Council Chambers
CITY COUNCIL
CALL TO ORDER
ROLL CALL
PLEDGE OF ALLEGIANCE
Summary Minutes of the Flint City Council regular meeting held Monday,
February 27, 2017, at 6:01 p.m., in the City Council Chambers, 3rd Floor, City
Hall.
PUBLIC HEARINGS
None
PUBLIC COMMENT
Per the amended Rules Governing Meetings of the Council (as adopted by the City
Council on Monday, April 27~ 2015), members of the public may address the Council
for three (3) minutes on ANY ITEM PERTAINING TO THIS AGENDA.
A copy of the Michigan Civil Rights Commission Report, re: The Flint Water
Crisis: Systematic Racism Through the Lens of Flint, dated February 17, 2017.
Communication received January 23, 2017, re: Proof of Service (2), Notice of
No Action Letter, Request for Time Extension, and Check Copy filed with the
Michigan Tax Tribunal by VW Leasing, LLC regarding Parcels No.
30-00-100-009 and 20-00-189-214.
Public Notice received March 10, 2017, re: A Notice of Cancellation for the
March 15, 2017 Karegnondi WaterAuthority (KWA) meeting.
Communication dated February 24, 2017 (received February 27, 2017), from
Derrick F. Jones, Purchasing Manager, to Flint City Council, re: Pursuant to
Section 18-21.10 of the Flint City Code, the Purchasing Department is issuing
notice to do all things necessary to have ServPro [no address noted] perform
emergency cleanup of several City Hall offices, in an amount
NOT-TO-EXCEED $80,502.01, and to have William E. Walter [no address
noted] repair a broken water line in City Hall, in an amount NOT-TO-EXCEED
$6,691.58 [Acct. No. 677-174.851-955.000], because the City Administration
has declared an emergency due to damages caused by a broken hot water
line within City Hall over a weekend, damaging several offices on multiple
floors, with the damages sustained by this flooding posing a threat to the
health and safety of the general public and City employees.
ADDITIONAL COMMUNICATION
APPOINTMENTS
LICENSES
RESOLUTIONS
170117 Settlement AgreementJCity of Flint/Damage Claim/Kimberly Hicks
Resolution resolving that the proper city officials are hereby authorized to
enter into a contract with Wade Trim, Inc. for the design re-engineering of the
Battery A Grit Chamber, as requested by Utilities/Water Pollution Control, in an
amount NOT-TO-EXCEED $242,000.00 [Sewer Fund Acct. No.
590-550.300-801.000]. [Administration Submission No. CA360201 7.]
Resolution resolving that the proper city officials, upon City Councils approval,
are hereby authorized to enter into a contract with Johnson & Anderson for a
storm/wastewater asset management plan, as requested by Utilities/Water
Service Center, in an amount NOT-TO-EXCEED $1,650,000.00 fSewer Fund
Acct. No. 590-545.300-801.000 SDEQ-13-SAW.1 [NOTE: According to the
Staff Review, the Michigan Department of Environmental Quality (MDEQ) has
awarded the city a Stormwater, Asset Management and Wastewater (SAW)
grant in the amount of $2,000,000.00, of which $1,650,000.00 is to be used
for an asset management plan for the sanitary and storm water collection
systems.] [Administration Submission No. CA36 12017.]
[NOTE: The City Council AMENDED Resolution No. 170131 during the 3-08-2017
Committee Meetings, however, no vote was taken on the amendmenL An amended
resolution has been drafted and submitted to the Administration for signatures in
anticipation of a Council vote on said amendmenLJ
Resolution resolving that the proper city officials, upon City Councils approval,
are hereby authorized to enter into a contract with Hubbell, Roth & Clark, Inc.
for storm/wastewater asset management plan developmentservices, as
requested by Utilities/Water Pollution Control, in an amount NOT-TO-EXCEED
Resolution resolving that the proper city officials, upon City Councils approval,
are hereby authorized to enter into a contract with Great Lakes Elevator for
the refurbishment of the East Pump Station Elevator, as requested by
Utilities/Water Pollution Control, in an amount NOT-TO-EXCEED $168,500.00
[Sewer Fund Acct. No. 590-550.300-930.000.] [NOTE: The elevator no longer
meets the current code regulations with the State of Michigan and must be
fully refurbished before it is considered safe to use. Otherwise it will have to
be removed.] [Administration Submission No. CA3632017.j
Resolution resolving that the proper city officials, upon City Councils approval,
are hereby authorized to enter into a contract with PCS Construction for
painting of the South Storage Tank and Lid, as requested by Utilities/Water
Pollution Control, in an amount NOT-TO-EXCEED $97,490.00 [Sewer Fund
Acct. No. 590-550.300-930.000 = $90,900.00 and Acct. No. Acct. No.
590-550.300-977.000 = $7,000.00.] [Administration Submission No.
CA364201 7.]
Resolution resolving that the proper city officials, upon City Councils approval,
are hereby authorized to enter into a contract with U Electric, LLC for the
installation of the South Anaerobic Digesting Sludge Storage Tank Mechanical
Equipment, as requested by Utilities/Water Pollution Control, in an amount
NOT-TO-EXCEED $158,000.00 [Sewer Fund Acct. No. 590-550.300-930.000.]
[Administration Submission No. CA365201 7.]
