SPECIAL JOINT MEETING
OF THE COUNCIL AND BUILDING AUTHORITY OF THE CITY OF NOVI
THURSDAY, JANUARY 21, 1999, AT 7:00 PM
ACTIVITES ROOM-NOVI CIVIC CENTER-45175 W. TEN MILE ROAD
Mayor McLallen called the meeting to order at 7:05 p.m.
PLEDGE OF ALLEGIANCE
ROLL CALL: Mayor McLallen, Mayor ProTem Crawford, Council Members DeRoche (absent/excused), Kramer, Lorenzo, Mutch (arrived 8:00), Schmid
ALSO PRESENT: Ed Kriewall, Craig Klaver, Les Gibson, Don Saven, Kathy Crawford, Denny Neiman, Larry Czekaj, Mark Sturing, Al Tuomala, Marty Smith
Larry Kilgore – Singh Development, advised they are very concerned about this project in terms of how it will impact Singh and the city. He asked what is the city’s goal in building this project. He understood the end product was to be affordable housing. He also understood the city did not want to compete with the private sector. Mr. Kilgore believes the question is; How do they go about that? He believes they must first decide what the end product is and then design around that. He continued by stating they must first define what affordable housing is and then design the project to meet that goal. He advised there are models for that goal and referred to non-profit senior housing (i.e., Presbyterian Village) as an affordable project. Mr. Kilgore advised non-profit senior housing is able to provide affordable housing because they begin by building conventional housing and because they are non-profit they can target the HUD Section 202 program for financing and also qualify for grant dollars. Mr. Kilgore believes if the city‘s goal is to provide affordable housing they should approach organizations similar to Presbyterian Village. He then reminded Council that their final costs would be nothing like the preliminary cost quotes they received.
Mr. Kilgore is also concerned about how this project will affect other senior housing and that it will create a competitive situation. Mr. Kilgore explained the private sector cannot compete with the price. He continued by stating this may also detract other senior housing projects from coming to Novi. Further, Mr. Kilgore advised there are many problems associated with staffing and a tremendous amount of liability because of the number of deaths associated with these facilities.
The members of the audience introduced themselves.
PURPOSE OF SPECIAL MEETING: Joint meeting between the City Council and Building Authority.
1. Senior Citizens Facility
Mayor McLallen advised the purpose of this meeting is to address some of the concerns that have been brought forward by Singh, the Building Authority, Administration and Council Members. She continued by stating when this project began the product was unavailable and now that market situation has changed.
Mr. Czekaj advised the members of the Building Authority have attempted to get a few quotes in terms of what the proposed project would actually cost. From that, Mr. Czekaj advised they reviewed the number and adjusted as they saw appropriate to come up with what a potential cost would be for the original design and what the cost would be if they did the Alternative Design A or B. Although the numbers are not firm, Mr. Czekaj believed these numbers will get everyone thinking in the right direction and would provide enough information for Council to decide which way they want the committee to proceed. Mr. Czekaj does not believe they will have a final number until they get to the point where they have construction bids that he estimated to occur in late March. Mr. Czekaj then asked Mr. Tuomala to describe Designs A and B.
Mr. Tuomala advised Council that the original scheme received a positive recommendation from the Planning Commission for the project’s rezoning request and for preliminary site plan last night. He reminded Council the original plan consisted of a central building with 159 units (82 one bedroom and 77 two bedrooms). Mr. Tuomala noted the scheme also has a one-story multi-purpose room attached to serve the residents and the senior community at large. Further, Mr. Tuomala advised there are 40 two bedroom detached ranch units for those seniors looking for independent housing.
Mr. Tuomala advised they prepared the second scheme for comparison purposes. He explained during the process of costing the scheme out that the ranch units are more cost effective. He advised they are less expensive to build and they can get more rent. Therefore, Mr. Tuomala advised they reduced the central building down to 115 units and expanded the ranches to 56 units for a total of 171 units in the second scheme.
Mr. Tuomala reported there is an alternate to both schemes that involves the deletion of the 4,600 square foot multi-purpose facility. He explained they could delete it completely or fund it through another source.
Mayor McLallen understands there are a total of 199 units in Alternate A and 171 units in Alternate B; Mr. Tuomala agreed.
Councilman Schmid understands they plan to charge $850.00 for the ranch unit; Mr. Tuomala agreed and noted they are 952 square foot units with carports. Councilman Schmid believes they need to further discuss affordability this evening.
