REGULAR MEETING OF THE COUNCIL OF THE CITY OF NOVI 
 MONDAY, JULY 1, 2002 AT 7:30 PM
NOVI CIVIC CENTER – COUNCIL CHAMBERS – 45175 W. TEN MILE ROAD

Mayor Clark called the meeting to order at 7:39 p.m.

ROLL CALL: Mayor Clark, Mayor Pro Tem Bononi-absent/excused, Council Members Capello, Csordas, DeRoche, Landry, Lorenzo

Mr. Helwig asked that a presentation be added to the agenda. Chief Shaeffer would show an in car police video of the life saving incident that occurred last week through the use of the Automatic External Deliberators by Officers Craig Chismar and Steve Balog. Also, in the typing of the amended agenda Item 15 amount was higher than it should be. Item 15 should be $1,105,355.

Mayor Clark added under Mayor and Council Issues, Chapter 20 Drainage District.

Chief Shaeffer spoke about the purchase of the 17 Automatic External Deliberator devices that have been placed in patrol cars and City facilities. All police personnel have received training on these small portable devices that detect heart problems and instructs the operator to administer a shock. On June 24^th officers saw a vehicle leave the roadway and crash on top of a brick retaining wall and they immediately responded to the driver who had no heartbeat and was not breathing. They used the AED and saved the drivers life. Chief Shaeffer showed a video of the event that was taken from a police vehicle and introduced Officers Balog and Chismar.

Mayor Clark presented the Lifesaving Awards to Officers Balog and Chismar and Chief Shaeffer presented the officers with Lifesaving Ribbons to wear on their uniforms.

Member DeRoche commented it was the most impressive thing he had seen in his tenure as a Novi City Councilman. He said the performance of our police force was absolutely amazing and he couldn’t be prouder of the community, the decisions that our police officers make and the fact that they saved a life and were able to demonstrate that to Council. He told the

Officers that he appreciated that they were out there doing their job and for the impact that has for our citizens.

1. Special Assessment District No. 152 – Shawood Walled Lake Heights Water Main.

Mr. Korte said when the water main went in on Austin the other end of the subdivision should have participated but for City and public reasons it didn’t. He raised many issues about the Shawood bridge that is now closed because it is collapsing and had said there was no way to do this, that, etc. without destroying the bridge. Now we are looking at a large amount of money, possibly $250,000, to replace the bridge. He asked why it wasn’t done when we had the whole thing torn up. He asked what Council what they were doing with the bridge now since it is closed off?

Chuck Tindall, 2353 Shawood, said this SAD was charged to their taxes about a year before any work was started. He had been trying to find out what was going on and if it was completed but didn’t get any response. He noted the information on the notice that this project came in under budget and noted that since he paid it up front he was expecting a $1,200 refund. He thought they would have been notified that it had passed and the assessment would be put on their tax bill but the notification came when the tax bill came in July. Mr. Tindall felt the City had $1,200 of his money for 2 years and he should get it back plus the 8% interest he had been charged. Also spoke about the bridge situation, and noted it’s been blocked off since Christmas Eve and felt the residents deserved some type of mailing about where this issue stood, what was being done and what had caused it. Mr. Tindall also asked if the people who paid the rebate would get it back because there is a rumor that the rebate would go to the current homeowner. He felt it was incomprehensible that the current owner would get the refund and was looking forward to some response to this.

Public hearing on SAD 152 was closed.

Mr. Korte asked why the City decided, 32 years ago, that the other end of his subdivision didn’t

need sewers because he remembered that, within 500 feet of a waterway, if the municipality

petitioned the Federal government they would help and that was how he got sewers so many

years ago. He felt the City hadn’t come very far in the past 32 years. He paid $24 quarterly for

his sewer assessment and that is what these people should have paid when it originally went

in. It is a tragedy there wasn’t proper engineering then and that there isn’t any now.

Public Hearing on SAD 154 was closed.

Janice Strehl, stated she wanted to change her vote to no. She felt with the financial condition, as it is right now, the stock market etc. was not advantageous for her to pay for this now.

Marie Watkins, 330 Ludlow, asked about the cost of the assessment? Mayor Clark said that information should have gone out to everyone. Mr. Helwig commented they had not proceeded to bid on anything until the Council made further decisions after getting this input.

There were preliminary estimates and Mr. McCusker advised they had looked at the total cost of the original projects and the road project and it was about $1,107,000, for water main projects it was about $509,600 and assessment values for the road and drain projects would be about $10,000 a household and for the water projects about $5,100 per household. Those estimates were based on the amount of materials and construction estimates to do the project.

John Harvey 1321 W. Lake Drive, was in favor of moving this forward and felt they were making good progress now. He said if you can’t figure out what to do with the roads, put in the water.

John Wright said he wondered about the easement and the talk about using a storage drain to go into the lake. He said kids swim there and he had made a few calls and was told it wasn’t allowed and didn’t know why sewer grates couldn’t be put in like their doing in the Hawthorn subdivision.

Mayor Clark closed the hearing on SAD 159.

Brian Kocian 1523 W. Lake Dr., said after watching the June 17^th Council meeting he had some great concerns to bring to Council’s attention. He asked Council, prior to putting the road bond before Novi citizens, at the June 3^rd meeting to put the road-paving portion of this SAD on the Road Bond. At that time he felt that the only way to get paved roads and City water was through this SAD. He was disappointed in the amount of time it had taken to move forward with this. It had been four years since he attended the first meeting and two years since he signed the petition. As a comparison he said he had watched a large parcel of property on West Park Drive go through purchase, design, approval, land clearing, grading and installation of underground utilities. He asked Council to keep in mind that they intended to pave the existing roads right where they are today. There is no more liability today to the City then there had been in the past. He asked Council to step aside without further delay and let the citizens who voted for and are paying for this project move forward to a better, cleaner and safer lifestyle. These were his comments of June 3^rd.

During the June 17th Council meeting, he watched as Member Lorenzo spoke about using surplus road bond funds to pave Delmont and Dinser. Her comments verified there are funds available. It was his opinion that those comments were made in very poor judgment. He appreciated Member Csordas’ statements that it would be unfair to pave those gravel roads when there are other citizens in the area that are paying for their roads through an SAD. He asked if funds are available why not use them to fund their road-paving project. His concern was that if there was any opposition out there it boiled down to dollars and cents. He stated he was very much in favor of this SAD and was willing to pay his fair share with or without those funds. With a majority vote in favor of this, we must move forward.

Mr. Korte noted the whole north end of this City was subdivided before 1920, and our taxes, as minimal as they were in 1922, 1932 and 1942, paved South Lake, East Lake, Grand River and all of the Mile Roads. He asked why they had to fight to get their specific roads paved and felt they had paid their fair share for 80 years. He asked how much it cost in gravel and all of that to keep their roads awful versus what it would be to pave their streets? He thought the reason he couldn’t get an answer was because to keep their roads in bad shape it cost the City more than to pave them.

Paul Weindorf 1641 West Lake Dr., thought there was more on the table than just dollars. There are some very large oak trees that fall in the protection guidelines of City ordinances. Putting in streets that are the width recommended by the engineers would harm these trees and possibly kill them. So, even if they had the money he would object to the proposed road because of possible harm to the trees. Before voting on it there are a lot of property issues that needed to be agreed upon and dealt with. For example, the road goes completely over his property because the City allowed someone else to build too close to the easement. He didn’t know how Council could go forward with these projects until they knew all the legalities. He objected strongly to changing the road names, particularly Ludlow because he thought he was buying in a private area and now it is being changed into a main thoroughfare road.

Stacy DeRoche, 1620 West Lake Dr., asked for paving because it is a wonderful neighborhood and a nice place for children to live and grow up and she wanted to provide them with clean, paved roads so they could enjoy their outdoor activities. Right now it is difficult to ride their bikes because it is like living on dirt. No matter how much maintenance is done, windows and garages are covered with dirt and driveways are dirt filled and it’s a constant battle to maintain a nice looking home and clean cars. Paving the roads would increase their property values especially with the new subdivision coming in. Ms. DeRoche commented she would like to see continuity between the new subdivision and their subdivision. The new subdivision is putting in their curbs and would pave soon and we remain in limbo on the dirt roads. She asked Council to expedite this.

Marie Watkins, 330 Ludlow, said she had lived 52 years with dirt, mud and everything else. The lake is now beautiful and clean, new homes are being built but she felt they should still get support for the roads and water. She asked if they took some of her property would they pay for it? Mayor Clark said it would depend on where the road would go and that there would be more meetings and everyone affected by this would receive a notice.

