City Council Minutes

Mayor Johnson called the meeting to order with the Pledge of Allegiance at 7:30 p.m. in the Northville City Hall Council Chambers, 215 West Main Street, Northville, Michigan.

Present: Mayor Christopher Johnson, Mayor Pro Tem Carolann Ayers, Councilmembers Kevin Hartshorne, Jerome Mittman, and Thomas Swigart

Absent: None

A. Citizen Comments None

Motion Ayers, seconded by Mittman to approve the agenda and consent agenda as presented.

Consent agenda as follows:

Approve City Council Minutes:

Regular Meeting of October 4, 2004

Approve Bills List: Checks #40138 to #40251, and #40252 to #40383

Receive Board and Commission Minutes:

Housing Commission: 9/8/04

Parks and Recreation Commission: 9/8/04

Senior Advisory Council: 9/23/04

Receive Departmental Reports:

Fire Department: 7/04

Parks and Recreation: 9/04

Historic District Commission / Tim Rodgers appointed to term vacated by Mark Cryderman, term expiring 1/1/07

Parks and Recreation Commission / Robert Sochacki appointed to term vacated by Susan Egan, term expiring 1/1/06

Request to Hold 2004 Holiday Parade (November 19^th) and Candle Walk (December 10^th)

Request for Holiday Parade Seating

Request for Public Hearing / FY 2005 Oakland County CDBG Funds

Request for Public Hearing / Reprogramming Wayne County CDBG Funds

Closure of Bandshell Area / Christmas Walk (November 21^st)

Holiday Decoration Request / All Aglow Program / Mother’s Club and Northville Public Schools

About two years ago, the City obtained a small grant to assist Northville Estates property owners in connecting to sanitary sewer. As part of the program, the City agreed to waive the interest on sanitary sewer assessments and the Rouge Program Office agreed to pay one half of the cost for a contractor to connect houses to the City’s sewer line. Recently, the City received a request from a Northville Estates property owner for assistance in connecting to water and sewer. The property owner was unable to participate in the previous program and now is in need of making these connections. At this time, the connection costs to the property owner are $23,746, not including the estimated cost of $6,000 - $12,000 to place water and sewer lines from the street into the house. Grant funds from the Rouge Program Office are no longer available.

In the past, eliminating septic systems was considered worth the cost of waiving interest charges as these systems are a source of ground water contamination. Growing interest charges could make connecting to City utilities out of financial reach for many Northville Estates residents. As such, Staff suggested that City Council consider adjusting or waiving the interest charges on the Northville Estates sewer and water assessments. Waiving the interest charges would save this property owner $8,416.

Council Comments / Discussion: Questions were raised pertaining to the number of properties remaining in Northville Estates not connected to water and sewer (approximately 20). Brief discussion ensued over the grant program offered two years ago and it was reiterated that eliminating septic systems is an overall benefit to the City and the environment. It was suggested that the water and sanitary sewer assessment interest charges be waived to the remaining Northville Estates property owners, with a sunset of five years.

Motion Mittman, seconded by Hartshorne to waive interest charges for sanitary sewer and water assessments in Northville Estates for property owners who have not connected to the City’s water distribution system or sanitary sewer connection system, for a period of five years. Motion carried unanimously.

Frank Audia, Kris Latchaw, Chris Jones, and Kristy Burke of Plante and Moran summarized the Audited Finance Report for the Fiscal Year ended June 30, 2004 and the Management Letter.

The General Fund Revenues and Expenditures were reviewed, noting:

Total revenues for fiscal year ending June 30, 2004, on a budgetary basis, included: 71% from

property taxes, 11% from state-shared revenues, and the remainder of revenue sources making up 18% of the total.

In comparing the revenue trends over the past three fiscal years, fiscal year 2004 had a total revenue of approximately $5.8M; an increase of 2.4%. This was primarily due to an increase in property tax revenue of approximately $185,000. State-shared revenue decreased approximately $55,000 and the remaining revenue sources were consistent in total.

General Fund expenditures, on a budgetary basis for fiscal year ended June 30, 2004 included: Public Safety at 43%, Administration at 16% and Public Works at 10%, which made up 69% of the total General Fund expenditures. This is consistent with previous years. The expenditures increased 4.4% over the previous year, mainly in Public Safety and Administration. The remaining line items were consistent.

