HomeMy WebLinkAbout0729_001MINUTES
COMMITTEE OF THE WHOLE
NOVEMBER 11, 1986
I. ROLL CALL
The meeting was called to order at 7:30 p.m. Present at the meeting were: Mayor
Carolyn H. Krause; Trustees Ralph Arthur, Gerald Farley, .Leo Flo ros, George Van
Geem and Theodore Wattenberg. Absent from the meeting was Trustee Norma
Murauskis. Also present at the meeting were: Village Manager Terrance Burghar+d,
Assistant to the Village Manager Michael Janonis, Public Works Director Herbert
Weeks, Deputy Director of Public Works Glen Andler and Fred Borich and Mark
Probst of Donohue Hetherington and Associates. Also present were two persons
from the print media.
II. MINUTES
The Minutes of the Committee of the Whole meeting of October 28, 1986 were
accepted and filed.
III. CITIZENS TO BE HEARD
There being no citizens present who wished to make a presentation before the
Committee of the Whale, the Committee moved on to the next item of business.
I V. PUBLIC WORKS FACILITY
Fred Borich, Project Engineer with Donahue, Hetherington and Associates, reviewed
with Committee members the Schematic Design Phase of the Public Works .Facility
Study. The Schematic Phase was begun at the beginning of September at the
direction of the Village Board and was meant to review alternate approaches in
designs to obtain the mostlogical building plan and systems given the program
requirements from the utilization study completed in August. Mr. Borich identified
four specific goals of the Schematic Design Phase. These were: Ap
I. To reduce the project cast as much as possible from the original $6.6 million
cost estimate.
2. Create a ,generic building site plan that would be adaptable to either the Melas
Park site or the Reese property.
I Develop realistic estimates of construction costs.
4 Produce a. functional and cost-effective building that would meet the needs of
the Village over the next 20 years.
Mr. Bo rich then reviewed the reductions that were obtained during the Schematic
Des,il,gn Phase. Specifically it was noted that prograrn reductions totaled, some 11,638
square feet of both enclosed heated', spa,ce and enclosed unheated storage#
Addit,''i',,onally, some $850,000 was cut from the original estimate through a, program
reduction and through utilizing less expensive construction mater,'I'A,18, and methods.
Facilities Specialist Mark Probst reviewed with Committee members the Site Plan
for the proposed facility noting the four basic work areas: Administration,garage
area, vehicle maintenance and shops and support. Also noted were provisions for
outside storage of material and vehicles. Fred Borich then reviewed with
Committee members various construction techniques and the associated cost savings
along with the advantages and disadvantages of each system. It was a,l,s,o, noted
that all of the 25 priority one deficiencies and 16 of the 17 priority to deficl,,,encies
previously *Identified in the space utilization study had been corrected throw thl"Is
design.
It was Mr. Borich's recommendation that the following action plan be adopted:
1. The design team immediately begin detailed design work in an effort to achieve
further refined cost estimates and a final site plan.
2. The Village Board review financing options.
3. Investigate options for site acquisition.
Discussion among Committee members elicited the following comments and
0
questions.
Trustee Ted Wattenberg J'n,Oicated that he supported the basic recorn mendat 'ions of
t
. .. .. . ...... 'rid . ............ ..... . . . . . . .................... , fA fiile W"i'th he facility as proposed.
the schematic design ph was corn o
Trustee Wattenberg also indicated that he was still against an Advisory
Referendum and felt that the Board should make a decision in this area on its own.
Trustee George Van Geem questioned Mr. Borich regarding the specifics of both
program and quality and construction cost reduct,ions.- Trustee Van Geern was
satisfied that the cuts that were made were prudent and resulted from extensive
discussion. Trustee Van Deem also *Inquired as to any factors built into the site
plan for future growth. He was 'Informed that with the current site plan both the
administrative area and the shop and support area could conceivably be 'increased
by up to 50% without a deleterious effect on the, rest of the site,. Trustee Van
deem also inquired as to whether safety issues had, been adequately addressedin
the site design and he was assured that they were. Based upon other discussion,
Trustee Van Deem commented that he was against the use of chain-link fencing as
a simple cost saving measure because of the possible adverse appearance of the
site, however, he did state that he would rather cut costs in the area of
construction costs than to reduce the building program any further. Trustee Van
Deem was also against phasing of the development and questioned Trustee Arthur's
request to reduce the overall cost of the facility by another $500,000 to $700,000.
Trustee Van Geem also requested that the cost of additional mezzanine space be
factored into the construction costs as an option.
"w2~
Trustee Gerald Farley questioned Mark Probst on the utility of a counter clock -wise
traffic flow and was informed that studies have shown that on-site accidents could
be reduced up to 20%. Trustee Farley also inquired as to other specific design
factors including the overall utility of the wash bay and the flexibility of the
overall design. He was informed that the wash bay was intended only for Public
Works vehicles and that flexibility had been built into the administration and other
shop areas through the use of non -permanent wall systems which will allow for easy
changes of the present wall configuration. Trustee Farley stated that he was not
sold on the need for further program cuts and advised the Board against being
penny-wise and pound foolish. Trustee Farley also stated that Trustee Arthur's
$500,000--$7`00,000 reduction figure was somewhat arbitrary and that without
sufficient justification, he would not be able to support it. Trustee Farley did,
however, say that he was willing to explore the possibility of further cuts if such
cuts did not compromise the viability of the facility.
Trustee Ralph Arthur stated that he had in recent weeks visited several public
works facilities in neighboring communities; specifically, the Public Works facilities
in Itasca, Waukegan and Arlington Heights. He stated that the tours were very
informative and that he was of the opinion that most of these facilities were
constructed with future phased expansion in mind. It was Trustee Arthur's conten-
tion that such planned phased expansion should be built into this facility as a
means of reducing initial costs. Trustee Arthur also noted that the cost estimates
submitted by Donohue as part of the schematic design phase did not 'Include the
cost of the land for the proposed site nor the access road. Trustee Arthur also
commented that he felt that the bridge crane which had been deleted from the
program should be reinstated. Trustee Arthur further stated that he felt that in
order to successfully sell the facility to the public in a Referendum that another
$500,000-$7`00,000 would have to be cut from the total price tag. He offered these
suggested areas as possible items which would produce cost savings,
me Delete the wash rack
am Secure the perimeter of the site with chain-link fence
4W Use split -faced block construction for the entire
facility including the administration building
low Eliminate the forestry shop
I"We
Store chemicals and fertilizers outside
Shorten south -end of garage
Further reduce equipment purchases
Delete security system
Convert electric hot water heaters to gas-fired models
Trustee Arthur stated that these were suggested areas of cost -savings and that he
would defer to the expertise of the staff and consultants for further cuts.
511
V.
Trustee Leo Floros stated that he was in favor of looking for more cost reductions
if such reductions were possible without compromising the viability of the facility.
Trustee Floros, also stated that in packaging the financing of the facility, the Board
should be careful not to forget that there is money in reserve which could be used
for this project as well as funding some of the costs through increased water rates,.
The bottom line as Trustee Floros put it was that in all likelihood we would be
going to the public with a Bond issue substantially less than $5 million. Trustee
Floros was also amenable to staged construction if, - again, a viable plan could be
worked out.
Mayor Carolyn Krause stated that she favored seeking further cost reductions where
possible and that any further reductions would help to meld a consensus on the
Board that the project ect was saleable. The Mayor also stated that such a consensus
would be necessary in pursuing ng land acquisition talks with the Metropolitan Sanitary
District. Based upon the action plan recommended by Donohue, the Mayor stated
that it was her opinion that staff should proceed with exploring further cuts but
that at the same time it should proceed to the next phase of detailed design in an
effort to further refine cost numbers. As part of that detailed work, the Mayor
felt it appropriate to go ahead with soil borings of the various sites and that in
order to meet any time requirements for placing this question on the spring
election ballot that staff and Donohue work on an eight week time -line for
completion of detailed design work.
Hal Predovich, Chairman of the Business District Development and Redevelopment
Commission, *Inquired as to whether future expandability of the building had been
factored into its design. Fred Borich responded that future expansion had been
planned and that depending on the final choice of construction materials, such
expandability would in most cases be easily attainable. Mr. Predovich also put
forth the 'idea that as a means of possibly generating revenue to cover the cost of
the new facility that the Department of Public Works explore the possibility of
doing contract work on its off time for private sector consumers.
After further general discussion by the Mayor and Board of Trustees, the consensus
was to authorize the consultants to proceed to begin detailed design work as well
as look at further cost cuts.
e
ARLINGTON BEST TAXI CAB REQUEST
The Mayor and Board of Trustees reviewed the request by Arlington Best Taxi
Company for 30 operating licenses. Upon questioning by the Board and Village
Manager, Mr. Dennis Meyer, owner of Arlington Best indicated that he would have
no problem complying with all aspects of the Village's Ordinances regarding
inspection, licensing and senior citizen and handicapped ride programs*
Upon general discussion, it was the consensus of the Mayor and the Board that 30
operating licenses should be authorized for Arlington Best Taxi Company.
V1* TRUSTEES' SALARIES
Trustee George Van Gee requested that Village Board members consider a $400
increase in the annual salary of Village Trustees,. His rationale for the increase
was that since salaries were last increased in 1981, inflation had eroded the real
dollar value of the salary. Trustee Van Geern admitted that an increase in salary
from $1,500 to $1,900 would 'in 'itself not generate interest in pursuing a Trustee
job, but he felt that by increasing the salary, the Board was symbolically
10 10
recognizing the relative worth of the job.
General discussion among Board members illicited no clear consensus, however,
Mr. Van Geern asked that two Ordinances be prepared for the next regular Board
meeting. The first Ordinance would call for an 'increase in the Trustees' salaries to
$1,900 and the second Ordinance would call for a decrease in the Trustees' salaries
to $1,200. Trustee Van Geern also noted that the new salary, should one be
adopted, would not go into effect for individual Trustees until that position stood
for re-election.
VII. ANY OTHER BUSINESS
There being no further business to be discussed, the Committee moved on to the
next item of business,.
V11LADJOURNMENT
There being no further business to be discussed, the meeting was adjourned at
9:5.5 P. m.
MEJ/rcw
Respectf ully submitted,
MICHAEL E. JANONIS
Assistant to the Village Manager
4MW 5 *W1
Village of,M'ount Prospect
Mount Prospect, Illinois
INTEROFFICE MEMORANDUM
TO: Michael E. Janon 'is, Acting Village Manager
FROM David C. Jepson, Finance Director C #
DATE: November 21, 1986
SUBJECT: Budget Projections for the 86/87 Fiscal Year
The budget process in the Village of Mount Prospect includes several distinct
stages during its life -cycle. The first stage is a planning phase in which
needs are identified, programs evaluated, and services recommended; the second
is a priority setting stage during which the Village Board reviews the proposed
recommendations and seeks citizen input through public hearings; the third is
the legislative stage in which the budget is formally adopted by the Village
Board and becomes the authorization to expend funds; and the last stage is
implementation. Prior to the implementation stage, the budget process is
primarily a planning process* but when the budget is adopted, it actually
becomes the fiscal plan for the coming year.
During the implementation stage, the budget acts as a control device whereby
receipts and expenditures are compared to the approved fiscal plan. Monthly
reports, are, --oreDared which id.yyentify each financial transaction with the budget.
These reports, containing varying amounts of detail, are distributed to the
Village Board, the Village Manager, department heads, supervisors and other
interested parties. Additionally, the Annual Financial Report records the
actual results for the year compared to the budget as a permanent record,
One additional benefit of the budget process that is realized during the
implementation stage is the information obtained in the current budget year that
can be used in planning for the next budget cycle. After a sufficient amount of
time has elapsed during the current fiscal year, trends are established and
these trends can be used for projecting totals for the entire budget year. When
reasonably accurate projections of total revenues and expenditures can be made,
they can be used to estimate the resources (fund balances) that will be
available to start the next budget year,
During the past several weeks, I have reviewed each line item in the Village
budget with the respective department heads to estimate total expenditures for
the year. Using this and other available information I have estimated total
revenues and expenditures by fund and the fund balances that should be available
to start the next fiscal year. The results are reported in four attached
schedules: 1) Revenue Estimates by Fund; 2) Expenditure Estimates by Fund; 3)
Estimated Revenues and Expenditures of the General Fund, and 4) Estimated
Unobligated Fund Balances. The schedules are organized by fund and contain the
actual 1985/86 fiscal year totals, 19B6/87 budget amounts, 12 month estimated
amounts for 1986/87, and the expected increase or decrease from the original
budget. The General Fund Schedule also includes supplementary pages which
explain significant increases or decreases. A discussion of some of the more
noteworthy information in the attached schedules follows:
Budget Projections for the 86/87 Fiscal Year
Page 2
Schedule 1 Estimated Revenue By Fund
Total Village revenues, net
of interfund transfers for the
1986/87 fiscal year,
are expected to
be $28,812,620,
a total of $3,527,590
more than had been
budgeted. From
Schedule 1,
it can be seen that there are
a number of decreases
in certain funds
(identified
by brackets) as well as increases in other funds.
The differences in six funds
account for most of the total
difference
General Fund $ 7379960
CDBG Fund < 1999540>
Risk Management 4939500
Downtown Redevelopment <194021000>
Police Pension Fund 290339015
Fire Pension Fund 29054,075
The increase in the General Fund can be attributed to a one-time special payment
of $350,000 for Sales Taxes that is expected in March 1987, flood reimbursements
from the Federal and State governments of $281 , 300 and State Income Tax of
$125,000. The decrease in the CDBG Grant Fund is because expenditures are
expected to be less than budgeted and grant revenues are received in an amount
equal to expenditures.
'increase ase i
The n the Risk Management Fund is the result of the Insurance Reserve
and the decrease in the Downtown Redevelopment Fund ,is because
an anticipated bond sale is expected to be delayed. The increases in the Police
and Fire Pension Funds are due to the realization of profits from investment
sales.
Schedule 2 Estimated Expenditures By Fund
Total expenditures, net of interfund transfers, are expected to be $25,652,410,
some $1 , 255,9"30 less than had been budgeted. There are budget increases in the
General Fund of $420,675, the IMRF Fund of $32,100 and the Capital Equipment,
Repair and Replacement Fund of $364,850. Following is a brief explanation of
the increases:
General Fund:
Manager Recruitment
$ 159000
Landlord/Tenant Organization
59000
Cable TV Equipment
69000
Police Salaries and Overtime
30,000
Fire Hireback and Overtime
439500
Code Enforcement Overtime
10,000
Code Enforcement Supplies
109000
Flood Costs
2439500
Repair Parts (From Revenue Sharing)
20,000
Solid Waste Study
7,,000
Public works Overtime
10,000
Building Maintenance Supplies
10,000
Sidewalk Replacement Program
209000
43 0
Budget Projections for the 86/87 Fiscal Year
Page 3
The increase in the IMRF Fund is due to higher IMRF and FICA contribution
requirements.
The increases in the Capital Improvement Fund are for the following purposes.*
Albert/George Engineering $ 50,000
Public Works Facility 210,000
Fire Pumper Replacement 140,000
$40OX00
Emig
The Fire Pumper Replacement was scheduled to be included in the 1987/88 budget
but was placed on order in August 1986. Although delivery will not take place
until June 1987, a payment will be due on the chassis in December 1986. As a
result, the total purchase will be recorded in 1986/87 rather than 1987/88,
Two significant decreases from budgeted amounts can be seen in the Water Fund
and the Downtown Redevelpment Fund. The decrease in the Water Fund is due to
lower energy costs than had been anticipated, and expected costs in Target
Area 2 in the Downtown Redevelopment District will be delayed until the 1987/88
budget year.
Schedule 3 Estimated Revenues and Expenditures, General Fund
This report summarizes the revenues by category and expenditures by function in
the General Fund. Total revenues are expected to be $12,895,260 and total
expenditures are expected --to be $12,530,950 for an excess of revenues over
expenditures of $364,310. Total revenues are expected to be $737,960 more than
budgeted and expenditures are expected to be $420,675 more than budgeted. The
additional revenue can be attributed to a one-time Sales Tax payment and flood
reimbursements. The increase in expenditures is due primarily to flood related
costs and other increases in operating costs in Police, Fire, Code Enforcement,
and Public Works. Notes explaining each significant change are included on
page 2 of Schedule 3.
Schedule 4 Estimated Unabligated Fund Balances
The purpose of this schedule is to determine the estimated cash balances as of
April 30, 1987. Total estimated revenues for 1986/87 are added and total
estimated expenditures for 1986/87 are subtracted from the actual unobligated
fund balances as of April 30, 1986 to arrive at the estimated balances expected
on April 30, 1987. The available balances at the start of the next budget year
are important elements in the fiscal planning for the new budget year.
Overall, it is expected that fund balances will show an increase of $3,160,210
from $9 171 187 to $12 9 331 397 during the 1986/87 fiscal year. However, when
the Pension fund increases of $4,087,090 are subtracted, the operating fund
balances will show a net decrease of $926,880 for a total of $B,244,307.
Following are comments on individual funds:
Budget Projections for the 86/67 Fiscal Year
Paqe 4
General Fund The fund balance of the General Fund is expected to
increase from $1,349,482 to $1,713,792 as of April 30, 1987. The
projected balance represents 13.7/10" of estimated 1986/87 expenditures. It
is generally recognized that a minimum fund balance of 10"/0' is needed for
working cash purposes to cover periods between property tax collections
and for contingencies.
Special
Revenue Funds
It was estimated that the
Special Revenue Funds
would be
drawn down
during 86/87. Specifically, in the MFT Fund a
balance
of $310,332
was estimated when the budget
was prepared compared
to the revised estimate
of $336,488. It was also
anticipated that the
Revenue
Sharing Fund
would be zero at the end of
1986/87. The deficit
balance
in the IMRF Fund
was unexpected and will
require a higher tax
levy in
1987,
Water Fund The expected balance of $2,283,800 in the Water Fund
represents a decrease of $174,375, but it is $527,275 more than the
amount projected at the start of the fiscal year. The jump can be
attributed to lower expenditures than had been expected during the last
six months of 1985/86 and in the current fiscal year.
Risk Management Fund The increase in fund balance is the result of
lower insurance claims than had been expected and the addition of
$500,000 from the insurance reserve loan.
Capital Projects Funds The balances in these funds are dependent upon
the status of various projects. The balances shown are consistent with
budget projections.
Debt Service Loans The reductions in the balances of Corporate
Purposes 1973 and 1974 are due to the 1985 tax levy abatement of
$179,7000
In conclusion, the attached schedules show total estimated revenues and
expenditures for the current fiscal year along with estimated fund balances that
should be available as of April 30, 1987. The projections are based upon actual
data for the first six months of the year and although they are subject to
change, I believe they are reliable.
As mentioned earlier, the budget
as adopted, becomes the fiscal plan of the
Village. This plan, as is the case
with other plans, may
need to be
changed
when circumstances change or when
new opportunities become available.
Changes
within a fund may be made at the discretion
of the Village
Manager.
However,
changes that increase the amount of
any specific fund must
be formally
approved
by a budget amendment. A schedule
of necessary budget
amendments
is being
prepared.
DCJ/sm
t
AGE OF MOUNT PROSPECT
Estimated Revenues By Fund
For the Fiscal Year Ending April 30, 1987
General Fund
Special Revenue Funds:
Revenue Sharing Fund
Motor Fuel Tax Fund
Comm. Development Block Grant
IL Municipal Retirement Fund
Totals
Enterprise Funds:
Water & Sewer Fund
Parking System Revenue Fund
Totals
Risk Management Fund:
Capital Projects Funds:
Capital Equip., Repair, Repl .
