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2016-04-04 - Village Board Committee of the Whole - Agenda Packet2. Special Business A. Discussion Regarding Wood Burning Chimneys and Outdoor Fire Pits (Trustee Johnson) B. Review the Scope of Work for the Lake -Cook Road Corridor Project (Trustee Ottenheimer) C. Discussion of Branding & Marketing (Trustee Weidenfeld) D. 2016 Golf Marketing Presentation (Trustee Johnson) E. Presentation of Regional Road Updates (Trustee Stein) F. Collector Route Street Designation (Trustee Berman) G. Update Village Finanical Policies (Trustee Johnson) H. Debt Issuance Update (Trustee Johnson) 3. Questions From the Audience Questions from the audience are limited to items that are not on the regular agenda. In accordance with Section 2.02.070 of the Municipal Code, discussion on questions from the audience will be limited to 10 minutes and should be limited to concerns or comments regarding issues that are relevant to Village business. All members of the public addressing the Village Board shall maintain proper decorum and refrain from making disrespectful remarks or comments relating to individuals. Speakers shall use every attempt to not be repetitive of points that have been made by others. The Village Board may refer any matter of public comment to the Village Manager, Village staff or an appropriate agency for review. 4. Adjournment The Village Board will make every effort to accommodate all items on the agenda by 10:30 p.m. The Board, does, however, reserve the right to defer consideration of matters to another meeting should the discussion run past 10:30 p.m. 5. Information Items The Village of Buffalo Grove, in compliance with the Americans with Disabilities Act, requests that persons with disabilities, who require certain accommodations to allow them to observe and/or participate in this meeting or have questions about the accessibility of the meeting or facilities, contact the ADA Coordinator at 459-2525 to allow the Village to make reasonable accommodations for those persons. 2.A Information Item : Discussion Regarding Wood Burning Chimneys and Outdoor Fire Pits ........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ Recommendation of Action Staff recommends discussion. Staff has recently received an inquiry from a resident concerned about the effects of smoke from wood burning chimneys and/or outdoor fire pits and has asked that the Village Board consider a future amendment to Village Code. Additional information can be found in the attached memorandum. ATTACHMENTS: • BOT memo (DOCX) • FD Handout (PDF) Trustee Liaison Johnson Monday, April 4, 2016 Staff Contact Chris Stilling, Community Development Updated: 3/29/2016 11:15 AM Page 1 Packet Pg. 2 2.A.a N`1111L,,A,GE OF BUFFALO GROVE DATE: March 31, 2016 TO: President Beverly Sussman and Trustees FROM: Christopher Stilling, Director of Community Development SUBJECT: Wood Burning Chimneys and Outdoor Fire Pits BACKGROUND Staff has recently received an inquiry from a resident concerned about the effects of smoke from wood burning chimneys and outdoor fire pits. Specifically, the resident cited instances where they have been unable to be outside or unable to open their windows due to the high amount of smoke from neighboring homes. The resident has asked that the Village Board consider a future amendment to Village Code to have a "No Burn Day" at least once a week. As part of the April 4, 2016 Committee of the Whole meeting, staff is seeking the Village Board's thoughts concerning a future amendment to Village Code. CURRENT VILLAGE CODE REQUIREMENTS Currently, Village Code permits outdoor fire pits and the use of a wood burning fireplace/ or chimney. However, Village Code does have nuisance provisions to prevent dense smoke from impacting adjacent homes. Section 8.24.170 states the following: The following are nuisances affecting the health, peace and comfort of the Village, as well as and in addition to any other act, omission of act, occupation or use of property or premises, equipment or structure deemed to be a menace to the health, peace and comfort of inhabitants of the Village, as declared in Sections 8.24.100 through 8.24.170: E. To cause or permit the emission of dense smoke from any fire, chimney, engine, oil burner or any other device so as to cause annoyance or discomfort to the residents thereof; In the event of a concern/inquiry by a neighbor, staff encourages residents to contact the Police Department for enforcement of the Village's nuisance regulations. In addition to Village Code, the International Fire Code establishes specific regulations for outdoor fire pits (handout attached). Staff has researched some of our neighboring communities and they all follow very similar regulations. Page 1 of 2 Packet Pg. 3 2.A.a "NO BURN DAY" As noted, a resident has requested that the Village consider a "No Burn Day" at least once a week. The resident cites a similar program in Maricopa County, Arizona (http://cleanairmakemore.com/our-air/the-offenders/woodburning_/). Staff notes that the Arizona program is typically initiated only on high pollution day based on air quality monitors and forecasters. The Arizona program does not have specific days of the week which prevent wood burning chimneys or fire pits; however, they do encourage limited use during the holiday season. STAFF RECOMMENDATION Staff recommends no changes to Village Code. Staff would be concerned about establishing such a program as it may be both difficult and time consuming to enforce. Furthermore, staff believes the current regulations are sufficient and we encourage residents to contact the Village in the event of a concern or question about a potential nuisance. Staff is seeking the Board's feedback on the matter. Attachments A. Fire Department's Outdoor Fire Pit Handout Page 2 of 2 Packet Pg. 4 -IJ/C Ai, 2.A.b Buffalo Grove Fire Prevention Bureau 1051 Highland Grove Drive Buffalo Grove, A 60089 (847) 537-0995 What are the Fire Prevention rules for outdoor fire pits? Outdoor pits fall into the category of a recreational fire. A recreational fire is defined as: An outdoor fire burning materials other than rubbish where the fuel being burned is not contained in an incinerator, outdoor fireplace, barbeque grill or barbeque pit and has a total fuel area of 3 feet or less in diameter and 2 feet or less in height for pleasure, religious, ceremonial, cooking, warmth or similar purposes. It is our opinion that commercially purchased fire pits can be used under the definition provided above. Here are a few outdoor fire pit safety rules for you to consider if you plan on purchasing one. • Purchase a fire pit that meets the definition above. In addition, the fire pit must have a lid and side screening which serve as spark arrestors. • Are there at least 25 feet of clearance from a structure or combustible materials? • Fire pits must not be used directly on wooden decks or balconies. • Fire pits often generate smoke that becomes objectionable to neighbors especially when they are not burning dry, seasoned fire wood. The Fire Code authorizes the Fire Department to order the extinguishment of an outdoor fire if neighbors complain about the smoke. Any fire in a fire pit can be ordered extinguished if the smoke from the fire is objectionable to a neighbor. • To avoid the type of situation noted above we encourage you to take your neighbors into consideration when you conduct an outdoor fire. • A fire pit shall not be used to burn off yard waste or trash. That is in violation of the code which could result in a fine. • Recreational fires shall be constantly attended by an adult until the fire is extinguished. A minimum of one portable fire extinguisher or garden hose must be readily available to extinguish the fire. We hope that these helpful safety tips will assist you the next time you use your outdoor fire pit or if you are considering the purchase of a fire pit. If you have questions about these safety tips please contact the Fire Prevention Bureau at (847) 459-2550. Enjoy the summer months safely! G:bureau 2009 Q Packet Pg. 5 2.B Information Item : Review the Scope of Work for the Lake -Cook Road Corridor Project ........