The meeting was called to order at or about 6:00 p.m.

Present: Members John Avdoulos, Vic Cassis, Lynn Kocan, David Lipski, Mark Pehrson, Lowell Sprague, Wayne Wrobel

Absent: Member Andrew Gutman

Also Present: Clay Pearson, Assistant City Manager; Barbara McBeth, Director of Planning; Tim Schmitt, Planner; Mark Spencer, Planner; Lance Shipman, Landscape Architect; Ben Croy, Civil Engineer; David Gillam, City Attorney; Maureen Krauss, Oakland County

Developers and Guests in attendance: John Houser, Singh Development; Bill Panos and Ted Minasian, Minasian Development; Bennett Donaldson, JB Donaldson; Matt Sosin, Northern Equities; Jeffrey Pitt, Amson Dembs Development; Gary Jonna, Whitehall Real Estate; Gary Hoffman, Oakland Business Tribune; Kim Kovelle, Novi News; Andrew Mutch, Novi Resident

The meeting attendees recited the Pledge of Allegiance.

Moved by Member Pehrson, seconded by Member Cassis:

No one from the audience wished to speak.

There was no Correspondence to share.

There were no Committee Reports to share.

There was no Planning Director Report.

There was no Consent Agenda.

There were no Public Hearings.

There were no Matters for Consideration.

The purpose of the meeting is to explore the topic that has been referred to as "Tax Base Alternatives". The focus is on ways to enhance the non-residential tax base in Novi, particularly in the OST zoning district.

Chair Kocan said that the purpose of this roundtable discussion is to explore tax base alternatives. She asked Director of Planning Barbara McBeth to give the background on this topic. Ms. McBeth explained that City Council requested some time ago that the dialogue begin regarding how to increase the tax base potential without placing the burden on the residents. The Planning Department researched this concept and presented their findings to City Council earlier in the year. This research focused on the OST and Light Industrial districts. Ordinances from the surrounding communities were reviewed. Specific items looked at include:

Building heights

Principal permitted uses

Parking requirements

Building Façade Requirements

Additionally, Ms. McBeth told the group that developers were contacted and asked what they felt the City was missing in their Ordinance. All of this information was compiled and given to City Council for review. Ms. McBeth said that a couple of presentations would follow, and she asked the developers to consider again, what uses might be missed in the Zoning Ordinance, and whether there are any standards that seem disproportionate. Ms. McBeth said that City Council would not likely sacrifice any of the Ordinances relating to natural features. The Planning Department recommended to City Council that nothing be sacrificed in the Landscape or Stormwater Ordinances either.

Planner Tim Schmitt addressed the group and told them that he had a background in economic development. He said that Novi is trying to be proactive in addressing the fact that due to Proposal A, tax bases are eroding and some communities are cutting their city services. Novi is not in a position to have to do that yet.

Earlier this year, the City completed its Fiscal Analysis. That document reminded us that down the road, when the City is closer to buildout and the Headlee Rollback takes effect, the City can’t roll back. Positioning the City now for the future is a luxury many cities don’t have. In general, Michigan is in a tough position. Novi is one of few cities that is very active with development. Unemployment in Michigan is at 7.5%, one of the top three in the nation. Novi is location-neutral with respect to the Big Three. All three are roughly the same distance from Novi. Auto suppliers look at Novi as an unbiased location.

Another issue that gets bantered about is tax abatements. Novi has taken the position that it is not necessary. Whether abatements are necessary in the future remains to be seen. One of the interesting things that Michigan is trying to do right now is to get further entrenched into sectors other than automobile. Oakland County’s Emerging Sectors is an initiative brought forward by L. Brooks Patterson. Novi needs to be aware of this initiative because at some point the zoning question will rise when a nano-technology or bio-technology business wishes to relocate to Novi. The more the City knows about these businesses, the better prepared it can be.