Corp. Purposes Constr. 1973
SSA #5 Lake Michigan Water
Downtown Redevlpmt . Constr,
Tot als
Deka Service Funds
Corporate Purposes 1973
Corporate Purposes 1974
Communications Equip. 1954
Downtown Redevlpmt . B & I
Fire Truck B & I
Insurance Reserve B & I
SSA #1 Prospect Meadows
SSA #2 Blackhawk
SSA #3 Busse/Wille
SSA #4 Busse/Wille
SSA #5 Lake Michigan Water
Totals
Pension Funds:
Police Pension Fund
Firemen's Pension Fund
Totals
1
Less Interfund Transfers
Totals - village Funds
Schedule 1
Fiscal Year
85/86 86/87 86/87 Increase or
Actual Budget Estimated <Decrease>
$10,994,819 $121157�300 $129895f260 $ 7379960
293,967
987,817
545,373
259,284
$ 290869441
$ 499979652
134,041
$ 59131 9693
$ 190739109
$ 7679408
850,001
9569445
1,790,214
$ 493649068
113,415
229,470
63,465
4,923
26,084
359388
5,112
10,783
275,954
:$
7649594
$ 1,432,383
1 "11268,1"253
$ 297009636
$<212619327>
$24,854,033
$ 1229530
00�000
6599100
11
1
$ 499609000
1259000
11
$ 8239500
11155,500lt5•
0,000
39104:18TOW41TIF
$ 11268,500
1,323,000
86,500
975,000
459,560
311 ,050
$
A
$ 4t9B5t660
$ 799,650
700
00
188,000
$ 211589750
Mir1219800
2379921
000
2489100
112,500
24 , 350
30,850
5,120
10,410
292,000
$ 3,301,515
3,377,075
$ 6,678,590
$<2,672,300>
12 * 620
$< 36,030>
< 25,000>
< 1999540>
< 5,150>
$< 2659720>
$< 99,500>
160
$< 99,340>
$ 4939500
$< 23,850>
< 101700>
14,900
<1.. ,402,.000>
$<194219650>
$<
3,500>
<
9,280>
<
1 ,500>
5,800
<
28 , 60015
<
125,000>
<
650>
<
50>
20
10
29200
$< 1639450>
$ 21033,015
2,054,075
$ 410879090
$ 159,300
1=,=,3=,13,52',L590 �9
AGE OF MOUNT PROSPECT
Estimated Expenditures By Fund
For the Fiscal Year Ending April 30, 1987
General Fund
Special Revenue Funds:
Revenue Sharing Fund
Motor Fuel Tax Fund
Comm. Development Block Grant
IL Municipal Retirement Fund
Totals
Enterprise Funds:
Water & Sewer Fund
Parking System Revenue Fund
Totals
Risk Management Fund:
Capital Projects Funds
Capital Equip., Repair, Repl.
Corp. Purposes Constr. 1973
SSA #5 Lake Michigan water
Downtown Redevlpmt. Constr.
Tot als
Debt Service Funds:
Corporate Purposes 1973
Corporate Purposes 1974
Communications Equip. 1984
Downtown Redevlpmt. B & I
Fire Truck B & I
Insurance Reserve B & I
SSA #1 Prospect Meadows
SSA #2 Blackhawk
SSA #3 Busse/Wille
SSA #4 Busse/Wille
SSA #5 Lake Michigan water
Totals
Pension Funds:
Police Pension Fund
Firemen's Pension Fund
Tot als
Less Interfund Transfers
Totals - Village Funds
Schedule 2
Fiscal Year
85/86 86/87 86/87 Increase or
Actual Budget Estimated <decrease>
$11,382,709 $12,110,275 $12,530,950 $ 4209675
$ 298,560
191649,046
548,180
319,946
$ 293309732
$ 490599308
111,236
$ 49170,544
$ 954,382
$ 498,B27
191809039
1,359,327
687,,904
$ 397269097
$ 161 960E
329,612
609114
22,790
299500
49685
99371
296,982
$ 194329383
1 ,268 9253
$ 297009636
$<29261,327>
$23 918.1643 3
r 1B59665
193309500
6599100
330,000
$ 592899170
B89270
$ 593779440
$ 193109700
$ 4409175
569000
1,450,000
2,490,000
$ 494369175
$ 1662625
317,825
60,115
247,300
282600
2402500
239160
2B9415
49685
99370
2819990
$ 1569780
1 ,310,170
459,560
362,100
$ 510349B75
87,070
$ 5y1219945
$ 805,025
55,200
19385-9400
1 , 289 , 800
$ 395359025
$ 161 9625
3179B25
60,115
2469935
14,060
22,160
2B 9415
4,685
99370
2B1 ,990
$ 19147,1B0
$ 1 92689500
193239000
$ 2,5919500
$<296729300>
,J &5 652,9410
a.
r
< 209330>
< 1999540>
329100
$< 2169655>
$< 2549295>
1 ,,11 200>
$< 255,495>
$< 201,2007
$ 364,850
< 659000>
<192009200>
$< 901,150>
< 365>
< 2B 9600>
< 226,440>
< 1 9000>
wr �
Schedule 3
AGE OF MOUNT PROSPECT
Estimated Revenues and Expenditures
For the Fiscal Year Ending April 30, 1987
Revenues:
Property Taxes
Sales Tax
Sales Tax - Special Pmt
State Income Tax
Other Taxes
Licenses, Permits, Fees
Fines
Investment Income
Flood Reimbursement
Other Income
Total Revenues
Expenditures:
Public Representation
Village Administration
Cable TV Operations
Finance Department
Village Clerk's Office
Police Department
Fire Department
Central Dispatch
Human Services
Planning and Zoning
Streets & Public Property
Engineering Division
Civic Groups
Pension
Total Expenditures
Excess or <Deficiency> of
Revenues over Expenditures
General Fund
Fiscal Year
85/86 86/87 86/87 Increase or
Actual Budget Estimated <Decrease> (A)
$ 298869072
4,412,328
1,177,664
168,721
1,616,355
2819227
142,144
$ 87,998
2919213
184,638
1,265,932
70,029
2,942,112
2,876,980
263,467
1509837
2079937
2,568,009
433,022
29,936
10 X599
$119382t7O9
(A) See attached explanatory notes.
M
�w 396339300
191259000
164,800
197329100
275,000
120,000
4021.100
$1291579300
$ 72,750
289,650
99,265
1,455,825
779100
3,171,415
3,095,120
300,000
169,545
215,800
2,699,685
388,200
65,320
10,600
$1291109275
$ 39615,200
4,600,000
350,000
19250tOOO
162,500
1,740,750
2959000
1389000
2B1,300
462,510
$12,895,260
$ 86,450
293,995
105,340
1,455,815
77,825
392019730
3,158,660
296,800
164,215
215,600
2,992,015
408,590
63,315
10,600
$12,530,950
$ 4712=2 36 4, 3 0
< 387" 890> 5 �j
$< 1B9100>
< 1009000>
1;
3509000
( 2,
125,000
3;
< 2,300>
B,650
20,000
18,000
2819300
( 4)
559410
( 5)
$ 7379960
$ 13,700
4,345
6,075
< 10>
725
30,315
63,540
< 32200>
< 5,330>
< 200>
292,330
20,390
2,005>
$ 420,675
NVOW
mi
( 11 )
(12)
(B) Salary Administration amount of $190,000 redistributed to other General Fund Departments,
VILLAGE OF MOUNT PROSPECT
Estimated Revenues and Expenditures
For the Fiscal Year Ending April 30, 1987
Explanatory Notes
1. Sales Taxes were expected to increase from $4,412,320 in 1985/86 to
$4,700,000 in 1986/87, or 7°0. Th is is consistent with prior years.
However, receipts for the first six months show an increase of only 3.60ft
The projection of $4,600,000 assumes an overall increase of 4.31/0s
2. Due to litigation efforts, the State of Illinois agreed to speed up Sales
Tax payments to municipalities. As part of the court agreement, and as
confirmed by H.B.1675, the State will make a one time payment in March 1987
of an estimated $350,000,
3. State income tax receipts for the first five months of 1956/87 are
approximately $80,000 higher than the same period in 1985/86. We are
estimating an increase for the full year of $125,000.
4. Flood reimbursements from the Federal and State governments are expected at
the rate of 87-1/2% of allowable costs of an estimated $321,500.
5. Other income includes $70,000 of non -budgeted revenues as a result of
interest from 3/1/85 through 11/30/86 on Sales Tax collections held by the
State of Illinois. This amount is being realized as a result of the court
order mentioned in Note 2.
6. Public Representation 0- Recruitment Fees
7. Village Administration - Landlord Tenant Organization
8. Cable TV
9. Police Department
10. Fire Department
11. Streets Division
Cable TV Equipment
Police Salaries
Weapons Purchase
$ 15,000
5,000
9,000
25,000
7,400
Overtime Costs 55,000
Code Enforcement Supplies 10,000
Flood Costs
243,500
Refuse Study
7,000
Repair Parts
20,000
Bldg. Maint. Supplies
101000
Public Works Overtime
10,000
12. Engineering Division Sidewalk Program 20,000
13. Total revenues are expected to exceed total expenditures by $317,285 more
than what was budgeted,
Schedule 4
..-LAS E OF MOUNT
PROSPECT
Estimated
Unobliqated
Fund Balances
April 30,
1987
Actual
86/87
86/87
Estimated
Balance
Estimated
Estimated
Balances
3/30/86
Revenues
Expenditures
4/30/87
General Fund
$
193499482
$1298959260
$12t5399950
$
197139792
Special Revenue Funds:
Revenue Sharing Fund
$
709280
$ 86,500
$
1569750
$
Motor Fuel Tax Fund
6719658
975,000
19310,170
336948B
Comm. Development Block Grant
**W
459,560
459,560
IL Municipal Retirement Fund
499647
3119050
< IIA03>
Totals
$
7919585
$ 19832t110
$
2,208,610
$
335,085
Enterprise Funds:
Water & Sewer Fund
$
2,458,175
$ 49860,500
$
5,034,875
$
2,283,800
Parking System Revenue Fund
80,772
125,160
87,070
118,862
Totals
$
295389947
$ 4,985,660
$
5,121 9945
$
2t4029662
Risk Management Fund:
$
1659095
$ 117889500
$
1,1091500
$
B449095
Capital Projects Funds:
Capital Equip., Repair, Repl.
$
190809914
$ 799,650
$
805,025
$
190759539
Corp. Purposes Constr. 1973
729422
700
559200
17,922
SSA #5 1ake Michigan Water
190619658
191709400
1t3851000
8479058
Downtown Redevlpmt . Constr.
1889000
192899800
510
Totals
$
393179304
$ 291589750
$
395359025
$
199419029
Debt Service Funds:
Corporate Purposes 1973
$
2179972
$ 121,800
$
1619625
$
1789147
Corporate Purposes 1974
4679615
2379920
3179825
387,710
Communications Equip. 1984
3B,540
63,000
609115
41p425
Downtown Redevlpmt. B & 1
4,923
248,100
246,935
6,088
Fire Truck B & 1
40*
Insurance Reserve B & 1
112,500
14,060
98,440
SSA #1 Prospect Meadows
319170
24,350
22t160
33,360
SSA #2 Blackhawk
32,865
30,850
28,415
35,300
SSA #3 Busse/Wille
3,104
5,120
4,685
3,539
SSA #4 Busse/Wille
9,514
10,410
99370
10,554
SSA #5 Lake Michigan Water
2039071
2929000
281 990
213,081
Totals
$
190089774
$ 19146,050
$
1 147 9180
$
190072644
Pension Funds:
Police Pension Fund
$
$ 3y3019515
$
1,2689500
$
290339015
Firemen's Pension Fund
3,377,075
1,323,000
2,054,075
Totals
$ 696789590
$
295919500
$
490879090
Less Interfund Transfers
$<216721,9300>
$<21672,300>
Totals - Village Funds
$ 9_11712187
102 -
$2828J,�2�9620
5,2.. 4 01,
$ 3312397
J
T'"111age of Mount Prospect
Mount Prospect, 1111*no'l's
INTEROFFICE MEMORANDUM
TO: MAYOR CAROLYN H. KRAUSE AND BOARD OF TRUSTEES
FROM: ACTING VILLAGE MANAGER
DATE: NOVEMBER 20, 1986
SUBJECT: EXCESS LIABILITY INSURANCE
With the continued dismal options presented by the insurance industry, it appears
that the Village is faced with three main alternatives with regard to excess
liability coverage. First, the Village can continue to seek proposals from insurance
brokers for a London -type insurance package which like our current policy will
probably provide what has to be characterized 'as coverage at unacceptably low
levels for correspondingly unacceptably high premiums. Second, the Village can
again consider to go without any excess liability coverage and rely on our loss
prevention programs and the statistical unlikelihood that we will suffer a
catastrophic claim against the Village. Third, the Village could consider re-
structuring its insurance coverage and take advantage of the upper level protection
afforded by the High-level `Excess Liability Pool (HELP).
The first option may, after continued searching, simply be unavailable at any price,
Inquiries to several local insurance brokers- have resulted in no firm quotes. The
second option has already been turned down once by this Board, and not without
justifiable concern, as an unacceptable means of managing or covering our
potential liability. The third, which while attractive, is not without its own risk
and would require the Village to take on at least initially a bigger up -front
responsibility for funding claims not covered by the HELP super pool.
The HELP super pool is a cooperative intergovernmental response to the
uncertainties of the current insurance market. The purpose of HELP is to provide
municipalities with a long-term stable fund out of which to cover potential
catastrophic losses. As proposed, the Village would be responsible for the first $1
million of each and every claim filed against it. The HELP pool would kick in
after the Village had paid out $1 million. While it is true that in the first years
of the pool's existence, coverage would be limited to an initial $1 million to $5
million on an aggregate basis, it is substantially more coverage than the Village
currently has with its London package.
As the fund matures and is fortunate enough not to sustain a large claim or series
of claims, the reserves will grow to a sizable amount within the first couple of
years.
Mr. Jepson's memo articulately points out the specific mechanics of the pool and
how it is funded and would be operated. Initial cost is also attractive. What the
Board is faced with are three major questions. The first is a threshold question:
Does the Village want to remain subject to the cyclical nature of the, insurance or
are we willing to commit to an alternative coverage source on a long-term basis?
The second question is, are we getting our money's worth in the current insurance
market? And the final question is, if we decide to commit to the HELP super-pool
are we adequately protected at levels not covered by the pool?
With regard to the first, questiong the Village, has in the past realized long-term
ww,*, ion with IRMA
benefits of moving toward selt insurance through its initial partici pat"
and later when it made the decision to go to a total self-insurance program. Based
upon those past actions, a move toward a super-pool concept for excess liability
insurance should not be a totally foreign concept. The potential disadvantages with
such a move are the long-term commitment; i.e., eleven years; the higher risk
involved, in the early year's of funding such, a pool and the risks associated with the
pool concept, However, the concept of shared risk is one that has proven itself
over time, 'to be a sound one if approached in the right manner.
The advantages of moving toward the HELP super-pool are that the Village gains
the protection of upper level liability coverage which it does not currently enjoy.
While it is true that in the early years, the Village will only receive up to $5
million in excess coverage, it is nonetheless coverage which is unavailable to the
Village on an individual basis* Second, the Village is in effect the master of its
own destiny in that we are no longer subject to the cyclical nature of the
insurance industry. Back in the late 19701s, the industry exp erieniced, a similar
crisis. That crisis passed and again insurance was available on a relatively cheap
basis. That was the case until last year when again the Village was faced with
outrageous premiums and sub-standard coverage.
A valid argument can be made that the industry will loosen up again sometime in
the future and that it is possible that the Village will again be able to purchase
amounts of excess liability for a relatively cheap price. That, however, is not a
sure bet. Many of the insurance companies that formerly handled municipal risk
have either gone out of business; i.e., liquidation, receivership, etc., or have
decided to no longer provide coverage. Those that are staying are very cautious
and the days of high coverage levels at bargain prices ices are probably gone forever.
Other municipalities who opt to join this HELP super-pool are making a conscious
long-term policy, dlecii,sion to get out, of the, insurance market and not be, subject to
,•Its cyclical ups and downs. What we are rn effect saying, , is that 'we put more
faith, in, our collectilve abillity- to control our losses while at the, sae time building
reserves to adequately cover major catastrophic losses.
Second, I think it is apparent that in the area of general liability coverage, the
Village, is, not getting its moneys worth with, the London-typ,e package. Our current
We m, eve, ,a, o
premium for $600,�000 of coverage is, $162,000#1 usthowrpyout f'
pocket, the- first $150,000 for each claim, and again arty amount above •1 $6,00,0000,
Claims between $150,101000 and $250,000 are covered, on, an, unlimited basis kwhiich is
a plus) but the next $500,000 is an aggregate amount of coverage,0, In, other words,
we are not covered for each and every c,l,a,,i',rn but, rather only until we ha,vie
exhausted the $500,000 be that through one claim or a dozen. Again, we are not
protected in the event of a catastrophic loss of $1 million or more. The Village is
left with issuing Judgment Bonds or deplet,ing our risk management reserves*
Third, under the terms of the HELP super -pool, the Village would be responsible for
the first $1 million in costs and expenses for each individual claim against it.
Because we are in effect self-insured for the first $1 million on an unlimited
number of claims the Village needs to be in a position where it can adequately
handle the numerous small claims that the Village will be involved with and the
potential for a catastrophic claim that would cost the Village up to $1 million.
Presently, the Village, on an annual basis, budgets an amount which we feel will,
based on past experience, cover the vast majority of claims made during that fiscal
year. Additionally, last year, the Village Board authorized the issuance of $500,000
in debt to in effect serve as additional funding for Risk Management. Any funded
amount not used in a particular fiscal year is then added to the reserve and by the
end of the 1985-1986 fiscal year, the Village will have in its Risk Management fund
approximately $840,000. This would be in addition to any amount funded for the
next fiscal year..
Therefore, the Village is currently in a position to handle most routine claims and
also that one big hit which, though unlikely, is nonetheless a possibility. Addi-
tionally, it is also important to remember that the nature of litigation would not,
except in the most unusual circumstances, call for the Village to pay out any large
sums of money in the same year in which the Village receives Notice of a Claim.
If a case goes to trial, the current backlog for a personal injury case is five to
seven years in Cook County. Settlement of any serious case would also likely take
several years in order to establish the rights of the parties and to get to a position
of serious settlement negotiation. Therefore, the Village enjoys the additional
cushion that any large claim for which it may be responsible would not be due and
owing for several years and, therefore, the Village could plan for such a
contingency.
As I see this issue, the Board is faced with a fundamental policy decision as to its
course of action over the next eleven years. It is also one of comfort level and
the Board's faith in the statistical unlikelihood that the Village will experience a
catastrophic claim exceeding $250,000. The Village, through its participation in the
super -pool and its current Risk Management reserves, should be in an extremely
healthy position to deal with such occurrences. Especially given the time-lag
between the point in which a claim is made and at which the Village would make a
payment either in the form of a jury award or a settlement, and that time could
be utilized to anticipate and fund for such a payout.
It is my recommendation, along with Mr. Jepson's, that the Village Board seriously
consider membership in the HELP Super -Pool as a cost-effective, long-term solution
to the Village's ongoing insurance problems.