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ Recommendation of Action Staff recommends discussion. Staff will provide the Village Board with an overview of the goals and objectives for the upcoming Lake - Cook Road Corridor project. Additional information can be found in the attached staff memorandum. ATTACHMENTS: • BOT Memo (DOCX) • Map (DOCX) Trustee Liaison Ottenheimer Monday, April 4, 2016 Staff Contact Chris Stilling, Community Development Updated: 3/31/2016 9:15 AM Page 1 Packet Pg. 6 2.B.a VILLACE",, OF DATE: March 31, 2016 TO: President Beverly Sussman and Trustees FROM: Chris Stilling, Director of Community Development Nicole Woods, Village Planner SUBJECT: Lake -Cook Road Corridor Project Project Background In February 2016, the Village Board adopted the Economic Development Strategic Plan (EDS Plan). One of EDS Plan's action steps for 2016 is to develop a vision for the Village's Lake - Cook Road Corridor. The following memorandum provides details regarding the proposed project's goals and objectives. Staff is seeking feedback from the Village Board prior to proceeding with a Request for Qualifications. Why Do We Need Lake -Cook Road Corridor Plan? The corridor, which generally includes those properties from Arlington Heights Road to Weiland Road and from Old Checker Road to just south of Lake -Cook Road, is a key corridor in the Village (Attachment A). It is one of the region's most traveled roads with over 40,000 vehicles per day and represents the gateway to Buffalo Grove. Lake -Cook Road connects the Village to regional highways as well as other local and regional roads. It also carries a symbolic and historical significance with community elements such as the municipal campus, U.S. Post Office, St. Mary's Parish, and other parks and open space. Lake -Cook Road's commercial properties are the heart of the corridor. These commercial properties, which include retail centers and office complexes, represent an important source of revenue and vitality for the Village. However they are outdated and not conducive to today's market demands. This pressing issue, along with the upcoming Lake -Cook Road expansion, presents an opportunity for the Village to think about the corridor's future. The ultimate question is: How can the Village best reposition the Lake -Cook Corridor so that it can optimize its growth potential? Project Goal and Objectives Corridor Repositioning The project's underlying goal is to examine how the Village can best reposition the corridor. The Lake -Cook Corridor Project will explore this question by examining the corridor's development options to improve the Village's identity, vitality, and economic and fiscal Page 1 of 4 Packet Pg. 7 2.B.a sustainability. In achieving this goal, the project should also fulfill other critical objectives that are outlined below. Comprehensive Plans Grounded in Market Realities A primary objective is ensuring that all visioning plans and ideas are comprehensive in scope and grounded in market realities. The project will focus on land use and development concepts but will also include other aspects necessary to reposition the corridor. These aspects include accessibility and connectivity, general design and place -making, economic development and market analysis, environmental analysis, and wayfinding. All of these elements must be examined within the context of present and future surrounding properties. Equally important, is for the project to be grounded in market realities. The study should draw upon market, traffic, economic, land use, and real estate data and other information to educate the Village on the highest and best use development and land use options. It is important that the fiscal impact and sustainability of these options are also reviewed. Community Engagement and Public Communication Another key objective of the project includes innovative community engagement activities. These activities will go beyond traditional public meetings to ensure a diverse array of residential, business, and other stakeholder voices are heard and incorporated. The activities will be educational as well as interactive. They can include but are not limited to the following public engagement strategies: • Key stakeholder interviews • Interactive websites • Community visioning forums utilizing visual preference surveys/key pad polling • Design charrettes • Public meetings • Attendance at community group meetings • Open Houses A related objective will be general communication about the process with the public. The project will have a dedicated webpage that details the project's progress, content, and upcoming events. The project will also be promoted in the Village's newsletter, upcoming business e-newsletter, and other social media. Such efforts will help increase clarity, confidence, and participation in the process by all members of the business and residential community who wish to be involved. High -Quality Visuals The project must also integrate high -quality visuals and other visioning exercises into the planning process. Three-dimensional imagery and various perspectives are necessary for all stakeholders to truly understand the look and feel of development and design ideas. Development Proposals A final objective is to recognize the fluidity of the project's timeframe vs. development proposals. Although the natural order is to first produce the plan and then redevelop the corridor per the plan's recommendations, there is an understanding that developers and businesses have been and continue to express immediate interest in the corridor. The Village will not halt such conversations and impede any development potential during the planning Page 2 of 4 Packet Pg. 8 2.B.a process. Rather the Village may consider engaging the services of a development expert/broker as part of the planning process. This expert can help guide and evaluate development options to ensure they are feasible and within the context of the plan's progress to -date. Project Process and Deliverables The Board allocated $100,000 in the 2016-2017 Budget to hire a consultant team who will carry out the professional services required for this project. Staff proposes to send out a Request for Qualifications this spring to design firms across the nation. Staff will seek consultants or an assembly of consultants that have market, development, land use, development, transportation, and design expertise to guide the project. Among the responses, staff will specifically look for a consultant team whose caliber, depth, and sophistication correlate with the complexity and significance of the project. Once the consultant is hired, staff expects that the project will proceed at its own pace. It is projected that the plan will be carried out over a 12-18 month -period in the projected stages, deliverables, and activities outlined below. The consultant will have flexibility in content, organization, and format of these stages. Similar to other projects, staff foresees the project to be guided by a Steering Committee who will meet during each stage of the project. Expected Project Stages, Deliverables, and Activities (Final Process to be Determined by Village and Selected Consultant) Stage 1: Project Kick-off After the consultant is selected, the project will begin its kick-off phase. During this phase, the Village and the consultant team will agree on a detailed project process, a specified scope, and community engagement plan. The consultant will present these concepts to the Village Board and hold a kick-off meeting with the Steering Committee. Deliverable: Project Overview, a document that details the project's process, scope, and community engagement plan. Stage 2: Existing Conditions/Market Assessment The existing conditions/market assessment phase provides a snapshot of the current market, demographic, land use, development, transportation, and environmental conditions in the Lake -Cook Corridor and examines the corridor within the context of the community and subregion. The latter stages of the plan will build off the information collected and analyzed during this phase. Deliverable: Existing Conditions/Market Assessment Report: a document that draws upon quantitative and qualitative data sources to provide an informative overview of current state of the Lake -Cook Corridor. Stage 3: Visioning During this stage of the project, the consultant team will provide scenarios that display future land uses and development options for the Lake -Cook Corridor. These ideas and scenarios will be grounded in market realties and be accompanied by key analytical information such as Page 3 of 4 Packet Pg. 9 2.B.a the fiscal impact and sustainability of the scenario. The public and other stakeholders will be able to learn, analyze, and ultimately weigh in on these options. The consultant will document this feedback and utilize it for the next stage of the project. Deliverable: Visioning Overview: a document that provides a high-level overview of various land use and development scenarios for the corridor. Stage 4: Key Recommendations The key recommendations stage serves as a "check -point" during the project's process. At this time, the consultant will synthesize feedback from the Visioning Stage and develop a more definitive vision for the Lake -Cook Corridor. The consultant will produce an outline of the recommendations and strategies needed to achieve that vision. These concepts will represent the framework for the Final Plan. Deliverable: Key Recommendations Report: a document that identifies a vison for the corridor and outlines the plan. Stage 5: Final Plan The culmination of the work described above will be presented in a Final Plan, which will lay out a vision and subsequent recommendations, strategies, and action steps. This plan will be presented publicly in a draft form so that all stakeholders can provide meaningful feedback on the plan. It will then be presented to the Board for final approval. Deliverable: Final Plan: a document that identifies a vison, recommendations, and action steps for the corridor. It will convey the future land use and development, transportation, economic development, design, and environmental elements for the corridor. Action Requested Staff is seeking feedback on the presented objectives, scope, and process for the Lake -Cook Road Corridor. Attachments A. Lake -Cook Road Corridor Map Page 4 of 4 Packet Pg. 10 (l38foad aopiaa00 peOU 1003-81e-1 : %9g) dew :}uauayae;;d a a� a 2.0 Information Item : Discussion of Branding & Marketing ........