John Harvey, 1321 West Lake Drive, expressed that he was strongly in favor of the water main. He said he was aware there had been a lot of work being done to get the easement and pavement issues resolved and when listening to comments from residents he hadn’t heard anyone say they didn’t want their street paved but they were wondering where the road would be.

Tom Harvey, 1603 West Lake Drive, said they know the subdivision can’t be brought up to 2002 standards but they are asking for some of the infrastructure. He felt it would be frivolous to pave without putting water in first. He said he understood the roads are a legacy problem but didn’t see what the difference was between putting asphalt down and spending the next 8 years solving these issues or sending 64 more dump trucks of dirt for 8 years while trying to solve these issues. Also, he noted that the north end of West Lake Drive is shown as being a part of

this project but there is a No Trespassing Private Road sign so it’s a private road and a private problem. The rest of these roads are shared amongst us more or less within the lines of where the easements were. Unless the City is going to put them back where they were 25 plus years ago tomorrow what’s the point? Who cares whether we drive on dirt, gravel or asphalt? These are not quaint gravel country roads. They heave in the winter, sink in the spring and every summer when it rains they wash out. This is not a pleasant country road atmosphere. When Northaven Woods cleared the land he couldn’t find Ludlow. He begged to have the roads paved and sealed up.

Mayor Clark commented on the additional response forms received today:

David J. Stram, 1538 West Lake Drive, disapproved and asked for consideration of a one-way traffic flow throughout the subdivision.

Lori and Rob Marshick stated they were in support of paving their roads by matching the existing roads and relieving water drainage problems. They urged Council to be sensitive to the existing road.

Stephanie and Henry Kozlowski, 1635 W. Lake Dr., objected to City water and roads.

Chuck and Lisa Blythe approved Resolution 5 of the SAD but were concerned about compensation for the corner of their lot to be taken for the road. They opposed cost assessment that would charge by frontage in lieu of per lot or per address. They asked who to contact regarding the northeast corner of their lot in SAD 160? They were also concerned about runoff drainage and felt that Oakland County Health officials or a private interest should approve the length of the run out.

Paul and Christie Weindort objected to the cost of road and water and didn’t want old oaks to be destroyed and didn’t agree to the width of the road because it completely went over his property due to an error by the City which allowed Lot 33 to be built. The City has not maintained the road fronting Lot 16 and they would not grant rights to the City to construct the proposed road. They did not agree with moving Ludlow to the south of Lot 13, which is a private easement.

Jacob Residence at 1619 West Lake, objected to City water and expense of paving.

Stephanie and Clive Spackman, 1652 West Lake Dr., objected to water and paving and felt the pricing was too high. He didn’t want water but wanted existing surfaces paved without disturbing personal property or trees, etc.

Jenny M. Young, 1640 West Lake, objected to paving, water lines and any and all considerations for this project.

David J. Modic, 1657 West Lake Drive, objected to plans presented due to width of proposed road and drainage costs and frontage.

Jeffrey Sobolewski, 1405 West Lake, supported the water main construction and road paving with curbs and gutters.

Ernest Schlager, 1419 West Lake, objected to the cost of the new road because the City had been collecting taxes for years and he wanted something back. He would not pay high water prices to the City of Detroit.

Steve Loe, 1507 West Lake Dr, was in favor of the repaving and water in Hawthorn Subdivision but hoped that the City authorities would pay closer attention to the contractors then they did to the projects west of him. Something like 18 acres had been cleared and on a daily basis for the last four weeks, in his opinion, public safety has been jeopardized by road closings with no notification and the dust is unbelievable and City ordinances were not being followed. Phone calls have rendered very little relief up there and he hasn’t found out who could write a ticket for all the ordinances being broken on that project. He said most opposition concerned money and not necessarily the paving of the road or water. He said he understood there would be a reconstruction of South Lake Drive under the guise of maintenance using tax money. He thought the reconstruction was unnecessary and that maintenance was needed but it is designed to relieve South Lake Drive residents of traffic in front of their homes. Why would the City pour more money into South Lake Drive to relieve those people of a situation that ¾ ‘s of the lake has in front of their homes. What makes South Lake Drive so special? He sent a letter to the Novi News and had copies for anyone who would like one.

Resident of John Hawthorn Subdivision approved of water and streets but had a problem with the storm drain running down the property on Lot #9. He said there was a storm drain at the end of West Lake Drive that is not maintained. Mr. Sobolewski has one and it is not maintained. He asked what made them think that this one would be maintained? He had witnessed the flooding of Mr. Sobolewskis’ property, flooding at the north end down by the point and at the end of Northaven and West Lake Drive.

Richard Curtis 101 Penhill, was concerned about dust and the beach lot. He said it used to be maintained as a beach and he didn’t want the City to put in a drain that was never cleaned out. On his side there is a 48-inch drain that was never cleaned out. The ditch across the street from him is lower than the catch basin and three feet on the other resident’s property. The City ordinance person drives by his home 3 to 5 times a day and he just got ticketed for having a dumpster door open and he felt there were other ordinance violations the City should be looking for.

Mayor Clark closed the public hearing.

CITY MANAGER

Mr. Helwig asked Mr. Printz, City Forester to share information about disease affecting the ash trees in the City.

Steve Printz commented that the problem with our Ash trees was also happening in Plymouth, Dearborn, Canton and Livonia. The Forestry Division has removed 20 Ash trees so far and expected to remove a least 100 more this year along ROW, public property and in parks. He noticed Ash decline in Dunbarton Pines, Cedar Springs, Chase Farms, Roma Ridge, Yorkshire Place and Orchard Ridge Place. These were not the only areas, as he believed wherever there are Ash trees this decline would be taking

place. Mr. Printz displayed a sample of an ash tree and noted Ash decline symptoms include thinning and yellowing of the leaves, suckers, dieback and woodpecker injury from eating the larvae that bores into the trees. The cause of this dieback is uncertain but it could be environmental stress. Management strategies include chipping and burying the wood when the tree is removed because the larvae live in the wood of the tree. Other strategies are to plant trees other than Ash, supplemental watering and fertilization of the tree and insecticide treatments. Currently, the City is removing all dead or diseased trees and working with master gardeners, Dr. Dave Roberts from Michigan State who can be contacted at 888-350-0900 ext 80902 or contact Steve Printz, City Forester.

Member Csordas asked what the City would do to replace the trees. Mr. Printz responded they were working on how to do that. Member Csordas asked specifically about the trees on Main Street? Mr. Printz said they were already replacing those. Member Csordas asked how residents would be notified? Mr. Printz stated a letter would be sent notifying residents as to why the tree was removed and they could contact him for specific action. Mr. Printz said they were not removing trees on private property just trees on public property, ROW and parks areas. They were advising subdivision associations to notify their members that they are urged to remove the diseased trees as soon as possible. Member Csordas asked what his plan was if the residents chose not to do anything? Mr. Printz said there is a stipulation in the nuisance ordinance that covered any diseased or hazardous trees and they would be sent a written notification with a date to have the trees removed by and that they are deemed by ordinance to remove the tree.

Mr. Fisher said following Council’s action on June 24, 2002, approving the Sandstone settlement that relieved property owners from the potential obligation of paying long term assessments to satisfy a potential judgment, the agreement or settlement was signed on June 25, 2002, which was the cutoff date for filing motions in the Court of Appeals. Before the end of the day the motion was filed in the Court of Appeals seeking a remand of that case back to the Circuit Court to allow entry of a consent judgment. He was happy to report that the Court of Appeals responded quickly and did enter an order remanding the case back to the Circuit Court and retain jurisdiction as we requested. We are now moving toward taking steps for entry of a consent judgment.

Chuck Tindall said the City held his money for almost two years and asked if he would be paid back with interest? He also asked if there was any truth to the rumor that previous homeowners would have to put forth extra effort to get their reimbursement.

Mr. Fisher responded that the ordinance specifically provided that if the excess was of an amount that was to be repaid it would go back to the owners’ of the property as shown by the City assessment roll.

Mayor Clark said that is what the ordinance had provided for a long period of time. If someone paid an assessment and sold the property the refund would go to the present owner of that property. Mr. Fisher agreed and said there is an assumption made that there was an adjustment at the time of closing so that the seller received an appropriate benefit and that the purchaser would have assumed the obligation and would take the excess. Mr. Tindall couldn’t believe that there was an ordinance that was so unfair. He said he had just spoke to a new neighbor and he made mention to the fact that the person that sold him the house lost a big chunk of his profit because he had to pay off the assessment prior to selling his home. How can you make an ordinance that required someone to pay an assessment before selling the home and then make an ordinance that says if there is any money coming back it goes to the person who bought it.