M1, A111ANONIS
E
MEJ/rcw
Village of M'ount Prospect
Mount Prospect, 111inol*S,
0a
TO: Michael E. Janonis, Acting Village Manager
FROM: David C. Jepson, Finance Director C
DATE: November 17, 1986
SUBJECT- Excess Liability Insurance "Super Pool,
All throughout 1985 and 1986, governmental units and private organizations alike
have been feeling the effects of the upheaval in the insurance industry. Insurance
coverage, part, ularly liability insurance, has been drastically reduced or
cancelled outright, and the pr,emiums on 'the, insurance that has been available has
skyrocketed. Policies now contain many more- exclusions than they previously
contained, and the basic claims structure has been changed from an occurrence
basis to a claims -made basis. (Insurance, coverage is now based upon the insurance
in force when the claim is made rather than when the *incident occurred). For the
Village of Mount Prospect, our liability coverage was reduced from $10 million in
1985 to $750,000 in 1986, and at the same time, our premium increased 180/10'.
Alarmed over this situation, a number of municipalities got together in December-`-"'
1985 to consider the possibility of forming a "Super Pool" to provide excess
liability insurance to member municipalities. After a number of discussion
meetings, the group decided to seriously explore the possibility. A steering
committee was appointed and guidelines were approved. To assist in working out
the necessary details, the group engaged Ancel, Glink, Diamond, Murphy and Cope,
P.C. to prepare the contract and by-laws; A. J. Gallagher & Co. for insurance
advice; Coopers & Lybrand for actuarial services; and Flatland, Hinners. and Co. as
a financial consultant. 11
After nine months of serious effort, a pool design has been agreed upon and a
draft of' the Contract and By-Law°s has been prepared. The group chose the acronym
HELP (Hiqh-level, Excess Liability Pool) to identify the pool. An explanation of
"HELP", a sche,dule of the munic,ipall'ties that were, "invited to in HELP, a copy of
the Contract and By -Laws and a, sample, resolution are i,ncluded as a separate
,� ffl-k 0,
attachment. Follow,ing ,i*s, a summary, or 'the highlights of the, plan:
1. Coverage would include general liability, automobile liability, and errors
and ommissions,
Z. Each municipality would be self-insured or responsible for the first
$1,000,000 of each claim,
3. The aggregate coverage for each municipality would be $1,000,000
initially, but it is expected that during or at the end of the first year
the coverage will increase to $5,000,000.
Excess Liability Insurance "Super Pool"
Page 2
4. The term of the agreement is eleven years.
5. The Village of Mount Prospect's contribution for the first year is
estimated to be $74,951.
6.1 December 15, 1986 has been established as the last date to determine if
the pool will be established as of January 1, 1987.
The pool will operate in the following manner: Each member mun,icipality will be
resoonsible for the first $1,000,000 of each li"abi'lity claim. After the
municipality has paid out $1 million, the Pool will then be responsible, up to the
limits of the coverage profs ($11 dm""ll, ion 1 : on and eventually $5 million) . The
coverage limits are specific and aggregate, which means that the coverage limit
for one claim and/or multiple claims is the same. Financing for claims against
the Pool would come first from monies paid by the municipalities as premiums and
then from a letter of credit of $15,000,000. If the letter of credit is drawn
upon, supplemental premiums would be assessed against each member. At the
conclusion of the eleven -year term, any monies remaining would be either distri-
buted in the proportion of premiums contributed or could be used to extend the
term of the agreement. All decisions would be made by a Board of Directors made
up of one member from each municipality.
The basic premise of HELP is that there will be very few, and hopefully, no claims
that will be made against the assets of the Pool. None of the 33 municipalities
invited to join HELP has ever had a claim of $1 000,000 and the IRMA Pool, with
over 17,000 claims in eight years, has not had a claim in excess of $500,0000 if
claims remain at a minimum, the Pool can provide insurance against catastrophic
losses and there could be a return of premiums plus interest to the member
municipality in the future.
From the above discussion, it appears that there could be significant advantages
in joining HELP. However, there are risks involved and there are disadvantages as
well. Following is a summary of the advantages and disadvantages:
Advantages Excess liability insurance would be available and the
Village would not be subject to cyclical changes in the insurance industry.
Additionally, the Village would not be grouped in a "municipal risk -pool"
which includes areas subject to earthquakes and hurricanes.
The contribution to the Pool would be a known amount and it could be
returned to the Village in the future along with 'interest.
The Village would have a voice in future insurance decisions* The Board of
Directors of HELP could decide to purchase additional insurance or lower
the attachment point ($500,000 or $750,000 rather than $1 000,000) if
industry conditions warrant such a decision.
Excess Liability Insurance "Super Pool"
Page 3
Disadvantages The term of the agreement is eleven years. This period
was chosen in the unlikely event that there were multiple claims in the
first year, and the letter of credit is used. This is highly unlikely
because of prior claims experience and the length of time it takes to
settle a claim of this nature. The terms of the agreement could be reduced
in the future as long as assets were available to cover any known claims,
However, it is being considered as a long-term commitment,
The Village and all members would be subject to additional assessments if
claims become greater than Pool assets. The actuaries estimated there was
a 10/10 chance of a special assessment in the first year, although they
stated they had no historical experience for making that estimate. Again,
the actuaries estimate that one claim out of each 1 000 liability claims
will be settled for $1 000,000 or more. However, this assumption is not
based upon historical experience but on their judgment.
Another way to try to evaluate this proposal is to look at a best -case and a
worst-case scenario. The best -case scenario is that there would be no claims over
eleven years. If the Village contributed $75,000 per year, there would be a
possible distribution of $1,125,000 to the Village at the end of eleven years.
The worst-case situation that I could imagine would be three claims in either the
second or third year after coverage has been increased to $59000,000, This
circumstance would probably result in the termination of the Pool and a liability
to the Village for future bond payments of up to $750,000, depending on the number
of members of the Pool. (If the Village were a member of the Pool, I would
recommend an increase in coverage from $1 million to $5 million over a period of
possibly five years rather than at the end of the first year). Nevertheless, it
is obvious that there are risks involved in joining the Pool.
To help in making a decision of this nature, I think it would be helpful to review
our current insurance program. Attached Exhibit 1 is an overview of our basic
coverage. We have three layers of coverage: the first layer which is the
Village's responsibility; the second layer which is covered by Lloyd's of London;
and the third layer of excess coverage which is provided by Firemen's Fund,
International Surplus Lines and Safety Mutual. Following is an explanation of
these layers of protection:
Layer One The Village is responsible for the first $50,000 of each
property claim, $150,000 for each liability claim, and $150,000 for each
workers' compensation claim up to an aggregate amount of $850,000 for all
claims,
Layer Two Lloyd's of London is responsible for any property loss
between $50,000 and $500,000 and any liability loss from $150,000 to
$2.50,000. Additionally, Lloyd's provides $500,000 of coverage for the
Village's share of losses from $850,000 to $1,350,000. The cost for this
coverage is $110,000.
Excess Liability Insurance "Super Pool"
Page 4
Layer Three Firemen's Fund provides property, insurance between 50'0,000
and $19,500,000 for a premium of $113,000. International Surplus Lines
provides, liability insurance from $250,000 to $750,000 for a $52,000
4
premium, and Safety Mutual provides workers' compensation coverage above
$150,,000 for $16,700,
The total cost for the protection in Layers Two and Three for 1986 is $195,000.
As of November 17, 1986, we have received cancellation notices from all of the
insurance carriers in Layer Three above, and we do not have any firm proposals
from our current insurance broker, A. J. Gallagher & Co. In addition to
A J. Gallagher, I have contacted two other brokers, Service Insurance Agency and
Lundstrom Insurance Agency, but they also do not have anything to offer as of this
date. I have heard that conditions in the insurance industry are improving, but
three area communities which have had recent renewal dates do not have any
liability insurance: Skokie which renewed May 1, Elk Grove which renewed July 1,
and Elgin on October 1. In all three cases no excess liability insurance was
offered to them.
There are no easy answers to the question of the Village's insurance dilemma. I
believe the risk of going without insurance is unacceptable; however, it also
seems foolish to place ourselves at the mercy of the insurance companies. There
are two factors that I think should be considered in deciding our course of
action. The first is our history of losses. For the past six years, our average
losses for all claims has been $156,000 per year. Workers' compensation c�laims
havez� averaged $101,000 o�ver this period, liability claims have averaged $2,5,1000
and property claims Ulud
incl, auto physical damage) have ave,raged $30,000. The
Village has had an excellent loss record. The second factor is that with the
$500,000 added to our insurance reserve this year, the Village should have
approximately %840,000 in our insurance reserve as of January 1, 1987. This
balance, gives the Village more flexibility than we have had in the past.
In view of the factors mentioned above, I am recommending that we structure our
a
insurance coverage for 1987 in the following manner:
Property Insurance Purchase conventional property insurance. I have
been assured that conventional property insurance is available at
competi,tive rates. I have received estimates of $25,000 to $30,000 for
$19,500,000 property insurance with a $25,000 deductible.
Workers' Compensation Continue with the same coverage that we have
currently. The only difference is that we would take it out of the Lloyd's
aggregate coverage. The cost should be between $209000 and $25,000.
Liability Insurance The Village would be self-insured up to $1,000,000
and join the HELP Pool for coverage in excess of $1 million, The total
cost would be approximately $759000.
Excess Liability Insurance "Super Pool"
Page 5
The total cost for premiums for the above structure would be between $120,000 to
$130,000 compared to $195,000 paid in 1986. With the reduction from 1986 to 1987
of $65,000 to $75,000, we would try to obtain coverage for liability claims that
are in the $500,000 to $1,000,000 range.
The above approach would actually give us better property coverage, the same
workers' comp coverage, and liability coverage would be shifted from the $150,000
to $750,000 range to catastrophic losses over $1 million. If a lower level of
liability coverage becomes available, we can add that at a later time. The one
disadvantage to this approach is that we are giving up specific liability coverage
for multiple claims. However, based upon our prior experience the possibility of
multiple claims in excess of $150,000 is remote. I believe this is a reasonable
approach and would give us the best coverage for the premiums paid.
This approach is somewhat similar to what IRMA will be providing in 1987. In
prior years, they purchased insurance for claims from $250,000 to $1,000,000 and a
second layer for claims in excess of $1 ,000,000. They reviewed their costs in
1986 and found that in the past five years they have paid $3.5 million for
insurance to cover the $250,000 to $1,000,000 range. For these premiums, less
than $500,000 was actually paid out for claims. As of January 1 t 1987, IRMA will
be self-insuring for claims between $250,000 and $1,000,000 rather than purchasing
insurance for this coverage.
If the HELP Pool is to start by January 1, 1987, it must receive commitments from
enough municipalities to guarantee a first year premium of $1,100,000 by
December 15, 19860 If we are to join, we will need to pass a resolution at the
December 2, 1986 Board Meeting. I am requesting that we discuss this matter with
the Board at the November 25, 1986 Committee of the Whole Meeting,
DCJ/sm
Enc
Allage of Mount. Prospect, i Is
t
,Aggregate Excess Sti udur-qz
(London Package)
Excess
Excess
Excess
Property
Casualty
Workers' Comp
Total s19,500,000
Total $750,000
Total s Statutory
Occurrence Form
Claims -Made Form
Occurrence Form
Fireman's Fund
International
Safety Mutual
Li m it:
Limit.
Limit:
$19,0000000
SWUM
Statutory
E
London
wil NO
1
London
Property
casualty
Limit
Limit
$450r00"0
$1000,000
$150r 000
$150,000
$50s000
Self Insured Retention
Each and Every Loss
Til L) I�A t "i !)U(,:(AMENT MAY BE CONVERTED INTO EITHER AN ORDINANCE
OR RESOLUTION BY ST R G ONE OR THE OTHER WP"-"\ AS IT APPEARS
1N THE TEXT.
ORDINANCE/RESOLUTION NO.
AN ORDINANCE/RESOLUTION AUTHORIZING
MEMBERSHIP IN THE HIGH-LEVEL EXCESS
LIABILITY POOL (HELP),
WHEREAS, Section 10 of Article VII of the Illinois Consti-
tution of 1970 authorizes units of local government to contract
or otherwise associate among themselves in any manner not
1,
prohibited by law or by ordinance; and.,
� �, psi,
WHEREAS, Chapter 127, Section 741, et seq., Illinois
Revised Statutes, entitled the "Intergovernmental Cooperation
Act," authorizes public agencies to exercise any power or
powers, privileges or authority which may be exercised by
such public agency individually to be exercised and enjoyed
jointly with any other public agency in the State; and,
WHEREAS, the Intergovernmental Cooperation Act in Section
746 in furtherance of the provisions contained within Article
VII, Section 10 of the Constitution authorizes an intergovern-
mental contract which among other undertakings allows public
agencies to jointly self -insure and authorizes eachpublic
agency member of the contract to utilize its funds to protect,
wholly or partially, any public agency member of the contract
against liability or loss in the designated insurable area*
and,,
WHEREAS, Chapter 85 of the Illinois Revised Statutes
authorizes multi-year contracts for joint self-insurance and
allows self-insured governments to assert a range of immunities;
and,,
WHEREAS, units of local government within Illinois have
found it increasingly difficult to purchase excess insurance
from commercial sources and where such insurance is available
the costs of such coverage often exceeds the ability of the
units of local government to pay for such insurance; and,
WHEREAS, many governmental bodies are capable of self-
insuring or conventionally insuring risks below one million
dollars, but require the participation of other governmental
bodies to deal with infrequent but catastrophic claims above
one million dollars; and,
WHEREAS, a number of municipalities have studied the
possibility of creating a joint self -insurance pool to provide
coverage for its members above claims which at the commencement
date of the Agency will be $1,000,000.00; and,
WHEREAS, the Members of the proposed Agency, including
this municipality, are prepared to individually fund a self-
insured retention amount of $1,000,000.00, which they may
fund through individual self-insurance, conventional insurance
or membership in a self-insurance pool; and,
WHEREAS, the Corporate Authorities of this municipality
0-
acknowledge that the concept of an excess -insurance pool requires
each Member to assume the obligation for all claims below
the high-level excess self-insurance amount at which the Agency
will commence its coverage; and,
WHEREAS, the Corporate Authorities recognize that member-
ship in such a pool requires a multi' -year commitment and an
_2-
Obligation to fund claims made against the Members of the
Pool for an extended period of time after the occurrence of
the incident which caused the claim to be made; and,
WHEREAS, the Corporate Authorities have reviewed the
Contract and By -Laws of the proposed High -Level Excess Liability
Pool and find that the goals of that organization and the
obligations imposed upon this municipality are in accordance
with the philosophy and public policy objectives of this com-
munity; and,
WHEREAS, self-insurance pools have successfully served
the needs of Illinois governmental bodies since at least January
11 1979; and,
WHEREAS, the Corporate Authorities of this public body
find that it is in the best interest of its citizens that
it become a Member of the High -Level Excess Liability Pool,
NOW, THEREFORE, BE IT ORDAINED/RESOLVED BY THE
. .. ..............................
OF THE
OF
NON
mp� wo . .......
COUNTY
ILLINOIS, as follows:
SECTION l: That theand mun cipal
clerk are hereby authorized to execute on behalf of the munici-
pality the Contract and By -Laws of the HIGH-LEVEL EXCESS LIABILITY
POOL (hereinafter "Agency") - A copy of the Contract and BY -Laws
is appended to and made a part of this Ordinance/Resolution
as Appendix 1.
SECTION 2: The powers of the Agency, unless the Contract
and By -Laws be amended, shall be limited to those contained
_3-
within Appendix 1.
SECTION 3: The commencement of the operations of the
Agency and the obligation of this municipality to fully partic-
ipate in such operations shall be effectuated in accordance
with the Contract and By-laws.
SECTION 4: Except to the extent of the limited financial
contributions to the Agency set forth in the Contract and
By -Laws, this municipality by its entry as a Member of the
Agency shall not be held responsible in any way for the claims
in tort made against any other Member of the Agency; and the
financial obligations are limited to the payment of claims
above the self-insured retention with claims and costs below
this amount individually assumed by each Member.
SECTION 5: This Ordinance/Resolution shall be in full
force and effect from and after its pasasge and approval as
provided by law.
PASSED this, day of 1986,
AYES:
NAYS:
P6111
APPROVED this day of 1, 19860
ATTEST:
Clerk
mc
0 0
INWAN ILI 'A
r wnicil each b6ffiBU�fi���
y responsible,
The High -1111L evel Excess Liability pool (HELP) is being
organi ell -7
,,ental bodies
like
your own to enter
into
to create a pool of funds contrib-
uted o principally ois
Enclosed with this syn home rule municipalities.
synopsis of the "HELP" Pool is a Contract
and By -Laws and an ordinance authorizing its execution, if
your municipality wishes to become a Member .-Of HELP it must
pass the enclosed ordinance and execute the . . .. . . . .................... I n,tr,a - ,act 1-11111"... a , n " d 13 - y
Laws, The HELP organization will commence its existence and
its initial scope of coverage on January 1. 1987, if
sufficient municipalities have agreed
.6,
wInch will contribute as first-yearpayments at
least the sum of $1,100,000.00. The municipalities which
are being invited to join HELP are listed on Appendix A of
the Contract and By -Laws,, Munici alities wh_tch, W * s
the
J 11 f" I"
P001 must also send ill , ` f,
out, in
is due thirty (30) days after •the Po, dix A. The other 50%
1 com-mences its term.
If the requisite membership has not been achieved by December
15, 1986, all money deposited will be returned. The checks
should be made out to "High -Level Excess Liability Pool" and
should be sent to:
George Coney, Chairman
Steering Committee
High -Level Excess Liability
C/o Elk Grove Village Hall
901 Wellington Avenue'
Elk Grove Village, Illinois
60007-3499
All municipalities must pass the enclosed ordinance in
exactly the form, submitted and s,lg,n the Contract and By
-Laws0, 0-*
without moldification. The Contract and By -Laws for the Agency
EXPIANATION (coi. d
Page 2 1
was drafted by Stewart H. Diamond of the law firm of ANGEL,
GLINK r DIAMOND I MURPHY & COPE I P - C - , which has draf ted simi lar
documents for more than a dozen intergovernmental self-insurance
pools. The Steering Committee has also used as consultants
James B. Finch of Arthur J. Gallagher & Co. on insurance mat-
ters, Flatland,, Hinners & Co. on financial matters and Coopers
& Lybrand on actuarial issues.
Each governmental body joining the HELP pool will agree
to cover the first $1,000,000-00 of any claim before the HELP
occurrence obligation of
In order to increase the amount of coverage to be offerei
by the Pool, it is expected that one of its Members will issue
bonds or commit itself to repay possible drawdowns from a
letter of credit in a gross amount of not to exceed
$15,000,000.00. The Corporate Authorities of Elk Grove Village
have indicated a willingness to serve in the role of Host
Member and to assume thi's responsibility. Because the develop-
ment of the legal docume,nts necess,ary to secure the right
of all parties are faixly complex, this expansion from a cover-
age of $1,000r000.00 to $5,000#000-00 will not take place
until all the documents have been prepared.
By signing the enclosed Contract and By -Laws, a Member
municipality agrees to the initial amount of coverage offered
by the Agency and agrees to reasonably consider the execution
of those documents which will be required to expand the amount
of coverage to $5,000,000,00., If a governmental body initially
joins the agency and is unwilling to execute the documents
necessary to allow for the expansion in the amount of coveraget
that governmental body will be required to leave the Pool.