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ Recommendation of Action Staff recommends reinitializing the branding and marketing project as outlined in the attached memo. Staff will review branding and marketing and a proposal for the next step in the process. ATTACHMENTS: • 4-4-16 Branding and Marketing Memo (PDF) Trustee Liaison Weidenfeld Monday, April 4, 2016 Staff Contact Jenny Maltas, Office of the Village Manager Updated: 3/31/2016 9:18 AM Page 1 Packet Pg. 12 2.C.a 11% I D11A CU M . 0111001 DATE: April 4, 2016 TO: Village President and Board of Trustees FROM: Jennifer Maltas, Deputy Village Manager SUBJECT: Branding and Marketing IN Past Efforts In 2015, the Village engaged DCC Marketing to develop a revised logo and accompanying branding for the Village, which would then be used to create style guidelines and be contained within all communications moving forward. The Village Board was presented with two sets of logos, which were also reviewed by a staff team including Trustee Weidenfeld who served as a liaison to the project. Ultimately, the Village Board generally agreed that the current logo is outdated, and a new logo would be beneficial. The Village Board was not able to come to a consensus on the direction of the new logo. Village staff made the decision to put the project on hold while the Economic Development Strategic Plan was developed. That plan has now been adopted by the Village Board and thus the discussion regarding the development of a new logo and branding initiative is ready to be considered again. As the Village moves forward on this initiative, it is important to consider feedback from meetings and discussions with the Village Board and to review the overall purpose of the project. Previous discussions focused almost entirely on the logo, with very little emphasis on the messaging and subsequent goals from a new image or brand perspective. The logo is one part of a larger project outcome, which should include imagery through graphic design and accompanying communications which clearly express the Village identity, both inwardly to residents, business owners, property owners and other stakeholders, as well as outwardly to those individuals who the Village desires to attract such as new residents, businesses and property owners. Purpose of Project The goal of the Branding and Marketing Project is to create a cohesive community identity through messaging first, and then to develop corresponding imagery that supports that messaging. This project includes a logo, in addition to refreshed marketing materials targeted not only to prospective businesses and residents, but also existing members of the community. The project also includes development of standards and style guidelines, such that when someone receives information from or about the Village of Buffalo Grove, it has consistency through a unique identity. A logo alone cannot portray the Village's identity, as there are a multitude of people, places, programs and other things that make up the Village; a logo is one small piece of an entire Page 1 of 3 Packet Pg. 13 2.C.a branding and marketing project. There are diverse areas of the Village that have distinct identities such as the industrial park, commercial corridors, neighborhoods, and entertainment and recreation areas. It is important that any logo developed be versatile enough such that it can be manipulated to effectively market each of the targeted areas which have distinct identities of their own within the Village. The Village of Buffalo Grove has over the last several years received numerous accolades and awards as a community. The timing is optimal to revisit this project due to this very momentum, in addition to new development projects on the horizon. The Village of Buffalo Grove is considered a leader and innovator in a number of areas, and it is important to capitalize on these recent accomplishments to create additional opportunity. In short, the Village has many qualities and awards that have set it apart from other municipalities, and Village Staff is focused on maximizing the opportunity to continue this momentum by leveraging it for continual growth. Brand Development The Branding and Marketing Project is a goal listed in the approved Economic Development Strategic Plan. As a result of the success of the committee format for the ED plan, Staff recommends creating a small steering committee which represents a cross section of the community (5-6 members maximum) along with Trustee Weidenfeld as a Board liaison to work with staff on this project. The purpose of the committee would be to take a higher -level view of the community's identity and values, brand characteristics, recommended audience and available marketing channels. As a first step, the steering committee will be asked to assist Staff in creating the vision and messaging the Village wants to portray through the branding and marketing process. Essentially, what is the "elevator speech" about Buffalo Grove? What is our story? Where are we going? The group will be asked to use descriptive vocabulary and narratives to help depict and tell the story of Buffalo Grove now, in addition to our goals for the future. This message will then be presented to the Village Board for comments and consideration, and ultimate concurrence. It is important to note that this type of project is highly subjective, subject to individual value judgments and difficult to achieve unanimous support for a single option. The plan as proposed is designed to provide the Village Board with macro -level insight into portraying the mission and brand promise, while allowing the steering committee to perform micro -level analysis and brand development. Thus, the decision point for the Village Board may be best focused on selecting a logo design and allowing the steering committee to develop underlying brand messages. Logo Development Once a brand message is agreed upon, it will be presented to a yet -to -be selected marketing company to develop the appropriate color palette options and logo styles. The committee will review the proposal, and in partnership with Village Staff, make a recommendation, which will then be presented to the Village Board. Next Steps Once a steering committee has been appointed, Staff will develop and provide recommendations similar to the process used for the Economic Development Steering Committee. Members of the Economic Development Steering Committee may be asked to provide input, as this goal was identified by the Committee and the members of the Committee have an advantage due to in- depth knowledge of the Village's goals through the ED plan. Upon consensus, Staff will Page 2 of 3 Packet Pg. 14 2.C.a convene the group and develop a timeline for meetings and development of methods to engage and begin producing deliverables with respect to messaging goals, which will then be presented to the board for consideration and concurrence. Due to the fluid and subjective nature of branding and marketing, in addition to logo and image development, a firm timeline is not currently proposed at this time. Staff will develop a tentative timeline with the committee. When the timeline is developed, it will be communicated to the Village Board as part of this ongoing initiative. Page 3 of 3 Packet Pg. 15 2.D Information Item : 2016 Golf Marketing Presentation ........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ Recommendation of Action Staff recommends discussion. Staff will be present to discuss current marketing platforms used for the upcoming season and review the state of the business. ATTACHMENTS: • 2016 VBG Golf Department Marketing Presentation (PDF) Trustee Liaison Johnson Monday, April 4, 2016 Staff Contact Geoff Tollefson, Golf Updated: 3/31/2016 2:10 PM Page 1 Packet Pg. 16 00 %OZ : USO uo|■muasadBm}ieWju@w:pedaQ ©!D :11 § 13 C4 q 13 N 1100 %OZ : USO uol;e}uasaad Bul}aiaew }uawpeda, A 0/////% A %,, 1100 9 Wz q 13 N 1100 %OZ : USO uol;e}uasaad Bul}aiaew }uaw:pedad jjoJ J8n 9W :}u9uay3ellV q 13 N ////%i,,,, A ////%a%,, A ////%%,. 