2023-03-20 - Ordinance 2023-025 - AUTHORIZING EXECUTION OF A SETTLEMENT AGREEMENT WITH COMMONWEALTH EDISON COMPANY AND AZAVAR AUDIT SOLUTIONS, INC. ORDINANCE NO. 2023-025
AN ORDINANCE MOTION AUTHORIZING EXECUTION OF A SETTLEMENT AGREEMENT WITH
COMMONWEALTH EDISON COMPANY AND AZAVAR AUDIT SOLUTIONS, INC.
WHEREAS, Azavar Audit Solutions, Inc. ("Azavar") and the Village of Buffalo Grove entered into
an agreement to audit Commonwealth Edison Company's ("ComEd") collection and remittance of
municipal utility taxes for electric service; and
WHEREAS, Azavar issued a notice of audit to ComEd seeking to audit ComEd's collection and
remittance of municipal utility tax for electric service; and
WHEREAS, the Village issued a notice of tax liability alleging that ComEd failed to collect and
remit certain municipal utility tax to the Village; and
WHEREAS, the Village and ComEd and Azavar continue to disagree about the liability for any tax
amounts at issue; and
WHEREAS,the Parties have agreed to resolve their differences; and
WHEREAS, it is in the best interest of the Village to resolve this matter and execute the
Settlement Agreement attached hereto as Exhibit A.
NOW THEREFORE BE IT ORDAINED:
Section 1. That the Village President is hereby authorized to execute the Settlement Agreement
attached hereto as Exhibit A.
Section 2. The Village staff is authorized to implement and enforce the terms of said Settlement
Agreement.
Section 3. This Settlement Agreement is subject to the final review and approval of the Village attorney.
Section 4. This Ordinance shall not be codified.
AYES: 5—Stein,Weidenfeld,Johnson,Smith, Pike
NAYES: 0—None
ABSENT: 1—Ottenheimer
PASSED: March 20,2023
APPROVED: March 20.2023
PUBLISHF�: March 21,2023
ATTEST: APPROVED:
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Jane �Erabian,Village Clerk Beverly Sussman, age President
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SETTLEMENT AGREEMENT
This Settlement Agreement dated March 27 , 2p23 ("Settlement
Agreement") is entered into by the Village of ButTalo Grove (ihe "Municipality"), and
Commonwealth Edison Company (`ComEd")(the Municipality,and ComEd together, the
"Parties."and each a"Part}�"), and Azavaz Audit Solutions, lne. {"Azavar").
RECITALS
WHEREAS, ComEd is an Illinois corporation engaged in the transmission, sa1e, and
distribution of electricity to the public in Illinois,and is a public utility as defined in Section
3-1Q5 of the Public Utilities Act.
WHEREAS,the Municipality� is a municipal corporation organized and existing under
Article VII af the 1970 Constitution of the State of fllinois.
WHEREAS, �zavar has entered into an agreement w�ith the Municipality to audit
ComEd's collection and remittance af municipal utility taxes for electric ser��ice;
WHEREAS. �I�itle 3. Chapter 3.66 imposes a Municipal Ltility Ta�t (`MU�1"') on the
distribution, supply, furnishing, or sale of eleetricity u�ithin the corporate limits of the
Municipality.
WHEREAS, an August 6, 2012, Azavar, as the Municipality's authorized agent,
issued a?Votiee of Audit to ComEd seeking to audit ComF.d's collection and remittance of
MUT� for electric service.
WHEREAS, on December 23. 2014 the ?vtunicipalin• issued a Notice of TaY Liability
('`NTL")alleging that ComEd failed to collect and remit certain MUT to the Municipality.
WHEREAS,ComEd timely filed its protest of the NTI,disputing the allegations in the
h7�L.
WHEREAS,the Parties continue to disagree about the��alidity of the allegations in the
I�T�L.
WHEREAS, in reeognition of the expense and hazards of litigation, the Parties now
w�ish to resolve the allegations in the NTL.
THEREFORE,in consideration of the�arious undertakings and covenants hereinafter
provided for, the Parties hereby agree as follows:
1
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SETTLEMENT TERMS
NOW, THEREFORE, in consideration of the mutual covenants, agreements and
conditions contained herein and upon acknowledgement by each of the Parties of the
receipt of valuable consideration, the Parties agree as follows:
l. Recitals. Each of the recitals set forth above is expressly incorporated herein.
2. Settlement Amount. In consideration of the foregoing and in further
consideration of the statements,representations, promises, covenants and warranties as set
forth herein,ComEd will pay to the Municipality in settlement of the NTL the total amount
of$125,000.00(one hundred twenty five thousand dollars and zero cents) (the"Settlement
Amount"). This payment will constitute full payment and satisfaction of the NTL.