The Management Letter was reviewed, noting:

The City continues to make great progress in building a healthy Fund Balance. It was reiterated that Fund Balance is necessary due to uncertainty related to major revenue sources and increasing costs. The City of Northville of 12-15 years ago would not be able to weather the State’s economic downturn. Over the last ten years, the City Council and Management has built up the City financially and, due to these efforts, the City is able to preserve its Fund Balance and maintain the level of services provided. It was stated that the City is well-positioned in the short-run to weather the State’s economic downturn and Management was encouraged to continue its efforts in protecting and increasing the Fund Balance level to ensure the City’s future financial health.

The effects of the Headlee Amendment and Proposal A as it pertains to the City’s ability to levy taxes were discussed. It was noted that the City is currently not levying at capacity, but the millage capacity (the difference between actual levy and Headlee Maximum) of the City will continue to shrink as the rates get "rolled back" annually. The City’s millage capacity for the June 30, 2004 fiscal year was 1.2056, a decrease of 0.1083 mills from the previous year.

The State’s economy is not showing signs of improvement with respect to local government units and the statutory state-shared revenue has and will continue to decrease. In the last four years, state-shared revenue has decreased approximately 20%, which is 10% of the City’s General Fund Budget. The City will continue to feel the effects of the slowdown in the State’s economy as the State’s fiscal year 2004/2005 proposed budget includes another 0.73% state-shared revenue reduction for the City of Northville from the fiscal year 2003/2004 levels. The City was urged to continue to be conservative in its estimation of statutory state-shared revenue as this line item in the State’s budget remains vulnerable.

The City continues to proactively monitor the water system. The water loss for fiscal year 2004 was 22.62%, down from the previous year’s 31.17%. The water loss percentage improved significantly from the prior year; however, the FY 2004 loss rate is still above the five year average. A leak detection study performed in June 2003 detected a leak in a parking lot near the Middle Rouge River, which was subsequently repaired. That leak impacted the water loss in the previous fiscal year and into the beginning of FY 2004.

Two new accounting pronouncements recently issued by the Governmental Accounting Standards Board pertain to accounting and disclosures related to post-employment benefits other than pensions. As a result, the City will be required to account for and disclose liabilities related to health care promises to retirees much in the same way that pensions are handled. Beginning in 2006, the City will be required to periodically measure its retiree health care liability through actuarial valuations. These valuations will also compute an "annual required contribution." The City has already been proactive in funding the post-retirement healthcare benefit liability and currently has $1.3M set aside in a fund to help offset this liability. It was stated that most communities are not at this level and will be hurt by these new accounting pronouncements.

Final comments stated that the City Council and Management continues to be proactive in anticipating property tax constraints through the use of multi-year forecasts. The City was commended for its proactive response to the State’s economic slowdown, while continuing to maintain a healthy Fund Balance and current service levels.

Council Comments/Discussion: Questions were raised relative to compensated absence payouts. Concern was expressed relative to the City’s unfunded post retirement medical liability. Plante & Moran noted that the new GASB pronouncements force communities to face funding these types of liabilities. While other communities have been using these types of funds to balance their budgets, the City of Northville’s proactive approach in responding to the State’s economic slowdown has allowed continued contributions to help fund the post-retirement healthcare liability.

Motion Mittman, seconded by Swigart to accept the City of Northville’s fiscal year 2004 financial statements, Plante & Moran’s Audit Report of those financial statements, and direct City staff to place a copy of those reports on file in the City Clerk’s office. Motion carried unanimously.

Plante & Moran submitted a proposal to continue as auditors for the City’s current fiscal year, which ends June 30, 2005. The proposed fee is a not-to-exceed amount of $36,860, which represents a $360 increase from the current year. The fee includes auditing services required by the recently issued Statement on Auditing Standards (SAS) No. 96 Audit Documentation and SAS No. 99 Consideration of Fraud in a Financial Statement Audit.

Motion Swigart, seconded by Ayers to reappoint Plante & Moran as the City’s auditors for the fiscal year ending June 30, 2005 under the terms identified in their letter dated September 23, 2004, in the amount not-to-exceed $36,860. Motion carried unanimously.