Amended resolution resolving that the governing body of the City of Flint, a
participating municipality as defined in the Municipal Employees Retirement
Act as recodified by Act No. 427 of the Public Acts of 1984, as amended, and
as the employer, hereby requests the Michigan Employee Retirement System
(MERS) to reallocate the total market value of assets as of October 1, 2016,
as listed in the below chart, AND, be it further resolved that the City
acknowledges that the estimated, employer defined benefit contributions at
1/23/17 for FY2017/FY2018, and future funding years are listed in the chart
below and are subiect to annual actuarial review, valuation and employer
contribution change, AND, in the near future (12/31/16) the actuary may issue
a qualified annual valuation report if contributions in the near term dont come
closer to actual payments being made to retirees, AND, resolving that the City
Clerk is hereby directed to send a certified copy of this resolution to
MERS-Finance, ATTN: Reallocations, 1134 Municipal Way, Lansing, Ml
48917. [NOTE: The City of Flint is a member of MERS. The MERS funding
scenario chosen calls for a smoothing of employer contributions among all
defined benefit retiree divisions with the exception of the Hybrid pension plan.
This action could bring down proposed first-year employer contributions from
$33.7 mill to $20.6 million. The reallocation involves increasing employer
reserve assets in two AFSCME 1600 union groups, one AFSCME 1799 union
group, exempt employees and fire. Decreases in employer reserve assets will
come from one AFSCME 1600 union group, one AFSCME 1799 union group,
two police union groups, two lieutenants & captains union groups and three
sergeants union groups.] [NOTE: Resolution amended to say that the city
acknowledges not the City Council acknowledges.] [Administration
Submission No. CA3662017j
Amended resolution resolving that the city has authorized the Crim Fitness
Foundation to act as agent on behalf of the City of Flint to request Safe
Routes to School Funding, to act as the applicants agent during the project
development, and to sign a project agreement upon receipt of a funding
award, AND, resolving that the city commits to owning, operating, funding and
implementing a maintenance program over the design life of the facilities
constructed with Safe Routes to School funding, as requested by
Transportation. [NOTE: Funding from the program will enable infrastructure
projects (sidewalks, signage, crosswalks and curbs) to occur at Eisenhower
Elementary, Brownell-Holmes Stem Academy and Eagles Nest Academy.~
[NOTE: Resolution amended to change By the City Council to By the
Mayor.~ [Administration Submission No. CA359201 7.]
Resolution resolving that all damage claims over $2,500.00 must be submitted
to the City Council for approval prior to disposition. [NOTE: The City Council
wishes to be more involved in decisions regarding damage claims.]
Resolution resolving that the appropriate City Officials are authorized to do all
things necessary to amend the 2016-17 adopted budget to include revenue
City of Flint, Michigan Page 6 Printed on 3/10/2017
CITY COUNCIL Meeting Agenda Final
- March 13, 2017
and appropriations for reimbursement from the State of Michigan for expenses
paid to Yeo & Yeo for their services in auditing the Water and Flushing Credit
Refund Program, in the amount of $46,982.00 [State Grants-Charges of
Services Rendered Acct. No. 101-191.100-539.100 and Professional Services
Acct. No. 101-191.100-801.0001. [Administration Submission No. CA369201 7]
Resolution resolving that all damage claims shall be processed by the City
Attorneys Office and only those claims over $10,000.00 shall be referred to
the City Council prior to disposition. [Administration Submission No.
CA3672017]
LIQUOR LICENSES
None
PUBLIC SPEAKERS
Per the amended Rules Governing Meetings of the Council (as adopted by the City
Council on Monday, April 27~ 2015), members of the public may address the Council
for three (3) minutes IN GENERAL.
ADJOURNMENT
Summary Minutes of the Flint City Council regular meeting held Monday,
February 13, 2017, at 6:04 p.m., in the City Council Chambers, 3rd Floor, City
Hall.
A motion was made by Councilperson Kincaid, seconded by Councilperson
Galloway, that this matter be Placed on File. The motion carried by the following
vote:
Aye: 9- Councilperson Mays, Councilperson Poplar, President Nelson,
Councilperson Fields, Councilperson Davis, Councilperson Winfrey,
Councilperson Galloway, Vice President VanBuren and Council person
Kincaid
Duration), of the Code of the City of Flint concerning the duration of tax
incentives.
HEARING HELD
January 1,2017, and expiring December 31, 2019, as requested by 1st Ward
City Councilperson Eric Mays. [NOTE: By way of background, Ms. Freeman is
replacing Chia Morgan, whose term expired December31, 2016.]
A motion was made by Councilperson Mays, seconded by Councilperson
Galloway, that this mailer be Approved. The motion carried by the following
vote:
Aye: 6 - Councilperson Mays, Councilperson Poplar, President Nelson,
Councilperson Winfrey, Councilperson Galloway and Vice President
VanBuren
No: 2 - Councilperson Davis and Councilperson Kincaid
Absent: 1 - Councilperson Fields
Resolution resolving that the proper City Official are hereby authorized to enter
into change order #3 to the contract with William E. Walter for additional HVAC
support services, as requested by Utilities and Maintenance, in the amount of
$15,000.00, for a total aggregate amount of $338,000.00 [General Fund Acct.
No. 101-753.200-801.000]. [Administration Submission No. CA347201 7.]
This Mailer was ADOPTED BY THE MASTER RESOLUTION on the Consent
Agenda.
Resolution resolving that the appropriate officials do all things necessary to set
a Public Hearing date of March 27, 2017, to consider the approval of a
Commercial Rehabilitation (Exemption Certificate) application for the Flint
Ferris Building, located at 615 S. Saginaw Street, with said hearing to be held
at 5:30 p.m. in City Council Chambers, City Hall, 1101 S. Saginaw Street, Flint,
as requested by the Community and Economic Development Division (CED),
and that notice of the hearing shall be published in an official paper of general
circulation not less than ten (10) days prior to said hearing. [Administration
Submission No. CA3492017.]