Its claims covered during the period of its members
r e mta at
that time
EXPIANATION (cont I d)
Page 3
The basic structure Of " the HELP pool iss'I
milar to those
which have successfully operated in Illinois for more than
7 years. The Pool is actually the admi"nistrati''ve arm, of an
intergovernmental contract adopted, pursuant to, apt' r; granted
# 0,
*thin the statutes and Cons t'i tution, o,f the State. With the
within
exception of two non -home rule muni cipali"ties which, were members,
of the ini'ti'al Study Group, all otherprospect*
ive Members
are home rule units. Home rule uni"Lts, have the unlimi,ted power
to tax or borrow to fund contractual obli'gations. The two
non -home, rule units who may bec,om.e Members are Streamwood,
which has a po' ulati f' 24r254,r and, Wlnnetka, whlich, is an
p on o
O�
Ill,inol'S Charter munic1paIity., These commun t like the
4'. 4, 1, e s,
home rule: communi,ties, have the abi'l,ity to levy an un-1,11"mited,
am,ount for the, payment, of tort claILms, and the establishment,
"11 1200, recently signed,
of reserves In addi,tion,,r Senate Bi
b
y the Governor', speci f i cally g'ves non -home rule munici pal ties
10 1
the right to, make multi-year contractual Comm* tments to self.%"'
insurance 'pools.
The specific
to be provided by
language of the scope of coverage document
the Pool will be approved by the Board of
jW I __ - -
-.crie intent of the parties
least as broad as that
EXPLANATION co.L- d
Page 4 1
11,he Members oJ
16
41 60,
the Pool in cony` enti onal
i v e claims macl,-e:
entiy neing offered by insurance com, anies. The
scope of coverage provided shall, however,
FA
claim made against the Member and reported to
fter the first date of the occurrence. The C,
LU OvIded will extend to general liability, vehicular
liability, and errors and omissions risks. As in the conven-
tional market,
burs contelLLJI? J CL
T h JOL S L t:,L In,_7_1W_CTS effi
bility of providing the $15,000,000.00 necessary to 'e'xpand
the scope of coverage of the Pool beyond $1,000,000.00, through
the sale of general obligation bonds. In order to retire
those bonds, with acceptable annual payment levels, a term
of at least 10 years was required. The eleventh year of the
membership in the Pool was added to allow the financing to
be arranged. At the end of the eleven -year period, the Members
will determine whether they wish to extend the term of the
contract or to allow the contract to expire and wind up the
affairs of the Pool. Since the coverage provided by the Pool
would extend beyond the life of the agreement, the Members
will be required to continue to meet periodically to
the payment of unresolved claims. Ultimately, 1
Article VII of the Contract and By -Laws is entitled
"Finances and Risk Management Pool", That article describes
in detail the manner in which the payments due from each Member
are determined. 0 1, utl rmula which considers
also include
factor for
W=
EXPLANATION (cont I a)
Page 5
AA1 funds paid to the Pool will be invested in the same
general manner as the funds of Ill,ino,J,
is municipalities, and
an annual audit of those funds is required by the Contract
and By -Laws.
The preparation of these
of the Pool was supervised
organized to investigate and
the creation of' this Pnnl- I
documents
by eleven
a- -
and the development
municipalities which
for
-L'iwtiu inun,icipaii,ties to which an invitation
to
of has been extended had excellent loss histories and
expressed a commitment to engage in loss prevention techniques.
Only the municipalities on Appendix A �to the Contract and
By -Laws will be allowed to become initial members of the Pool.
Once organized, the- Pool Members will consider whether it
will be beneficial to admit new Members. Part of that decision
will center on a determination of how to use reserve funds
previously established by the Pool,
Each Member of the Pool, by signing the Contract and
By -Laws initially commits itself' to, fully fund their propor-,
tional share of the scope of coverage., If four mun 4 4, al 4, t� *
ICIP i, ies
each expexiencoed losses of $2,000 0 0 0 . 0 0 'then 'u,nde r the I nitial
scope of coverage the membership would be oil-ilgated to pay,
their proportional share of $4,000,000.00,, the first mi Alio
o,, n
dollars of each loss being covered by the Member The pract,ica'l
limitation upon the obli" gation of the xe*mbers is the
$1,000,000-00 aggregate limit placed upon the claims, Wh"1ch
must be pa,id from, any, particular municipal-ity, along with the
historic ll low f,requency of such clai'ms. If t h,, e MeMbers,
of the Pool believe that the amount ot coverage they had agreed
to provide was excessive, they- couldprospectively reduce
the amount, of coverage atany time, The Members of the Pool
would, howevierr be, responsi"ble for the claims which occurred
prior to the, lim.i-ta,tilon, in coverage.
EXPIANATION (conu*d)
Page 6
"I
The members of the Steering Committee believe that thg
conventional insurance market has repeatedly failed us in
the past,, We ®- that because of the cyclical nature
of that # market, it- will fail municipalities in the future.
A self ,.ins,ured pool to protect against extremely infrequent
claims will allow the Members of this Pool to fund their a
cipated losses while allowing, the return of surplus funds
in the event that the group experiences a good loss history.
If
® have any questions about the contents of this
brief summary or the Contract and By -Laws, you may contact
either the Steering Comm -i ttee Chairman r George Coney at (312)
439-3900 or the Agency Attorney, Stewart Diamond at (312)
782-7606. Nocommunity should ,,,,p��ss the sample ordinance r
to the inf ormat ional, meeting wh_ich wilbe held, on ThursdaT
If there are any changes to be in the attached Contract
® By -Laws 'as ai. result of your review of these documents
and Your submission of comments prior to that dater a final
version of the Contract and By -Laws will be handed out at
that meeting, I
October 10, ®
022 1
CONTRACT AND BY" -LAWS
HIGH-LEVEL EXCESS LIABILITY POOL
10/10/86
INDEX
Pa No
1
ARTICLE
I.
Definitions and Purpose.
7
ARTICLE
II.
Powers,
9
ARTICLE
III.
Participation and 'berm.4M
12
ARTICLE
IV,
Commencement of the Agency,
13
ARTICLE
V.
Board of Directors.
24
ARTICLE
VI.
Board of Directors Meetings.
26
ARTICLE
VII,
Finances and Risk Management Pool,
36
ARTICLE
VIII.
Scope and Amount of Loss Protection,
40
ARTICLE
IX,
Obligations of Members.
44
ARTICLE
X.
Liability of Board of Directors
or Officers,
46
ARTICLE
X1.
Additional Coverage.
47
ARTICLE
XII.
Optional Defense by Member.
50
ARTICLE
XIII,
Contractual Obligation.
52
ARTICLE
XIV,
Host Member
53
ARTICLE
XV,
Expulsion of Members,
56
ARTICLE
XVI.
Termination of the Agency,
H E L
CONTRACT AND BY-LAWS
HIGH-LEVEL EXCESS LIABILITY POOL
ARTICLE Ie Definitions and Purpose.
DEFINITIONS:
As used in this agreement, the following terms shall
have the meaning hereinafter set out:
AGENCY - The High -Level Excess Liability pool (H.E.L.P.)
established pursuant to the Constitution and the statutes
of this State by this intergovernmental agreement.
ANNUAL PAYMENT - The minimum amount a MEMBER shall be
obligated to pay to the AGENCY during a fiscaly ear.
CLAIMS ADMINISTRATOR - A person or group of persons who
either as employees or independent contractors are employed
to administer the claims made against the MEMBERS.
CO 10NAL INSURANCE - Insurance coverage which may
from time to time be purchased by or through the AGENCY
--from. an insurance company approved by the Department
of Insurance to write such coverage in Illinois for risks
which the MEMBERS determine will not be covered or be
entirely covered by the JOINT RISK MANAGEMENT POOL; also
excess insurance.
DEBT INS MS - Bondsoo letters of credit, loan agree-
ments, or other documents by which funds are borrowed
t,)" / I 0/b 6
by the AGENCY or by a MEMBER of the AGENCY to fund in
whole or in part the Joint Risk Management Pool.
HOST MEMBER - A MEMBER of the AGENCY which issues or
becomes principally obligated for a debt instrument.
JOINT RISK MANAGEM POOL - A fund of public monies
established by the AGENCY to provide risk management
services, administer and jointly self -insure certain
claims within an agreed scope, to purchase conventional
insurance where such coverage is available in reasonable
amounts andf where issued, to repay debt 'instruments
and to pay other costs within the purposes of the AGENCY;
FV71a**
JOINT SELF-INSURANCE - A self-insurance program in which
MMBERS agree to contribute annual, and where required, '
0
supplementary payments and other required payments such
. ..........
as interest payments to support the costs of administra-
tion, a risk management program and a joint risk management
Poole
MEMBERS Units of local government and joint contractual
agencies composed of units of local government which
initially or later enter into the intergovernmental con-
tract established by this intergovernmental agreement.
POOL CONTRI, ON FORMULA - A formula approved by the
Board of Directors which will establish the amount of
required annual payment to the AGENCY.
RISK MANAGEMENT - A program attempting to reduce or limit
injuries to persons or property caused by the operations
of MEMBERS.
STEERING COMMITTEE 4004 A committee organized to bring about
the creation of the AGENCY* Documents or funds to be
sent to the Steering Committee should be sent to:
George Coney
Steering Committee Chairman
High -Level Excess Liability Pool
c/o Village af%,Elk Grove Village
901 Wellington Avenue
Elk Grove Village, Illinois 60007
SUPP Y PAYMRNTS - Payments which may be called
for, in accordance with the Contract and By -Laws, by
the Board of Directors from time -to -time if the amount
of the annual payment is insufficient to fund the AGENCY.
PURPOSE:
The AGENCY is a cooperative agency voluntarily estab li shed
by contracting un --its of local governments and similargovern-
mental entities as defined in the Illinois Constitution of
1970 pursuant to Article VII, Section 10 of the 1970 Constitu-
tion of the State of Illinois, Chapter 851 Sections 1-101
through 9-407p and Chapter 127, Section 746 of the Illinois
Revised Statutes for the purpose of seeking theprevention
or lessening of liability claims for injuries topersons or
property or claims for errors and omissions made against the
NEMBERS, and other parties included within the scope of coverage
of the AGENCY.
d� 3-
;__
It is the intent of the MEMBERS of the AGENCY to create
an entity which will administer a joint risk management pool
and utilize such funds contributed by the MEMBERS to defend
and protect, in accordance with these By -Laws, any MEMBER
of the AGENCY and other parties against stated liability,
Such BY -Laws shall constitute the substance of a contract
among the MEMBERS.
All funds contained within the Risk Management Pool are
funds directly derived from its Members which are units of
local government or similar governmental entities within the
State of Illinois., It is the intent of the parties in entering
into this agreement that, to the fullest extent possible,
the scope of risk management undertaken by them through a
joint self-insurance program using governmental funds shall
not waive, on behalf of any local public entity or public
employees as defined in the Local Governmental and Governmental
Employees Tort Immunity Act, any defenses or immunities therein
provided.
Specifically, the MEMBERS of this AGENCY intend to effect
no waiver of immunities through their contribution of public
funds retained within the risk management pool. Such contribu-
tions being reserves to protect against uninsured risks in
accordance with Chapter 127, Section 7.46, are not intended
to constitute the issuance of a policy for insurance coverage
(by an insurance company authorized by the Department of Insur-
ance to write such coverage in Illinois), as provided in Chapter
_4-
/ 9
L.P
K
85, Section 9-103 of the Illinois Revised Statutes. Nor do
the MEMBERS, if permitted by law, intend to waive any immunities
by the purchase of conventional insurance by the AGENCY.
In order to give the MEMBERS the ability to partially
pre -fund the joint risk management pool, through thepossible
sale of debt instruments, it is necessary to establish a term
for the AGENCY which is long enough to permit the sale and
retirement of debt instruments payable over a period of up
to the term of the AGENCY to be retired by the commitment
of the MEMBERS to make payments. In addition, by entering
into a contract which will provide some coverage on an occur-
rence basis, even if the claim is filed at some time after
eleven years from the date of the commencement of this contract,
the MEMBERS state and acknowledge their continuing contractual
obligations arising out of occurrences which takeplace during
the term of this contract.
In creating an excess self -insurance pool, the MEMBERS
of this AGENCY are entering into a type of intergovernmental
contract which has not previously existed in Illinois. In
forming such an AGENCY, the MEMBERS -state and acknowledge
that the AGENCY has no responsibility for thepayment of claims
for amounts less than the level at which the scope of coverage
of this AGENCY shall from time to time commence. The scope
of coverage to be provided by the AGENCY is excess coverage
to commence only after the MEMBER or some other party on behalf
of the MEMBER has fully paid the amount of its self-insured
"905ftft
r
H. E. LJ* P. fI 0z"
retention. At the commencement of the term of the AGENCY,
the amount of that retention is $lfOOO?OOOr per occurrence,
The AGENCY, always subject to any limit on aggregate payments,
shall not be obligated to expend any funds or pay any claim
until the MEMBER, or some party on behalf of the MEMBER, has
paid $1,000,000, including costs of defense, for each occurrence
against which a claim is made against the assets of the AGENCY.
H.E . 18 6
µ
ARTICLE II. Powers.
The powers of performs accomplish
purposes set forth in Article I shall, within the budgetarvil
limits and procedures set forth in these By -Laws, be the fol-
lowing:
1 4'
(a) To employ agents, employees and independent contrac-
tors,
ontrac-tors,
machinery,(b) To lease real property and to purchase or lease equ3-p-
personal necessary
carryingthe out of thepurposq4 AGENCY,
carry educational w programs relating
causeto risk reductions,
creation
funds for, • administer • management
pool and to repay debt instruments of the AGENCY,
its MEMBERS,
purchase conventional insurance
the joint risk management
(f) To establish
reasonable and necessary
and prevention
procedures shall e followed
ac
H
It is anticipated that within the first year of the term
of the AGENCY, the amount of coverage as specified in
Article VIII to be provided will be increased to not less
than $5400,000 per occurrence and in the aggregate for each
MEMBER. This increased amount of coverage is expected to
be backed by the issuance of bonds by a host MEMBER, the pro-
curement of a Letter of Credit, or through some other debt
instrument.
A#
WWIfo �,,y,,. ,.
IN
l�
PRO
pi
4 f 40
at s
'vy"�", ww"o"
. . . ...... . 0, v"m
v"t 0 0"
Jii- 1,01F 00ww
N!
pole
A
A'
vAn"
JJU Nll f l-l L
Such withdrawal shall relate back to the end
of the first fiscal year. In addition, if the AGENCY should
vote to increase its scope of coverage to not less than $5,000,000
at some time during the first fiscal year and should require
all MEMBERS to execute documents providing in more detail
the manner in which they shall be obligated to pay their propor-
tional share of the retirement or repayment of a debt instru-
ment, a MEMBER may withdraw from the AGENCY by refusing to
execute such documents. Such withdrawal shall be effective
at the date that the AGENCY shall increase the amount of its
coverage, but in no case later than the end of the first fiscal
year,. Any MEMBER which withdraws from the AGENCY in the manners
OWE
F
specified above shall, however, be responsible for its propor-
tional share of claims within the scope of coverage of the
AGENCY as it existed prior to the effective date of its with-
drawal. The proportional share due from that MEMBER shall
be that proportion which its annual payments bear to those
annual payments of all of the other MEMBERS.
H.E.L.Po 10/10/85
11/14/85
ARTICLE IV. Commencement of the Agency.
The AGENCY will commence its term at 12:01 a.m. on January
lt 1987t ife-v by December 15, 1986, there has been deposited
"I with the Steering Committee resolutions or ordinances approvini
the Contract and By -Laws of the AGENCY by at least ten (10)
of the governmental bodies, the names of which are set forth
in Appendix A, obligating themselves to become MEMBERS of
the AGENCY in accordance with these By -Laws, and to pay in
the first fiscal year annual payments totalling at least
$11100,000.00.
At the time that the submission of the .resolution or
ordinance approving the contract and By -Laws of the AGENCY
is sent to the Steering Committee, the MEMBERS shall enclose
a check in the amount of 50% of the first year's initial payment
to the AGENCY as is shown on Appendix A. The other 50% shall
be due within 30 days after the AGENCY commences its term.
Provided, however, that if necessary to produce at least
$1,100,040.00, each MEMBER which signs the Contract and By -Laws
shall obligatedIIMincreaseII► « payment
to a total annual payment not more than 10% higher than the
amount shownAppendix r
If the required acts necessary to bring about the commence-
ment of the AGENCY have not occurred by December 15, 1986,
the obligation of those governmental bodies which have passed
the resolution or ordinance to become a MEMBER of the AGENCY
shall cease and all funds sent to the Steering Committee will
be returned with any interest earned.
-12-
P
ARTICLE V. Board of Directors.
(a) There is hereby established a Board of Directors
of the AGENCY. Each MEMBER shall appoint one (1)
person to represent that body on the Board of Directors
along with another person to serve as an alternate
1.
representative when the initial representative is
unable to carry out that representative's duties.
The representative and alternate shall be appointed
in the same manner as other appointive officers are
selected when no specific method for such office
is established by statute. Once such appointments
are made known to the AGENCY the persons appointed
shall remain in office until the AGENCY receives
evidence of the appointment of other persons, The
AGENCY shall be the judge of the proper appointment
of representatives and alternates to the Board of
Directors and shall utilize in case of dispute general
principles of Illinois law. The representative and
alternate selected need not be elected officials
of the MMER. It is anticipated, but not required,
that persons chosen to serve on the Board will have
responsibilities within their MEMBER community for
some management duties relating to the AGENCY.
40013-
J.,
The Board of Directors shall select from among
the representatives a Chairman, Vice Chairman, Secre-
tary and Treasurer. In the first fiscal year of
the AGENCY, these persons shall be selected during
the first quarter of the fiscal year to serve terms
of two (2) years from the commencement date. There-
after, they will be selected during the final quarter
of the appropri4ta.fiscal year to serve two year
terms commencing at the start of the next fiscal
year. No person may serve as Chairman of the Board
of Directors for more than two (2) consecutive full
two-year terms. The Chairman shall be the chief
executive officer of the AGENCY. The Chairman shall
preside at all meetings of the Board and the Executive
[*ttee at which the Chairman is present. The
.............. .........
Chairman may request information from any officer
of the Board or the AGENCY or -any employee or independ-
ent contractor of the AGENCY. The Chairman shall
vote on all matters that come before the Board or
Committees on which the Chairman serves. The Chairman
shall be a non-voting ex -officio member of all commit-
tees of the AGENCY on which the Chairman does not
directly serve. The Chairman shall have such other
powers as are set forth in these By-laws and such
-14-
other powers as he may be given from time to time
by action of the Board.
The Vice Chairman shall carry out all duties of
the Chairman of the Board during the absence or inabil-
ity of the Chairman to perform such duties and shall
carry out such other functions as are assigned from
time to time by the Chairman or the Board of Directors.
The Treasure -p- shall have charge and custody of
and be responsible for all funds and securities of
the AGENCY; receive and give all receipts for moneys
due and payable to the AGENCY from any source whatso
ever; deposit all such moneys in the name of the
AGENCY in such banks, savings and loan associations
or other depositories as shall be selected by the
Board of Directors; invest the funds of the AGENCY
as are not immediately required in such investments
as the Board of Directors shall specifically or gener-
ally select from time to time; and maintain the finan-
cial
inan-
cial books and records of the AGENCY* Provided,
however, that all investments of AGENCY funds shall
be made only in the manner permitted to an Illinois
home rule community* The Treasurer shall, ingeneral,
perform all the duties incident to the office of
Treasurer and such other duties as from time to time
may be assigned to him by the Board of Directors.
dNftl5-
The Secretary shall keep the official records
of the AGENCY. The Secretary shall see to the keeping
of the minutes of meetings of the AGENCY and shall
retain past financial records of the AGENCY. The
Secretary shall see to the sending of all notices
required by these By -Laws and shall carry out other
clerical duties of the AGENCY.
The AGENCY shall purchase a bond in the cumulative
amount of at least $2,500,000.00 to assure the fidelity
of the Chairman and Vice Chairman of the Beard, the
Treasurer and any other officer, committee member,
or employee who shall have the right to authorize
the transfer or payment of AGENCY funds. Without
amending these By-Lawsr the Board of Directors, by
motion, may increase the amount of the bonds or the
persons covered.
