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SPECIAL JOINT MEETING OF THE COUNCIL AND
NOVI BUILDING AUTHORITY OF THE CITY OF NOVI
MONDAY, AUGUST 6, 2001, AT 7:00 PM
NOVI CIVIC CENTER – COUNCIL CHAMBERS – 45175 W. TEN MILE ROAD
Mayor Clark called the meeting to order at 7:03 PM.
PLEDGE OF ALLEGIANCE
ROLL CALL/COUNCIL Mayor Clark, Council Members Bononi - absent/excused, Cassis, Csordas, DeRoche – absent/excused, Kramer, Lorenzo – absent/excused
ROLL CALL Larry Czekaj, Craig Klaver, Kathy Smith-Roy-absent, Don Saven,
BUILDING AUTHORITY Mark Sturing
APPROVAL OF AGENDA
CM-01-08-204 Moved by Cassis, seconded by Kramer; CARRIED UNANIMOUSLY:
To approve the agenda as presented.
Vote on CM-01-08-204 Yeas: Clark, Cassis, Csordas, Kramer
Absent: Bononi, DeRoche, Lorenzo
AUDIENCE PARTICIPATION - None
PURPOSE OF SPECIAL MEETING
1. Meadowbrook Commons Update
Larry Czekaj, Building Authority, commented the Building Authority’s work was ending and they had started the transition to the management aspects of the project. The project was started about two years ago and issues had come up but collectively through the good planning of Building Authority members and the support staff they were able to discuss the issues before they floated the bonds. Mr. Czekaj said the project was financially on track and should be up and running by late 2001. Additional work on the project such as siding, grass and trees was completed everyday. The contractor has done a good job but they were late in delivering the project and the City is being compensated.
Mr. Czekaj said they would be leaving the Management Company with enough proceeds to make the first bond payment, which is the interest portion of the bond due in October and there is additional money left for "tweaking" the project. Landscaping and other "wish list" items are not completed yet.
All 60 of the ranch units have been leased or reserved. Out of the 115 units in the "big house" 90 units have been spoken for and they are in the process, with the Management Company, of getting 90 leases signed. The Management Company, staff and Mr. Klaver have been caring, reassuring, gentle, and forceful with a smile with senior members of the community.
Mr. Czekaj said as the Building Authority they had continuing issues. While the construction phase is quickly ending, City Council and staff would handle the management phase. While the construction aspect is nearing completion there is still a lot of work that remains to be done. They believed good management had been chosen with PM One but they need to be watched, prodded and poked and expected to provide answers and documentation. They had planned a 3% to 5% vacancy but would like to caution the Management Company and City staff that if we anticipate a 5% vacancy factor it still left $12,000 to $15,000 worth of rental units available now. That is a lot of money per year and that first 90% or 95% rental income is very important but that 5% to 10% differential on the back end of the transaction is what would make or break it for all of us.
Mr. Klaver introduced Melissa Graban who represented PM One. PM One has been on board for quite a while and in addition to being our leasing agency they have also served to advise about features such as trash compactors. He thought the Building Authority would have a series of recommendations or issues for Council providing some advice on areas of concern and suggestions.
There had been a lot of discussion on rules, etc. and they felt those had been resolved. The feedback from residents residing in the ranch units has been very favorable. There are a few features they wanted to develop as they proceed such as a community garden for the residents and possibly to open it up to the community and a couple park settings.
They had been working closely with Kathy Crawford who had helped keep them on track in terms of senior services. The Community Center portion of the building would have activities that would also be available for all community members.
Member Cassis thanked the Building Authority Committee for doing a splendid job. He felt with the percentage rented before the project was formally opened was a credit to Mr. Czekaj and others involved. He said they were the unsung heroes doing the hard work behind the scenes. The subject of senior housing went back 12 to 13 years ago and we should be grateful because the segment of the population that is so dear to us now has the ability to enjoy some good housing.