Councilman Schmid asked how will this project compete with the private sector and will they be able to rent them? Mr. Tuomala advised they have built this unit in several locations and it is very desirable (i.e., easy transition for those moving from a home for the first time). Mr. Tuomala does not believe it is the kind of project that competes with any other projects in this immediate area.
Councilwoman Lorenzo asked how much would the rent in the units in the central building amount to in Alternate B? Mr. Klaver interjected; they had planned to present the costs associated with this project in the next step of their presentation.
Mr. Klaver referred to the material in the packet. He explained the first page consists of two quotes they received for cost estimates for the proposed original design and alternate designs A or B. He noted on the advice of the city’s bond council they added a 15% bond cost to those quotes in the second number and the numbers are inclusive of everything (i.e., tap fees). He continued by stating the second page depicts the senior housing design options and their costs by type of unit. Mr. Klaver advised page 3 further analyzes the quotes and resulting project costs. He added they averaged the two quotes they received for the projected cost and noted they used a 92.5% occupancy rate. Mr. Klaver reported the last page represents senior housing rental for debt service. He noted these numbers are the product of prior planning committees and the Implementation Committee based upon visiting many different units in other communities. He further noted these numbers are just representative and they believe they will need to be adjusted. Mr. Klaver reminded Council this is only the debt component as they discussed in the joint study session with Plante and Moran, and added there is an additional fee as part of the rent for operational expenses and replacement funds for appliances, etc. ($150.00 per month).
Mr. Klaver further reported one of the reasons they looked at alternative funding for the multi-purpose room was because everything in the project is supported by the rents. He explained since the general public will use the room, they wanted to avoid a philosophical equity in having that space fully funded by rental funds.
Mayor McLallen asked how has the senior list waiting for this kind of housing changed? Kathy Crawford advised there are currently 570 names (90% are Novi citizens) on their list that are looking for this kind of house because there are still a number of household responsibilities they have difficulty accomplishing in order to stay where they currently reside or they are unable to drive and have difficulty getting transportation to their appointments. Mrs. Crawford noted they are currently making as many as 600 runs daily with their senior van. Mrs. Crawford continued by stating the construction of this facility is a commitment to the senior population now and in the future.
Mayor McLallen realizes the city has certain advantages in creating this kind of housing. However, she asked why can’t the needs of the people on the list be met by the Singh project? Mrs. Crawford understands the Singh project will market their product outside the community and she believes this project will meet the current needs for Novi residents. She explained they are constructing a senior community of people sharing similar stages and this facility also provides an efficient way for the city to deliver services to the senior population. In terms of competition, Mrs. Crawford believes they need to keep focusing on Novi senior’s needs which is a form of housing that does not currently exist. Further, Mrs. Crawford understands they are targeting the middle income seniors and recalled they never suggested they were providing low-income housing. She continued by stating she understands they cannot be all things to all people with this one product. However, she understands this project will still meet the needs of a large number of Novi seniors.
Mayor McLallen believes they need to come to terms with what would keep the people on the list from utilizing other sites? Mrs. Crawford replied many of the seniors who participate in the senior activities are like a family and it would be desirable for them to live near each other to share their similar experiences.
Mrs. Crawford further advised they have evaluated a number of HUD and MSHDA projects, but the different Councils were not supportive of this type of project because residency was not required. She restated they really wanted to meet the needs of Novi’s senior residents and did not want to solicit people from outside the community to live here.
Councilwoman Lorenzo asked whether the people on the list can afford rents between $500.00 and $1,000.00 a month? Since the concept of this project began years ago, Mrs. Crawford advised they discussed rents in a range from $450.00 to $650.00 to $750.00. She said the amount of the rent depended upon what option they chose and she advised they received a favorable response from the seniors. Mrs. Crawford believes they will be able to meet the needs of many people living on a limited income. She added she believes those seniors who only rely upon their social security can no longer afford to live in Novi.
Councilwoman Lorenzo asked whether the rental amounts would change after constructing the project because she understands the numbers are not firm. Mr. Klaver replied the numbers are the best estimate and after providing a large amount of information about the project to those companies providing the estimates, he believes the numbers are realistic. He also pointed out they have a fairly large contingency and they will exceed the 92.5% occupancy estimate. He added they also have some margin built in a variety of different areas. Mr. Klaver continued by stating if the hard bid comes back two million dollars over these quotes, the rents will obviously increase dramatically. However, he added they do not expect that to happen.