The Board may select a financial institution
to carry out some or all of the functions which would
otherwise be assigned to a Treasurer and may select
a risk management company or agent to serve as claims
administrator* The Board may also employ persons
or companies as independent contractors to carry
out some of the functions of officers of the AGENCY.
The Board of Directors may from time to time establish
other officers of the Board and may elect a representa-
tive on the Board to serve in any of such offices.
"`l_., "
H , EW --.4 4 rk) V
The Board shall fill any vacancies which may occur
in any offices for the remainder of the term.
(b) The Board of Directors shall determine the general
policy of the AGENCY which policy shall be followed
by the AGENCY officers r agents r employees and indepen-
dent contractors employed by the AGENCY. Among other
items, it shall have the responsibility for (1) Hiring
11
of AGENCY of f icej�s'#' agents employees and independent
contractors; (2) Setting of compensation for all
persons, firms and corporations employed by the AGENCY;
(3) Setting of fidelity bonding requirements for
officers, 1� i
cers, employees or other persons; (4) Approval
of amendments to the By -Laws; (5) Approval of the
acceptance of new MEMBERS and expulsion of MEMBERS;
(6) Approval and amendment of the annual budget of
the AGENCY; ( 7 ) Establishment and amendmenuu
t of the
scope and amount of pooled self-insurance coverage
I
offered by the AGENCY; (8) Resolution of disputes
over the scope of pooled self-insurance coverage
provided by the AGENCY; (9) Approval of educational
and other programs relating to risk reduction; (10)
Approval of reasonable and necessary loss reduction
and prevention procedures which shall be followed
by all MEMBERS; (11) Purchase of conventional insurance;
(12) Authorization to a host MEMBER to issue debt
instruments when all other contractual prerequi!-
- 17 mom
H
. rE . L D . -L %�)
sites for such issuance have been effected; (13)
Approval of annual and supplementary payments to
the Risk Management Pool for each MEMBER; (14) Approval
of rules and regulations regarding the payout of
funds from the Risk Management Pool as shall from
time -to -time seem appropriate.
(c) Each MEMBER shall be entitled to one Cl) vote on
the Board of Directors. Such vote may be cast only
by the designated representative of the MEMBER or
in the representative's absence, by an alternate
selected by the M. MBER in the same manner as specified
for the selection of the principal representative.
No proxy votes or absentee votes shall be permitted.
Voting shall be conducted by voice vote unless one
(1) or more 14MBERS of the Board of Directors shall
request a roll call vote; provided, however that:
1. Any vote which requires a greater than majority
vote for passage shall be by roll call vote, and
2. Any member of the Board who abstains or casts
a vote in a minority position on a matter
upon which a voice vote is taken may have
that vote specifically recorded in the minutes
by indicating such desire to the presiding
officer.
(d) The representative selected by the MEMBER shall serve
until a successor has been selected. The representa-
MCC
P
tive chosen by the MEMBER may be removed in the same
manner as other non -tenured appointive officers within
the MEMBER. In the event that a vacancy occurs in
the representative or alternate representative selected
by the Corporate Authorites of a MEMBER, that body
shall appoint a successor. The failure of a MEMBER
to select a representative or the failure of that
person to participate shall not affect the responsibi-
lities or duties of a MEMBER under this Contract,
(e) The Board of Directors shall have the power to esta-
blish both standing and ad hoc committees. it is
contemplated that the AGENCY will have at least the
following standing committees: Finance, Risk Manage-
ment, Claims Review and Membership► and Revenue.
The Chairman of the Board may also establish ad hoc
committees which do not conflict with those established
by the Boards Unless the Board of Directors shall
establish some other procedure, the selection of
members of the Board of Directors who shall serve
on such committees and chair them shall reside with
the Chairman of the Board of Directors, but such
decI.sions shall be confirmed by the Board. The Chair-
man may make Interim appointments to fill vacancies
which occur between Board meetings.
The Board of Directors may assign to a committee
the authority to authorize the expenditure of funds
-19-
for administrative expenses, but the settlement of
claims or suits to be paid from the joint risk manage-
ment pool shall be decided by the Board of Directors,
except as the Board shall specifically assign in
whole or in part such function to a person or com.
mittee4,
The Board of Directors shall create an Executive
Committee, That Executive Committee shall at a minimum
consist of the Chairman and Vice Chairman of the
Board, the Treasurer, the representative or alternate
of any host MEMBERS, and the Chairman of the other
standing committees of the AGENCY along with other
persons. The Executive Committee shall make recommenda-
tions to the Board and shall undertake other functions
as the Board shall assign,
(g) A quorum shall consist of a majority of the MEMBERS
of the Board of Directors. Except as provided in
Subsection (h), herein, or elsewhere in these By -Laws,
a simple majority of a quorum shall be sufficient
to pass upon all mattersO
(h) A greater vote than a majority of a quorum shall
be required to approve the following matters:
(i) Such matters as the Board of Directors shall
establish within its rules as requiring for
passage a vote greater than a majority of a
quorum, provided, howeverr, that such a rule
WHO 9
0
can only be established by a greater than a
majority vote at least equal to the greater
than majority percentage within the proposed
rule.
(vi) The amendment of these By -Laws to cause the
or low range of the debit -credit formula, as
provided for in Article VII (i), or the modifi-
cation of the scope or amount of coverage of
the AGENCY and the authorization to a host
MEMBER which has specifically agreed by resolu-
tion of its corporate authorities to obligate
itself to execute a debt instrument shall require
that specific written notice of the proposed
change be sent by registered or certified mail
to the chief executive officer of the MEMBER
and to the regular and alternate representative
of the MEMBER on the Board of Directors, no
less than ten (10) days prior to a meeting
at which this matter is proposed and that the
amendment as proposed or as amended at a Board
meeting shall require concurrence of at least
two-thirds (2/3) of the entire membership of
the Board of Directors,
No one serving on the Board of Di rectors shall receive
any salary or other payment from the AGENCY. Any
salary, compensation, payment or expenses for such
representative, shall be paid by each MEMBER separate
from this Contract. Provided, howeverr, that the
Chairman of the Board, Vice Chairman, Treasurer and
Secretary and such other Board officers as are given
by the Board of Directors a right to reimbursement
may submit to the Board of Directors for its approval
claims for reimbursement of expenses incurred in
the pursuit of their positions as officers of the
AGENCY. The reimbursement for such expenses shall
include amounts advanced on behalf of the AGENCY
either by the officer himself or by a MEMBER of the
AGENCYs A host MEMBER may be compensated for agreeing
to issue or issuing a debt instrument, be reimbursed
f or expenses or be granted credits f or sums otherwi se
due the AGENCY.
:F=
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* E * L a P 8 6
ARTICLE VI, Board of Directors Meetings.
(a) Regular meetings of the Board of Directors shall
be held at least three (3) times a year. The dates
of regular meetings of the Board shall be established
at the beginning�iRf' each fiscal year. Any item of
business may be considered at a regular meeting.
A special organizational meeting may be held within
thirty (30) days prior to the commencement date of
the AGENCY upon not less than seven (7) days' written
notice from the Chairman of the Steering Committee.
At least one (1) meeting must be held during
the first half of the fiscal year. Special meetings
of the Board of Directors may be called by its Chairman,
or by representatives of any three (3) MEMBERS,
Ten- (10) days' written notice of regular or special
meetings shall be given to the official representatives
of each MEMBER government and an agenda specifying
the subject oject of any special meeting shall accompany
such notice. Business conducted at special meetings
shall be limited to those items specified- in the
agenda. Provided, howeverr, that where it is necessary
to call a special meeting of the Board to authorize
_24-
the payment of the settlement of a claim or claims
or other matter requiring rapid attention, such a
meeting may be called by delivered written or tele-
phonic notice of no less than 48 hours.
(b) The time, date and location of regular and special
meetings of the Board of Directors shall be determined
by the Chairman of the Board of Directors or by the
convening author�ktye
(c) To the extent not contrary to these By-laws, and
except as modif i ed by the Board of Directors r Roberts
Rules of Order, latest edition, shall govern all
meetings of the Board of Directors.
(d) Minutes of all regular and special meetings of the
Board of Directors shall be sent to all members and
alternate members of the Board of Directors within
twenty (20) days after each meeting. The Board shall""
subsequently vote on the approval of the minutes.
ARTICLE VII. Finances and Risk Management Pool.
(a) The fiscal year of the AGENCY shall commence on the
date the AGENCY comes into existence and shall be
for a twelve (12) month period except that the Board
may change the date of the conunencement of the fiscal
� �' i111
year. In the event that the Board chooses to change
the fiscal year of the AGENCY, the term of this con-
tract shall be extended for the number of months
necessary to accommodate the new fiscal year, provided,
however, that the right of withdrawal accorded MEMBERS
during the first fiscal year of the AGENCY shall
terminate twelve (12) months from the commencement
date without regard to any change in the fiscal year. -
(b) The Board of Directors shall approve a preliminary
budget for the administration of the AGENCY for each
forthcoming year during the final quarter of the
prior fiscal year* Copies of all preliminary and
f incl budgets shall be promptly mailed to each member
of the Board of Directors. The Board of Directors
shall, before the end of the year prior to the start
of each fiscal year, approve a final budget, the
n
pool contribution formula, and the amount of annual
payments due from each MEMBER, including, where applic-
able, a debit and credit calculation for each MEMBER
and the date upon which the .paanent is due, Provided,
however, in its first year of operations t the initial
annual payment for the first year of the AGENCY shall
be that amount shown on Appendix A and the budget
shall be that ak)t-oved by the Board of Directors
during the first quarter of the fiscalyear.
Failure to approve a preliminary or final budget
within the times set forth within this Section shall
not relieve the MEMBERS of the obligation to make
annual or supplementary payments to the AGENCY so
long as such budgets are finally adopted, and the
MEMBERS are
given at least thirty
(3 p)
days after
the passage
of the f inal budget or
the
determination
of amounts due in which to make payments to the AGENCY,
Where the proceeds of a debt instrument have been
received, the obligation of MEMBERS to repay that
debt shall not be dependent upon the approval of
a budgets Budgets may be amended at any time by
majority vote of the Board of Directors.
dw
(c) Calls for supplementary payments shall be made by
the Board of Directors.
b W
-27.gyp
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" dam. a )
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The Board shall, where necessary,
make calls for supplementary payments from MEMBERS,
including expelled MEMBERS, claims which occurred
during the time of their membership. Provided, that
in any year in which the scope of coverage is provided
on a "claims made" basis, supplementary payments
may only be used to pay and administer claims made
during the sub jest `�'year or such later period as assumed
by the AGENCY or specified in a conventional insurance
policy purchased by the AGENCY.
The forwarding of annual and supplementary payments
1.7
L*D
AGENCY or specified in a conventional policy. In
years after the first fiscal year, the Board of Direc-
tors may permit annual or supplementary payments
to be made on a monthly or quarterly basis.
(d) Each MEMBER shall have prepared and submit to the
AGENCY an annual audited statement of all revenues
prepared by a certified public accountant on a G . A . A . P .
basis, For the purpose of computing amounts due
for participation in the AGENCY, revenues shall be
classified by fund type as follows:
General Fund:
Included:
1). taxation of all types; real estater sales,
utility, income tax etc.
2). license and permit fees
3). intergovernmental revenue
Ce fines and forfeitures
5). interest earnings
6). fees charges or service
7)e franchise revenues
Excluded:
1). refunds
2). interfund transfers
ISPgcial Revenue Funds
Included:
1). taxation of all types
2). intergovernmental revenue
3). interest earnings
4)* grant funds
Excluded:
1)* interfund transfers
2). refunds
Debt Service Funds
S0
"pecial Assessment/Special Service District Funds
Oe
Included:
1), taxation of all types
a,
2),, interest earnings
10
ExcludedO
proceeds from new debt where proceeds are
to be used to retire existing debt
2). interfund transfers
Included:
1). taxation of all types
2), interest\earnings
3). developer contributions
4). grant funds
Excluded:
1). interfund transfers
2). bond proceeds
EnterpriseFunds
Included:
1) . all sales
2)e license and permit fees
3). service charges
4). interest earnings
5)* taxation
6). grant funds
0
Excluded,
1). interfund transfers
2)o revenues collected while acting as an agent
for another governmental body where amounts
collected are passed through
Internal Service Funds - Excluded
Trust and Agency Funds - Excluded
General Exclusion
4�
All revenues associated with a specifically excluded
risk or activity will not be 'Included for the calcula-
tion of premiums.
Revenues shall be computed using the figures shown
in the annual audit statement of the MEMBER for the
H
last fiscal year available on the date at which the
audits are due* In the event a current audited finan-
cial statement is not available, or, if available,
k
does not present revenues in the manner required,
the Board of Directors shall estimate the revenues
of the MEMBER based upon the best figures then avail-
able. The decision of the Board shall be final.
For the first year, of the existence of the AGENCY,
revenues shall be those utilized in the development
of the computation of the annual payment shown in
Appendix A.
(e) The Board of Directors shall in subsequent years
after reviewing the audit submitted from each MEMBER
establish a tentative computation of the revenues
of each ... ... ... -1,41MI'BER W r . . .. . i tten- noti ce- of this tentative
determination shall be sent to each MEMBER. If a
MEMBER wishes to contest the determination of the
amounts, it may request a hearing before the Board
of Directors. The decision by the Board after such
hearing shall be final unless the Board shall be
found by a court to have committed a clear abuse
of discretion.
(f) During the final quarter of each fiscal year, the
Board of Directors shall establish the pool contribu-
tion formula which will be used in determining the
annual payments due from each MEMBER for the next
Her — 0 Lr.P* L 0,
succeeding fiscal year. The four factors which will
be equally weighted in creating the formula are:
Revenues, as defined in Article VII(d), Miles of
Streets, Full -Time Equivalent Employees and the Total
Number of State Licensed Vehicles. MEMBERS shall
be required to provide information to the AGENCY
which will allow the Board of Directors to quantify
each of these four factors. All questions relating
to the computation of these four factors will be
resolved by the Board of Directors and will be applied
equally to all M. EM BERS. A The
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t,�ulro" �9� Vw � �,r � �n,;��, F�� -gym 4. ,���� � � ��' ';; ;,,,, ,�,,,, r; I ;�(I IN!'
MIT
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I
in the annual payment, except where the Board of
Directors should modify that proportion based upon
an error in the information reported or an error
in computation. In the event that for any reason
the proportional payments due from a MEMBER shall
be adjusted, the amounts due from other MEMBERS shall
likewise be subject to adjustment but the implementa-
tion of the- adjustment may be delayed until the funds
are needed.
(g) If all claims known or unknown within the scope of
coverage provided by the AGENCY, plus any other amounts
owed by the AGENCY during any particular period for
:NC
which funds of the AGENCY were combined to create
the joint risk management pool, have either been
0119 d
_77-
. . . . . .. . .
ly
in the same proportion to the total as their payments
during the period bore to the payments of all MEMBERS
less any sums owed the AGENCY* Provided, however,
that a MEMBER may elect to transfer such excess funds
to the Joint Risk Management Pool for any later or
prior period for which it owes or will owe funds
to the AGENCY. MEMBERS shall remain obligated for
all payments due the AGENCY under this Contract and
By -Laws if it should be determined even after the
payment of any rebate that additional sums are neces-
sary to fulfill the contractual obligations agreed
to herein. Such obligation shall continue so long
as there are claims made against the AGENCY for in-
juries that fall within the scope of coverage provided
by the AGENCY for the period in question,
_33-
H . E - L . P . L 0/ _L 01," 8-s 611
(h) The Board of Directors shall provide to the MEMBERS
an
Mj==tcial affairs of the AGENCY
to be made by a t the
end of each fiscal year in accordance with the gener-
ally accepted auditing principles. The annual report
shall be delivered to each MEMBER within 180 days
after the close of the prior fiscal year.
(i) The Board of Directprs may require reports from all
agents and independent contractors including attorneys
with regard to the status of their work for the AGENCY,
problems encountered during the performance of their
duties, and recommendations for improvements in the
performance of the AGENCY including their efforts
on the AGENCY'S behalf.
� 3 4 -
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m ;HAA'71�" I. I t All
Al All
"Alt
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0,
he Board of Directors shall approve
the debit or credl*lt*formulation either directly or
in the approval of the adjusted annual payment due
from the MEMBERS* Provided, however, that the Board
of Directors shall, for each year of the existence
of the AGENCY provide a sum in the joint risk manage-
ment pool which, after the debit or credit adjustment
has been made, shall be in a gross amount sufficient
to pay for the anticipated total costs required to
fully fund the operations of the AGENCY.
at the comiie�n
ERS
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"am
04 "1uu
Any excess sums may be returned or placed within
the joint risk management pool.
rr E.L.P. 1�/ IJ/6 6
ARTICLE VIII, Scope and Amount of Loss Protection.
Scope of coverage and the amount of coverage to be provided
® the AGENCY shall be determined from time to time by the
Board of Directors. The AGENCY may modify both the scope
of coverage and the amount 'of coveragel both upward and down-
\
ward, provided, however, that any modcations shall only
apply prospectively.
The AGENCY shall provide coverage for each ® up
to $1r000,000 in the aggregate for losses in excess of $1,000,000
per occurrencie. No indemncation shall be provided by th4
AGENCY until the MEMBER has expended $1,000,000 in loss payments
as a result of the occurrence. Defense costs shall be included
toward satisfying both e payment by the MEMBER and
the coverage provided by the AGENCY.
Coverage, other than errors and omissions coverage, is
provided by the AGENCY only for those occurrences which occur
during a fiscal year for which the MEMBER has made an ANNUAL
PAYMENT and all required SUPPLEMENTARY PAYMENTS and for which
written notice is given to the AGENCY within ten (10) years
subsequent to the date of occurrence. Where an occurrence
is continuous and involves more than one such fiscal year,
N
r
coverage is provided only to the extent of the coverage amounts
in effect, as regards the MEMBER, during the fiscal year in
which the occurrence began.
Errors and omissions coverage is provided by the AGENCY
only for those occurrences which occur subsequent to the first
day of continuous membership in the AGENCY by the MEMBER and
for which written notice is first given to the AGENCY during
a fiscal year for which the MEMBER has made an ANNUAL PAYMENT
and all required SUPPLEMENTARY PAYMENTS,
Aggregate limits are provided on a fiscal year basis
and all payments to or on behalf of a MEMBER for occurrences,
other than errors and omissions, occurring during the fiscal
year plus all payments to or on behalf of that MEMBER for
errors and omissions occurrences for which written notice
is first given during the fiscal year accumulate towards the
satisfaction of the aggregate limit for the fiscalyear .
The amount of money which a member must pay before the
obligation of the AGENCY shall commence is known as the self-
insured retention. The AGENCY will commence with a self-insured
retention by its MEMBERS of $1,000,000 per occurrence* Under
no circumstances shall the obligation of this AGENCY commence
until a MEMBER has paid for that occurrence the amount of the
self-insured retention established by the AGENCY from time to
time. The MEMBERS of the AGENCY are aware of a limited number
of cases in the United States in which insurance companies
purporting to offer coverage excess of a deductible or a self -
:"z
L
insured retention amount have been compelled by courts to
commence the level of their coverage at lower levels. By
entering into this contract each MEMBER acknowledges that
it is the absolute understanding of the MEMBERS of this AGENCY
that under no circumstances shall the AGENCY be compelled
to make any payments until a MEMBER has fulfilled the full
responsibility of paying the total amount of the self-insured
1.
retention.