1100 %OZ : USO uol;e}uasaad Bul}aiaew }uaw:pedad jjoJ J8n 9W :}u9uay3ell% q 13 N 1100 %OZ : USO uol;e}uasaad Bul}aiaew }uaw:pedad jjoJ J8n 9W :}uaL q 13 N 1100 %OZ : USO uol;e}uasaad Bul}aiaew }uaw:pedad jjoJ J8n 9W :11 q 13 N 1100 %OZ : USO uol;e}uasaad Bul}aiaew }uaw:pedad jjoJ J8n 9W :}u9uay3ellV q 13 N ua ` p w to r, 1100 %OZ : USO uol;e}uasaad Bul}aiaew }uaw:pedad jjoJ J8n 9W :}u9uay3ellV q 13 N co 4- 0 0) 4- 0 O L O O O C C4 1I00 %OZ : USO uol;e}uasaad Bul}aiaew }uaw:pedad jjoJ J8n 9W :}u9uay3ellV q 13 N m 00 cV L O 00 N V- 1100 %OZ: USO UOI)elugsgid BuilmimW juaw:peda(] jjo!D!Dl3A 9W :IU9WLl3ellV q 13 C4 RIMIMMEEMIMMEMMEMMIMEM ....................... ....... mmmmm�� 1100 %OZ : USO uol;e}uasaad Bul}aiaew }uaw:pedad jjoJ J8n 9W :}u9uay3eljv q 13 N 1100 %OZ : USO uol;e}uasaad Bul}aiaew }uaw:pedad jjoJ J8n 9W :}u9uay3ellV q 13 N 1100 %OZ : USO uol;e}uasaad Bul}aiaew }uaw:pedad jjoJ J8n 9W :}u9uay3elly q 13 N 1100 %OZ : USO uol;e}uasaad Bul}aiaew }uaw:pedad jjoJ J8n 9W :}u9uay3ellV q 13 N 1100 %OZ : USO uol;e}uasaad Bul}aiaew }uaw:pedad jjoJ J8n 9W :}u9uay3ellV q 13 N 1100 %OZ : USO uol;e}uasaad Bul}aiaew }uaw:pedad jjoJ J8n 9W :}u9uay3ellV q 13 N 1100 %OZ : USO uol;e}uasaad Bul}aiaew }uaw:pedad jjoJ J8n 9W :11 q 13 N 1100 %OZ : USO uol;e}uasaad Bul}aiaew }uaw:pedad jjoJ J8n 9W :}u9uay3ellV q 13 N A A A 1100 %OZ : USO uol;e}uasaad Bul}aiaew }uaw:pedad jjoJ J8n 9W :}u9uay3ellV q 13 N 1100 %OZ: USO UOI)elugsgid BuilmimW juaw:peda(] jj0!D!Dl3A 9W :IU9WLl3ellV q 13 C4 A A A I 1100 %OZ : USO uol;e}uasaad Bul}aiaew }uaw:pedad jjoJ J8n 9W :}u9uay3ellV q 13 N 1100 %OZ: USO UOI)elugsgid BuilmimW juaw:peda(] jj0!D!Dl3A 9W :IU9WLl3ellV q 13 C4 I 1100 %OZ : USO uol;e}uasaad Bul}aiaew }uaw:pedad jjoJ J8n 9W :11 q 13 N 1100 %OZ : USO uol;e}uasaad Bul}aiaew }uaw:pedad jjoJ J8n 9W :}u9uay3ellV q 13 N 1100 %OZ : USO uol;e}uasaad Bul}aiaew }uaw:pedad jjoJ J8n 9W :}u9uay3ellV q 13 N 1100 %OZ : USO uol;e}uasaad Bul}aiaew }uaw:pedad jjoJ J8n 9W :}u9uay3ellV q 13 N A A A A 1100 %OZ : USO uol;e}uasaad Builaiaew }uaw:pedad jjoJ J8n 9W :}u9uay3ellV q 13 N 00 %OZ : USO uo|■muasadBm}ieWju@w:pedaQ ©!D !DeA9W a § 13 C4 2.E Information Item : Presentation of Regional Road Updates ........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ Recommendation of Action Staff recommends discussion. Staff will provide an update on regional road improvements to be completed by other agencies. ATTACHMENTS: regional road update memo 16-0304 (DOCX) Trustee Liaison Stein Monday, April 4, 2016 Staff Contact Darren Monico, Public Works Updated: 3/31/2016 2:36 PM Page 1 Packet Pg. 46 2.E.a j IAGE OF BUkTALO GROVE TO: DANE C. BRAGG, VILLAGE MANAGER FROM: DARREN MONICO, VILLAGE ENGINEER SUBJECT: NON VILLAGE JURISDICTIONAL ROAD UPDATES DATE: MARCH 4, 2016 CC: MIKE REYNOLDS, DIRECTOR OF PUBLIC WORKS 11 Introduction Below is an update on Regional Area roads within the Village of Buffalo Grove under the jurisdiction of other departments including the Lake County Department of Transportation, the Cook County Department of Transportation and Highways, and the Illinois Department of Transportation. There are a few big changes from last year's summary: the delay of Lake Cook Road and Weiland Road for one year, the Dundee Road and Buffalo Grove Road intersection turning lanes, the bridge decks on Lake Cook Road, and the beginning of the Phase 1 Study of the intersection of Milwaukee Road and Deerfield Parkway. Non -jurisdictional Roads Summary: 2016 Replace Lake Cook Road bridge decks over Buffalo Creek and the WI -Central Railroad 2016 Buffalo Grove Road and Dundee Road intersection, adding turn lanes on NE and NW corner 2018 Weiland Road from Lake Cook Road to Deerfield Parkway 2018 Lake Cook Road from Raupp Blvd to Hastings Road (all in one contract over two years) 2019 Lake Cook Road from Raupp Blvd to Hastings Road 2019 Weiland Road from Deerfield Parkway to Aptakisic Road 2020 Buffalo Grove Road from Deerfield Parkway to Route 22 2021 Aptakisic Road from Buffalo Grove Road to Route 83 2021 The Weiland/Prairie Connector from Aptakisic Road to Prairie Road 2021 Prairie Road from the connector to Route 22 Please note the year listed is when the project is expected to begin, most of these projects will be a two season construction project. The length of the project does not include preparatory work by other agencies for utility relocation which could be prior to the start date, such as ComEd or AT&T. Lake County Department of Transportation The Lake County Department of Transportation (LCDOT) has jurisdiction over the following roads in Lake County: Arlington Heights Road, Aptakisic Road, Buffalo Grove Road, Deerfield Parkway, Prairie Road, and Weiland Road. LCDOT has a five year construction plan that is updated each year. The proposed 2016 to 2020 plan will not be released until the summer so the contents of this report are based on the 2015 to 2019 plan and a recent meeting with LCDOT representatives. The Weiland Road and Prairie Road improvement has been split in to 4 sections and the schedule is shown below: Packet Pg. 47 2.E.a 2017 Weiland Road from Lake Cook Road to Deerfield Parkway 2019 Weiland Road from Deerfield Parkway to Aptakisic Road 2021 The Weiland/Prairie Connector from Aptakisic Road to Prairie Road 2021 Prairie Road from the connector to Route 22 When Lake County programs a project outside of the 5 year plan as shown above, the projects are considered placeholders and the project will most likely be moved back as future 5 year plans are developed. However, Lake County has notified the Village that the connector portion is likely to be built in 2021 and is not merely a placeholder, and while the next portion from the connector to Route 22 is currently a placeholder they are attempting to find funding to construct it with the connector portion. There is a chance that the entire project could be delayed one year to coincide with the Lake Cook Road project. In early 2015 staff learned that LCDOT was planning to start a Phase 1 Study of Deerfield Road east of Milwaukee Road for widening in 2017 but was not planning to include the intersection of Milwaukee Road and Deerfield Parkway/Road. Staff then met with LCDOT and requested to not only add the intersection to the Phase 1 design but asked to start the project a year earlier. LCDOT agreed and staff expects that study to begin this year. While the completion of the intersection construction is still more than 5 years away, staff is encouraged that the project is in the pipeline to begin the study/design/construction process. Buffalo Grove Road from Route 83 to Route 22 is scheduled for construction in 2020. This will include the intersection work at Buffalo Grove Road and Aptakisic Road. Aptakisic Road widening project from Buffalo Grove Road to Route 83 is scheduled for construction in 2021 and this is expected to be performed in this year and is not merely a placeholder. Arlington Heights Road from Lake Cook Road to Route 83 is currently listed as a placeholder in 2021. This is a reconstruction project and not a widening project. Design is programmed to start in 2018. This is not listed in the summary above due to the uncertainty of the County's programming after 2020. Cook County Department of Transportation and Highways: The Cook County Department of Transportation and Highways (CCDTH) has jurisdiction over the following roads in Cook County: Arlington Heights Road, Buffalo Grove Road, Lake Cook Road, Old Arlington Heights Road and Weiland Road. CCDTH has recently informed the Village that they will be replacing the bridge decks on two bridges located on Lake Cook Road. The two bridges are located over Buffalo Creek and over the Wisconsin Central Railroad, which are located west of Raupp Blvd and East of Hastings Lane respectively. Both will require one lane to be closed in each direction for approximately one month for each bridge. Construction is expected to start in July. Cook County elected to not wait to complete this at the same time as the Lake Cook Road widening project. The Lake Cook Road widening project from Raupp Blvd to Hastings Drive is currently in the Phase 2 Design stage and Cook County is still working on property acquisition for the entire project. Cook County is currently planning to let the job for bid in late 2017. This is a one year delay from the previous plan and the project has now been combined into one project with a two year duration instead of two separate, overlapping projects for a three year duration. Minor construction may start in 2017 such as utility relocation but the major road work will begin in 2018. Packet Pg. 48 2.E.a Illinois Department of Transportation: The Illinois Department of Transportation (IDOT) has jurisdiction over all the numbered State Routes including: Dundee Road (Route 68), Half Day Road (Route 22), and McHenry Road (Route 83). In addition to the regular patching and overlaying jobs, the only project IDOT has notified the Village of is the addition of two turn lanes at the intersection of Buffalo Grove and Dundee Road. The two turn lanes will be for westbound Dundee Road to northbound Buffalo Grove Road and southbound Buffalo Grove Road to westbound Dundee Road. The project has an IDOT letting date of April 22na 2016 and staff expects construction to start in the summer. Packet Pg. 49 2.F Information Item : Collector Route Street Designation ........