SPECIAL MEETING OF THE COUNCIL OF THE CITY OF NOVI

THURSDAY, APRIL 13, 1995 AT 7:00 PM EDT

NOVI CIVIC CENTER - ACTIVITIES ROOM - 45175 WEST TEN MILE ROAD

The meeting was called to order at 7:00 PM with Mayor McLallen presiding.

ROLL CALL: Council Members Crawford (present), Mason (absent), Mitzel (present), Pope (absent), Schmid (present), Toth (present), and Mayor McLallen (present).

Present (5) Absent (2-Mason*, Pope*)

* Council Members Mason and Pope arrived at 7:15 PM.

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APPROVAL OF AGENDA:

Mr. Kriewall asked that a MERS Resolution be added as item #12 and David Fried asked that an Executive Session be added to discuss settlement of a lawsuit. It was noted that an Executive Session could only be held tonight with the consent of the two absent members who were expected shortly so the council would vote on this issue when they arrived.

Councilman Crawford said if the title of this meeting was a

regular meeting to discuss budget, they wouldn't have to go through all this. He asked if they could schedule more regular meetings next year and the agenda need only consist of budget items.

PROPOSED BUDGET REVIEW

1. Assessor

Jim Klausmeyer said the one thing he wanted to address was his request for an additional staff person which was removed by Mr. Kriewall. He commented that Department Heads were told to make their pitch to council for a decision on additional personnel.

Council Members Pope and Mason arrived.

Mr. Klausmeyer referred to a graph showing the percent of new construction - new dollars coming into the budget. In 1988, approximately 65% of new dollars was commercial/industrial while in 1995 over 90% is new residential. In 1988 approximately 45% of the city's SEV was residential and with what has occurred over the last 7 or 8 years, the current SEV is approximately 55% residential. Mr. Klausmeyer said essentially what that meant was that the homes were getting more complex and that put some stresses on the field work. He said that under State tax law 4026, they are required to go through the entire city every five years, and they have not been able to do that. He noted that there were approximately 4,700 new detached condo or single family home sites that would be available for construction in the subdivisions that were coming on line during the year and this represented approximately half of the inventory currently on stock. The cost of one additional staff member was figured at a first year cost of $45,675 including salary, fringes and equipment.

Mr. Klausmeyer said that Councilwoman Mason requested a review of tax tribunal losses and those figures were depicted on the handout. He said that the bulge hit in 1993 and the unsettled cases were diminishing and he would expect future litigation fees to diminish somewhat. He noted that they just finished the Sears case and Lord & Taylor were coming in Thursday; Mr. Koster has been requested to assist as Dr. Barr did on the Sears case with fees.

Councilwoman Mason asked how the school helped on the Sears case, and Mr. Klausmeyer said they gave the city $25,000 which offset the fee of $75,000.

Ms. Mason asked why they weren't hiring people who were already educated in assessing; she said three times they have paid for education and those people were no longer there. She felt when the city paid $400 or $500 for education, the employee should have to agree to pay that money back if they left within a year.

Jim Klausmeyer said in the past they have hired an experienced field appraiser but it didn't work out and the person was let go. Currently, one appraiser comes from Farmington Hills and has worked out well, and the others have come from secretarial positions within the city. He said the education qualifications presented the best service possible to the citizens, and he noted that every staff member including the secretaries were certified at his insistence so they could answer calls and help with the counter traffic in an intelligent, competent manner.

Councilwoman Mason asked if he saw a problem if the city had a policy where if someone took a class and left within a year, they had to pay back the cost. Kathy Smith-Roy noted they had that policy right now for college classes, and Councilwoman Mason said that didn't cover assessing classes. Jim Klausmeyer said he had no objection to that stipulation.

Glenn Lemmon said people stay or leave for personal reasons

but as far as educating employees, the Assessing Department deals with the public generally in volatile situations every day and you wanted knowledgeable, educated people dealing with the public. He said in the ten months he has been with the city, one clerk has received her Level 1 and next month that clerk and an appraiser will be going for Level 2 and this has been done at no cost to the city. Mr. Lemmon explained that he was a State certified appraiser/assessor and has done some teaching at Henry Ford and Schoolcraft College and has passed along his notes and helped these employees at no cost to the city. He also noted that once a person was certified, they were required to take classes on an annual basis to keep that certification up.