Mayor Clark said the ordinance Mr. Fisher was referring to had been on the books for a number of years. Mr. Fisher stated it had been on the books since 1973 and the theory was that by doing the benefit the value of the home has been enhanced and therefore the purchaser would have paid the higher value as a result of the project being done that the seller would have reaped the benefits of that at the time he sold it.

Mr. Tindall said he paid $9,000 for the improvement to go by his house, which had been adjusted to about $7,500 and his tax assessment said the value of his home only went up $450 and $450 again another year. So he paid $7,500 and the value of his home over two years only went up $900. He also thought his homeowners insurance would go down because of the fire hydrants but it didn’t. As far as the assessment not going up by $7,500 that led him to believe that he was over assessed all those years prior to not having City water available. He felt he should get a rebate on that money.

Mayor Clark noted the assessment had no bearing on what a willing buyer and seller were willing to negotiate on the sale of their home. Mayor Clark suggested he talk with the Treasurer or Mr. Fisher. He then asked about the interest on his money and Mayor Clark said he would have to deal with the Treasury Department about that and if needed they would get a legal opinion.

Mr. Fisher said his assumption was that the interest had gone back into the project to assist in securing the $1,200 refund potential.

Mr. Tindall wanted to know how they could do this because this money was added to the tax rolls before this job even went out for bid and he paid it before it went out for bid. He spoke about the Oakland Press editorial about the City giving up 75 acres of parkland. Mr. Tindall felt that as citizens they deserved to know who the City officials were that caused the lawsuit to happen and why.

Mr. Korte, Shawood Lake, spoke about retaining walls and deck a month ago. Those issues are being cleared up and worked on. Now he wanted to speak about road issues. The City has acknowledged they have to redo parking areas in two places. One because Mr. Davis tore it up and shouldn’t have and the other one has been an ongoing battle for six years and 2 ½ years ago they acknowledged they have to tear it out. $8,000 of concrete had been dumped on his two properties. They cut the eastern portion off of 2026 Austin because it wasn’t in correctly. He would accept 2026 Austin if the company removed all the stuff they put on the

three-day-old cement when they put in the new cement. He contacted two contractors that said it couldn’t be done. Hopefully the City can get it done or they can tear the whole thing out for the third time. At 2030 Austin they put in a 20 x 24 slab and tipped it to flood the garage. So they cut the back half of it out and now it drains into his flowerbed and treed area and is still too high and the whole slab has to come out. He asked how long he had to put up with this as his fences went down prior to May 8^th and asked what he was supposed to do? It’s now July 1, and it has been two months. Roger, for the record, in his road grater solved the flooding problem; JCK started it again. Now there is temporary gravel because it is too high and the road is even higher when he complained it was too high to begin with. Wouldn’t it make sense to take the road down and put the cement in? He said no, the City put the cement in and then raised the road. Mr. Korte said you’ve got a big problem out there and you better solve it before he got attorneys. Two months and $8,000 of taxpayer’s money is unacceptable.

Mayor Clark asked Mr. Helwig to provide a report on this matter at the next Council meeting. Mr. Helwig said he would and that he had been out there with Mr. McCusker and the retaining wall was done before over a week ago and this would be resolved.

Dave McCain 25797 Mulberry, noted there is a water shortage problem in his subdivision and from what he understood they were at the end of the supply line and when sprinklers or house water is used they are the last to get the water. In the last week and a half there wasn’t enough water to take a shower in the morning. When he drove through his subdivision everyone was watering their lawns. He noted there were 10 houses watering on the wrong day this morning. They water between 6 AM and 9 AM in the morning and he suggested either the time needed to be regulated for watering or an additional water line needed to be brought into the subdivision. He asked if the new complexes off Beck Road and around the area would be tied into the existing water line that was already running short or would there be some enforcement for those watering on the wrong days. He called the City and was told they didn’t have the staff to enforce those rules so if he could find out the addresses of those in violation he could report them. He didn’t feel that was his job; that’s why he pays taxes and expects water pressure when he showers in the morning.

Mayor Clark noted the community has had some areas where the water pressure was very low and it was possible some people are using their old well systems to water their lawns. Mayor Clark stated he and Member Capello experienced the same thing and asked for an update at the next meeting.

Bob Shaw, 40612 Village Oaks, asked if there was anything added to this evening’s agenda? He read from the Charter "No business shall be transacted at any Special meeting of the Council unless the same has been stated in the notice of such meeting." His concern was that the Council took action after the Executive Session ended and took more action, a Resolution, CM-02-06-170 with five yeas, two nays and Members Capello and Lorenzo absent. He said this was obviously a violation of the Open Meetings Act of 1976, which states in Section 10, paragraph. 5, Council must meet in public session with an item on the agenda and then take action in a formal manner thereby taking care of the action they took on June 24^th. Mr. Shaw asked Council to read Section 10.1 and Section 1.1 about civil action to compel complaints with the Open Meetings Act and he reminded Council of Section 12.1, the violation of the Open Meetings Act being a misdemeanor and the liability provisions of Section 13. Part 1. He suggested that Council do things legally and follow the Open Meetings Act and schedule another special meeting, properly announce it and take the action in a legal manner.

Otherwise, he thought Judge McDonald might not look too favorably upon some action taken that violated another famous state law.

Mr. Fisher noted the Open Meetings Act contemplates meeting in closed session and also contemplates that when you do meet in closed session that action will be potentially taken afterward which was announced at the beginning of the meeting as it was called to order. If there is a question of whether or not that is an issue and Mr. Shaw is essentially making a statement that extends any prior decisions the Council can ratify the decision at anytime including adding it to the agenda this evening and ratifying it.

Andrew Mutch said when he heard about the Sandstone settlement he had a feeling he had heard Chamberlain announce that we had achieved peace in our time. He was sure there were those who would come up and speak in support of the actions of this Council, the "yes men" who diligently have been here at every meeting to counter our comments and questions with "don’t ask those questions the Council is doing the right thing".

Mr. Mutch stated that on Monday, June 24^th five members of Council held a special meeting with five Council members, the City Attorney and Mr. Carson, Sandstone’s attorney was present. He said the public didn’t have the opportunity to be present because they didn’t know that the Council would act that evening and there was no notice that action would be taken. The agenda made no reference to any action being taken, no notice was given during the meeting that action would be taken until the action was taking place. The minutes clearly state that Action item #1 was Enter Executive Session for the purpose of discussing pending litigation. A motion was made, vote taken and the Council entered into Executive Session at 7:10 PM and reconvened at 10:28 PM. Then Mayor Clark commented that the Council had been in Executive Session since 7:10 PM for the purpose of discussing pending litigation and particularly Sandstone litigation. Then Mayor Clark asked Mr. Fisher to read the proposed resolution and then Council took action. Mr. Mutch said there was a question raised about the Open Meetings Act but he thought it was much more basic. It goes to our City Charter, our Constitution that all Council Members had taken an oath to support and uphold. Section 6.3 of the Charter states "no business shall be transacted at any special meeting of the Council unless the same has been stated in the notice of such meeting. However, other than the enactment of an ordinance any business which may lawfully come before a regular meeting may be transacted at a special meeting if all the members of the Council consent thereto and all the members absent file their written consent."

So the question is was there a violation of the City Charter and did Members Lorenzo and Capello file their written consent that action be taken that evening to approve the Sandstone settlement. We are all aware of the time frame involved. If the Council had not acted that evening there probably would not have been time to assure that a motion would have been filed at the Court of Appeals and we would probably be looking at appealing that decision as we should have all along. Instead we are moving forward this evening authorizing the expenditure of over a million dollars to continue the settlement forward. All it would have taken is one sentence in an agenda stating action would be taken on the Sandstone settlement or someone could said during the meeting they would return from Executive Session to take action on the settlement. He asked if the Mayor and Council members or City Attorney were unaware of basic provisions of the City Charter that governed the business of the Council? We have seen this pattern again and again in the dealings with the Sandstone litigation. There has been a pattern of misinformation in efforts to keep the residents out of the process.