Councilwoman Lorenzo does not know what their confidence is based upon if they do not have firm numbers. Mr. Klaver advised the city solicited quotes from those companies and experts that have no vested interest in this project.
Councilwoman Lorenzo is concerned they will not be able to meet the target market and noted the rental amounts already exceed $750.00. She continued by stating she wonders how much above that amount the seniors can afford. She also believes they need to look more closely at who their target market is.
Although Mr. Czekaj believes that question is premature at this point, he agreed with Councilwoman Lorenzo. Mr. Czekaj believes at that point they would have a couple choices. He explained there would have to be a willingness from Council to spend more money and for discussion purposes, he believes they could estimate the increase to be approximately a $25.00 increase in rent across the board for every additional million dollars. Mr. Czekaj continued by stating they could also scale back the project (i.e., remove multi-purpose room). Mr. Czekaj advised tonight they are just trying to determine whether Council is willing to move forward to find out what this project is actually going to cost. According to the bonding process, Mr. Czekaj understands they do not have to have their final bond amount until the referendum period would expire. He continued by stating at that point they would be able to provide costs to Council based upon the contracts Mr. Tuomala has reviewed. Mr. Czekaj believes the question before Council would then be whether they should move forward or scale back the project and provide other alternates.
Mr. Czekaj stated it would be helpful if Singh could share their demographic study with them in terms of how many seniors are actually interested in these types of units.
Councilwoman Lorenzo agreed with much of what Mr. Kilgore stated. She restated she believes the most important issue is to meet what is affordable to the target market. Councilwoman Lorenzo continued by stating although ideally the seniors would like to have a recreation center, she believes it is more important to provide an affordable, decent and safe apartment. She restated once they identify their target market, they can move forward. Councilwoman Lorenzo would like them to move forward and utilize all the experts to determine their target market.
Mr. Klaver advised one technique they use when they prepare the bids would be to present a number of alternatives with separate prices. He continued by stating this would give them the flexibility to remove the multi-purpose room from the project if the bids for that option are too high. He noted they used this technique when they constructed the Civic Center. Further, Mr. Klaver believes an additional $200.00 per month ($2,400.00 per year) is a significant increase for seniors. Mr. Klaver continued by stating the Implementation Committee researched what would be considered to be affordable to try to back into what would be affordable to the target group. However, he added they did not anticipate the increase in construction costs in their research.
Councilwoman Mutch arrived at 8:00 p.m.
Councilman Kramer supports moving forward with this project. However, he asked that they provide a competitive market analysis before their next meeting. He added he believes the rental amounts for the alternate without the multi-purpose would amount to approximately $540.00 for a one bedroom and $640.00 for a two bedroom unit in the central building, and $900.00 for a ranch unit. Councilman Kramer believes it may make sense to design and situate the central building in a way that it could be expanded in the future.
Mr. Klaver understands the site would not permit that option.
Councilman Kramer restated he would like to see further analysis, but added he does not believe they need to go to extraordinary measures.
Mr. Klaver pointed out they believed the ranch units were more than an economic consideration than the Implementation Committee. He explained the other considerations were the architectural transition and the issue of those seniors who are not willing to move into the main building.
Because Councilman Kramer believes the multi-purpose room is an essential part of the project and therefore, he would like to see further information about other alternatives for financing it.
Councilman Schmid believes the purpose of this project has changed slightly. He explained he understood the original concept was designed to accommodate those seniors who could not afford other housing. Further, it is important to Councilman Schmid that they obtain affordable housing for those seniors that cannot afford the projects in the private sector. He continued by stating if the city cannot provide affordable housing, then they should get out of the business.
Councilman Schmid asked who is managing this facility? Mr. Kriewall replied they plan to hire a management company.
Councilman Schmid restated he is ready to move forward with affordable housing ($500.00 to $600.00). However, he is somewhat concerned about the ranch units because of the rental amounts. Although Councilman Schmid understands the purpose of these units is to subsidize the rents in the main building, he believes the city would be entering the competitive market with them. Councilman Schmid restated if they cannot move forward with affordable housing, the city should then leave it to the experts.
Mr. Neiman advised the rent has two elements. He explained the base rent covers the debt service of the bonds and serves as a portion of the capital reserve (i.e., appliance replacement). He continued by stating based on the interest rates, the city has the advantage of low rates for long term financing. Based the conservative 92.5% occupancy rate, Mr. Neiman believes that component of the rent should not much need adjustment. Therefore from an inflation (2-3% per year) standpoint, Mr. Neiman believes that amount will increase very little.