Mayor McLallen suggested that this issue be sent to administration to clarify how it fit into the current administrative policy and bring that back to council.

Councilman Toth asked that the Assessor provide council with a memo and perhaps a spread sheet on all staff members as to what training they should be having on a year to year basis, what organizations they belonged to and maybe they could finally put this to bed because it sounded like this was an ongoing process. He suggested that it be updated yearly for council as to who had to attend classes, what levels people were at and where he would like them to be. Mr. Toth noted that there was a lot of money for conferences, workshops, memberships, etc. and if the assessor could show them what he was doing with his people, that would solve 99% of the problems and questions.

Mayor McLallen said that prior to all members being present, the city attorney requested that they change the special meeting agenda to include an executive session tonight for litigation matters.

It was then,

Moved by Councilman Toth,

Seconded by Councilman Mitzel,

That the agenda be amended to schedule an Executive Session to be held immediately re pending litigation and to add item #12-MERS Resolution.

Yes (7) No (0) Motion carried unanimously

Council moved to Executive Session re Pending Litigation.

Council returned from Executive Session.

It was then,

Moved by Councilman Mitzel,

Seconded by Councilman Crawford,

That the agenda be amended to add Authorization of Settlement re Rose case.

Yes (7) No (0) Motion carried unanimously

It was then,

Moved by Councilman Mitzel,

Seconded by Councilman Crawford,

That the city attorney be authorized to accept the settlement in the Rose case in the amount of $325,000.

Yes (7) No (0) Motion carried unanimously

Councilwoman Mason left the meeting.

Councilman Toth resumed the floor. He said what he would like from the Assessing Department was a breakdown of the staff in a professional matrix as to what each individual required for their level of professional ability to either increase it in the future or maintain it. If they were on a professional trail that year to year had them attending so many classes and belonging to so many professional organizations a matrix laying that out would answer a lot of council's questions.

Mayor McLallen said there seemed to be an issue of the cost of continuing education for members of this particular department because this department had very special needs and furthering that, Mr. Toth would like the department to lay out those needs and costs. She said further was the issue brought out by Member Mason whether this department should have a variance or leave from accepted administrative policy which said that employees who received an education but left city employment within a specified time should reimburse that cost to the city. She asked if all of that should be put together and sent to the administration on behalf of the council.

Councilman Toth said right now his comments were directed only at the Assessing Department but as far as reimbursement if an employee left within six months or a year, he felt that should be a city wide policy. Mayor McLallen said apparently it was; she just wanted it clarified so could they use his route to send a message that they would like all this clarified and brought back to council and Councilman Toth agreed.

Councilman Toth said the chart Mr. Klausmeyer showed them on new homes showed they had gone from 30% to 90% of their work effort in the past five years and he sensed there were some problems in handling that but he had an opposite feeling. These were all new homes and prices were already set by the seller so it should be a relatively easy matter to find out prices and set the assessment level based on those prices plus with the turnover, they could work out a percentage fairly easy and do increment increases per year.

Jim Klausmeyer said but the statute said they had to establish a file card, and they use a cost approach and then compare that with the sales that occur in the market place. He said to take a sales price as an estimate of market value wasn't necessarily so. Mr. Klausmeyer said they were constrained by some guidelines and rules that say they have to maintain files, do the drawings, and estimate the market and adjustments had to be made annually. He said ideally the selling price and the assessed value of a property would be exactly half and the distribution around that 50% was where the quality assessment came in and that was where the training came in.

Councilman Toth said his only thought as a lay person not in the assessing field was when new homes were being sold, the department saw the set prices coming in. Mr. Klausmeyer said there were 1.600 sales in the city last year and 500 of them were new houses.

Councilman Toth questioned the large amount in pensions for the coming year - from $11,700 to $20,500.

Les Gibson said that was right off the actuary and that was something that would be seen in all departments. He said for several years there were excess investment earnings and for a few years, the city did not have to make any contribution. Now the city was being phased back in as those interest earnings have been used up. Councilman Toth asked if he had a rough idea of how much they were being phased in, and Mr. Gibson said the entire increase in the pension cost this year went up by $211,000.

Councilman Mitzel asked if there was a possibility of contracting assessing services, and Mr. Klausmeyer said part of the problem with contracting services was each government unit had their own form of computer programs and data entry and that made things a little cumbersome to get someone in to handle an area.