It began in spring of 2001 when Mr. Shaw asked whether the City was looking to trade property to settle the Sandstone litigation and he was told that it was not being contemplated. However, we now realize that that’s not the case. In September 2001 when the settlement was first announced several Council members thought maybe the residents should be offered an opportunity to vote on this deal but no effort was made for that to happen. Then we learn in December 2001 after the litigation in Circuit Court where Judge McDonald ruled that yes, North Novi Park is actually a park and the residents might be offered the opportunity to vote on that. Sandstone themselves were willing to cut back the price of the settlement if the City put the issue to a vote and the City refused that and never let the citizens know that that was an opportunity. It required a Freedom of Information Act request by the newspapers for that to come out. In April 2002 residents were told that this was the final offer to Sandstone no more negotiations but now we learn negotiations continued. The final straw, this special meeting, where concerned residents wanted an opportunity to speak out before the final deal was settled, Council didn’t notice it, didn’t announce it and took action in violation of the City Charter. There is probably no recourse but he thought Council should reflect on their actions and think about what they had done. He asked if the City’s mantra was "by any means necessary"? That evening the settlement was reached with Sandstone and provided zero details to the residents and they probably still don’t know the details of the settlement. Mr. Mutch said in the settlement process the City has time and again turned away from its ordinances and City Charter. He quoted portions of the settlement. "The land now owned by the City within 200 feet of the property and with 200 feet of the additional land or portion thereof shall be and remain a park." Sandstone gets in their agreement 200 feet of perimeter property around their property to remain as a park and yet those residents who have come time and again asking Council to make the effort to preserve the rest of North Novi Park have been rebuffed, nothing had come forward and nothing was in writing to make sure that land would be protected. The agreement also states "The City is required to deliver to Sandstone the property in a condition otherwise required in the agreement and consent judgment and all such activity should be collectively referred to as the remediation, recognizing that the uses on such property and additional land shall be served by public water system and also recognizing that in view of the fact that the property and additional land shall be used for private purposes." This is interesting because there is a resolution in Council packets this evening that requests Oakland County to expend a half million dollars for the purpose of remediation to protect shallow ground water wells on property formerly used as an orchard site, which is the North Novi Park site. So Council is asking Oakland County to spend a half million dollars to protect ground water well which in the agreement it states would not be used and the Sandstone development would be provided with public water. It is also interesting that the City made agreements with other property owners and as far as we know they have never consulted with those property owners and how they are affected. This provision states "with respect to any portion of the actual land which is zoned to permit residential use any commercial development of adjacent property by Sandstone regardless of whether Sandstone has acquired such extra land shows the parties understand the ordinance provides rear yard setbacks of not more than 20 feet and a side yard setback of not more than 15 feet provided that a six foot masonry screening wall with brick face on all exterior sides." The extra land belongs to the homeowners who live along Dixon Road. The people felt they were abutting a City park but now are going to have commercial development in their back yard. The City was so gracious as to negotiate for them a six-foot masonry wall and 15 to 20 feet of setback; it would have been nice to consult with them as well.

Mr. Mutch stated there were numerous other provisions. Such as "any removal of trees by the City on the property or additional property shall not impose an obligation on anyone to replant or make any payment per any City Ordinance or to otherwise compensate City." So if the City takes trees off City property they are not going to replant those trees and they are not going to replenish the tree fund for any expenditure to provide those trees and we are not going to follow our ordinance or our Charter. He felt there was something seriously wrong with the settlement and was disappointed in the process. He thought the Council had an obligation to the residents. Council made their deal with Sandstone and they are going to have to live with it. At the very least Council could do the following: Ensure that the rest of North Novi Park is protected from future encroachments and perhaps this should be put into the City Charter. The parkland given away should be replaced. He said one of the provisions of the agreement is that Sandstone can dump their storm water on City property. They don’t have to retain the water on their property so in actuality we are probably losing more than 95 acres. He said Council also has an obligation for the impact of development that is being forced on the north end of Novi. 65,000 square feet of commercial on 12 Mile, another 70,000 square feet of commercial in Vistas and he asked Council if they had discussed this with any of the residents in the Vistas’ PUD? He felt this would have a negative impact on the Vistas and Council could at least tell them it’s coming and all the other factors that are going to drive the population of North Novi over 30,000 people. What do we have up there, an inadequate fire station and an every decreasing park. He asked Council to inform the residents every step of the way. Another provision is that the City doesn’t have to follow its ordinance when it remediates the property. Does that mean the people on Dixon Road would be informed of the arsenic remediation when the dust comes through their window? He thanked the members and supporters of the Friends of North Novi Park for their support.

Mayor Clark commented that someday those that are easy to criticize would be faced with the responsibility of leadership. If anyone thinks that any member of this Council took their obligation lightly with regard to Sandstone, they are sadly misinformed. Council had a solemn obligation to 50,000 residents of this community not simply to 95 acres of parkland. This Council worked long and hard and didn’t have 75 million dollars, this Council was not ready to preside over the bankruptcy of one of the finest communities in the State of Michigan. This Council was not ready to preside over putting additional burdensome taxes on this City to destroy our competitiveness against other communities especially now in tight economic times. All of these would be very real consequences if Council had proceeded and lost the appeal. Our bond rating would have been in horrendous shape and our ability to do things that needed to be done in this community would have been shackled and prevented for years to come. Mayor Clark said he would be the first person in this room to stand up to applaud Mr. Mutch, Mr. Shaw and those that joined them in a lawsuit to express their opinion under the rule of law in court. That is their absolute right but it is easy to make those types of allegations when they are not faced with the responsibility that the people sitting at this table have to every member of this community. He said, as far as remediation, if there was no lawsuit, he would do everything in his power to see that the land was remediated, which would have required removal of vegetation and trees. Arsenic is such a problem that the Federal government

lowered the standards for acceptability of arsenic from 100 parts per billion to 10. There is no way any child or grandchild of his or any person who had children with on ounce of common sense would have let them play on this land knowing it was laced with arsenic. He said he is proud of Council, his colleagues, the City and everything they had done to protect the each and every resident of the City. Mayor Clark commented he respected the rights of others to disagree with Council. The time to disagree is over, the time to heal is now and the time to move this City forward in a positive fashion and deal with some real pending problems is now.

Council reconvened at 10:01 PM.

Mr. Fisher noted there had been a lengthy dialog during public Audience Participation suggesting interpretations of the Open Meetings Act that he did not believe were supported by applicable law. On the other hand we have been doing the publics business in connection with the Sandstone matter for more than a year and a half and the City had actually conducted a public hearing on the settlement in October 2001 when the resolution was adopted following the public hearing and then had to proceed through a lawsuit that cost the City money that could have been spent in another manner. He didn’t see why, as a straight business matter, while he doesn’t think the Council made an error, he didn’t see any reason why this agenda should not be amended now to add a matter wherever the Council pleased to ratify the resolution of June 24, 2002 .

Member Capello said he would be in favor of amending the agenda and adding that item to the agenda as Item 19. He was not asking for any reconsideration but rather for discussion and ratification purposes.

A. Approve Minutes of:

June 17, 2002, Regular meeting

June 24, 2002, Special meeting

B. Schedule Executive Session immediately following the regular meeting of July 1, 2002 in the Council Annex for the purpose of discussing pending litigation.

C. Authorize the Police Department to apply for and accept, if applicable, Target Corporation Law Enforcement Grant.

D. Acceptance of water main easement and temporary construction easement from Windward Bay Condominium for the West Park Drive water main project; Parcel Nos. 50-22-03-126-001 thru 035.

E. Approval of Claims and Accounts – Warrant Nos.625A, 625B and 626

UNANIMOUSLY: To Approve Amended Resolution #7 to

John Hawthorn’s Subdivision 1 & 2 and Supervisor’s Plat No. 2 water main.

#159 – Lake Wall, John Hawthorn’s Subdivision 1 & 2 and Supervisor’s Plat No. 2 water main.

Member DeRoche asked to abstain because he has a financial interest in the outcome of the vote.

Nays: None

Member Lorenzo was concerned over the length of time it takes for this whole process to move forward and asked for an explanation.

Mr. Helwig said he would do a written summary of the length of time it has taken so that it could be documented and learned from. If Council stayed on course with the resolutions and acted tonight and things continued according to the normal schedule the water line could be in place before winter and the roadwork would begin in the spring of 2003. Mr. Helwig said he would send out a timetable as to exactly what needed to happen. Member Lorenzo commented her other concern, as arbitrator of the peoples choice, was that by the time this came back to Council for Resolution #6 she would like from the staff and administration a more definitive number of objections versus approvals before they decide Resolution #6. Member Lorenzo also asked about the changing of the Ludlow Street name, if it was an error on the plan or were they changing the name of the easement to Ludlow. Mr. McCusker said that section of Ludlow was an alley originally and to keep it unified they named it Ludlow so it would confuse police, or fire or other services that were dealing with it.