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ Recommendation of Action Staff recommends pursuing the designation of collector route status for seven streets, providing opportunities for Federal funding to offset reconstruction/repaving costs. Several roads identified as Collector Routes are eligible for 80% Federal funding. ATTACHMENTS: • Collector road option memo 16-0325 (DOCX) Trustee Liaison Berman Monday, April 4, 2016 Staff Contact Darren Monico, Public Works Updated: 3/31/2016 2:42 PM Page 1 Packet Pg. 50 2.F.a j ...AGE OF BUkTALO GROVE TO: DANE C. BRAGG, VILLAGE MANAGER FROM: DARREN MONICO, VILLAGE ENGINEER SUBJECT: COLLECTOR ROAD OPTION MEMO DATE: MARCH 25, 2016 CC: MIKE REYNOLDS, DIRECTOR OF PUBLIC WORKS 11 The Village has several streets that are classified as Major or Minor Collector Routes by the Illinois Department of Transportation. These streets are eligible for Federal funding for road improvement projects. IDOT formally called these FAU Routes, for Federal Aid Urban Routes, but has transitioned to listing them as a "Functional Class." All of the State and County routes are designated as Collector or a higher designation. The Village has the following roads listed as collectors in Lake County: Checker Road Barclay Boulevard Old Checker Road Brandywyn Lane Prairie Lane Thompson Boulevard Arlington Heights Rd (83 to Thompson) Brandywyn Lane and Thompson Boulevard were recently approved and added as Collector Routes to the IDOT system in 2015. The applications for Main Street, Busch Parkway and Pauline Avenue were not approved due to proximity to other Collector Routes or did not have sufficient traffic counts. There are currently no Village streets in Cook County listed as Collector Routes, however, staff believes Weidner Road and Bernard Drive may qualify to be Collector Routes as well. The Lake County Mayors Caucus has recently increased the Federal funding participation for Collector Route projects to 80% from 70% and now includes Phase 2 Design cost at 80% as well (Phase 1 studies are not eligible for funding through the caucus). The Mayors Caucuses in Lake and Cook Counties have significant Federal funding designated for distribution but have not received enough projects to utilize all of the funds. Funds not used are redistributed to other states for qualified projects. To utilize Federal funding, the roads require a width of at least 36' wide based on current road cross section. There are different requirements for roads with ditches or no sidewalks, etc. There are two options to meet this 36' width requirement —1) the roads can be widened to 36' or 2) parking can be restricted on one side with no change in the current width. All of the Lake County Collector Routes as well as Bernard Drive and Weidner Road are between 33' and 35' wide. Widening these roads would add between 6" to 18" to each side of the street. The entire curb would be removed and replaced at 36' wide. All of the driveway aprons are expected to be replaced due to road grade changes for drainage improvements. As a side note, the recently revised Development Ordinance requires future collector streets to be at least 36' wide. Packet Pg. 51 2.F.a To apply for Federal funding, the Phase 1 Study needs to follow the Federal process similar to the Lake Cook Road and Weiland Road projects, albeit with a reduced scope. Being that this is a cumbersome and lengthy process; staff does not wish to proceed with the hiring of a design engineer to complete the Phase I analysis for collector routes without concurrence by the Village Board. A Phase 1 study, depending on the scope, could cost between $250,000 to $400,000 to complete the Thompson and Brandywyn collector route reconstruction plans. The Phase 1 may involve a public meeting with the residents. Overall, with Federal funding the Village could save approximately $11 million dollars for road improvements for the seven roads in Lake County alone over a twenty year life cycle. As last discussed in March of 2015, the 20 year budget shortfall was approximately $57.5 million dollars. By utilizing the Federal funding opportunities for the Lake County Roads, this could be reduced to $46.5 million dollars. In Cook County, if Bernard Drive and Weidner Road are approved, this could further reduce the budget shortfall to $43 million dollars. If a Phase 1 process is started this year, the roads could begin construction in approximately four to five years due to the lengthy Federal process, consistent with any planned modifications or improvements to those streets. In conclusion, staff recommends pursuing the opportunity for Federal funding where available. If this funding is secured, staff recommends widening the roads to the required 36', or where possible, such as on Brandywyn Lane between Thompson Boulevard and Aptakisic Road, to restrict parking on one side as parking is currently restricted for over two-thirds of the west side of the street due to the school. The Village, by pursuing collector route designation, is not obligated to seek or utilize Federal funds for reconstruction or repaving activities on these streets, rather the process opens up another channel of possible funding. Packet Pg. 52 2.G Information Item : Update Village Finanical Policies ........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ Recommendation of Action Staff recommends discussion. Attached are policy updates for debt issuance, post issuance compliance, revenue collection and investments. The original debt policy (2003) has been amended to reflect new technologies available for competitive sales (online auctions), describe more debt options, reaffirm the village's philosophy on the use of debt, reference a new post -issuance compliance manual, and provide a glossary of debt terms to better help the readers understand the language used both in the policy and in reviewing bond ordinances. The Village's current financial advisors, Speer Financial, have reviewed this policy. The post -issuance compliance manual is a companion document to the debt policy and defines the roles and responsibilities of the financial director in maintaining the tax-exempt or tax -advantaged status of the bonds. This manual will provide a framework to help stay in compliance with Internal Revenue Service and United States Treasury Regulations. This manual has been reviewed by the Village's current bond counsel, Chapman & Cutler. The revenue collection policy is a new policy, it is intended to identify the major sources of revenue and the Villages efforts to gain compliance on the payment of all revenues owed to the Village. The investment policy was amended to reduce the collateral rate on non Federal Deposit Insurance Corporation (FDIC) deposits from 110 percent to 103 percent. Staff believes the 110 percent level to be excessive and it precludes some financial institutions from bidding on Village services. Other changes included in the policy are the ability to invest in high grade municipal bonds and use surety bonds and letters of credit as collateral. ATTACHMENTS: • Debt Policy 2016 (DOC) • Post -Issuance Compliance Manual (DOC) • Revenue Collection Policy (DOCX) Investment Policy (DOC) Trustee Liaison Johnson Monday, April 4, 2016 Staff Contact Scott Anderson, Finance Updated: 3/31/2016 2:24 PM Page 1 Packet Pg. 53 2.G.a VILLAGE OF BUFFALO GROVE DEBT POLICY I. PURPOSE AND GOALS The Debt Policy sets forth comprehensive guidelines for the financing of capital expenditures. It is the objective of the policies that (1) the Village obtain financing only when necessary, (2) the process for identifying the timing and amount of debt or other financing be as efficient as possible, (3) the most favorable interest rate and other related costs be obtained, and (4) when appropriate, future financial flexibility be maintained. Debt financing, which includes general obligation bonds, special assessment bonds, revenue bonds, temporary notes, lease/purchase agreements, lines of credit, and other Village obligations permitted to be issued or incurred under Illinois law, shall only be used to purchase capital assets that cannot be acquired from either available current revenues or fund balances. The useful life of the asset or project shall exceed the payout schedule of any debt the Village assumes. To enhance creditworthiness and prudent financial management, the Village is committed to systematic capital planning and long-term financial planning. Evidence of this commitment to capital planning will be demonstrated through the annual adoption of a Capital Improvement Plan (CIP) identifying the benefits, costs and method of funding each capital improvement planned for the succeeding five years. GOALS In following this policy, the Village shall pursue the following goals when issuing debt: • Long-term debt will not be used to finance current operations or to capitalize operating expenses. The capitalization of expenses, which represents a shift of operating costs into long-term debt, should be a practice that is expressly prohibited. Long-term debt will be used only for capital projects that cannot be financed from current revenue sources. Where capital improvements or acquisitions are financed through the issuance of debt, such debt will be retired in a period not to exceed the expected life of the improvement or acquisition. • Assess financial alternatives to include new and innovative financing approaches as well as seeking categorical grants, revolving loans or other state/federal aid • The Village will also issue long-term debt for