Chair Kocan asked that Mr. Schmitt speak briefly on the Fiscal Analysis. He responded that the City surprisingly found out that the Headlee Rollback may be in the City’s future. The office development, especially along Meadowbrook Road and Haggerty Road, does provide a positive impact to the City in the long run. Typically, the City is seeing high quality buildings being built in these areas. As a general rule, these buildings require minimal police and fire runs. They have less impact on sewer and water. The drawback is the traffic. Novi is trying to be ahead of that problem by taking care of the road improvements. Mr. Schmitt continued that the new residential is bringing in more tax dollars, but the police and fire runs are increasing too. These runs include EMS and tripped fire alarms. Attached condominiums tend to produce more service calls, probably because of the "ownership society" so people are a little more worried. As an area becomes more dense, fewer taxes are collected but more strain is put on the City services.

Chair Kocan asked if the office/industrial/commercial component was performing okay. Mr. Schmitt said that retail is doing well in Novi, and Nordstroms has just announced their new location here. He said the City does attract regional retail, and the shoppers come from a wide geographical area. Mr. Schmitt said some say that the City has more industrial than most, because of the way Grand River developed. There are four light industrial parks. The City is only scratching the surface of office development. Novi continues to do well, even through the downturn at the beginning of the century, and once the City reaches office buildout, it will be a key part of the community.

Member Cassis said that the Police Department can charge for "false alarms" and the City can further regulate that if it becomes necessary. He did not think that this should be a deterrent to the City in considering residential projects.

Planner Mark Spencer discussed the OST District, which is an important component of the City’s non-residential Zoning Districts. The district was created with the intent of encouraging high-tech, multi-use businesses having accessory, warehousing, assembly, production and manufacturing activities. The goals of the OST District outlined in the Zoning Ordinance include:

Providing sufficient space, in appropriate locations, to meet the needs of the City's expected future economy for all types of research, office, high tech and related uses.

Protecting abutting residential properties.

Promoting developments which minimize the danger of hazards to the community.

Protecting the most desirable use of land while protecting the character and established pattern of adjacent development, conserving the value of neighboring land and structures, and protecting the City's tax revenue.

The OST District regulations permit high-tech multi-use facilities with accessory warehousing, assembly, production and manufacturing activities; offices; medical offices; facilities for human care; public buildings; financial institutions; recreation facilities; day-care centers; and customary accessory uses and structures to locate in the District.

The current OST District contains 1,319 acres of land with 47 developed lots containing 1.8 million square feet of floor space. In the last 6 years, 19 major projects were completed in the District. Properties in the OST District provide a significant portion of the City’s tax base and have a combined assessed value of $153.8 million dollars. The average assessment of the 47 developed lots is $2.2 million per parcel or $383,400 per acre. Currently, an additional 967,000 square feet of floor space on 132 acres of land is in the City’s planning process for the OST District. After these parcels are developed, 802 acres of land, or 60% of the District, will remain available for development.

Maureen Krauss from Oakland County addressed the meeting. She explained that Brooks Patterson began the Emerging Sectors Program about one year ago. The County considers itself the brain of the automotive industry. 41% of the County population has a college degree, compared to the State at 23%. Even though the economy has been tough the past few years, Oakland County has been lucky to keep pretty even with the amount of jobs that have come in. Mr. Patterson considers this one of his legacy projects. The automotive suppliers, technical centers, research and development facilities produce tremendous technology. The Emerging Sector Program helps the existing companies look for new applications of their technology and collaborations and other research institutes that they might not otherwise figure out on their own. Companies spend their time running their own companies. They do not take the time to find out what is going on at Lawrence Tech or at Wayne State, or whether there is a good European company with whom they should be collaborating. This Program is an expansion/retention effort. In addition, it is attracting new industries that can complement what is already here.

Ms. Krauss has been working in Economic Development for a long time. For the past seven years she has been with Oakland County, working with the European market. She travels to Europe several times a year to meet with firms that are considering expanding their operation here. The Emerging Sector companies are looking for workforce. That has been constant for the past twenty years, but now the search is for a highly skilled, technical workforce. Anyone can say they want to attract a bio-technology firm, but the area has to have something to offer. In Oakland County, we have the workforce to offer. These Emerging Sector companies can locate anywhere. Quality of life is really critical. In Oakland County, these work together. The County must provide quality of life to attract the companies, and the companies must locate here so that the County can afford to provide the quality of life.