Member Capello asked about properties that were not being included. Mr. Fisher said it’s a total project cost allocated amongst everyone and so these people are paying a portion of the project cost for everybody else as well. They are all in one project amount together and paying their respective share based on benefits received. Member Capello said his concern was if that is a private easement and no one else is allowed to use it it was different then paving all the other roads and everybody having access to those roads. Mr. Fisher said that while it appeared to be a private easement it was accessed by emergency vehicles and others for service purposes so we want it to be in serviceable condition. Secondly, there is confusion that revolves around a consent judgment that was entered some time ago with the City as a party and that is the piece. Member Csordas said he wanted to be sure that the roadways would not change location. Mr. Fisher said there are some situations in which the actual travel portion of the road was not in the same location on file with register of deeds and he thought in those cases he believed the road would continue to follow the travel portion that has existed in that fashion for many years.

Member Capello wanted this item tabled because he had some problems with the resolution. He had seen letters from JCK to engineers of projects that are in the development process between the time they filed for preliminary site plan approval but they don’t have preliminary approval or final approval. The letters are going back to the engineers saying how do you want us to review this? Do they want the plans redone and submitted under the new ordinance or should they see if the old plans fit under the new ordinance. Member Capello said he would like to see the resolution add between Items #2 and #3 the same language as item #2 stating "a developer that has submitted a formal application and applied for preliminary site plan approval" then follow the rest of the language as Item #2 so we would be moving the date back, May 20^th, so that if they submitted the preliminary site plan by May 20^th it would be under the old ordinance. However, he didn’t want to do that without Mayor Pro Tem Bononi being present so he wanted to defer the item. He thought they needed to find out how many projects were in that gray area.

Member Landry disagreed with Member Capello’s interpretation but did support tabling this item until a full Council was present.

Mayor Clark asked if this presented any problems with the agreement with Sandstone? Mr. Fisher stated he didn’t think this would have an impact on Sandstone. He reported to Council that he had heard from developers that have projects that have been in the pipeline for some period of time and they have spent thousands and in some cases tens of thousands of dollars on engineering based on the old ordinance and have threatened litigation.

Member Lorenzo agreed to table and felt Mayor Pro Tem Bononi should be present for this item as she had a lot to do with this whole project and was on the committee. However, she was concerned with what was said with regard to when these should be allowed to go through because just submitting for preliminary doesn’t mean you have to be approved. She wanted to know what developers had been expressing their concerns.

Mr. Fisher said Beth Brock was familiar with some of them. He thought one of them was Pine Tree Meadows and he could obtain the others for her. Member Lorenzo thought they had to keep in mind why it was important to get this ordinance on the books and what the intent and purpose was.

Mayor Clark asked if the maker of the motion would accept this tabling until the next meeting on July 15, 2002. Member Capello agreed.

Member DeRoche appreciated that they were taking the legal ramifications of this ordinance seriously. He noted he was opposed to the ordinance in principal and if it stood he felt they should do this in a fashion that doesn’t jeopardize Novi with a series of lawsuits where we end up buying all this property at market value. If that is the case, it should be considered upfront going into it.

Member Csordas was concerned about potential litigation because in essence they changed the rules for a lot of people in midstream who are in various stages. He would be very interested to hear how many projects are in building and would be impacted by this and about the taking of land. He thought the ordinance was a good thing; he supported it and felt the committee did a great job. He thought they had to be very cautious. It is a good process and if everyone in the pipeline now is not affected it wouldn’t have that big of an impact on the City overall.

Member Landry stated since potential liability was a concern and he requested an opinion letter indicating risk potential liability and research on similar issues on municipalities passing an ordinance affecting storm water or other requirements.

Member DeRoche asked if they would extend that invitation to allow Council members to direct questions to the City attorney.

Quality.

with the Michigan Department of Environmental Quality.

Member Landry asked if the motion maker would accept a friendly amendment

indicating that the rezoning is being approved because it would bring it into compliance

with the Master Plan. Member Lorenzo agreed.

Member Lorenzo asked that this be subject to Council policy with regard to storm water. Member Csordas accepted the amendment.

Member Landry asked Mr. Roskelly, the applicant, if he planned on being the builder of the houses as well as the developer? Mr. Roskelly said no. Member Landry asked him if he had an average expected price. Mr. Roskelly said $400,000.

Mr. Roskelly commented that he fell in the category of the so-called storm water management. He purchased the land on March 7, 2001; prior to that he went to JCK for a meeting with Victoria Weber regarding storm water and was told it was a ten-year storm. Thirteen years ago he developed Camborne Place Subdivision to the east and contiguous to this parcel of land. On January 26, 2001 he had an informal meeting with the Novi staff and presented two layouts. One layout showed a cul-de-sac with a lane in the center and no exit to Ten Mile and a second layout was shown and staff indicated they preferred the one with the cul-de-sac. So he proceeded with the cul-de-sac plans. However, at the Planning Commission meeting he was told that he couldn’t run all these people through the subdivisions and they agreed unanimously on the plan without the cul-de-sac. Mr. Roskelly said he began this procedure from the meeting of June 26, 2001 and then went through the delivery of ten sets, twelve sets back and forth through the Planning Commission. He originally went to the Planning Commission on March 20^th and they tabled it. He made all the changes and went back on June 5^th and they gave him unanimous approval with this plan and now he is in front of Council. He said there is a hardship with the new storm water ordinance and asked that he be given some consideration since he was had been in the mill since July 2001. He said because these lots by the R-4 have to be 80 by 125 and they are 80 by 154 so instead of 10,000 sq. ft. there are no lots less than 12,300 sq. ft. He hoped JCK would say it’s not a critical spot for the requirement of a 100-year storm but more important he felt that because he had been in the mill so long he should have consideration to avoid the hardship.

Mayor Clark suggested he attend the meeting on the 15^th of July because there would be a discussion. Member Capello said depending on what happened on July 15^th if Council decided he was under the new ordinance he believed that Willowbrook Farms

#1, which is next to his project had the ability to tie in to the regional basin. Mr. Roskelly said they were in another drainage district. They go to the west and his goes to the east. Member Capello said they needed to take a close look at that. Mr. Roskelly said the Drain Commission said there’s a small portion of the southeast corner that is in the other district. When he did the subdivision 14 years ago he went to the Drain Commission and they moved the drainage district line so he is sort of in the middle of two. Member Capello said Council sent a request to the Planning Commission to look into an ordinance, which would create larger setbacks along arterial roads and give developers some type of incentive in the interior to give us better setbacks. He asked Mr. Evancoe for an update as to where they are on that ordinance at the next meeting?

Member Csordas noted this is an example of his concerns about the stormwater ordinance. He felt rules couldn’t be changed when people have already invested significant amounts of money to develop.

Member Lorenzo asked why it took from March 20^th to June 5^th to have the plans changed to go back to the Planning Commission? Mr. Roskelly stated he had the other set of plans but still had to do some work on them and he told the Planning Commission he could have them in a week. He delivered the ten sets of the revised plans on April 1^st so it took him ten days. Then it went back out for study to all the staff members and on May 28^th he delivered another 12 sets after he received all the revisions the departments asked for. The last delay was because the Planning Commission docket was full. Member Lorenzo asked for clarification, not tonight, as to why it is taking so long for some people to get through the process. She wanted to know where these things are getting hung up. His original pre-application meeting was June 2001. It took 30 days for all to review his plans and to get back to him and that happened 3 or 4 times. Mr. Roskelly said it did take him five months from the first to the next one. Member Lorenzo stated that was one of her points. When we are considering a policy time is both ways. Mr. Roskelly said if we go from January to July that is a long time and that was when he got the best date he could and asked for the most action he could get and it was still a matter of seven months. Member Lorenzo said if Council decided on another policy it would be very difficult to say who’s in and who’s out. What is the magic number? It seemed the resolution presented to Council was typical; when there is an ordinance amendment this is what you do. You receive an approval you’re in. If you don’t receive an approval you’re not.

Mr. Roskelly said to determine how big a retention pond he would require it was necessary for him to compute the storm water runoff of the entire 9.5 acres and to do that he ended up losing one parcel. He had to practically do all of the storm sewer management in the site, plus the landscaping, trees, etc. and he only has tentative preliminary approval.