refunding of other outstanding debt for the purpose of interest rate savings. As a guide, the minimum net present value savings shall be three percent (3%) of the par value of the proposed new bonds to be issued. However, circumstances may occur where a refunding may be advantageous with net present value savings of less than 3%. In those cases, approval of the President and Board of Trustees will be required in order to proceed. • Determine the amortization (maturity) schedule which will best fit with the overall debt structure of the Village's general obligation debt and related tax levy at the time the new debt is issued. The Village may choose to delay principal payments or capitalize interest Packet Pg. 54 2.G.a during the project construction. For issuance of revenue bonds, the amortization schedule which will best fit with the overall debt structure of the enterprise fund and its related rate structure will be considered. Consideration will be given to coordinating the length of the issue with the lives of assets, whenever practicable, while considering repair and replacement costs of those assets to be incurred in future years as an offset to the useful lives, and the related length of time in the payout structure. • Level or declining debt service shall be employed unless operational matters dictate otherwise, or except to achieve overall level debt service with existing bonds. The Village shall be mindful of the potential benefits of bank qualification and will strive to limit its annual issuance of debt to $10 million or less when such estimated benefits are greater than the benefits of exceeding the bank qualification limit. Should subsequent changes in the law raise this limit, then the Village policy will be adjusted accordingly. • The cost of taxable debt is higher than for tax-exempt debt. However, the issuance of taxable debt is mandated in some circumstances and may allow valuable flexibility in subsequent contracts with users or managers of the improvement constructed with the bond proceeds. Therefore, the Village will usually issue obligations tax exempt, but may occasionally issue taxable obligations. II. DEBT ISSUANCE IN GENERAL A. Authority and Purposes of the Issuance of Debt The laws of the State of Illinois authorize the issuance of debt by the Village. The Local Bond Law confers upon municipalities the power and authority to contract debt, borrow money, and issue bonds for public improvement projects as defined therein. Under these provisions, the Village may contract debt to pay for the cost of acquiring, constructing, reconstruction, improving, extending, enlarging, and equipping such projects or to refund bonds. The Village Charter authorizes the Village Board to incur debt by issuing bonds for any lawful municipal purpose as authorized by the State Constitution or it Home Rule Powers. B. Types of Debt Issued i) Short -Term (three years or less) The Village may issue short-term debt to finance the purchase of capital equipment having a life exceeding one year or provide increased flexibility in financing programs. ii) Long -Term (more than three years) The Village may issue long-term debt which may include, but not limited to, general obligation bonds, certificates of participation, capital appreciation bonds, tax increment allocation revenue bonds, special assessment bonds, special service area bonds, self -liquidation bonds and double barreled bonds. The Village may also enter into long-term leases for public facilities, property, and equipment with a useful life greater than one year. C. Capital Improvement Program The Capital Improvement Plan (CIP) as approved by the Village Board shall determine the Village's capital needs. The program shall be a five-year plan for the 2 Packet Pg. 55 2.G.a acquisition, development and/or improvement of the Village's infrastructure. The first year of the program shall be the Capital Budget. If the current resources are insufficient to meet the needs identified in the Capital Budget, the Village Board may consider incurring debt to fund the shortfall. The Village Board, upon advice from the Village's financial advisor, may also consider funding multiple years of the Capital Improvement Program by incurring debt. The CIP should be revised and supplemented each year in keeping with the Village's policies on debt management. D. Structure of Debt Issues The duration of a debt issue shall not exceed the economic or useful life of the improvement or asset that the issue is financing. The Village shall design the financing schedule and repayment of the debt so as to take best advantage of market conditions and, as practical, to recapture or maximize its credit capacity for future use, and moderate the impact to the taxpayer. E. Sale of Securities All debt issues should be sold through a competitive bidding process based upon the lowest offered True Interest Cost (TIC), unless the Board deems a negotiated sale the most advantageous to the Village. F. Credit Enhancements The Village may enter into agreements with commercial banks or other financial entities for the purpose of acquiring letters of credit, municipal bond insurance, or other credit enhancements that will provide the Village with access to credit under terms and as specified in such agreements when their use is judged cost effective or otherwise advantageous. Any such agreements shall be approved by the Village Board. III. LEGAL CONSTRAINTS AND OTHER LIMITATIONS ON THE ISSUANCE OF DEBT The Village Board may utilize the guidelines established by this policy, or may choose, in its discretion, to consider other relevant factors in incurring debt. The validity of any debt incurred in accordance with applicable law shall not be invalidated, impaired or otherwise affected by non-compliance with any part of the procedure set forth pursuant to this policy. A. State Law 30 ILCS 305/0.01, et. Seq.: the short title is "The Bond Authorization Act." B. Authority for Debt The Village may, by bond ordinance, incur indebtedness or borrow money, and authorize the issue of negotiable obligations, including refunding bonds, for any capital improvement of property, land acquisition, or any lawful purpose except current expenses, unless approved by the Village Board. 3 Packet Pg. 56 2.G.a C. Debt Limitation Because the Village of Buffalo Grove is a Home Rule Community, the debt limitations of the bond laws are not applicable. D. Methods of Sale All bonds shall be sold at a public sale, except that bonds may be sold at a private sale in accordance with 30 ILCS 350/10. The Village may issue short-term notes by negotiated sale if the bond ordinance or subsequent resolution so provides. i) Bonds All bonds will mature within the period or average period of usefulness of the assets financed; and the bonds will mature in installments, the first of which is payable not more than five years from the dated date of the bonds. Term bonds may be allowable if recommended by the Village's financial advisor and approved by the Village Board. ii) Financial Advisor To ensure independence, the Financial Advisor will not bid on nor underwrite any Village debt issues on which it is advising. IV. DEBT ADMINISTRATION A. Financial Disclosures The Village shall prepare appropriate disclosures as required by the Security and Exchange Commission, the federal government, the State of Illinois, rating agencies, underwriters, investors, agencies, taxpayers, and other appropriate entities and persons to ensure compliance with applicable laws and regulations. B. Review of Financing Proposals All capital financing proposals that involve a pledge of the Village's credit through the sale of securities, execution of loans or lease agreements and/or otherwise directly involve the lending or pledging of the Village's credit shall be referred to the Director of Finance/Treasurer who shall determine the financial feasibility, and the impact on existing debt of such proposal, and shall make recommendations accordingly to the Village Manager. C. Establishing Financing Priorities The Director of Finance/Treasurer shall administer and coordinate the Village's debt issuance program and activities, including timing of issuance, method of sale, structuring the issue, and marketing strategies. The Director of Finance/Treasurer along with the Village's financial advisor shall meet, as appropriate, with the Village Manager and Village Board regarding the status of the current year's program and to make specific recommendations. D. Rating Agency Relations The Village shall endeavor to maintain effective relations with the rating agencies. The Village Manager, Director of Finance/Treasurer, and the Village's financial advisors 0 Packet Pg. 57 2.G.a should meet with, make presentations to, or otherwise communicate with the ratings agencies on a consistence and regular basis in order to keep the agencies informed concerning the Village's capital plan, debt issuance program, and other appropriate financial information. E. Refunding Policy The Village should consider refunding outstanding debt when legally permissible and financially advantageous. A net present