This Matter was ADOPTED BY THE MASTER RESOLUTION on the Consent
Agenda.
Resolution resolving that the proper City Official are authorized to enter into a
contract with LiquiForce Services (USA), Inc. for storm and sewer relining for
the period ending June 30, 2018, as requested by Purchasing, in an amount
NOT-TO-EXCEED $2,500,000.00 [Sewer Fund Acct. No.
590-540.300-801.000 = $500,000.00/FY2O1 7; Sewer Fund = $2,000,000.00
pending FY2018 Budget]. [Administration Submission No. CA3522017]
This Matter was ADOPTED BY THE MASTER RESOLUTION on the Consent
Agenda.
Executive Session was requested regarding this matter on February 13, 2017; and
ADOPTED:_______________________
Executive Session was requested regarding this matter on January 23, 2017; and
ngela heeler, Acting Chief Legal Officer D Id Sabuda, Interim Chief Financial
Officer
ADOPTED:
Executive Session was requested regarding this matter on February 13, 2017; and
BY THE MAYOR:
RESOLUTION
The Department of Purchases & Supplies has solicited proposals for the design re
engineering of the Battery A Grit Chamber as requested by the Utilities Water Pollution Control; and
Wade Trim, Inc., 555 S. Saginaw Street, Suite 201, Flint, Michigan 48502 was the lowest
priced and highest ranked proposal from six solicitations for said requirements. Funding for said services
will come from account 590-550.300-801.000; and
IT IS RESOLVED, that the Proper City Officials are hereby authorized to enter into
contract with Wade Trim, Inc. for the design re-engineering of the Battery A Grit Chamber in an amount
not to exceed $242,00.00. (Sewer Fund)
W. Weaver
FY17-BDB
RESOLUTION STAFF REVIEW
WPC is in urgent need to modify its Battery A grit removal system. The current system
was installed in 1963 and is obsolete. It does not function properly, and allows grit to spill
over into the primary tanks/sludge storage tanks, which causes accelerated equipment
wear and abrasion. In addition, excessive grit has knocked primary tanks out of service,
and resulted in costly periodic cleanouts.
Proposals for engineering support and assistance from qualified firms with significant
experience in this area is necessary, and was requested. The selected firm, Wade Trim,
Inc., ranked highest, with an average score of 91 out of 100 points. They were also the
lowest cost firm.
Financial Implications:
There is adequate funding for this contract in the FY201 7 yearly budget account. Use
accounts 590-550-300-801.000 ($242,000.00) when approving this contract.
Staff Person:____________________
(Dept H auThorized siat
BY THE MAYOR:
RESOLUTION
The Department of Purchases & Supplies has solicited a proposal for a storm/wastewater
asset management plan as requested by Utilities/Water Service Center; and
Johnson & Anderson, 2387 5. Linden Rd., Suite B-142, Flint, Michigan was the lowest
responsive bidder and received the highest score from the five proposals that were received for said
requirements. Funding for said services will come from account number 590-540.300-801.000 SDEQ- 13-
SAW; and
IT IS RESOLVED, that the Proper City Officials, upon City Councils approval, are hereby
authorized to enter into a contract with Johnson & Anderson for storni/wastewater asset management plan,
in an amount not to exceed $1,650,000.00. (Sewer. Fund)
6~sA~<
a en W. Weaver
FYI7-KRN
RESOLUTION STAFF REVIEW
DATE: 1-23-17
Agenda Item Title: SAW Grant Storm water/Wastewater Asset Management Plan
Funds are to be paid with grant money. Account has not been set up.
Staff Person: c
ept Head or other authorized staff~
SEALED BIDS RECEIVED PURCHASING DEPARTMENT ON DECEMBER 1, 2016
FOR STORM! WASTEWATER ASSET MANAGEMENT PLAN DEVELOPMENT SERVICES
FOR WATER SERVICE CENTER
PROPOSAL #17-556
JOHNSON & ANDERSON FLEIS ft VANDEN~RINI( FTC&H/ROWE WADE TRIM TLC ENGINEERING
23875. Linden Rd. 9475 Holly Rd., Grand 5913 Executive Dr. 555 S. Saginaw St. 8204 Westgten Dr.
Flint, MI BLanc, Ml Lansing, MI Flint, MI Houston, TX
$1,600,000 $1,600,000 . $1,600,000 $1,600,000 s1,6ao,000
Average score 87.5 Average score 79.63 Average score 74.38 Average score 72,13 Average score 58.63
170 flsa
(Proposal #17000549) SUBMISSION NO.: c4 31~2 20 / 7
PRESENTED: 3-a /7
ADOflED: _____________________
BY THE MAYOR:
RESOLUTION
The Department of Purchases & Supplies has solicited a proposal for storm/wastewater
asset management plan development services as requested by Utilities/Water Pollution Control Facilities;
and
Hubbell, Roth & Clark, Inc., 555 I-Iulet Dr., Bloomfield Hills, Michigan was the lowest
responsive bidder and received the highest score on the proposals that were received for said requirements.