He said that one of the things they had to do in a given time span was get the drawings of the houses on the computer so they could have a drawing of the house when they generated computer field cards. He noted that Commerce Township hired someone to do that at $2 or $3 apiece on a home computer and maybe the data entry could be done so there were some things they could contract out.

Councilman Mitzel said maybe Finance could shed some light on whether it would be beneficial to pay for contract services versus a hire.

Councilman Pope asked what the policy reason was in light of Proposal A cap that they still had to keep up with market. Mr. Klausmeyer said the constitution and when a property sold, the assessment went to 50% of true cash value.

Mayor McLallen said two major issues have come up in the discussion of the assessing budget - the cost of education for personnel and a review of reimbursement policy and a request for cost comparison of contracting services and whether contracting would be more beneficial to the city than the department's request for one additional worker.

Councilman Schmid asked Mr. Kriewall why he decided not to add a person, and he said primarily financial.

2. General Administration

Carol Kalinovik said to go over the year in review, General Administration continually tried to look at everything and get everything that could possibly be contracted so they would have a firm price, everything that was multi-use between several departments was consolidated into one function, and they just finished the HVAC update and gained some valuable information to continue the energy savings program.

She noted a real increase in office supplies because of the shortage of paper. All the area code reprogramming has been done on the phone systems and they were able to do a lot of things in the line of maintenance to the building and entrance improvements at no cost for labor thanks to the court program workers under Cindy Uglow's direction.

Councilman Mitzel said the $50,000 for sidewalks in this year's budget had not been carried over; he asked if it had been rolled into the fund balance. Les Gibson said he would check with Tony Nowicki on the grant.

Councilman Toth expressed concern over rising costs for postage commenting that sometimes he gets three or four pieces of mail a day from different city offices and if that was being duplicated to the other council members.... He said he thought there had to be a better method and asked if there was some way to look at cutting those costs.

Carol Kalinovik agreed it was something they could look at but reminded him that she was not directly involved with who sent what to who.

Councilman Toth said it bothered him that they still had $1,100 in maintenance agreements on typewriters and a maintenance agreement on the binding machine and the fax machine. His suggestion was to just pay for the repairs when need be. Carol Kalinovik mentioned that they had just rebid the typewriter contract and it was $600 less than last year, and she explained that hourly repair rates were so high, it was more practical to have a maintenance agreement.

Councilman Toth noted three additional phones in the budget, and Ms. Kalinovik said the money would only be spent if a phone should break. Kathy Smith-Roy pointed out that the phones had been previously removed from the budget.

Councilman Toth questioned $20,000 for a new copier; he said they were currently leasing the copier for $2,000 which was included in the budget and he asked if the $20,000 was over and above that. Carol Kalinovik said it was not.

Councilman Mitzel explained that in an effort to cut costs, he recycles all the envelopes, rubber bands, etc. received in his packet and asked that his mail be held at city hall for pick up.

Mayor McLallen noted rising paper costs and asked if there was any movement afoot to figure out a way to minimize paper. She said she has suggested and looked at programs on the way the city does minutes as a way to cut down on paper. Carol Kalinovik said they have gone to copying everything as two sided and she would be glad to look at any other ways to cut use. She noted that from all she has heard, they would be living with the rising cost of paper for the next two years so anytime paper was on sale, they try to buy a double portion.

Councilman Pope asked Kathy Smith-Roy to explain to the other council members what they had talked about earlier about the $400,000 for Insurance and bonds and there being extra money left from the old account.

Kathy Smith-Roy said when they purchase insurance, they buy a stop loss agreement which meant once they reached a certain dollar amount in expenses paid by the city on a lawsuit, the insurance company would pick up all of the expenses incurred after that dollar amount. She said because they were no longer with MMRMA, all of the claims below $50,000 were required to be paid by the city including defense costs so even though the city's premiums for MML were just over $200,000, they have put in just over $175,000 to cover MMRMA claims that haven't been settled yet. If the money is not used, it will go into fund balance.

Councilman Pope asked if there was any advantage to setting that money aside to begin a pool for self insurance, and Kathy Smith-Roy said they looked at that last year and the set-aside amount far surpassed the premiums they were required to put down. She said as long as there was competition between MML and MMRMA, she didn't think there was a big advantage to self insurance.