value debt service savings of at least three percent or greater should be achieved. F. Post -Issuance Compliance The Finance Director/Treasurer shall be responsible for following post -issuance compliance for all debt issues. The procedures are noted in the Post -Issuance Procedures Manual for Tax -Exempt Bonds Issued by The Village of Buffalo Grove. V. GLOSSARY OF TERMS Ad Valorem Tax — A direct tax based "according to value" of property. Advanced Refunding Bonds — Bonds issued to refund an outstanding bond issue prior to the date which the outstanding bonds become due or callable. Proceeds of the advanced refunding bonds are deposited in escrow with a fiduciary, invested in United States Treasury Bonds or other authorized securities, and used to redeem the underlying bonds at maturity or call date. Amortization — the process of paying the principal amount of an issue of bonds by periodic payments either directly to bondholders or to a sinking fund for the benefit of bondholders. Arbitrage — Usually refers to the difference between the interest paid on the tax-exempt securities and the interest earned by investing the proceeds in higher yielding taxable securities. Internal Revenue Service regulations govern arbitrage (references I.R.S. Reg. 1.103-13 through 1.103-15). Arbitrage Bonds — Bonds which are deemed by the I.R.S. to violate federal arbitrage regulations. The interest on such bonds becomes taxable and the bondholders must include this interest as part of gross income for federal income tax purposes (I.R.S. Reg. 1.103-13 through 1.103-15). Assessed Value — An annual determination of the just or fair market value of property for purposes of ad valorem taxation. Basis Point —1/100 of one percent. 5 Packet Pg. 58 2.G.a Bond — Written evidence of the issuer's obligation to repay a specified principal amount on a date certain, together with interest at a stated rate, or according to a formula for determining that rate. Bond Anticipation Notes (BANS) — Short-term interest bearing notes issued by a government in anticipation of bonds to be issued at a later date. The notes are retired from proceeds of the bond issue to which they are related. Bond Counsel — An attorney retained by the Village to render a legal opinion whether the Village is authorized to issue the proposed bonds, has met all legal requirements necessary for issuance, and whether interest on the bonds is, or is not, exempt from federal and state income taxation. Bonded Debt — The portion of an issuers total indebtedness represented by outstanding bonds. Callable Bond — A bond which permits or requires the issuer to redeem the obligation before the state maturity date at a specified price, the call price, usually at or above par value. Capital Appreciation Bonds (CAB) — A long-term security on which the investment return is reinvested at a state compound rate until maturity. The investor receives a single payment at maturity representing both the principal and investment return. Commercial Paper — Very short-term, unsecured promissory notes issued in either registered or bearer form, and usually backed by a line of credit with a bank. Coupon Rate — The annual rate of interest payable on a coupon bond (a bearer bond or bond registered as to principal only, carrying coupons evidencing future interest payments), expressed as a percentage of the principal amount. Debt Limit — The maximum amount of debt which an issuer is permitted to incur under constitutional, statutory or charter provision. Debt Service — The amount of money necessary to pay interest on an outstanding debt, the serial maturities of principal for serial bonds, and the required contributions to an amortization or sinking fund for term bonds. Demand Notes (Variable Rate) — A short-term security which is subject to a frequently available put option feature under which the holder may put the security back to the issuer after giving specified notice. Many of these securities are floating or variable rate, with the put option exercisable on dates on which the floating rate changes. 6 Packet Pg. 59 2.G.a Double Barreled Bonds (Alternative Revenue Bonds) — A bond which is payable from the revenues of a governmental enterprise and are also backed by the full faith and credit of the governmental unit. Enterprise Funds - Funds that are financed and operated in a manner similar to private business in that goods and services provided are financed primarily through user charges. General Obligation Bond - A bond for whose payment the full faith and credit of the issuer has been pledged. More commonly, but not necessarily, general obligation bonds are payable from ad valorem property taxes and other general revenues. Lease Purchase Agreement (Capital Lease) - A contractual agreement whereby the government borrows funds from a financial institution or a vendor to pay for capital acquisition. The title to the asset(s) normally belongs to the government with the lessor acquiring security interest or appropriate lien therein. Letter of Credit - A commitment, usually made by a commercial bank, to honor demands for payment of a debt upon compliance with conditions and/or the occurrence of certain events specified under the terms of the commitment. Level Debt Service - An arrangement of serial maturities in which the amount of principal maturing increases at approximately the same rate as the amount of interest declines. Long -Term Debt - Long-term debt is defined, for purposes of this policy, as any debt incurred whose final maturity is more than three years. Maturity - The date upon which the principal of a municipal bond becomes due and payable to bondholders. Mini -bonds - A small denomination bond directly marketed to the public. Net Interest Cost (NIC) - The traditional method of calculating bids for new issues of municipal securities. The total dollar amount of interest over the life of the bonds is adjusted by the amount of premium or discount bid, and then reduced to an average annual rate. The other method is known as the true interest cost (see "true interest cost"). Offering Circular - Usually a preliminary and final document prepared to describe or disclose to investors and dealers information about an issue of securities expected to be offered in the primary market. As a part of the offering circular, an official statement shall be prepared by the Village describing the debt and other pertinent financial and demographic data used to market the bonds to potential buyers. Other Contractual Debt - Purchase contracts and other contractual debt other than bonds and notes. Other contractual debt does not affect annual debt limitation and is not a part of V/ Packet Pg. 60 2.G.a indebtedness within the meaning of any constitution or statutory debt limitation or restriction. Par Value or Face Amount - In the case of bonds, the amount of principal which must be paid at maturity. Parity Bonds - Two or more issues of bonds which have the same priority of claim or lien against pledged revenues or the issuer's full faith and credit pledge. Principal - The face amount or par value of a bond or issue of bonds payable on stated dates of maturity. Private Activity Bonds - One of two categories of bonds established under the Tax Reform Act of 1986, both of whom are subject to certain tests and State volume caps to preserve tax exemption. Ratings - Evaluations of the credit quality of notes and bonds, usually made by independent rating services, which generally measure the probability of the timely repayment of principal and interest on municipal bonds. Refunding Bonds - Bonds issued to retire bonds already outstanding. Registered Bond - A bond listed with the registrar as to ownership, which cannot be sold or exchanged without a change of registration. Reserve Fund - A fund which may be used to pay debt service if the sources of the pledged revenues do not generate sufficient funds to satisfy the debt service requirements. Self -Supporting or Self Liquidating Debt - Debt that is to be repaid from proceeds derived exclusively from the enterprise activity for which the debt was issued. Short -Term Debt -Short-term debt is defined for purposes of this policy as any debt incurred whose final maturity is three years or less. Spread - The income earned by the underwriting syndicate as a result of differences in the price paid to the issuer for a new issue of municipal bonds, and the prices at which the bonds are sold to the investing public, usually expressed in points or fractions thereof. Tax -Exempt Bonds - For municipal bonds issued by the Village tax-exempt means interest on the bonds are not included in gross income for federal income tax purposes; the bonds are not items of tax preference for purposes of the federal, alternative minimum income tax imposed on individuals and corporations; and the bonds are exempt from taxation by the State of Illinois. M Packet Pg. 61 2.G.a Tax Increment Bonds - Bonds secured by the incremental property tax revenues generated from a redevelopment project area. Term Bonds - Bonds coming due in a single maturity. True Interest Cost (TIC) - Also known as Canadian Interest