Funding for said services will come from 590-550.300-801.000 ($530,000) and also from a grant account
number 590-550.300-801.000 SDEQ-l3-SAW ($350,000); and
IT IS RESOLVED, that the Proper City Officials, upon City Councils approval, are hereby
authorized to enter into a contract with Hubbell, Roth & Clark, Inc. for storm/wastewater asset management
plan development services, in an amount not to exceed $880,000.00. (Sewer Fund) $350,000 grant account;
$130,000 FYI 7; $400,000 pending FY18 budget
W. Weaver
FY17 - KRN
RESOLUTION STAFF REVIEW
November 2, 2016
Agenda Item No:
Agenda Item Title: WPC Plant Asset Management Plan Engineering Services
Financial ImDlications:
The contract, partially lunded with a grant from MDEQ will span over three fiscal years.
Completion is expected by November 30, 2018. Please use account 590-550.300-801.000
when approving and Funding this contract The exact funding split has yet to be determined.
The Citys funding portion of this contract will be the total contract amount minus the
approved grant allocation ($880,000.00 [MIJEQ Granti = Citys pprtion).
~ 43cqea~ (viOl.) 1Y43O~~Q%~ ~MC..
Budgeted Expenditure? S Yes C No Please explain if no:
Staff Person:______________________
(DepL nrAuth~izedSbfI)
S .A~SI.r ~.I.t~M;I Ml;cr~Il -WI ,~SI~T 4CM F lAS IlII3Jv.~l I XilI)WPIl va WIS 1411 kLV 1)01k
SEALED BEDS RECEIVED PURCHASING DEPARTMENT ON SEPTEMBER 15, 2016
FOR STORM/WASTEWATER ASSET MANAGEMENT PLAN DEVELOPMENT SERVICE
FOR WATER POLLUTION CONTROL
PROPOSAL #17-549
ADOPTED: ______________________
BY THE MAYOR:
RESOLUTION
The Department of Purchases & Supplies has solicited bids for the refurbishment of the
East Pump Station Elevator as requested by the Utilities Water Pollution Control; and
Great Lakes Elevator, 530E. Grand River Rd., Williainston, MI 48895 was the lowest
bidder from five solicitations for said requirements. Funding for said services will come from account 590.
550.300-930.000; and
IT IS RESOLVED, that the Proper City Officials are hereby authorized to enter into
contract with Great Lakes Elevator for the refurbishment of the East Pump Station Elevator in an amount
not to exceed $168,500.00. (Sewer Fund)
FY17-BDB
RESOLUTION STAFF REVIEW
February 1112017
The WPC East Pumping Station elevator is critical for operations as it allows for personnel
and equipment to be conveyed efficiently so that it may be maintained and monitored
properly. The current elevator is old, obsolete, and was damaged in a flooding incident.
Because it no longer meets the current code regulations with the state of Michigan it must
be fully refurbished before it is considered safe to use. Otherwise it must be removed.
Financial Implications:
There is adequate funding for this contract in the FY2O1 7 yearly budget account. Use
accounts 590-550-300-930.000 ($168,500.00) when approving this contract.
Staff
ADOPTED: ______________________
BY THE MAYOR:
RESOLUTION
The Department of Purchases & Supplies has solicited bids for painting of the South
Storage Tank and Lid as requested by the Utilities Water Pollution Control; and
PCS Construction, LLC, 6209 Hickory Drive, Goodrich, Michigan 48438 was the lowest
bidder from four bids that were received for said requirements. Funding for said services will come from
account&---590.550r300-930.000 ($90,900.00), 590-550-300-977.000 ($7,000.00); and
IT IS RESOLVED, that the Proper City Officials are hereby authorized to enter into
contract with PCS Construction, LLC for painting of the South Storage Tank and Lid in an amount not to
exceed $97,490.00. (Sewer Fund)
Derrick Jones, P c sing Manager David L. Sabuda, Chief Financial Officer ge a Wh icr
lntcrrn C cfLcgal Officer
L l_
t~r. ~i.
Tcdfen W. Weaver
FY17- 8DB
RESOLUTION STAFF REVIEW
February 11,2017
Aaenda Item Title: Painting of the South Storage Tank and Lid
WPC utilizes its south storage tank and lid to store solids before they are utilized in the
digestion process. The coatings on the tank walls and the floating lid are in poor condition.
They need to be repainted to protect them from the environment and make them last
longer.
Financial Implications:
There is adequate funding for this contract inthe FV2O1 7 yearly budget account. Use
accounts 590-550-300-930.000 ($90,900.00) and 590-550-300-977.000 ($7,000.00)
when approving this contract.
590-550.300-977.000 $7,000.00-
CA Hull Co., Inc. TSP Services, Inc. Niles Construction Services, Inc.
8177 Goldie Rd. 25000 Capitol St. 5048 Pilgrim Rd.
Walled Lake, MI 48390 Redford, MI 48239 Flint, MI 48507
Painting of South
Storage Tank and $230,000.00 $178,769.00 $126,260.00
Lid
* Alternate bid using different concrete only coating for tank rather than concrete/metal coating required for tank Lid
17013ff
(Bid #17000046) SUBMISSION NO.: C6t13(oS aoiy
PRESENTED: . 3 - / 7-
ADOPTED:
BY THE MAYOR:
RESOLUTION
The Department of Purchases & Supplies has solicited bids for the installation of the South
Anaerobic Digesting Sludge Storage Tank Mechanical Equipment as requested by the Utilities Water
Pollution Control; and
U Electric, LLC, 9239 Reid Road, Swartz Creek, Michigan 48473 was the lowest bidder
from two bids that were received for said requirements. Funding for said services will come from account
590-550.300-930.000; and
IT IS RESOLVED, that the Proper City Officials are hereby authorized to enter into
contract with U Electric, LLC for the installation of the South Anaerobic Digesting Sludge Storage Tank
Mechanical Equipment in an amount not to exceed $158,000.00. (Sewer Fund)
FYI7BDB
RESOLUTION STAFF REVIEW
February 11,2017
Agenda Item Tifle: Installation of the South Storage Tank Mechanical Equipment
WPC is in urgent need to replace the inadequate mixing system for its South sludge
storage tank. The current system, installed in 1950s, was obsolete, unreliable and has
been removed. It did not deliver the homogeneous sludge needed for efficient digestion,
dewatering and was subject to clogging. The new system will reduce operation costs.