Councilman Pope said they would not be normally notified of the dollar amount going to fund balance; he asked if she would notify him of the amount going to fund balance when they got to the end of the year.

He said that he and Councilman Toth talked to the MML representative regarding handling the city's claims a little different and there has been some concern that the claims get to the attorneys and they kick the fees up and then they come to the city and say they were spending too much money and should probably settle and anybody who sues the city, they should pay. The representative suggested a committee that would look at these things very early before they get to executive session. He asked if there was any support to consider doing that, and Mayor McLallen clarified it would be like a risk assessment committee.

Councilman Schmid said he felt they spent too much on attorney fees and the city paid the first $50,000 so his thought was to have the attorney make an assessment of the case early on - whether to settle now or prepare for trial.

Kathy Smith-Roy said they had an option with MML to decrease their exposure to $10,000 rather than $50,000 and that would force the insurance company to also review those costs.

Councilman Schmid said he didn't think anybody was really looking at attorney fees, and Kathy Smith-Roy said the attorney fees were sent to David Fried every month to review. Councilman Schmid said he felt they could save probably half of the attorney fees by making an assessment early on to settle or not.

Councilman Pope said the representative gave him examples of several other communities that do this and they would be willing to participate.

Councilman Pope asked that the city manager come back with a resolution for a future agenda for a risk assessment committee.

Mayor McLallen recapped that the big issues that came up were keeping an eye on postage and reviewing any ways that they could administratively deal with sending out less mail, a review of the maintenance agreements, adjust our use of paper to cut costs, and the value of forming a risk assessment review.

Councilman Pope noted there was a section regarding Miscellaneous Subscriptions and although it was only $200, if council was ordering magazines he felt it should be under their budget and they should be held accountable not general administration.

Council members discussed the volume of paper used to copy minutes; Councilman Mitzel suggested they keep a check-off list of what they actually read in the packet and if they weren't reading other boards and commissions minutes, those could be eliminated. Councilman Mitzel said he preferred to have minutes on disks and Councilman Toth said he would like that, too. The Mayor noted they all had computers and they could do 60 cents for disks rather than receiving huge packets full of minutes. Suggestion was to try it with other board minutes to start with.

Councilman Toth said another concern was the fact that he saw a lot of different city letterheads; Carol Kalinovik said there was one standard printed city letterhead for correspondence going outside the building. Everything done in-house was on plain copy paper with computer logos for various departments.

Consensus was when the new computers were installed, they would start putting minutes on disk for council.

Councilman Crawford said one of the things the Mayor mentioned in her summary as a big concern was office equipment maintenance; he said one member mentioned it and he was curious as to what constituted big. Mr. Crawford said after being in that business for some years, he thought of it as money well spent like insurance.

He asked if they were looking for something from administration on this or were they looking for consensus from council or if one member mentioned something, was it expected that staff would spend several hours....

Mayor McLallen said that was the point of summary; she thought they had consensus on the two from Assessing. She said if more information was wanted on something, this was the chance to say it to administration. She said the four issues brought forth were reviewing postage costs, maintenance agreements, office supplies and what they could do with paper, and Mr. Pope's suggestion concerning risk assessment. She asked if it was the consensus of council to have administration pursue these or were they happy with how they were presented.

Councilman Crawford said his question was how would they be pursued; he asked what direction were they giving someone. If he had not said something, what would they have expected back - a written report or no response or what.

Ed Kriewall said these were concerns for the department heads handling those issues to take under advisement but he wouldn't expect a report back on most of the issues.

Mayor McLallen asked if Mr. Crawford was suggesting they poll council and if it was a minority issue, it would not be taken forward. Councilman Mitzel commented that if a member voiced a concern or a question and they said it wasn't a council concern, that member would just ask Mr. Kriewall for the information anyway as many of them have already done before it even got to the table.

Mayor McLallen suggested that risk assessment be pursed by administration for a future agenda and the rest of the issues be taken under advisement; members agreed.

3. Buildings and Grounds

Carol Kalinovik noted that Cindy Uglow has been able to do many of the repairs in the building that formerly someone was hired from outside to do, and Ed Kriewall reviewed items that had been removed from the budget. He said asphalt/concrete repair had been listed at $339,000 but they could not afford it although that price would probably go up with time.