Mr. Neiman reported the second component of the rent that covers management costs (i.e., lawn care, heats, light, etc.) will experience inflation, but noted this is a much smaller component of the rent. Mr. Neiman estimated this amount could increase approximately 1% and would be less than the inflation rate prevalent in the market place.
Mayor ProTem Crawford believes affordable housing is subjective. He explained affordable housing in the year 2000 will be no where near what they believed to be affordable housing in the early eighties. He continued by stating that many of the general rent ranges are from ten years ago and they have changed. Mayor ProTem Crawford does not believe they can provide everything to all people. However, Mayor ProTem Crawford would like to move forward with this project even though they have experienced a set back with some cost estimates. Mayor ProTem Crawford reminded Council they have been researching this project for almost fifteen years and asked where has the private sector been during that time. Mayor ProTem Crawford believes there is a market for all of these developments and also believes they all serve a different market. Mayor ProTem Crawford added he believes the multi-purpose room is an essential amenity of the project and he would like to see it included in the total project with any means they can.
Councilwoman Mutch asked whether there is a standard or measure by which affordable housing is gauged? Mr. Klaver replied they looked at other units and they conducted a survey where they gathered income information and budget information. Mr. Klaver advised they consider this to be the most relevant base in inflation. Mr. Klaver reminded Council about the earlier comments made by Mr. Neiman and that their increases have been minimal due to the fact that so much of the rent is fixed. He added they only looked at what is available in rentals and they did not look at single family housing.
Councilwoman Mutch thought if they were looking at primarily Novi residents, the most expensive would most likely be recently built homes instead of homes that have been paid off for some time.
Mr. Klaver believes the only difficulty in looking at straight rental units is that they do not offer services.
It seems to Councilwoman Mutch that this facility will only draw from Novi residents and the private sector will draw from other areas. Therefore, she does not think this will cause a competitive situation.
Councilman Schmid noted Singh’s letter suggests for someone to afford $900.00-$1,000.00 per month they would have to make $43,000.00-$48,000.00 per year and although it seems high to him, he thinks it is something to look at. He also believes the seniors do not have this kind of income and their income amounts to perhaps $35,000.00 and less.
Mrs. Crawford advised a typical person on the list is a gentleman living alone in his paid for mobile home in a park. She stated the lot rent amounts to approximately $450.00 per month and increases a significant amount yearly for someone living on a fixed income. Consequently, Mrs. Crawford advised most of his social security check pays for the lot rent. In addition, Mrs. Crawford reminded Council that seniors have costs associated with their medication and other medical expenses. She added mobile homes are not usually located near shopping areas and the residents need transportation. She added the utility costs are high and the maintenance costs are also expensive. Mrs. Crawford stated this is the typical type of person that would like to move into this project. Although they have never conducted a means survey, Mrs. Crawford advised they know these people have a limited income.
Councilwoman Lorenzo asked whether most of the people on the list are active in Novi’s Senior Center? Mrs. Crawford replied many are.
Councilwoman Lorenzo asked whether it would possible to survey them about what they can afford? Mrs. Crawford replied they tried to survey the seniors in the past and unless they really understand the reason why they would have to provide their income information, they will probably not disclose their actual income.
Councilwoman Lorenzo advised they would not ask for income; they would ask what is the highest rent they could afford. Mrs. Crawford replied it would still be very difficult to get that information because she believes they would choose the lower amount.
Mayor McLallen asked how would they determine eligibility for this project? Mrs. Crawford advised they are aware of which seniors need assistance, but they have not yet decided how they will determine eligibility. Mrs. Crawford continued by stating they do know they want a clearinghouse to determine someone’s eligibility and noted a management company can supply that service.
Regarding marketability, Mr. Czekaj stated if there is a market for the type of housing Singh and Blair Bowman are constructing, then he believes there is a market for this project.
Councilwoman Lorenzo stated if they cannot serve the people on the list, then she believes she would question whether they should move forward and that perhaps it is best left to the private sector. Councilwoman Lorenzo continued by stating she knows there is a market, but that was never her intent. She explained her intent was to support those people who really need this kind of housing.
Mr. Czekaj believes if they are unable to provide affordable housing to the people on the list, then the private sector is certainly not accommodating them now or in the near future. He continued by stating they would like to accommodate all people for all things, but they are unable to do that and noted the project was not designed to be a panacea to every senior.