3. Erroneous Payments to the Municipality. The Municipality understands that
ComEd is engaged in audit processes with other lllinois communities. In connection with
those audits,if ComEd is determined to owe MUT to another community that it erroneously
paid to the Municipality, and pays another community any such amount on or before
December 31, 2022, the Municipality agrees that, upon notice and reasonable verification
of same, ComEd may deduct such amount(the "Credit") from a future MUT remittance to
the Municipality. The Credit shall be only for the actual tax erroneously remitted to the
Municipality and not for any penalties or interest ComEd may have additionally paid
another community. The Credit may be taken by ComEd without regard to any statute-of-
limitations or refund arguments that otherwise might be available to the Municipality
pursuant to local ardinance or state law. Under no circumstances shall the total amount of
the Credit exceed 10% of the Settlement Amount.
4. Payment Method and Instructions. Within 15 business days of the full
execution of this Settlement Agreement, ComEd will pay the Settlement Amount to the
Municipality in full and final settlement of the NTL, the sufficiency of which is hereby
acknowledged and agreed to by the Municipality. ComEd will make payment of the
Settlement Amount by wire to Cozen O'Connor's Illinois IOLTA account.
5. No Admission. This Settlement Agreement constitutes the compromise of
disputed claims, causes of actions, denials, and/or defenses made or to be made by the
Parties or any of them, and attorney fees and costs, and is being entered into solely for the
purpose of bringing to an end the real or potential claims referred to herein and to avoid
further costs of litigation. The Parties understand and agree that neither the entry into this
Settlement Agreement nor the payment of the Settlement Amount shall constitute or be
construed as an admission of liability by either Party to any person or entity. This
Settlement Agreement, each of its provisions, any prior drafts thereof, any negotiations,
proceedings, or agreements relating to it, and any matter arising in connection with such
negotiations, proceedings, or agreements, shall not be offered or received in evidence in
any litigation other than litigation brought to enforce the terms of this Settlement
Agreement.
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6. General Releases. Effective upon the full execution of this Settlement
Agreement by the Parties, the Municipality, on behalf of itself, and its agents,
representatives, personal representatives, subsidiaries, partners, managers, members,
officers, directors, employees, shareholders, affiliates, divisions, predecessors, successors,
and assigns, hereby waives, releases, relinquishes, and forever discharges any and all
claims, suits, causes of action, debts, liens, demands, liabilities, obligations, covenants,
controversies, agreements, promises, damages, costs, and expenses of any nature or kind
whatsoever,at law or in equity,related to the MUT due ar allegedly due to the Municipality
on or before December 31, 2017, which it has brought or could have brought as of the date
of this Settlement Agreement, against ComEd and/ar any of its respective affiliates or its
respective members, managers, officers, directors, shareholders, owners, partners, agents,
lenders, employees, attorneys, personal representatives, successors and assigns.
Contemporaneously,and as part of this mutual release, ComEd,on behalf of itself and each
of its agents, representatives, personal representatives, subsidiaries, partners, managers,
members, officers, directors, employees, shareholders, affiliates, divisions, successors,
predecessors and assigns,hereby waives,releases,relinquishes, and forever discharges any
and all claims, suits, causes of action, debts, liens, demands, liabilities, obligations,
covenants, controversies, agreements, promises, damages, costs, and expenses of any
nature or kind whatsoever, at law or in equity, related to the MUT due or allegedly due to
the Municipality on or before December 31, 2017, which it has brought or could have
brought as of the date of this Settlement Agreement, against the Municipality and/or its
respective affiliates or its respective members, managers, officers, directors, shareholders,
owners, partners, agents, lenders, employees, attorneys, successors and assigns.
7. Disclosure and Confidentiality. The Parties and Azavar agree to maintain the
negotiations, calculations, and terms of this Settlement Agreement in confidence to the
fullest extent permitted by law. In making any disclosure pursuant to this Paragraph, the
Parties and Azavar agree that they will limit the content of all disclosures and make only
such disclosures as are necessary to comply with such permitted disclosures:
a. to the Parties' attorneys, accountants, appraisers, agents, and other persons
for the purpose of providing accounting or tax advice or services to one of
the Parties;
b. by counsel to the Municipality, as necessary to provide privileged and
confidential legal advice to any other municipality that has issued an NTL
to ComEd,provided that such municipaliries agree to treat such information
as confidential;
c. as deemed necessary by ComEd, in response to inquiries made regarding
this Settlement Agreement by other municipalities that have issued a NTL
to ComEd, provided that Parties agree to treat the information provided by
ComEd as confidential;
d. in response to a lawful subpoena, court order or written request from a state
ar federal government official provided that priar notice,is given to the non-
disclosing Party or Parties;
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e. as deemed necessary by ComEd to any regulatory body with jurisdiction
over it, including but not limited to, the Illinois Commerce Commission;
f. to the extent necessary to comply with state ar federal laws ar regulations,
including, but not limited to, to the Freedom of Information Act ("FOIA")
and the Open Meetings Act ("OMA");
g. to the extent necessary to enforce the terms of this Settlement Agreement or
in any other legal dispute involving only Parties to this Settlement
Agreement and/or Azavar.