There is a cycle of development associated with a city’s growth. Residential comes first, then retail. Then, industrial and research and development come along. Whenever the County gets a company that is looking to expand or locate here, Ms. Krauss asks where the key decision maker lives. Then, she draws a five-mile radius around that home because that is where that company would love to be. The key decision makers want to live near where they work. Novi has an excellent helping of developments. It has an excellent school system. These are the things that will help bring high quality developments to the community.

The County’s research department identified the ten Emerging Sectors that had certain grandeurs of growth rate, and whose locating to this area would make sense. Mr. Patterson wanted to do this to remain a leader in job growth in the state of Michigan. The characteristics of these Emerging Sectors were researched at great length through many processes. The six that the County is focusing on are:

Automation and Robotics

Advanced Electronics and Control Systems

Micro- and Nano-technology

Biotechnology

Medical devices and instruments

Alternative Energy Technology

Each of the identified ten Emerging Sectors were given a business case. Why would a California nano-technology business want to expand to this area? Of the ten sectors, the six sectors being focused upon are the ones with relations or applicability to the auto industry. Ms. Krauss said that this week, two Oakland County employees are at a nano-technology show in California. They have set up meetings with companies to discuss what Oakland County might have to offer these firms.

Oakland County is the future location for emerging technology companies, not only because of our available work force, but because of the tremendous amount of research happening at universities in Oakland County and southeast Michigan.

Oakland County spoke with Beaumont Hospital regarding their new piece of machinery. It was produced in Belgium. The County found that 60% of the technological purchases come from outside of the United States, even though this country is the leader in that field. Beaumont is the second largest employer in Oakland County. Aside from their hospital undertakings, research and technology are great strengths.

Technology companies traditionally look at the two coasts for locations. Those areas are strong for venture capital. There are many universities and research institutes. If one were to consider Oakland County as the midpoint between Chicago and Toronto, then it becomes more understandable that Oakland County is part of a very important market.

Ms. Krauss iterated the statistics regarding the workforce. Over 40% of the residents have college degrees. There are 14 institutions of higher learning. Wayne State, Ann Arbor and MSU are not too far away.

There are 648 foreign firms in Oakland County. They represent 24 countries. Over the past twelve years, Oakland County has gained two foreign companies per month. Ms. Krauss noted that when Eberspaecher first came here, they had two employees.

Ms. Krauss said that she went to Germany with Mr. Patterson and Ms. Granholm in November of 2004. They focused on the retention of existing companies. They also spoke with bio-tech companies. They centered in on the Munich area. It was educational for both Oakland County and the Germans. They thought of Oakland County as "cars" and thought that bio-tech work should go to the coast. Oakland presented its business case. They reiterated the workforce potential here, and the ability to find research partners.

Ms. Krauss said that Oakland County worked very closely with Incat to keep them here. She said that this Emerging Sectors program is not a program that will end in two years. It is a long term way of looking at things.

Ms. Krauss said that Oakland County is going to attend a medical device show. They are going to a national bio show in Philadelphia. They are looking at the international markets – Europe, Japan and Asia. They are not just looking at auto suppliers. They are looking at what their strengths are.

Member Cassis asked if Ms. Krauss is "trying to sell" when she goes to the shows. She responded that they are trying to sell; they bring along a four-page business case report for each industry. She said that for the nano-technology report, it was very surprising – the number of businesses (25) already involved in the industry. The amount of research involved in nanotechnology in southeast Michigan is very large. Ms. Krauss said that they do not give a lot of information at the trade shows because most of it lands in the garbage. They do make sure to make the initial contact, and they follow up later with more details and information.

Ms. Krauss said that they are also speaking to the existing Emerging Sector companies in Oakland County. She said that for every 15 jobs created in the community, it creates $3,000,000 in economic impact – either through taxes or spinoff jobs. This is an important figure for Novi to consider.

Ms. Krauss said that residents don’t always pay for all of the services they demand. They usually pay less. It is the business community that rounds out the tax base. It is important, when looking to balance a community, to bring good, quality businesses to the community.