Councilwoman Lorenzo understood they were not going to serve those who could only afford $200.00 to $300.00 a month, but she believes $700.00 to $900.00 a month amounts to a mortgage payment. Councilwoman Lorenzo stated she is not looking to get into the real estate business; she is looking to serve Novi seniors with low to moderate income.
Mayor McLallen believes the overriding concern is about who are they serving and why.
Mayor McLallen advised she supports the plan that includes the multi-purpose room because the Civic Center can no longer support the many activities available in Novi. She believes this project is an economical way to create a service satellite to the Civic Center. She also believes the seniors on the list should truly have a need for this facility and that it is not because it merely provides a sense of community. She added she believes they are moving away from their original intent.
Mrs. Crawford does not want to imply that this facility would provide a country club atmosphere. She restated this facility would provide a more efficient way to deliver programs and offer services to Novi seniors.
Mayor McLallen asked what does the committee want from Council this evening? Mr. Czekaj replied they need direction with respect to the bonding and the architectural design aspects. For construction, Mr. Czekaj advised they would like to move to the stage of soliciting some firm costs. He continued by stating one reason they are meeting tonight is because some time ago (last November or December) there was discussion that $12M would be sufficient and now the original plan realistically will cost approximately $18-19M with rental amounts between $600.00 and $900.00 per month. Mr. Czekaj said they need further direction so they can keep this project on the fast track. He said even if Council advised they have no more than $14M, they would still be able to get back to work. He continued by stating if affordability to Council amounted between $600.00 to $900.00 they could still come back with an alternative and firm costs.
Councilwoman Mutch would like a commitment from Council about moving forward with senior housing and if so, what are the key issues. Councilwoman Mutch continued by stating she understood there were people who were living in Novi and they could no longer afford to live here. She thought that it was unfortunate to lose those residents who have invested of themselves in the community for many years. She believes if they can build something on a financially sound basis and make it affordable ($600.00 to $900.00 range), she would support moving forward. Further, Councilwoman Mutch understands this range for rent is what is currently being charged in Novi for apartment rentals and that the average of the rentals would serve as a good measure as to what is affordable. Councilwoman Mutch restated she believes they should consider a person’s longevity in the community because they have invested the community and it would also serve as a way to minimize the risk of someone taking advantage of the situation.
Councilman Schmid believes the key to this issue is to accommodate the citizens on Mrs. Crawford’s list and not those who have simply lived in Novi for many years. Councilwoman Mutch stated she is not saying that and agreed they need to accommodate those citizens on the list who have lived in the community for a long time.
Councilman Schmid further stated if a senior cannot afford $800.00 a month, then they should not build this facility.
Councilman Kramer believes the criteria they are struggling with is the issue of affordability and however it is measured. Councilman Kramer supports Alternative B because he believes it makes the entire project more affordable. Further, Councilman Kramer restated he believes they need to look more closely at the market place so they are not in competition with other senior housing in the city. He continued by stating once they conduct a financial analysis they should be able to determine how much they can afford to spend.
Mr. Czekaj asked whether they should look at alternatives that would require further variances for noncompliance with the city’s ordinance. Although he does not want to speak for Mr. Tuomala, Mr. Czekaj understands the proposed project is not excessive; Mr. Tuomala agreed.
Mayor ProTem Crawford’s definition of affordability is the $600.00 to $900.00 range because he believes it will target many of the citizens on the list. Further, he reminded Council if they keep talking about this project for another fifteen years affordability will increase. He stated he believes they need to stop talking about this project and start doing it.
Mayor ProTem Crawford recalled the rent would increase by $25.00 per month for every additional million dollars; Mr. Gibson believes that amount is closer to $50.00 or $60.00 per million per unit.
Mayor ProTem Crawford understands if they increase the project by four million dollars, it would increase the payment by a couple hundred dollars per month. He asked whether there are ways to decrease the costs by using different materials? Mr. Tuomala replied they currently meet all the minimal standards of the ordinance. He continued by stating because he is also the architect for Singh he can reliably state this project is not the same quality as Singh or is it meant to be.
Mayor ProTem Crawford would like to see rents in the $600.00 to $900.00 range and believes they should move forward with this project as quickly as possible to keep it affordable.
Mr. Czekaj understands there will be approximately a $300.00 difference in the rent amount when compared with the Singh project.