Moreover, acknowledging that the Municipality is a public body subject to FOIA requests
and the OMA, and may be subject by law to other public-disclosure requirements, it is
therefore agreed that, if there is a legally required public disclosure on or before December
31, 2024 of any of the terms of this Settlement Agreement pursuant to FOIA, the Open
Meetings Act, or any other similar public disclosure-requirement, the Municipality shall
notify ComEd by electronic mail at least two (2) business days prior to such disclosure of
any of the terms of this Settlement Agreement pursuant to such legal requirements.
Notwithstanding the foregoing, the Municipality shall not be required to provide notice
pursuant to this paragraph related to the consideration or approval of the Settlement
Agreement by the corporate authorities of the Municipality or the publication of related
documents including, but not limited to, meeting minutes and agendas.
The Municipality shall provide such electronic mail communication to the following e-
mail address:
• litigationattorneys@exeloncorp.com.
ComEd acknowledges that, notwithstanding the notice requirement set forth above, the
Municipality retains full discretion as to the manner with which it will comply with FOIA,
OMA, and any other public disclosure law or regulation.
Except for the permitted disclosures referenced above,the Parties and Azavar further agree
not to initiate any publicity or make any public statement or comment regarding or related
to the NTL or this Settlement Agreement except as required by law or as set forth above in
this Paragraph. If inedia requests are received or questions raised regarding the NTL or
this Settlement Agreement, Azavar shall decline to comment and the Parties shall provide
only the following response,without elaboration: "The Parties decided to settle this matter.
Further comment regarding the settlement is prohibited by the Parties' Settlement
Agreement, except as required by law."
The Parties and Azavar acknowledge and agree that damages that will result to ComEd if
the Municipality or Azavar violates the provisions set forth in this Paragraph shall be
extremely difficult or impossible to establish or prove, and agree that the amount of one
thousand dollars and zero cents ($1,000.00) shall constitute liquidated damages for any
such violation by the Municipality or ComEd and five thousand dollars and zero cents
($5,000.00) shall constitute liquidated damages for any such violation by Azavar.
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ComEd and the Municipality agree that such liquidated damages shall be in lieu of all other
claims that ComEd or the Municipality may make by reason of any such violation.
8. Extension of Statute of Limitations. For all tax periods that remain open on or
before December 31,2022, Municipality may request and,if it does so,ComEd shall agree,
to extend the applicable limitations period for assessments,refunds and credits of the MUT,
as codified, by executing the form attached hereto as Exhibit A prior to the expiration of
such tax periods. Should the Municipality choose to conduct an audit for such tax periods
in accordance with 65 ILCS 5/8-11-2.5 and 50 ILCS 45/35 for any tax periods that remain
open on or before December 31, 2022,the Municipality shall, no later than April 15, 2023,
notify ComEd of such audit in accordance with 50 ILCS 45/35. The Parties agree to
conduct such audit in good faith and to exercise their best efforts so that such audit be
concluded by December 31, 2023.
9. Release as a Defense. This Settlement Agreement may be pleaded as a full and
complete defense and may be used as the basis for an injunction against any action, suit,
or proceeding, which may be prosecuted, instituted, or attempted by any Party in breach
thereof.
10. Remedies. The Parties expressly agree that if either Party elects to take any
legal action to enforce the terms of this Settlement Agreement, in addition to any other
remedies available, the prevailing Party shall be entitled to recover from the other Party all
of its associated costs and expenses,including,without limitation, its reasonable attorneys'
fees incurred by the prevailing Party in connection with such enforcement steps.
1 l. Survival. All promises, covenants, warranties and representations contained
in this Settlement Agreement shall survive execution of this Settlement Agreement, except
where explicitly stated otherwise.
12. Successors and Assigns. This Settlement Agreement shall be binding upon
and inure to the benefit of the Parties' respective successors, assigns, beneficiaries, heirs,
executors, trustees, administrators, representatives, officers, directors, stockholders,
agents, and insurers.
13. Representation by Counsel. The Parties acknowledge that they have each
been represented by independent counsel of their own choice throughout all of the
negotiations that preceded and resulted in the execution of this Settlement Agreement. This
Settlement Agreement shall be construed fairly as to all Parties and not in favor of or
against any of the Parties regardless of who prepared this Settlement Agreement.