Member DeRoche asked if Mr. Roskelly was in compliance with the wetlands and woodlands ordinances? He replied that there were no wetlands or designated woodlands but he did have a landscape plan that would replace every tree that was there. Member DeRoche asked if he complied with the current storm water ordinance? He said he did. Member DeRoche asked about the similar/dissimilar ordinance for the houses he was going to build. He said he would not be building the houses but he had a copy of Mr. Singh’s restrictions for Willowbrook subdivision, they were strong and he would be using them as a format Member DeRoche asked if there were other

ordinances or compliance issues he had to apply for? Mr. Roskelly said no. Member DeRoche said he was trying to illustrate that our own processes are responsible for a certain amount of time. He felt this was a very powerful illustration of a landowner who had been looking at this for 14 years, brings something in that’s clean, has unanimous support from the Planning Commission, is in compliance with the existing ordinances and we are talking about taking away his ability to earn money and build what he wants to on his property. As second to the motion he would not support the friendly amendment because Council should evaluate it in whole and be fair with the decision made at the next or future meeting. Mrs. Cornelius repeated the motion as being "subject to Council policy regarding storm water". Member DeRoche thought it said "new" policy and there was clarification that wasn’t the case. Mr. Roskelly already paid about $3,400 in bills to our staff and consultants to approve this. Do you think they won’t re-review this and charge him another $3,400 and cost him another 3 or 4 months in time and money? He hoped Mr. Roskelly would be treated fairly and that Council realized the ramifications of the decisions they make.

9. Request for Final Plat approval for WILLOWBROOK FARMS NO. 3 from Singh Development for a 51 lot subdivision located on the south side of Grand River on Meadowbrook Road. The 54 acre site is zoned R-4 (One Family Residential) District.

located on the south side of Grand River on Meadowbrook Road. The 54 acre site is zoned R-4 (One Family Residential) District subject to the wetland mitigation being completed by August 5, 2002.

Mike Kahm spoke about Beth Kudla’s letter regarding covenants and restrictions. He asked, regarding the last item Ms. Kudla mentioned, where there was a provision in their Final Preliminary Plat that they discussed three years ago about no decks and no pools being allowed. Mr. Kahm said that was not what they meant and wanted to be sure that Jerry knew that when he gave Ms. Kudla direction for the covenants and restrictions. The minutes speak specifically of Lots 98 and 99 and those two lots were two that Council allowed some wetlands that extend further to the north onto Mr. Weiss’ property. There was a provision in the approval that they could keep the wetlands on those lots as long as they put conservation easements over the wetlands. The reference in the minutes was there was concern about them not putting pools or decks in those conservation easements, which they agreed to. He wanted to be sure that it was clear that no pools and decks were for those two lots only, not the entire subdivision.

Member Capello asked talking about storm water, if Willowbrook I had its own detention basin? Mr. Kahm said it did. Member Capello asked about Willowbrook II and III? Mr. Kahm said they also had their own basins. Member Capello said one of the recommendations was that Mr. Kahm pay a storm water detention tap fee for Willowbrook III for $16,000. Mr. Kahm said that was corrected based on a new state law. Member Capello said then you’re not paying that tap fee. He said he was not.

Member Landry asked to be recused from this item as he had done legal work for one of the insurance companies that submitted a proposal.

Member Csordas reluctantly supported the motion considering what happened with the Sandstone deal.

Member Lorenzo said contrary to a memo received on June 13^th we would not have budgeted $128,162 less for this expense. Actually, from the line item in the 2002/2003 budget it is $3,411 less. Mr. Helwig asked Ms. Smith-Roy explain the figures.

Ms. Smith-Roy said the budget was split among several different entities. There is a line item in the budget for the library and Meadowbrook Commons and that accounted for the difference to get to the $128,000 so that number is accurate. Ms. Smith-Roy asked that Council not include the total dollar amount because they might have to go back to the insurance company. In the interim we have obtained insurance for Meadowbrook Commons and the Novi Ice Arena because of the uncertainty, cost savings and recommendations from the two management companies they were working with. She said they would ask MML to adjust their figures accordingly.

Member Lorenzo, maker of the motion, agreed to remove that specific line item. She understood why there was a difference. It was just that the point was that they would be paying approximately what was budgeted for this line item out of the General Fund. If the $128,000 had been saved it could have been appropriated in some other manner. Ms. Smith-Roy said they would be able to do that. Meadowbrook Commons is going to pay a portion of their insurance. The budget amount would only cover the insurance premium for the General Fund and the library would pay their portion, approximately $49,000 and they had budgeted approximately $50,000. She wasn’t sure how much from Meadowbrook Commons in terms of dollars because they had to go back and ask for the difference. It would be a reduction between $30,000 and 50,000 and that would also be a savings to the General Fund and it would come from the Meadowbrook Commons Operations. The money would be recovered from the rents that the residents are charged.

Member Csordas asked if they secured coverage from another entity? Ms. Smith-Roy said they did. Insurance was obtained on a short-term basis for Meadowbrook Commons through PM One, our management company, under their master plan. It was a lower amount for premium and they would be getting additional quotes in August and whoever Council selected this evening would be offered to bid for that same time period beginning October 15^th. He asked if other entities were interested in bidding? She said for Meadowbrook Commons they used the management company’s recommendation so they would compare it with whoever Council selected. They wanted to leave their options open, make the best decision and make sure they had coverage on the ice arena and Meadowbrook Commons. She said for the ice arena they stayed with the same insurance carrier, All Sports Inc. Member Csordas was pleased that Ms. Smith-Roy and staff shopped insurance and agreed to the amendment.

Member Capello said it seemed that most of the larger general contractors have a smaller limit on their primary policy and a larger umbrella policy. MML showed there was no umbrella at all and that we are paying a full $10 million for primary insurance. Alliance has a $5 million primary and a $5 million umbrella. Does it make sense to try to get an umbrella policy to cover a part of the $10 million instead of paying for primary insurance to the tune of $10 million? Mr. Klaver said it was his understanding that the pools philosophy was with a larger group of municipalities participating that a lower underlying policy and larger umbrella does not apply. Member Capello said usually the umbrella coverage is a different company then the primary coverage.

Ed Plato of the City Attorney’s office, responded that he was asked to compare the Alliance coverage with the MML coverage and that information was provided to Council. He resolved some of the ambiguities and is now comparing apples to apples between the two coverages. As it stands on paper, we are comparing comparable coverages but the premium for the Alliance coverage is substantially lower. It is written with a $5 million primary and a $5 million umbrella policy. Member Capello asked if they could go to different companies to get the umbrella policy? Mr. Plato said MML is not technically an insurance company and the way they write the coverage is with a $10 million limit.

Member DeRoche asked if the exclusions and coverage had been resolved? Mr. Plato said he spent time with the Alliance and had a detailed listing of all their exclusions. In fact, they are basically the same exclusions as MML with the exception that the Alliance policy doesn’t have an exclusion for terrorism. Member DeRoche asked if MML had a

terrorist exclusion? Mr. Plato believed they did. Member DeRoche asked if it had been accepted by the insurance regulators? Mr. Plato said yes. Member DeRoche asked the staff if the umbrella covered all the underlying coverages of the general liability policy and workers compensation; Mr. Plato said yes, with the Alliance. He asked if there was any circumstance where the underlying coverage would cover the claim and the umbrella would not. Mr. Plato said no, they were basically comparing a $10 limit with a $10 million limit. Member DeRoche asked if the umbrella extended any additional coverage that the underlying coverage did not. Mr. Plato said to his knowledge it did not; both the MML and the Alliance are pools that seek their excess or re-insurance separately. He asked Mr. Klaver what analysis had been done? Mr. Klaver said an analysis was not done because the City attorney reviewed those issues previously. Mr. Plato said the Alliance Group is underwritten by Specialty National Insurance Company, an A rated company and a part of the Kemper Group and is an insurance company not a pool. The Kemper Insurance Company underwrites the program. Member DeRoche said then we are issued insurance company paper for our policy that is A rated by AM Best. Mr. Plato said that’s correct. He asked if the MML had its own rating by AM Best and if it was their re-insurer? Ms. Smith-Roy said it was their re-insurer. They buy them insurance that’s rated. Member DeRoche said what if the re-insurer picks it up over here and what if the MML went out of business, who’s responsible. Ms. Smith-Roy believed the same group covered them but she would have to verify it. Ms. Smith-Roy said all re-insurance is A rated. Member DeRoche said the MML has a $10 million surplus and we have a very large lawsuit that we are settling with them in this City that could have a substantial impact on their ability to do business. Mr. Plato agreed they should look into that situation. Also, there was some question with the Alliance plan with regard to whether there would be a claims administration fee, a claims handling fee, which you don’t have under the coverage. In fact, there isn’t a claims handling fee so that would not be an additional cost factor. There was a question about whether defense costs would be deducted from or attributed to the self-insured retention and they would be attributed to that. So defense costs would be used against the self-retention so the deductible would be used up quicker. There was a difference in the property coverage where the Alliance Group had written $25 million and the MML had written $37.3 million and the reason for that was because the schedule of property provided to the Alliance did not include the Senior Citizens Center. When that is included it would increase the premium another $9,000 or $10,000 so we are still $150,000 talking about a difference in premium between the Alliance and the league in excess of $150,000. Member DeRoche said we have an apples to apples quote both backed by excellent companies and one is costing less money. Mr. Plato said without having the Meadowbrook properties included the premium for the Alliance would be $453,229. Mr. Plato said when they were able to compare companies they came to us with comparable coverages and a significant savings with Alliance.

