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HomeMy WebLinkAbout3193_001COMMITTEE OF THE WHOLE A G E N D A Meeting Location: Meeting Date and Time: Board Room, 2nd Floor Tuesday, July 28, 1981 Public Safety Building 7:30 P.M. 112 East Northwest Highway CALL TO ORDER - ROLL CALL II. ACCEPTANCE OF MINUTES OF JULY 14, 1981 III. XYTEL INDUSTRIAL REVENUE BOND REQUEST The Xytel Corporation, a privately held firm, has made application for $2,000,000 for the issuance of Industrial Revenue Bonds. $1;500,000 would be used for the purchase of the land and the building, $400,000 for the purchase of equipment and the remaining $100,000 for fees from other project costs. The Xytel Corporation develops model process systems for energy research. There will be no manufacturing or fabrication of a nature to cause any environmental concerns. The Xytel Corporation hopes to locate in the Rauenhorst Industrial Development area and Rauenhorst supports the concept of Industrial Revenue Bonds and has offered a lease agreement to Xytel. Xytel Corporation has been in business for approximately 7k years and is privately held. As such, they are not required by law to have an audit which is a requirement i1aly of our local ordinance #2925. They have submitted, instead, a financial balance sheet which is attached. In the absence of an -audit, a CPA statement covering the balance ' sheet has the standard disclaimers regarding the content of.the data. The Board will have to consider whether or not the absence of three years of formal audits is significant enough to dis-allow.--the application. Additionally, the Board should question the financial ability of the Corporation to assume an additional expense of some $200,000 to $300,000 for the debt retirement of $2,000,000 Bond issue. The current profitability of the Corporation is approximately $100,000 per year which is 5.5% of total sales. It is the Manager's opinion that a significant increase in sales would be required in order to meet the debt service. I Finally, in reviewing the lease agreement between Rauenhorst and Xytel, it is not clear to the Manager as to whether or not Xytel intends to lease the premises or purchase the premises. If the premises is purchased, then the receipts from the Industrial Revenue Bonds would likely be used for that purchase. If, however, the property is to be leased, then the Corporation could invest the receipts of the Bond issue during the lease period to generate additional capital from the difference between the interest rate of the investment and that payable on the Tax Exempt Bonds. The Manager questions this latter approach as to whether or not that might be an abuse of Industrial Revenue Bonds. Attached for your information are the financial state- ments of Xytel, a draft Memorandum of Agreement, a draft Resolution, the application, and other explanatory material. Copies of these materials have been in the hands of our Attorneys and they are of the opinion that if as a matter of policy the Board would desire to proceed with the Issue, that would require the tightening of certain language provisions. IV. IRMA CLAIMS/COST REVIEW Since June of 1979, our liability, property and Workers' Compensation insurance has been provided through the Intergovernmental Risk Management Agency. As requested by the Board, the staff is prepared to review the entire program and the Village's loss experience. An extensive report on the history of IRMA, its costs, loss prevention program, and claims administration is attached. On the basis of these reports, it is clear that the majority of claim dollars (84%) paid in the past two years has been directly to the Village for damage to Village vehicles, property, or to Village employees as Workers' Compensation benefits. The balance (16%) has been paid to individuals for claims against the Village or paid as legal fees and administrative costs, it is the policy of IRMA to vigorously investigate all claims and to pay only those that can be thoroughly substantiated. IRMA has also subrogated claims to insurance companies which may be involved in suits or accidents with the Village. To date, more than $10,000 has been recovered on our behalf. During the time IRMA has been handling our coverage, we have had a number of large claims including a Workers' Compensation death claim, 4 totalled squad cars, 2 substantial property damage claims and I major Workers' Compensation injury. Most of the claims made against the Village are minor in nature and, therefore, fall below the $1,000 deductible level. During the 2 years of experience with IRMA, we have paid $56,931.23 in deductible payments. In originally establishing the IRMA program, we had estimated that our annual deductible expense would be $35,000. Obviously the number of deductibles and their amounts are less than anticipated originally. In addition, the atta"ched report provides information about the Village's 1 ' oss prevention program, claims administration and an analysis of major claims. In addition to Mrs. Peppler being available for the meeting, we have invited Mr. Edward Hansen, Risk Manager for IRMA, (Reports attached.) V. EMPLOYEE HEALTH AND LIFE INSURANCE The Village is currently insured with Connecticut VMMMUMMMMM General for life and health insurance for all full-time employees and their dependents. For this coverage, we are experience -rated; that is, our premium is based on the claims paid in benefits. We currently pay $123.76 for health insurance coverage for an employee with dependents. As the time came for premium rate review, we instructed our brokers, Arthur J. Gallagher, to investigate the possibility of other carriers and self-insurance. Initially, it appeared that setting up a self-insurance program would be the most cost-effective alternative; based on our experience, however, Connecticut General has extended aur current rates until May 1, 1982. This presents us with a projected annual cost of $338,066. ,The staff recommends that we continue with Connecticut General and our current policy while continuing to investigate self-insurance and other markets for next year. (Letter attached.) VI. MANAGER'S REPORT 1. Tree Farm Estates Update 2. Joint Action Water Agency Update 3. Citizens Utilities Industrial Revenue Bond Update VII. ANY OTHER BUSINESS VIII.ADJOURNMENT DEFERRED ITEMS Zoning Ordinance Administrative Update Development Code Administrative Update Capital Facilities Planning Liquor License Code Electronic Games Emergency Vehicle Response Policy Self -Service Gas Stations