14. Entire Agreement. The Parties understand and agree that this is the entire
agreement between the Parties.
15. Modification or Amendment. This Settlement Agreement shall not be
modified, altered, or discharged except by an instrument in writing, signed by the Party
against whom enforcement of the amendment, alteration, or modification is sought.
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16. Governing Law. This Settlement Agreement shall be construed and enforced
in accordance with the laws of the State of Illinois,without reference to principles of choice
or conflict of law.
17. Execution in Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and shall be admissible in
evidence, but all of which together shall constitute one and the same instrument and shall
become effective when counterparts executed by each Party have been delivered to counsel
for all other Parties. Execution by facsimile, by an electronically transmitted signature, or
by Portable Document Format (PDF), shall be fully and legally binding on the Parties.
18. Headings. The paragraph headings in this Settlement Agreement are for
convenience only and shall not affect the meaning or interpretation of its provisions.
19. Authority and No Assignment. Each Party: (a) represents and warrants that
it is authorized to enter into this Settlement Agreement and that it is authorized to give the
releases contained herein and (b) represents and warrants that, other than as expressly set
forth herein,neither it nor any of its agents,representatives, officers,members, employees,
or attorneys have made, assigned, transferred, sold, pledged or hypothecated, or have
purported to make, assign, transfer, sell, pledge ar hypothecate, any actual ar alleged
claims,demands,causes of action,obligation,liabilities,or any interest in the matters being
released by this Settlement Agreement, which, but for such assignment, transfer, sale,
pledge, or hypothecation, would be subject to the release in this Settlement Agreement.
20. Severability. Should any provision of this Settlement Agreement be declared
or determined by a court to be illegal or invalid, the court shall have the power to modify
this Settlement Agreement so that it conforms with prevailing law and the validity of the
remaining parts, terms, or provisions shall not be affected thereby. If any provision of this
Settlement Agreement shall be held, declared, or pronounced void, voidable, invalid,
unenforceable, or inoperative, in whole or in part, for any reason by any court of competent
jurisdiction, government authority, or otherwise, such holding, declaration, or
pronouncement shall not adversely affect any other provision of this Settlement
Agreement, which shall otherwise remain in full force and effect and be enforced in
accordance with its terms. To the extent permitted by applicable law, the Parties hereby
knowingly, voluntarily and intelligently waive any provision of law that prohibits or
renders void or unenforceable any part, provision, representation or warranty hereof.
21. Attorney Fees and Costs. Other than as expressly provided herein,the Parties
shall each bear their own attorney fees, costs and expenses incurred in connection with this
matter.
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Dated this Z� da� of March 2023 Dated this 27th dav of March 2023
VII,I.AGE OF BUh�FAI,n GttOVE CO:�iMONWEAL 1�}I EDISON COMPANY
BY - -- �- BY�_1���L����'�rita.�.
Village Pr�ident 'G
Title: Title: SVP&General Tax Officer
Dated this22nd�ay of MarCh , 2023
ALAVAR AUI}I"r SOLI:"ii<)'�S,[tiC.
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By: � � !: �
T'icle: President
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Exhibit A
CONSEtiT TO EXTEND THE TIME TO ASSESS TAX AND F'ILE A REFUND
CLAIVI
Commonwealth Edison Company (`ComEd")and the Village of Buffalo Grove
(`'Municipality") (collectively the"Parties") consent and agree to the following:
1. The amount of any municipal utility ta�c due to Municipality on or after January 1,
2020 through December 31. 2020 ma}� be assessed on or before December 31,
2023.
2. On ar before December 31. 2023, ComEd mav file a claim for refund of, or take a
credit for, any� municipal tax paid to Municipality in error on or after January 1,
2020 through December 3l. 2020.
3. If a pro��ision of the Municipality"s Code of Ordinances or any other Illinois law
suspends the running of the period of limitations to assess or issue refunds for
such tax, then, when the period resumes under such provision, the extended
period to assess or request a refund will include the number of days remaining in
the extended period immediately before the suspension began.
4. This Form contains the entire terms of the Consent to Extend the Time to Assess
"I'�and Eile a Refund Claim. There are na representaCions, promises,or
agreements between the Parties except those found or referenced on this Form.
Dated this 21 day of March 2Q_ Dated this?�thday of March , ?p 2�
VILI..AGE OF Bl'FFALO GRO�'E Cf�LiMO?�Vl"EAI."I�H EDISOV COMPANY
By� - :- �P 6a�.t-�'�a��t�—
Village President �t,
Title: Title: SVP&General Tax Officer
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