Councilman Mitzel asked if the automatic doors on the north side were an ADA requirement, and Ms. Kalinovik said they were looking at that. Mr. Kriewall said under ADA, this building needed some signage and a few minor things, and Mr. Mitzel said he would appreciate a report on the city's buildings in that regard.

Councilman Crawford said common sense told them that handicapped parking should have an automatic door and it ought to be in the budget. Les Gibson said that was in the current budget and it should be completed this summer.

Councilman Crawford asked which items were in and which were out of the lists on pages 4 and 5, and Kathy Smith-Roy said all the maintenance items were in except Asphalt/Concrete which was considered a capital item. Atrium Lighting and Exterior Lighting were removed from Building Improvements and Councilman Crawford asked what that entailed.

Carol Kalinovik explained that the exterior lighting flush with the ground has been troublesome because it would fill with water and she would like to replace it with something similar to what the library has. She said the hanging fixtures in the atrium were creating a lot of heat with almost constant burn out of the bulbs and they had to get a lift to change the bulbs so they would like to change that to a more efficient type of lighting.

Councilman Crawford asked if they had ever pursued that with the architect that recommended those in the first place, and Kathy Smith-Roy said McSweeney took one fixture down and sent it to the manufacturer and they were investigating why they were heating up.

Councilman Crawford said he felt the maintenance items were particularly important because once things became a little unkempt, people using the facility had a little less regard for it. He said he would get with Carol Kalinovik to determine what items were in and which were out. He said the asphalt item was a huge item but he felt it had to be done. Councilman Crawford said this was an example of the things they were compiling over the years like taking out something last year and something else the year before and one of these years, all of it would come crashing down on them.

Councilman Toth said they had problems with the parking lot and sidewalks basically because they were put in wrong; he noted that 12 Oaks and Town Center and West Oaks all had large areas of parking lots and sidewalks older than city hall and they didn't have the problems. He said the doors were falling apart and the lights were too because of the outfit that designed it and some of the people that constructed it. Mr. Toth said that MDOT was requiring a guarantee from their people who replace the roads so when it goes in they get a five year guarantee and any repairs needed within that period are being done by the construction companies. He said whoever they contract to repair the sidewalks and/or parking lot should provide a five year guarantee. Councilman Toth said before they touch the sidewalk, he would like to see an engineering report on what was wrong with it.

Mayor McLallen said the major issue on Buildings & Grounds has been $339,000 for asphalt & concrete that was not currently in the budget as well as approximately $39,000 for interior and exterior lighting improvements. She said the consensus appeared to be to see how at least the concrete portions could be done or how to phase it out over several years to improve it.

Mayor McLallen said the issue she wanted to bring up was the non-functionality of the building was becoming more apparent with the years. She asked if they had any recourse to the designers, the builders and the engineers; she asked if they had any ability to go back after those parties and say this was a dysfunctional building and we hold them responsible. She commented that this was a relatively young building to be having some of the problems; she said it was not general maintenance but apparent poor design causing them and asked if they had any legal ability to get those companies back in the building.

She said council appeared quite willing to request administration to seriously bring back numbers into the budget on the exterior sidewalks and driveways and to pursue whether the city had the ability to go after the companies that designed and built the building.

Councilman Toth suggested the use of floor lamps for atrium lighting, and Councilman Mitzel mentioned using a flat light like what they had on the podium in the council chambers. He continued that he didn't feel they could handle it this year, but in future the atrium needed a better audio system.

Councilman Crawford asked if Building & Grounds was the appropriate category for audio/visual in the council chambers; he noted there was nothing in this budget. He felt the whole audio/visual setup in the council chambers was not good and they needed better equipment, better lighting, probably more cameras, and he would like them to look into boom mikes and pin-on mikes for consultants. Councilman Crawford said at the least they ought to budget in enough money to get a professional evaluation on what equipment they needed.

Carol Kalinovik said she understood Cindy Stewart had been doing some work on this but no money was budgeted.

Mayor McLallen said this was a capital issue that council over time has expressed a need for and capital for lighting and capital for the exterior asphalt/concrete - how to phase it, how to deal with it - that needed to come back to council. Further considerations were ADA compliance. She said obviously council would have to make the decision on how much money they would put in the budget because these items were not there.