Mayor ProTem Crawford believes any further market analysis is unnecessary because of the aging of the baby boomer generation and therefore, he believes the different types of housing will accommodate the large amount of growth in the senior population in Novi.
Mr. Saven has a grave concern in regard to the construction costs because they are not going to decrease. He explained residential square footage is currently over one hundred dollars per square foot. He continued by stating there are also concerns about the availability of labor because they will be competing with the increased activity in Detroit who is known to pay top dollar to their laborers.
Mr. Kriewall believes they should carefully consider Mr. Neiman’s comments about the inflationary costs attributed to the rents. He reminded Council that the rise in rent for their project is nil when compared with the higher rates for those facilities in the private sector. Mr. Kriewall believes another key factor is the escalating costs associated with labor and materials.
Councilwoman Lorenzo is not looking to compete with the apartment complexes in Novi if the seniors can already afford them. She restated she is not looking to get into the real estate business.
Mr. Czekaj advised the apartment complexes do not offer senior services and were not built to provide senior accommodations.
Further, Councilwoman Lorenzo believes if the rent is similar to the going market rate for apartments, then she would question whether government should be involved in this business.
Councilwoman Lorenzo asked for further clarification about what action was taken in regard to this project last night? Mr. Klaver replied the Planning Commission gave a positive recommendation for the project’s rezoning and for preliminary site plan approval.
Councilwoman Lorenzo understands the city has moved forward with a rezoning when they are uncertain whether there is a project. She continued by stating she is concerned because if this particular project does not move forward, then the city has a piece of property that is rezoned to multiple family. Mr. Klaver reminded it is city owned property.
Mark Sturing stated he is concerned about staying on their mission to provide affordable housing. He stated they are now realistically talking about rental amounts in the range of $600.00 to $900.00 per month. Mr. Sturing has much respect for Singh’s evaluation and added he is the pessimist of the committee in terms of numbers. Mr. Sturing believes their numbers are realistic based upon what contractors have given them to date. However, Mr. Sturing also realizes when final plans come in, the numbers may increase. Mr. Sturing continued by stating because the cost increases for every million dollars that he believes it would be a good idea to determine what the people on the list will pay. Further, Mr. Sturing believes they should provide some type of restrictions for residency so they do not depart from their social purpose. Mr. Sturing advised one reason for this meeting is for some clarification from Council about the mission of this project. Mr. Sturing concluded by stating he believes Singh when they say the city will find some surprises with the final numbers.
Mayor McLallen believes there is a consensus to keep this project affordable to accommodate those people who truly have an economic need. Further, she understands they still need to establish eligibility requirements and that there are two hundred citizens who would meet those requirements. Mayor McLallen believes the question is about the threshold for affordability and if the construction costs exceed that threshold, should they discontinue the project. Mayor McLallen does not believe anyone supports having the rental amount exceed one thousand dollars.
Councilman Kramer suggested they conduct an anonymous survey that would include the rent range for each type of unit and provide the income restrictions. Councilman Kramer added he still believes they need to provide a market analysis. He asked whether the other developers would share their market plan to see whether they can all exist.
Councilwoman Mutch suggested that they also provide requirements on the survey. Further she does not want to construct a substandard building because she is concerned that the other developers will want to construct their projects in the same way. However, she added she would not oppose a variance for things such as setback requirements.
Mayor ProTem Crawford would not support constructing a facility below the city’s standards. Although Mayor ProTem Crawford does not believe a survey is needed, he does not want to conduct a survey that would associate a person’s income with the kind of unit they could rent because he believes this kind of restriction could create a class system. If they do conduct a survey, he suggested that they provide a range of rental amounts (i.e., $700.00 to $1,000.00) to determine whether the citizen is still interested.
Councilwoman Mutch knows there is a market and the survey would only ask if what the city is proposing would be affordable.
Mayor ProTem Crawford does not believe the city wants to get into this because this kind of survey would involve having to provide income, house equity and so forth.
Councilwoman Mutch believes if someone wants to have the option of indirect public subsidized housing, they must compromise by providing some personal information that would allow them to take advantage of this kind of housing.
Mrs. Crawford hopes that they do not just base eligibility on income because there are many other things to consider (i.e., wheelchairs, poor vision, etc.).