WPC has already purchased the equipment needed for this new mixing system. This
contract will cover the installation of the new Rotomix equipment.
Financial Implications:
There is adequate funding for this contract in the FY2OI 7 yearly budget account. Use
accounts 590-550-300-930.000 ($1 58,000.00) when approving this contract.
Staff Person;______________________
(OepU~~thera~lt,odzed5tMQ
$238,612.0 $158,000.00
(bid bond) (certified check)
I7OI3~.I
Resolution Requesting the Michigan Employee Retirement System to
Reallocate Employer Pension Reserve Assets of the City of Flint
BY THE MAYOR:
WhEREAS, the City of Flint has been a participating municipality in the Municipal Employees Retirement
System of Michigan (MERS); and
WhEREAS, pursuant to Municipal Employees Retirement Board requirements, since December31, 1994, asset
accounting had been separate for each division, instead of aggregate for the entire municipality; and
WHEREAS, over time, significant disparities have arisen in the Citys MERS plan as a result of allocating the
fair market value of plan assets on a divisional basis instead of on an aggregate basis, which disparities the City
of Flint wishes to eliminate; and
WHEREAS, in order to address the anticipated increase in unfunded liability for pensions to be provided
participants in the defined benefit plan that is likely to occur as a result of diminished contributions to that plan,
the City wishes to reallocate certain divisional market assets between these divisions; and
WHEREAS, the Mayor and the administrative team have reviewed the various funding plans provided by MERS
and the MERS actuaries and have determined that the reallocation of employer reserve assets will allow for an
increased employer pension contribution over fiscal years 2016/17 employer pension contribution and also allow
the City to operate with current City services in tact; and
WHEREAS, the administration along with MERS have notified, met and discussed the reallocation of employer
contribution assets along with the estimated effect on the level of pension asset funding with the proposed revised
employer pension contribution with the City Attorney, the non-union pension representative and the City
bargaining units.
NOW ThEREFORE BE IT RESOLVED, that the governing body of City of Flint, a participating municipality
as defined in the Municipal Employees Retirement Act as recodified by Act No. 427 of the Public Acts of 1984,
as amended, and as the employer, hereby requests MERS to reallocate the total market value of assets as of October
1,20l6asfollows:
BE IT FURTHER RESOLVED that the City acknowledges that the estimated, employer defined benefit
contributions at 1/23/17, for fiscal year 2017/18 and future funding years are listed below and are subject to annual
actuarial review, valuation and employer contribution change. And in the near future, (12/31/16) the actuary may
issue a qualified annual valuation report if contributions in the near lerin dont come closer to actual payments
being made to retirees.
Actuarial estimated employer contributions subject to future valuation and change is as follows:
Fiscal Year Contribution Asset Allocation Equal to Funded Estimated Percent Funded
Ratio Estimated Employer
Contribution
July_1,
2017 $20.6M 43%
2018 $22.8M 39%
2019 $26.8M 35%
2020 $31.5M 32%
2021 $36.1M 29%
2022 $37.8M 28%
2023 $38.9M 27%
BE IT FURTHER RESOLVED that the City Clerk is hereby directed to send a certified copy of this resolution
to MERS-Finance Attn: Reallocations, 1134 Municipal Way, Lansing, Michigan 48917.
2
RESOLUTION STAFF REVIEW (7 ~~
Agenda Item Title: Resolution Requesting the Michigan Employee Retirement System to Reallocate Employer
Pension Reserve Assets of the City of Flint.
On June 30, 2016, the Municipal Employees Retirement System of Michigan (MFRS) presented the annual City of
Flint actuarial report dated 12/31/2015 to City staff This actuarial report outlined a 43% funded ratio and
requested an optional $42 million or optional $40.7 million employer pension contribution effective for 7/1/2017.
The annual 12/31/2014 actuarial report actuarially calculated an employer pension contribution of $17 million for
7/1/2016.
In summary, the 12/31/2015 actuarial report discloses that four major actuarial assumptions have changed for all
MERS Plan participants. Those four changes are:
The report further discloses that the pension system is paying $50 million annually to retirees while employer and
employee contributions along with investment income are adding up to a $30 million annual contribution. Another
issue that was disclosed by MERS staff is that some City of Flint retiree divisions did not have enough assets and
those divisions were triggering a three times minimum funding of the division. The three times funding policy is a
MERS Board policy and increases employer pension contribution requirements if funding is low in a division.
These factors have driven the anticipated employer contribution to $42 million per year for fiscal year July 1, 2017
June 30, 2018, in lieu of a $17 million dollar contribution being made for the 2016/17 fiscal year.
Finance staff along with MERS staff and the actuary assigned to Flint met with the City Administrator in early July
2016 to outline funding issues and the higher pension contribution. From that meeting I met with the Mayor and
administration leadership to highlight the funding issue at hand. In early October MERS presented to the Flint City
Council those pension issues attributable to the increase in employer pension contribution. From these meetings
the City requested that MERS give alternate ftmding scenarios to fairly fund the pension system if the City moved
retirees without assets into theft proper funded division and eliminate the three times funding MERS Board Policy
rule where applicable.