Mr. Klaver met with Alliance representatives prior to the recommendations from Mr. Plato. He was told that the defense costs would not be credited against the SIR limits. This afternoon he was told, and it was followed up with fax information, that these would be included. That is a significant change and raises the question as to the process. It raises the issue of whether or not these were the intended provisions of the original proposal and whether they represent changes to the original bid which he thought would raise questions regarding the process. Mr. Klaver felt they should go with the original proposal and not allow it to be modified subsequent to those discussions.

Mayor Clark stated the self-insured retention provisions concerned him because there are a lot of claims that are under $250,000, which means we are going to eat them all. The policy expired June 30 and the MML agreed to extend the policy until July 2, 2002. Mr. Klaver said the competition this year is a positive development but hoped that next year they would be able to get more detailed information and that the same parties would again offer proposals and provide a more clarity and solid information ahead of time.

Bob Bucko, representative of Municipal Insurance Alliance said when the program was put together the biggest problem the City was facing was the area of zoning coverage because of the Sandstone situation. He said their self-insured retention for the City’s liability is $10,000 and that is for primary general liability and $100,000 on errors and omissions coverage. He said retention is the deductible. Mr. Bucko said what was most important in their proposal was how they addressed the zoning issues. The City’s current program excludes temporary takings. He said they are providing coverage up to a million dollars for the temporary taking under zoning litigation and could improve that coverage over the years when working with the City. Their program is with the Kemper Insurance Company’s A rated paper. The MML is a pool and has no rating and there are assessment provisions if the league pool depletes. Mr. Bucko said their program is in four states, Ohio, Michigan, Indiana and Wisconsin. They underwrite their program for over 2,500 public entities in those four states and about 8,000 nation wide. He commented he was talking about saving about $180,000 and they addressed the biggest issue facing the City, which was the temporary takings under the zoning litigation. Mr. Bucko said they offered a tremendous savings in premium and a lower deductible. Member Csordas asked when they submitted their proposal and he said the proposal went into the insurance company the first part of May. Mr. Bucko said it is very important that the City currently has a deductible (SIR) per occurrence is $250,000 for litigation and there was a comment that said the City would pay all the losses anyway. If that is the case, you would not only be looking at tremendous savings in premium but also a $10,000 deductible in liability and a $100,000 on public officials, which would be additional savings if there was litigation down the road. Mr. Bucko said the reason why there were differences on the claims was because they like to bring in their people to put together a claims program and an administration program that involved the City. The City has input on the attorneys to be used and would work with them negotiating how the claims should be handled and how it best fit the City’s needs and their needs. Mr. Youngblood, President of Midwest Claims was present and would be happy to answer any questions Council had.

Member Capello said to Mr. Plato that for the Alliance, in a lot of the categories for the limits, it says $5 million, $5 million, etc. and he assumed that $5 million is for the primary insured. Mr. Plato said that was for the primary so when the umbrella coverage is added it is essentially $10 million. You are comparing $10 million with MML to $10 million with the Alliance. Member Capello asked if the deductible comparison was also equal? Mr. Plato said the deductibles were comparable with the exception of the deductible for police liability coverage. It is $25,000 with the Alliance and $100,000 with MML. Member Capello asked about MML coverage for takings and zoning? Mr. Plato said, to his knowledge the MML didn’t provide that coverage and said it was somewhat unique for the Alliance to provide it especially at the limit of $1 million. Member Capello asked if neither was approved tonight what would be done about coverage for the next 30 days? Mr. Klaver said it would depend on whether the company eventually selected would be willing

to use the effective date of July 1^st. He said they were told everyone would be willing to do that this evening because it was only 24 hours. If it is a two-week period and they weren’t willing to backdate it then there would be no coverage for a claim. He wanted to clarify that the $250,000 SIR was picked up from a report in the third proposal received, which we considered non-responsive. The current deductible is $100,000.

Member Capello didn’t see why they would pay $100,000 for less coverage with MML.

Mayor Clark said there is a good reason. This is July 1^st and we need only one claim to come in and if there’s no coverage in that gap then we are back into a situation like we had with Sandstone. Mr. Plato said both companies have agreed to have their policy retroactive to June 30^th.

Mr. Helwig referred to paragraph on bottom of page 2. Mr. Klaver had said the representation was from the gentleman we just heard from regarding covering defense and legal costs, which can be very sizable and eat up this $100,000 plus difference very quickly. Mr. Plato has described here that in conversing with Mr. Bucko before he wrote the memo Mr. Bucko confirmed they would not be covered and that was their proposal. It goes on to say that the documentation supports the fact they are not going to cover the defense and legal costs and that it would be charged back to us. At 5 p.m. today there was a call saying they have clarified this now and it is similar to the League proposal. Mr. Helwig said that was not what we, as staff, could condone after going through competing proposals accepting something two and a half hours before Council is going to consider something that had been advertised and went through a formal process. He said it was not the way we should be conducting business. We want to save money, we are not wedded to the MML for obvious reasons but that is the basis for what was received from administration.

Member DeRoche agreed with Mr. Helwig and stated the bidding process was the biggest concern he had and he still had questions about the wording of exclusions. He didn’t like the uncertainty of having a new player in the Council Chambers trying to explain what it is that they are representing to the City. Member DeRoche said that was why he thought the City needed a professional who worked for the City and could be held responsible. If a professional was involved they could have the discussions, do the City’s business and get these things just so during communications with the insurance companies. He said it is not uncommon to extend the deadlines. Member DeRoche would like administration to go back to the MML and buy a policy with them for a certain amount of time to assist us in making this decision. If we can’t do that then a decision had to be made tonight. Seeing as the MML is potentially on the downside of this vote he thought a vote to allow the administration to purchase either tonight, not to exceed the higher amount, would give the administration the leverage they need to go back to the MML and possibly get that extension. Mayor Clark said we don’t have any extra time. Member DeRoche said traditionally a binder is issued so it is actually recognized. Mayor Clark said a binder says you have insurance but it doesn’t say what insurance you have and he would not represent a client on that basis because if something happens the agent is on the hook. Member DeRoche said he had never seen, in his experience in the business, an insurance company not pay a claim because they didn’t issue the policy yet. They are generally held to what they bind. Mayor Clark stated he had seen a few in the past and had represented some agents that thought they wrote something too. There might be some feelings here with the League in light of what we have just been through but that aside we have to look at the best interest of the City. We are talking about a one-year

period and once we get Sandstone behind us there might be more than two companies willing to bid for our business. He was concerned about protecting the City tonight.

Member DeRoche said the Alliance was talking about including the claims service in the price of their quote now and he needed to know who owned Midwest Claims Service to make sure he doesn’t have a conflict of interest and asked if they had any affiliation with Safety National Casualty of St. Louis MO and there was a conflict so Member DeRoche asked to be recused or abstain.

Member Lorenzo said the Alliance appeared to have a comparable product and felt the concern was about the level of trust. She asked Alliance representatives to convince Council why they should trust their commitments.