Councilwoman Mutch suggested they base the amount of rent on a sliding scale determined by income. Mrs. Crawford stated it is difficult to calculate the rent in this way because it ends up in the hands of a citizen’s committee and many have had a horrendous experience. However, Mrs. Crawford added if they do decide to base eligibility on income they should use the HUD or MSHDA regulations as a guideline to develop a standard. If the city is unable to provide subsidized housing, Mrs. Crawford recommends that all the residents pay the same rental amount.
Councilman Schmid believes their target is in the $600.00 to $800.00 range and that the best person to verify this is Kathy Crawford.
Councilman Kramer disagrees in principle with Mayor ProTem Crawford’s statements. He explained they must define their own niche in the market so they do not directly compete with the other projects. In order to do that Councilman Kramer believes they must assess the market.
Mr. Kilgore advised he has worked on many subsidized housing projects and he believes the Building Authority is on the right track to reach their goal if they rearrange things somewhat. Mr. Kilgore referred to Plan B and he believes they have underestimated the value of the Novi market. He explained the curve in the housing values and in assessments have increased dramatically. He continued by stating seniors are willing to pay upwards to $2,500.00 per month for housing. Therefore, he suggested that they review the Plan B concept in terms of the small ranches because the concept is unique and developers are not providing this option. He then suggested that they make money with this option and use the profit from these rentals to subsidize the rents in the central building. He continued by stating to achieve a social purpose with this project, they must provide affordable housing in the $500.00 to $600.00 range. He also agreed they must be certain they are helping the right people and the only way to be certain is to acquire income information.
Councilman Schmid does not believe anyone would be willing to pay $2,500.00 for a eight hundred square foot home and that those who have that amount to spend will be drawn to projects similar to Singh’s.
Mayor McLallen asked whether the committee has enough information from tonight’s meeting to move forward.
Mr. Czekaj asked whether they could review Singh’s demographic studies; Mr. Kilgore agreed and added there is a high market for $600.00 per month rentals.
Mayor McLallen understands the original intent was to accommodate those seniors who could not take advantage of the other kinds of housing available in the market because of their unique situation. She further asked whether it is acceptable that they only meet the needs for a portion of the people that use this project.
Mr. Czekaj believes they have had their charge further defined and they want to move ahead quickly.
Mayor McLallen understands if they continue to move forward with this project, it will proceed or not proceed by late spring; Mr. Czekaj agreed.
Mayor McLallen asked whether the committee can come back before Council within thirty to forty five days? Mr. Klaver advised there is an issue with the timing of the project in terms of its impact on costs and bond costs. Further, he reminded Council they are incurring design costs. Mr. Klaver noted they are scheduled to appear before the ZBA on February 2 and therefore, this would not be consistent with thirty to forty days. Mr. Klaver added they also need a not to exceed amount and if they were given an amount of $20M it would allow them to proceed within the forty five day referendum period and bring back firm numbers in three weeks. However in the mean time, Mr. Klaver stated they need to begin the bonding process.
Mayor McLallen believes the agreed upon stated goal is to serve as many of the people on the list that are truly in need of this product at a reasonable cost. Further, the Mayor advised they would also like to provide a niche for something that is not being provided elsewhere in the community that could perhaps subsidize the group from the list. Mayor McLallen added because the numbers have changed so radically, Council would like to confirm who are they serving, determine whether they can be served by any other project in the community and if not, can they then deliver a product that meets their needs.
Mr. Czekaj understands there are other people besides those on the list in need of this kind of service. Therefore, he would be concerned if Mrs. Crawford canvassed only her list, that the answer would not be satisfactory. He asked whether they could rely on Mrs. Crawford to provide a rental range or does Council want something more concrete.
Mayor McLallen agreed they have relied heavily on Mrs. Crawford because of her link with the senior community. However, Mayor McLallen is concerned about establishing a not to exceed figure because the cost of the project has been rapidly escalating.
Mr. Czekaj suggested that the Building Authority rely on the information given to them by Mrs. Crawford by the end of next week so they can determine what their charge is.
Mayor ProTem Crawford understands the not to exceed figure is to move forward with the bonds and that they can accept anything up to that number; Mr. Klaver agreed.
Mayor McLallen understands there is still a consensus to continue to move forward with the process for this project.
Mr. Klaver advised they would like to come back before Council on February 1.
Mayor ProTem Crawford understands they do not need the not to exceed amount tonight; Mr. Klaver agreed.
There being no further business before City Council, the meeting was adjourned at 9:30 p.m.
Kathleen S. McLallen Tonni L. Bartholomew
Date Approved: February 1, 1999