 or 5 area per month. Member Gatt thought they were a little higher than that last month. He was concerned that the police are getting one or two drunk drivers a week out of there. He asked if that area was still being patrolled vigorously. Deputy Chief Molloy said the Post area as well as Lucky’s and Tequila Rain area.

Member Paul said she knew that Lucky Strike and Tequila Rain have now beat Post Bar in some of their problems, and she suggested that a joint report be done. She didn’t think it was fair just to look at Post Bar, but to all the other problem areas.

Member Paul commented that this site was done by a court order, but it is poorly designed and poorly run, and not that safe either. There are mesh fronts that goes between where the bleachers are and they back up against one another, and there are some areas where the fence is not adjoined to the post. She said they keep getting things for their business establishment, and suggested that a building inspector visit this site. She didn’t want to see anyone get hurt. Member Paul requested this item be postponed until an inspection could be made by the Building Department.

Member Paul said Walden Woods had Arcadia done in the beginning of last year, and one of the residents contacted her saying there was pitting and problems in the back cul-de-sac already. Member Paul wasn’t sure she wanted to release this last amount until engineering or the DPW looks at it. Mr. Hayes said the engineers are responsible for all construction projects. JCK has inspected everything, but there might have been problems that have developed since their last inspection. However, we do have a maintenance bond, so if it’s determined that it is a material or workmanship problem we can always pull the bond to get that corrected.

Member Paul asked if the check should be issued or should they postpone until September 12, and have Mr. Hayes re-inspect this. Mr. Hayes said he didn’t know the extent of the problem. Member Paul said they are saying it is quite extensive as it is a very wide and long cul-de-sac that abuts a wetland. She would like to hear back from Mr. Hayes before issuing any more money.

Member Paul commented that this is for JCK and she thought it was for John Carlo. Mr. Hayes said JCK was the construction engineer. She wanted to postpone until Council heard back from the Engineering Department to see if this is a fact, and what needs to be done with the payment.

Member Paul stated she wanted to receive the $20,000 grant money for the City, but this is going to go along with the plantings for this fall. Mr. Printz said she was correct; it would be included as part of the plan and part of the replacements this fall or next spring.

Member Nagy said she received telephone calls from residents and went out and inspected Pioneer Meadows. She asked if this was the same contractor that did Pioneer Meadows and

was advised that they were the sub contractor. She asked who the next lowest bidder was and thought they were $7,000 less. Mr. Hayes said that would be underground contracting, which is over the engineers estimate. Member Nagy apologized and said they were $7,000 higher. She asked Mr. Hayes what the condition of Pioneer Meadows was in his estimation. Mr. Hayes said he had heard various reports from various people. He knew there was a problem with a sink hole in the street and that was corrected by Coop-Arz, and there are other depressions or sink holes at the edge of the right of way off the pavement. Member Nagy said there is a big chunk missing now with stuff around it located on the north east area. She knew there were a lot of complaints like they tore down the power line, dug up the gas main, the work was poorly executed, and the clean up was very poor. She didn’t think they compacted the backfill correctly from what she remembers as well. She asked Mr. McCusker if he had anything to do with this. She asked if he looked at some of the stuff where there were problems.

Mr. McCusker replied they cleaned up some of the problems, but there are still a few others on a punch list that aren’t complete. Member Nagy asked if there was a bond and Mr. McCusker said there was a bond. Member Nagy asked if he pulled the bond. Mr. McCusker said he had asked the attorneys and Mr. Schultz has been working on that. He said it was not the contractor that is named it was the general contractors bond that they are pulling.

Mayor Pro Tem Landry said he thought Member Nagy made a lot of sense, but was concerned that this is not City money. This is the resident’s money because they will have to pay the City back. We are talking about spending $7,000 to $8,000 more, this is an SAD and they will have to repay this money. He said he heard what she was saying 100%, but it is not our money we are spending. She asked how many homeowners they were talking about. Mr. Hayes said there was a total of nine parcels. Member Nagy said it would be approximately $800 each. She asked how the process would work.

Mr. Helwig said he would call on Ms. Smith-Roy because she has been involved. He said they had this discussion at leadership group about this firms past work, and the feeling was it was more on the general contractor than it was this firm.

Ms. Smith-Roy said with regards to the roll there would not be sufficient funds currently so the homeowner would have to be reassessed for this difference.

Member Nagy said what bothers her about this is for those who live there it was a combination of the engineering firm, Ayres Lewis, as well as this company. Their complaints were in regard to both, it wasn’t just one. Mr. Hayes said the entity that is being held responsible for any problems with Pioneer Meadows is not Coop-Arz, it is Thompson McCulley, the prime contractor. Legally, we can’t go after anyone else other than the prime. Member Nagy asked who designed this water main extension project. Mr. Hayes said this project was designed by

JCK. Member Nagy said we are not going to run into a problem like we did with Pioneer Meadows where there was a design by JCK, we paid extra money through Ayres Lewis, and they threw it out and did whatever they did, and we ended up with tons of problems. If that design was good and you as an engineer saw it yourself, I don’t want to get into the same situation. Mr. Hayes said they have a consistent approach where the same engineering firm that does the design also does the construction engineering. She said so JCK designed it and they will be doing the construction engineering. Mr. Hayes said yes. Member Nagy asked if the oversight of the project would also fall upon JCK. Mr. Hayes said they would do the daily inspections.

Member Nagy withdrew her motion and made another.

Mayor Pro Tem Landry said his understanding is that the contract for engineering consulting services came out of Consultant Review Committee with a two to one recommendation for Spalding DeDecker, and came to this Council and died. He asked for an agreement of Council to bring it back for reconsideration. He asked what happened, and if there was a contract with someone.

Mr. Helwig said we are working day to day with the existing contractor, Ayres Lewis, they were not replaced.

Mayor Pro Tem Landry said when it came back from consultant review and the recommendation from them wasn’t approved by Council it just died. He asked if it could be moved for reconsideration.

Mr. Gillam said it sounded like they were technically past the point of reconsideration, but the motion would be some kind of motion to rescind the prior action, and that would get it back in front of Council.

Member Nagy said they have updated the Master Plan and she wanted to ask Planning Director Barbara McBeth whether or not they have also updated the zoning to correspond with the new Master Plan.

Ms. McBeth said the zoning map is updated periodically, for example after tonight’s action to rezone the property south of Twelve Oaks Mall, the zoning map will be updated to include that modification. Member Nagy asked if it would coincide with the new Master Plan. Ms. McBeth said that one was in conformance with the Master Plan.

Member Lorenzo said as rezoning occurs the zoning map is updated.

Member Nagy said she was going down Grand River and saw that the Paradise Fun Park has been done and there is a waterfall out front, and she thought it would really look nice if it was lit. She asked if there was an ordinance against up lighting. Ms. McBeth said the ordinance that is in place for exterior lighting prohibits up lighting into the night sky. Member Nagy said wouldn’t it stay within the waterfall. Ms. McBeth said if they want to submit a plan that would show how it could be lit without excess light going into the night sky she would take a look at it. Member Nagy asked if down lighting could be used. Ms. McBeth said there are specific standards in the Zoning Ordinance that limit light that goes off site including light that goes up into the air. They could have some lighting in that area and she would probably recommend that, but it would have to be reviewed under our ordinance standards. Member Nagy asked her to e-mail which ordinance it was so she could look it up. Ms. McBeth said she would.

There being no further business to come before Council, the meeting was adjourned at 11:22 P.M.

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Lou Csordas, Mayor Maryanne Cornelius, City Clerk

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Transcribed by: Charlene Mc Lean Date approved: September 12, 2005