Chair Kocan asked what Oakland County needs from the City of Novi. Ms. Krauss responded that the Governor has announced a two billion dollar bond proposal that would provide funding for high tech and emerging sector business. In the past, State programs have required a local contribution. Novi is doing its best to maintain a high quality of life. It has a friendly planning process. These things are important in the long term. If the bond goes through, the County is going to ask Novi to provide a matching contribution. There are no definite answers to the question right now. Based on history, one of the tools the State will require is matching contribution.

Ms. Krauss said that the other thing that Emerging Sector companies need is money – either investors or venture capital.

Ms. Krauss said that they are also surveying these companies to find out what their infrastructures are. Infrastructures are very different for these emerging companies than it is for a traditional manufacturer. Today she is asked not about water and sewer, but about T-1 lines and Oakland County’s wireless initiative. She said these companies need flexible lab space. She has spoken with a company that needed a hydrogen tank. The County works on strategies that will keep municipalities informed.

Ms. McBeth thanked Ms. Krauss and said that her point about residential not paying for its services is precisely the reason why this meeting has been called. Ms. McBeth asked each of the developers to weigh in with their suggestions.

Gary Jonna, Whitehall Real Estate: The virtues of Novi speak for themselves – availability of land, great infrastructure, wonderful access to transportation networks. Sometimes a developer deals with perception versus reality. There is a perception that the approval and entitlement process in Novi is a difficult one. Whether that is real, it is the perception. Maybe educating the brokerage community would help because they are on the front end of a lot of these deals. This education could include the availability of land, the entitlement process, touting virtues, infrastructure. This has been glazed over.

Member Sprague asked if Mr. Jonna considered Novi to be a hard community in which to develop. Mr. Jonna responded that today, in such a competitive environment, people are making decisions months out – not years out. If the Community doesn’t have reliability or deliverability, whether perceived or actual, it is a problem. He said there is a perception that Novi has a lengthy process to navigate – through planning and through building permits.

Member Sprague said he knows that is the perception, he asked if it was Mr. Jonna’s experience. He said that they (the Planning Commission) see it when they see it, and everything is according to Ordinance when it is all done. He does not know how to work things in. He has built buildings in other communities but not in Novi.

Mr. Jonna said that this is a regulated environment. It is not uncommon in fast growing communities for there to be so many Ordinances and regulations. He did not think Novi was unique. There are other fast paced communities that have similar issues. It has a chilling effect, when a user sits ten months out in the City of Novi. Brokers and developers are saying that it is not going to happen over night, and it is a lengthier process. It doesn’t just rest on the Planning Department. It also includes the Building Department. That is what makes the whole thing. To him, it is mostly the Building Department that plays a major role.

Mr. Jonna said that developers must convince somebody that they can actually deliver in Novi and can build a building. He said the developer must say, "I have a product here that is going to walk right through the process." That is the only surefire method. That diminishes flexibility and shrinks their margins. It is a burden. But that is what it takes to have the users relieved. It is a byproduct of the system.

Mr. Jonna suggested that the City look at their assessments against similar products in neighboring communities. Another thing that developers look at are the taxes - If the assessments are competitive, great.

Mr. Jonna said that many of the zoning text modifications have been appropriate. Increasing stories and heights, looking at signage – he agrees with everything he has read.

Mr. Jonna touched on infrastructure – it is very important. The inventory, where fiber is, the reliability of certain areas, franchise dividers – users come in and look at power voltage and reliability and fiberoptics. That is a major point.

Mr. Jonna said that one issue that has touched him specifically is that the City has gotten away from incremental permitting in the land improvement permits. The very thing that gave developers a fighting chance on fast-tracking a development has become unpopular.

Mr. Jonna said that the City has done a magnificent job on the road and utilities. He cited Grand River improvements as a catalyst to transformation.

Mr. Jonna agreed that at this time TIFFS and tax abatements are not being considered, and the question is, will it be something to consider in the future.

Mr. Jonna suggested that the City create a marketing package for their website that is specifically geared toward potential tenants, users, manufacturers. This site would describe the virtues of the community and dispel the negative perception that exists. The site could establish credibility and competitiveness and past track records.

John Houser, Singh: Represented a residential developer and came to learn more about this issue.