MEMBERS may fund the amount of the self-insured retention
through reserve funds, conventional insurance, membership
in pools, the issuance of judgment funding bonds or other
methods. The method by which a member of the AGENCY fulfills
its responsibility to fund the self-insured retention is a
matter of no consequence to this AGENCY. This AGENCY intends
to offer a scope of coverage which will commence only in excess
of the self-insured retention. The extent of intergovernmental
cooperation or contractual obligation of the MEMBERS to fund
the AGENCY does not extend whatever to any primary coverage
or obligations below the amount of the self-insured retention.
The MEMBERS of the AGENCY would not have entered into this
Contract and By -Laws if any MEMBER understood the obligation
of the AGENCY to its MEMBERS to extend in any manner below
the level of the self-insured retention.
For the first year of the existence of the AGENCY the
MEMBERS intend to provide excess coverage which would typically
be provided by conventional comprehensive general liability
�38-
vehicular liability, and errors and omissions policies. Because
the parties desire to commence the term of this AGENCY as
soon as possible, they have not agreed upon the text of such
coverage, including provisions relating to the obligation
of the members to report claims, to defend the claims within
the level of their self-insured retention, dispute resolutions
and other items typically found in conventional insurance
policies. The parties intend to adopt such provisions as
are applicable for a joint governmental self-insurancepool,
Within the first six (6) months of the commencement of the
AGENCY, the Board of Directors shall, by a vote of at least
the concurrence of a majority of the entire membership of
the Board of Directors, approve a specific text of the scope
of coverage offered which document shall apply to all claims
which occurredprior to the approval of the textural material,
and to all subsequent claims until the nature of the scope
of coverage shall be modified in the manner provided in Article
V(h)(vi). In the event that there should be a conflict between
the text of the scope of coverage document and the Contract
and By -Laws, this later document shall prevail. The AGENCY
may from time to time expand the scope or amount of coverage
to be provided, which expansion may be extended to thepayment
of claims which occurred prior to the date of the expansion.
In the event that the AGENCY should reduce or modify the amount
or scope of coverage to be provided, such reduction shall
only apply to claims which occurred subsequent to the date
of the modification.
1� ) 9 r
c
ARTICLE IX* Obligations of Members.
The obligations of MEMBERS of the AGENCY shall be as
follows
(a) To appropriate, budget for, where necessary to levy
for and to promptly pay all annual and supplementary
or other payments to the AGENCY at such times and
in such amounts as shall be established by the Board
of Directors within the scope of this agreement.
MEMBERS shall also be required to pay their proporado
tional share of the repayment of principal and interest
obligations and other costs incurred - b
by a host MEMBER.,
in obligating itself under a debt instrument. The
proportional share of each MEMBER shall be that propor-
tion its annual payment for that fiscal year bears
to the annual payments of the other MEMBERS. Any
delinquent payments shall be paid with a penalty
which shall be equal to the highest interest rate
allowed by statute to be paid by an Illinois home
rule municipality or the prime rate then in effect
at the Continental Illinois National Bank, or the
First National Bank of Chicago, whichever rate is
lower.
I=
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(b) To select a person to serve on the Board of Directors
and to select an alternate representative,
(c) To allow the AGENCY reasonable access to all facilities
of the MEMBER and all records relating to claims
and the financial obligations of a MEMBER.
(d) To provide the Pool the right and give it the opportu-
nity to associate with the MEMBER or any conventional
insurance carried providing coverage to the MEMBER,
or both, in the defense and control of"any claim,
suit or proceeding which involves or may involve
the Pool and in which event the MEMBER, such insurers
and the Pool shall cooperate in all things in defense
of such claim, suit or proceedingO
(e) To furnish full cooperation with the AGENCY'S attor-
ys claims administrator and any agent, employee,
of f icer or i ndependent contractor of the AGENCY relat"_
ing to the purpose and powers --of the AGENCY.
(f ) To follow in its operations all loss reduction and
prevention procedures established by the AGENCY withiA
its purpose and powers, including, but not limited
to the use of release forms, post'
ing of notice, parti-
cipation in educational and record-keeping programs,
limitations in activities offered, and the use of
loss preventative techniques and devices.
(g) To furnish to the AGENCY an audit prepared by a Certi-
fied Public Accountant of all revenues of the MEMBER
-41-
for any fiscal year of the MEMBER for which figures
are requested by the AGENCY. If an audit is not
furnished, the AGENCY may employ an auditor to peform
such an audit and the MEMBER shall be required to
pay the reasonable cost of such audit.
(h) To report to the Secretary of the AGENCY and the
claims administrator, at the earliest practicable
moment, any infor�m4tion of a claim received by the
0
MEMBER and from which the MEMBER could reasonably
conclude that coverage from the AGENCY will be sought,
In the event that the required information is not
submitted to the Secretary and claims administrator
within the time periods set forth above, the Board
of Directors of the AGENCY, may in whole or in part
decline to provide a defense to the MEMBER or to
extend the funds of the AGENCY for the payment of
losses or damages incurred. In reaching its deci-
Sion, the Board shall consider whether and to what
extent the AGENCY was prejudiced in its ability to
investigate, defend or earlier settle the claim due
to the failure of the MEMBER to promptly furnish
notice of the claim to the Secretary. In the absence
of a fraud or a clear abuse of discretion, the decision
of the Board of Directors shall be final. Information
must be furnished to the AGENCY not only at the time
that a claim is made which could reasonably be expected
E T.
to be within the scope of coverage of the AGENCY,
but also updated information must be provided as
the nature of the claim becomes more fully known
and litigation occurs and proceeds. Information
must also be furnished if a claim reasonably thought
to be below the level of the amount of coverage provided
by the AGENCY should approach or be asserted by the
J
claimant to fall�-wlthin the amount of coverages.
( i) To either employ a professional claims administration
firm to handle all self-insured claims, enter into
an insurance contract (for claims at lower levels
of coverage than those provided for by the AGENCY)
which includes an obligation of that insurance company
to furnish information to the AGENCY of pending claims
or, if the MEMBER performs claims administration
utilizing its own personnel, the obligation to employ
a firm to perform claims auditing. The claims auditing
firm will be chosen by the AGENCY and the reasonable
cost of such audit will be borne by the MEMBER,
(j) In the event that the AGENCY shall be required to
expend funds for administrative, legal or other costs
brought about by the failure of a MEMBER topay sums
owed the AGENCY or to take other actions required
under this Contract and By -Laws, such amounts expended
shall be added to the sums due the AGENCY and shall
be payable by the MEMBER,
40043-
/ ", �-, 0`_
on
ARTICLE X. Liability of Board of Directors or Officers.
The members of the Board of Directors or officers of
the AGENCY should use ordinary care and reasonable diligence
in the exercise of their power and in the performance of their
duties hereunder; they shall not be liable for any mistake
of judgment or other action made, taken or omitted by them
in good faith; nor for any action taken or omitted by any
agent, employee or independent contractor selected with reason-
able care; nor for loss incurred through investment of AGENCY
funds, or failure to invest, No Director shall be liable
for any action taken or omitted by any other Director, No
Director shall be required to give a bond or other security
to guarantee the faithful performance of the Director's duties -
hereunder. The Board of Directors shall authorize, if neces-
sary, the use of the joint risk management pool to defend
and hold harmless any Director or officer for actions taken
by the Board or performed by the Director or officer within
the scope of his authority for the AGENCY. The AGENCY may
purchase conventional insurance providing similar coverage
for such Directors and officers and if such coverage has been
purchased shall require that the coverage of the insurance
an M#
H. E.L.P. L i o
company shall be relied upon before utilizing the funds of
the joint risk management pool to provide a defense or make
a settlement.
..45-
10/ 10/8 6
ARTICLE XI. Additional Coverage,
Membership in the AGENCY shall not preclude any MEMBER
from purchasing any insurance coverage above those amounts
purchased by the AGENCY. The AGENCY shall make its facilities
available to advise MEMBERS,.of the types of additional or
different coverages available to units of local government.
OEM
ARTICLE XII. Optional Defense by Member.
The scope of coverage provided by this AGENCY shall only
commence at such point that the MEMBER has made a good faitl
offer to settle the claim at a level within the self-insured
retention of the MEMBER and . that offer has been rejected. '
V
Where the scope of coverage of the AGENCY is activated, the
MEMBER, through the procedure set out in this article, shall
have an opportunity to object to a settlement whenever the
AGENCY proposes to settle any pending claim or suit. The
MEMBER shall be given advance notice of any proposed settlement.
Such natio: may be given by the establishment of a reserve
amount in documents provided to the MEMBER by or through the
AGENCY, provided that the amount of the settlement does not
exceed the amount reserved. The officers and employees of
the AGENCY shall, however, endeavor to give specific oral
or written notice to a MEMBER of the exact ,amount of any pro-
posed settlement at least fourteen (14) days prior to the
date at which the AGENCY proposes to bind .itself topay a such
settlement amount. It is recognized by the MEMBERS that under
some circumstances the AGENCY may not be able to give fourteen
(14) days' prior oral or written notice of the proposed settle-
--47-fts
meet. The officers, employees or independent contractors
of the AGENCY shall attempt to give the MEMBERS as much notice
of the settlement as is possible under the circumstances of
each case.
CL AMBER should disagree with the amount for which
the SNC :roposes to settle a case or claim, the represent-
ati-% -f MEMBER on the Board of Directors of the AGENCY,
the - _ cernate member, the local governmental attorney or the
chief administrative officer of the MEMBER may notify the
claims administrator of the AGENCY that the MEMBER. exercises
its right to prevent the AGENCY from reaching a settlement
at the agreed --upon amount. The claims administrator may require
that such information be transmitted in writing.
In the event that the case or claim is eventually resolved
through a settlement or judgment within the dollar limits
of coverage provided by the AGENCY and in an amount less than
the amount at which the case could have been previously settled
by the AGENCY, then the MEMBER which has undertaken the costs
of its defense shall be entitled to its additional ,actual
costs including reasonable attorneys' fees, up to the level
at which its costs and the prior allocated costs of the AGENCY,
including reasonable attorneys' fees, equal the amount at
which the case could have been settled by the AGENCY. To
the extent that the case or claim is resolved through settlement
or judgment at an ,amount greater than that at which the case
or claim could have been previously settled by the AGENCY
-48-
..........
and a claim is thereby made within the dollar limits of coverage
provided by the AGENCY, the MEMBER shall be obligated for
that portion of the settlement or judgment which exceeds the
sum of money at which the case could have been earlier settled
by the AGENCY including all allocated costs of the AGENCY.
If at iny ne the amount of the allocated costs of the AGENCY
devo- -- t_-, --he case shall equal or exceed the amount at which
the c se could have been settled and the AGENCY is providing
a defense, the AGENCY may require periodic supplementary pay-
ments from the MEMBER if the MEMBER wishes to have the AGENCY
continue to provide the defense.
Allocated costs shall mean those costs which are allocated
to individual cases under the bookkeeping and accounting system
Utilized by the AGENCY. The AGENCY may establish the amount
at which it could have settled the case through a written
settlement offer by the plaintiff or through other competent
evidence of the availability of the settlement at a particular
sum and the desire of the MEMBER to preclude settlement discus-
sions and the sum at which the AGENCY believed the case could
--------have been settled.
_49-
H E 6 6
ARTICLE XIII, Contractual Obligationo
'his :'.'-.'W1-.-.%.ument shall constitute a contract among those
become MEMBERS of the AGENCY. The obligations
and r �Pcn..Sibilities of the --MEMBERS set forth hereint including
the obligation to take no action inconsistent with these By -Law
as originally written or validly amended shall remain a contin-
uing obligation and responsibility of each MEMBER. The terms
of this Contract may be enforced in a court of law by the
AGENCY or any of its MEMBERS.
The consideration for the duties herewith imposed upon
the MEMBERS to take certain actions and to refrain from certain
. . . . . . . ................. ....
other actions is based upon the mutual promises and agreements
of the MEMBERS set forth herein. If any dispute arises regard-
ing this Contract, the MEMBERS agree that a court shall inter-
pret the actions and duties of the parties in accordance with
the specific standard or burden of proof set out in this Contract
and By -Laws. This Contract and By -Laws may be executed in
duplicate originals and its passage by entities listed in
Appendix A shall be evidenced by a certified copy of an ordi-
nance or resolution passed by a majority of the members of
:"0
the governing board then in office. Provided, however, that
except to the extent of the financial contributions of the
AGENCY agreed to herein or such additional obligations as
may come about through amendments to these By -Laws no MEMBER
agrees or contracts herein to be held responsible for any
claims in
nrt or contract made against any other MEMBER,
The c-,-&"40tr-.,.'-ing parties intend in the creation of the AGENCY
to establish an organization for joint risk management only
within the scope herein set out and have not herein created
as between MEMBER and MEMBER, except for that limited extent,
any relationship of surety, indemnification or responsibility
for the debts of or claims against any MEMBER,
P E.L.P. 10/10/86
ARTICLE XIV. Host Member,
The -'--'-lage of Elk Grove Village has agreed to consider
servilig as a host MEMBER for the AGENCY, During its first
fiscal year, the AGENCY shall produce documents to present
to its host MEMBER and all other MEMBERS to cause the issuance
or commitment to issue a debt instrument. It is anticipated
that the debt instrument will be general obligation bonds
in the amount of $15,000,000 or a letter of credit in that
amount. Elk Grove Village shall not be required to execute
any document obligating itself to be a host MEMBER with which
't does not agree.
i All of the reasonable costs incurred by
Elk Grove Village in considering whether to fulfill its role
as a host MEMBER shall be paid for by the AGENCY, If the
AGENCY has on hand funds other than those received from the
debt lonstrument, Elk Grove Village may require that any claims
be paid first out of such funds before funds procured from
a debt instrument are utilized. Funds procured by Elk Grove
Village through the issuances of a debt instrument issued
to benefit the AGENCY shall be paid directly to the AGENCY,
Other MEMBERS of the AGENCY may also voluntarily agreed to
be a host MEMBER.
� 52-
ARTICLE XV* Expulsion of Members.
By concurrence of two-thirds (2/3) of the entire
membersh_--.-�, of the Board of Directors present at a regular
or special meeting, any MEMBER may be expelled. Such expulsion
may be carried out for one or more of the following reasons:
(a) Failure to make any payments due to the AGENCY.
(b) Failure to undertake or continue loss reduction and
prevention procedures adopted by the AGENCY.
(c) Failure to allow the AGENCY reasonable access to
all facilities of the MEMBER and all records which
relate to the purpose or powers of the AGENCY,
(d) Failure to furnish full cooperation with the AGENCY'S
attorneys, claims administrator and any agent, employ-
ee, officer or independent contractor of the AGENCY
relating to the purpose and powers of the AGENCY,
(e) Furnish incorrect financial, claims history or other
information to the AGENCY,
(f) A history of eXCessive pending or closed claims or
losses which in the absolute discretion of the Board
of Directors creates an unacceptable risk of similar
adverse future claims or losses.
-53-
(g) Failure to carry out any obligation of a MEMBER which
impairs the ability of the AGENCY, to carry out its
purpose or powers.
No MEMBER may be expelled except after written notice from
the AGENCY of the alleged failure along with a reasonable
..!- w/ v
opportuni-of not less than thirty (30) days to cure the
alleged failure. Provided, 'however, that no opportunity to
cure shall be necessary for an expulsion brought in whole
or in part because of a poor loss or claim history, The MEMBER
may request a hearing before the Board before any decision
is made as to whether the expulsion shall take place. The
hearing must be requested in writing not later than five (5)
days after the time to cure has expired or in case no time
to cure is required within 30 days of -the notice by the Board
of an 'intent to expel. Times required for notices under this
contract shall be measured from the date of mailing or delivery
if personally delivered. The Board shall set the date for
a hearing which shall not be less than ten (10) days after
the request for the hearing. If the time to request a hearing
has passed and the MEMBER has not requested a hearing or if
no hearing is required or if such a hearing has been requested
no later than sixty (60) days after the close of that hearing,
the Board shall determine whether the MEMBER will be expelled.
A decision by the Board to expel a MEMBER shall be final unless
the Board shall be found by a Court to have committed a clear
abuse of discretion. The Board of Directors may establish
the date at which the expulsion of the MEMBER shall be effective
Comic
at any time not less than thirty (30) days after the vote
expelling the MEMBER has been made by the Board of Directors.
If the motion to expel the MEMBER made by the Board of Directors
or a subsequent motion does not state the time at which the
expulsion shall take place, such expulsion shall takeplace
thirty ("JI days after the date of the vote by the Board of
Directors expelling the MEMBER.
After expulsion, the fozmer MEMBER shall continue to
be fully obligated for any annual or supplementary payments
for which it was delinquent at the time of its expulsion and
supplementary payments later voted by the AGENCY for losses
which were within the scope of coverage of the AGENCY during
the time of its membership, along with any other unfulfilled
obligation as if it was still a MEMBER of the AGENCY. The
expelled MEMBER shall, after expulsion, no longer be entitled
to participate or vote on the Board of Directors or to receive
the benefits of self-insurance coverage for any claim made
after the date of expulsion and depending upon the nature
and amount of pending claims against an expelled MEMBER r the
Board of Directors may limit the amount of coverage to be
proviWed or requir4 the expelled MEMBER to make additional
payments to the AGENCY to retain the coverage. No MEMBER
expelled from the AGENCY, except for thepayment of third-party
claims, shall receive any return from the AGENCY of funds
paid into the Joint Risk Management Pool,
-55-
/ I G /, 0" 6
ARTICLE XVI. Termination of the Agency.
At t.lu%&e conclusion of the eleven -year term of this Contract
and BY -Laws, all MEMBERS shall remain fully obligated for
their portion of any claim against the assets of the joint
risk management pool whit' I'.%s within the scope of coverage
of the AGENCY along with any other unfulfilled obligation,
including but not limited to calls for supplementary payments
attributable to the period of their membership which may be
called for in subsequent years. The Board of Directors shall
continue to meet on such a schedule as shall be necessary
to carry out the winding up of the affairs of the AGENCY.
Because of the nature of claims filed against governmental
bodies, it is contemplated that the Board may be required
to meet for some time to conclude all matters relating to
the termination of the AGENCY. When all of the affairs of
the AGENCY are wound up and all claims and expenses of the
AGENCY are paid, the members of the Board of Directors shall
distribute any funds remaining in the joint risk management
pool to the MEMBERS in the proportion which those MEMBERS
contributed funds to the AGENCY* MEMBERS ,expelled from the
-56-
AGENCY shall not be entitled to the return of any funds.
At the conclusion of the eleven (11) year term of this Contract
and BY -Laws, if all debt instruments shall have been repaid,
MEMBERS of the AGENCY may elect to distribute to the then
existing members some of the funds contained within the joint
risk management pool. The distribution of those funds, however,
shall not affect the obligation of the MEMBERS to make supple-
mentary payments to the j int risk management pool in the
event that claims which fall within the scope of coverage
of the AGENCY need to be paid at subsequent times. In deter-
mining the amount of funds which may be returned to the MEMBERS,
the AGENCY shall procure the recommendation of an actuary.
The AGENCY may also purchase conventional insurance to fund
either the remaining known claims against the AGENCY or incurred
but not reported claims.
DATED:
1 19
OWN ......
A C C E P T E D
. . . ......... VON ..' " I . I -!'
Munixi I pa Clerk
low 5 7 am
Mayor
WHEREUPON under the authority granted to me by Ordinance
(Resolution) No passed by the Corporate
Authorities on the day of
19 1, 1 do hereby execute and the Clerk does hereby attest
to my signature as evidence that the
has approved participation in the
0111 ON ,.,for a term commencing on
in accordance with this Contract and By -Laws in lots executed
form and as it may subsequently be validly amended.