In late November 2016, MERS provided two funding scenarios that would reduce the Citys employer pension
contributions if certain administrative steps were taken. The necessary administration steps that would allow for a
reduction in employer pension contribution is as follows:
Step One City staff could reclassified all retirees who had been assigned at the pension system conversion to
retiree groups with no assets or active employees to their proper retirement division where there were assets and
active employees. This administrative action would bring down the proposed first year employer pension
contributions from $42 million to approximately $36 million. (Revised on 1/23/20 17 to $33.7 million payment)
Step Two The second MERS fUnding scenario called for a smoothing of employer contributions among all
defined benefit retiree divisions with the exception of the Hybrid pension plan. This action could bring down
proposed first year employer contributions from $33.7 million to $20.6 million. A City Council resolution is
necessary to have the employer pension contributions moved/smoothed between retirement divisions.
In addition, MERS legal staff provided a legal opinion stating that the smoothing of employer assets was allowable
under Internal Revenue Service regulations. Further, MERS recommended that the City also work with union and
non-union groups to notify them of a pending asset transfer among divisions. (See Attachment)
In early and mid-January 2017, City and MERS staff held two meetings with the non-union employee
representative and bargaining unit representation along with the City attorney (first meeting) to explain the current
fiscal situation of the defmed benefit pension system and answer all comments and questions from all participants
in regards to the potential two steps the City could take.
In late January 2016, the City did receive four employer defined benefit funding proposals from MERS. (Sec
Attached) I presented these four employer pension contribution options to the Mayor and her leadership team along
with the City Council Finance Chair and the City Council President. After extensive discussion and debate, the
leadership team recommends that the City opt for the second employer pension contribution scenario and
appropriate $20.6 million in fiscal year 2017/18 and continue to follow the second option employer pension
contribution amounts through 6/30/2024, as adjusted by the actuary in future annual actuarial reports. It is
estimated at this time that any other pension funding scenario would have left zero fund balance reserves across all
hinds within a two to three year perod and potentially would have reduced city services including police and fire
operations.
The table below highlights the original recommended employer contribution to the selected employer pension
contribution schedule.
Fiscal Year Base Line Employer Estimated Percent Selected Estimated Percent
Contribution Pension Contribution Funded Asset Allocation Funded
Base Line Equal to Funded Ratio Move Retirees and
Employer Smooth Assets
Contribution
July 1,
2017 $42.OM 43% $20.6M 43%
2018 $32.5M 39% $22.8M 39%
2019 $32.6M 37% $2&8M 35%
2020 $33.IM 37% $31.5M 32%
2021 $33.3M 36% $36.1M 29%
2022 $33.1M 36% $37.8M 28%
2023 $33.OM 36% $38.9M 27%
City staff is currently working with the State Treasurers office to develop new funding strategies and funding
sources for the Flint Pension System.
Financial implications: The selected fImding scenario will allow for a greater employer pension contribution to
the MERS pension system. ($3.6 million or a 21.2% contribution increase over the Fiscal Year 2016/17 employer
pension contribution) However, future funding must increase to offset the annual estimated annual $20 million
dollar payout to retirees that is not covered by the annual employer and employee contribution as well as
investment income earned. The actuary warns that if employer contributions dont increase they will issue a
qualified annual valuation report as of 12/31 / 16. (See attached report) This means the annual valuation report will
contain language noting that the policy used to determine the minimum required employer contribution is not
consistent with the actuarial recommendations.
Budgeted Expenditure? Yes X No Please explain if no: In Fiscal year 2017/18 and into the future.
Other Implications (i.e., collective bargaining~: All unions and the non-union employee pension representative
have been involved and informed of the progress of this financial situation effective 1/3/17. All questions
presented by the unions have been answered.
Staff Recommendation: The ICFO recommends approval as long as the outlined and future adjusted actuarial
funding requirements are contributed by the City. It is further recommended that if there are any excess dollars
from any operating fluid that those dollars be advance contributed to the MERS pension system to insure the
viability of the Defined Benefit Pension System in the future.
It is further recommended that the City continue to pursue other financing options from the State and then apply
those funds to the defined benefit pension system if received. It may be necessary to adjust the City operating
budget in the future either in services or benefits (both active and retiree) to insure the going concern of the defined
benefit pension plan wi RS.
Approval:___________________________
I ~&~(
David,
As a follow up to our conversation, you requested that I speak with our Legal and Finance departments in regards to the
idea of moving assets from one division in MERS to another in the hopes of evenly spreading out assets and not having
one or two divisions trigger the 3x minimum policy. Here are the responses I received:
Please let me know if you have further questions or if the municipalitys representative wishes to discuss further with
me.
When moving assets among divisions, a municipality would need to exercise care that it is in compliance with any
contractual restrictions it may have with its labor groups regarding the use or movement of assets among divisions. I
understand our Legal Team is giving you additional guidance in this area.
~
--
Finally, there may be restrictions a municipality has at the fund level that might impact whether assets can be moved
among divisions, Some special revenue funds (Oke an infrastructure fund, healthcare fund, etc.) or enterprise funds
(like a water & sewer fund) may have restrictions that those program revenues must be spent on program related
expenses. Forexaniple, some federal and state programs are very restrictive on how those monies can be spent. As a
result, such a restriction might prohibit transferring some assets from those retirement divisions supported by the
restricted funds to other divisions (like a division that supports employees from general fund revenues). One would want
to ensure that these asset transfers dont violate the use of any special revenue or other restricted funds before doing
the asset transfers.