The Parks and Recreation Department has investigated online registration opportunities as part of their ongoing effort to improve service to residents. Two options were explored. The first option involved purchasing server-based software at an estimated price of $40,000 - $50,000, plus annual support services and credit card processing fees at an annual cost estimate of $25,000. The second option was to use internet-based software with no initial purchase cost and annual estimated expenses of $24,197. The internet-based software would be provided and supported by Active.com. It is anticipated that over time, as more registrations are processed online, the cost to the Parks and Recreation Department will decrease as will the need for additional staff to manage the increased volume of registrations created by the growing population.

Council Comments / Discussion: Questions and brief discussion relative to the additional costs incurred by online registrants.

Motion Ayers, seconded by Swigart to approve a two year agreement with Active.com to provide internet registration services for the Parks and Recreation Department and authorize the City Manager to sign the agreement on behalf of the City, pending City Attorney and liability insurance review. Motion carried unanimously.

In late September the City received sealed bids for inflatable unit rentals, which are part of the annual Northville Nite New Years Eve event. While two bids were received, neither bidder was able to meet the liability insurance requirement of $3,000,000 general liability. The bids were rejected and Staff solicited new bids. One bid was received from Eccentric Entertainment in the amount of $4,350 for seven inflatable units, plus an additional $1,500 for the required $3,000,000 liability insurance coverage. The bid exceeds the available budget by $1,350. Eccentric Entertainment indicated they could provide six inflatable units, with the required liability coverage, for the budgeted amount of $4,500.

In addition, Eccentric Entertainment submitted optional bids for several performing artists. The bid for the Temporary Tattoo Artist was recommended in the amount of $250.

Motion Ayers, seconded by Hartshorne to award the bid for Northville Nite inflatable rentals to Eccentric Entertainment of Belmont, Michigan in the amount of $4,500 and for the Temporary Tattoo Artist in the amount of $250. Motion carried unanimously.

The City Council approved use of the FY2004 Community Development Block Grant (CDBG) funds in the amount of $5,000 to acquire new chairs for the Allen Terrace Activity Room. Oakland County authorized the use of the bid document and proposal used to purchase new seating for the Northville Township Town Hall and the Senior Community Center. Under this bid document, the City could purchase 50 chairs for a total cost of $5,283.75. $5,000 of the funds will come from the FY2004 Oakland CDBG funds and the balance would be paid from the Northville Housing Commission operating budget.

The Housing Director noted that the City of Northville was a recipient of the Oakland County Community Development Block Grant Program Founding Community Award, saluting 30 years of participation in the Oakland County CDBG program.

Motion Hartshorne, seconded by Mittman to award the purchase of 50 new chairs for the Allen Terrace Activity Room to Facility Matrix Group, in the amount of $5,283.75. Motion carried unanimously.

In July 2004, the City Council approved the Department of Public Works request to purchase a new backhoe to replace a 1995 Case loader/backhoe. The Parks and Recreation Department is interested in purchasing the 1995 loader/backhoe valued at $20,000. As the Parks and Recreation Department is operated under a shared-services agreement, the DPW is requesting that the City Council declare the loader/backhoe as excess equipment and approve the sale of this equipment for $20,000 to the Parks and Recreation Department.

Motion Swigart, seconded by Hartshorne to declare the City’s 1995 loader/backhoe as "excess equipment" and authorize its sale in the amount of $20,000 over a three year period to the Northville Parks and Recreation Department. Motion carried unanimously.

Mittman noted that the next Planning Commission meeting is scheduled for October 19^th. Brief discussion followed relative to the house being constructed at the corner of Eaton and Thayer. It was stated that this house meets the current zoning ordinance requirements. Following further discussion, it was suggested the Planning Commission review the current zoning ordinance requirements relative to

bigfoot, front-yard setbacks, grade levels, and average building heights to determine if adjustments in the ordinance are warranted.

Mittman also commented on the recall effort, including the manner in which the recall effort was handled and the personal notification to the Mayor and City Council that the recall effort was canceled. He addressed the initiators of the recall, who were present, and expressed his hope of a cooperative effort to enhance Northville’s future.

It was suggested that Staff research whether the lighting near the projection screen could be turned down or off, while the rest of the lights remain on in the Council Chambers during video and power point presentations.

Kathy Tarrant-Parks, 632 N. Center St., questioned the legality of certain "bigfoot" homes in the Cabbage Town area. It was stated that the homes meet the current zoning ordinance requirements.

B. Staff Communications None

There being no further business to come before Council, the meeting was adjourned.

Respectfully submitted,

Dianne Massa
City Clerk