ATTEST:
�58-
Draft 11/6/86
HIGH-LEVEL EXCESS LIABILITY POOL
Retroactive Date: December 1, 1986 applicable to claims occurring within the
terms, and co,nditions oft a Errors and Omissions Coverage Part.,
*This does not include amounts of supplementary payments or other sums due
under the contract or by-laws.
CEPA-1
Draft 11/6/86
COMPREHENSIVE GENERAL LIABILITY
AND EMPLOYER'S LIABILITY
IV Coverage Agreements:
B. The Pool hereby agrees, to play on behalf oft
he Public Entity all sums
whillch the Publil EnCity h come legally obligated to pay, forth e saler diistributio,ni of alcoholicveraiges, by, reason of any local,, state or
federal liquor control laws now, , in force and all la lws amendatory,
thereto; and that such extension includes inidemnity for loss, of ns of'
support: all provided however that, the Public Entl i , s not engaged in
elg og
the business of manufacturing, distributing sl inr servinof
alcoholic beverages.
C. The Pool hereby agrees to payl on behalf of the Public Entity all sums that
the Public Entity shall become obligated to pay for Incidental Medical
Malpractice Injury.
Incidental Medical Malpractice Injury means 'injury arising out of the
rendering of or failure to render, during the coverage period, the
following services:
1. Medical, surgical, dental, x-ray or nursing service or treatment
or the furnishing of food, or beverages in connection
therewith; or
2. The furnishing or dispensing of drugs or medical, dental or
surgical supplies ora fiances
3. Mobile intensive care personnelas defi n chapter 1111
410, or the Illinois statutes are co vered f rb ol
4 odily injury
arising out of any of the serlets,they are, �authorizjed to do
under 4104 and for which liability is incurred under 4109.
CEPA-1 •1-
II. EXCLUSIONS
This coverage does not apply:
A. to ang, obl" t" n for which the Nblic Entity or any carrier as his insure
may e hX 11110able under any workers' compe,nsaition,, unemploymen
compensation or disability ben,efits lawor under any similar
B. to peirsonal in=to any ernployeeof the Pubtc Entity arising out. of and
in the coju' Me is employment by, the Public Entity; but this exclusion
does, not, apPly to fiability assurneld by the Public Entity under, an
6
I "denta! contract*
to propert, y dama to, (1) prop, owned or occupled by or rented to
the Public ,Ent property u, by, the Public Entity, but part, (2) of
thils elusion %es not apply with respeict, of 11 iablility under a written
sidetrack algreement.
D. to loss of use of tangible property which has not been physically injured
or destroyed resulting from:
1. a delay in or lack of performance by or on behalf of the
NamePublic Entity of any contractor agreement, or
ff 0,1111i'll: a b A
Al Am
tZ
E. to p operty damage to the Public Entity's products arising out of such
produce or any part, of such products;
0
0 lip
AwdolM
COPA -1 �2�
LolfdiL 1 1/0/00
the Public F f because of any known or ?cted defector deficiency
therein.
G. toproperty damage to work performed by or on behalf of the Public
Entity arising, out of thework or any porti I on thereof, or out of materials,
pa rts o r eq u, i int furnis h ed in n connection therewith.
H. to liablility arising out of aircraft products or reliance upon any
representation or, warranty made with respect thereto, or to any liability
W
arising ou't of the groundingof any aircraft;
'[p
to personal injury or property damage arising out of the hazardous
Properties of nuclear material;
J. to, personal 'injury or property da age arising out of the dischar", e,
9'
dis er al release or escape of smoke, vapors, soot, fumes, acids, alkalis,
toxic chemicals, liquids, or ass, waste materials or other irritants,
contaminants or pollutants into or upon land, the atmosphere or any
water, course, or body of water; but this exclusion does not apply if such
discharge, dispersal, release or escape is sudden and accidental;
K. to liability imposed upon the Public Entity under the "Employee
Retirement Income Security Act of 1974" Securities Act of 1933 or
Securalti, es, Act of 1934 and any law amendatory thereof, or any similar
provision of any Federal, State or local statutory law or common law.
L
tUii]lty ar,"''i ing out of' the rendering of, or the failure to render, o, abs*
professional services, by, o,r,o,n behalf of the Public Entity, for others, in
Pu tic nU11tys c apacity as an architect, engineer or surveyor,
,bE'
1 including, but, not,, limlited to, an�)'If negligent act,,, errorl, omilssion or
A
milstake involving the preparation of surveys, maps,, plans, designs or
specifications or supervi I sory inspection or engineering services furnished
in connection therewith;
M. to personal injury or property damage due to war, (whether or not
declared) civil war, insurrection, rebellion or revolution, or to any act or
condition incident to any of the foregoing.
N. to personal injury or property damage arising out of the ownership,
maintenance or use, including loading or unloading, of any aircraft, or
a ny wate rcraft ove r 40 feet;
0. to personal injury or property, damage arising out of the ownership,
mallntenance or use of any ,autornobile;
P. to punitive or exemplary damages;
Q011 to liabilit of indiivIduals otherwise covered for acts committed
outsi`,4, le olthe scope of their duti s and powers;
0 king R. to causes of acti , on, seeonly nonmonetary claims such as
0
injunction, mn and declaratory relief;
S. to payment of the attorneys' fees of opposing counsel or other
court: costs wh,ere a jug g:ment providingno ot.he,r monetary relief to
the plaintiff is entered-,
I
COPA -1
Draft 11/6/86
T. to, causes of'actl '/here the pla'intiff seeks nc ,iages buit only
the return, of tax tinds or any other fU'r6tods alles1,A have been
id toor, receivedby-the municipality, i In error or without, authority,
in law;
U. to causes of action seeking only back pay or retroactive salary
increases based upon all discrimination;
V. to causes of action alleging improper, acts by officers of the public
entities who serve as representatives of those entities on other
intergovernmental a I encies tothe extent that such a claim all eg es
r
I a io,ns, pe
cts formed geyonclservice, as a mere member of 'the
legislative bod of such Agency (For example, acts performed by an
agency,officer."',,
W. to causes of action involving the ownership, operation or
participation of a public entity in anyway in an airport facility;
X. to liability arising ut Of or, in any wa connected with the
operat,ion of" thr cr i of eminent lomain, condlemnation
proceedings,, or mverse condemnation, by whatever named called,
wh
ty accrues directly against,the public entity, by ether such liabill I
virtue f reement, entered to by or on behalf of the public
entity;
I . a
Y. to liability arising or resuiting from any Landfill sites owned,
operated or in the control of the lic ,ntity exclept for those ..
premises operations, claims normally found In the ownership or use
of an office building.
Z. to liability arising or resulting from Hospital or Physician
Malpractice.
AA to personal injury or property damage resulting from recreational
or athletic activities or athletic contests or exhibitions
sponsored by, under the supero is ion of, or on the premises owned,
rented or controlled by a parks and recreation department of the
pub] ic entity.
CBPA4 404-
Draft 11/6/86
111111. Definitions:
When used in this benefit schedule (including endorsements forming a part
hereof)
A
A. flailrcraftle means a heavier-than-air vehicle containing an internal pow�er
0,
source and des,i I gned for the transport, of person's or property principally
in the air.
spacecraft) or
a1mraftproducts" means aircraft (including missiles or
any other, goodsor roducts manufactured, sold, handied or d*strhi , buted
services providelT11, or recommended by the Public Entityor 51by others
trading una�er his name for use in the manufacture, repair, operation,
M It A
aircraft.
ma i menan ce o r use o fa ny
Co "comp,let edop,e,ratio,n,sh,azard""' includes personal injury and property
damage arising, out of operations or reliance upon a representation or
wartantymadeatan "me with respect thereto, but only if the personal
injury or roperty amage ccurs after such operations have been
complete r aban; - oned and occurs away from premise's owned by or
rented to the, public entIty''. "Operations" include materials, parts or
equipment furnished in connection therewilth. Operations shall be
deemed completed at the earliest of the f ll ing times.
1. When all operations to be performed by or on behalf of
the Public Entity under the contract have been
completed.
2. When all operations to be performed by or on behalf of
the Public Entity at the site of the operations have been
completed, or
W'hen, the portion of the work out of which the inoury or
damage arises, has been put to its intended use gy any
person or organization other than another contractor or
subcontractor engaged in performing operations for a
11
principal as a part of the same project.
Operations which may require further service or maintenance work, or
correction, repair or replacement because of any defect or deficiency, but
which are otherwise complete shall be deemed completed.
The completed operations hazard does not include personal injury or
property damage arising out of
operattons in conn,ecti,on with the transportation of
property,, unless the Personal injury or property damage
ans
eated by thes out of a condition in, or oen a vehIcIle cr
loading or unloading thereof.
2. the existence of tools, uninstalled equipment or
abandoned or unused materials;
of t
fees, costs and ex enses and all other
D. defense costs," means attor'ney S,
ti
incurred 'in, connection wi tga ton,
fees,, costs, and expenses `th 'the invest'
a&ustment,defense and appeal of a claim or suit covered hereunder.,
J
However, "defense costs" do not include the office expenses of the Pool
COPA -1 10510
Draft 11/6/86
Alil
............
1 III
db 40
fill
P- A
I.
06 A
40 a
an
g lip
dp
w I Mil
I
COPA -1
urart I Ilb/bb
Public Enti iless committed or direttec' -he purpose of protecting
persons or �._ _perty from injury or death;
products includes yrs nlal injury and propertysin
o
ut of t Public t s products or relt"ance,upon, a representation,
4
wa rra nt'y, Mad e, at ti m le with respect, th e r to th e 1pe, rso 'n
nj fr propertydamage cc rs a frompremises owned r
re Public tit ar physical possession f ssuch r � ud s
has been relinquished to others;
M. " property damage" means physical injury to or destruction of tangible
property;
iw w • w .0w w w w w •
s
# f # # #
;", # # r #
f
OW
u
# #IW 4P# IS,#
e,711Arh"
• # #v v. .
# # ..
# # # # ! #
CEPA-1 /
Draft 11/6/86
IV. Stop -Gap Supplemer,
A. Declaration:
The Public Entity named in this program declares that he has complied
with the provisions of all workers' compensation or industrial insurance
acts, laws,, statutes of codes of the state of: Illinois
lesplect, to all employees of the Public Ent" subject to th
with r
ovis*
compuls,,ory ptions,and, if applicablethe elect* ption provision.
ive
t's
h'�
I
thereby has insured paym,ent, of all require
comZZsation and medical benefits to any, suc
emp e injured in the course, of his employment,
2. has obligated himself to report the remuneration,
number of "workmen hours" or other, required basis of
premiurn developed' by all such employe,es, to the,
department,, commission, or board as prescribed by said
acts,, laws statutes or codes.
B. Insuring Agreement:
Ila
0 0 NAM
C. Exclusions:
This supplement does not apply to:
11. bo itg In njury, disease or death suffered by a rnaster or
mem er of a crew of a, y v,es,se,l or b , any em pl of
the Public Entity in t e course, o, a,n employment
subject 't✓o the United States Longshoremen s, and
Harbor Workers' Compensation Act or the Federal
Employers Liability Act;
2. bodily, injury, d'isease or death suffered by any erson
knowing pd by, tublic 'ntity i violato, on of
any law as, to, age, or under the, age oyears
regardless of any such laws;
I bod'i, I y injury, disease or death suffered or ca used by a n y
ern loyee whose remuneration has not been included
in the total renumerration upon whichpremium for this
supplement is based;
4. aircraft operation or the performance of any duty in
4,
connection with aircraftwhile in flight;
5. an premium, assessment, penaltg, fine, benefits, or
of er obligation impo,sed y any workers'
CBPA-1 -8_
Draft 11/6/86
penslation, unemployme ompensation or
ai.aoility benefits law or under any simi'lar law;
6. anly claim for bodity in ryi, oitsease or death wilth
res wect to Which the Pu 111c Entity *is depriv,ed of any
de ense or defenses,,, or is othe rwise subJect to penalty
because of default in premium payment under or any
other failure to comply with'tht provisioinis of any act,
law, statute or code described in the declaration above.
7. any injury sustained because of any act comm itted
i nte nti o n a I ly by o r at th e directi o n of th e P u b I i c E nitity.,
None of the exclusions, of this, coverage to which this enclorsernent ii
attached apply except exclusions, and definitions applicable to th
hiazards, ofnuclear energy and other hazards thereto. I
DO i Supplement Period:
This supplement, applies ony to accidents or occurrences happening on
and after theeffective date ner,jeof and during the insurance peirl
E #i, Coverage Provisions:
None ofthe coveracle agreements,, conditions or other terms shall apply
to the benef'its afforded by this s,upplement except the following
ccjid,e,n,jtfi-or-- Occurrence,
agreements and conclition s,-,, Noti'�-ceof
Seve,riabillity of Interest, Other Insurance, Action Against Company,
Defense, Settlement,, Supplementary Paymenls,, Assistance and
Cooperation of the Insured, Notice of Claim or Sul"t,, Subrogation..
CEPA-1 -9-
Dratt 11/6/86
SECTION TWO
COMPREHENSIVE AUTOMOBILE LIABILITY
Coverage Agreements:
The Poo,lwill (ayon behalf f tu, e Entity all sums which the Public Entity
shall become legally obligated' to pay as, damages because of
A. Bodily Injury D. Nonowned Automobi le, Lia bi I ity
B Propert Damage E. Hired Automobile Liiabl I I Ity
C. Medica' Payments J. Personal Injury Protection
to which this certificate applies, caused by an occurrence and arising oUt
of the ownership, mai . ntenance, or use,,inicluding loadibigi and unloading
of'any autornobile, and the Pool shall have the
y
right, to defend ansult
a,gainst the Public Entity seeking damages on account of" siuch bodily
inju ry or property damage.,
Exclusions:
AW
d1b AW
fp's
AW
10 Ak
a low
qF
10
2. property rented to or, "in the care, custody or, control' of the
*ty
ftblic Entity,,, or to- which the PubIc Ent! Is Tor any purpose,
exercising physical controf, otherthan, property damage, to a,
ile
resid ence or pri vate ga ra g e by a pri vate, pa,,sse, n g er a uto mo bIt
cove re, d byt h i Is a,,g re e m e n
D to bodily injury or proplerty damage due to war, whether or not declared,
4,
civil war, insurrection, rebellion or revolution or to any act or condition
iW &
nctolent, to, anj of the foregoing, with respect to expenses for first aid
underthe Me ical Payments provision;
E. to bodi y, i Jury or pr damage arising out of the d-ischarge,
dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis,
toixic chem,icals, liquids, or as s, waste materials or other irritants,
contaminants or pollutants "into or upon land, the atmosphere or any
CBPA-1 4010.
Draft 11/6/86
watercour body of water; but this ex cm does not apply if such
discharge, u.,persal, release or escape is suducn and accidental.
Covered Entity:
A. the Public Entity;
B. any trustee or executiw officer thereof, but with respect to a non -
owned automobile only while such automobile is being used in the
business of the Public Entity;
C. any other person while using an owned autornobile or ited
automobile with the permission of the Public Entil,''
provided his actual,
operation or if he is not operating) is, ottier acdtua use tfie�reofis within,
the scope of such permission,, but with respect, to bodily iinj*u,ry or
o
property damage arising out of �the loading r unloaldilng the,re of,such
otherperson shall be a Public Entity only if "he is#
1. a lessee or borrower of the automobile,, or
2. an employee of the Public Entity or of such lessee or borrower;
D. any person or, organization but only with respect to his or its
4,
liaility because,other
of acts or omissions of an Public Entity under (a), (b) or
(c) above.
E. None of the following is a Public Entity:
any person whi'le engagedin the, business of his employer with
respect, to bodily, minjury, to any -fellow employee of such person
i i njured in the course, of his e ml,,pi loyment-,
2. the owner or lessee (of whom the Public Entity is a sub- lessee)
of a hired automobile or the owner of a nonowned
automobile, or any agent or employee of any such owner or
lessee;
IV 0
•
04, M dN
IV. LIMITS OF LIABILITY
1W it V& a
ow
Cove, , ge A - The limit
sche, ule as applicable to
liability for all damages,
of bodily injury liability stated in the
"each entity" is the limit of the Pool's
including damages for care and loss of
CBPA-1 -11-
46
LU" MMZ
T10 10
01; *fity of the Pool for; all damages because
Cdjve,�age B -I The total liabi 1
of' all,, property damage sustiaine,d by one or, more persons or
organizations a's the result" of any one occurrence shall not exceed
the limit of property d1arnagie liability stated in the schedule as
japplicableto each occurrence
Vw DEFINITIONS
When used in reference to this coverage:
#1 nonowned automobile" means an automobile which is neither an
owned automobile nor a hired automobile;
"awned automobile" means an automobile owned by the Named
Public Entity;
of private passenger automobile" means, a four-wheel private
passenger or station wagon -type tautornobi le;
V1. CONDITIONS
Excess - Hired and Nonowned Automobiles
With respect to a hired automobile, or a nonowned automobile, this
certificate shall be excess over any other valid and collectible insurance
avallable to the, Public Entity.
CEPA-1 - 1 2-•
601 641 6 Ill l/ 11illollf Vv
SECTION THREE
40 Illiq jl� q
THI515 A CLAIMS MADE COVERAGE PART
IT IS FURTHER agreed:
gill"
lk 1PA4
FA
1w 1w
all
All 4p
4w 'ItRe-U-1-11,II11110 its
CBPA-1 .013.
GENET CONDITIONS ALL SECTL
Inspection and Audit
F is
00
r
low—
OU
w w
Public Entity's Duties in the Event of Occurrence. Maim or Suit
z.
y
mayAL
y„
i
40
im
��
MF
IMF lop T
Draft 11/6/86
proceeds.all
provided as the, natureof the claim beto m"eis more fully known and
litigation occurs and Information
claim reasonably
nb below level scope""
rage
p cu SIMM b'' X Agency
IIF; ul°! approach
ppa o be asserted b i claimant
to tea.[ within thie,scopeof
coverages.
In addition to any notice requirements above, the following shall also
apply,
a. The Pool shall not be called upon to, assume; charge of the
settlement or defense of any claim r sultbrought , r
roc e i s i stitut'ed ai t t P licy
tit �,but t Poll
sill have tri an shallbe t' opportunity,
to
as
sociat it thePublic Entity tdefense, and' control of
any claim, suit or proceeding relative to an occurrence where
the claim or suit involves appears reasonably Iikel to
ry
volve, t e, Pool, in which event t Public Entity andthe Po ,
shall cooperate in all th n s i hdefense f suchclaim, sunt
.
r rce �
b. In the event, of an occurrence reasonably likelyto involve the
Pool; rt setting of reserve on any claim or suit including
cepa,. -14-
Draft 11/6/86
m ju Iti oeiIJairris, o,r, it arising out ie occurrence, such
40'
reserve ng fifty, percent or more of the retained I mit,; TIt"Itle
42 USC 1983 cases With reserves, of twenty five percent or more
of the retained limit; or regardless of reserve, any occurrence
involving:
1. one or more fatalities,,
2. Loss of a limb,
I Loss of use, of any sens,o,ry organ,
4. Q1uadrT' leg i a o r, pa ra p I egi a
5. it burnse , involving ten percent or more of the
Thd gree
body,
4,
6Se
. riousfacia! disfigurement,
7. Paralysis;
I Ok f
do
4W
e. In the event that the amounL of ultimate net loss becomes
certain either through trial court judgment or agreement by
the Public Entity, the claimant and the Pool as being in excess
of the, Pu b 1 *1 cEntity's Reten ti, o n p e r occu rre n ce, th en th e Pui b 1 *1 C
E nt'�tfmay pay -the amount of ultimate net loss to the clairnant
toect, settlement and the Pool will, upon request of the,
Pub!'[c Entity,,, make such, payment to, the cls aiman't on behalf of
the, Publ'tc Entity any parentsf fn excess of the retained limits
*I*ty, up t, e r u,
of, 11'abi 1 o the fu I'm stated in the Declaration with
respect to each cicturrenice subject to the limit in the
aggregate where applicable for c annual period during
the currency of this coverage.
f., The Public Entity sball not, m'ake any payment, settlement or
admission of liabl I I" 'y in riespect of any cla'im f'o,r injury or
disease for which the Pool may be, I w)"tMut, the prior
consent of the Pool.