Please let me know if you additional information, Betsy and would be glad to discuss this further with you or the Flint
financial staff.
I hope that this provides you with the information you were seeking.
You also requested that the internal actuaries breakdown the ballpark figures we gave you by division. They are
currently working on that and I will send it to you as soon as I have it.
Regards,
M&w~eJ O&~rLsov.~
Marne J Canaan
Regional Manager
Municipal Employees Retirement System of Michigan
1134 Municipal Way
Lansing, Ml 48917
Toll Free: 800.767.MERS (6377)
Direct line: 517.703.1213
Fax: 517.703.9707
www.mersofmich.com
i,q,zui, ~ -- --
-
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CONFIDENTIALITY NOTICE:
This email and any attachments are for the sole use of the intended recipient(s) and may contain information that is
confidential and protected from disclosure under the law, including attorney-client communications. Any unauthorized
review, use, disclosure, or distribution is prohibited. If you are not the intended recipient, please contact the sender by
reply email and delete/destroy all copies of the original message and attachments.
DISCLAIMER:
This email may contain a summery description of the Municipal Employees Retirement System of Michigan benefits,
costs, rates, valuations, or other calculations, policies or procedures. MERS has made every effort to ensure, but does
not guarantee that the information provided is accurate and up to date. Where this email conflicts with the relevant
MERS Plan Document, the MERS Plan Document controls.
CBIZ CBIZ Retirement Plan Services
CBIZ Benefits & Insurance Services, Inc.
17199 Laurel Park North, Ste. 405
Livonia, MI 48152
httD:/iretirement.cbiz.com
Flint, City of
In care of:
Municipal Employees Retirement System of Michigan
1134 Municipal Way
Lansing, Michigan 48917
Subject: Revised December 31, 2015 Annual Valuation to Reflect Transfer of Retirees
from Divisions 01, 02 and 05
As requested by MERS and the City of Flint, we prepared a revised December31, 2015 annual
valuation to reflect the transfer of the retirees from divisions 01, 02 and 05 into the various
divisions they retired from. Our calcuI~tions also reflect the transfer of assets out of divisions
01, 02, and 05 under the following scenarios:
Scenarios I assets are transferred from divisions 01, 02 and 05 in proportion to the
Our analysis was prepared in the context of the MERS defined benefit plan only. Any additional
analysis regarding the financial condition of the employer is outside the scope of this project and
is not our area of expertise.
Our calculations show the results of the December31, 2015 annual valuation including the
employer contribution for the fiscal year beginning July 1, 2017. In addition, we prepared
projections under these scenarios to illustrate the long term impact of these transfers.
This report should not be relied upon for any other purpose. Reliance on information contained
in this report by anyone for anything other than the intended purpose could be misleading.
CBIZ CBIZ Retirement Plan Services
CBIZ Benefits & Insurance Services, Inc.
17199 Laurel Park North, Ste. 405
Uvonia, Ml 48152
http://retirement.cbiz.com
The information in this report is purely actuarial in nature. It is not intended to serve as a
substitute for legal, accounting and investment advice.
This report was prepared at the request of MERS and the municipality and may be
provided only in its entirety by the municipality to other interested parties. CBIZ
Retirement Plan Services is not responsible for the consequences of any unauthorized
use.
Our calculations were based on the same demographic data, financial data, plan provisions,
assumptions and methods that were used in the December311 2015 annual valuation.
The results of our calculations are shown in the tables and graphs following this report.
Transferring the retirees out of divisionsOl, 02 and 05, results in lower required
employer contributions for the City for the fiscal year beginning July 1, 2017. This is the
case under all Scenarios.
Transferring the retirees out of divisions 01, 02, and 05 does not change the ultimate
cost of the plan, the same unfunded actuarial accrued liability is being paid off both
before and after the transfer. The transfer simply changes the pattern of the required
employer contribution. In particular, the transfer results in lower required employer
contributions in the short-term followed by higher required employer contributions later.
Under the Baseline (before the retirees are transferred) the 3 times benefit payments
minimum employer contribution is triggered for division 01. This funding requirement
results in a large employer contribution for the fiscal year beginning July 1, 2017. As a
result, under the Baseline, the projected funded ratio of the plan declines for only a short
period of time before it begins increasing towards 100%.
Under all four Scenarios, the funded ratio decreases to dangerously low levels. This is
because the plan is in a negative cash flow and large benefit payments are made out of
the plan, while lower contributions are made into the plan. Annual benefit payments
from the plan are expected to average about $50 million over the next 10 years, resulting
in a decrease in projected plan assets unless the benefit payments are offset by similarly
sized employer and employee contributions.
Under Scenarios 3 and 4 more money is going into the plan in the near future than under
Scenario 2. As a result, the funded ratio is slightly better under Scenarios 3 and 4 than
under Scenario 2 in the short term. The additional employer contributions under
Scenarios 3 and 4 are used to lower contributions throughout the amortization period
(i.e. the additional contributions are not reserved).
CBIZ CBIZ Retirement Plan Services
CBIZ Benefits & Insurance Services, Inc.
Livonia, MI 48152
http://retirement.cbiz.com
Under all four scenarios the minimum required employer contributions under the current
funding policy are not projected to improve the plans funded status above its current
43% level for 20 years. Because of this we recommend that the City contribute
additional amounts significantly above the minimum contribution requirement if
Scenarios 1, 2, 3 or 4 are adopted.
If any of these Scenarios are adopted without a commitment to significant additional
employer contributions in the near term, we will issue a qualified annual valuation report
as of December 31, 2016. This means the annual valuation report will contain language
noting that the policy used to determine the minimum required employer contribution is
not consistent with our recommendations.
Sincerely,
cL~L.J)
Cathy Nagyi FSA~
/-c
W James Koss ASA, MW
Actuary Actuary
CBIZ Retirement Plan Services
CBIZ CBIZ Benefits & Insurance Services, Inc.
17199 Laurel Park North, Ste. 405
Livonia, Ml 48152
http://retirement.cbiz.com
This report was prepared at the request of the municipality and is intended for use by the
municipality and those designated or approved by the municipality. The report may be
provided to parties other than the municipality only in its entirety and only with the
permission of MERS and the municipality.
The purpose of the revised annual valuation report is to show the impact of the transfer of
the retirees on the employer contribution.
One or more of the signing actuaries are Members of the American Academy of Actuaries
(MAAA) and meet the Qualification Standards of the American Academy of Actuaries to
render the actuarial opinion contained herein.
All actuarial calculations have been prepared in conformity with generally accepted actuarial
principles and practices and with the Actuarial Standards of Practice issued by the Actuarial
Standards Board.
This report should not be relied on for any purpose other than the purpose described in the
primary communication.
The valuation was based upon information furnished by the municipality and MERS staff
concerning Retirement System benefits, financial transactions, active members, terminated
members, retirees and beneficiaries. We checked for internal and year to year consistency,
but did not otherwise audit the data. CBIZ Retirement Plan Services is not responsible for
the accuracy or completeness of the information provided for the preparation of these
calculations.
Page 4 of 8
csiz Retirement Plan services is a trade name underwhioh certain subsidiaries of CBIZ, Inc. market
investment advisory, third party administration, actuarial and othercorporate retirement plan services.
CBIZ CBIZ Ret
CBIZ Benefit
17199
December 31, 2015 Annual Actuarial Valuation Results - Revised forTransferof Retirees
Scenario 1-Assets Allocated in Proportion to Liabilities
GSIZ Retirement Plan Services isa trade name under which certain subsidiaries of CBIZ, Inc. market
investment advisory, third party administration, actuarial and other corporate retirement plan services.
CBIZ CBIZ Reti
CBIZ Benefit
17199
CBIZ Retirement Plan Services is a trade name under which certain subsidiaries of CBIZ. lno. market
investment advisory, thial party administration, actuarial and other corporate retirement plan services.
CBIZ CBIZ Reti
CBIZ Benefit
17199
Scenario 3: Resultr
Annual Valuatlo,
Scenario 1: Results of 12/31/2015 Scenario 2: Results of 12/31/2015 Retiree Transfers .
Annual Valuation - Revised for Retiree Annual Valuation. Revised for Equal Funded R~
Transfers - Asset Allocation in Retiree Transfers Asset Allocation. employer contribut
Baseline Proportion to Liabilities Equal Funded Ratio year
Valuation Total Total
Year Employer Total Em plover
Ending Fiscal Year Actuarial Contribution Employer contribution
December Beginning Accrued Valuation Funded Inflated Valuation Funded Contribution Valuation Funded Inflated Valuation Fundei
31, July 1
___________ Liability
__________ Assets Ratio Dollars Assets Ratio Inflated Dollars Assets Ratio Dollars Assets Ratio
2015 2017 566 243 43% 42.0 243 43% 33.7 243 43% 20.6 243 43%
2016 2018 559 217 39% 32.5 217 39% 28.7 217 39% 228 217 39%
2017 2019 553 206 37% 32.6 201 36% 29.1 194 35% 26.8 198 36%
2018 2020 546 203 37% 33.1 191 35% 30.2 173 32% 31.5 184 34%
2019 2021 538 195 36% 33.3 179 33% 31.0 156 29% 36.1 171 32%
2020 2022 531 192 36% 33.1 172 32% 32.7 147 28% 37.8 162 30%
2021 2023 523 190 36% 33.0 166 32% 33.8 142 27% 38.9 153 29%
Notes:
(I) The Actuarial Accrued liability. Valuation Assets, and Funded Ratio as e calculated as of Oecembersl.
(2) Contributions ore calculated for the applicable fiscal year.
(3) The impact of the assumptions change is phased-in over aS year period. Ike phase-in is not reflected in any of the scenarios.
(4) Under Scenario 3 additional employer can rributions are mode during rise first 4 years over the minimum from Scenario 2 such thor the rota! is around $28 million per year far the)
(5) Under Scenario 4 additIonal employer contributions are made during the first 2 years over the minimum from Scenario 2 such that the rota! is around $30 million per yearfar the)
CBIZ Retirement Plan Services is a trade name under which certain subsidiaries of CBIZ, Inc. market
investment adVisoly, third party administration, actuarial and other corporate retirement plan services.
CBIZ CBIZ Ret
CBIZ Benefit
17199
90.0% 40000000
80.0%
35000000
70.0%
30000000
0 60.0% c
C0 0
25000000 -
-D
50.0% .0
C
U,
0
C 20000000
/
0
40.0% C)
10.0% 5000000
0.0% 0
Baseline
Valuation YearEnding December 31, Scenario 1 Fiscal Year Beginningiuly
Scenario2
Scenarios
sconario4
CBIZ Retirement Plan Services isa trade name under which certain subsidiaries of CB1Z, Inc. market
investment advisory, third party administration, actuarial and other 00rporate retirement plan services.