Jim Youngblood, Vice President of the Municipal Insurance Alliance and president and partner of Midwest Claims Service, which is a subsidiary company of the Municipal Insurance Alliance spoke. When he met with Mr. Klaver there was discussion on whether or not the SIR included defense trust. We have an option of going both ways. From the time he left Mr. Klaver’s office and talked to the underwriters they were not able to calculate the difference in premium to submit for excluding the defense costs in the proposal. As far as trust, they have over 2,000 municipalities and a have 98% retention level because of their service. He said they became involved in the detail at the 11^th hour and apologized for not having the ability to get the information together. However, $450,000 for premium and he added in their proposal the City has $100,000 for wrongful acts, which are civil rights violations and would involve for the most part employment issues claims under Title 7. The general liability includes zoning and taking and other land use cases. The City would have $1 million coverage with a 10,000 deductible or SIR. We can have an SIR for a deductible. The SIR is to the City’s advantage because you make the calls on the first $10,000. Police professional liability is $10,000, wrongful acts are $100,000 and auto liability is $10,000. He said they handle the claims for the City and the reason for a contract is that they want to know what the City’s guidelines are. We have municipalities with a million dollar SIR, with $50,000, $100,000 etc., and every municipality has their own unique internal directions as far as authority extending, processing claims that you have to pay with the $10,000 thus we have a contract and agreement. The City gives him authority to process those claims and if the City doesn’t want to give him the authority then a procedure is devised wherein they submit a report to the Council and they approve or disapprove those cases. Now, $10,000 in this day of litigation isn’t very much and the average lawsuit is probably $12,000 to $15,000. It is for handling small claims. In addition, he agreed to handle sewer backup claims, which there was no coverage for with MML or through the Municipal Insurance Alliance. He did that because they have a claim administration company. He has two internal employees that are lawyers, two senior adjusters, three regular adjusters who handle small claims. He

has a staff of 12 people and with that they process all the claims and all they do is municipal books so they know what they are doing. He apologized to the administration for the 11^th hour and agreed that this process was somewhat unorthodox, as did Member Lorenzo. It was the 11^th hour and they felt that Novi was a good account and wanted to have Novi as a part of the members of the Municipal Insurance Alliance. He said he could provide lists of their insured who would highly recommend them.

Member Lorenzo asked Mr. Plato given the discussion that has ensued and the commitments on the part of the alliance what his recommendation would be? Mr. Plato recommended, initially, MML because there were a lot of outstanding issues. She asked if he felt these issues had been resolved and if this coverage was comparable if not better than MML? Mr. Plato said there were factors to be considered that a monetary value could not be put on and that was the City’s history with the League and how they handled claims in the past. He said, comparing coverage and premiums, clearly it appears that the Alliance premium is substantially lower than the League for the same coverage and in some circumstances better coverage.

Mr. Klaver emphasized this isn’t about credibility but is more a matter of the process. When the proposal was submitted he specifically asked where the defense costs would be included and was told there would be additional expenses. He now understood that was a misunderstanding between them and later clarified. Mr. Klaver felt they had to stick to what was submitted and what was submitted didn’t include that. He appreciated the representations and was sure they would honor them but felt it would destroy the entire process. They are in a position to know what the other bid is and he thought if there was the slightest possibility, not suggesting they did, they were allowed to come back and modify their proposal that’s our problem and that’s where we have strayed. He felt they should stick with what was originally submitted.

Mayor Clark said they made the point that with the defense costs excluded it might change the number as well so we don’t know what that number is.

Member Csordas called the question. He could not support this bid and felt the process had not been professional.

Mr. Fisher commented that in many instances five votes is needed to spend money but his understanding from discussing this is that the money has been allocated and we are just determining who to pay.

Member Lorenzo withdrew her motion. Mayor Clark said it is 11:30 PM and asked if Council was going to leave the City without insurance? She thought the Alliance should be given a chance. Mayor Clark wasn’t worried about giving another company a chance he was concerned about protecting the City of Novi and the 50,000 residents. We just got done with a $72 million lawsuit and he didn’t want to play with fire. Mr. Fisher said they didn’t need a unanimous vote because the quorum now is four.

Member Capello said throughout the budget the money is allocated but until Council agreed to enter into a contract and give it to a certain person he thought five votes would still be needed.

Mr. Fisher said the money is allocated for a specific line item for this particular purpose and this would merely determine where to put it.

Mayor Clark asked if the Chair could second a motion. Mr. Fisher said yes.

Member Lorenzo said she understood what Mr. Klaver said but she was looking at a business decision in terms of coverage and price based on their commitments this evening and they would cover the City for the two days. Mayor Clark said Council didn’t know what the additional costs would be regarding excluded defense costs.

Mayor Clark asked Mr. Youngblood if they wrote coverage with defense costs excluded wouldn’t they charge a higher premium? Mr. Youngblood said yes, but he couldn’t tell Council tonight what they would be because it goes through the rating system. However, he could have a quote within two weeks. Mayor Clark said we don’t have two weeks. Mr. Youngblood said he could amend the policy and it would still be substantially less.

Member Csordas said he didn’t want to do business with the people who are recommended but he could not support Alliance because it was like opening a bid and someone comes in and says that’s not good enough I’m going to change it right now but I’m not going to give you any paper. Alliance has not done anything wrong but the process has not been professional and Mayor Clark is correct we have a significant obligation to the people of this community. Member Csordas told Mr. Youngblood that he hoped he would come back but this needs to be done tonight.

Mr. Youngblood said as Vice President of the company he could tell Council that they could exclude defense costs for $50,000; that would still save the City $100,000 and based upon the raters calculation he would give the City any difference. He said based upon his experience $50,000 would be more than adequate for the rate and he again apologized for the last minute but they were told of a lot of changes and interpretations of their coverage at the 11^th hour that they had to correct. He said he would make that guarantee to Council, on the record, as Vice President of the Alliance.

Members Landry and DeRoche re-entered the meeting.

12. Authorization to apply for and accept, over the Internet, the 2002 Local Law

Member Capello asked administration to get him the costs for the improvements at Meadowbrook and Cranbrook Roads.

14. Approval of right-of-way acquisitions and grading easements for road and utility improvements – Grand River: Beck Road to CSX Bridge

Mr. Fisher preferred that Item #19 be addressed before Item #15.

19. Discussion and ratification of resolution adopted by Council at 6-24-02 meeting.

Member Landry stated, for the record, that he didn’t think Council did anything improper and would echo the Mayor’s comments that he is extremely proud of the way this Council handled itself in these negotiations. He would support this motion solely to avoid spending one nickel of this City’s money having to defend any type of claim asserting that there was anything that Council did wrong. It would be a waste of money to do so, we did nothing wrong and solely in the interest of that would he support this motion.

Mr. Fisher said this is a motion to ratify approval of the resolution of June 24, 2002.

CM-02-07-193 Moved by Lorenzo, seconded by Csordas; CARRIED UNANIMOUSLY: To Award contract as Change Order to Waterland Trucking, low responsive bidder, in the amount of $1,164,600.00, for excavation and disposal of contaminated soil in association with the authorized Sandstone settlement. Amount is $1,105,355

Mr. Helwig said this pertained to arsenic remediation and clean zone areas within the 75 acres. It does not pertain to anything beyond the 75 acres, which might be of issue at another date but which we have two years from the date of consent judgment entry to deal with. We have one year from entry of consent judgment to deal with this 75 acres. He said seven proposals were received on April 15^th and this is the lowest. A change order is being recommended in order to facilitate the immediate commencement of this work. The insurance documents are in place and all other things that Council needs prior to commencing the work are already in place because Waterland Trucking already has a significant job ongoing for the City of Novi.

Member Capello asked if we had the costs for time and materials. Mr. Helwig said they did.

Mayor Clark said it was his understanding that what this did was actually reduce the amount that the City would be paying if we get these grants. Mr. Fisher said in a sense that was correct but it could be used for other purposes but if used for this purposes the General Fund or related monies would not have to be used. Mayor Clark said that was conveniently forgotten earlier when there was a reference by a member of the audience to go to the county for $500,000, which was incorrect because it was $577,914 plus another $192,638, which would not come out of the taxpayer’s pocket.

Nays: None

Mayor Clark thought everyone had the opportunity to review the material under the proposed District 20 Drainage District and there was also communications from the City attorney. Mayor Clark’s interpretation was that it was constitutionally questionable and on a practical level it looked like empire building at the expense of individual communities. He thought it would put tremendous financial burdens on them and one person or his three designees would be in charge as to how much each community would have to pay. It is almost the situation we had with Quail Ridge where we resolved our own problems between two communities and worked

it out in a practical fashion that would cost each community very little. He stated he was unabashedly opposed to this and urged the Council to adopt a resolution saying the City of Novi is 100% opposed to this plan. Mayor Clark suggested, if Council supported this idea, the resolution be adopted and sent to every other community in Oakland County.

1. Letter from Anthony Tomasso, Re: proposal for City water service.

Mayor Clark asked the administration to contact Mr. Tomasso because it seemed the residents on his street were very desirous of getting City water.

There being no further business to come before Council, the meeting was adjourned at 12:06 AM.

________________________________ _______________________________

Richard J. Clark, Mayor Maryanne Cornelius, City Clerk

Transcribed by: ____________________________

Charlene McLean

Date approved: July 15, 2002