C8PA-1 -is-
0
C. Appeals
0 4W
Ok
KAM ej 04 ff
Wr
ff
D. Action Against The Pool
L.$IdIL I IJU/00
Ull
lop
10
Bankruptcy or insolvency of the Public Entity shall not relieve the Pool of any
of its obligations hereunder.
E. Other Coverage
If collectible co,veragewith any otherins urer is available to the Public Entity
covering a losis also, covered, hereunder, (whether on a primary', excess, or
contingent basis), the certificate here,under, shall be in excess fin shall not
contr"bute, w,*th I I
I I , such other cert"ficate; provided that this clause does not
apply with respect to excess coverage purchased specifically to be in excess of
this benefit schedule.
F. Subrogation
The Poo] shall be subrogated to the extient, of any payment hereunder to all
the Public Entity's rights of recovery therefor; and the Public Entity shall do
CBPA-1
:01
CRPA-1
nothing after loo, prejudice such rights, and sF lo everything necessary to
s,ecur e such rig h ny amount so recovered shc-L app(ortioned as follows:
I ararw
211 :4 1,
Changes
Assignment
dab
Cancellation
A
This coverage may be canceled by the Public Entity, auring the first year bY
115)nfifteen---1--1-
viq written notce to the Cairman ote ord of"'Dirctors, wi in days after theiclose oft ehf rst fiscal f earh. BInaddition,ecancellation can be
effective midterm at the date that theyPool requires the Public Entity to
execute documents providing for their retirement or repayment of a debt
instrument.
This, coverage may 'be canceled by the Pool by malting written notice to the
Plublic Entity stating when, not less than thirty 00) days thereafter, such
cancellation sha'11 become effective. 'Such cancellation may be carried out for
one or more of the following reasons:
1. Failure to make any payments due to the Agency.
2. Failure to undertake or continue loss reduction and
prevention procedures adopted by the Agency.
3. Failure to allow the Agency reasonable access to all facilities of
the Member and all records which relate to the purpose or
powers of the Agency.
4. Failure to furnish full cooperation with the Agency's
attorneys, cla, ims administrator and any agent, employee,
is
off" icer, or independent contractor of the Agency.
Draft 11/6/86
54, Furnish inc, ..t financial, claims history o,, information
to the Agency.
6. A h isto r oof excessive pending or closed claims or losses which
in the agslute discretion of the Board of Directors creates an
unacceptable risk of similar adverse future claims or losses.
7. Failure to carry out any obligation of a Member which impairs
the ability of the Agency,, to carry out its purpose or powers.
If the Public Entity or the Pool cancels, earned premium will be computed on a
pro rata basis.
J. Territory
This coverage applies only to claims occurring:
14
An ' ywherein the, world provided the original suit for such damage is brought
Within the United States of America, its territories or possessions, or Canada.
K. Cumulation of Limits
An '"occurrence" w�ith a duration of rnore than one coverage period shall be
treated as a! single "'occurrence"' arising cluring the coverage period when the
10occurrence" begins*
CEPA-1 .018.
Village of Mount Prospect
Mount Prospect, Illinois
INTEROFFICE MEMORANDUM
TO: Michael E. Janonis, Acting Village Manager
FROM: David C. Jepson, Finance Director
DATE:
November 18, 1986
SUBJECT., Revenue Sources
One of the on-going concerns of many elected officials and municipal
administrators is the issue of determining the appropriate revenue sources to
be used for financing municipal services. Property taxes, sales taxes, other
special taxes, licenses and permits, user fees, intergovernmental revenue, and
a number of other sources are all commonly used by Illinois municipalities.
However, two questions that need to be addressed on a recurring basis are:
"How much revenue should be provided?" and, "What is the right 'mix' of
revenues between the sources that are available?"
0
The answer to the first question is directly related to the types and levels
of services provided, and the effectiveness with which those services are
delivered. The answer to the second question is often related to the economic
makeup of the community, but there are also outside influences, i.e., actions
by the Federal and State governments, which can affect the desired balance.
Specifically, the elimination of Federal Revenue Sharing will require a change
in the 'mix' in most communities.
Both questions are routinely addressed in the annual budget process. However,
in
n view of the changes that are taking place on the Federal level and changes
that have occurred at the local level, it appears that this is an appropriate
time to review revenue sources that- may be available to the Village of Mount
Prospect,
In this report, I will review the revenue sources currently being used by the
Village, other revenues that are commonly being used by other Illinois munici-
palities, and finally, I will compare Mount Prospect's revenues with those of
our neighboring communities, Arlington Heights and Des Plaines.
Current Revenue Sources
On the following page is a listing of the revenue sources that provided the
financing for Village services for the fiscal year ended April 30, 19866 The
listing includes the actual amounts received as well as specific amounts on a
per capita basis and as a percentage of the overall total:
VILLAGE OF MOUNT PROSPE
Statement of Revenues
General Governmental Purposes (1)
For the Fiscal Year Ended April 30, 1986
Taxes:
Property Taxes
Sales Taxes
Other Taxes
Total Taxes
Licenses and Permits:
Total
Per Capita
0/ /0 of
Amount
Amount
Total
$ 3,7531177
$ 70.30
27.1
41412t328
82*64
31.9
'192 199
t
3e60
1 e4
T-8 1 11 .
X357,7
15 6 * 5 4
60.4°d
Vehicle Licenses
606,1,9'36
$ 11 937
4.4 0"
Business Licenses
78t282
1e47
0*5
Liquor License's
105t650
1e97
008
Other Licenses
1,29830
e24
001
Permits
271102.060
5,06
1,99
Total Licenses/Permits
N Ow
$ 11073,758
20olil
/0
7,70"
Fees For Services:
Water Administration
$ 120,000
2e25
009/001
Franchise Fees
227,311
4.21
1*6
Other Services
127,139
2.38
009
Total Fees
TF*� 474,9450
8 * 891
3.40/0"
Fines and Forfeits:
Local Fines
110 252
2.07
0*8%
Circuit Court
171.0 975°
3.20
1.2�
Total Fines
28 1'
5*27
2 0 0%
Intergovernmental;
State Income Tax
$ 191779664
$ 22*06
8.5°a"
Motor Fuel Tax
878,382
16e45
6e3
Revenue Sharing
2909029
5,43
291
CDBG Grant
545,373
10e21
3e9
Other Grants
Total Intergovernmental
6811,147
2., 9,-5- 9-- 1559 5
1, 280,6
$ 55*43
21e4%
Investment Income:
$ 318,590
$ 5*97
2.3°0
Other Income:
Reimbursements
2, 0 1118 7'
$ 3 a 77
1,.5%
Miscellaneous Income
1791343
3*35
1 *3
Total Other Income
$7– 3809530
$ 7 2
2
Total Revenue
1 45 8541,
59o33
100001/00,
�1} General Fund, Special Revenue Funds, and Debt Service Funds
excluding Library Revenues
Revenue Sources
Page 3
From the Village's Statement of Revenues, it can be seen that Mount Prospect
relies heavily on property taxes, sales taxes, and intergovernmental revenue.
These three revenue sources make up 80°0 of our total revenue. This
percentage is also consistent with prior years' experience as our average
percentage from these three sources over the past five years has been 81.3°0'.
Property Taxes and Sales Taxes are the predominant revenues for the Village.
The Village has a strong property value base that has increased consistently
over the past ten years. Equalized Assessed Valuation of property in Mount
Prospect has increased from $212,910,999 in 1975 to $517,263,736 in 1985, for
a 10 year increase of 143/10. The result has been a fairly stable tax rate,
especially over the past five years. Sales taxes have increased over the last
ten years at a compounded annual rate of over 7°a . In 1975/76 sales taxes
produced $2,195,009 compared to $4,412,328 in 1985/86. It should be mentioned
that Sales tax receipts are especially important as they are the only elastic
revenue which is used to provide general governmental services.
Intergovernmental Revenues have also been an important source of financing for
the Village. State Income Tax and Motor Fuel Tax are State -shared taxes,
whereas Revenue Sharing and the CDBG Grant are Federal entitlements. Even
though Intergovernmental Revenues are an important source of revenue, the
Village has little control over the amounts received. The termination of the
Revenue Sharing Program is a good example of how unreliable this source can
be. The elimination of Federal Revenue Sharing will require a change in the
mix of revenues the Village has been utilizing.
Licenses and Permits make up 7.7°0' of the overall total with vehicle licenses
providing 4.4914, or just over $600,000. Permit revenue was considerably higher
in 1985/86 than in previous years, with the total value of construction during
the year greater than the four previous years combined. Accordingly, Permit
revenue is highly dependent on the level of construction activity. The other
four categories: Fees for Services, Fines and Forfeits, Investment Income,
and Other Income, make up the remaining 10.51/0" of the Village's general
revenue.
It should be mentioned that increases have recently been adopted for Vehicle
Licenses, Business Licenses, and Liquor Licenses. These increases should
produce approximately $225,000 additional revenue in the 1986/87 fiscal year.
Other Revenue Sources
The general authority for developing revenue sources for home rule munici-
palities is found in the 1970 Illinois Constitution. Article VII, Section 6
(a) provides, in part, that
"...a home rule unit may exercise any power and perform
any function pertaining to its government and affairs
including but not limited to, the power to regulate for
the protection of the public health, safety, morals and
welfare* to license; to tax; and to incur debt."
Revenue Sources
Page 4
It has been determined that under the 1970 Constitution, home rule munici-
palities have a broad general, power to t,ax. A home rule municiPality,
,t wishes protaxa sales
therefore, can impose any '- perty s,0 kind of taxes I
taxes, use taxes, inheritance taxes, motor vehicle taxes, tobacco products
taxes, hotel/motel taxes, per capita head taxes, leasing taxes, admission
taxes, wheel taxes, gasoline taxes, public utility taxes and amusement taxes,
provided that such taxes are not based on or measured by income, earnings, or
occupations e
Additionally, home rule municipalities have a broad grant to license for
regulation of the public good. However, local regulation of certain
professions is specifically prohibited by statute, and registration and
license fees are limited to sums which bear a reasonable relationship to the
costs of enforcement and regulation e
The Constitution does not address user fees, but it is implied from the grant
of broad powers that a municipality can impose user fees of almost any type.
Although a home rule municipality has the authority to impose a wide variety
of taxes and fees, there is a somewhat limited number of other revenue sources
that are commonly being used by other communities. Northern Illinois
University recently conducted a revenue survey of 188 Illinois municipalities.
In that study, the following commmonly used special taxes and licenses and
user fees were reported:
Special Taxes
Food & Beverage Tax
Local Sales Tax
Hotel/Motel Tax
Real Estate Transfer Tax
Utility Taxes
License/User Fees
Business Licenses
Liquor Licenses
Vehicle Licenses
Ambulance Fees
Garbage Fees
A brief explanation of these revenue sources which are not being used by the
Village of Mount Prospect follows:
Food and Beverage Tax The Food and Beverage Tax is a tax imposed upon
the purchase of prepared food or alcoholic liquor at a restaurant or
liquor establishment and upon the purchase of alcoholic liquor at retail.
The tax is often considered a privilege tax or luxury tax because the
items purchased are not necessities. During 1985, the State of Illinois
reported sales from Drinking and Eating Establishments in Mount Prospect
o f $ 34 9 611 9 000. This does not include sales from retail businesses such
as a grocery store, which are not classified as a Drinking or Eating
Establishment but which sell alcoholic beverages at retail. Based upon
this *information, it is estimated that a Food and Beverage Tax would
produce revenue of approximately $450,000 for each 11/0' tax.
Revenue Sources
Page 5
Local Sales Taxes Local sales taxes can be imposed on retail sales in
addition to the 1%0 municipal tax collected by the State of Illinois. The
1 of
/a municipal tax collected by the State is expected to produce $4,600,000
during the 1986/87 fiscal year. As a result, it is relatively easy to
determine the additional revenue that could be realized by the adoption
of an additional sales tax. It should be pointed out that this type of
tax is not commonly used in the Chicago suburban area and is difficult to
administer,
Hotel/Motel Tax
The Hotel/Motel Tax is a tax added
on to
the room
rate of the hotel or
motel. The most common rate charged
is 3010f.
It is
difficult to estimate
the revenue a tax like this would produce
in Mount
Prospect, but with
a 3/10 rate it could be in the range
of $20,000 to
$40,000. The tax is fairly easy to administer because
of the
limited
number of businesses
involved. Additionally, this tax is
usually
paid by
individuals who are
not residents of the Village,
Real Estate Transfer Tax The Real Estate Transfer Tax is a tax
imposed on the sale of real property. The tax is usually assessed
against the seller and generally ranges from .05/10to .25/'G' of the selling
price. Recent real estate sales statistics indicate that the average
selling price of a home in Mount Prospect is just over $108,000. A .251,0'
tax would amount to $270 on the average real estate sale and would
produce an estimated $125,000 to $150,000 annually. The tax is
relatively easy to administer because it must be paid before the title
can be recorded,
Utility Taxes The Utility Tax is the most common special tax used by
Illinois municipalities . The rates vary from 1,10' to 5'/0' and have been
imposed on gas, electric, telephone, and water. Average revenues on a
per capita basis are $4.00 for gas, $5.00 for electric, $2.00 for
telephone, and $.60 for water for each 11.-0 of tax imposed. It is an easy
tax to administer because it is collected by the utility companies.
However, it should be mentioned that it is possibly the most regressive
tax imposed, because it taxes basic necessities,
Ambulance Fees In the revenue study conducted by Northern Illinois
University mentioned above, 104 of the 188 municipalities surveyed
provided ambulance services. Of those 104, that provided the service, 69
charged a fee with the average fee being $63. An ambulance fee, is an
ideal user fee because the user of the service is readily identifiable.
The ambulance fee is also one fee that has a minimal effect on residents,
because the fee is usually reimbursable by Medicare or private health
insurance. If 2,000 of the 21500 ambulance service calls provided by the
Mount Prospect Fire Department were billable at $60 per call, and if 75 o'
of the charges were collected, it could result in net revenue of
approximately $90,000 per year. It should be mentioned that there is a
significant amount of clerical work involved in billing and collecting
ambulance fees,
Revenue Sources
Page 6
Refuse Disposal Fees Municipalities finance garbage collection either
through fees or property taxes or a combination of both. Additionally,
residents of some communities pay a fee directly to a private contractor.
In the Revenue Study mentioned above, 78 of the municipalities f inanced
garbage disposal through property taxes and 93 reported that they charged
a user fee. In our neighboring communities, Des Plaines charges a fee
and Arlington Heights residents pay the contractor directly.
The collection of a refuse disposal fee could be accomplished by adding
the charge to the water bill. It would be an efficient way to collect
the fee with costs estimated in the range of 3/10' to 5*1' of the amount
collected. A fee of $6.00 per month for single-family and $3.00 per
month for multi -family units could produce $1,200,000 annually.
The above revenue sources are not all-inclusive but they are representative of
some of the other types of revenue being collected by other municipalities.
Comparison of Mount Prospect, Des Plaines, and Arlington Heights
In response to the questions of "How much revenue should be provided?" and
"What is the right mix of revenues?" each municipality is unique. The answers
to these questions usually reflect the philosophy of elected officials and
administrators and the economic makeup of the community. Nevertheless, I
thought 4-t would be worthwhile to compare the revenue sources of the Village
of Mount Prospect with Des Plaines and Arlington Heights. Attached Exhibit 1
is a comparison of revenue sources for the three communities based on the
total amount of revenue received, per capita revenue, and each revenue
category as a percent of the overall total.
In a comparison such as this, the total dollar amounts and the percentages can
be somewhat misleading because of the differences in population. As a result,
I believe the per capita amounts are more comparable. A review of Exhibit 1
indicates that there are a number of similarities. For example, Property
Taxes are at $70.30 per capita for Mount Prospect, $74.71 for Des Plaines, and
$75.45 for Arlington Heights. Also, Vehicle Licenses are $11.37, $11.20, and
$11.03, respectively. And Intergovernmental Revenues are $55.43, $50.22, and
$54.43 for the three communities.
However, there are a number of significant disparities. The most obvious
difference is the total revenue amount with the per capita amount in Mount
Prospect at $259.33, Des Plaines at $333.14 and Arlington Heights at $336.96.
Some of the other differences can be seen in the following categories:
Revenue Sources
Page 7
Des Plaines
Sales Tax
Other Taxes - Including
Road & Bridge Tax, Hotel/Motel
Auto Leasing Tax and
Real Estate Transfer Tax
Business Licenses
Garbage Service Fee
Fines and Forfeits
Investment Income
Other Income
Arlington Heights
Sales Tax
Other Taxes - Including
Tax Amusement Tax and
Hotel/Motel Tax
Business Licenses
Permits
Water Admin. Fee
Other Services - Including
Ambulance Service Fee
Investment Income
Other Income
Some of these differences are, obviously due to the economic makeup of the
individual community. Sales Taxes, Hotel/Motel Taxes, the Auto Leasing Tax,
and Business Licenses are directly related to the types and level of
commercial activity in the community. The Amusement Tax is dependent on a
unique facility and unusually high Permit Fees indicate substantial building
activity. Even Investment Income is unique because it is a function of
the cash balances that are maintained.
One of the noteworthy revenue sources in Des Plaines is the Garbage Service
Fee. This revenue is obtained by billing single-family residents and multi-
family units of up to four units a monthly fee of $5.5'x. The total revenue
produced in 1985 was $988,000 or $17.32 per capita. There is a notable
exception of this category for Mount Prospect and Arlington Heights. Mount
Prospect's means of financing refuse collection costs of some $1,200,000 are
included in the property tax amount. In Arlington Heights, this amount is not
included because each resident is billed directly by the refuse disposal
contractor. If the financing for this service would be included in Arlington
Heights' revenue sources, I think it is safe to say that it would add
approximately $20.00 per capita to their overall total.
The amount of revenue collected by a municipality does not guarantee the level
of services that will be received by the residents of that particular
community. Nor does it guarantee the quality of the life in that community.
However, I believe that the comparison presented does indicate the "leanness"
of Mount Prospect's revenue sources and the relative value of the services
received by Mount Prospect residents.
Revenue Sources
Page 8
In conclusion, we have seen that the Village ■of Mount Prospect relies heavily
on Property Taxesq Sales Taxes and IntergovernmentRevenue
al as its primary
sources of revenue. As circumstances change, such as the elimination of
Federal Revenue Sharing or with the addon of new projects or programs, the
"mix" of revenue sources needs to be re-examined. Some user fees have been
increased for the 1986/87 fiscal year and some others could be increased.
Additionally, it was pointed out that there are some special taxes and user
fees that are being used by other municipalities that could be adopted by the
Village. Finally, a comparison of revenues with Arlington Heights and Des
Plaines shows a much lower per capita amount being collected 'in Mount Prospect
than in our neighboring communities.
The amount of information provided in this report is of necessity limited, but
I will be happy to provide any additional information that may be required.
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