Member Cassis asked what the average length of the lease was? Mr. Klaver said one year and they would be staggered. Member Cassis asked how many people were Novi residents? Mr. Klaver didn’t know but he could get the information and he thought it would be the majority.
Member Kramer echoed Member Cassis comments about the Building Authority and thought it had been a pleasant, fruitful, efficient and effective group.
Member Kramer asked if there was any money designated for the park area? Mr. Czekaj said there was nothing set aside specifically but they had talked about future park areas and gazebos. Right now, everything isn’t in but based upon their best estimates they are about $200,000 to the good considering all the expenditures that have taken place or set aside. He said they had waited on some of those items until the final landscaping plan to see if they had the money.
Member Kramer questioned whether a park would be an appropriate use for the money. It would serve the community, senior community and it would add to the site. He commented he would be looking for a recommendation from the Building Authority for an appropriate use for those funds.
Member Kramer commented the rules of the facility would either remain or be reviewed after they had some experience with the residents in the facility. Mr. Klaver said they were still discussing the rules and were dealing with issues such as flower planters, mailboxes, etc. Generally speaking, the Management Company did a good job and an overhaul of the rules had not been necessary. He thought once the residents were in the main building it might open up some issues because it was a slightly different environment than the ranches. So far the existing rules accommodated all situations.
Member Kramer noted six months or a year from now he would like to see results of a community overview of the rules to see if the residents thought they needed to be modified..
Member Kramer asked when the senior program would be relocating? Mr. Klaver said Mrs. Crawford and some of the OLHSA staff hoped to move over two weeks before the main building was done. They are working with Carol Kalinovik to establish an office, ordering equipment and getting phone lines, etc. They hoped to begin setting up their office by the middle of August and lease in by September 1st.
Mr. Klaver said because of space the larger activities such as meal programs and social programs would be at the Civic Center and many activities would be in both places such as card events and social events.
Member Kramer thought a management program or plan was needed to maintain a low vacancy rate and asked if they had one. There should also be an active recruiting and waiting list. Mr. Klaver said they anticipated having a waiting list in place.
Mr. Sturing noted the Management Company provided them with a weekly report. It is very detailed in terms of what’s rented and what’s reserved and is probably one of the best monitoring devices to determine a trend before it got out of control. PM One knows their objective is to lease the units as fast as possible. He would not be surprised to see a vacancy factor of about 2% or less in a very short time.
Mr. Czekaj said they asked PM One to look into making units available on a per diem basis for someone visiting an ill loved one. The Management Company would have to make sure the linens are clean, etc. like a hotel room.
Member Csordas asked about the percentage of units not rented. Mr. Czekaj said vacant units are down to 9% because more of them have been reserved. To reserve a unit a person would have to send in a reservation agreement with a $50.00 non-refundable deposit. There are no ranch units left. Member Csordas asked what percentage of those people walk? Ms. Graban said less than 5%.
Member Csordas asked if the number of the units occupied were generating enough revenue to retire and service the debt? Mr. Czekaj said yes, once fully on line and the Management Company was going back for a revised budget including a maintenance reserve. There would be enough to satisfy the debt on an ongoing basis and build up the reserve at the same time. Member Csordas asked if there was an incentive in the contract for maintaining occupancy? Also, do the residents pay City taxes?
Mr. Klaver said they would not pay City taxes because they lease and the project is tax exempt because the City owns it.
Ms. Graban said the replacement reserve each month is $2,100 and would be used in the future for replacements in addition to other operating expenses. She said there was no incentive or bonus to the Management Company for maintaining occupancy. She did not believe this was in the contract; traditionally it is not.
Member Csordas asked what her "gut" feeling was on this being 100% occupied? Ms. Graban felt it would be reasonable to project a very stable 97% to 98% occupancy. That was the reason they were going to a leased management plan in the main building where they are staggering the lease expirations so there isn’t a huge vacancy at one time. They would watch the number of leases expiring in a 10 to 14 month period from the initial move in date. They are offering residents the option to sign anywhere from a ten to a fourteen month lease where we are putting a top number of expirations in that period at 30 leases per month. Once they get to 30 leases that would be a month that would be closed for expirations.
Member Csordas asked if people typically came to places like this and stayed for awhile? Ms. Graban said they do, especially as more community is created and they begin to feel that not only is the apartment their home but the community on the whole is their home. They don’t want to leave their neighbors.
Mr. Klaver said one of the recommendations of the original study committee was the ranch units which represent a sort of transitional opportunity for people who might be currently living in a private home. They found, looking at other operations that the younger more active seniors tend to gravitate towards the ranch homes. After five or ten years they want the convenience and security offered by the main building so they tend to move from the ranches into the main building.
Member Csordas wanted everyone to know this was a revenue neutral project that does not cost the City anything. However, there is an opportunity, possibly, to generate revenue to reinvest into the project.
Mayor Clark congratulated the Building Authority Members and their predecessors for turning this into a reality so our seniors have the opportunity to remain in the City of Novi.
2. Novi Library Bond Issue
Mr. Czekaj said they, as the Building Authority, have been approached by the Library Board to explore ways they could be of assistance to them with the new library project. Mr. Klaver has been their liaison with the Library Board.
Mr. Klaver said Council was very aware of their commitment to place this issue on the ballot in the November election, the joint meeting with the Library Board and their desire to utilize the Building Authority. There have been a series of meetings with the Library Board , Brenda Evans and Mr. Neiman. They have looked at what other communities did in terms of getting input from the Library Board. Mr. Klaver said when the Building Authority was done with the construction phase this would be turned over to the Library Board to manage. The Building Authority has no expertise in how to operate a Library.
It would be the Building Authority’s goal to take a program, developed by the Library Board, which would include the features, designs, etc. and translate that through financing and construction of the project. There has been only one meeting and with the assistance of the bonding attorney and looking at other communities the Building Authority would continue to discuss this issue with them and come back with recommendations for Council. It would be Council’s role and decision to direct them as to how to operate the Library.
Member Kramer asked what the Building Authority’s position was and if they were willing or hesitant.
Mr. Czekaj said they had not discussed it amongst themselves other than to say they are willing and able to assist if the circumstances are right and if that is the decision of City Council.
Mr. Sturing echoed Mr. Czekaj’s comments that they were willing to serve if that was the direction of Council.
Member Csordas recognized the work of Mr. Klaver, Ms. Smith-Roy, Mr. Saven and Ms. Norman. He asked if Mr. Helwig’s staff would be available to continue with this? Mr. Helwig said if this becomes a designated priority as stated by the voters of this community and this Council, they would support that priority.
Member Cassis asked how this would take place and was it after the bond issue was decided Council would come back and start the time clock for this project.
Mr. Helwig said it would be presumptuous to do otherwise when something of this magnitude is going before the voters. Brenda Evans, the Library Board and Mr. Neiman have already been meeting and conferring. Mr. Neiman has been looking at various alternatives so that given a favorable approval by the community they would be ready. It is important to not presume an outcome by our actions.
John Chambers, President of the Library Board, commented that they appreciated the opportunity to meet with the Building Authority, Mr. Klaver and Mr. Neiman on Thursday morning. They set stages so they had common ground to communicate back and forth to exchange and explore ideas. He said they thought the voters of Novi would approve the ballot issue in November because it is a good and worthwhile project. He wanted to be sure all the avenues open to them as a community were explored and then select the best method of doing the project. They are planning and were very enthusiastic after the Thursday meeting. They hoped to continue that type of endeavor with the Building Authority and with administration. Ms. Smith-Roy had also been helpful with the financial information and forecasting for them.
AUDIENCE PARTICIPATION - None
There being no further business to come before Council, the meeting was adjourned at 7:53 PM.
Richard J. Clark, Mayor Maryanne Cornelius, City Clerk
Transcribed by: ______________________________
Date approved: August 13, 2001