COUNCIL TOOK A TEN MINUTE BREAK AT 9:30 PM.

4. Fire Department

Chief Lenaghan reviewed the handout from the Michigan Dept. of Labor safety standards as they apply to the Fire Department. He noted there was a cost for compliance and in setting up the budget, these things were taken into consideration. He said they had a couple stations they were concerned about because of sidewalks and driveways.

Councilman Toth said there was $374,000 under Vehicles and $192,000 was for a pumper tanker which was a carryover item so that money should already be set aside. Les Gibson said it was set aside in the police & fire millage fund and a pass-through item as far as the general fund was concerned. Councilman Toth and Mr. Gibson discussed whether this was affected by Headlee and Truth in Taxation and Councilman Toth said he didn't feel these funds should be counted because they were already spent.

Chief Lenaghan said he had submitted a five year plan on personnel which could be started anytime but it had been removed. He said they had done pretty well over the years using part time and paid on call people to supplement the operation and the objective was to staff the trucks they currently have in service.

He said they had two vehicles in each station and he was asking for minimum staffing of two people. He noted that they have been without an Assistant Chief for some time and the staffing proposal would allow them to fill this position.

Chief Lenaghan said he put in a request for pay increases of $.50 per hour for most part time people; Councilman Toth asked approximately how much money that would that be and Chief Lenaghan said he would bring those figures back.

Councilman Crawford said he was concerned about some of the things that were not approved in the budget, for example driveway and basin repairs, automatic defribrillators, etc. He said he didn't know how important they were or why they were taken out but he felt some of those things probably needed to be done. He said he would like more backup or a plan to do this six months from now or next year; he asked if some of this could be thrown in with the Police & Fire Bond Committee.

Mayor McLallen said this was the third presentation they had heard on buildings & grounds needs; was there any way to bid them all at once to get a better price. Mr. Kriewall said he would provide council with a recommendation.

Mayor McLallen said recently there was a regional fire incident on I-94 and fire departments took a lot of heat on their

lack of preparedness. She said because of Novi's location, they are at risk for a similar incident such as they had a few years ago, and she would like a response from the Fire Chief as to whether he felt they were prepared to deal with it.

Chief Lenaghan said he would get a report to them on what they have done to prepare for this from training to mutual aid arrangements. He said they were as prepared as they could be with the resources available.

Mayor McLallen said the big issues for the Fire Department are Buildings & Grounds, a resolution from council on the $.50 raise for hourly employees, and the capital items.

Chief Lenaghan said there was nothing in the budget for fire equipment or radio equipment and he suggested that the money in the budget for a new pick up truck be used for fire equipment and something for radio equipment instead and they would find a way to keep the old truck running another year.

Due to the lateness of the hour, consensus was to carry over the remainder of the budget items to the next meeting.

12. MERS Resolution

Kathy Smith-Roy explained that this had to do with the administration of the reports that MERS provides for us in terms of allocating the assets in our fund. She said right now all they had was a pool of assets for the city which they use to determine what the city's funding requirements will be for the next year. She said what they want to do is divide the pool up into the various personnel divisions and allocate the assets for each of those divisions and what that would do was provide a more accurate means to the actuaries to determine if we have the proper funding.

It was then,

Moved by Councilman Pope,

Seconded by Councilman Crawford,

That the following Resolution for Adopting Asset Split By Division be approved:

Whereas, the governing body of the City of Novi desires to have their assets allocated by division beginning with the total market value of assets on December 1, 1994.

Be It Further Resolved, that the governing body of the City of Novi, a municipality within the meaning of that term as defined in the Municipal Employees' Retirement Act established by Act No. 427 of the Public Acts of 1984, as amended, hereby directs the Municipal Employees' Retirement System to instruct the system's actuary to allocate the total market value of assets on December 31, 1994 to each valuation division in proportion to the actuarial accrued liability as determined by the Entry Age Normal Funding Method.

Be It Further Resolved, that the City of Novi understands that this allocation technique will only be used in the first year to establish the initial asset base, and after the first year assets will be maintained by division based on that particular division's actual experience.

Yes (6) No (0) Absent (1-Mason) Motion carried

There being no further business to come before the council, the meeting was adjourned at 10:50 PM.

MAYOR

CITY CLERK

Date Approved: