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1986-044ORDINANCE NO. 86 -44 ORDINANCE PROVIDING FOR THE ISSUANCE OF $3,300,000 OF CORPORATE PURPOSE BONDS, SERIES 1986, OF THE VILLAGE OF BUFFALO GROVE, COOK AND LAKE COUNTIES, ILLINOIS, AND PROVIDING FOR THE LEVY OF A DIRECT ANNUAL TAX FOR THE PAYMENT OF PRINCIPAL OF AND INTEREST ON THOSE BONDS. BE IT ORDAINED BY THE PRESIDENT AND BOARD OF TRUSTEES OF THE VILLAGE OF BUFFALO GROVE, COOK AND LAKE COUNTIES, ILLINOIS, AS FOLLOWS: Section 1. It is found and declared by the President and Board of Trustees of the Village of Buffalo Grove, Cook and Lake Counties, Illinois (the "Village "), as follows: (a) It is necessary and in the best interests of the Village to undertake a program of additions to, improve- ments to and extensions of the public works and public facilities in the Village, (the "Public Works and Facilities Program ") for the betterment of the Village. The Village presently estimates the total cost of that program, including engineering costs, administrative costs, construction costs and costs of financing, to be approximately $3,300,000. (b) The Village does not have sufficient funds on hand or available from other sources with which to pay the costs of its Public Works and Facilities Program and to pay the Village's own costs in connection with that purpose and in connection with the borrowing of money as described in this Ordinance. • (c) It is in the best interest of the Village to issue $3,300,000 principal amount of its general obligation corporate purpose bonds, as provided in this Ordinance, to pay the costs of the Public Works and Facilities Program. (d) The borrowing of the sum of $3,300,000 and the issuance of general obligation corporate purpose bonds of. the Village in that amount for the purpose of paying the costs of the Public Works and Facilities Program, pertains to the government and affairs of the Village, is for a proper public purpose of the Village and is in the public interest. Section 2. The sum of $3,300,000 shall be borrowed by the Village for its corporate purposes, including (a) paying costs of the Village for its Public Works and Facilities Program described in Section 1 above and (b) paying costs of the Village in connection with that purpose and with the issuance of the bonds authorized by this Ordinance, including the fees of a bond registrar, paying agent and transfer agent. In evidence of such borrowing, negotiable bonds of the Village in the aggregate principal amount of $3,300,000 (the "Bonds ") shall be issued as provided in this Ordinance.. The Bonds shall be issued only in fully registered form without coupons in the denominations of $5,000 and integral multiples of that sum. The Bonds shall be designated "Corporate Purpose Bonds, Series 1986" and shall be numbered consecutively from R -1 upward but need not be authenticated or delivered in consecutive order. -2- 9 0 Bonds authenticated and delivered prior to July 1, 1987 shall be dated as of July 15, 1986. Bonds authenticated and delivered on or after July 1, 1987 shall be dated as of the January 1 or July l next preceding the date of their authentication and delivery to which interest has been paid, except Bonds authenticated and delivered on a January 1 or July 1 to which interest has been paid, which Bonds shall be dated as of that January 1 or July 1. The Bonds shall mature on January l in each of the years and amounts and shall bear interest from their date until paid at rates per year as follows: Maturing (January l) Amount Maturing Interest Rate 1989 $ 85,000 9.00% 1990 95,000 9.00 1991 100,000 9.00 1992 110,000 9.00 1993 120,000 9.00 1994 135,000 7.60 1995 140,000 7.10 1996 155,000 7.20 1997 165,000 7.30 1998 175,000 7.40 1999 190,000 7.50 2000 205,000 7.50 2001 220,000 7.50 2002 240,000 7.50 2003 260,000 7.55 2004 280,000 7.60 2005 300,000 7.65 2006 325,000 7.70 Interest on the Bonds shall be payable on January l and July 1 in each year, with the first interest payment date being July 1, 1987. Interest shall be computed on the basis of a 360 -day year of twelve 30 -day months. -3- LJ Bonds maturing on January 1 of each of the years 1989 through 1996, inclusive, are not redeemable prior to their maturity. Bonds maturing on January l of each of the years 1997 through 2006, are redeemable prior to their maturity at the option of the Village, in whole or in part and if in part in the inverse order of maturity, on any interest payment date on or after January 1, 1996, at par plus the respective redemption prices (expressed as a percentage of the principal amount of the Bonds to be redeemed) set forth below, plus in each case accrued and upaid interest to the date of redemption: Date of Redemption Redemption Prices January 1, 1996 through December 31, 1996 103.0% January 1, 1997 through December 31, 1997 102.0% January 1,1998 through December 31, 1998 101.0% January 1, 1999 and thereafter 100.0% If less than all the Bonds of any maturity are to be redeemed on any redemption date, the Bond Registrar appointed in this Ordinance shall assign to each Bond of the maturity to be redeemed a distinctive number for each $5,000 of principal amount of that Bond. The Bond Registrar shall then select by lot from the numbers so assigned, using such method as it shall deem proper in its discretion, as many numbers as, at $5,000 per number, shall equal the principal amount of Bonds of that maturity to be redeemed. -4- Notice of the redemption of any Bonds, which by their terms shall have become subject to redemption, shall be given to the registered owner of each Bond or portion of a Bond called for redemption not less than 30 or more than 60 days before any date established for redemption of Bonds, by the Bond Registrar, on behalf of the Village, by registered or cer- tified mail sent to the registered owner's last address, if any, appearing on the registration books kept by the Bond Registrar. In the case of a Bond to be redeemed in part only, the notice shall specify the portion'of the principal amount of the Bond to be redeemed. The mailing of the notice specified above to the registered owner of any Bond shall be a condition precedent to the redemption of that Bond, provided that any notice which is mailed in accordance with this Ordinance shall be conclusively presumed to have been duly given whether or not the owner received the notice. The failure to mail notice to the owner of any Bond,.or any defect in that notice, shall not affect the validity of the redemption of any other Bond. Each Bond shall be executed by the manual or facsimile signature of the Village President and the manual or facsimile signature of the Village Clerk and shall have the corporate seal of the Village affixed to it (or a facsimile of that seal printed on it). The Village President and the Village Clerk (if they have not already done so) are authorized and directed to file with the Illinois Secretary of State their manual -5- signatures certified by them pursuant to the Uniform Facsimile Signatures of Public Officials Act, as amended, which shall authorize the use of their facsimile signatures to execute the Bonds. Each Bond so executed shall be as effective as if manually executed. In case any officer of the Village whose signature or a facsimile of whose signature shall appear on the Bonds shall cease to be such officer before authentication and delivery of any of the Bonds, that signature or facsimile signature shall nevertheless be valid and sufficient for all purposes, the same as if the officer had remained in office until delivery. No Bond shall be valid for any purpose unless and until a certificate of authentication on that Bond sub- stantially in the form set forth in the bond form in Exhibit A of this Ordinance shall have been duly executed by the Transfer Agent appointed below. That certificate upon any Bond shall be conclusive evidence that the Bond has been authenticated and delivered under this Ordinance. The Bonds shall constitute the general obligations of the Village. The full faith and credit of the Village are pledged to the payment of the principal of and interest on the Bonds. Continental Illinois National Bank and Trust Company of Chicago, Chicago, Illinois, is appointed Paying Agent, Transfer Agent and Bond Registrar for the Bonds. The Village M-M • President and Village Clerk are authorized and directed to execute in the name of and on behalf of the Village the Agency Agreement dated as of July 21, 1986 between the Village and the Transfer Agent substantially in the form of Exhibit B to this Ordinance. The Bonds shall be payable in lawful money of the United States at the principal corporate trust office of the Paying Agent. The principal of each Bond shall be payable at maturity upon presentment of the Bond at the principal cor- porate trust office of the Paying Agent. Interest on each Bond shall be payable on each interest payment date by check or draft of the Paying Agent mailed to the person in whose name that Bond is registered on the books of the Bond Registrar at the close of business on the 15th day of the month preceding that interest payment date. The Bonds shall be negotiable, subject to the follow- ing provisions for registration and registration of transfer. The Village shall maintain books for the registration of the Bonds at the principal corporate trust office of the Bond Registrar. Each Bond shall be registered on those books. Transfer of each Bond shall be registered only on those books upon surrender of that Bond to the Bond Registrar by the registered owner or his or her attorney duly authorized in writing together with a written instrument of transfer satis- factory to the Bond Registrar duly executed by the registered owner or his or her duly authorized attorney. Upon surrender -7- • • of a Bond for registration of transfer, the Village shall execute and the Transfer Agent shall authenticate and deliver, in the name of the transferee, one or more new Bonds of the same aggregate principal amount and of the same maturity as the Bond surrendered. Bonds may be exchanged, at the option of the registered owner, for an equal aggregate principal amount of Bonds of the same maturity of any other authorized denomina- tions, upon surrender of those Bonds at the principal corporate trust office of the Bond Registrar with a written instrument of transfer satisfactory to the Bond Registrar duly executed by the registered owner or his or her duly authorized attorney. In all cases in which the privilege of exchanging or transferring Bonds is exercised, the Village shall execute, the Transfer Agent shall authenticate, and the Bond Registrar shall deliver, Bonds in accordance with the provisions of this Ordinance. All Bonds surrendered in any exchange or transfer shall be cancelled immediately by the Bond Registrar. For every exchange or registration of transfer of Bonds, the Village or the Bond,Registrar may make a charge sufficient to reimburse it for any tax, fee or other govern- mental charge, other than one imposed by the Village, required to be paid with respect to that exchange or transfer, and pay- ment of that charge by the person requesting exchange or registration of transfer shall be a condition precedent to that exchange or registration of transfer. No other charge may be MM • 0 made by the Village or the Bond Registrar as a condition precedent to exchange or registration of transfer of any Bond. The Bond Registrar shall not be required to exchange or register the transfer of any Bond after notice of redemption of that Bond or any portion of that Bond has been mailed, or during the 15 days next preceding mailing of a notice of redemption of Bonds. The Village, the Paying Agent and the Bond Registrar may treat the registered owner of any Bond as its.absolute owner, whether or not that Bond is overdue, for the purpose of receiving payment of the principal of or interest on that Bond and for all other purposes, and neither the Village, the Bond Registrar nor the Paying Agent shall be affected by any notice to the contrary. Payment of the principal of and interest on each Bond shall be made only to-its registered owner, and all such payments shall be valid and effective to satisfy the obli- gation of the Village on that Bond to the extent of the amount paid. The Bonds shall be in substantially the form set forth in Exhibit A to this Ordinance. Section 3. The offer of Continental Illinois National Bank and Trust Company of Chicago (the "Purchaser ") to purchase the Bonds at a price of $3,300,603.65, plus accrued interest to the date of delivery, is accepted, and the Village President is authorized and directed to execute the Bond Purchase Agreement dated July 21, 1986 between the Village and the Purchaser substantially in the form of Exhibit C to this Ordinance in the name of and on behalf of the Village. The prior distribution of the preliminary Official Statement of the Village dated July 21, 1986 in the form of Exhibit D to this Ordinance, and all other actions of the Village relating to the offering, issuance and sale of the Bonds are hereby ratified, confirmed and approved. The final Official Statement of the Village substantially in the form of Exhibit E to this Ordinance is approved. The Village President is authorized to execute that Official Statement in the name of and on behalf of the Village and to deliver the Official Statement to the Purchaser. Section 4. The Bonds shall be executed as provided in this Ordinance and delivered to the Village Treasurer or its designee who shall deliver them to the Transfer Agent. The Transfer Agent is directed to authenticate the Bonds and deliver the Bonds to the Purchaser upon receipt of the purchase price for the Bonds. The Village President and the Village Clerk are authorized and directed to execute and deliver the Bonds and to take all necessary action with respect to the issuance, sale and delivery of the Bonds, all in accordance with the terms and procedures specified in this Ordinance. Section 5. There is levied a direct annual tax upon all taxable property within the Village sufficient to pay and discharge the principal of the Bonds at maturity and to pay -10- interest on the Bonds for each year, including specifically the following amounts for the following years: Year of Levy 1986 (including interest through January 1, 1988) 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 An Amount Sufficient to Produce the Sum of: $372,970.53 340,265.00 342,615.00 339,065.00 340,065.00 340,165.00 344,365.00 339,105.00 344,165 00 343,005.00 340,960.00 343,010.00 343,760.00 343,385.00 346,885.00 348,885.00 349,255.00 347,975.00 350,025.00 That tax shall be in addition to all other taxes levied by the Village. If at any time sufficient funds are not on hand from amounts derived from this tax levy to make a payment of interest or principal on the Bonds as it becomes due, that payment shall be made from the general funds of the Village. Those general funds shall be reimbursed from the amounts derived from the taxes levied by this Ordinance when those amounts shall be on hand (and not needed for paying other payments of interest or principal then coming due on the Bonds). Section 6. The Village Clerk is directed to file a certified copy of this Ordinance with the County Clerks of Cook -11- and Lake Counties. It shall be the duty of the County Clerks annually for each of the years 1986 through 2004 to ascertain the respective rates necessary to produce the tax levied in this Ordinance and to extend that tax for collection on the tax books against all of the taxable property within the Village in connection with other taxes levied in each of such years for general Village purposes, and such taxes shall be computed, extended and collected in the same manner as is now or may subsequently be provided for the computation, extension and collection of taxes for general purposes of the Village. When collected, the taxes levied in this Ordinance shall be placed in a separate and special fund established . exclusively for paying principal of and interest on the Bonds, designated as "The Corporate Purpose Bonds, Series 1986, Bond and Interest Fund" (the "Fund "). The deposits of such moneys in that Fund and investments of the Fund may be commingled for deposit and investment purposes with other funds of the Village established solely for paying principal of and interest on other general obligation bonds of the Village. Moneys in the Fund shall never be commingled with or loaned to any other funds of the Village which were not established for such a purpose or which are used for any other purpose, as long as any Bonds are outstanding and unpaid. All interest and other investment earnings on the Fund shall become, when received, a part of the Fund, but this paragraph shall not prevent the Village from transferring interest and other investment -12- • earnings on the Fund to general operating funds of the Village, as long as doing so shall not result in the amounts in the Fund being insufficient to pay principal of and interest on the Bonds as they come due. Amounts deposited in the Fund are appropriated for and irrevocably pledged to, and shall be used only for the purpose of, paying the principal of and interest on the Bonds, or reimbursing general funds of the Village expended for those purposes as provided in Section 5 of this Ordinance, or for making transfers from the Fund of interest and other investment earnings as allowed by the preceding paragraph of this Sec- tion. All amounts received upon the sale of the Bonds, together with all interest and other investment earnings on those amounts, are appropriated and set aside for the purposes for which the Bonds are being issued as set forth.in this Ordinance. Section 7. The Village covenants with the holders of the Bonds from time to time outstanding that it will take no action in the investment of the proceeds of the Bonds, amounts in the Fund or any other funds of the Village which would result in making interest on the Bonds subject to federal income taxes by reason of causing the Bonds to be "arbitrage bonds" within the meaning of Section 103(c) of the Internal Revenue Code of 1954, as amended, or as such Section may be redesignated, and any lawful regulations promulgated or -13- i proposed under that Section (or its redesignated Section). The President, Clerk and Treasurer of the Village are authorized and directed to take such action as is necessary in order to carry out the issuance and delivery of the Bonds including, without limitation, to make any representations and certifications they deem proper pertaining to the use of the proceeds of the Bonds and moneys in the Fund in order to establish that the Bonds shall not constitute arbitrage bonds as so defined. The Village further covenants with the holders of the Bonds from time to time outstanding that: (a) it will take all actions, if any, which shall be necessary, in order further to provide for the levy, extension, collection and application of the taxes levied by this Ordinance; (b) it will not take any action which would adversely affect the levy, extension, collection and application of the taxes levied by this Ordinance, except to abate those taxes to the extent that money is on hand and set aside to pay principal. of and interest on the Bonds; and (c) it will comply with all present and future laws concerning the levy, extension and collection of the taxes levied by this Ordinance; in each case so that the Village shall be able to pay the principal of and interest on the Bonds as they come due. -14- i • Section 8. All ordinances, resolutions and orders or parts of ordinances, resolutions and orders in conflict with this Ordinance are repealed to the extent of such conflict. The Village Clerk shall cause this Ordinance to be published in pamphlet form. This Ordinance shall be in full force and effect after passage and publication as provided by law. PASSED by the President and Board of Trustees of the Village this July 21, 1986. Voting Aye ( list names): 5 - Marienthal, O'Reilly, Glover, Shields, Kowalski Voting Nay (list names): 0 - None Abstaining (list names): 0 - None Absent (list names) : 1 - Reid Village Clerk SIGNED by the Village President this July 21, 1986. Village Preside ATTEST: VR . L Village Clerk Published in pamphlet form July 22 1986. 51M EXHIBIT A UNITED STATES OF AMERICA STATE OF ILLINOIS COUNTIES OF COOK AND LAKE VILLAGE OF BUFFALO GROVE CORPORATE PURPOSE BOND, SERIES 1986 Bond No. R- Date of Bond: Registered Owner: Principal Amount: $ Interest Rate: Date of Maturity: The Village of Buffalo Grove, Cook and Lake Counties, Illinois (the "Village "), for value received, promises to pay to the Registered Owner specified above or registered assigns, upon presentation and surrender of this bond at the principal corporate trust office of Continental Illinois National Bank and Trust. Company of Chicago, Chicago, Illinois (the "Paying Agent ") the Principal Amount of this bond specified above on the Date of Maturity specified above and to pay the registered owner of this bond interest on that sum at the Interest Rate per year specified above from the Date of Bond specified above to the date of payment of this bond, payable semiannually on January 1 and July 1, with the first interest payment date being July 1, 1987. Interest shall be computed on the basis of STATE OF ILLINOIS UNITED STATES OF AMERICA COUNTIES OF COOK AND LAKE VILLAGE OF BUFFALO GROVE CORPORATE PURPOSE BOND, SERIES 1986 Bond No. R- Principal: Amount: $ Interest Rate: Date of Bond: Date of Maturity: Registered Owner: The Village of Buffalo Grove, Cook and Lake Counties, Illinois (the "Village "), for value received, promises to pay to the Registered Owner specified above or registered assigns, upon presentation and surrender of this bond at the principal corporate trust office of Continental Illinois National Bank and Trust Company of Chicago, Chicago, Illinois (the "Paying Agent ") the Principal Amount of this bond specified above on the Date of Maturity specified above and to pay the registered owner of this bond interest on that sum at the Interest Rate per year specified above from the Date of Bond specified above to the date of payment of this bond, payable semiannually on January 1 and July 1, with the first interest payment date being July 1, 1987. Interest shall be computed on the basis of a 360 -day year of twelve 30-day months. Interest on this bond shall be payable on each interest payment date by check or draft of the Paying Agent mailed to the person in whose name this bond is registered at the close of business on the 15th day of the month next preceding that interest payment date. The principal of and interest on this bond are payable in law- ful money of the United States of America. No interest shall accrue on this bond after its Date of Maturity unless this bond shall have been presented for payment at maturity and shall not then have been paid. This bond is one of an authorized issue of bonds in the aggregate principal amount of $3,300,000, the proceeds of which are to be used for corporate purposes of the Village as described in the Ordinance of the Village authorizing the issu- ance of this bond and the issue of bonds of which it is a part (the "Ordinance "). This bond was issued in accordance with the Illinois Constitution and pursuant to the Ordinance. This bond and the issue of which it is a part (together the "Bonds ") have been issued by the Village upon full payment therefor as pro- vided in the Ordinance. The full faith and credit of the Village and the tax levy referred to below are irrevocably pledged to the punctual payment of the principal of and the interest on this bond. This bond is a general obligation of the Village. A -2 Bonds maturing on January 1 of each of the years 1989 through 1996, inclusive, are not redeemable prior to their maturity. Bonds maturing on January 1 of each of the years 1997 through 2006, inclusive, are redeemable prior to their maturity at the option of the Village, in whole or in part and if in part in the inverse order of maturity, on any interest payment date on or after January 1, 1996, at par plus the respective redemption prices (expressed as a percentage of the principal amount of the Bonds to be redeemed) set forth below, plus in each case accrued and unpaid interest to the date of redemption: Date of Redemption Redemption Prices January 1, 1996 through December 31, 1996 103.0% January 1, 1997 through December 31, 1997 102.0% January 1, 1998 through December 31, 1998 101.0% January 1, 1999 and thereafter 100.0% If less than all the Bonds of any maturity are to be redeemed on any redemption date, the Bond Registrar named below will assign to each Bond of the maturity to be redeemed a distinctive number for each $5,000 of principal amount of that Bond. The Bond Registrar will then select by lot from the numbers so assigned, using such method as it shall deem proper in its discretion, as many numbers as, at $5,000 per number, shall equal the principal amount of Bonds of that maturity to be redeemed. A -3 Notice of the redemption of any Bonds, which by their terms shall have become subject to redemption, will be given to the registered owner of each Bond called for redemption in whole or in part not less than 30 or more than 60 days before any date established for redemption of Bonds, by the Bond Registrar, on behalf of the Village, by registered or certified mail sent to the registered owner's last address, if any, appearing on the registration books kept by the Bond Regis- trar. In the case of a Bond to be redeemed in part only, the notice will specify the portion of the principal amount of the Bond to be redeemed. The mailing of the notice specified above to the registered owner of any Bond will be a condition prece- dent to the redemption of that Bond, provided that any notice which is mailed in accordance with the Ordinance will be con- clusively presumed to have been duly given whether or not the owner received that notice. The failure to mail notice to the owner of any Bond, or any defect in that notice, shall not affect the validity of the redemption of any other Bonds. This bond is negotiable, subject to the following pro- visions for registration and registration of transfer. The Village maintains books for the registration and registration of transfer of Bonds at the principal corporate trust office of Continental Illinois National Bank and Trust Company of Chicago, as Bond Registrar. This bond is registered on those books and transfer of this bond may be registered on those A -4 books upon surrender of this bond to the Bond Registrar by the registered owner or his or her attorney duly authorized in writing together with a written instrument of transfer satisfactory to the Bond Registrar duly executed by the registered owner or his or her duly authorized attorney. Upon surrender of this bond for registration of transfer, a new bond or bonds in the same aggregate principal amount and of the same maturity will be issued to the transferee as provided in the Ordinance. This bond may be exchanged, at the option of the registered owner, for an equal aggregate principal amount of bonds of the same maturity of any other authorized denomina- tions, upon surrender of this bond at the principal corporate trust office of the Bond Registrar with a written instrument of transfer satisfactory to the Bond Registrar duly executed by the registered owner or his or her duly authorized attorney. For every exchange or registration of transfer of this bond, the Village or the Bond Registrar may make a charge sufficient to reimburse it for any tax, fee or other govern- mental charge, other than one imposed by the Village, required to be paid with respect to that exchange or transfer, and pay- ment of that charge by the person requesting exchange or regis- tration of transfer shall be a condition precedent to that exchange or registration of transfer. No other charge may be made by the Village or the Bond Registrar as a condition pre- cedent to exchange or registration of transfer of this bond. A -5 The Bond Registrar will not be required to exchange or register the transfer of any Bond after notice of redemption of that Bond or any portion of that Bond has been mailed, or during the 15 days next preceding mailing of a notice of redemption of Bonds. The Village, the Paying Agent and the Bond Registrar may treat the registered owner of this bond as its absolute owner, whether or not this bond is overdue, for the purpose of receiving payment of the principal of or interest on this bond and for all other purposes, and neither the Village, the Bond Registrar nor the Paying Agent shall be affected by any notice to the contrary. Payment of the principal of and interest on this bond shall be made only to its registered owner, and all such payments shall be valid and effective to satisfy the obli- gation of the Village on this bond to the extent of the amount paid. All conditions which by law must have existed or must have been fulfilled in the issuance of this bond existed and were fulfilled in compliance with law. Provision has been made for the levy and collection of a direct annual tax, in addition to all other taxes, sufficient to pay and discharge the principal of this bond at maturity and to pay interest on this bond as it falls due. The issuance of the Bonds by the Village will not cause the Village to exceed or violate any applicable limitation or condition respecting the issuance of bonds A -6 imposed by the law of Illinois or by any.ordinance or resolu- tion of the Village. The Bonds are issued for purposes for which the Village is authorized by law to issue bonds including to pay costs of the Village for its Public Works and Public Facilities Program, as defined in the Ordinance, and to pay costs of the Village in connection with the issuance of the Bonds. This bond shall not be valid for any purpose unless and until the certificate of authentication on this bond shall have been duly executed by the Transfer Agent. IN WITNESS WHEREOF, the Village of Buffalo Grove, Cook and Lake Counties,.Illinois, by its President and Board of Trustees, has caused this bond to be executed by the manual or facsimile signature of its Village President and the manual or facsimile signature of its Village Clerk and has caused its corporate seal to be affixed to this bond (or a facsimile of its seal to be printed on this bond), all as of the Date of Bond specified above. (SEAL) ATTEST: Village Clerk VILLAGE OF BUFFALO GROVE, ILLINOIS By A -7 Village President Date of Authentication: This bond is one of the bonds described in the Ordi- nance authorizing the issuance of $3,300,000 Village of Buffalo Grove Corporate Purpose Bonds, Series 1986. Continental Illinois National Bank and Trust Company of Chicago By Authorized Officer For Value Received, the undersigned sells, assigns and transfers to this bond and all rights and title under this bond, and irrevocably constitutes and appoints attorney to transfer this bond on the books kept for registration of this bond. Dated: A -8 EXHIBIT "B" AGENCY AGREEMENT This AGREEMENT, dated as of July 15, 1986, between the Village of Buffalo Grove, Illinois, a body corporate and politic of the State of Illinois (hereinafter called "Issuer ") 'and Continental Illinois National Bank and Trust Company of Chicago, as Agent (hereinafter called "Agent "). WHEREAS, for its lawful purposes, the Issuer has duly authorized the issue/ or may from time to time authorize the issue of the Village of Buffalo Grove, Illinois, Corporate Purpose Bonds, Series 1986 (hereinafter called the "Securities ") and said Issuer wishes the Agent to act as its Paying Agent, Bond Registrar and Transfer Agent for said Securities; NOW, THEREFORE, each party, for the benefit of the other party hereby agrees as follows: I. APPOINTMENT Issuer hereby appoints Continental Illinois National Bank and Trust Company of Chicago to act as said Paying Agent, Bond Registrar and Transfer Agent for said securities. Continental Illinois National Bank and Trust Company of Chicago hereby accepts its appointment as said Paying Agent, Bond Registrar and Transfer Agent. II. BASIC DUTIES A. 1. Promptly upon issuance of said securities by Issuer, Agent, through an Authorized Signer, shall manually authenticate said securities upon the written order of one or more authorized officers of Issuer. Thereafter, Agent shall, through an Authorized Signer, manually authenticate all Securities resulting from transfer or exchange of Securities. 2499 -1:4:1 -2- 2. Agent shall maintain an office or agency in the City of Chicago, Illinois, where Securities may be presented for registration of transfer or for exchange; and shall also maintain an office or agency in the City of Chicago, Illinois, where securities may be presented for payment. Agent shall keep a register of the Securities and of their transfer and exchange. B. Issuer may have one or more co- registrars, one or more additional paying agents, and one or more additional transfer agents. However, Agent shall be principal registrar, principal paying agent, and principal transfer agent. The appointment of any additional co- registrar, co- paying agent and co- transfer agent shall be evidenced by a written instrument delivered to Agent making such appointment of such additional Agent of Issuer, and accepted by such additional co- registrar, co- paying agent and co- transfer agent. Agent shall be sole paying agent for registered interest. C. Agent may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. Agent may rely on any document believed by it to be genuine and to have been signed or presented by the proper person. Agent need not investigate any fact or matter stated in the document. Agent undertakes to perform such duties and only such duties as are specifically set forth in the Agreement. Specifically, (but without limiting the preceding sentence to the following) Agent shall have no duties or responsibilities whatsoever to anyone if there shall be a default in payment of principal or interest on said Securities. 2499 -1:4:2 -3- III. COMPENSATION Issuer covenants and agrees to pay to Agent from time to time for its services hereunder reasonable compensation and certain other fees and expenses in accordance with Agent's regularly published fee schedules in effect from time to time. In addition, Issuer covenants and agrees to pay to Agent reasonable compensation for any additional services not contemplated by this Agreement but required by law, regulation or otherwise in accordance with Agent's regularly published fee schedules in effect from time to time. Agent is authorized to charge Issuer's commercial checking account with Agent from time to time for said compensation and other fees and expenses, provided a statement for said compensation, fees and expenses shall have been mailed to Issuer not less than 14 days prior to the making of such charge. IV. SUCCESSION OF DUTIES Agent may resign any or all of its duties hereunder by 60 days' written notice to Issuer. Issuer may remove Agent from any or all of its duties hereunder by 60 days` written notice to Agent. Promptly, upon such resignation or removal, Issuer shall appoint a successor to Agent for any such capacity which it has resigned or been removed from. Issuer shall pay all due compensation of Agent on or before the effective date of such resignation or removal. Agent shall do all things reasonably necessary to effect an orderly and effective transfer of duties to any successor agent. 2499 -1:4:3 QAZ V. STANDARDS OF PERFORMANCE A. Certificates All certificates issued by Issuer under this Agreement shall be the standard 8 x 12 size, and arranged in such a manner as to be compatible with Agent's automated systems. Specifically, such certificates shall be in the size and format approved as the "Sample Municipal Bond for Issuance under "TEFRA ", as specified by the American National Standards Committee of the American Banking Association" or any similar standards adopted by the Municipal Securities Rulemaking Board. All certificates shall be issued in denominations of $5,000 or integral multiples thereof. Issuer shall at all times provide Agent with an adequate supply of certificates for any anticipated transfers or exchanges of the Securities. All or any signatures of Issuer, or of any party other than Agent or any Co- Agent, on said certificates shall be by facsimile signature. Issuer shall be responsible for the payment of the printing or other expenses for such certificates. Issuer shall secure for each issue of Securities appropriate "CUSIP" number(s) and shall notify Agent of such number(s) prior to the issuance of the applicable Securities. Any co- registrar, co- paying agent or co- transfer agent shall forward to Agent any Securities surrendered to it for transfer, exchange or payment. Agent and no one else shall destroy all Securities surrendered for transfer, exchange, payment or cancellation and forward a certificate of their destruction to Issuer. 2499 -1:4:4 -5- B. Transfers and Exchanges 1. When Securities are presented to Agent for transfer or exchange, Agent shall so transfer or exchange such securities if the require- ments of Section 8- 401(1) of the Uniform Commercial Code are met. 2. Agent shall make all payments hereunder to the applicable Securityholder of record as of the 15th day of the month prior to interest payment dates of January 1 and July 1 of each year commencing July 1, 1987. C. Funds for Payments Issuer will provide Agent with funds to make any interest or principal payments on the business day next preceding the date such payment is due. Agent is hereby authorized to effect any semi - annual payment of interest or any payment of principal by charging Issuer's commercial checking account with Agent on the said business day next preceding the date on which interest or principal is payable. D. Replacement of Securities If the holder of a Security claims that the Security has been lost, destroyed or wrongfully taken, Issuer shall issue and Agent shall authenticate a replacement Security if the requirements of Section 8 -405 of the Uniform Commercial Code are met. Only Agent shall perform this function. An indemnity bond must be sufficient in the judgment of Issuer and Agent to protect Issuer, and Agent, from any loss which any of them may suffer if the Security is replaced. Issuer may charge for its expenses in replacing a Security. 2499 -I -4:5 CO E. Redemptions If any Securities are to be redeemed pursuant to a Partial Redemption in accordance with their terms, Issuer shall give Agent at least 60 days written notice thereof. Agent shall select the securities to be so redeemed at least 45 days before any redemption date. Agent shall then notify by ordinary mail any holders of any Securities to be so redeemed no less than 30 days prior to any such redemption date. Agent or any Co -Agent shall not be required to exchange or register a transfer of any security for a period of 15 days next preceding the date of selection of securities for such a partial or other redemption. F. Defaults If issuer defaults in a payment of interest on the Securities, it shall fix a record and payment date for any such defaulted interest, which record date shall be at least 15 days before any such payment date. The Issuer shall mail to each Security holder a notice that states the record date, the payment date, and the amount of defaulted interest to be paid. The Issuer may pay defaulted interest in any other lawful manner. G. Repayment to Issuer Except as may be required under applicable law, any monies deposited with or paid to the Agent or any paying agent for payment of the principal or interest on any Securities and not applied but remaining unclaimed by the holders of said Securities for six years after the date upon which the principal of or interest on any such Securities 2499 -1:4:6 -7- shall have become due and payable, shall be repaid to the Issuer by Agent or such paying agent on written demand. Thereafter, the holder of any of the Securities shall look only to the Issuer for any payment which such holder may be entitled to collect and all liability of the Agent or such paying agent with respect to such monies shall thereupon cease. VI. DUPLICATE ORIGINALS The parties may sign any number of copies of this Agreement. Each signed copy shall be an original, but all of them together represent the same agreement. SIGNATURES Village Of Buffalo Grove, Illinois By Village President (Title) By Village Clerk (Title) CONTINENTAL ILLINOIS NATIONAL BANK AND TRUST COMPANY OF CHICAGO, Agent Seal Attest: ��/�C Q� L� By Trust Officer Second Vice President 2499 -1:4:7 & 1—C119 VILLAGE OF BUFFALO (MOVE, ILLINOIS $3,300,000 CORPORATE PURPOSE BONDS, SERIES 1986 July 21, 1986 Village of Buffalo Grove, Illinois 50 Raupp Boulevard Buffalo Grove, Illinois 60089 Ladies and Gentlemen: The undersigned (the "Underwriter ") hereby offers to enter into this Bond Purchase Agreement with you (the "Village ") for the purchase by the Underwriter and sale by the Village of your $3,300,000 Corporate Purpose Bonds, Series 1986, dated July 15, 1986 (the "Bonds "). This offer is made subject to acceptance by the Village prior to 11:30 p.m. C.D.T., on the date hereof, and upon such acceptance, this Bond Purchase Agreement shall be in full force and effect in accordance with its terms and shall be binding upon both the Village and the Underwriter. 1. Upon the terms and conditions and upon the basis of the representations herein set forth, the Village agrees to sell to the Underwriter all (but not less that all) of the $3,300,000 aggregate principal amount of the Village's Corporate Purpose Bonds, Series 1986, at an aggregate purchase price of $3,300,603.65 plus accrued interest from July 15, 1986 to the date of closing. The Bonds are more fully described in the Official Statement hereinafter mentioned. The Bonds shall mature and bear interest at the rates as shown on the cover page of such Official Statement. The Bonds shall be issued as fully registered bonds in the denomination of $5,000 or any integral multiple thereof. The Bonds shall be as described in, and shall be issued and secured under and pursuant to, an ordinance adopted July 21, 1986 (the "Ordinance "), substantially in the form as so adopted, with only such changes therein as shall be mutually agreed upon between us. The Underwriter agrees to make a public offering of the Bonds at the initial offering prices set forth in the Official Statement (hereinafter mentioned) but reserves the right to change such offering prices without any requirements of prior notice. 2. You shall deliver or cause to be delivered to us, promptly after your acceptance hereof, one copy of your Official Statement relating to the Bonds substantially in the form dated July 21, 1986 (such Official Statement with such changes, if any, and including the cover page and all appendices, exhibits, reports and statements included therein or attached thereto herein called the "Official Statement "), signed on your behalf by the Village President. You authorize the use of copies of the Official Statement and the Ordinance in connection with the initial public offering and the sale of the Bonds. 3. The Village represents to and agrees with the Underwriter that: (a) Both at the time of acceptance hereof by the Village and the date of closing, the statements and information which are supplied by the Village contained in the Official Statement are and will be true, correct and complete in all material respects, and the Official Statement does not and will not contain any statement or information that is untrue or incorrect in any material respect and does not and will not omit any material statement or information which should be contained therein in order to make the statements and information therein, in light of the circumstances under which they are made and such information used, not misleading in any material respect. In making this representation the Village has relied on the information obtained and supplied by the Underwriter from sources other than the Village, it being understood that the Official Statement has been prepared by the Underwriter in cooperation with the Village and submitted to the Village for its approval. (b) The Village is and will be at the date of closing a municipality duly organized and validly existing under the laws of the State of Illinois with authority to issue the Bonds pursuant to the applicable provisions of such laws and the provisions of the Ordinance. (c) The Village's financial statements contained in the Official Statement and its financial statement for the year ended April 30, 1985 delivered to the Underwriter present fairly the financial position of the Village as of the dates indicated and the results of its operations for the periods specified and said financial statements have been prepared in conformity with the modified accrual basis method of accounting consistently applied. Since April 30, 1985, there has been no material or adverse change in the financial position or results of operation of the Village nor has the Village incurred any material liabilities other than in the ordinary course of business or as set forth in or contemplated by the Official Statement. (d) When delivered to and paid for by the Underwriter at the Closing in accordance with the provisions of this Bond Purchase Agreement, the Bonds will have been duly authorized, executed, issued, authenticated, registered and delivered and will constitute valid and binding obligations of the Village in conformity with and entitled to the benefit and security of the Ordinance. - 2 - (e) The execution and delivery of this Bond Purchase Agreement, and adoption of the Ordinance, and compliance with the provisions thereof, under the circumstances contemplated hereby, have been approved by all appropriate Village proceedings, are and will be valid and binding obligations of the Village,• and will not in any material respect conflict with or constitute on the part of the Village, a breach of or default under any agreement or other instrument to which the Village is subject. (f) The Village does not have any knowledge of any action, suit, proceeding, or investigation at law or in equity or before or by any public board or body, pending, (1) to restrain or enjoin the issuance or delivery of any of the Bonds; (2) in any way contesting the existence or powers of the Village; or (3) wherein an unfavorable decision, ruling or finding would materially and adversely affect the authority for or validity or enforceability of the Bonds, the Ordinance or this Bond Purchase Agreement. 4. At 11:00 a.m., C.D.T., on August 13, 1986, or such other time or on such earlier or later date as we mutually agree upon (herein called the "Closing "), the Village will deliver or cause to be delivered to us in the City of Chicago, Illinois or at such place as we may mutually agree upon, the Bonds in definitive form (all the Bonds to be prepared by the American National Standards Institute), duly executed, authenticated, registered, and imprinted with CUSIP numbers, together with the other documents hereinafter mentioned; and the Underwriter will accept such delivery and pay the purchase price thereof by wire transfer of Federal Funds as directed or check payable in Federal Funds to the order of the Village. 5. The Underwriter has entered into this Bond Purchase Agreement in reliance upon the representations and agreements of the Village herein and the performance by the Village of its obligations hereunder and in reliance upon its own investigations both as of the date hereof and as of the date of closing. The Underwriter's obligations under this Bond Purchase Agreement are and shall be subject to the following conditions: (a) At the time of closing: (i) The Official Statement and the Ordinance shall be in full force and effect and shall not have been amended, modified or supplemented except as may have been agreed to in writing by us. (ii) The proceeds of the sale of the Bonds shall be applied as. described in the Official Statement and the Ordinance. (iii) The Village shall have duly adopted and there shall be in full force and effect such resolutions as, in the opinion of Isham, Lincoln & Beale, Chicago, Illinois, (herein called "Bond Counsel "), shall be necessary in connection with the transactions contemplated hereby. - 3 - (b) The Underwriter shall have the right to cancel its obligations to purchase the Bonds, if: (i) legislation (other than H.R. 3838 in the form adopted by the United States House of Representatives on December 17, 1985 or the substitute version of H.R. 3838 passed by the United State Senate on June 24, 1986) shall be introduced in or enacted by the Congress of the United States or adopted by either House thereof or shall have been recommended to the Congress or otherwise endorsed for passage (by press release, public statement, other form of notice) by the President of the United States, the Treasury Department of the United States, the Internal Revenue Service or by the Chairman or ranking minority member of the Senate Finance Committee or of the House Committee on Ways and Means or shall have been introduced and favorably reported for passage to either House of Congress by any committee of such House to which such legislation had been referred for consideration, or a decision shall have been rendered by or adopted by either House thereof or a decision by a court of the United States or the United States Tax Court or an order, ruling or regulation shall have been issued or proposed by or on behalf of the Treasury Department of the United States or the Internal Revenue Service, with respect to Federal income taxation upon revenues or other income of the general character to be derived by you upon interest received on obligations of the general character of the Bonds which, in the Underwriters' judgment, materially adversely affects the market price of the Bonds. (ii) There shall exist any event which in our reasonable judgment either: A. makes untrue or incorrect in any material respect any statement or information contained in the Official Statement, or B. is not reflected in the Official Statement but should be reflected therein in order to make the statements and information contained therein not misleading in any material respect. (iii) There shall have occurred any outbreak of hostilities or other national or international calamity, the effect of such outbreak or calamity on the financial markets of the United States being such as, in our reasonable judgment, would affect materially and adversely our ability to market the Bonds. - 4 - (iv) There shall be in force a general suspension of trading on the New York Stock Exchange or minimum or maximum prices for trading shall have been fixed and be in force or maximum ranges for prices for securities shall have been required and be in force on the New York Stock Exchange, whether by virtue of a determination by that Exchange or by order of the Securities and Exchange Commission or any other governmental authority having jurisdiction. (v) A general banking moratorium shall have been declared by either Federal or Illinois authorities having jurisdiction and be in force. (vi) A stop order, ruling, regulation, proposed regulation or statement by or on behalf of the Securities and Exchange Commission shall have been issued or made to the effect that the issuance, offering or sale of obligations of the general character of the Bonds or of the Bonds as contemplated hereby or by the final Official Statement is in violation of any provision of the Securities Act of 1933, as amended and as then in effect, or of the Securities Exchange Act of 1934, as amended and as then in effect, or of the Trust Indenture of 1939, as amended and as then in effect. ( vii) Legislation shall have been enacted or actively considered for enactment or decision by a court of the United States shall have been rendered or a ruling, regulation, proposed regulation or statement by or on behalf of the Securities and Exchange Commission or other governmental agency having jurisdiction of the subject matter shall have been made to the effect that the Bonds or any securities of the Village or any similar body of the type contemplated herein are not exempt from the registration, qualification or other requirements of the Securities Act of 1933, as amended and as then in effect, the Securities Exchange Act of 1934, as amended and as then in effect, or of the Trust Indenture Act of 1939, as amended and as then in effect. (viii) The New York Stock Exchange or other national securities exchange or any governmental or self - regulatory authority shall have imposed as to the Bonds or similar obligations any material restrictions not now in force (or presently enacted to take effect at a later date) with respect to the extension of credit by or the charge to the net capital requirements of the Underwriter. (ix) There shall have been any materially adverse change in the affairs of the Village. (x) Moody's Investors Service has not assigned a credit rating for the Bonds of at least Al on or before August 13, 1986. - 5 - (c) At or prior to the date of closing, we shall receive the following documents: (i) The unqualified approving opinion of Bond Counsel dated the date of the closing in form and substance satisfactory to us; (ii) A certificate dated the date of closing signed by the Village President or other executive officer satisfactory to us and by the Village's Clerk, in form and substance satisfactory to us, to the effect that the representations and warranties of the Village contained herein are true and correct in all material respects as of the date of the closing; (iii) A duly certified copy of the Ordinance; (iv) A duly certified copy of prepared minutes of the Village including the motions authorizing the execution and delivery, of the Official Statement and the Bond Purchase Agreement; (v) A specimen Bond; and (vi) Such additional legal opinions, certificates, proceedings, instruments, and other documents as we or Bond Counsel may reasonably request to evidence the truth and accuracy of your representations herein contained and the due performance or satisfaction by you at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by you. If the Village shall be unable to satisfy the conditions to the Underwriter's obligations contained in this Bond Purchase Agreement and if the Underwriter has not waived compliance with any unsatisfied condition or if the Underwriter's obligations shall be terminated for any reason permitted by this Bond Purchase Agreement, this Bond Purchase Agreement shall terminate and neither the Underwriter nor the Village shall have any further obligation hereunder. 6. Except as indicated below, all expenses in connection with this transaction shall be paid by the Village. Such expenses include but are not limited to: (a) The fees and disbursements of Bond Counsel. (b) The Village's legal and accounting fees. (c) The cost of the preparation, printing, and delivery of the Bonds. (d) Rating agency fees. (d) Registration fees. The Village agrees to cooperate with the Underwriter if the Underwriter decides to qualify the Bonds under the Blue Sky laws of any state. The cost of any such qualifidation including legal expenses, if any, for the preparation of Blue Sky and Legal Investment Memoranda shall be paid by the Underwriter. The Underwriter shall also pay any advertising expenses. 7. Any notice or other communication to be given to the Village under this Bond Purchase Agreement may be given by delivering the same in writing at your address set forth above to the attention of the Village Clerk and with a copy to the Village Manager and any such notice or other communication to be given to the Underwriter may be given by delivering the same in writing to Continental Illinois National Bank and Trust Company of Chicago, 231 South LaSalle Street, Chicago, Illinois 60697, to the attention of William L. Hood, Vice President. 8. This Bond Purchase Agreement is made solely for the benefit of the Village and the Underwriter (including the successors or assigns of the Underwriter, but not including investors who have purchased the Bonds) and no other person, partnership, association, or corporation shall acquire or have any right hereunder or by virtue hereof. All representations and agreements of the Village in this Bond Purchase Agreement shall survive the delivery of any payment for the Bonds regardless of any investigation made by or on behalf of the Underwriter. 9. The approval of the Underwriter when required hereunder shall be in writing signed by an officer thereof and delivered to you. This Bond Purchase Agreement shall become legally effective upon its acceptance by you, as evidenced by the signature of the Village President and the Village Clerk in the space provided therefor below, and delivered to us. 10. This agreement shall be construed in accordance with the laws of the State of Illinois and may not be assigned by the Village or the Underwriter. RICO"—, M21 VILLAGE OF BUFFALO GROVE COOK & C;'OUNTIES, ILLINOIS By -� - Village President By VillagOCIerk DATED: 7 -7.1-% CONTINENTAL ILLINOIS NATIONAL BANK AND TRUST COMPANY OF CHICAGO By, Its Vice President and duly authorized officer - 7 - E-g ~o WV PRELIMINARY OFFICIAL STATEMENT DATED JULY 8, 1986 o ii L� o OFFICIAL STATEMENT �o czz New Issue Rating: Moody's: a Cr In the opinion of Bond Counsel, interest on the Bonds is exempt from federal income taxes under " existing law as of the date of original delivery of the Bonds. Interest on the Bonds is not exempt from Illinois E ° income taxes. For a discussion of effects on the Bonds of tax reform legislation currently under N consideration by Congress, see "PENDING FEDERAL TAX LEGISLATION." o $3,300,000 C O_ VILLAGE OF BUFFALO GROVE, ILLINOIS N Corporate Purpose Bonds, Series 1986 CU 3 Dated: July 15, 1986 Due: January 1, as set forth below N � N N M o The Bonds will be issued in denominations of $5,000, or any integral multiple thereof, in fully V o registered form. Interest on the Bonds will be payable on July 1, 1987, and semiannually thereafter on each January 1 and Julv 1. Principal of and redemption premium. if anv. on the Bonds will be savable at the principal corporate trust office of Continental Illinois National Bank and Trust Company of Chicago, 00 Chicago, Illinois, Bond Registrar and Paying Agent. Interest on the Bonds will be payable by check or draft by the Bond Registrar to the registered owners thereof as of the fifteenth day of the month next preceding the applicable interest payment date. L The full faith and credit of the Village of Buffalo Grove are irrevocably pledged to the punctual E U C � payment of the principal of and interest on the Bonds. Pursuant to the Bond Ordinance, the Bonds shall be cc o direct and general obligations of the Village, and the Village shall be obligated ,;o levy ad valorem taxes upon s all the taxable property in the Village for the repayment of the Bonds and the interest thereon, without a. .L� limitation as to rate or amount. o SERIAL BONDS a ,o Due Interest Price or Due Interest Price or N o Amount* January i Rate Yield Amount* January 1 Rate Yield CIO cu $ 85,000......, 1989 $175,000...... 1998 95,000'._.... 1990 190,000...... 1999 ° 100,000...... 1991 205,000...... 2000 N N C 110,000....... 1992 220,000...... 2001. cc 120,000...... 1993 240,000...... 2002 a 135,000:..... 1994 260,000...... 2003 140,000...... 1995 280,000...... 2004 t0 L U E — N 155,000...... 1996 300,000...... 2005 L = 165,000...... 1997 325,000...... 2006 d C V c N (Accrued interest from July 15, 1986 to be added) a a co a c C, The Bonds are offered when, as and if issued and accepted by the Underwriter and subject to approval 0 3 of legality by Isham, Lincoln & Beale, Chicago, Illinois, Bond Counsel, and certain other conditions n `° described herein. It is anticipated that the Bonds will be available for delivery in Chicago, Illinois, on or about 1986. O a C O � N cc l& CONTINENTAL BANK d U w :5 7Q CONTINENTAL ILLINOIS NATIONAL BANK AND TRUST COMPANY OF CHICAGO CL N A N Y The Date of the Official Statement is , 1986. * Subject to change. No dealer, broker, salesman or other person has been authorized to give any information or to make any representations other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as statements of the Village of Buffalo Grove or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of any offer to buy, nor shall there be any sale of the Bonds by any person, in any jurisdiction in which it is unlawful to make such offer, solicitation or sale. Unless otherwise indicated, the Village of Buffalo Grove is the source of all tables and statistical and financial information contained in this Official Statement. The information set forth herein relating to governmental bodies or from other sources is believed to be reliable, but is not guaranteed as to accuracy or completeness. The information and opinions expressed herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the operations of the Village of Buffalo Grove since the date hereof. Bond Counsel have not reviewed or participated in the preparation of this Official Statement. This Official Statement should be considered in its entirety and no one factor considered less important than any other by reason of its position in this Official Statement. Where statutes, ordinances, reports or other documents are referred to herein, reference should be made to such statutes, ordinances, reports or other documents for more complete information regarding the rights and obligations of parties thereto, facts and opinion contained herein, and the subject matter thereof. Upon issuance, the Bonds will not be registered under the Securities Act of 1933, as amended, and will not be listed on any stock or other securities exchange and neither the Securities and Exchange Commission nor any other federal, state, municipal or other governmental entity, other than the Village of Buffalo Grove shall have passed upon the accuracy or adequacy of this Official Statement. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER -ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF CalMENCED, MAY BE DISCONTINUED AT ANY TIME. TABLE OF 00NTTEUM INTRODUCTION ............................... ..............................1 THEBONDS .................................. ..............................1 Purpose............................... ..............................1 Authority.. ....................... ..............................1 Security and Repayment ........ ............................... .....1 GeneralDescription...... .. ....... ..............................2 Registration, Transfer and Exchange ... ..............................2 Optional Redemption ................... ..............................2 Notice of Redemption .................. ..............................3 Partial Redemption of Bonds ........... ..............................3 Sources and Uses of Funds ............. ..............................3 THE VILLAGE OF BUFFALO GROVE .......................................... ....4 General Information.... ...... .. ..............................4 ECONOMIC AND DEMOGRAPHIC INFORMATION ....... ..............................4 Population..... ............ ............................... ....4 Residential Development ............... ..............................5 Income and Employment ................. ..............................6 Employment by Industry ................ ..............................6 UnemploymentRates .................... ..............................7 RetailActivity ....................... ..............................7 Transportation.... ........... ..............................7 VILLAGE GOVERNMENT AND SERVICES ... ... ............................... .8 Municipal Facilities and Services ..... ..............................8 Education.. .... ................ ............................... .9 PROPERTY TAX PROCEDURES ....... ............................... ..........10 Levy .................................. ...................:.........10 Assessment ............................ .............................10 Equalization ............... ......... .............................10 Exemptions ............................ .............................11 TaxRates .................. .......... ............................11 Collections... ... ... ............. ........................ ......11 Truthin Taxation Act.. ... ......... .............................12 PERSONAL PROPERTY REPLACEMENT TAX .. ....... .............................12 PROPERTY TAX STATISTICAL INFORMATION ............. ....................13 Tax Rates, Extensions and Collections..... ... . ........ .. .13 Assessed and Estimated Market Value of Taxable Real Property....... 14 Comparative Tax Rates ................. .............................15 PrincipalTaxpayers ................... .............................16 DEBT SUMMARY... ........ ............................17 Direct and • Overlapping Debt of the Village .........................17 Direct Debt.. ................... .............................17 Net Overlapping Debt .................. .............................18 Selected Debt Statistics.. .: ... ..18 Principal Retirement Schedule of Long-Term General Obligation Debt.19 Schedule of Revenue Bond Coverage - Waterworks and Sewerage Fund ... 20 Pension Fund Obligations..... ...... .............................21 SUMMARY FINANCIAL INFORMATION .............. .............................22 Accounting Practices... ............. .............................22 General Fund - Balance Sheet..... ..... ........................23 General Fund - Audited Revenues and Expenditures .............. ..24 RATINGS..... ............................. .............................25 TAX EXEMPTION ................ ............ .............................25 PENDING FEDERAL TAX LEGISLATION ............ .............................25 UNDERWRITING....... ...................... .............................26 FINANCIAL STATEMENTS ....................... .............................26 CERTAIN LEGAL MATTERS ...................... .............................26 NO LITIGATION CERTIFICATE .................. .............................27 AUI' HORIZATION .............................. .............................27 APPENDIX A Form of Legal Opinion APPENDIX B Audited Financial Statement ii VILLAGE OF BUFFALO GROVE Cook and Lake Counties, Illinois John Marienthal Bobbie O'Reilly Janet M. Sirabian Village Clerk Verna L. Clayton Village President VILLAGE IRUSTEES Gary Glover William Reid OFFICIALS William R. Balling Village Manager Paul Kochendorfer Village Treasurer William H. Brim Director of Finance and General Services Peat, Marwick, Mitchell & Co. Certified Public Accountants Isham, Lincoln & Beale. Bond Counsel iii Patrick Shields Melanie Kowalski William G. Raysa Village Attorney [THIS PAGE INTENTIONALLY LEFT BLANK] OFFICIAL STATEMENT $3,300,000 VILLAGE OF BUFFALO GROVE, ILLINOIS a RPORATE PURPOSE BONDS, SERIFS 1986 I I Z I I ZTC r_ y a �,► The purpose of this Official Statement, including the cover page hereof, is to set forth certain information in connection with the sale of $3,300,000 aggregate principal amount of Corporate Purpose Bonds, Series 1986 (the "Bonds "), of the Village of Buffalo Grove (the "Village ") authorized and issued under and pursuant to the constitutional home rule powers of the Village and an ordinance adopted by the Board of Trustees of the Village on (the "Bond Ordinance "). Certain factors that may affect an investment ecision concerning the Bonds are described throughout this Official Statement. Persons considering a purchase of the Bonds should read this Official Statement in its entirety. Purpose Proceeds of the sale of the Bonds will be applied to several capital projects. These projects include the construction of a new police headquarters, public service center expansion, and the construction and equipping of a golf course currently owned and operated by the Village. Authority The Bonds are being issued pursuant to and in accordance with the authority granted to the Village by the 1970 Illinois Constitution Article 7, Section 6(a), regarding home rule units of local government and pursuant to the Bond Ordinance. Security and Renavment The full faith and credit of the Village are irrevocably pledged to the punctual payment of the principal of and interest on the Bonds. Pursuant to the Bond Ordinance, the Bonds shall be direct and general obligations of the Village, and the Village shall be obligated to levy ad valorem taxes upon all the taxable property in the Village for the repayment of the Bonds and the interest thereon, without limitation as to rate or amount. The taxes levied pursuant to the Bond Ordinance are required to be set aside and used for no other purpose. -1- General Description The Bonds will mature on January 1 of the years and in the amounts listed on the cover page hereof, and will bear interest payable July 1, 1987, and semiannually thereafter on each January 1 and July 1, at the rates per annum set forth on the cover page hereof. The Bonds will be issued only as fully registered bonds in denominations of $5,000 and any integral multiple thereof. The principal of, and premium if any, on the Bonds will be payable at the principal corporate trust office of the Bond Registrar. Interest on the Bonds will be payable by check or draft mailed to the registered owners of record of the Bonds as of the fifteenth day of the month next preceding the applicable interest payment date. Each Bond will bear interest from the later of its date or the most recent interest payment date to which interest has been paid or duly provided for. Registration, Transfer and Exchange The Bond Registrar is required to maintain a current list of the names and addresses of the registered owners of the Bonds. The registered owner of a Bond shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of or on account of the principal of and interest on any such Bond shall be made only to or upon the order of such registered owner, or his legal representative. Upon payment of any required tax or other governmental charge and the surrender of the Bonds at the principal corporate trust office of the Bond Registrar with an endorsement of a written instrument of transfer, in form and with guarantee of signature satisfactory to the Bond Registrar, Bonds may be exchanged for an equal aggregate principal amount of fully registered Bonds of the same maturity and interest rate and of any other authorized denominations. Bonds may be transferred by the owners thereof in person or by their duly authorized attorneys at the principal corporate trust office of the Bond Registrar, but only in the manner, subject to the limitations (including surrender thereof for cancellation) and upon payment of amounts sufficient to reimburse the Village and the Bond Registrar for any tax or other governmental charge due with respect to the transfer of the Bonds. Upon such transfer a new Bond or Bonds of the same maturity and authorized denominations of $5,000 or any integral multiple, for the same aggregate principal amount and bearing the same interest rate, will be issued to the transferee. Optional Redemption Bonds maturing on or after January 1, 1997, are redeemable prior to maturity at the option of the Village, in whole or in part on January 1, 1996 or on any interest payment date thereafter. If less than all of the outstanding Bonds are to be redeemed, the Bonds to be redeemed shall be selected in the inverse order of their maturity. If less than all of a maturity is to be redeemed, the Bonds shall be called by lot within a maturity by the Bond Registrar. -2- The Bonds are redeemable at the redemption prices (being expressed as a percentage of the principal amount) set forth below, plus accrued interest to the date of redemption. Notice of Redemption Notice of redemption shall be given by mail not less than 30 days nor more than 60 days prior to the date fixed for redemption to the registered owners of Bonds, or portions thereof, to be redeemed at their addresses as shown on the registration books of the Bond Registrar. When Bonds have been so called for redemption, and if notice of redemption shall have been mailed as aforesaid (and notwithstanding any defect therein or the lack of actual receipt thereof by a registered owner), and funds for such payment, including the applicable premium, have been deposited with the Bond Registrar designated for the Bonds, interest on Bonds so called for redemption shall cease to accrue from and after the redemption date. Partial Redemption of Bonds In the event of the redemption of less than all the Bonds of like maturity, the Bond Registrar shall assign to each Bond of such maturity a distinctive number for each $5,000 principal amount of such Bond and shall select by lot from the numbers so assigned as many numbers as, at $5,000 for each number, shall equal the principal amount of such Bond to be redeemed. The Bonds to be redeemed shall be the Bonds to which were assigned numbers so selected; provided that only so much of the principal amount of each Bond shall be redeemed as shall equal $5,000 for each number assigned to it and so selected. Sources and Uses of Funds The following table sets forth the estimated sources and uses of funds in connection with the issuance of the Series 1986 Bonds: Sources Principal Amount of Series 1986 Bonds ................... Total ........... ............................... Uses Various Projects ......... ............................... Costs of Issuance ........ ............................... Total .......................................... -3- Redemption Date of Red Lion Price January 1, 1996 through December 31, 1997 x"03 January 1, 1997 through December 31, 1998 102 January 1, 1998 through December 31, 1999 101 January 1, 1999 and thereafter 100 Notice of Redemption Notice of redemption shall be given by mail not less than 30 days nor more than 60 days prior to the date fixed for redemption to the registered owners of Bonds, or portions thereof, to be redeemed at their addresses as shown on the registration books of the Bond Registrar. When Bonds have been so called for redemption, and if notice of redemption shall have been mailed as aforesaid (and notwithstanding any defect therein or the lack of actual receipt thereof by a registered owner), and funds for such payment, including the applicable premium, have been deposited with the Bond Registrar designated for the Bonds, interest on Bonds so called for redemption shall cease to accrue from and after the redemption date. Partial Redemption of Bonds In the event of the redemption of less than all the Bonds of like maturity, the Bond Registrar shall assign to each Bond of such maturity a distinctive number for each $5,000 principal amount of such Bond and shall select by lot from the numbers so assigned as many numbers as, at $5,000 for each number, shall equal the principal amount of such Bond to be redeemed. The Bonds to be redeemed shall be the Bonds to which were assigned numbers so selected; provided that only so much of the principal amount of each Bond shall be redeemed as shall equal $5,000 for each number assigned to it and so selected. Sources and Uses of Funds The following table sets forth the estimated sources and uses of funds in connection with the issuance of the Series 1986 Bonds: Sources Principal Amount of Series 1986 Bonds ................... Total ........... ............................... Uses Various Projects ......... ............................... Costs of Issuance ........ ............................... Total .......................................... -3- VILLAGE OF BUFFALO GROVE General Information The Village of Buffalo Grove is located 29 miles northwest of downtown Chicago in Cook and Lake Counties. The Village was incorporated March 7, 1958 and received home rule status effective March 1, 1980, following a referendum. The Village encompasses approximately 6 square miles, with 2 square miles in Cook County and the remainder in Lake County. In Cook County, the Village is bordered on the east by the Village of Wheeling and the south by the Village of Arlington Heights. On the north and east sides of the Village of Buffalo Grove, in Lake County, a large amount of undeveloped and unincorporated land separates the Village of Buffalo Grove from the Villages of Lincolnshire and Long Grove. This provides the Village with the potential for future annexation to increase its tax base. EOONCMIC AND DEMOGRAPHIC INFORMATION Population The Village has experienced rapid growth in population, adding 10,841 to its 1960 population of 1,492 by the 1970 census and another 9,897 by the 1980 census, an 801 increase. The Village's population has continued to grow at a substantial rate since 1980, registering an 1T /o increase by 1985. The 1985 special census figures evidence the fact that the portion of the Village located in Cook County is both fully developed and adjacent to incorporated areas. While the portion of the Village located in Cook County experienced a population increase of only 27. between 1980 and 1985, the population in Lake County increased by 401. It is expected that in future years the Lake County portion will experience the most growth, due to further development within the Village and to the annexation potential mentioned above. SOURCE: U.S. Department of Commerce, Bureau of Census for 1960 -85. -4- Percent Cook Lake Percent Total Increase count 5 Count � Cook Lake 1960 = - -- 1, 10 (Y/. 1970 12,333 72i /o 9,966 1,833 80. 167/. 1980 22,230 80% 13,144 9,086 5f/o 41% 1985 (special 26,168 1T /0 13,405 12,763 51% 4A census) SOURCE: U.S. Department of Commerce, Bureau of Census for 1960 -85. -4- Residential Development The Village has experienced substantial residential growth during the past two decades. The 1980 Census of Housing reported 7,865 housing units in the Village, an increase of 130.6% over 1970. Of this total, approximately 5,300 (67%) were single unit structures. Building permit data presented below indicate that in 1981 and 1982, as in most other communities, construction activity slowed dramatically due to the recession. In 1983, construction activity increased, and by 1985, the Village experienced an increase of M. in construction value over 1984. In 1985, according to the Survey of Buildi , published by Bell Federal Savings and Loan Association, talo Grove built the fourth highest number of single and multi - family units out of 193 Chicago suburbs. Building Permits Residential Commercial Construction Construction Total No. Value No. Value 1976 -80 Total TI$g $84,371,78r -2T- $15,159,287 $99,531,063 1976 -80 Avg. 438 16,874,356 5 3,031,856 19,906,212 1981 31 $ 2,170,090 15 $ 1,909,296 $ 4,079,386 1982 27 3,142,000 3 1,058,071 4,200,071 1983 101 8,425,059 5 3,986,785 12, 411, 844 1984 291 21,095,300 9 2,154,618 23,249,918 1985 510 33,184,778 14 8,297,730 41,482,508 1981 -85 Total 960 $68,017,227 46 $17,406,500 $85,423,727 1981 -85 Avg. 192 13,603,445 9 3,481,300 17,084,745 Source: Village of Buffalo Grove 1985 Annual Report. -5- Income and Employment The Village is a residential suburb of Chicago which enjoys above average wealth. Buffalo Grove ranked as the 10th highest community in Illinois in terms of median family income, according to the 1980 Census, surpassing the state median by over 42`'/0. The 1980 median home value for the Village is also substantially higher than the median for the state as a whole, exceeding it by over 70%. Village State Difference 1970 Median Family Income � — 1970 Median Home Value $34,000 $19,800 71.7% 1980 Median Family Income $32,338 $22,746 42.2% 1980 Median Home Value $90,100 $52,800 70.6% SOURCE: 1970 Census of Population Characteristics 1980 Census of Population Characteristics Employment by Industry - Village of Buffalo Grove Residents in the Village benefit from employment opportunities throughout the Chicago metropolitan area. According to the 1980 Census, 92.1% commute outside Buffalo Grove for employment. In addition; 1980 Census data indicate that over 38% of Village residents hold jobs in the executive and professional category, compared to 23% for Cook and 2%. for Lake Counties. Employed Persons ............. Manufacturing. ............... Nondurable.... .. •• Durable .................... Retail Trade................. Services ..................... SOURCE: U.S. Department of C mmerce, Bureau of Census, General Social and Economic Characteristics K-T 1980 Percent of Total 1970 1980 Village State U.S. 3,957 11 —,476 1 100 - U-16 10 Uff- 1,333 2,646 23.1 25.8 22.4 515 982 8.6 8.4 8.6 818 1,664 14.5 17.4 13.8 556 2,364 20.6 16.0 16.1 713 3,100 27.0 27.1 28.7 SOURCE: U.S. Department of C mmerce, Bureau of Census, General Social and Economic Characteristics K-T Unemployment Rates(l)(annual averages - civilian labor force) Unemployment rates for the Village alone are available only at the time of the federal census and were less than half the unemployment rate for the state or for either county in 1980. Lake County's unemployment rates have been historically below state and national averages, while Cook County's unemployment rates have been historically below state averages. Retail Activity The Village benefits from a substantial retail base. Located within Buffalo Grove are several shopping centers, including the Plaza Verde Shopping Center, Strathmore Square, Cambridge Commons, Grove Shopping Center and Ranchmart Shopping Center. These five shopping centers are among the ten largest taxpayers and account for approximately 5% of the Village's assessed value. The 1982 Census of Retail Trade reports 111 retail establishments within the Village, providing a sales volume of $78,987,000. Food stores, drug and proprietary stores, and gasoline service stations account for most of the Village's retail sales. Transportation The many transportation alternatives available to Village residents allow them to pursue employment opportunities throughout the Chicago metropolitan area. PACE, the Regional Transportation Authority's suburban bus line, runs several routes through the Village, including a route that connects to the Chicago and Northwestern Train Station in Arlington Heights. Several U.S. Routes connect the Village to Illinois state highways. -7- 1980(2) 1981 1982 1983 1984 1985 4/86 Village of Buffalo Grove.�1 Cook County, Illinois 8.0% 8.5% 10.9% 10.7/. 8.8% 8.67/. 7.8% Lake County, Illinois 7.0% 6.8% 8.6% 7.7% 6.1% 6.1% 5. ZZ State of Illinois 8.37/. 8.5% 11.3 %, 11.4% 9.1% 9.2% 8.2% United States 7.2% 7.67/. 9.70/. 9.60/. 7.5% 7.3% 7.1% Source: (1) Illinois Department of Labor, Bureau of Employment Security for 1981 -1986. Data presented by place of residence -- excludes (2) self - employed, agricultural and military workers. U.S. Department of Commerce, Bureau of Census for 1980. Retail Activity The Village benefits from a substantial retail base. Located within Buffalo Grove are several shopping centers, including the Plaza Verde Shopping Center, Strathmore Square, Cambridge Commons, Grove Shopping Center and Ranchmart Shopping Center. These five shopping centers are among the ten largest taxpayers and account for approximately 5% of the Village's assessed value. The 1982 Census of Retail Trade reports 111 retail establishments within the Village, providing a sales volume of $78,987,000. Food stores, drug and proprietary stores, and gasoline service stations account for most of the Village's retail sales. Transportation The many transportation alternatives available to Village residents allow them to pursue employment opportunities throughout the Chicago metropolitan area. PACE, the Regional Transportation Authority's suburban bus line, runs several routes through the Village, including a route that connects to the Chicago and Northwestern Train Station in Arlington Heights. Several U.S. Routes connect the Village to Illinois state highways. -7- VILLAGE 00MUMU AMID SERVICES The Village is governed by a President and Board of Trustees, elected at- large. The six Trustees serve four -year terms, with half the Board elected every two years. The Village Manager, whose position was created by ordinance in 1967, oversees Village operations and carries responsibility for the supervision of staff, delivery of services, facility management, and financial administration. Municipal Facilities and Services The Village provides direct services in the areas of public safety, water utility distribution, sewerage collection, public works services, and recreation. For these functions, the Village employs 139 full -time employees. The Village Manager is responsible for the Police Department. The police force consists of 37 full -time police officers, aided by 20 civilians who serve as support staff. The Village Hall, which also serves as Police Headquarters, was constructed in 1968 and partially remodeled in 1978. The Village maintains two active fire stations, built in 1974 and 1981, which are staffed by 22 professional firefighter /paramedics and 22 firefighters paid on a per call basis. Part -time firefighters also serve as emergency medical technicians. In 1982, the Village's fire insurance rating was upgraded from a Class Seven to a Class Four, a rating exceeded by only 19 other municipalities or fire protection districts in the state. Beginning in 1984, as replacement for a ground water supply system, the Village has received Lake Michigan water as a member of the Northwest Water Commission, which includes the Villages of Arlington Heights, Palatine, and Wheeling. The Village has contracted to purchase water from the Commission and to pay its portion of debt service on the Commission's water revenue bonds from revenues derived from the operation of its local water system. Pursuant to its agreement with the Commission, and prior to the changeover, the Village constructed four storage reservoirs and made other improvements to its existing water distribution system. The Village's wells are still operational and are available to supplement Lake Michigan water as needed. The Village's water system currently has 6,943 customers and is served by 112.4 miles of water mains. The Village operates a sewage collection system for all residents. Waste water treatment, however, is provided by either the Metropolitan Sanitary District of Greater Chicago or the Lake County Public Works Department, for which Cook County residents are taxed, while Lake County residents of Buffalo Grove are billed user fees on a monthly basis. As part of its municipal recreation program, the Village owns and operates an existing 18 -hole golf course. Additional recreational services are provided by the Buffalo Grove Park District, which is nearly coterminous with the Village. The Park District owns and maintains approximately 110 acres of park lands and an indoor - outdoor swimming pool. In addition, through cooperative agreements with the public schools, the District provides recreational programs in school facilities. am Education The Village is served by five school districts, with attendance determined by county of residence and school district boundaries. Primary education is provided by Community Consolidated School Districts No. 21 in Cook County, and No. 96 and No. 102 in Lake County. Secondary education is provided by Township High School Districts No. 214 in Cook County and No. 125 in Lake County. The Village is served by Community College District No. 532, College of Lake County, a two year public institution for Lake County residents. The College is located on 230 acres adjacent to Grayslake approximately 16 miles from the Village. In addition, an extension facility, the Lakeshore Educational Center, is maintained in Waukegan. The Village is also served by Community College District No. 512, William Rainey Harper College. This two year public college is located on a 200 -acre site in Palatine, approximately five miles from Buffalo Grove. The College also operates 17 off - campus locations. 10 Levy As part of the budgeting process and in accordance with law, ordinances are adopted by the Village of Buffalo Grove which authorize the raising of revenue by direct ad valorem taxes on all real property in the Village. These ordinances, containing the tax levies, must be certified and filed in the offices of the Lake County and Cook County Clerks. The Village of Buffalo Grove, as a constitutional home rule unit, has no statutory tax rate or levy limitations. Ar.aPC.cunPnt Lake County Real property, except for certain railroad property which is assessed directly by the State, is valued for tax purposes by the Township Assessor on the basis of market data, cost of property, or present worth of income - producing property. A single level of assessment, 33 1/3% of full market value, is required for all property in Lake County. Property must be reassessed every four years; the most recent quadrennial assessment year for township counties was 1985. The work of the Township Assessor is subject to supervision and review by the County Supervisor of Assessment. The County Board of Review hears taxpayer complaints and receives exemption applications. Taxpayers have further rights of appeal at the state level. The Board of Review has the power to equalize the average level of assessments among the townships in the County and has done so in recent years. Cook County The Cook County Assessor is responsible for assessing all taxable real property in the County, except for certain railroad property assessed by the State. Cook County is presently divided into four assessment districts; one district is reassessed each year. The northeast quadrant of Cook County, in which Buffalo Grove is located, received its quadrennial reassessment in 1984. Cook County classifies property into 5 major and 3 special classes for purposes of assessment and taxation, with each classification bearing its own percentage of fair market value. These percentages range from 16% for residential property, and for temporary incentives for certain industrial and commercial development, to 4CP /o for most commercial and industrial property. Taxpayers may contest their assessments through procedures established by the Assessor and may, in addition, appeal to the Cook County Board of Appeals. Equalization Equalization of the level of property assessment among counties in the State is conducted by the Illinois Department of Revenue. A multiplier is assigned to all property in each County to bring the County's average level of assessment to the statutory requirement of 33 1/37. of full market value. For the 1984 tax year, the state multiplier assigned to Lake County, after township equalization, was 1.0, while the multiplier assigned to Cook County was 1.8445. Railroad property, assessed directly by the State, is not subject to such equalization. -10- Exemptions An annual general homestead exemption provides that the assessed valuation for certain property owned and used exclusively for residential purposes can be reduced for 1979 and subsequent years by the amount of any increase over the 1977 assessed valuation, up to a maximum reduction of $3,500. In addition, persons 65 or older may apply for an annual reduction of up to $2,000 in the equalized assessed valuation of an owner - occupied residence. These permitted reductions have increased to current levels through periodic legislative action. Having a lesser impact on the Village's total valuation, a home i rovement exemption allows owners of single family residences to make up to 30,000 in home improvements without increasing the assessed valuation of their property for at least four years and a Disabled Veteran's exemption provides an annual reduction of $30,000 of assessed valuation for owner - occupied residential property. Tax Rates Each County Clerk computes tax rates by dividing the levies filed for each purpose by the total equalized assessed valuation of the Village. Due to differences between the counties in timing and in assessment practices, the total valuation used by Lake County is comprised of actual values in Lake County and estimated values in Cook County, with adjustments made the following year, as necessary. Taxes to be extended are calculated by applying tax rates to all property in the Village. This calculation also includes a weighted factor received from the Illinois Department of Revenue which compensates for differences in assessment levels and apportions the Village's levies between the counties. Collections Lake County Property taxes are collected by the Lake County Treasurer who remits to the Village its share of the collections. Taxes levied in one year become payable during the following year. During the collection year, tax bills are scheduled to be mailed on May 1 with payments due June 1 and September 1, but in no event sooner than 30 days after the bill is mailed. Penalty for late payment is 1 11A per month per installment past due. -11- Cook County Cook County taxes become due and payable during the collection year in two installments. The first installment is due March 1 and is an estimated bill, computed as one -half the prior year's tax bill. The due date for the second installment is scheduled for August 1, or 30 days after the bill is mailed, whichever is later. The second installment is based on the current levy and equalized assessed valuation and will reflect any change from the prior year. Unpaid taxes accrue penalties at the rate of 1 11TI. per month per installment due. Truth in Taxation Act Under the Illinois Act, notice in prescribed form must be published and a public hearing must be held if the aggregate annual levy, exclusive of debt service levels, is estimated to exceed 10 -T/0 of the taxes extended upon the levy of the preceding year, exclusive of election costs. No amount in excess of 105% of the taxes extended upon the levy of the preceding year may be extended for the current year unless the levy is accompanied by a certification of compliance with these procedures. The Village has been and expects to be in compliance. All ad valorem personal property taxes in Illinois were abolished effective January 1, 1979. The Personal Property Replacement Tax became effective July 1, 1979. This tax represented an additional tax based on the income of corporations and trusts, a new income tax for partnerships and Subchapter S corporations, and a new tax on the invested capital of public utilities. The distribution schedule requires eight payments during a calendar year from such tax revenues. Moneys received by a taxing district shall be first applied toward payment of the proportionate amount of debt service which was previously levied and extended against personal property for bonds outstanding as of December 31, 1978, and next applied toward payment of a proportionate share of the pension retirement obligations of the City. -12- Z O F H (� H 01 Q F ay-I W > O a r-� G O u cg C O .y C W N 01 L F •c w e ��u L C N W M s m o`DO � .J-1 i 1 p 5 u LV+ ~ 00 O , (31 m � rn O 1 O U 1 VO w O •p LC C >, uUU .�-1 r� cn H D` CO O• O� CI 7>1 N �5"� ( S O) V O a u ^+ Y O 4 Y t�1 �o (J�1 rn � vJi vii rJ'1 I Uuul .+ N vl J N J 1 u vt r� •p O N N N 4! n vMi IliJ J WUU % •.� D\ 'D 00 F a>i o a `p H N^.. .-1 .•� co N .n r 1 X a, O N M O+ 1 IO L I 1 w O u " v°, rn a°o 0 m 1Va t• 5oj �--� .-1 O, Q` O, O1, O, O• w u o M N L N "i cc n N J x C14 w 00 Cl O V Q� f� O• f�1 r•1 r-1 00 y •p r. p� n OC J J X 'N V1 N 1 T 4 Fw o � ip o. J n rn v> n -o O S zg O w+ -1 . M N O, O r--1 N m y rn rn rn rn rn O rn 's TI � ol � CY, a, ol C, -13- N N N u u ti C O7 > N L N rn O L (L(JJ L 7J .a o G V O U U (U u w m w 0 > m •2 N u W Npp T Cl L N O O W W N > O 4) � a a g w v � y u ~yy O G O. p L u > u O N V r-1 Ql N w u m N 10 O1 L O U T P Ol N s U O 3� L O W 01 u n O .V 0 u r 7 N CG uc 6 07o 0 U � N v O 'Q 0 co O Y IE w w O w m O N N w 7 M v Assessed and Estimated Market Value of Taxable Real Property Village of Buffalo Grove Real Property Assessed values(1) Estimated Tax Percent market year Lake Cook Total increase value(2) 1975 $ 21,078,322 $ 42,159,667 $ 63,237,989 - $ 189,713,967 1976 27,855,550 53,304,582 81,160,132 28.3% 243,480,396 1977 33,305,344 52,325,287 85,630,631 5.5 256,891,893 1978 49,425,922 54,570,919 103,996,841 21.4 311,990,523 1979 65,828,832 58,029,223 123,858,055 19.1 371,574,165 1980 81,286,826 73,669,999 154,956,825 25.1 464,870,475 1981 86,413,201 79,265,576 165,678,777 6.9 497,036,331 1982 89,707,131 85,057,050 174,764,181 5.5 524,292,543 1983 95,215,991 81,251,426 176,467,417 .97 529,402,251 1984 104,846,000 91,270,981 196,116,981 11.13 588,350,943 (1) The ratio of assessed value to market value is estimated by the Lake County Supervisor of Assessment to be 33 1/37. throughout the County, and by the Cook County Assessor to be 33 1/3% only for the County as a whole, due to the classification of real property in Cook County. (2) Estimated market value has been calculated for real property by utilizing the final certified assessed valuation for the Village and extending by the estimated ratio of assessed value to market value (33 1/3%). To the extent that the Village's equalized assessed value in Cook County is composed largely of residential property, which is assessed and equalized at a lower percent of market value than in other Illinois counties, any calculation of market value using 33 1/3% will understate the result. It is estimated by the Village that the actual market value for all real property is significantly higher than shown above, based upon extrapolated data provided by the Illinois Department of Revenue through its tax reapportionment studies. The current estimate is approximately $627,000,000. SOURCE: Village of Buffalo Grove 1985 Annual Report Lake County Supervisor of Assessment Cook County Assessor -14- Comparative tax rates (per $100 assessed and equalized valuation) Village of Buffalo Grove (for all purposes) Lake County Cook County All Overlapping Governmental Units County, including Forest Preserve District Lake County Cook County Metropolitan Sanitary District of Greater Chicago Lake Co. Cook Co. Combined School Districts Lake Co. (Dist. #96, #125, #532) Cook Co. (Dist. #21, #214, #512) Buffalo Grove Park District Lake Co. Cook Co. Indian Trails Public Library District Lake Co. Cook Co. All Other Lake Co. Cook Co. Combined Total Lake Co. Cook Co. Tax Years 1984 1983 1982 1981 $1.681 $1.570 $1.064 $1.246 1.977 1.985 1.322 1.298 .696 .583 .594 .567 1.059 1.023 .937 .810 -0- -0- -0- -0- .694 .715 .664 .643 4.836 4.838 4.583 4.618 4.672 4.761 4.701 4.254 .448 .404 .401 .367 .502 .473 .406 .391 .332 .255 .229 .246 .502 .473 .406 .391 .192 .273 .250 .244 .044 .061 .045 .108 $8.185 $7.923 $7.121 $7.288 9.277 9.274 8.322 7.737 SOURCE: Village of Buffalo Grove 1985 Annual Report -15- Principal Taxpayers SOURCE: Village of Buffalo Grove 1985 Annual Report -16- Percent 1984 of total Equalized equalized Type of assessed assessed Name business valuation valuation LaSalle National Bank Plaza Verde Shopping $ 4,293,981 2.19% Under Trust #40890 Center Stonegate Garden Apartments Apartment complex 3,240,132 1.14 Strathmore Square Shopping Center 1,483,166 .76 Cambridge Cannons Shopping Center 1,297,479 .66 Bank of Buffalo Grove Commercial Banking 1,223,630 .62 Properties George McElrogs Buffalo Grove Business 1,016,030 .52 Park - Unit 1 LaSalle National Bank Grove Shopping Center 966,380 .49 Under Trust #104353 Chicago Title & Trust Go. Ranchmart Shopping 918,342 .47 Under Trust #31380 Center Continental Bank of Buffalo Commercial Banking 914,634 .47 Grove, N.A. Properties Buffalo Grove Toyota Automobile Dealership 737,800 .38 Total 7.70'10 SOURCE: Village of Buffalo Grove 1985 Annual Report -16- DEBT SUMMARY VILLAGE OF BUFFALO GROVE Direct and Overlapping Debt of the Village (as of April 30, 1986) Principal Amount Direct Debt (including this issue) Outstanding General Obligation Bonds(1) (2) $ 20,182,000 Golf Course Installment Purchase Contract 485,000 Revenue Bonds (Waterworks & Sewerage) 3,410,000 Total Debt $ 24,077,000 Less self- supporting(3) 31410,000 Total net direct debt $ 201667,000 (1)Excludes three Special Service Area Bond Issues totalling $13,450,000 which are not general obligations of the Village. (2)General Obligation debt outstanding $ 50,000 Municipal Building $ 135,000 Fire Station Construction $ 172,000 Dundee Fire Station Note $ 900,000 1981 Corporate Purpose Bonds $ 4,450,000 Corporate Purpose Bonds Series 1982A $11,175,000 1984 Corporate Purpose Bonds $ 3,300,000 Corporate Purpose Bonds, Series 1986 (this issue) (3) Includes $3,410,000 Waterworks & Sewerage Revenue Bonds -17- Net Overlapping Debt Estimated amount of net general obligation Village of debt as of Percent Buffalo Grove Name of governmental unit Apr. 30, 1985 applicable share of debt Cook County $290,550,000 .263 $ 764,147 Cook County Forest Preserve District 24,650,000 .263 64,830 Metropolitan Sanitary District of Greater Chicago 680,200,000 .268 1,822,936 Lake County Forest Preserve District 22,600,000 2.462 556,412 Buffalo Grove Park District 2,200,000 96.840 2,130,485 Wheeling Park District 3,285,000 .900 29,565 Vernon Area Public Library District 335,000 11.417 38,247 Wheeling Gomm. Consol. #21 Wheeling Township H.S. #214 2,005,000 3.402 68,210 Harper Community College #512 2,000,000 1.909 38,180 Kildeer Countryside Community Consolidated #96 3,275,000 52.294 1,712,629 Aptakisic -Tripp Community Consolidated #102 3,040,000 37.289 1,133,595 Adlai E. Stevenson H.S. District #125 10,665,000 27.184 2,896,455 College of Lake County #532 3,555,000 2.904 103,237 Total overlapping debt $11,358,928 Total net direct debt $20,667,000 Total net direct and overlapping debt $32,025,928 Selected Debt Statistics Equalized Assessed Valuation, 1984....... . ................ $196,116,981 Estimated Full Value of Taxable Property, 1984 ................. $588,350,943 Population, 1985.. ............ ............................... 26,168 Statutory Debt Limit ................ ........................... None Net direct debt Net direct and overlapping debt -18- Per Capita As %of Estimated Full Value $ 790 3.51% $ 1,224 5.447. -19- w MVIN GOJJN M Jc0 c0 a`�VIMO J M J �••� .••� M .+ J M N O 00 '+ D` T .-i 1� ID �? O �NNMJJ c�aaa .- �DIDnr�oocoaornrnrno V +. W y •D OW JM VI 00N 0 0 0 u'1 VI O � C r-i t0 .-1 00VIO J W IM D %O D 10 04 M N O N u N U W D�f10n�OJMNOTWt��O�MMN� --1 L y .-11+ �•"^ 10 ID-10 M� 0O 0000VIOVI VIA VI VI �'D L] uV ""�Mf�✓1N M OH O OHO N 10 M0 01O� --�N MJMVINN �OONID ID I�OD VIM I 10 ID .-i -1-4 .-i ,-i -4,4 p N L 00 Ol 7) VI Vl000vl0 Vl �+'�VIO VlO 0000v11 O ,,,� A H LM ODT O.+N MJvl ID 1�D�ONJID OD ON .- iI- 1NNi -/ry �••�r -1.-IN NNNNMM O M O m W J��a00o a°poP w.. E u m c I J n .4 C tu t0 w ry .] 7 61 W pJ O VI 0 0 VI VI V1 V1 VIp O VI O VI VI VIN v.TJVO1 VI Ou O vNi �'I�10nO ^WNO N pR.D01 U W ,.j 1 L `� > y w�� OD v,00�nvlvlopo�n�n N VI O N 1� N V1 S VI 1� 1� O u C 0 = vW O-1 MM�TJJVI VI�DN N.N VI J - f J j r a y a�. w� n� "'000000 G d +OCi n vw m NJ JJ N ^" w In au-f4Qga coca" v, - H - M M M M 1-1 .r Cp N 1,a��p - -ANN v LO p e+01 L go m N m C y p S p Q p p Q a P F 0 P R a 33 0 0 T a C G0 0 0 0 Wrw .. q.� ..f....1.. -4 14..N NN NN C4 -19- Scbedule of Revenue Bond Coverage - Waterworks and Sewerage Fund (April 30, 1985) Village of Buffalo Grove *Excludes depreciation and amortization SOURCE: Village of Buffalo Grove 1985 Annual Report -20- Net revenue Revenue Fiscal Operating Operating available for Debt service requirements bond year revenues expenses* debt service Principal Interest Total coverage 1976 $1,180,853 453,204 727,649 40,000 276,500 316,500 2.30 1977 1,322,139 595,821 726,318 40,000 273,700 313,700 2.32 1978 1,601,229 680,512 920,717 40,000 270,900 310,900 2.96 1979 1,730,069 759,260 970,809 40,000 268,100 308,100 3.15 1980 1,838,988 1,074,763 764,225 40,000 265,300 305,300 2.50 1981 1,571,777 1,213,742 358,035 50,000 262,500 312,500 1.15 1982 1,677,969 945,752 732,217 50,000 259,000 309,000 2.37 1983 1,931,013 1,217,215 713,798 50,000 255,000 305,500 2.34 1984 3,417,742 1,477,874 1,939,868 50,000 253,750 303,750 6.39 1985 4,018,324 2,466,065 1,552,259 60,000 247,800 307,800 5.04 *Excludes depreciation and amortization SOURCE: Village of Buffalo Grove 1985 Annual Report -20- Pension Fund Obligations The Village, is required by State law to provide funds sufficient to meet actuarial requirements of its annual pension fund obligations. The amounts necessary to fund the Police and Fire Pension Fund obligations are determined by the Illinois Department of insurance. As of April 30, 1985, the unfunded accrued liability of the Fire Pension Fund was zero and the unfunded accrued liability of the Police Pension Fund was $349,561. Illinois legislation, signed into law in September 1979, changed the funding period for the prior service cost for both the Police and Fire Pension Systems to a 40 year period ending in 2020. Other full -time municipal employees are covered by the Illinois Municipal Retirement Fund (IMRF). As of December 31, 1985, the present value of future contributions to be made by the City on behalf of present employees was $3,357,312, including unfunded prior service of $2,228,695. The DIRF annually determines the contribution rate necessary to provide full funding of the unfunded prior service costs, including interest, over a 40 year period. -21- StAMARY FINANCIAL INFORMATION Financial statements of the Village appearing in this Official Statement, other than budget information, have been taken from the annual audits. Budget information is taken from the Village's official budget. Portions of the audit for fiscal 1985 is contained in Appendix B herein. Complete copies of audits for fiscal 1983 through 1985 are available upon request from the Director of Finance and General Services for the Village, Bill Brim. Accounting Practices The Village historically has maintained its financials according to Generally Accepted Accounting Practices as adapted by the National Council on Governmental Accounting. The Government Finance Officers Associations, which recommends that all municipalities adopt these accounting practices, now awards a "Certificate of Conformance" to those who do. The Village has been awarded a Certificate of Conformance each year since 1982. -22- VILLAGE OF BUFFALO (MOVE General Fund Balance Sheet -23- Fiscal Years Ending April 30 1 983 1984 1985 Assets Cash $ - $ 87,726 $ 161,079 Investments, at cost 1,365,40 1,267,000 2,552,000 Receivables, net of allowance for uncollectibles: Taxes (note 3) 1,314,967 .1,513,532 1,337,813 Municipal sales tax 234,096 256,830 302,962 Illinois income tax 35,426 40,136 42,683 Interest 11,131 15,029 20,956 Miscellaneous 10,000 10,000 10,000 Due from other funds 1,124 4,183 6,757 Total Assets $2,972,241 $3,203,436 $4,474,250 Liabilities and Fund Equity Bank overdraft $ 88,476 - - Accounts payable and accrued liabilities 163,675 163,087 254,160 Contracts payable 43,888 - - Deposits 196,633 209,953 314,633 Due to other funds 76,359 41,915 86,402 Deferred property tax revenue 1,314,967 1,513,532 1,377,813 Total liabilities $1,881,998 $1,928,487 $2,033,008 Fund equity: Unreserved - undesignated 1,090,243 1,274,949 2,441,242 Total fund equity 1,090,243 1,274,949 2,441,242 Total liabilities and fund equity $2,972,241 $3,203,436 $4,474,250 -23- W O ,Du o C% O t� h M N O rn O .J -1 aJ .0 Y 0 0VS M +1 .0n ..-0 � � N N J .-•1 v1�O� n D co m In N M A1nO N 0 7 O� O r of lD IT N- N - M 10 6-1 f p IO N J M f1 r �vO..-•0 -•l � � � O O S O J v 4) V! S 10 'D co 1 00 O C', d• N J �D D` II'1 N N �D 8 M �--1 J N vl 10 N O, O, O N O, M �D O N ri a0 M-.O M.DM S mJT N N M O �0 J •-'i CD tro� �DMMMOOJ T MI�M V1 J 10 N 00 J (L 10 N O)M 00 r-1 'W �Nt\ �D N SO �O M J O 6 Gfl�� a 4'fM 4} ENR CN co co .-/ r•1 U1 .-1 N O M J Vl M M Ol a' ON M c0 c0 V OTODOJI� O ✓1M�D J M 00 �'+ M O �D co vl N N O uY M N W 1/1 n N 1/1 1 1- O M N '-i M 1� N f` n M J �•�1 M .i N U'1 .� M Yl 4? 49 47 44 N N u 7 G O eS-I CO 'pc M .-1 IO�+ OM Mc0 NM �V�rD•i1 .-i 00 0O 0 N CT S J N N 00O OO J N N O I N 00 M � �N Jcco O ID S .-1 u N S co m c0 !� .-I n O+ 00 CO w C) J .� N u'1 1� u1 O c0 v1 N 10 10 Ul G 'OC vi C7 N W eD O J �O rl S 00 0 N _ > O a, O, N I� J M c0 M Vl .•-1 M N N r•1 Vl N 1� n n N J `-� M •per" ry .-+ rl J -4 N S y N 4i 4'S 4J 46q 4i 4f 10 m L •p � 7 U 10 m 10 M �O �D O� Q` .� O+ T O M .••1 N N .-1 M 6 O�S�D0OM O N9O O c01/1 N O N W N O+ r-1 T V1 T .--I .-i 00 �D 10 to O.-i I�JMJ M M-J O` 10 OO O` M a, I�'o J N r•1 N .- u'1 t� M J .�.i N .� O+ O 1 S •••1 N J '� 43 9 4) V! 44 u on o�p u M L H C W d U cl U N N W C G 10 N G N •.U+ O N O 7 w w •.Gi W W O•.L+ n O O Y d u T U N 41 0 M 7 N u •O 'O Gl u c G 7 N o0 Cy G cc w 7 7 c0 W Ic u v u u Gy t+ y X •O 9 U y d O 1++ 10 N W C u u u d N 6 N W mcOOO c > oom a `o m•. ,�,, ,sw ouyu w Tvl> ueC6 u N �U cT0 W mu0 fGp C� o f c mOUOD G G .. L 0! O Vi r-I .--1 5 L N .. •a 7 'd U1 d / io N m u m 00 0! ' i lc C Ol r L 0 u c W w L m U CN O 7 is W V O d .O 3 �'.� v v v u o v r. � 7•'1 o u �� E, � .o � � o —24— C 1:,� -� The rating assigned to the Series 1986 Bonds by Moody's expresses only the views of this rating agency. The explanation of the significance of those ratings may be obtained from Moody's. There is no assurance that any rating will continue for any period of time or that such rating will not be revised or withdrawn. Any revision or withdrawal of ratings may have an effect on the market price of the Series 1986 Bonds. TAX EXEMPTION In the opinion of Isham, Lincoln and Beale, Chicago, Illinois, interest on the Bonds is exempt from federal income taxes under existing law as of the date of original delivery of the Bonds. Interest on the Bonds is not exempt from Illinois income taxes. The form of Legal Opinion can be found in Appendix A. PENDING FEDERAL TAX LEGISLATION On December 17, 1985, the United States House of Representatives passed H.R. 3838, the Tax Reform Act of 1985, (the bill in that form is referred to as the "Fuse Tax Bill "). The House Tax Bill would make substantial changes in Federal income tax law. Certain of those changes relate to the tax - exempt status of interest on bonds issued by state and local governments on or after January 1, 1986. The House Tax Bill would establish various additional requirements which, if applicable, would have to be met in order for interest on the Bonds to be exempt from Federal income taxes. Among these is a requirement that the Village spend not less than 5% of the net proceeds of the Bonds within 30 days of their date of issuance. Under the House Tax Bill, with its effective date provisions as adopted by the House of Representatives, the failure of the Village to comply with these requirements could result in interest on the Bonds being taxable, retroactive to the date of issuance of the Bonds. On March 14, 1986, the Chairman and ranking members, respectively, of the Senate Finance Committee and the House Ways and Means Committee and the Secretary of the Treasury issued a joint statement (the "Joint Statement ") endorsing a postponement of the effective date of certain provisions of the House Tax Bill to the earlier of September 1, 1986 or the date of its enactment. Under the Joint Statement, the provisions of the House Tax Bill relating to expenditure within 30 days of issuance and certain other requirements would not apply to Bonds issued prior to the earlier of September 1, 1986 or the date of enactment of the legislation. On June 24, 1986, the United States Senate passed a substitute version of H.R. 3838 (the "Senate Tax Bill ") in place of the House Tax Bill. The Senate Tax Bill would modify the provisions of the Code pertaining to the tax - exempt status of interest on state and local government obligations, but such modifications would apply only to obligations issued after December 31, 1986 and, thus, would not apply to the Bonds. The Senate Tax Bill also would amend provisions relating to a tax on a taxpayer's alternative minimum taxable income. -25- Generally, these provisions would require after December 31, 1986 that one -half of any tax- exempt interest, including interest on bonds such as the Bonds, earned by a corporation (other than S corporations, regulated investment companies and real estate investment trusts) be taken into account in computing such corporation's alternative minimum taxable income. Upon the delivery of the Bonds, Bond Counsel is to deliver its additional opinion to the effect that, if the effective date of the provisions of the House Tax Bill referred to in the Joint Statement is subsequent to the issuance of the Bonds, interest on the Bonds is exempt from federal income taxes under existing law, as it would be amended by the House Tax Bill with such an effective date as to those provisions. The additional opinion of Bond Counsel, however, will be to the effect that, if the Bonds are held by property and casualty insurance companies, interest on the Bonds may be subject, under the provisions of the House Tax Bill but with provisions as to effective date as endorsed by the Joint Statement, to what is, in effect, an alternate minimum tax for taxable years beginning after December 31, 1987. The additional opinion will also be to the effect that interest on the Bonds is exempt from Federal income taxes under present law, as it would be amended by the House Tax Bill, in the amended form in which it was passed by the United State Senate, except that, while the Bonds are held by corporations, such interest may be subject to an alternate minimum tax for taxable years beginning after December 31, 1986. There can be no assurance as to whether the House Tax Bill or the Senate Tax Bill will be enacted into law or, if enacted, what its provisions, including effective date, will be. There can be no assurance as to whether the Village can or will comply with any new tax legislation and what the effect, if any, may be on the taxability of interest on the Bonds. It is possible that any legislation will have the direct or indirect effect of changing the economic consequences of owning obligations such as the Bonds. Investors should consult their own tax advisors to determine the potential impact of pending tax reform proposals on their federal income taxes. UNDERWRITING The Underwriter has agreed to purchase the Bonds at an aggregate purchase price of $ plus accrued interest to the date of delivery, pursuant to a Bond Purchase Agreement entered into between the Village and the Underwriters. The Underwriter reserves the right to join with dealers and other underwriters in offering the Bonds to the public. The obligation of the Underwriter to accept delivery of the Bonds is subject to various conditions of the Bond Purchase Agreement, but the Underwriter is obligated to purchase all of the Bonds if it purchases any of the Bonds. FINANCIAL STATEMEM The financial statement included in Appendix B to this Official Statement has been examined by Peat, Marwick, Mitchell & Co., independent certified public accountants, and is included herein in reliance upon the authority of said firm as experts in accounting and auditing. -26- CERTAIN LEGAL MATTERS Legal matters incident to the authorization and issuance of the Bonds are subject to the approving opinion of Isham, Lincoln & Beale, Chicago, Illinois, Bond Counsel. Certain legal matters will be passed upon for the Village by the Village Attorney. NO LITIGATION CERTIFICATE Upon the delivery of the Bonds, the Village shall furnish a certificate, in form satisfactory to Bond Counsel, to the effect that, among other things, there is no litigation pending in any court to restrain or enjoin the issuance or delivery of the Bonds, or in any way contesting the validity or enforceability of the Bonds or the pledge of the Village's full faith, credit and taxing power for their payment. AU MORIZATION The Village has authorized the distribution of this Official Statement. At the time of delivery of the Bonds, the Village President will furnish a certificate executed stati that to the best of his knowledge the Preliminary Official Statement did not1as of its date) and the Official Statement does not (as of its date) and will not (at the date of delivery of the Bonds) contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. This Official Statement has been duly executed and delivered by the following officer on behalf of the Village of Buffalo Grove. VILLAGE OF BUFFAIA GROVE, ILLINOIS Village President -27 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX A FORM OF LEGAL OPINION Form of Opinion of Bond Counsel July , 1986 Continental Illinois National Bank and Trust Company of Chicago 231 South LaSalle Street Chicago, Illinois 60697 Gentlemen: We have examined a certified copy of the tran- script of proceedings and accompanying certificates relating to the issuance of $3,300,000 aggregate principal amount of Corporate Purpose Bonds, Series 1986 (the "Bonds "), of the Village of Buffalo Grove, Cook and Lake Counties, Illinois (the "Village "). The Bonds are initially dated July 15, 1986 and mature on the dates and in the amounts and bear interest at the rates per year as follows: Maturing (January 1) 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Amount Maturing Interest Rate -2- Interest on the Bonds is payable on January 1, and July 1 in each year, with the first interest payment date being July 1, 1987. Bonds maturing on or after January 1, 1997 are subject to redemption at such times and upon such terms as are stated in the Bonds. We have also examined executed Bond Number .1. Based upon our examination of the certified copy of the transcript of proceedings, the accompanying certifi- cates and the Bond referred to above, it is our opinion that the Bonds are valid and legally binding general obligations of the Village in accordance with their terms, payable from ad valorem taxes levied against all of the taxable property in the Village without limitation as to rate or amount. We are further of the opinion that interest on the Bonds is exempt from federal income taxes under existing law. Very respectfully yours, APPENDIX B AUDITED FINANCIAL STATEHM VILLAGE OF BUFFALO GROVE, ILLINOIS Audited Financial Statements All Funds and Account Groups April 30, 1985 F NPEAT MARWICK Board of Trustees Village of Buffalo Grove, Illinois: Peat, Marwick, Mitchell & Co. Certified Public Accountants Peat Marwick Plaza 303 East Wacker Drive Chicago, Illinois 60601 312- 938 -1000 We have examined the combined financial statements of the Village of Buffalo Grove, Illinois as of and for the year ended April 30, 1985 as listed in the accompanying table of contents. Our examination was made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the combined financial statements referred to above present fairly the financial position of the Village of Buffalo Grove, Illinois at April 30, 1985 and the results of its operations and the changes in financial position of its proprietary fund types and pension and nonexpendable trust funds for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year, after giving retroactive effect to the change, with which we concur, as described in note 4 to the combined financial statements. Our examination was made for the purpose of forming an opinion on the combined financial statements taken as a whole. The supplemental information listed in the table of contents is presented for purposes of additional analysis of the combined financial statements rather than to present the financial position, results of operations, and changes in financial position of the individual funds. The supplemental information has been subjected to the auditing procedures applied in the examination of the combined financial statements and, in our opinion, is fairly stated in all material respects in relation to the combined financial statements taken as a whole. The information contained in the statistical section has not been subjected to the auditing procedures applied in the examination of the combined financial statements and, accordingly, we express no opinion thereon. June 28, 1985 P/- 40 1 L A t % ua 2 6 —,o F M— N M •O N h .'t h O O ? N N O •-+ N .D 1P1 N O %D 00 — O .7 00 CO •-+ h N Vl O h O+ Q\ O O O .O Vl W O h .D Ili O •D 1!� .O O O` M N O O .-+ N ., w O .7 N N N O, D, h w .. w ., O T O J N w .. .. .. O 00 h -• N .. .. J .7 O\ O Y H '+ h •Q O� .1 .1 O J M M � 1/'1 M O V'1 .•. 00 N O %D a` O O C H 12 O N N h .'f .••i M ti M .••� •••� N N M •'•. lD N N h w. 6 •�. 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J m Y u N N N m 4 L •a Y I I I l l l l t 1 1 J J 1 1 1 1 1 1 I I I 1 J w 0 J J J u c ui V1 u1 7 y m O c0 M M M q U J d d m I 1 1 1 1 1 I 1 1 1 1 I N I 1 1 1 1 I 1 d C ..a N N ) 1: a cn M M m m 1"" I I 1 I 1 I 1 1 I 1 1 1 I 1 1 c•1 ao m cN q r �. .•-i M N v1 u'1 1� y w w F N N N N m Y C V a0 O O c0 00 c0 N O 00 O h N I I 1 1 I I I 1 1 I 1 1 l 1 1 U y a 1 N T m W Y N m N N N - N ti cc q q Y V Y E O C 7 •.+ Y .••� n N J N O N d O N a, 1 0 OD 00 N y 7 c W q m vl N J a0 T O n n N M O� M O c0 au �O til w u O 7 •W OO c .-. I c •O J N O N N c w� a0 O h k• I a l .ra I n M I OO 1 1 ~ d V W r, co M "It .J-c ..c J O N o c•O1 N ~ OG Y O Hc� m Sao, ° o m Nw o O u 6 4 11 1 1 1 w V c - co Oo N IA c0 a0 cm U 07 oo m U u Y .. w ro p Y "o 'o q q F yl V Go a0 O O O 0^O k7 A •> 0 C m q I 1 1 1 1 to ..4 a .. .. V T F m Y u m a 10 1� J •o In o aD m M M M O •u M Y Y E Y> 1 1 I I I 1 1 O •O n J 1 1 I I 1 1 I N N N �O u C W uI PO .•r .r N M M M c0 E Y > Y u O O OM N M O N N N O m .O M O .. O J J J cn u m M .-1 •O J 00 w w O N N N N m c 1 N I J^ I 1 1 1 m I I 1 1 1 1 I J J J m U C-4 M M O J J J J •u .. N N N N J C m • N N C m u W Y m m Y \ q m q u a m Y u y m p •^Yi ..Oi C A w 7 Y In A w m d C m E W q J m Y C Y I Y T m x c0 Y 0. •.+ ..c y 8 m Cc �0 T m O u 7 Y ?C u m Y W g C W 6 Y C Y m u Y q c w > m u O 0. V Y W .3 u C ..+ u C Y Y O Y .+ m> uV T8••4 4) Y q V •.+ 7 ••+ u T O u Y m O Y m m e 07' •.+ u w m .0 1 ••� A ••+ .+ w W 3 W .+ u Y C m Y ••� •.+ m 11 U O Y Y •.+ m Y •• Y 0.m q Y q q m O T W a u Y A 4 m •.L Y Y O m m Y m 7 L A C m Y m O m m m I •.4 m W% + a oo C u Im 3 r. Y a e m a o Y q T ^� M A T O v1 Y •a c U Y •a Y m m •.•c .+ m •c O U •.� •• W u 1 V C C C C A u m. C W q C W .+ q C 00 Y -+ A 7 1+ A ++ T 0.0 q .r ... w v Y u m g Y w Y q .•+ 7 .•� 7 C ••+ u A m m w Y C m m m m e C m q m 8 •.+ Y Y u E Y m w m m 4+ •.+ u w m Y T 0. Y •.� 3 0. m OO m L Y U Y q Y 1 3> C q Y> u u u T •.+ m T •� m W O> .•+ q •.+ O .. u C Y W A W m Y w w O O O C ••+ a. Y w Y C m C -+ J V 04 .G 0. W •O m u 0 A F T 7 Y q > •.+ Y u Y -+ >.. Y U A Q Y w U �L W m m W Y m F E F m 0. A w .+ m u Y to C A O m •.+ •.� u C Y Y m O Y A 01 Y Y E m .� Y m •.+ u m O g q u ••+ 7 Y > U ,p u u Y Y u .0 0 Y 7 W m— m" .d T. w m w w O• u Y m Y C q Y C O u r7 O C m m •A O W W •.c u u 7 m 0 Y C> u ;4 L' C O4 O u 7 •.a W m u W W W •.+ u C w c O c Y 7 - m .al 0-+�+ O Y Y u$ m Y Yv C u C 0.Y W W m > C ouww w C Y m u 0 01 Y Y Y Y 01 la d V 9z in in W as 0 w v) 3 VILLAGE OF BUFFALO GROVE, ILLINOIS Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - All Governmental Fund Types Year ended April 30, 1985 Revenues: Property taxes Licenses and permits Intergovernmental revenues Fines Interest income Miscellaneous Total. revenues Expenditures: Current: General government Public safety Highways and streets Employee retirement benefits Capital projects Debt service: Principal retirement Interest and fees Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Operating transfers in Operating transfers out Total other financing sources (uses) Excess (deficiency) of rev- enues and other financing sources over expenditures and other financing uses Fund balances at April 30, 1984 Residual equity transfer Fund balances at April 30, 1985 Exhibit 2 Total Special Debt Capital (memorandum General Revenue Service Projects only) $ 1,927,442 176,249 236,759 - 2,340,450 1,360,146 - - - 1,360,146 1,873,442 469,289 - - 2,342,731 312,864 - - - 312,864 196,56.1 39,124 8,701 240,451 484,837 158,120 - - - 158,120 5,828,575 684,662 245,460 240.451 6,999.148 1,293,124 - - - 1,2932124 3,047,424 - - - 3,.047,424 782,552 85,476 - - 868,028 - 167,468 - - 167,468 - - 1,598,780 1,598,780 207,590 - 207,590 - - 228.964 - 228,964 5.123,100 252,944 436,554 1,598,780 7,411.378 705,475 431,718 (191,094) (1.358,329) .(412,230) 430,319 - 299,353 - 729,672 (82,700) (383,372) - - (466,072) 347,619 (383,372) 299,353 - 263,600 1,053,094 48,346 108,259 (1,358,329) (148,630) 1,274,949 313,767 76,642 3,073,149 4,738,507 113,199 - - - 113,199 $ 2,441,242 362,113 184.901 1.714.820 4.703.076 See accompanying notes to combined financial statements. 4 E \!: I I I I� I I Q•1 I I I I I I I Oy ql I I I I I f11 N Y> w p v v q•�I 7 v • 9 .•� •� -O O P � P N • d d n al • 1 1 1 1 1 ' I I I I N 1 1 „ b 1 1 1 O) I n� u <I Y ~ !1 wN+� rat Oy1I nt n Y •+ ^�I 0° °o °N 1ooV r n 1m.1 yn .•1 ti ..1 1 1 1 1 1 1� t� 1 1 1 1 II e•M 1 tl Y , 111 ! > w C v O 1 1 J „ 1 I �.1 1 1 1 11 I • 1 1 1 1 1 1( I I 1" 1 1 1 1 I11x1I,'I'' C y a •YI N� N dq C C tl ti .-1 y,w M O wl w1 1 1 1 1 1 1 1 C C q O Y: W p \ � N�•1 „ N O) n n V O N a0. .paiy • Y m ^ t l� l l I l t I I I / m� V •y< O +I ^ d �� N� d� S� m� d N� n�l ( I p •Y 1•� P � N � N� G ! e d d� d� d� d� r�) C � 6M 1 1 1 t 1 I) II 1 1 1 1 II Y; N� M < N1) Y I N Y Y •,, • C� • O d 0 0) I . i,: r ••i �q Y N 1�•In�ma0 1 � 1 1 1 1 �O,d I � �1 M O v NN Nd x•10 O N m 0 m P N h NNN I n�1 ct �1 � �I .r O O w N D OI N e 0-1 n amna�nvin rO.. m w 0 � xI lee �a2 al - p w N @ 6 tl "Q O O o It Y 1 1 1 J 1 1 1 N ^N I -1 1 1 y r e•w M 1nm M • N N t w Y Y Y Y V Y O T O •� Y T C Y: P•1 •P.1 p tl p M 0 0 .� 'O O V v � Y pj u M Y M 0 M 'Y •� Go w i tl 10'1 � G Y M ■ 4 •.Y1 -Yj � O 7 d Y p .n .r 9 •Y t > ■Y� q �» �Y � •� 9> O �� L Y O O ae�11 ■ � u q 16� IJS " M Y O O O F C O 0 Y Y\ Y\ < < Y Ga Y aY \ \ 1.111 y 6 O M O • 01 \\ Y O Y r1 \ • Y O Y C u w •� Y M w Y W � q D T Y 6 >>�• O M N1 \'O N Y Y C A•> u M Y O y« L M• Y Y'u Y 7 4 O T rr Y N tl ■•w •w p O D Q-A- 0 M Y� : • w• 9 ni Y Y -Y b O Y YM q a m p Y tl 0• 9• Y q w M N \ \ y u y q C ••1 ^ 4 0 W m W Gd 6 N q 0 \ Y tl Y 6 D C Y \ �� ua w w m ra q o S VILLAGE OF BUFFALO GROVE, ILLINOIS Combined Statement of Revenues, Expenses, and Changes in Retained Earnings - Proprietary Fund Types except Trust Funds Year ended April 30, 1985 Operating revenues: Water and sewerage charges Charges for services Daily green fees and memberships Merchandise sales Connection and recapture fees Cart and club rental Food and bar rental Driving range fees Miscellaneous Total operating revenues Operating expenses: Central garage operations Water operations Sewer operations Northwest Water Commission Golf course operations Cost of sales - pro shop Employee retirement benefits Depreciation and amortization Miscellaneous Total operating expenses Operating income Nonoperating revenues (expenses): Property taxes (notes 2 and 4) Interest revenue Interest expense Gain on sale of fixed assets Total nonoperating revenues (expenses) Income before equity in earnings of Northwest Water Commission and operating transfer Equity in earnings of Northwest Water Commission Operating transfer out Net income Internal Enterprise Service $ 2,954,680 - - 717,417 371,210 -- 67,716 - 1,045,538 - 118,790 - 8,521 - 44,455 - 23,790 - 4,634,700 717,417 - 293,196 770,869 - 1,103,864 - 565,502 - 360,992 - 52,245 - 45,861 - 319,003 202,633 7,769 - 3,226,105 495,829 1,408,595 221,588 920,584 - 583,312 135,009 (1,807,954) - 33.467 (304,058) 168,476 Exhibit 4 Total (memorandum only) 2,954,680 717,417 371,210 67,716 1,045,538 118,790 8,521 44,455 23.790 5,352,117 293,196 770,869 1,103,864 565,502 360,992 52,245 45,861 521,636 7.769 3,721,934 1,630,183 920,584 718,321 (1,807,954) 33.467 (135,582) 1,104,3,37 1,.204,537 390,064 I,494,601. 317,322 317,322 (224,600) - (224,600) 1,197,259 390,064 1,587,323 Depreciation expense al- located to contributed capital 110 - Reta.ined earnings at April 30, 1984 (note 4) 6,264,499 1,754,761 Retained earnings at April 30, 1985 $ 7,461,868 2,144,825 See accompanying notes to combined financial statements. 6 110 8,019,260 9,6 06,693 VILLAGE OF BUFFALO GROVE, ILLINOIS Combined Statement of Changes in Financial Position - Proprietary Fund Types except Trust Funds Year ended April 30, 1985 Sources of working capital: Operations: Net income Items not requiring (providing) working capital: Depreciation and amortization Gain on sale of fixed assets Equity in earnings of Northwest Water Commission Working capital provided by operations Other sources of working capital: Decrease in restricted assets Proceeds on sale of fixed assets Total sources of working capital Uses of working capital: Purchase of fixed assets Repayment of revenue and general obligation bonds payable Decrease in restricted liabilities Total uses of working capital Net increase in working capital Elements of net increase (decreases) in working capital: Cash Investments, net Receivables, net Due from other funds Pro shop inventory Cash overdraft Accounts payable and accrued liabilities and contracts payal Deposits Due to other funds Deferred revenue Net increase See accompanying notes to Exhibit 5 Total Internal (memorandum Enterprise Service only) $ 1,197,259 390,064 1,587,323 319,003 202,633 521,636 - (33,467) (33,467) (317,322) - (317,322) 1,198,940 559,230 1,758,170 683,950 - 683,950 - 35,946 35,946 1,882,890 595,176 2,478,066 1,021,034 700,407 126,668 1,848,109 $ 34,781 (305,579) 841,049 (65,898) 8,538 (462) )le (491,822) (63,335) 97,801 14,489 in working capital $ 341781 combined financial statements. 7 137,787 1,158,821 - 700,407 - 126,668 137,787 1,985,896 457,389 492,170 - (305,579) 449,000 1,290,049 4,149 (61,749) 37,377 45,915 - (462) (35,339) (35,339) (16,145) (507,967) 18,347 (44,988) - 97,801 - 14,489 457,389 492,170 Exhibit 6 VILLAGE OF BUFFALO GROVE, ILLINOIS Combined Statement of Revenues, Expenses, and Changes in Fund Balances - Pension and Nonexpendable Trust Funds Year ended April 30, 1985 Operating expenses: Refund of members' contributions 9,119 Nonexpendable 9,119 Miscellaneous Pension Trust Fund 192 Total operating expenses Trust Funds Working Cash Total Operating revenues: 539,762 8,261 548,023 Property taxes (note 2) $ 194,904 - 194,904 Members' contributions, net 115,299 - 115,299 Interest 238,870 8,261 247,131 Total operating revenues 549,073 8,261 557,334 Operating expenses: Refund of members' contributions 9,119 - 9,119 Miscellaneous 192 - 192 Total operating expenses 9,311 - 9,311 Net income 539,762 8,261 548,023 Fund balances at April 30, 1984 2,013,021 104,938 2,117,959 Residual equity transfer - (113,199) (113,199) Fund balances at April 30, 1985 $ 2,552,783 - 2,552,783 See accompanying notes to combined financial statements. 8 VILLAGE OF BUFFALO GROVE, ILLINOIS Combined Statement of Changes in Financial Position - Pension and Nonexpendable Trust Funds Year ended April 30, 1985 y Sources (uses) of working capital: Net income Purchase of investments Residual equity transfer Net increase (decrease) in working capital Elements of net increase (decrease) in working capital: Cash Receivables Due from other funds Net increase (decrease) in working capital Nonexpendable Pension Trust Fund Trust Funds Working Cash $ 539,762 8,261 (494,142) - (113,199) $ 45,620 (6,790) 52,410 $ 45,620 See accompanying notes to combined financial statements. 9 (104,938) (3,140) (1,798) (100,000) (104,938) Exhibit 7 Total 548,023 (494,142) (113,199) (59,318) (9,930) 50,612 (100,000) (59,318) VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements April 30, 1985 (1) Summary of Significant Accounting Policies The Village of Buffalo Grove, Illinois (Village) was incorporated March 7, 1958. The Village operates under a Council- Manager form of government and provides the following services as authorized by its articles of incorporation: public safety, waterworks, sewerage, building and zoning, - engineering, recreation, civil defense, and overall administration. The accounting policies of the Village conform to generally accepted accounting principles as applicable to governmental units. The following is a summary of the more significant policies. Basis of Presentation - Fund Accounting The accounts of the Village are organized on the basis of funds or account groups, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self- balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures /expenses. The various funds and account groups are summarized by type in the combined financial statements. The following fund types and account groups are used by the Village: Governmental Fund Types • General Fund - The General Fund is the general operating fund of the Village. It is used to account for all financial resources except those required to be accounted for in another fund. • Special Revenue Funds - Special Revenue Funds are used to account for the proceeds of specific revenue sources (other than expendable trusts or major capital projects) that are legally restricted to expenditures for specified purposes. Debt Service Funds - Debt Service Funds are used to account for the accumulation of resources for, and the payment of, general long -term debt principal, interest, and related costs. Capital Projects Funds - Capital Projects Funds are used to account for financial resources to be used for the acqui- sition or construction of major capital facilities (other than those financed by proprietary funds and trust funds). 10 (Continued) VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements Proprietary Fund Types Enterprise Funds - Enterprise Funds are used to account for operations (a) that are financed and operated in a manner similar to private business enterprises - where the intent _ of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and /or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. Internal Service Funds - Internal Service Funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the Village, or to other governmental units, on a cost - reimbursement basis. Fiduciary Fund Types Trust and Agency Funds - Trust and Agency Funds are used to account for assets held by the Village in a trustee capacity or as an agent for individuals, private organizations, other governmental units, and /or other funds. These include nonexpendable and pension trust and agency funds. Nonexpendable and pension trust funds are accounted for and reported on the same basis as proprietary funds since capital maintenance is critical. Account Groups General Fixed Assets Account Group - This group of accounts is established to account for all fixed assets of the Village, other than those accounted for in the proprietary funds . General Long -term Debt Account Group - This group of accounts is established to account for all long -term debt of the Village except that accounted for in the proprietary funds. (Continued) 11 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements Basis of Accountin The modified accrual basis of accounting is followed for the governmental funds and agency funds. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual, i.e., both measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Expenditures, other than interest on long -term debt, are recorded when the liability is incurred. See note 2 for property tax accrual policy. In applying the susceptible to accrual concept to intergovernmental revenues, the legal and contractual requirements of the numerous individual programs are used as guidance. There are, however, essentially two types of these revenues. In one, monies must be expended on the specific purpose or project before any amounts will be paid to the Village; therefore, revenues are recognized based upon the expenditures recorded. In the other, monies are virtually unrestricted as to purpose of expenditure and generally irrevocable, i.e., revocable only for failure to comply with prescribed compliance requirements, e.g., equal employment opportunity. These resources are reflected as revenues at the time of receipt or earlier if they meet the "susceptible to accrual" criterion. Licenses and permits, charges for services, fines, and miscellaneous revenues (except investment earnings) are recorded as revenues when received in cash because they are generally not measurable until actually received. Investment earnings are recorded as earned since they are measurable and available. The accrual basis of accounting is utilized by proprietary funds and pension and nonexpendable trust funds. Investments Investments consist primarily of collateralized certificates of deposit and State of Illinois Public Treasurer's Investment Pool money market units and are carried at cost, which approximates market value. Included in the investments of the Police Pension Fund are U.S. Treasury securities of $1,255,765, which are carried at cost. At April 30, 1985 these securities had an aggregate market value of $1,233,385. It is the Village's intention to hold these securities until maturity. Tnvantnriae Inventories, consisting of golf pro shop merchandise, are stated -at lower -of cost (first -in, first -out) or market (net realizable value). (Continued) 12 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements General Fixed Assets General fixed assets have been acquired for general governmental purposes. Assets purchased are recorded as expenditures in the governmental funds and capitalized at cost in the General Fixed Assets Account Group. Contributed fixed assets are recorded in general fixed assets at fair market value at the time received. Fixed assets consisting of certain improvements including roads, bridges, curbs and gutters, drainage systems, and lighting systems, have not assets normally are immovable and of value Therefore, the purpose of stewardship for satisfied without recording these assets. other than buildings, streets and sidewalks, been capitalized. Such only to the Village. :apital expenditures is No depreciation is required to be recorded on general fixed assets. Fixed Assets - Proprietary Fund Types Fixed assets recorded in the Proprietary Funds are stated at cost. Depreciation is provided over the estimated useful lives using the straight -line basis. Depreciation is not recorded on land or land improvements. Depreciation on assets acquired through contributions is allocated to contributed capital. The estimated useful lives of the major fixed asset classifications are as follows: Years Buildings 20 Well and system improvements 3 - 50 Furniture and equipment 2 - 10 Vehicles 2 - 12 Maintenance and repairs are charged to expense as incurred. During the current year, $329,653 of interest in the Waterworks and Sewerage Fund (Enterprise Fund) relating to construction in progress was capitalized. The interest expense of the fund, amounting to $1,764,205, is net of the amount capitalized. Vacation Pay and Sick Leave In the event of termination, Village employees are not reimbursed for accumulated sick leave. Vacation pay does not vest; employees must take vacation by December 31 of the year in which it is earned. Terminees are reimbursed for any accumulated unpaid vacation pay. The amount of such accumulated vacation benefits at April 30, 1985 is not material; therefore it is not accrued for in the accounts of the Village. Such amount does not exceed a normal year's accumulation. (Continued) 13 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements Revenue Recognition - Enterprise Funds Water sales revenue is recognized when the water is consumed. Accounts receivable at April 30, 1985 includes $64,521 of water sales revenue which had not been billed to customers. Yearly membership fees of the Golf Course Fund are recorded as income on a straight -line basis over the effective playing season, i.e., April through October. Fees paid for advance starting times are amortized to income over the related time period. Daily green fees and locker rentals are recorded as income when received. Amortization Discount on Water Revenue and General Obligation Bonds is amortized by the interest method over the term of the debt. The amortization expense for the year ended April 30, 1985 amounted to $11,776. Budget The budget data included in the combined financial statements represent the Village's 1984 -1985 Program Budget, and the appropriations represent the Village's legal expenditure limit. The Village Board of Trustees follows these procedures in establishing the budgetary and appropriations data reflected in the financial statements: (1) The Village Manager submits to the Board a proposed Program Budget for the fiscal year commencing May 1. The Program Budget includes proposed expenditures and the means of financing them. (2) Public budget and appropriations hearings are conducted by the Village to obtain taxpayer comments. (3) The Program Budget and Appropriation Ordinance is legally enacted through a resolution adopted by the Board. (4) Any expenditures that exceed the total appropriations at the fund level must be approved by the Board of Trustees. (Continued) 14 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements During the year the Street Maintenance, Municipal Building Debt Service, and Capital Projects Funds' actual expenditures exceeded their budgeted amounts by $761, $30, and $202,852, respectively; however, no fund had actual expenditures which exceeded appropriated amounts. No other fund had actual expenditures exceeding its total budgeted or appropriated amount. Appropriations which are not expended by year -end lapse and must be reappropriated in the following year for the expenditure to be made. The budget for each fund is prepared on the same basis of accounting as described in "Basis of Accounting" above. Encumbrances The Village does not employ the encumbrance method of accounting to reserve current fund balance for subsequent year expenditures. Account Classification - Working Capital For purposes of financial reporting, the assets and liabilities of the Proprietary Fund Types, except for restricted assets, unamortized bond discount, fixed assets, notes payable, bonds payable, and investment in Northwest Water Commission are considered to comprise the elements of working capital. Combined Statements Total Data The total columns within the combined financial statements are the aggregate of the fund types and account groups. No consolidating or other eliminations were made in arriving at the totals; thus, they do not present consolidated information. Restricted Assets and Retained Earnings - Enterprise Fund Restricted assets for the Lake Michigan Water project result from bond proceeds. Assets accumulated in restricted accounts, in accordance with the Waterworks and Sewerage (Enterprise) Fund revenue bond ordinance, are reflected as reservations of retained earnings. Retained earnings reserved for the Lake Michigan Water project represent a portion of water and sewerage charges designated for costs associated with the project. (Continued) 15 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements Reporting Entity The Comprehensive Annual Financial Report includes all entities for which the Village exercises oversight responsibility as defined by the National Council on Governmental Accounting (NCGA) Statement Nos. 3 and 7. The Village has developed criteria to determine whether outside agencies with activities which benefit the citizens of the Village should be included within its financial reporting entity. The criteria includes but is not limited to whether the Village (1) selects the governing authority or management, (2) has the ability to significantly influence operations, or (3) has accountability for fiscal matters (e.g., financial budget approval, management of assets, etc.) As more fully explained in note 4 the Village is currently responsible for 15.5% of all costs related to the Northwest Water Commission's (Commission) project to bring Lake Michigan water from the City of Evanston, Illinois to the Village and the other member communities. The Village, along with the member communities, made capital contributions to the Commission to provide the necessary funds for architectural and engineering and preliminary construction costs. The Village has determined that the Commission meets the requirements of NCGA Statement Nos. 3 and 7. Accordingly, the Commission is accounted for using the equity method in Waterworks and Sewerage Fund (Enterprise Fund). See note 4. (2) Property Tax The Village is a home -rule community under the 1970 Illinois Constitution and, accordingly, does not have a statutory rate limit. The Village's property tax is levied each calendar year on all taxable real property located in the Village. In accordance with NCGA Interpretation No. 3, for governmental funds only property taxes which are due within the current year and collected are recognized as revenue and net taxes receivable are reflected as deferred revenue. It is the Village's policy not to recognize collections after fiscal year end as revenues of that fiscal year. Property taxes on the proprietary and fiduciary funds are recorded on the accrual basis. (Continued) 16 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements The County Assessors of Cook and Lake Counties are responsible for assessment of the taxable real property of the Village lying within their respective Counties. One quarter of each County is reassessed each year on a repeating quadrennial schedule established by the Assessor. The County Clerks compute the annual tax for each parcel of real property and prepare tax books used by the County Collectors as the basis for issuing tax bills to all taxpayers in each County. Property taxes are collected by the County Collectors and are submitted to the County Treasurers, who remits to the units their respective shares of the collections. Taxes levied in one year become due and payable in two installments on March 1 and August 1 during the following year. The first installment is an estimated bill, and is one -half of the prior year's tax bill. The second installment is based on the current levy, assessment, and equalization, and any changes from the prior year will be reflected in the second installment bill. Taxes must be levied by the first Tuesday in September for the current levy year. The levy becomes an enforceable lien against the property as of January l immediately following the levy year. The 1984 property tax levy is recorded as a receivable, net of estimated uncollectibles. Based upon collection histories, the Village has provided at April 30, 1985 an allowance for uncollectible real property taxes equivalent to 1% of the current year's levy. All uncollected taxes relating to prior years' levies have been written off. (3) Fixed Assets A summary of changes in general fixed assets follows: Balance Balance Apr.30,1984 Additions Deletions Apr.30,1985 Land $ 87,200 - - 87,200 Buildings 2,175,213 - - 2,175,213 Equipment 784,097 75,113 21,261 837,949 Public improvement 23,073 - - 23,073 $ 3,069,583 75,113 21,261 3,123,435 (Continued) 17 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements A summary of proprietary fund type property, plant, and equipment at April 30, 1985 follows: Land and improvements Buildings Wells and system improvements Equipment Less accumulated depreciation (4) Northwest Water Commission Internal Enterprise Service $ 1,099,858 - 152,755 - 12,152,714 - 162,656 1,3702835 13,567,983 1,370,835 3,067,428 880,745 $ 10,500,555 490,090 On February 23, 1981 the Village entered into an agreement with three nearby communities to form the Northwest Water Commission (Commission). The Commission was organized to construct a pipeline for obtaining Lake Michigan water for the villages and has entered into a long -term contract for the purchase of water from the City of Evanston, Illinois. Each member community appoints a representative to the governing board of the Commission which is responsible for developing the annual budget and overseeing the financial operations. The Village has entered into a 40 -year water purchase contract with the Commission from the date of the first water delivery. Water rates paid by the Village will be determined by the Commission and will be sufficient at all times to (1) pay the costs of operation and maintenance of the Commission's water supply system, including charges payable to the City of Evanston, Illinois; (2) provide an adequate depreciation reserve; (3) pay the principal and interest on any outstanding debt; (4) comply with the covenants of any ordinance authorizing the issuance of debt; and (5) carry out its corporate purposes and powers. During the past several years the Village has issued General Corporate Purpose Bonds to (i) pay its proportionate share (15.5 %) of the engineer- ing and related costs of the Commission's project to bring Lake Michigan water from the City of Evanston, Illinois to the member communities and (ii) internal improvements in the Village's water distribution system. The Corporate Purpose Bonds have been recorded in the Waterworks and Sewerage Fund (Enterprise Fund) as it is the Village's intention to service the debt from the Fund's earnings to the extent possible. Additional revenues, if necessary, are provided through property taxes. For the year ended April 30, 1985, $920,584 (net) of property tax revenues were recorded in the Waterworks and Sewerage Fund. (Continued) 18 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements During the fiscal year ended April 30, 1985 the Village adopted the provisions of NCGA Statement No. 7 "Financial Reporting for Component Units Within the Governmental Reporting Entity." As a result of applying the Statement, as of May 1, 1982 the Enterprise Funds retained earnings increased as follows: Balance at April 30, 1984, as reported $ 4,813,617 Adjustment 973,912 Balance at April 30, 1984, as adjusted $ 5,787,529 The cumulative equity associated with the Commission has been recorded as "Designated for Lake Michigan Water" in the accompanying financial statements. Rey financial data for the Commission for the year ended April 30, 1985 are as follows: Operating revenues $ 3,650,800 Operating expenses 601,925 Operating income before depreciation 3,048,875 Depreciation 298,001 Operating income 2,750,874 Nonoperating expense, net (703,636) ..Net income $ 2,047,238 Assets $ 87,059,060 Working capital $ 3,629,091 Revenue bonds payable $ 38,225,000 Equity: Contributed capital 36,251,945 Retained earnings 8,330,543 44,5:82,488 Acquisition of property, plant, and equipment $ 5,995 ,5.32 (Continued) 19 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements (5) Long -term Debt A summary of changes in long -term debt follows: General Long -term Debt: $225,000, 4.6: - 5.5: 1969 Municipal Building bonds; payable in annual installments of $20,000 to $25,000 through January 1988. Funded by Debt Service Fund property tax levy $300,000, 6.55 1981 Busch Road Fire Station construc- tion note; payable in semiannual installments of $15,000 through September 1990. Funded by General and Federal Revenue Sharing Funds operating transfers to Debt Service Fund $367,378, 6.55 1981 Dundee Road Fire Station note; payable in semiannual installments of $21,500 through May 1990. Funded by General and Federal Revenue Sharing Funds operating transfers to Debt Service Fund $2,093,918, 9.122 Series 1982 -A General Corporate Purpose Bonds; payable in annual installments of $104,175 to $250,020 from December 1, 1984 through December 1996. Funded by Debt Service Fund property tax levy and transfers from General, Federal Revenue Sharing, and Motor Fuel Tax Funds $2,425,000, 9.25 Series 1984 General Corporate Purpose Bonds; payable in annual installments of $59,700 to $217,000 from January 1, 1987 through January 1, 2005. Funded by Debt Service Fund property tax levy Total general obligation debt, payable from future resources Enterprise Funds: Golf Course Fund - $1,097,000, 75 1981 Golf Course installment purchase contract; payable in semiannual installments of $40,000 to $46,500 through November 1991 Waterworks and Sewerage Fund: $4,000,0009 75 Series 1970 Waterworks and Sewerage Refunding Revenue Bonds; payable in annual install- ments of $60,000 to $2,000,000 through May 2000 $1,050,000, 9.875 Series 1981 General Corporate Purpose Bonds; payable in annual installments of $50,000 to $100,000 from December 11 1983 through December 1995 $8,500,000, 12.045 Series 1982 General Corporate Purpose Bonds; payable in annual installment of $350,000 through January 1, 1985 $2,931,082, 9.125 Series 1982 -A General Corporate Purpose Bonds; payable in annual installments of $145,825 to $349,980 from December 1, 1984 through December 1996 $8,750,000, 9.25 Series 1984 General Corporate Purposes Bonds; payable in annual installments of $215,300 to $783,000 from January 1, 1987 through January 1, 2005 Total revenue bonds payable and general obligation debt payable Total long -term debt 20 Balance Retire - Balance ADr.30,1984 Additions ments ADr.30.1985 $ 90,000 - 20,000 70,000 195,000 - 30,000 165,000 257,878 - 43,000 214,878 2,093,918 - 114,590 1,979,328 2,425,000 - - 2.425.000 5,061,796 - 207,590 4,854.206 645,000 - 80,000 565,000 3,540,000 - 60,000 3,480,000 1,000,000 - 50,000 950,000 350,000 - 350,000 - 2,931,082 - 160,407 2,770,675 8.750.000 - - 8.750.000 17.216.082 - 700.407 16.515.675 $ 22.277.878 - 907.997 21.369.881 (Continued) VILLAGE OF BUFF.ALO GROVE, ILLINOIS Notes to Combined Financial Statements The annual requirements to amortize all debt outstanding as of April 30, 1985, including interest payments of $18,933,725 are as follows: $ 817712359 31,532,247 40,303,606 (6) Restricted Assets The ordinance authorizing the issuance of Waterworks and Sewerage Refunding Revenue Bonds (note 5) created separate accounts designated as "operation and maintenance," "bond and interest," "term bond sinking fund," "depreciation and contingencies," "bond reserve," and "surplus." On the first business day of each month, the above accounts shall be credited as follows: Operation and maintenance account - an amount sufficient to pay the reasonable expenses of operation, maintenance, and repair for that month. Bond and interest account - an amount equal to not less than one -fifth of interest and one -tenth of principal due on the next payment date, until there is accumulated an amount sufficient to pay such principal or interest. Term bond sinking fund account - beginning July 1, 1979, the sum of $8,000 until $2,000,000 is accumulated to redeem bonds numbered 401 to 800. Depreciation and contingencies account the sum of $2,000 until the sum of $200,000 is on deposit in said account. During 1979 the maximum amount required was accumulated. 21 (Continued) General Year ending Long -term Enterprise April 30 Debt Funds Total 1986 $ 811,874 2,432,349 3,244,223 1987 737,790 2,138,147 2,875,937 1988 725,050 2,111,039 2,836,089 1989 696,108 2,097,015 2,793,123 1990 685,693 2,082,713 2,768,406 1991 -1995 2,891,775 9,726,726 12,618,501 1996 -2000 1,643,230 8,852,147 10,495,377 2001 -2005 579.839 2.092.111 2,671.950 $ 817712359 31,532,247 40,303,606 (6) Restricted Assets The ordinance authorizing the issuance of Waterworks and Sewerage Refunding Revenue Bonds (note 5) created separate accounts designated as "operation and maintenance," "bond and interest," "term bond sinking fund," "depreciation and contingencies," "bond reserve," and "surplus." On the first business day of each month, the above accounts shall be credited as follows: Operation and maintenance account - an amount sufficient to pay the reasonable expenses of operation, maintenance, and repair for that month. Bond and interest account - an amount equal to not less than one -fifth of interest and one -tenth of principal due on the next payment date, until there is accumulated an amount sufficient to pay such principal or interest. Term bond sinking fund account - beginning July 1, 1979, the sum of $8,000 until $2,000,000 is accumulated to redeem bonds numbered 401 to 800. Depreciation and contingencies account the sum of $2,000 until the sum of $200,000 is on deposit in said account. During 1979 the maximum amount required was accumulated. 21 (Continued) VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements Bond reserve account - the sum of $4,000 until the sum of $400,000 is on deposit in said account. During 1979 the maximum amount required was accumulated. Surplus account - all funds remaining after providing for all the deposits hereinbefore listed. Restrictions on funds deposited are as follows: Funds accumulated in the term bond sinking fund account shall be used only for the calling and redeeming of bonds numbered 401 to 800. Funds accumulated in the depreciation and contingencies account shall be used for the necessary renewals and replacement of the system or to pay interest and principal when no other funds are available. Funds accumulated in the bond reserve account shall be used only for the payment of principal or interest whenever sufficient funds are not available in the bond and interest account. Funds accumulated in the surplus account shall be used exclusively for: (a) the purpose of making improvements or extensions of the system. (b) the calling and redeeming or purchase in the open market of the bonds. For purposes of financial "term bond sinking fu reserve" accounts are reservation of retained reporting, the assets of the "bond and interest," nd," "depreciation and contingencies," and "bond classified as restricted with a corresponding earnings. The Village is in compliance with all of the significant bond covenants described above. (7) Illinois Municipal Retirement Fund The Illinois Municipal Retirement Fund (IMRF) covers substantially all full -time employees of the Village except members of the Police and Fire Departments and elected officials. (Continued) 22 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements The IMRF's actuary estimates that as of December 31, 1984 (date of the latest valuation) the present value of accumulated total IMRF pension benefits to be borne by the Village was $2,215,423. The actuarial present value of accumulated plan assets was $701,625 on the same date. Therefore, the estimated present value of future contributions to be made by the Village on behalf of present employees was $1,513,798. The pension obligation includes, in addition to the future normal cost of $460,916, the amount of unfunded prior service cost computed to be $1,052,882. The present value of pension obligations was computed using revised actuarial assumptions, approved by the IMRF Board of Trustees. These assumptions were updated to reflect current experience and economic conditions. Information concerning accumulated vested benefits has -not been determined. The annual Village contribution rate fixed by the IMRF Board of Trustees provides for full funding of prior service costs, including interest, as determined actuarially over a future period of not more than 40 years, as well as the normal retirement cost, term cost of death and disability benefits, and the cost of administration. The plan assumes a 7% rate of return in determining the actuarial present value of its accumulated plan assets. Employer contributions made during the year ended April 30, 1985 were $222,111. (8) Police Pension Fund Funded Obligation The Police Pension Fund covers substantially all uniformed members of the Village's Police Department. Actuarial Deficiency According to the governing act, the Board is required to establish and maintain a reserve not to exceed the total actuarial requirements of the Police Pension Fund. In municipalities having less than the actuarial requirements of the Police Pension Fund, the Board shall designate the proportionate amount needed annually to ensure the accumulation of such actuarial reserve over a 40 -year period ending in 2020. The total actuarial requirements at April 30, 1984 (date of the latest valuation) amounted to $2,063,337 as determined by the Illinois State Department of Insurance. The actuarial reserve surplus of $111,119 is reflected as part of unreserved fund balance and includes the net transactions of the Police Pension Fund for the year ended April 30, 1985. However, the current normal costs and the resultant liability for the year ended April 30, 1985 are not reflected as an increase in the actuarial requirements because the date of the Illinois State Department of Insurance determination was as of April 30, 1984. (Continued) 23 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements The significant actuarial assumptions used in the Illinois State Department of Insurance valuation are as follows: Actuarial cost method Investment return Mortality rates Salary progression assumption Contributions Entry age normal cost 6 .5% Based on the 1971 Group Annuity Mortality Table 5z Employer contributions made during the year were $125,360 based upon actuarial requirements determined by the Illinois State Department of Insurance. (9) Fire Pension Fund The Fire Pension Fund covers substantially all uniformed members of the Village's Fire Department. Actuarial Requirements According to the governing act, the Board of Trustees of the Fire Pension Fund is required to establish and maintain a reserve not to exceed the total actuarial requirements of the Fire Pension Fund. In municipalities having less than the actuarial requirements of the Fire Pension Fund, the Board shall designate the proportionate amount needed annually to ensure the accumulation of such actuarial reserve over a 40 -year period ending 2020. The total actuarial requirements at April 30, 1984 (date of the latest valuation) amounted to $249,937 as determined by the Illinois State Department of Insurance. The actuarial reserve surplus of $128,390 is reflected as part of unreserved fund balance and includes the net transactions of the Fire Pension Fund for the year ended April 30, 1985. However, the current normal costs and the resultant liability for the year ended April 30, 1985 are not reflected as an increase in the actuarial requirements because the date of the Illinois State Department of Insurance determination was of April 30, 1984. The significant actuarial assumptions used in the Illinois State Department of Insurance valuation are as follows: Actuarial cost method Investment return Mortality rates Salary progression assumption 24 Entry age normal cost 6.5% Based on the 1971 Group Annuity Mortality Table 5z (Continued) VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements Contributions Employer contributions made during the year ended April 30, 1985 were $69,544 based upon the actuarial requirements determined by the Illinois State Department of Insurance. (10) Segments of Enterprise Activities There are two services provided by the Village which are financed by user charges - waterworks and sewerage and golf course. The key financial data for the year ended April 30, 1985 for these two services are as shown below: Operating revenues Operating expenses: Depreciation and amortization Other Total operating expenses Operating income Nonoperating expenses Operating transfer out Net income Assets Net working capital Revenue bonds and general obligation debt payable Fund equity Acquisition of property, plant, and equipment Golf Waterworks Course and Sewerage Fund Fund Total 616,376 4,018,324 4,634,700 22,374 334,750 357,124 441,037 2,466,065 2,907,102 463,411 2,800,813 3,264,226 132,965 1,217,.509 1,370,474 (27,,312) (276,746) (304,058) - (224.,600) (224,600) $ 125,653 716,163 841,816 $ 1,258,523 23,087,684 24,346,207 87,604 4,079,607 4,1671211 $ 565,000 15,950,675 16,515,675 602,953 5,529,780 6,132.733 24,046 996,988 1,021,034 (Continued) 25 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements (11) Leases The Village's Golf Course Fund leases golf carts under a noncancelable operating lease which extends through November 1987. The rental expense for the year ended April 30, 1985 amounted to $49,059. The lease payments under the agreement are 45Z of the gross receipts from rental of the golf carts. There is no guaranteed minimum rent. The Village has no material lease obligations that are considered to be capital leases. (12) Interfund Balances Individual interfund balances at April 30, 1985 are shown as follows: (13) Individual Fund Deficits - Special Revenue Fund - Illinois Municipal Retirement The fund balance of the Illinois Municipal Retirement Fund has a deficit balance of $18,281 at April 30, 1985. It is anticipated that this deficit will be reduced through future property tax revenues. (Continued) 26 Amounts payable from Governmental Proprietary Special Revenue Enterprise Motor Waterworks Fuel Capital and Golf Amounts payable to General Tax Projects Sewerage Course Total General $ - 6,757 - - - 6,757 Special Revenue Funds - Illinois Municipal Retire- ment Fund - - - 2,024- 1,512 3,_536 Proprietary: Internal Service - Central Garage 77,594 - - 5,609 - 83,203 Enterprise - Waterworks and Sewera8e 8,808 - 57,583 - - 66,391 Total $ 86,402 6,757 57,583 7,633 1,512 159,887 (13) Individual Fund Deficits - Special Revenue Fund - Illinois Municipal Retirement The fund balance of the Illinois Municipal Retirement Fund has a deficit balance of $18,281 at April 30, 1985. It is anticipated that this deficit will be reduced through future property tax revenues. (Continued) 26 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements (14) Contingencies The Village is a member of the Intergovernmental Risk Management Agency (IRMA) which, through its risk - sharing provisions, provides the Village with its insurance coverage for liability, property damage, and workmen's compensation insurance. As a self- insurance administrator, IRMA enables risk sharing with other municipalities which in turn share their risks with the Village. At April 30, 1985 management knows of no claim, asserted or unasserted, which if asserted and paid would have a materially adverse affect on the financial position of the various funds of the Village at April 30, 1985. 27 [THIS PAGE INTENTIONALLY LEFT BLANK] &$ *if- „ OFFICIAL STATEMENT New Issue Rating: Moody's: A -1 In the opinion of Bond Counsel, interest on the Bonds is exempt from federal income taxes under existing law as of the date of original delivery of the Bonds. Interest on the Bonds is not exempt from Illinois income taxes. For a discussion of effects on the Bonds of tax reform legislation currently under consideration by Congress, see "PENDING FEDERAL TAX LEGISLATION. " $3,300,000 VILLAGE OF BUFFALO GROVE, ILLINOIS Corporate Purpose Bonds, Series 1986 Dated: July 15,1986 Due: January 1, as set forth below The Bonds will be issued in denominations of $5,000, or any integral multiple thereof, in fully registered form. Interest on the Bonds will be payable on July 1, 1987, and semiannually thereafter on each January 1 and July 1. Principal of and redemption premium, if any, on the Bonds will be payable at the principal corporate trust office of Continental Illinois National Bank and Trust Company of Chicago, Chicago, Illinois, Bond Registrar and Paying Agent. Interest on the Bonds will be payable by check or draft by the Bond Registrar to the registered owners thereof as of the fifteenth day of the month next preceding the applicable interest payment date. The full faith and credit of the Village of Buffalo Grove are irrevocably pledged to the punctual payment of the principal of and interest on the Bonds. Pursuant to the Bond Ordinance, the Bonds shall be direct and general obligations of the Village, and the Village shall be obligated to levy ad valorem taxes upon all the taxable property in the Village for the repayment of the Bonds and the interest thereon, without limitation as to rate or amount. SERIAL BONDS Due January i Interest Price or Due Rate Yield Amount January 1 Interest Rate Price or Yield Amount 85,000. .... 1989 9.0 5.9 $175,000...... 1998 7.4 100 100 95,000...... 1990 9.0 6.2 190,000...... 1999 2000 7.5 7.5 100 100,000...... 1991 9.0 6.4 205,000...... 9.0 6.6 220,000...... 2001 7.5 100 110,000...... 1992 120,000...... 1993 9.0 6.8 240,000...... 2002 7.5 100 135,000...... 1994 7.6 7.0 260,000 ...... 2003 2004 7.55 7.6 100 100 140,000...... 1995 7.1 100 280,000...... 7.2 100 300,000...... 2005 7.65 100 155,000...,.. 1996 165,000...... 1997 7.3 100 325,000...... 2006 7.7 100 (Accrued interest from July 15, 1986 to be added) Bonds offered when, as and if issued and accepted by the Underwriter and subject to approval The are of legality by Isham, Lincoln & Beale, Chicago, Illinois, Bond Counsel, and certain other conditions described herein. It is anticipated that the Bonds will be available for delivery in Chicago, Illinois, on or about August 13, 1986. CONTINENTAL CONTINENTAL COMPANY The Date of the Official Statement is July 21, 1986. No dealer, broker, salesman or other person has been authorized to give any information or to make any representations other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as statements of the Village of Buffalo Grove or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of any offer to buy, nor shall there be any sale of the Bonds by any person, in any jurisdiction in which it is unlawful to make such offer, solicitation or sale. Unless otherwise indicated, the Village of Buffalo Grove is the source of all tables and statistical and financial information contained in this Official Statement. The information set forth herein relating to governmental bodies or from other sources is believed to be reliable, but is not guaranteed as to accuracy or completeness. The information and opinions expressed herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the operations of the Village of Buffalo Grove since the date hereof. Bond Counsel have not reviewed or participated in the preparation of this Official Statement. This Official Statement should be considered in its entirety and no one factor considered less important than any other by reason of its position in this Official Statement. Where statutes, ordinances, reports or other documents are referred to herein, reference should be made to such statutes, ordinances, reports or other documents for more complete information regarding the rights and obligations of parties thereto, facts and opinion contained herein, and the subject matter thereof. Upon issuance, the Bonds will not be registered under the Securities Act of 1933, as amended, and will not be listed on any stock or other securities exchange and neither the Securities and Exchange Commission nor any other federal, state, municipal or other governmental entity, other than the Village of Buffalo Grove shall have passed upon the accuracy or adequacy of this Official Statement. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER -ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF CU41ENCED, MAY BE DISCONTINUED AT ANY TIME. w INTRODUCTION ............................... ..............................1 THE BONDS .................................. ..............................1 Purpose ......... ............................... ....................1 Authority.... ....................... ..............................1 Security and Repayment ................ ..............................1 General Description ........... ....... ..............................2 Registration, Transfer and Exchange ... ..............................2 Optional Redemption ................... ..............................2 Notice of Redemption .................. ..............................3 Partial Redemption of Bonds ........... ..............................3 Sources and Uses of Funds ............. ..............................3 THE VILLAGE OF BUFFALIO GROVE ............... ..............................4 General Information .. ................ ..............................4 ECONOMIC AND DDDGRAPHIC INFORMATION ....... ..............................4 Population.. ......... ............................... ...........4 Residential Development ............... ..............................5 Income and Employment ................. ..............................6 Employment by Industry ................ ..............................6 Unemployment Rates .................... ..............................7 Retail Activity ....................... ..............................7 Transportation ........................ ..............................7 VILLAGE GOVERNMENT AND SERVICES.. ....................... ............8 Municipal Facilities and Services ..... ..............................8 Education.. ..................... ............................... .9 PROPERTY TAX PROCEDURES ... ............................... ..............10 Levy .................................. .............................10 Assessment ............................ .............................10 Equalization .......................... .............................10 Exemptions ............................ .............................11 Tax Rates ............................. .............................11 Collections.. •................... .............................11 Truth in Taxation Act ....................... .....................12 PERSONAL PROPERTY REPLAM,4ENT TAX .......... .............................12 PROPERTY TAX STATISTICAL INFORMATION.. ... .............................13 Tax Rates, Extensions and Collections ....... ......................13 Assessed and Estimated Market Value of Taxable Real Property ....... 14 Comparative Tax Rates ................. .............................15 Principal Taxpayers ................... .............................16 DEBT SUMMARY ................ .. . .. ...........................17 Direct and Overlapping Debt of the Village .........................17 Direct Debt .. .... ................... .............................17 Net Overlapping Debt .................. .............................18 Selected Debt Statistics.. .. .... ..... ........18 . ... ..... ... . ...... .. Principal Retirement Schedule of Long -Term General Obligation Debt.19 Schedule of Revenue Bond Coverage - Waterworks and Sewerage Fund ... 20 Pension Fund Obligations .............. .............................21 SUMMARY FINANCIAL INFORMATION .............. .............................22 Accounting Practices... .............. .............................22 General Fund - Balance Sheet....................................... 23 General Fund - Audited Revenues and Expenditures ................... 24 RATINGS................ ............................... ................25 TAX EXEMPTION........ .................. .............................25 PENDING FEDERAL TAX LEGISLATION ............ .............................25 UNDERWRITING.. .. ...................... .............................26 FINANCIAL STATR4ENTS ....................... .............................26 CERTAIN LEGAL, MATTERS.. .................. .............................26 NO LITIGATION CERTIFICATE .................. .............................27 AUTHORIZATION .............................. .............................27 APPENDIX A Form of Legal Opinion APPENDIX B Audited Financial Statement ii VILLAGE OF BUFFALO GROVE Cook and Lake Counties, Illinois John Marienthal Bobbie O'Reilly Janet M. Sirabian Village Clerk Verna L. Clayton Village President VILLAGE TRUSTEES Gary Glover William Reid OFFICIALS William R. Balling Village Manager Paul Kochendorfer Village Treasurer William H. Brimm Director of Finance and General Services Peat, Marwick, Mitchell & Co. Certified Public Accountants Isham, Lincoln & Beale Bond Counsel iii Patrick Shields Melanie Kowalski William G. Raysa Village Attorney OFFICIAL STATEMERr $3,300,000 VIUAGE OF BUFFAW GROVE, ILLIIUIS O(RPORATE RRPOSE BONDS, SIItIES 1986 The purpose of this Official Statement, including the cover page hereof, is to set forth certain information in connection with the sale of $3,300,000 aggregate principal amount of Corporate Purpose Bonds, Series 1986 (the "Bonds "), of the Village of Buffalo Grove (the "Village ") authorized and issued under and pursuant to the constitutional home rule powers of the Village and an ordinance adopted by the Board of Trustees of the Village on July 21, 1986 (the "Bond Ordinance "). Certain factors that may affect an investment decision concerning the Bonds are described throughout this Official Statement. Persons considering a purchase of the Bonds should read this Official Statement in its entirety. Purpose Proceeds of the sale of the Bonds will be applied to several capital projects. These projects include the construction of a new police headquarters, public service center expansion, and the construction and equipping of a golf course currently owned and operated by the Village. Authority The Bonds are being issued pursuant to and in accordance with the authority granted to the Village by the 1970 Illinois Constitution Article 7, Section 6(a), regarding home rule units of local government and pursuant to the Bond Ordinance. Security and ReDavment The full faith and credit of the Village are irrevocably pledged to the punctual payment of the principal of and interest on the Bonds. Pursuant to the Bond Ordinance, the Bonds shall be direct and general obligations of the Village, and the Village shall be obligated to levy ad valorem taxes upon all _ the taxable property in the Village for the repayment of the Bonds and the interest thereon, without limitation as to rate or amount. The taxes levied pursuant to the Bond Ordinance are required to be set aside and used for no other purpose. -1- General Description The Bonds will mature on January 1 of the years and in the amounts listed on the cover page hereof, and will bear interest payable July 1, 1987, and semiannually thereafter on each January 1 and July 1, at the rates per annum set forth on the cover page hereof. The Bonds will be issued only as fully registered bonds in denominations of $5,000 and any integral multiple thereof. The principal of, and premium if any, on the Bonds will be payable at the principal corporate trust office of the Bond Registrar. Interest on the Bonds will be payable by check or draft mailed to the registered owners of record'of the Bonds as of the fifteenth day of the month next preceding the applicable interest payment date. Each Bond will bear interest from the later of its date or the most recent interest payment date to which interest has been paid or duly provided for. Registration, Transfer and Excbange The Bond Registrar is required to maintain a current list of the names and addresses of the registered owners of the Bonds. The registered owner of a Bond shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of or on account of the principal of and interest on any such Bond shall be made only to or upon the order of such registered owner, or his legal representative. Upon payment of any required tax or other governmental charge and the surrender of the Bonds at the principal corporate trust office of the Bond Registrar with an endorsement of a written instrument of transfer, in form and with guarantee of signature satisfactory to the Bond Registrar, Bonds may be exchanged for an equal aggregate principal amount of fully registered Bonds of the same maturity and interest rate and of any other authorized denominations. Bonds may be transferred by the owners thereof in person or by their duly authorized attorneys at the principal corporate trust office of the Bond Registrar, but only in the manner, subject to the limitations (including surrender thereof for cancellation) and upon payment of amounts sufficient to reimburse the Village and the Bond Registrar for any tax or other governmental charge due with respect to the transfer of the Bonds. Upon such transfer a new Bond or Bonds of the same maturity and authorized denominations of $5,000 or any integral multiple, for the same aggregate principal amount and bearing the same interest rate, will be issued to the transferee. Optional Redemption Bonds maturing on or after January 1, 1997, are redeemable prior to maturity at the option of the Village, in whole or in part on January 1, 1996 or on any interest payment date thereafter. If less than all of the outstanding Bonds are to be redeemed, the Bonds to be redeemed shall be selected in the inverse order of their maturity. If less than all of a maturity is to be redeemed, the Bonds shall be called by lot within a maturity by the Bond Registrar. -2- The Bonds are redeemable at the redemption prices (being expressed as a percentage of the principal amount) set forth below, plus accrued interest to the date of redemption. Redemption Date of Redemption Price January 1, 1996 through December 31, 1996 103 January 1, 1997 through December 31, 1997 102 January 1, 1998 through December 31, 1998 101 January 1, 1999 and thereafter 100 Notice of Redemption Notice of redemption shall be given by mail not less than 30 days nor more than 60 days prior to the date fixed for redemption to the registered owners of Bonds, or portions thereof, to be redeemed at their addresses as shown on the registration books of the Bond Registrar. When Bonds have been so called for redemption, and if notice of redemption shall have been mailed as aforesaid (and notwithstanding any defect therein or the lack of actual receipt thereof by a registered owner), and funds for such payment, including the applicable premium, have been deposited with the Bond Registrar designated for the Bonds, interest on Bonds so called for redemption shall cease to accrue from and after the redemption date. Partial Redemption of Bonds In the event of the redemption of less than all the Bonds of like maturity, the Bond Registrar shall assign to each Bond of such maturity a distinctive number for each $5,000 principal amount of such Bond and shall select by lot from the numbers so assigned as many numbers as, at $5,000 for each number, shall equal the principal amount of such Bond to be redeemed. The Bonds to be redeemed shall be the Bonds to which were assigned numbers so selected; provided that only so much of the principal amount of each Bond shall be redeemed as shall equal $5,000 for each number assigned to it and so selected. -3- VILIAGE OF BUFFALO GROVE General Information The Village of Buffalo Grove is located 29 miles northwest of downtown Chicago in Cook and Lake Counties. The Village was incorporated March 7, 1958 and received home rule status effective March 1, 1980, following a referendum. The Village encompasses approximately 6 square miles, with 2 square miles in Cook County and the remainder in Lake County. In Cook County, the Village is bordered on the east by the Village of Wheeling and the south by the Village of Arlington Heights. On the north and east sides of the Village of Buffalo Grove, in Lake County, a large amount of undeveloped and unincorporated land separates the Village of Buffalo Grove from the Villages of Lincolnshire and Long Grove. This provides the Village with the potential for future annexation to increase its tax base. Population The Village has experienced rapid growth in population, adding 10,841 to its 1960 population of 1,492 by the 1970 census and another 9,897 by the 1980 census, an 80% increase. The Village's population has continued to grow at a substantial rate since 1980, registering an 187. increase by 1985. The 1985 special census figures evidence the fact that the portion of the Village located in Cook County is both fully developed and adjacent to incorporated areas. While the portion of the Village located in Cook County experienced a population increase of only 2% between 1980 and 1985, the population in Lake County increased by 407.. It is expected that in future years the Lake County portion will experience the most growth, due to further development within the Village and to the annexation potential mentioned above. SOURCE: U.S. Department of Commerce, Bureau of Census for 1960 -85. -4- Percent Cook Lake Percent Total Increase County County Cook Lake 1960 I - -- 1,452 I�IPI 1970 12,333 727% 10,500 1,833 857. 157. 1980 22,230 807. 13,144 9,086 597. 4111 1985 (special 26,168 18. 13,405 12,763 517. 4%. census) SOURCE: U.S. Department of Commerce, Bureau of Census for 1960 -85. -4- Residential Development The Village has experienced substantial residential growth during the past two decades. The 1980 Census of Housing reported 7,865 housing units in the Village, an increase of 130.6% over 1970. Of this total, approximately 5,300 (67%) were single unit structures. Building permit data presented below indicate that in 1981 and 1982, as in most other communities, construction activity slowed dramatically due to the recession. In 1983, construction activity increased, and by 1985, the Village experienced an increase of 74T/o in construction value over 1984. In 1985, according to the Sur ve of Buildi published by Bell Federal Savings and Loan Association, Buttalo Grove built the fourth highest number of single and multi - family units out of 193 Chicago suburbs. Residential Construction Building Permits Commercial Construction Total Source: Village of Buffalo Grove 1985 Annual Report. -5- No. Value No. Value 1976 -80 Total T79 —27- 1.5,159,= $99,531,063 1976 -80 Avg. 438 16,874,356 5 3,031,856 19,906,212 1981 31 $ 2,170,090 15 $ 1,909,296 $ 4,079,386 1982 27 3,142,000 3 1,058,071 4,200,071 1983 101 8,425,059 5 3,986,785 12, 411, 844 1984 291 21,095,300 9 2,154,618 23,249,918 1985 510 33,184,778 14 8,297,730 41,482,508 1981 -85 Total 960 $68,017,227 46 $17,406,500 $85,423,727 1981 -85 Avg. 192 13,603,445 9 3,481,300 17,084,745 Source: Village of Buffalo Grove 1985 Annual Report. -5- Income and Employment The Village is a residential suburb of Chicago which enjoys above average wealth. Buffalo Grove ranked as the 10th highest community in Illinois in terms of median family income, according to the 1980 Census, surpassing the state median by over 4A. The 1980 median hone value for the Village is also substantially higher than the median for the state as a whole, exceeding it by over AYL SOURCE: 1970 Census of Population Characteristics 1980 Census of Population Characteristics Employment by Industry - Village of Buffalo Grove Residents in the Village benefit from employment opportunities throughout the Chicago metropolitan area. According to the 1980 Census, 92.17. commute outside Buffalo Grove for employment. In addition; 1980 Census data indicate that over.3T /o of Village residents hold jobs in the executive and professional category, compared to 23% for Cook and 2%. for Lake Counties. Village State Difference 1970 Median Family Income Tru,-m- 1980 1970 Median Home Value $34,000 $19,800 71.7/. 1980 Median Family Income $32,338 $22,746 42.T/. 1980 Median Home Value $90,100 $52,800 70.6% SOURCE: 1970 Census of Population Characteristics 1980 Census of Population Characteristics Employment by Industry - Village of Buffalo Grove Residents in the Village benefit from employment opportunities throughout the Chicago metropolitan area. According to the 1980 Census, 92.17. commute outside Buffalo Grove for employment. In addition; 1980 Census data indicate that over.3T /o of Village residents hold jobs in the executive and professional category, compared to 23% for Cook and 2%. for Lake Counties. SOURCE: U.S. Department of Commerce, Bureau of Census, General Social and Economic Characteristics S� 1980 Percent of Total 1970 1980 Village 9tate U.S. Employed Persons ............. ='/ 11,+ $ 150. T1. 15 T M. Manufacturing ................ 1,333 2,646 23.1 25.8 22.4 Nondurable ................. 515 982 8.6 8.4 8.6 Durable .................... 818 1,664 14.5 17.4 13.8 Retail Trade ................. 556 2,364 20.6 16.0 16.1 Services ..................... 713 3,100 27.0 27.1 28.7 SOURCE: U.S. Department of Commerce, Bureau of Census, General Social and Economic Characteristics S� loyment Rates(l)(annual averages - civilian labor force) Unemployment rates for the Village alone are available only at the time of the federal census and were less than half the unemployment rate for the state or for either county in 1980. Lake-County's unemployment rates have been historically below state and national averages, while Cook County's unemployment rates have been historically below state averages. Retail Activity The Village benefits from a substantial retail base. Located within Buffalo Grove are several shopping centers, including the Plaza Verde Shopping Center, Strathmore Square, Cambridge Commons, Grove Shopping Center and Ranchmart Shopping Center. These five shopping centers are among the ten largest taxpayers and account for approximately 5% of the Village's assessed value. The 1982 Census of Retail Trade reports 111 retail establishments within the Village, providing a sales volume of $78,987,000. Food stores, drug and proprietary stores, and gasoline service stations account for most of the Village's retail sales. Transportation The many transportation alternatives available to Village residents allow them to pursue employment opportunities throughout the Chicago metropolitan area. PACE, the Regional Transportation Authority's suburban bus line, runs several routes through the Village, including a route that connects to the Chicago and Northwestern Train Station in Arlington Heights. Several U.S. Routes connect the Village to Illinois state highways. -7- - 1980(2) 1981 1982 1983 1984 1985 4/86 Village of Buffalo Grove . . -- Cook County, Illinois 8.07. 8.57. 10.9% 10.5°7. 8.8% 8.6% 7.8% Lake County, Illinois 7.0°/0 6.87. 8.67. 7.7°7. 6.17. 6.1% 5.2% State of Illinois 8.37. 8.57. 11.37. 11. Q. 9.17. 9. A 8.27/. United States 7.2% 7.67. 9.77. 9.67. 7.57. 7.37. 7.17. Source: (1) Illinois Department of Labor, Bureau of Employment Security for 1981 -1986. Data presented by place of residence -- excludes self - employed, agricultural and military workers. (2) U.S. Department of Commerce, Bureau of Census for 1980. Retail Activity The Village benefits from a substantial retail base. Located within Buffalo Grove are several shopping centers, including the Plaza Verde Shopping Center, Strathmore Square, Cambridge Commons, Grove Shopping Center and Ranchmart Shopping Center. These five shopping centers are among the ten largest taxpayers and account for approximately 5% of the Village's assessed value. The 1982 Census of Retail Trade reports 111 retail establishments within the Village, providing a sales volume of $78,987,000. Food stores, drug and proprietary stores, and gasoline service stations account for most of the Village's retail sales. Transportation The many transportation alternatives available to Village residents allow them to pursue employment opportunities throughout the Chicago metropolitan area. PACE, the Regional Transportation Authority's suburban bus line, runs several routes through the Village, including a route that connects to the Chicago and Northwestern Train Station in Arlington Heights. Several U.S. Routes connect the Village to Illinois state highways. -7- The Village is governed by a President and Board of Trustees, elected at- large. The six Trustees serve four -year terms, with half the Board elected every two years. The Village Manager, whose position was created by ordinance in 1967, oversees Village operations and carries responsibility for the supervision of staff, delivery of services, facility management, and financia� administration. Municipal Facilities and Services The Village provides direct services in the areas of public safety, water utility distribution, sewerage collection, public works services, and recreation. For these functions, the Village employs 139 full -time employees. The Village Manager is responsible for the Police Department. The police force consists of 37 full -time police officers, aided by 20 civilians who serve as support staff. The Village Hall, which also serves as Police Headquarters, was constructed in 1968 and partially remodeled in 1978. The Village maintains two active fire stations, built in 1974 and 1981, which are staffed by 22 professional firefighter /paramedics and 22 firefighters paid on a per call basis. Part -time firefighters also serve as emergency medical technicians. In 1982, the Village's fire insurance rating was upgraded from a Class Seven to a Class Four, a rating exceeded by only 19 other municipalities or fire protection districts in the state. Beginning in 1984, as replacement for a ground water supply system, the Village has received Lake Michigan water as a member of the Northwest Water Commission, which includes the Villages of Arlington Heights, Palatine, and Wheeling. The Village has contracted to purchase water from the Commission and to pay its portion of debt service on the Commission's water revenue bonds from revenues derived from the operation of its local water system. Pursuant to its agreement with the Commission, and prior to the changeover, the Village constructed four storage reservoirs and made other improvements to its existing water distribution system. The Village's wells are still operational and are available to supplement Lake Michigan water as needed. The Village's water system currently has 6,943 customers and is served by 112.4 miles of water mains. The Village operates a sewage collection system for all residents. Waste water treatment, however, is provided by either the Metropolitan Sanitary District of Greater Chicago or the Lake County Public Works Department, for which Cook County residents are taxed, while Lake County residents of Buffalo Grove are billed user fees on a monthly basis. As part of its municipal recreation program, the Village owns and operates an existing 18 -hole golf course. Additional recreational services are provided by the Buffalo Grove Park District, which is nearly coterminous with the Village. The Park District owns and maintains approximately 110 acres of park lands and an indoor - outdoor swimming pool. In addition, through cooperative agreements with the public schools, the District provides recreational programs in school facilities. ff:11 Education The Village is served by five school districts, with attendance determined by county of residence and school district boundaries. Primary education is provided by Community Consolidated School Districts No. 21 in Cook County, and No. 96 and No. 102 in Lake County. Secondary education is provided by Township High School Districts No. 214 in Cook County and No. 125 in Lake County. The Village is served by Community College District No. 532, College of Lake County, a two year public institution for Lake County residents. The College is located on 230 acres adjacent to Grayslake approximately 16 miles from the Village. In addition, an extension facility, the Lakeshore Educational Center, is maintained in Waukegan. The Village is also served by Community College District No. 512, William Rainey Harper College. This two year public college is located on a 200 -acre site in Palatine, approximately five miles from Buffalo Grove. The College also operates 17 off - campus locations. Levy As part of the budgeting process and in accordance with law, ordinances are adopted by the Village of Buffalo Grove which authorize the raising of revenue by direct ad valorem taxes on all real property in the Village. These ordinances, containing the tax levies, must be certified and filed in the offices of the Lake County and Cook County Clerks. The Village of Buffalo Grove, as a constitutional home rule unit, has no statutory tax rate or levy limitations. Aaapaampnr Lake County Real property, except for certain railroad property which is assessed directly by the State, is valued for tax purposes by the Township Assessor on the basis of market data, cost of property, or present worth of income - producing property. A single level of assessment, 33 1/11 of full market value, is required for all property in Lake County. Property must be reassessed every four years; the most recent quadrennial assessment year for - township counties was 1985. The work of the Township Assessor is subject to supervision and review by the County Supervisor of Assessment. The County Board of Review hears taxpayer complaints and receives exemption applications. Taxpayers have further rights of appeal at the state level. The Board of Review has the power to equalize the average level of assessments among the townships in the County and has done so in recent years. Cook County The Cook County Assessor is responsible for assessing all taxable real property in the County, except for certain railroad property assessed by the State. Cook County is presently divided into four assessment districts; one district is reassessed each year. The northeast quadrant of Cook County, in which Buffalo Grove is located, received its quadrennial reassessment in 1984. Cook County classifies property into 5 major and 3 special classes for purposes of assessment and taxation, with each classification bearing its own percentage of fair market value. These percentages range from 16% for residential property, and for temporary incentives for certain industrial and commercial development, to 407. for most commercial and industrial property. Taxpayers may contest their assessments through procedures established by the Assessor and may, in addition, appeal to the Cook County Board of Appeals. Equalization Equalization of the level of property assessment among counties in the State is conducted by the Illinois Department of Revenue. A multiplier is assigned to all property in each County to bring the Count 's average level of assessment to the statutory requirement of 33 1/30 of full market value. For the 1984 tax year, the state multiplier assigned to Lake County, after township equalization, was 1.0, while the multiplier assigned to Cook County was 1.8445. Railroad property, assessed directly by the State, is not subject to such equalization. IWO Exemptions An annual general homestead exemption provides that the assessed valuation for certain property owned and used exclusively for residential purposes can be reduced for 1979 and subsequent years by the amount of any increase over the 1977 assessed valuation, up to a maximum reduction of $3,500. In addition, persons 65 or older may apply for an annual reduction of up to $2,000 in the equalized assessed valuation of an owner- occupied residence. These permitted reductions have increased to current levels through periodic legislative action. Having a lesser impact on the Village's total valuation, a home i rovement exemption allows owners of single family residences to make up to30,000 in hcme improvements without increasing the assessed valuation of their property _for at least four years and a Disabled Veteran's exemption provides an annual reduction of $30,000 of assessed valuation for owner- occupied residential property. Tax Rates Each County Clerk computes tax rates by dividing the levies filed for each purpose by the total equalized assessed valuation of the Village. Due to differences between the counties in timing and in assessment practices, the total valuation used by Lake County is comprised of actual values in Lake County and estimated values in Cook County, with adjustments made the following year, as necessary. Taxes to be extended are calculated by applying tax rates to all property in the Village. This calculation also includes a weighted factor received from the Illinois Department of Revenue which compensates for differences in assessment levels and apportions the Village's levies between the counties. Collections Lake County Property taxes are collected by the Lake County Treasurer who remits to the Village its share of the collections. Taxes levied in one year become payable during the following year. During the collection year, tax bills are scheduled to be mailed on May 1 with payments due June 1 and September 1, but in no event sooner than 30 days after the bill is mailed. Penalty for late payment is 1 112% per month per installment past due. -11- Cook County Cook County taxes become due and payable during the collection year in two installments. The first installment is due March 1 and is an estimated bill, computed as one -half the prior year's tax bill. The due date for the second installment is scheduled for August 1, or 30 days after the bill is mailed, whichever is later. The second installment is based on the current levy and equalized assessed valuation and will reflect any change from the prior year. Unpaid taxes accrue penalties at the rate of 1 112% per month per installment due. Truth in Taxation Act Under the Illinois Act, notice in prescribed form must be published and a public hearing must be held if the aggregate annual levy, exclusive of debt service levels, is estimated to exceed 105/0 of the taxes extended upon the levy of the preceding year, exclusive of election costs. No amount in excess of 105% of the taxes extended upon the levy of the preceding year may be extended for the current year unless the levy is accompanied by a certification of compliance with these procedures. The Village has been and expects to be in compliance. PERSONAL PROPERTY REPLAC:EMERr TAX All ad valorem personal property taxes in Illinois were abolished effective January 1, 1979. The Personal Property Replacement Tax became effective July 1, 1979. This tax represented an additional tax based on the income of corporations and trusts, a new income tax for partnerships and Subchapter S corporations, and a new tax on the invested capital of public utilities. The distribution schedule requires eight payments during a calendar year from such tax revenues. Moneys received by a taxing district shall be first applied toward payment of the proportionate amount of debt service which was previously levied and extended against personal property for bonds outstanding as of December 31, 1978, and next applied toward payment of a proportionate share of the pension retirement obligations of the City. -12- HO F x�m o F W y O .0 W y tLp C F 9 —13— u N d J a'~o � J ^J'I 7i T O, T O% O1 S I v Go ou W 0 pp Cl N d T C9 L v -4 C, � O+ p� O� T 8 L U U L t!i .--1 N N J N CO) I W y 1(JJ X N 1 rd W J �D S N F.-li s 0 y p en n O c0 J C7 oD N u 71 N C, 10 w 10 N tyt�1 O F s c 'C T w Qom, N t- I u u N x L '\ N 0% N f'1 w O� 1 ti -4 L � O 7 L 0 I .0 y co o c y O, O+ O+ O, O% Ol 1 u U a u u C u o'a9 x o u c T L y uuW N r co cc VN1 N o en 00 N m nt tm u u F Q u J a C .-1 a ,..i .4 1 w cc { p -4 W N N 00 m V M pN C C 6 7 y p O r- O� I M w S p Ln ri -4 .4 > O d > CL 8 GN 01 OY c �� •-+ O �p O .-I 1-1 Ai c w W w7 F N I ap r�-1 N 'p y L T O H N H N 1.4 .-i 9 iJ C ul N O W Q` O N .7 In > .1 • O pu o a F 4 � w � N 10 .4 r w i w y�ya 1 p 0W x rr ~ 7 A F W C, 00 QpNp� 9! ao o�OD F 9 y U L '► v r4 ' 4 . 4 rte-/ C, v v M —13— Assessed and Estimated Market Value of Taxable Real Property Village of Buffalo Grove 1984 104,846,000 91,270,981 196,116,981 11.13 588,350,943 (1) The ratio of assessed value to market value is estimated by the Lake County Supervisor of Assessment to be 33 1/37. throughout the County, and by the Cook County Assessor to be 33 1/3% only for the County as a whole, due to the classification of real property in Cook County. (2) Estimated market value has been calculated for real property by utilizing the final certified assessed valuation for the Village and extending by the estimated ratio of assessed value to market value (33 1/3%). To the extent.that the Village's equalized assessed value in Cook County is composed largely of residential property, which is assessed and equalized at a lower percent of market value than in other Illinois counties, any calculation of market value using 33 1/3% will understate the result. It is estimated by the Village that the actual market value for all real property is significantly higher than shown above, based upon extrapolated data provided by the Illinois Department of Revenue through its tax reapportionment studies. The current estimate is approximately $627,000,000. SOURCE: Village of Buffalo Grove 1985 Annual Report Lake County Supervisor of Assessment Cook County Assessor -14- Real Property Assessed values(1) Estimated Tax Percent market year Lake Cook Total increase value(2) 1975 $ 21,078,322 $ 42,159,667 $ 63,237,989 - $ 189,713,967 1976 27,855,550 53,304,582 81,160,132 28.37/. 243,480,396 1977 33,305,344 52,325,287 85,630,631 5.5 256,891,893 1978 49,425,922 54,570,919 103,996,841 21.4 311,990,523 1979 65,828,832 58,029,223 123,858,055 19.1 371,574,165 1980 81,286,826 73,669,999 154,956,825 25.1 464,870,475 1981 86,413,201 79,265,576 165,678,777 6.9 497,036,331 1982 89,707,131 85,057,050 174,764,181 5.5 524,292,543 1983 95,215,991 81,251,426 176,467,417 .97 529,402,251 1984 104,846,000 91,270,981 196,116,981 11.13 588,350,943 (1) The ratio of assessed value to market value is estimated by the Lake County Supervisor of Assessment to be 33 1/37. throughout the County, and by the Cook County Assessor to be 33 1/3% only for the County as a whole, due to the classification of real property in Cook County. (2) Estimated market value has been calculated for real property by utilizing the final certified assessed valuation for the Village and extending by the estimated ratio of assessed value to market value (33 1/3%). To the extent.that the Village's equalized assessed value in Cook County is composed largely of residential property, which is assessed and equalized at a lower percent of market value than in other Illinois counties, any calculation of market value using 33 1/3% will understate the result. It is estimated by the Village that the actual market value for all real property is significantly higher than shown above, based upon extrapolated data provided by the Illinois Department of Revenue through its tax reapportionment studies. The current estimate is approximately $627,000,000. SOURCE: Village of Buffalo Grove 1985 Annual Report Lake County Supervisor of Assessment Cook County Assessor -14- Comparative tax rates (per $100 assessed and equalized valuation) Village of Buffalo Grove (for all purposes) Lake County Cook County All Overlapping Governmental Units County, including Forest Preserve District Lake County Cook County Metropolitan Sanitary District of Greater Chicago Lake Co. Cook Co. Combined School Districts Lake Co. (Dist. #96, #125, #532) Cook Co. (Dist. #21, #214, #512) Buffalo Grove Park District Lake Go. Cook Co. Indian Trails Public Library District Lake Co. Cook Co. All Other Lake Co. Cook Co. Combined Total Lake Co. Cook Co. Tax Years 1984 1983 1982 1981 $1.681 $1.570 $1.064 $1.246 1.977 1.985 1.322 1.298 .696 .583 .594 .567 1.059 1.023 .937 .810 -0- -0- -0- -0- .694 .715 .664 .643 4.836 4.838 4.583 4.618 4.672 4.761 4.701 4.254 .448 .404 .401 .367 .502 .473 .406 .391 .332 .255 .229 .246 .502 .473 .406 .391 .192 .273 .250 .244 .044 .061 .045 .108 $8.185 $7.923 $7.121 $7.288 9.277 9.274 8.322 7.737 SOURCE: Village of Buffalo Grove 1985 Annual Report -15- Principal Taxpayers SOURCE: Village of Buffalo Grove 1985 Annual Report -16- Percent 1984 of total Equalized equalized Type of assessed assessed Name business valuation valuation LaSalle National Bank Plaza Verde Shopping $ 4,293,981 2.19% Under Trust #40890 Center Stonegate Garden Apartments Apartment complex 3,240,132 1.14 Strathmore Square Shopping Center 1,483,166 .76 Cambridge Commons Shopping Center 1,297,479 .66 Bank of Buffalo Grove Commercial Banking 1,223,630 .62 Properties George McElrogs Buffalo Grove Business 1,016,030 .52 Park - Unit 1 LaSalle National Bank Grove Shopping Center 966,380 .49 Under Trust #104353 Chicago Title & Trust Co. Ranchmart Shopping 918,342 .47 Under Trust #31380 Center Continental Bank of Buffalo Commercial Banking 914,634 .47 Grove, N.A. Properties Buffalo Grove Toyota Automobile Dealership 737,800 .38 Total 7.70% SOURCE: Village of Buffalo Grove 1985 Annual Report -16- DEBT SL MARY VILLAGE OF BUFFALO (MOVE Direct and Overlapping Debt of the Village (as of April 30, 1986) Direct Debt (including this issue) General Obligation Bonds(l) (2) Golf Course Installment Purchase Contract Revenue Bonds (Waterworks & Sewerage) Total Debt Less self- supporting(3) Total net direct debt Principal Amount Outstanding $ 20,182,000 485,000 3,410,000 $ 24, 077, 000 3,410,000 $ 20,667,000 (1)Excludes three Special Service Area Bond Issues totalling $13,450,000 which are not general obligations of the Village. (2)General Obligation debt outstanding $ 50,000 Municipal Building $ 135,000 Fire Station Construction $ 172,000 Dundee Fire Station Note $ 900,000 1981 Corporate Purpose Bonds $ 4,450,000 Corporate Purpose Bonds Series 1982A $11, 175,000 1984 Corporate Purpose Bonds $ 3,300,000 Corporate Purpose Bonds, Series 1986 (this issue) (3)Includes $3,410,000 Waterworks & Sewerage Revenue Bonds 11wil Net Overlapping Debt Estimated amount of net general obligation Village of debt as of Percent Buffalo Grove Name of governmental unit Apr. 30, 1985 applicable share of debt Cook County $290,550,000 .263 $ 764,147 Cook County Forest Preserve District 24,650,000 .263 64,830 Metropolitan Sanitary District of Greater Chicago 680,200,000 .268 1,822,936 Lake County Forest Preserve District 22,600,000 2.462 556,412 Buffalo Grove Park District 2,200,000 96.840 2,130,485 Wheeling Park District 3,285,000 .900 29,565 Vernon Area Public Library District 335,000 11.417 38,247 Wheeling Cam. Consol. #21 Wheeling Township H.S. #214 2,005,000 .3.402 68,210 Harper C®unity College #512 2,000,000 1.909 38,180 Kildeer Countryside Community Consolidated #96 3,275,000 52.294 1,712,629 Aptakisic -Tripp Community Consolidated #102 3,040,000 37.289 1,133,595 Adlai E. Stevenson H.S. District #125 10,665,000 27.184 2,896,455 College of Lake County #532 3,555,000 2.904 103,237 Total overlapping debt $11,358,928 Total net direct debt $20,667,000 Total net direct and overlapping debt $32,025,928 Selected Debt Statistics Equalized Assessed Valuation, 1984 ....... . ..................... $196,116,981 Estimated Full Value of Taxable Property, 1984 ................. $588,350,943 Population, 1985 ................ ............................... 26,168 Statutory Debt Limit ................ ........................... None Net direct debt Net direct and overlapping debt am As %of Estimated Per Capita Full Value $ 790 3.51% $ 1,224 5.447. u L A fo0 O Y dCC 41 V C ^ F •D s� W O u aJ C j v L Ny 6 v L U n O Y C7 -0 m O 00 > .. u u G V n as o -to o V �C •r C! P9 u•�.r�OmJ JN n JmmO�v1 u1nO 0� V JJ� �o n.••�J <'7NOm.+T O�.-+h .pJO E7 u S 0. ��--ih J ^m JO�o OHO .+S m.r illmO U 6V. d C NNn J J v1 �D �Ohhmmm TO. O.O r� 8 00 • _G Y .. 'C Oc. OSnhnO✓+v�OOOOOv+u+ O CD OHO NnNOJOO N Tmt�.DSnM CN FO6ta, ~ •v l0 ••. nh II'1NOQ. .r .-wn o+OrnON.p nO h N �O C � O.O.+NnJ n V1N N.+OCN�p �phmY1 � �0 E•^ ^ N -1 -1 -1 - -1 -1 -{ N - -1 N d W ] � OOO�nO�v�uvO V'�OOOOOou'1I o ,FC" y ^I nq ^ .-� .••� .•1 ..1 N N N N N n t+1 n e`1 Y d ] tll L1. Y C7 �-C+. V N G 8oS OinOOoin emu'. v1tn O�n OOOV1 u•�V�u•f V1 m O N Vl O N h N h N 0 ✓1 N O O O N h N h h UGC .O l0�1•.hmQ�O Jet v�l1N -1 N . N d N Y Y m N v1 0 N h N vl L` Vl h h U �� nt�1J JJY'1 V1�pNNN. ar y. O` hhhhOOOOOO O 7.-1 'y Eu U G C q Lp N v v IT N W N O u e ] oY — L d u C v 0 0 0 0 YLCLp nRlnn.+ 4. V1V 0 m GC v+.n C •7 N N s. ID O .d 0� n U Y+. •r hm0`O.�N nS V��p�m0+O .�Nn�7 Ol �0 •p Y m m mQ. O. O�O.T Q. O. p. p. p. O 00 0 SO000 OS N N N N N N N -19- 0 S v S ern C Scbedule of Revenue Bond Coverage - Waterworks and Sewerage Fund (April 30, 1985) Village of Buffalo Grove Debt service requirements Principal Interest Total Revenue bond coverage 40,000 Net revenue Fiscal Operating Operating available for year revenues expenses* debt service 1976 $1,180,853 453,204 727,649 1977 1,322,139 595,821 726,318 1978 1,601,229 680,512 920,717 1979 1,730,069 759,260 970,809 1980 1,838,988 1,074,763 764,225 1981 1,571,777 1,213,742 358,035 1982 1,677,969 945,752 732,217 1983 1,931,013 1,217,215 713,798 1984 3,417,742 1,477,874 1,939,868 1985 4,018,324 2,466,065 1,552,259 Debt service requirements Principal Interest Total Revenue bond coverage 40,000 276,500 316,500 2.30 40,000 273,700 313,700 2.32 40,000 270,900 310,900 2.96 40,000 268,100 308,100 3.15 40,000 265,300 305,300 2.50 50,000 262,500 312,500 1.15 50,000 259,000 309,000 2.37 50,000 255,000 305,500 2.34 50,000 253,750 303,750 6.39 60,000 247,800 107,800 5.04 *Excludes depreciation and amortization SOURCE: Village of Buffalo Grove 1985 Annual Report -20- Pension Fund Obligations The Village, is required by State law to provide funds sufficient to meet actuarial requirements of its annual pension fund obligations. The amounts necessary to fund the Police and Fire Pension Fund obligations are determined by the Illinois Department of Insurance. As of April 30, 1985, the unfunded accrued liability of the Fire Pension Fund was zero and the unfunded accrued liability of the Police Pension Fund was $349,561. Illinois legislation, signed into law in September 1979, changed the funding period for the prior service cost for both the Police and Fire Pension Systems to a 40 year period ending in 2020. Other full -time municipal employees are covered by the Illinois Municipal Retirement Fund (IMRF). As of December 31, 1985, the present value of future contributions to be made by the City on behalf of present employees was $3,357,312, including unfunded prior service of $2,228,695. The IlIRF annually determines the contribution rate necessary to provide full funding of the unfunded prior service costs, including interest, over a 40 year period. -21- R MARY FINANCIAL INFORMATION Financial statements of the Village appearing in this Official Statement, other than budget information, have been taken from the annual audits. Budget information is taken frcm the Village's official budget. Portions of the audit for fiscal 1985 is contained in Appendix B herein. Complete copies of audits for fiscal 1983 through 1985 are available upon request from the Director of Finance and General Services for the Village, Bill Brimm. Accounting Practices The Village historically has maintained its financials according to Generally Accepted Accounting Practices as adapted by the National Council on Governmental Accounting. The Government Finance Officers Associations, which recommends that all municipalities adopt these accounting practices, now awards a "Certificate of Conformance" to those who do. The Village has been awarded a Certificate of Conformance each year since 1982. -22- VILLAGE OF BUFFALO (MOVE General Fund Balance Sheet -23- Fiscal Years Ending April 30 �8 1 1985 Assets Cash $ - $ 87,726 $ 161,079 Investments, at cost 1,365,40 1,267,000 2,552,000 Receivables, net of allowance for uncollectibles: Taxes (note 3) 1,314,967 1,513,532 1,337,813 Municipal sales tax 234,096 256,830 302,962 Illinois income tax 35,426 40,136 42,683 Interest 11,131 15,029 20,956 Miscellaneous 10,000 10,000 10,000 Due from other funds 1,124 4,183 6,757 Total Assets $2,972,241 $3,203,436 $4,474,250 Liabilities and Fund Equity Bank overdraft $ 88,476 - - Accounts payable and accrued liabilities 163,675 163,087 254,160 Contracts payable 43,888 - - Deposits 196,633 209,953 314,633 Due to other funds 76,359 41,915 86,402 Deferred property tax revenue 1,314,967 1,513,532 1,377,813 Total liabilities $1,881,998 $1,928,487 $2,033,008 Fund equity: Unreserved - undesignated 1,090,243 1,274,949 2,441,242 Total fund equity 1,090,243 1,274,949 2,441,242 Total liabilities and fund equity $2,972,241 $3,203,436 $4,474,250 -23- GN O —24— O1 'Q 7 'D In O cIfN y�, J 'u.i-R - M O. 'OD D D+ . M N O+ - I� O'D "D S CL- �n VOD 1 O J N a.D J \ .N O •� Nn ON N + O 7 1 -I .-I OD N N iIt0Vn l0 1 l -'1 I M ID R iO fR J%D%D I�nO O ON J J �4 O�NJ�DnM co J N nO+ O� M 1D N O N N �D 6' I-d M O lc ID J N N �D M IND en lo J nJT N N Cl) O J .•-� lD f0 7 %OMMMmJ t� In O� M r•I ,l O+ co MI M IO N V1 �O J N %D O� IT O N IO 00 M J J IN O (LJ - - - i~ M u1 .-I v N 04 6 6)14 ID co .c7l-I I ID O f` C, .-I -1 V1 .-1 N C N I� .a O O N M J O M J In M � O .'•I O M M In a0 In p O In W O OO, OD OJT lD IL In NNO O �D I/1 en %D IIIMN J N M In OD t`N M N O I m 1� O. O M r•-1 r--1 M I� N n n � J .••i M .^/ N V! If1 iR r-1 M d} V1 M m O1 4a N'DNJ'd0 u1 .J-1 ODD u`Di .N-I Iln cJ��1I N INn S n oo S � O+ J J C O M - ^ ON O rl J ✓1 r1 J If1 I� O N T N •pC r-I N lD o cll O� In "o TMOMr -1 r/ N O M In O M N Ov O ID ID J J.•+ 7 •L+ .-a .- -i In NJO^D J - N J i cn tR � bl tR a W 1 ^ w m Cd 7 'O J ab O+ OD r, .•I In ID CNN In n '�•1 I, O� . 4 co O '�-I AND O OHO .--1 lo 1� ID8 J O J C^ N O+ N co O �D CO 0 CJ �D J ��77 ^ � n N rI co en tlN -4 M M O� n m m �D .N-1 .� .•I J N i� t� .--I N 1� J N v J �/ M .•4 O .--I N .--I •p U1 >a if1 h V! V! 44 64 L •r+ r-1 6 m rl "D h Mp %D IO rnmblNOe�a1 D+ O..• -1 al O, O M .•a N N .•a mll N W O NO O OM N O V1 O4 r I M O• O,o f`JMJ .--I M m co ID Mr•IJ oD D\ In � o 2 OO O. P ID O oo I, ,D J N .4 N r-/ V1 t� M v J v N r•i O 1.4 .� J r-•I N J .--I &f iR f? iR V! eCO m G! L O1 m (J m v N >I d M66 {.1 N w u U m m m G d U L+ C >+ 7 OGl O 7 N N Ol C N O L7 p w G m u GCl m H "�•p L `^I m U m Ol 0 7 W W v m m +a CI W m d O •.+ •.+ > m'O�j W O �$! yyy X'C � L pmp v ~ y U 7 R1 C G C$ N > O w CO /O O7 d N C N •.. C Fm+ Fes. •.. u L y~y L m Cl CL N w t %.0 R1 W L m Y +I d C CI N •• 07 r•I �. d � Ol G G QG OLQ O U O O � (� N T m > w C) .. L O! O m r� .•4 •• W U IO 5 L w M 'r m W m GW •,..N .-1 77 w m m �p 01 d 10 m N m 00 -w -u Q m Nd m u u C vC .--I OIO .'Gyr A C W W UOd •.-I L m w f0 O N C> m co 7 .--I .--1 4 pI.. U F CA w 2 F F+w pm F .D W I C .. q .+ 7617 v > LLC7 .G a v'3 o fs7a —24— O1 'Q 7 RATINGS The rating assigned to the Series 1986 Bonds by Moody's expresses only the views of this rating agency. The explanation of the significance of those ratings may be obtained from Moody's. There is no assurance that any rating will continue for any period of time or that such rating will not be revised or withdrawn. Any revision or withdrawal of ratings may have an effect on the market price of the Series 1986 Bonds. TAX EXEMPTION In the opinion of Isham, Lincoln and Beale, Chicago, Illinois, interest on the Bonds is exempt from federal income taxes under existing law as of the date of original delivery of the Bonds. Interest on the Bonds is not exempt from Illinois income taxes. The form of Legal Opinion can be found in Appendix A. PENDING FEDERAL TAX LEGISLATION On December 17, 1985, the United States House of Representatives passed H.R. 3838, the Tax Reform Act of 1985, (the bill in that form is referred to as the "House Tax Bill "). The House Tax Bill would make substantial changes in Federal income tax law. Certain of those changes relate to the tax - exempt status of interest on bonds issued by state and local governments on or after January 1, 1986. The House Tax Bill would establish various additional requirements which, if applicable, would have to be met in order for interest on the Bonds to be exempt from Federal income taxes. Among these is a requirement that the Village spend not less than 5% of the net proceeds of the Bonds within 30 days of their date of issuance. Under the House Tax Bill, with its effective date provisions as adopted by the House of Representatives, the failure of the Village to comply with these requirements could result in interest on the Bonds being taxable, retroactive to the date of issuance of the Bonds. On March 14, 1986, the Chairman and ranking members, respectively, of the Senate Finance Committee and the House Ways and Means Committee and the Secretary of the Treasury issued a joint statement (the "Joint Statement ") endorsing a postponement of the effective date of certain provisions of the House Tax Bill to the earlier of September 1, 1986 or the date of its enactment. Under the Joint Statement, the provisions of the House Tax Bill relating to expenditure within 30 days of issuance and certain other requirements would not apply to Bonds issued prior to the earlier of September 1, 1986 or the date of enactment of the legislation. On June 24, 1986, the United States Senate passed a substitute version of H.R. 3838 (the "Senate Tax Bill ") in place of the House Tax Bill. The Senate Tax Bill would modify the provisions of the Code pertaining to the tax - exempt status of interest on state and local government obligations, but such modifications would apply only to obligations issued after December 31, 1986 and, thus, would not apply to the Bonds. The Senate Tax Bill also would amend provisions relating to a tax on a taxpayer's alternative minimum taxable income. -25- Generally, these provisions would require after December 31, 1986 that one -half of any tax - exempt interest, including interest on bonds such as the Bonds, earned by a corporation (other than S corporations, regulated investment companies and real estate investment trusts) be taken into account in computing such corporation's alternative minimum taxable income. Upon the delivery of the Bonds, Bond Counsel is to deliver its additional opinion to the effect that, if the effective date of the provisions of the House Tax Bill referred to in the Joint Statement is subsequent to the issuance of the Bonds, interest on the Bonds is exempt from federal income taxes under existing law, as it would be amended by the House Tax Bill with such an effective date as to those provisions. The additional opinion of Bond Counsel, however, will be to the effect that, if the Bonds are held by property and casualty insurance companies, interest on the Bonds may be subject, under the provisions of the House Tax Bill but with provisions as to effective date as endorsed by the Joint Statement, to what is, in effect, an alternate minimum tax for taxable years beginning after December 31, 1987. The additional opinion will also be to the effect that interest on the Bonds is exempt from Federal income taxes under present law, as it would be amended by the House Tax Bill, in the amended form in which it was passed by the United State Senate, except that, while the Bonds are held by corporations, such interest may be subject to an alternate minimum tax for taxable years beginning after December 31, 1986. There can be no assurance as to whether the House Tax Bill or the Senate Tax Bill will be enacted into law or, if enacted, what its provisions, including effective date, will be. There can be no assurance as to whether the Village can or will comply with any new tax legislation and what the effect, if any, may be on the taxability of interest on the Bonds. It is possible that any legislation will have the direct or indirect effect of changing the economic consequences of owning obligations such as the Bonds. Investors should consult their own tax advisors to determine the potential impact of pending tax reform proposals on their federal income taxes. UMERWRITING The Bonds will be purchased by Continental Illinois National Bank and Trust Company of Chicago, Underwriter, pursuant to a Bond Purchase Agreement with the Village dated July 21, 1986. The Underwriter intends to reoffer the Bonds at an average price of 101.67. of the principal amount of the Bonds. The obligation of the Underwriter to accept delivery of the Bonds is subject to various conditions of the Bond Purchase Agreement, but the Underwriter is obligated to purchase all of the Bonds if it purchases any of the Bonds. FINANCIAL STATEMEWS The financial statement included in Appendix B to this Official Statement has been examined by Peat, Marwick, Mitchell & Co., independent certified public accountants, and is included herein in reliance upon the authority of said firm as experts in accounting and auditing. -26- CERTAIN LEGAL MATTERS Legal matters incident to the authorization and issuance of the Bonds are subject to the approving opinion of Isham, Lincoln & Beale, Chicago, Illinois, Bond Counsel. Certain legal matters will be passed upon for the Village by the Village Attorney. NO LITIGATION CERTIFICATE Upon the delivery of the Bonds, the Village shall furnish a certificate, in form satisfactory to Bond Counsel, to the effect that, among other things, there is no litigation pending in any court to restrain or enjoin the issuance or delivery of the Bonds, or in any way contesting the validity or enforceability of the Bonds or the pledge of the Village's full faith, credit and taxing power for their payment. AUMMIZATION The Village has authorized the distribution of this Official Statement. At the time of delivery of the Bonds, the Village President will furnish a certificate executed statin& that to the best of his knowledge the Preliminary Official Statement did not (as of its date) and the Official Statement does not (as of its date) and will not (at the date of delivery of the Bonds) contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. This Official Statement has been duly executed and delivered by the following officer on behalf of the Village of Buffalo Grove. VMME OF BUFFAW GROVE, ILLIPAIS Vi age Presi ent -27- APPENDIX A FORM OF LEGAL OPINION Form of Opinion of Bond Counsel August , 1986 Continental Illinois National Bank and Trust Company of Chicago 231 South LaSalle Street Chicago, Illinois 60697 Gentlemen: We have examined a certified copy of the tran- script of proceedings and accompanying certificates relating to the issuance of $3,300,000 aggregate principal amount of Corporate Purpose Bonds, Series 1986 (the "Bonds "), of the Village of Buffalo Grove, Cook and Lake Counties, Illinois (the "Village "). The Bonds are initially dated July 15, 1986 and mature on the dates and in the amounts and bear interest at the rates per year as follows: Maturing (January 1) Amount Maturing Interest Rate 1989 $ 85,000 9.00% 1990 95,000 9.00 1991 100,000 9.00 1992 110,000 9.00 1993 120,000 9.00 1994 135,000 7.60 1995 140,000 7.10 1996 155,000 7.20 1997 165,000 7.30 1998 175,000 7.40 1999 190,000 7.50 2000 205,000 7.50 2001 220,000 7.50 2002 240,000 7.50 2003 260,000 7.55 2004 280,000 7.60 2005 300,000 7.65 2006 325,000 7.70 -2- Interest on the Bonds is payable on January 1, and July 1 in each year, with the first interest payment date being July 1, 1987. Bonds maturing on or after January 1, 1997 are subject to redemption at such times and upon such terms as are stated in the Bonds. We have also examined executed Bond Number 1. Based upon our examination of the certified copy of the transcript of proceedings, the accompanying certifi- cates and the Bond referred to above, it is our opinion that the Bonds are valid and legally binding general obligations of the Village in accordance with their terms, payable from ad valorem taxes levied against all of the taxable property in the Village without limitation as to rate or amount. We are further of the opinion that interest on the Bonds is exempt from federal income taxes under existing law. Very respectfully yours, APPENDIX B ADDITID FINANCIAL STAZIIKF.IiT VILLAGE OF BUFFALO GROVE, ILLINOIS Audited Financial Statements All Funds and Account Groups April 30, 1985 PIPEAT MARWICK Board of Trustees Village of Buffalo Grove, Illinois: Peat, Marwick, Mitchell & Co. Certified Public Accountants Peat Marwick Plaza 303 East Wacker Drive Chicago, Illinois 60601 312- 938 -1000 We have examined the combined financial statements of the Village of Buffalo Grove, Illinois as of and for the year ended April 30, 1985 as listed in the accompanying table of contents. Our examination was made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the combined financial statements referred to above present fairly the financial position of the Village of Buffalo Grove, Illinois at April 30, 1985 and the results of its operations and the changes in financial position of its proprietary fund types and pension and nonexpendable trust funds for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year, after giving retroactive effect to the change, with which we concur, as described in note 4 to the combined financial statements. Our examination was made for the purpose of forming an opinion on the combined financial statements taken as a whole. The supplemental information listed in the table of contents is presented for purposes of additional analysis of the combined financial statements rather than to present the financial position, results of operations, and changes in financial position of the individual funds. The supplemental information has been subjected to the auditing procedures applied in the examination of the combined financial statements and, in our opinion, is fairly stated in all material respects in relation to the combined financial statements taken as a whole. The information contained in the statistical section has not been subjected to the auditing procedures applied in the examination of the combined financial statements and, accordingly, we express no opinion thereon. June 28, 1985 1 r q N •O N N O %O co m 10 .•.. O J 10 CO OD .-� Cn N b O •O N p y� wl O J n N O, 10 O� 1010 v1 00 O n �D ON m r1 O �O v1 OD O O b t X u H.•+ O CO ^N J w w w w w w w w OJN NN O�O�' ��„�,�t0'1J w w w . w OD\OJN b _ ...N OOn w O O1 t1 w N W F N air 1+1 w O+vl en 0W) f1 .-n .r N .-. a0 � W N f(•1 N ^ J QQ 4 Y uI O O O m H u N O 1 1 1 1 1 1 1 1 1 1 M O Y C Q 1 J a\ O to C7 .O.t - v C 7 .•i O m 4 •O u1 vl u t'1 � . 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F W r• V n. n J op u W 7 •O h f0 W n C �' V u V 1 I I I u 8 V > C e0 n J N N N -1c, G 1+ M 0L V .•r ..� N en en e•1 E > V O O en N f•1 c0 N N N u O W C7 .+ .O Nt O ^•• O J J J In u W I 1 J C Ir1 c0 N e•1 c O J J J J •W ^� N N N N J C N W f? C m V m v u e m eu W C V O c0 c u C -0 .0 ., O M qV c a m en A 14 C E q 7 W 4 •�Ee W V C V I V T m •.xe 7 m W W T m u J V v. u m V W •0 C M[ V C V m u V e u u ►. a u a n u .+ m w of o ee >"V T8•� •a u u T u W 14 v L W F 1 •••p o a M .+ .+ W J 1. .'ii ►. .-Oi V V 4 m q C W •.� .+ V — •.+ m c m 'O •O O T C •O A L m m %w C w .0 Aj C C u u 0. V A W •.+ V V O W V m 7 u C d O W W m 1 •.+ .•. c .. .+ 4 m r u eo 3 d .+ C V •O T A > W O u M u q W .+ q m V •+ .+ F u V • N C C C C c u m O C C C IIO .O a 4 7 A ++ T 0.0 q .r ..� 1+ v V U m q cI W V •O .+ a .+ .+ 7 C •� a1 A m V W V C W m W m G W 'O W 8 ••+ V V u E V W W W W W •m u w W V T 4 d•+ 3 4 m m W u m ••+ W T •.+ W 4 O > .+ O •• L G V 14 c W W V 1. L O O O G .-� 1. W u 4 V w eu C m C .+ J F T 7 d •C >— V u V •� > .•+ V F F F W •+O 0. •.+ t 4 1.O W u 0 A u A B V 1. a ac M m W L u m 4 A N .+ o u V c0 e A o m •.. •.. u A m 2 E m V m •.+ u m O qO L •.I 7 V 7 4 m •C+ Ad .W] t. m w t+ O r] V V u .c O V .+ u d C> u ] C a a O C W W •-e O 1+ 1. •.+ u u 7 W 0 oVG V 7 ••+ 4 m u L M M -A U C W C O c V 7 W 1 C U~ C O. d W W pup x W V V v •O V M oG W c m W u o V c A a C = w m W 6 V A ig 0 h n Exhibit 2 VILLAGE OF BUFFALO GROVE, ILLINOIS F Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - All Governmental Fund Types Year ended April 30, 1985 Total Special Debt Capital (memorandum General Revenue Service Projects only) Revenues: Property taxes $ 1,927,442 176,249 236,759 - 2,340,450 Licenses and permits 1,360,146 - - - 1,360,146 Intergovernmental revenues 1,873,442 469,289 - - 2,342,731 Fines 312,864 - - - 312,864 Interest income 196,561 39,124 8,701 240,451 484,837 Miscellaneous 158,120 - - - 158,120 Total revenues 5,828,575 684,662 245,460 240,451 6,999.148 Expenditures: Current: General government 1,293,124 - - - 1,293,124 Public safety 3,047,424 - - - 3,047,424 Highways and streets 782,552 85,476 - - 868,028 Employee retirement benefits - 167,468 - - 167,468 Capital projects - - - 1,598,780 1,598,780 Debt service: Principal retirement - - 207,590 - 207,590 Interest and fees - - 228.964 - 228,964 Total expenditures 5,123,100 252,944 436,554 1,598,780 7,411,378 Excess (deficiency) of revenues over expenditures 705,475 431,718 (191,094) (1,358.329) .(412,230) Other financing sources (uses): Operating transfers in 430,319 - 299,353 - 729,672 Operating transfers out (82,700) (383,372) - - (466,072) Total other financing sources (uses) 347,619 (383,372) 299,353 - 263,600 Excess (deficiency) of rev- enues and other financing sources over expenditures and other financing uses 1,053,094 48,346 108,259 (1,358,329) (148,630) ' Fund balances at April 30, 1984 1,274,949 313,767 76,642 3,073,149 4,738,507 Residual equity transfer 113,199 - - - 113.199 Fund balances at April 30, 1985 $ 2,441,242 362,113 184.901 1.714.820 4.703,076 See accompanying notes to combined financial statements. 4 a I l l l m .. Al A• O O N > W tl r v s � o Y Y N p P ■ m ^ A A V w v v 0 O O p p 6 Y 1 1 1 1 1 1 1 1 1 1 1 0 1 1 M O ti • • � Q n n I ]YMO I N 11111 1cl vI j _PII p1 O1I 7 V p O O d J N wl N N d I 1 1 1 t 1 1 1.1 1 1 � 1 1 I N I I �� ' 1 1 1 1 1 I I �� O N�I N� d� �� N Im•1� •• tT C � Y ••YI ttC U C p V' C z •y >W N m • O o � oI b C� N Y Y 1 p . 1 p 1 b 1 1�? pC � ti d N d ImC N n � .bn N N I 1•'f N O V1 m O d ^I b ^N� • ■ O V J N N J P.1I1I P J Y u G ; � C • • O �o S ■ � • 1 e Y N N y Y m Y� Om nd O m nN� N O OPf 10 ~mm 11 �pJ 1 1 1 II 1 �m NNn d A� n i • : ; >W tl v N b N d^ O M N d N O N m 0 � m Ip•1 •J• J nb 1 1 1 1 N O bb J C yy nN aN N NJm J m J y. .• ti ti N •••I M1 yl N �• A 0 0 000 H S bN.. nN .0 -1 -1 1 � oP b n h p P ^ • 1 1 1 1 1 1� II 1 1 1 II N^o N N�I � C C Y Y • Y > G W 9 y O u m O M O C _ • Is Y � P P qp Y O u• > Y tl O • —.0 ] w• v 0 ■ 0 n u Y Y u • C tl u w • Y Y Y O • i Y O ] M +• Y I1 u M ] O O Y ��II Y � Y O] tl W tl � • Y Y 7 CO Z m Y W• C •^ •� • ^' •1 � Y E > LY • u w iY tl Y 6 0> •.� Y y w O � •• Y Y ••� ••� ••� � u q] U •O Y d M 6 O .Yi •Y e e�yy yy ■ 1. Y. C C ■ a • 6 G O ■ • Y M• O • -Y O u Y Q~ y ■ i Y Y Y G C O •+ >n Y 6� O• M O C O F p Y Y • Y O Y• Y Y y a w •M • ~ Y • ]O w 6 u •Q •m •u o ] .a ammO aw .O . W < a ■ Y C •� ^.� YIY •-1 r•I fL ^ S C 7 • YJ U Y LI Y 6 6 YOO 'O ■ S > G G b C Y W d ■i O N Exhibit 4 VILLAGE OF BUFFALO GROVE, ILLINOIS Combined Statement of Revenues, Expenses, and Changes in Retained Earnings - Proprietary Fund Types except Trust Funds y Year ended April 30, 1985 Total Internal (memorandum Enterprise Service only) Operating revenues: Water and sewerage charges $ 2,954,680 - 2,954,680 Charges for services - 717,417 717,417 Daily green fees and memberships 371,210 -- 371,210 Merchandise sales 67,716 - 67,716 Connection and recapture fees 1,045,538 - 1,045,538 Cart and club rental 118,790 - 118,790 Food and bar rental 8,521 - 8,521 Driving range fees 44,455 - 44,455 Miscellaneous 23,790 - 23,790 Total operating revenues 4,634,700 717,417 5,352,117 Operating expenses: Central garage operations - 293,196 2937196 Water operations 770,869 - 770,869 Sewer operations 1,103,864 - 1,103,864 Northwest Water Commission 565,502 - 565,502 Golf course operations 360,992 - 360,992 Cost of sales - pro shop 52,245 - 52,245 Employee retirement benefits 45,861 - 45,861 Depreciation and amortization 319,003 202,633 5217636 Miscellaneous 7,769 - 7,769 Total operating expenses 3,226,105 495,829 3,721,934 Operating income 1,408,595 221,588 1,630,183 Nonoperating revenues (expenses): Property taxes (notes 2 and 4) 920,584 -- 920,584 Interest revenue 583,312 135,009 718,321 Interest expense (1,807,954) - (1,807,954) Gain on sale of fixed assets - 33,467 33,467 Total nonoperating revenues (expenses) (304,058) 168,476 (135,582) Income before equity in earnings of Northwest Water Commission and operating transfer 1,104,537 390,064 1,494,601 Equity in earnings of Northwest Water Commission 317,322 - 317,322 Operating transfer out (224,600) - (224,600) Net income 1,197,259 390,064 1,587,323 Depreciation expense allocated to contributed capital 110 - 110 Retained earnings at April 30, 1984 (note 4) 6,264,499 1,754,761 8,019,260 Retained earnings at April 30, 1985 $ 7,461,868 2,144,825 9,606,693 See accompanying notes to combined financial statements. M VILLAGE OF BUFFALO GROVE, ILLINOIS Combined Statement of Changes in Financial Position - Proprietary Fund Types except Trust Funds Year ended April 30, 1985 Sources of working capital: Operations: Net income Items not requiring (providing) working capital: Depreciation and amortization Gain on sale of fixed assets Equity in earnings of Northwest Water Commission Working capital provided by operations Other sources of working capital: Decrease in restricted assets Proceeds on sale of fixed assets Total sources of working capital' Uses of working capital: Purchase of fixed assets Repayment of revenue and general obligation bonds payable Decrease in-restricted liabilities Total uses of working capital Net increase in working capital Elements of net increase (decreases) in working capital: Cash Investments, net Receivables, net Due from other funds Pro shop inventory Cash overdraft Accounts payable and accrued liabilities and contracts payable Deposits Due to other funds Deferred revenue Exhibit 5 Total Internal (memorandum Enterprise Service only) $ 1,197,259 390,064 1,587,323 319,003 202,633 521,636 - (33,467) (33,467) (317,322) - (317,322) 1,198,940 559,230 1,758,170 683,950 - 683,950 - 35,946 35,946 1,882,890 595,176 2,478,066 1,021,034 137,787 1,158,821 700,407 - 700,407 126,668 - 126,668 1,848,109 137,787 1,985,896 $ 34,781 457,389 492,170 (305,579) - (305,579) 841,049 449,000 1,290,049 (65,898) 4,149 (61,749) 8,538 37,377 45,915 (462) - (462) - (35,339) (35,339) (491,822) (16,145) (63,335) 18,347 97,801 - 14,489 - Net increase in working capital $ 34,781 See accompanying notes to combined financial statements. 7 457,389 (507,967) (44,988) 97,801 14.489 492,170 Exhibit 6 VILLAGE OF BUFFALO GROVE, ILLINOIS Combined Statement of Revenues, Expenses, and Changes in Fund Balances - Pension and Nonexpendable Trust Funds Year ended April 30, 1985 See accompanying notes to combined financial statements. 0 Nonexpendable Pension Trust Fund Trust Funds Working Cash Total Operating revenues: Property taxes (note 2) $ 194,904 - 194,904 Members' contributions, net 115,299 - 115,299 Interest 238,870 8,261 247,131 Total operating revenues 549,073 8,261 557,334 Operating expenses: Refund of members' contributions 9,119 - 9,119 Miscellaneous 192 - 192 Total operating expenses 9,311 - 9,311 Net income 539,762 8,261 548,023 Fund balances at April 30, 1984 2,013,021 104,938 2,117,959 Residual equity transfer - (113,199) (113,199) Fund balances at April 30, 1985 $ 2,552,783 - 2,552,783 See accompanying notes to combined financial statements. 0 VILLAGE OF BUFFALO GROVE, ILLINOIS Combined Statement of Changes in Financial Position - Pension and Nonexpendable Trust Funds Year ended April 30, 1985 Nonexpendable Pension Trust Fund Trust Funds Working Cash Sources (uses) of working capital: Net income $ 539,762 8,261 Purchase of investments (494,142) - Residual equity transfer - (113,199) Net increase (decrease) in working capital $ 45,620 (104,938) Elements of net increase (decrease) in working capital: Cash (6,790) (3,140) Receivables 52,410 (1,798) Due from other funds - (100,000) Net increase (decrease) in working capital $ 45,620 (104,938) See accompanying notes to combined financial statements. 9 Exhibit 7 Total 548,023 (494,142) (113,199) (59,318) (9,930) 50,612 (100,000) (59,318) VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements April 30, 1985 (1) Summary of Significant Accounting Policies The Village of Buffalo Grove, Illinois (Village) was incorporated March 7, 1958. The Village operates under a Council- Manager form of government and provides the following services as authorized by its articles of incorporation: public safety, waterworks, sewerage, building and zoning, engineering, recreation, civil defense, and overall administration. The accounting policies of the Village conform to generally accepted accounting principles as applicable to governmental units. The following is a summary of the more significant policies. Basis of Presentation - Fund Accounting The accounts of the Village are organized on the basis of funds or account groups, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self - balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures /expenses. The various funds and account groups are summarized by type in the combined financial statements. The following fund types and account`' groups are used by the Village: Governmental Fund Types General Fund - The General fund of the Village. It financial resources except for in another fund. Fund is the general operating is used to account for all those required to be accounted Special Revenue Funds - Special Revenue Funds are used to account for the proceeds of specific revenue sources (other than expendable trusts or major capital projects) that are legally restricted to expenditures for specified purposes. Debt Service Funds - Debt Service Funds are used to account for the accumulation of resources for, and the payment of, general long -term debt principal, interest, and related costs. Capital Projects Funds - Capital Projects Funds are used to account for financial resources to be used for the acqui- sition or construction of major capital facilities (other than those financed by proprietary funds and trust funds). (Continued) 10 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements Proprietary Fund Types Enterprise Funds - Enterprise Funds are used to account for operations (a) that are financed and operated in a manner similar to private business enterprises - where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and /or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. Internal Service Funds - account for the financing one department or agency of the Village, or to cost - reimbursement basis. Fiduciary Fund Types Internal Service Funds are used to of goods or services provided by to other departments or agencies other governmental units, on a Trust and Agency Funds - Trust and Agency Funds are used to account for assets held by the Village in a trustee capacity or as an agent for individuals, private organizations, other governmental units, and /or other funds. These include nonexpendable and pension trust and agency funds. Nonexpendable and pension trust funds are accounted for and reported on the same basis as proprietary funds since capital maintenance is critical. Account Groups General Fixed Assets Account Group - This group of accounts is established to account for all fixed assets of the Village, other than those accounted for in the proprietary funds . General Long -term Debt Account Group - This group of accounts is established to account for all long -term debt of the Village except that accounted for in the proprietary funds. (Continued) 11 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements Basis of Accounting The modified accrual basis of accounting is followed for the governmental funds and agency funds. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual, i.e., both measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Expenditures, other than interest on long -term debt, are recorded when the liability is incurred. See note 2 for property tax accrual policy. In applying the susceptible to accrual concept to intergovernmental revenues, the legal and contractual requirements of the numerous individual programs are used as guidance. There are, however, essentially two types of these revenues. In one, monies must be expended on the specific purpose or project before any amounts will be paid to the Village; therefore, revenues are recognized based upon the expenditures recorded. In the other, monies are virtually unrestricted as to purpose of expenditure and generally irrevocable, i.e., revocable only for failure to comply with prescribed compliance requirements, e.g., equal employment opportunity. These resources are reflected as revenues at the time of receipt or earlier if they meet the "susceptible to accrual" criterion. Licenses and permits, charges for services, fines, and miscellaneous revenues (except investment earnings) are recorded as revenues when received in cash because they are generally not measurable until actually received. Investment earnings are recorded as earned since they are measurable and - available. The accrual basis of accounting is utilized by proprietary funds and pension and nonexpendable trust funds. Investments Investments consist primarily of collateralized certificates of deposit and State of Illinois Public Treasurer's Investment Pool money market units and are carried at cost, which approximates market value. Included in the investments of the Police Pension Fund are U.S. Treasury securities of $1,255,765, which are carried at cost. At April 30, 1985 these securities had an aggregate market value of $1,233,385. It is the Village's intention to hold these securities until maturity. TnuanYnriuc Inventories, consisting of golf pro shop merchandise, are stated -at lower _of cost (first -in, first -out) or market (net realizable value) . (Continued) 12 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements General Fixed Assets General fixed assets have been acquired for general governmental purposes. Assets purchased are recorded as expenditures in the governmental funds and capitalized at cost in the General Fixed Assets Account Group. Contributed fixed assets are recorded in general fixed assets at fair market value at the time received.. Fixed assets consisting of certain improvements including roads, bridges, curbs and gutters, drainage systems, and lighting systems, have not assets normally are immovable and of value Therefore, the purpose of stewardship for satisfied without recording these assets. other than buildings, streets and sidewalks, been capitalized. Such only to the Village. :apital expenditures is No depreciation is required to be recorded on general fixed assets. Fixed Assets - Proprietary Fund Types Fixed assets recorded in the Proprietary Funds are stated at cost. Depreciation is provided over the estimated useful lives using the straight -line basis. Depreciation is not recorded on land or land improvements. Depreciation on assets acquired through contributions is allocated to contributed capital. The estimated useful lives of the major fixed asset classifications are as follows: Years Buildings 20 Well and system improvements 3 - 50 Furniture and equipment 2 - 10 Vehicles 2 - 12 Maintenance and repairs are charged to expense as incurred. During the current year, $329,653 of interest in the Waterworks and Sewerage Fund (Enterprise Fund) relating to construction in progress was capitalized. The interest. expense of the fund, amounting to $1,764,205, is net of the amount capitalized. Vacation Pay and Sick Leave In the event of termination, Village employees are not reimbursed for accumulated sick leave. Vacation pay does not vest; employees must take vacation by December 31 of the year in which it is earned. Terminees are reimbursed for any accumulated unpaid vacation pay. The amount of such accumulated vacation benefits at April 30, 1985 is not material; therefore it is not accrued for in the accounts of the Village. Such amount does not exceed a normal year's accumulation. (Continued) 13 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements Revenue Recognition - Enterprise Funds Water sales revenue is recognized when the water is consumed. Accounts receivable at April 30, 1985 includes $64,521 of water sales revenue which had not been billed to customers. Yearly membership fees of the Golf Course Fund are recorded as income on a straight -line basis over the effective playing season, i.e., April through October. Fees paid for advance starting times are amortized to income over the related time period. Daily green fees and locker rentals are recorded as income when received. Amortization Discount on Water Revenue and General Obligation Bonds is amortized by the interest method over the term of the debt. The amortization expense for the year ended April 30, 1985 amounted to $11,776. Budget The budget data included in the combined financial statements represent the Village's 1984 -1985 Program Budget, and the appropriations represent the Village's legal expenditure limit. The Village Board of Trustees follows these procedures in establishing the budgetary and appropriations data reflected in the financial statements: (1) The Village Manager submits to the Board a proposed Program Budget for the fiscal year commencing May 1. The Program Budget includes proposed expenditures and the means of financing them. (2) Public budget and appropriations hearings are conducted by the Village to obtain taxpayer comments. (3) The Program Budget and Appropriation Ordinance is legally enacted through a resolution adopted by the Board. (4) Any expenditures that exceed the total appropriations at the fund level must be approved by the Board of Trustees. (Continued) 14 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements During the year the Street Maintenance, Municipal Building Debt Service, and Capital Projects Funds' actual expenditures exceeded their budgeted amounts by $761, $30, and $202,852, respectively; however, no fund had actual expenditures which exceeded appropriated amounts. No other fund had actual expenditures exceeding its total budgeted or appropriated amount. Appropriations which are not expended by year -end lapse and must be reappropriated in the following year for the expenditure to be made. The budget for each fund is prepared on the same basis of accounting as described in "Basis of Accounting" above. Encumbrances The Village does not employ the encumbrance method of accounting to reserve current fund balance for subsequent year expenditures. Account Classification - Working Capital For purposes of financial reporting, the assets and liabilities of the Proprietary Fund Types, except for restricted assets, unamortized bond discount, fixed assets, notes payable, bonds payable, and investment in Northwest Water Commission are considered to comprise the elements of working capital. Combined Statements Total Data The total columns within the combined financial statements are the aggregate of the fund types and account groups. No consolidating or other eliminations were made in arriving at the totals; thus, they do not present consolidated information. Restricted Assets and Retained Earnings - Enterprise Fund Restricted assets for the Lake Michigan Water project result from bond proceeds. Assets accumulated in restricted accounts, in accordance with the Waterworks and Sewerage (Enterprise) Fund revenue bond ordinance, are reflected as reservations of retained earnings. Retained earnings reserved for the Lake Michigan Water project represent a portion of water and sewerage charges designated for costs associated with the project. (Continued) 15 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements Reporting Entity The Comprehensive Annual Financial Report includes all entities for which the Village exercises oversight responsibility as defined by the National Council on Governmental Accounting (NCGA) Statement Nos. 3 and 7. The Village has developed criteria to determine whether outside agencies with activities which benefit the citizens of the Village should be included within its financial reporting entity. The criteria includes but is not limited to whether the Village (1) selects the governing authority or management, (2) has the ability to significantly influence operations, or (3) has accountability for fiscal matters (e.g., financial budget approval, management of assets, etc.) As more fully explained in note 4 the Village is currently responsible for 15.5% of all costs related to the Northwest Water Commission's (Commission) project to bring Lake Michigan water from the City of Evanston, Illinois to the Village and the other member communities. The Village, along with the member communities, made capital contributions to the Commission to provide the necessary funds for architectural and engineering and preliminary construction costs. The Village has determined that the Commission meets the requirements of NCGA Statement Nos. 3 and 7. Accordingly, the Commission is accounted for using the equity method in Waterworks and Sewerage Fund (Enterprise Fund). See note 4. (2) Property Tax - The Village is a home -rule community under the 1970 Illinois Constitution and, accordingly, does not have a statutory rate limit. The Village's property tax is levied each calendar year on all taxable real property located in the Village. In accordance with NCGA Interpretation No. 3, for governmental funds only property taxes which are due within the current year and collected are recognized as revenue and net taxes receivable are reflected as deferred revenue. It is the Village's policy not to recognize collections after fiscal year end as revenues of that fiscal year. Property taxes on the proprietary and fiduciary funds are recorded on the accrual basis. (Continued) 16 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements The County Assessors of Cook and Lake Counties are responsible for assessment of the taxable real property of the Village lying within their respective Counties. One quarter of each County is reassessed each year on a repeating quadrennial schedule established by the Assessor. The County Clerks compute the annual tax for each parcel of real property and prepare tax books used by the County Collectors as the basis for issuing tax bills to all taxpayers in each County. Property taxes are collected by the County Collectors and are submitted to the County Treasurers, who remits to the units their respective shares of the collections. Taxes levied in one year become due and payable in two installments on March 1 and August 1 during the following year. The first installment is an estimated bill, and is one -half of the prior year's tax bill. The second installment is based on the current levy, assessment, and equalization, and any changes from the prior year will be reflected in the second installment bill. Taxes must be levied by the first Tuesday in September for the current levy year. The levy becomes an enforceable lien against the property as of January 1 immediately following the levy year. The 1984 property tax levy is recorded as a receivable, net of estimated uncollectibles. Based upon collection histories, the Village has provided at April 30, 1985 an allowance for uncollectible real property taxes equivalent to 1% of the current year's levy. All uncollected taxes relating to prior years' levies have been written off. (3) Fixed Assets A summary of changes in general fixed assets follows: (Continued) 17 Balance Balance Apr.30,1984 Additions Deletions Apr.30,1985 Land $ 87,200 - - 877200 Buildings 2,175,213 - - 2,175,213 Equipment 784,097 . 75,113 21,261 837,949 Public improvement 23,073 - - 23,073 $ 3,0692583 75,113 21,261 3,123,435 (Continued) 17 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements A summary of proprietary fund type property, plant, and equipment at April 30, 1985 follows: Land and improvements Buildings Wells and system improvements Equipment Less accumulated depreciation (4) Northwest Water Commission Internal Enterprise Service $ 1,099,858 - 152,755 - 12,152,714 - 162,656 1,370,835 13,567,983 1,370,835 3,067,428 880,745 $ 10,500,555 490,090 On February 23, 1981 the Village entered into an agreement with three nearby communities to form the Northwest Water Commission (Commission). The Commission was organized to construct a pipeline for obtaining Lake Michigan water for the villages and has entered into a long -term contract for the purchase of water from the City of Evanston, Illinois. Each member community appoints a representative to the governing board of the Commission which is responsible for developing the annual budget and overseeing the financial operations. The Village has entered into a 40 -year water purchase contract with the Commission from the date of the first water delivery. Water rates paid by the Village will be.determined by the Commission and will be sufficient at all times to (1) pay the costs of operation and maintenance of the Commission's water supply system, including charges payable to the City of Evanston, Illinois; (2) provide an adequate depreciation reserve; (3) pay the principal and interest on any outstanding debt; (4) comply with the covenants of any ordinance authorizing the issuance of debt; and (5) carry out its corporate purposes and powers. During the past several years the Village has issued General Corporate Purpose Bonds to (i) pay its proportionate share (15.5%) of the engineer - ing and related costs of the Commission's project to bring Lake Michigan water from the City of Evanston, Illinois to the member communities and (ii) internal improvements in the Village's water distribution system. The Corporate Purpose Bonds have been recorded in the Waterworks and Sewerage Fund (Enterprise Fund) as it is the Village's intention to service the debt from the Fund's earnings to the extent possible. Additional revenues, if necessary, are provided through property taxes. For the year ended April 30, 1985, $920,584 (net) of property tax revenues were recorded in the Waterworks and Sewerage Fund. (Continued) 18 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements During the fiscal year ended April 30, 1985 the Village adopted the provisions of NCGA Statement No. 7 "Financial Reporting for Component Units Within the Governmental Reporting Entity." As a result of applying the Statement, as of May 1, 1982 the Enterprise Funds retained earnings increased as follows: Balance at April 30, 1984, Adjustment Balance at April 30, 1984, The cumulative equity associated "Designated for Lake Michigz statements. as reported $ 4,813,617 973,912 as adjusted $ 5,787,529 with the Commission has been recorded as in Water" in the accompanying financial Rey financial data for the Commission for the year ended April 30, 1985 are as follows: Operating revenues Operating expenses Operating income before depreciation Depreciation Operating income Nonoperating expense, net Net income Assets Working capital Revenue bonds payable Equity: Contributed capital Retained earnings Acquisition of property, plant, and equipment 19. $ 3,650,800 601,925 3,048,875 298,001 2,75o,874 (703,636) $ 2, 047, 238 $ 87, 059, 060 $ 3, 629, 091 $ 38L 225, 000 36, 251, 945 8,330,543 $ 44,582,488 $ 579951532 (Continued) VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements (5) Long -tenn Debt A summary of changes in long -term debt follows: General Long -term Debt: $225,000, 4.67. - 5.5'. 1969 Municipal Building bonds; payable in annual installments of $20,000 to $25,000 through January 1988. Funded by Debt Service Fund property tax levy $ $300,000, 6.52 1981 Busch Road Fire Station construc- tion note; payable in semiannual installments of $15,000 through September 1990. Funded by General and Federal Revenue Sharing Funds operating transfers to Debt Service Fund $367,378, 6.52 1981 Dundee Road Fire Station note; payable in semiannual installments of $21,500 through May 1990. Funded by General and Federal Revenue Sharing Funds operating transfers to Debt Service Fund $2,093,9189 9.122 Series 1982 -A General Corporate Purpose Bonds; payable in annual installments of $104,175 to $250,020 from December 1, 1984 through December 1996. Funded by Debt Service Fund property tax levy and transfers from General, Federal Revenue Sharing, and Motor Fuel Tax Funds $2,425,000, 9.22 Series 1984 General Corporate Purpose Bonds; payable in annual installments of $59,700 to $217,000 from January 11 .1987 through January 1, 2005. Funded by Debt Service Fund property tax levy Total general obligation debt, payable from future resources Enterprise Funds: Golf Course Fund - $1,097,000, 72 1981 Golf Course installment purchase contract; payable in semiannual installments of $40,000 to $46,500 through November 1991 Waterworks and Sewerage Fund: $4,000,000, 72 Series 1970 Waterworks and Sewerage Refunding Revenue Bonds; payable in annual install- ments of $60,000 to $2,000,000 through May 2000 $1,050,000, 9.877 Series 1981 General Corporate Purpose Bonds; payable in annual installments of $50,000 to $1007000 from December 19 1983 through December 1995 $8,500,000, 12.042 Series 1982 General Corporate Purpose Bonds; payable in annual installment of $350,000 through January 1, 1985 $2,931,082, 9.122 Series 1982 -A General Corporate Purpose Bonds; payable in annual installments of $145,825 to $349,980 from December 1, 1984 through December 1996 $8,750,000, 9.22 Series 1984 General Corporate Purposes Bonds; payable in annual installments of $215,300 to $783,000 from January 1, 1987 through January 1, 2005 Total revenue bonds payable and general obligation debt payable Total long -term debt 20 Balance Retire- Balance Aor.30.1984 Additions ments Aor.30.1985 90,000 - 20,000 70,000 195,000 30,000 165,000 257,878 43,000 214,878 2,093,918 - 114,590 1,979,328 2,425,000 - - 2,425.000 5,061,796 - 207,590 4.854.206 645,000 - 3,540,000 - 1,000,000 - 350,000 - 2,931,082 - 8.750.000 - 80,000 565,000 60,000 3,480,000 50,000 950,000 350,000 - 160,407 2,770,675 - 8.750.000 17,216.082 - 700.407 16.515.675 $ 22.277.878 - 907,997 21.369.881 (Continued) VILLAGE OF BUFFALO GROPE, ILLINOIS Notes to Combined Financial Statements The annual requirements to amortize all debt outstanding as of April 30, 1985, including interest payments of $18,933,725 are as follows: General Year ending Long -term Enterprise April 30 Debt Funds Total 1986 $ 811,874 2,432,349 3,244,223 1987 737,790 2,138,147 2,875,937 1988 725,050 2,1119039 2,836,089 1989 696,108 2,097,015 2,793,123 1990 685,693 2,082,713 2,768,406 1991 -1995 2,891,775 91726,726 129618,501 1996 -2000 1,643,230 8,852,147 10,495,377 2001 -2005 579,839 2,092,111 2,671.950 $ 8,771,359 31,532,247 40,303,606 (6) Restricted Assets The ordinance authorizing the issuance of Waterworks and Sewerage Refunding Revenue Bonds (note 5) created separate accounts designated as "operation and maintenance," "bond and interest," "term bond sinking fund," "depreciation and contingencies," "bond reserve," and "surplus." On the first business day of each month, the above accounts shall be credited as follows: Operation and maintenance account - an amount sufficient to pay the reasonable expenses of operation, maintenance, and repair for that month. Bond and interest account - an amount equal to not less than one -fifth of interest and one -tenth of principal due on the next payment date, until there is accumulated an amount sufficient to pay such principal or interest. Term bond sinking fund account - beginning July 1, 1979, the sum of $8,000 until $2,000,000 is accumulated to redeem bonds numbered 401 to 800. Depreciation and contingencies account - the sum of $2,000 until the sum of $200,000 is on deposit in said account. During 1979 the maximum amount required was accumulated. (Continued) 21 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements • Bond reserve account - the sum of $4,000 until the sum of $400,000 is on deposit in said account. During 1979 the maximum amount required was accumulated. • Surplus account - all funds remaining after providing for all the deposits hereinbefore listed. Restrictions on funds deposited are as follows: Funds accumulated in the term bond sinking fund account shall be used only for the calling and redeeming of bonds numbered 401 to 800. Funds accumulated in the depreciation and contingencies account shall be used for the necessary renewals and replacement of the system or to pay interest and principal when no other funds are available. Funds accumulated in the bond reserve account shall be used only for the payment of principal_ or interest whenever sufficient funds are not available in the bond and interest account. Funds accumulated in the surplus account shall be used exclusively for: (a) the purpose of making improvements or extensions of the system. (b) the calling and redeeming or purchase in the open market of the bonds. For purposes of financial reporting, the assets of the "bond and interest," "term bond sinking fund," "depreciation and contingencies," and "bond reserve" accounts are classified as restricted with a corresponding reservation of retained earnings. The Village is in compliance with all of the significant bond covenants described above. (7) Illinois Municipal Retirement Fund The Illinois Municipal Retirement Fund (IMRF) covers substantially all full -time employees of the Village except members of the Police and Fire Departments and elected officials. (Continued) 22 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements The IMRF's actuary estimates that as of December 31, 1984 (date of the latest valuation) the present value of accumulated total IMRF pension benefits to be borne by the Village was $2,215,423. The actuarial present value of accumulated plan assets was $701,625 on the same date. Therefore, the estimated present value of future contributions to be made by the Village on behalf of present employees was $1,513,798. The pension obligation includes, in addition to the future normal cost of $460,916, the amount of unfunded prior service cost computed to be $1,052,882. The present value of pension obligations was computed using revised actuarial assumptions, approved by the IMRF Board of Trustees. These assumptions were updated to reflect current experience and economic conditions. Information concerning accumulated vested benefits has not been determined. The annual Village contribution rate fixed by the IMRF Board of Trustees provides for full funding of prior service costs, including interest, as determined actuarially over a future period of not more than 40 years, as well as the normal retirement cost, term cost of death and disability benefits, and the cost of administration. The plan assumes a 7% rate of return in determining the actuarial present value of its accumulated plan assets. Employer contributions made during the year ended April 30, 1985 were $222,111. (8) Police Pension Fund Funded Obligation The Police Pension Fund covers substantially all uniformed members of the Village's Police Department. Actuarial Deficiency According to the governing act, the Board is required to establish and maintain a reserve not to exceed the total actuarial requirements of the Police Pension Fund. In municipalities having less than the actuarial requirements of the Police Pension Fund, the Board shall designate the proportionate amount needed annually to ensure the accumulation of such actuarial reserve over a 40 -year period ending in 2020. The total actuarial requirements at April 30, 1984 (date of the latest valuation) amounted to $2,063,337 as determined by the Illinois State Department of Insurance. The actuarial reserve surplus of $111,119 is reflected as part of unreserved fund balance and includes the net transactions of the Police Pension Fund for the year ended April 30, 1985. However, the current normal costs and the resultant liability for the year ended April 30, 1985 are not reflected as an increase in the actuarial requirements because the date of the Illinois State Department of Insurance determination was as of April 30, 1984. (Continued) 23 VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements The significant actuarial assumptions used in the Illinois State Department of Insurance valuation are as follows: Actuarial cost method Investment return Mortality rates Salary progression assumption Contributions Entry age normal cost 6 .5Z Based on the 1971 Group Annuity Mortality Table 5% Employer contributions made during the year were $125,360 based upon actuarial requirements determined by the Illinois State Department of Insurance. (9) Fire Pension Fund The Fire Pension Fund covers substantially all uniformed members of the Village's Fire Department. Actuarial Requirements According to the governing act, the Board of Trustees of the Fire Pension Fund is required to establish and maintain a reserve not to exceed the total actuarial requirements of the Fire Pension Fund. In municipalities having less than the actuarial requirements of the Fire Pension Fund, the Board shall designate the proportionate amount needed annually to ensure the accumulation of such actuarial reserve over a 40-year period ending 2020. The total actuarial requirements at April 30, 1984 (date of the latest valuation) amounted to $249,937 as determined by the Illinois State Department of Insurance. The actuarial reserve surplus of $128,390 is reflected as part of unreserved fund balance and includes the net transactions of the Fire Pension Fund for the year ended April 30, 1985. However, the current normal costs and the resultant liability for the year ended April 30, 1985 are not reflected as an increase in the actuarial requirements because the date of the Illinois State Department of Insurance determination was of April 30, 1984. The significant actuarial assumptions used in the Illinois State Department of Insurance valuation are as follows: Actuarial cost method _ Investment return Mortality rates Salary progression assumption 24 Entry age normal cost 6 .5% Based on the 1971 Group Annuity Mortality Table 52 (Continued) a VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements Contributions Employer contributions made during the year ended April 30, 1985 were $69,544 based upon the actuarial requirements determined by the Illinois State Department of Insurance. (10) Segments of Enterprise Activities There are two services provided by the Village which are financed by user charges - waterworks and sewerage and golf course. The key financial data for the year ended April 30, 1985 for these two services are as shown below: Operating revenues Operating expenses: Depreciation and amortization Other Total operating expenses Operating income Nonoperating expenses Operating transfer out Net income Assets Net working capital Revenue bonds and general obligation debt payable Fund equity Acquisition of property, plant, and equipment 25 Golf Waterworks Course and Sewerage Fund Fund Total $ 616,376 4,018,324 4,634,700 22,374 441,037 463,411 152,965 (27,312) 334,750 2,466,065 2,800,815 1,217,509 (276,746) (224,600) 357,124 2,907,102 3,264,226 1,370,474 (304,058) (224:600) $ 125,653 716,163 841,316 $ 1,258,523 23,087,684 24,346,207 $ 87,604 4,079,607 4,167,211 $ 565,000 15,950,675 16,515,675 $ 602,953 5,529,780 6,132.733 $ 24,046 996,988 1,021,034 (Continued) VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements y - (11) Leases The Village's Golf Course Fund leases golf carts under a noncancelable operating lease which extends through November 1987. The rental expense for the year ended April 30, 1985 amounted to $49,059. The lease payments under the agreement are 45Z of the gross receipts from rental of the golf carts. There is no guaranteed minimum rent. The Village has no material lease obligations that are considered to be capital leases. (12) Interfund Balances Individual interfund balances at April 30, 1985 are shown as follows: Amounts payable to General Special Revenue Funds - Illinois Municipal Retire- ment Fund Proprietary: Internal Service - Central Garage Enterprise - Waterworks and Sewerage Total Amounts pavable from Governmental Proprietary Special Revenue Enterprise Motor Waterworks Fuel Capital and Golf General Tax Projects Sewerage Course Total $ - 6,757 - - - 6,757 77,594 - - 8,808 - 57,583 $ 86,402 61757 57,583 2,024 1,512 3,536 5,609 - 83,203 - 66,391 7,633 1,512 159,887 (13) Individual Fund Deficits - Special Revenue Fund - Illinois Municipal Retirement The fund balance of the Illinois Municipal Retirement Fund has a deficit balance of $18,281 at April 30, 1985. It is anticipated that this deficit will be reduced through future property tax revenues. (Continued) W. VILLAGE OF BUFFALO GROVE, ILLINOIS Notes to Combined Financial Statements (14) Contingencies The Village is a member of the Intergovernmental Risk Management Agency (IRMA) which, through its risk - sharing provisions, provides the Village with its insurance coverage for liability, property damage, and workmen's compensation insurance. As a self- insurance administrator, IRMA enables risk sharing with other municipalities which in turn share their risks with the Village. At April 30, 1985 management knows of no claim, asserted or unasserted, which if asserted and paid would have a materially adverse affect on the financial position of the various funds of the Village at April 30, 1985. 27