Ted Minasian, Minasian Development: Office Developer. He heard comments about the City’s preference to avoid tax abatements while hoping that the quality of life will attract new tenants and companies. To that end, he suggested that the redevelopment of Main Street would help him to bring more people here. He was excited to hear about a Downtown Development Authority helping to get the Main Street project back on track, with a developer who has proven himself and is willing to take a gamble. The message now that he hears from the City is that they may not be that supportive of investments at this time. He would really like to see a partnership with the City and the developer to keep things moving in a positive direction along Main Street.

Mr. Minasian was familiar with and excited about the Gateway Ordinance. He thought that it would revitalize that area of the City. He would like to see the City be flexible in its review of Gateway projects, as there are some minor flaws in the Ordinance.

Mr. Minasian said an issue with the Ordinance is that even though it allows for a two-story office building, the height restriction precludes that from happening without the developer going to the ZBA. It is now his understanding that the City itself acknowledges that perhaps it should be more flexible on this issue. This would make the process more efficient. The old way of developing called for eight-foot ceilings; today people want nine and ten feet. Mr. Minasian prefers 14-foot floors. With two stories, a parapet and finished grade, the building quickly exceeds the building height. If more height was allowed, architectural excitement could be added to the building. The NCC only allows 25-foot tall buildings. OS-1 only allows thirty feet. If the City wants to allow two stories, let developers build two stories.

Member Cassis asked Mr. Minasian and Mr. Jonna what they felt about extending the Gateway theme down Grand River. It was decided that the developers would all speak and then questions would be asked.

Bennett Donaldson, JB Donaldson: Just attended a symposium on the state of affairs. He has built every type of building, and he really has seen a decline in the manufacturing side. In order to entice OS uses, the City needs to consolidate and be more consistent. He mentioned Miracle Software and said this would bring 120 software engineers to the community. Everyone was helpful in getting this job through, but there were hurdles. Initially, when Mr. Donaldson told Miracle Software of the forecasted timeframe, it scared them. He had to come in and meet with Clay, Rick and Barb in order to get the assurances that they could make this project happen.

Mr. Donaldson said he is now working with a British/German company that also has timing issues. In this case, the Applicant is deciding between Novi and Canton. Canton is able to meet the timing issue, and they also have a technology abatement that is worth about $30,000 to the Applicant. That is a difficult thing to overcome, and JB Donaldson might have to reduce its basis or building costs. Mr. Donaldson said that this Applicant likes Novi better. He thought the City could consider offering specific abatements, like a technology abatement, to entice businesses.

Mr. Donaldson also stated that now the Planning Department is requiring that easements be turned in with Final Site Plan submittals. He said that now the City won’t even take the final plans if the easements don’t come with them. He said it would be helpful if the City had a website or an e-mail that could help the development community. It would behoove them to know ahead of time instead of having a stall at the counter, with everyone trying to figure out how something is going to get done. He said this issue needs to be re-tooled. From a common sense standpoint, there are a few holes in that process.

Matt Sosin, Northern Equities: Appreciated the dialogue. He said that the Ordinances affect them daily. He said that if the developers were allowed to give more input on these Ordinances, like the Landscape Ordinance, some of the comments at this meeting would be different.

Mr. Sosin said that the planning and permitting process is redundant. The same sheets of paper are being submitted over and over. He wished the Stamping Set could be used for Soil Erosion and Right of Way. It is all the same information. Turning it in over and over increases the review time by weeks. All of these separate submittals with the same information are being reviewed by the same people. This could be a very simple change.

Mr. Sosin understood that the City is not going to offer many abatements. However, the City could find ways to reduce the development costs. One way to do this is to allow alternative technologies to be used in the building process. The City has been slow in allowing the use of plastics or other new building materials. This would not include items that would compromise quality.

Mr. Sosin said that signage in Novi is a discussion point. Potential clients compare this City’s Ordinance with other cities. He has lost more than a few deals because of signage. The City’s Ordinance is very difficult, and prestigious, large tenants look for generous signage. There are ways to amend the Sign Ordinance so that the City doesn’t end up with too much signage. He said that Haggerty Corporate Park is an example of how signage can be done tastefully.

Mr. Sosin said that the developers have figured out how to get through the Planning Department – the way to do it is to put up speculative buildings. There are costs and risks associated with that. The Building Permit process is nebulous – sometimes it takes six weeks. Or eight weeks. Or ten weeks. Most of his build-outs are very simple and similar to other buildouts they have done, and yet the process is very complicated. There needs to be consistent delivery times on the building permits. Things are reviewed differently from one review to the next. There is a lack of consistency and timeliness. He believes it is because the Building Department is busy. He did not think that a simple buildout – three offices and a bathroom – should take a month and a half to review.

Mr. Sosin said that if Novi is going to attract prestigious tenants – they like to be on high floors, for whatever reason. The City is going to have to raise their height restriction. Even the three story building is hard to develop with the restriction in place.

Jeff Pitt, Amson Dembs: He was interested in the tax abatement issue. He suggested that studies be done to provide a better understanding of this issue. The study could track what deals the City is losing. If incentives were offered, would there be a net gain at the end of the day?

Mr. Pitt agreed that there is confusion with the Building Department. He thought it would be interesting to simplify that situation. Overall, Amson Dembs’ work is all in Novi.

Mr. Jonna said that he understood that the Gateway zoning was concentrated on the east end of town. He said he has spoken with Ms. McBeth about the appropriateness of the Gateway West. The question is whether the identity envisioned for one end of town is appropriate for the other end of town, along the Grand River corridor. It seems logical and worthy of consideration.

Member Cassis appreciated the comments made by the developers. He thought that Gateway going westward might increase the tax base. He asked Mr. Minasian what he thought. He responded that Grand River and Novi is the epicenter of everything. Going east is one step down from what Main Street might be. It could logically be continued going west. He hadn’t given it much thought and would like to drive the area to see what projects already exist.

Member Cassis thought that a certain type of strip existed west of Taft Road that was similar to the strips on the east end of Grand River.

Mr. Minasian wondered if the OST along Meadowbrook would be increased to include the frontage lots. Condominiums seem to be a hot market right now, but in a few years, they may not be.

Mr. Jonna said that people locating to Novi will increase its economic base. Whatever can be done collectively by the people at this meeting, to create an environment that is friendly to potential users and tenants and makes Novi competitive from a timing and economic standpoint, is economic development.

Chair Kocan said that very good information has come forward at this meeting. There is a specific time frame of June in which the City Council wished to hear back on this issue. Chair Kocan asked whether the preference would be to add additional time to the May 25^th Planning Commission Agenda to continue this roundtable. Ms. McBeth said that was possible. She said that there could be an early meeting similar to what transpired here this evening.

The question of abatements came back up. Ms. Krauss said that the Applicants must think about other things that also affect their bottom lines. Does it always have to be a tax abatement? She said that Wixom has been a lot more aggressive with their abatements. When a company comes to the County and asks for a tax abatement, the County does contact Novi and ask about it. She said that Novi does have a tax abatement policy. She worked on it for Textron, and she said it was a painful experience; no one should work on policy with the Applicant sitting at the table. She said there are not a lot of projects that will fit the City’s criteria.

Mr. Schmitt said that the City was open to any suggestions, and the Planning Commission and the developers should feel free to forward any additional comments to Ms. McBeth or him.

Chair Kocan asked why the Ordinance had both a story restriction and a building height restriction, and Mr. Schmitt said that this is an issue that could be further explored.

Member Sprague asked the developers to let the City know if there are specific problems in the OST Ordinance that is preventing that district from developing.

There were no Supplemental Issues.

No one from the audience wished to comment further.

The meeting adjourned at or about 7:30 p.m.

WED 05/25/05 PLANNING COMMISSION MEETING 7:30 PM

MON 05/30/05 CITY OFFICES CLOSED

MON 06/06/05 CITY COUNCIL MEETING 7:00 PM

TUE 06/07/05 ZONING BOARD OF APPEALS 7:30 PM

WED 06/08/05 PLANNING COMMISSION MEETING 7:30 PM

Transcribed by Jane L. Schimpf, May 19, 2005 Signature on File

Approved: May 25, 2005 Angela Pawlowski, Planning Assistant Date