Cost. A rate which, when used to discount each amount of debt service payable in a bond issue, will produce a present value precisely equal to the amount of money received by the issuer in exchange for the bonds. The TIC method considers the time value of money while the net interest cost (NIC) method does not. Yield to Maturity - The rate of return to the investor earned from payments of principal and interest, with interest compounded semiannually and assuming that interest paid is reinvested at the same rate. Zero Coupon Bond - A bond which pays no interest, but is issued at a deep discount from par, appreciating to its full value at maturity. Dated April 18, 2016 9 Packet Pg. 62 2.G.a RESOLUTION NO. 2016- A RESOLUTION AMENDING THE VILLAGE OF BUFFALO GROVE POLICY AND PRACTICE RELATIVE TO DEBT WHEREAS, the Village of Buffalo Grove is a public agency responsible for the efficient and effective use of debt to provide financing for capital development and improvement purposes; and WHEREAS, the issuance of debt the Village will also be used from time to time to provide for the efficient and cost effective refunding of existing debt, as appropriate; and WHEREAS, the development and adoption of policies and practices on matters of public finance serve as a guide and directive to the fiscal affairs of the Village of Buffalo Grove. NOW, THEREFORE, BE IT RESOLVED BY THE PRESIDENT AND BOARD OF TRUSTEES OF THE VILLAGE OF BUFFALO GROVE, COOK AND LAKE COUNTIES, ILLINOIS that: Section 1. The Village of Buffalo Grove Debt Policy dated April 18, 2016 which is attached hereto and made a part hereof as Exhibit "A" is hereby adopted as a guide on how the Village shall manage the issuance and repayment of any and all debt sold from time to time and amends the original policy adopted on March 21, 2003. Section 2. The Village's Director of Finance is responsible for the management of this Policy as well as for any and all reporting required to support the intent of said Policy. This Policy shall be effective with the adoption of this Resolution and as it is amended from time -to -time. AYES: NAYES: ABSENT: ADOPTED: 01111.11 APPROVED: 12016. ATTEST: Village Clerk Village President 10 Packet Pg. 63 2.G.b POST -ISSUANCE PROCEDURES MANUAL FOR TAX-EXEMPT BONDS ISSUED BY THE VILLAGE OF BUFFALO GROVE THE "ISSUER") Adopted: Revised: 2085 0000700 Packet Pg. 64 2.G.b NOTHING IN THIS MANUAL IS INTENDED TO REDUCE THE RESPONSIBILITY OF THE ISSUER. THESE PROCEDURES ARE INTENDED TO FACILITATE COMPLIANCE WITH TAX RELATED COVENANTS MADE IN BOND DOCUMENTS. I. POLICY STATEMENT........................................................................................................................ 1 II. PROCEDURES ...............................................................................................................................2 A. Bonds Subject to these Procedures........................................................................ 2 B. Facilities/Assets Subject to these Procedures........................................................ 2 C. Assignment of Responsibility to Staff..................................................................... 2 D. Duties of the Compliance Officer........................................................................... 2 1. Maintaining List of Bonds.............................................................................. 2 2. Maintaining List of Facilities.......................................................................... 2 3. Recordkeeping...............................................................................................3 a. Transcript Items...................................................................................... 3 b. Expenditure & Investment Items........................................................... 3 c. Records of Use........................................................................................ 4 d. Rebate & Yield Calculations.................................................................... 4 e. Actions under these Procedures............................................................ 4 4. Arbitrage Computations................................................................................ 5 5. Annual Review and Reports........................................................................... 5 6. Action on the Discovery of a Potential Violation .......................................... 5 a. Reallocation............................................................................................ 5 b. Remediation............................................................................................6 c. Voluntary Closing Agreement Program .................................................. 6 7. Action on IRS Contact.................................................................................... 6 a. Examination of Bonds............................................................................. 6 b. Compliance Checks................................................................................. 7 8. Training..........................................................................................................7 E. Changes to the Manual........................................................................................... 7 F. Specific Procedures for Special Cases..................................................................... 8 G. Authorization and Expense..................................................................................... 8 0 U 0 a �a c c ii a� a� co a N Ln 0 c d c c� Q E 0 c.� d U c M 3 N N 0 (L c a) U co Q Packet Pg. 65 2.G.b Appendix A — List of Bonds Appendix B-1— List of Bond - Financed Property Appendix B-2 — List of Disposed Bond - Financed Property Appendix C — Glossary of Terms and Concepts Packet Pg. 66 2.G.b I. Policy Statement This Post -Issuance Procedures Manual (the "Manual") is intended to provide procedures (the "Procedures") for compliance with the requirements of the Internal Revenue Code of 1986, as amended (the "Code"), and applicable United States Treasury Regulations (the "Regulations") necessary to maintain the tax exemption of the interest on bonds or other obligations issued by and for the benefit of the Issuer. The Issuer has and will from time to time issue various issues of tax-exempt bonds, tax credit bonds or direct pay bonds (the "Bonds"). Maintaining the tax-exempt or tax -advantaged status of Bonds requires continuing compliance by the Issuer with certain covenants and agreements contained in the documents relating to the issuance of the Bonds. In connection with each issue of tax-exempt Bonds, the Issuer has covenanted or will covenant not to take any action that would cause the interest on the Bonds to become included in the gross income of the holders of the Bonds for federal income tax purposes. These Procedures are being adopted by the Issuer to assist the Issuer in fulfilling covenants to maintain the tax-exempt or tax -advantaged status of the Bonds. It is the intention of the Issuer that the Issuer will comply with all applicable Federal tax law requirements and maintain sufficient records to demonstrate such compliance. The Issuer is aware that the Internal Revenue Service ("IRS") maintains an active force of revenue agents who examine bond issues for compliance. As a result of such examinations, the IRS may require payment of financial penalties or impose other sanctions to preserve the tax -exemption or tax -advantaged nature of the Bonds or may declare bonds to no longer be tax-exempt or tax -advantaged. Any such declaration could result in legal action against the Issuer. To minimize the risk of such occurrence, these Procedures have been adopted to provide a framework for post -issuance compliance. This Manual is only for the benefit of the Issuer. No other person (including an owner of a Bond) may rely on the Procedures included in this Manual. The Issuer is aware that the existence of adequate written procedures may influence the IRS to settle matters on more favorable terms should such settlement be required. Federal tax law imposes restrictions related to the investment and expenditure of Bond proceeds and on the use of facilities financed with Bonds. Compliance with these restrictions is often necessary to maintain the tax -exemption or tax -advantaged nature of the Bonds. The Issuer is responsible for following tax -related covenants concerning the Bonds These Procedures are not intended to diminish or augment those covenants. In order to most efficiently apply limited resources, these Procedures may be limited to Bonds issued after a specified date. Certain concepts and terms addressed and used in these Procedures are further described in the glossary attached hereto, as Appendix C. Packet Pg. 67 2.G.b 11. Procedures A. Bonds Subject to these Procedures Attached hereto as AppendixA is a list of the Issuer's outstanding Bonds subject to these Procedures. The Compliance Officer (as hereinafter defined) should update this list whenever Bonds are issued and whenever an issue of Bonds subject to the Procedures is fully retired. If payments on the Bonds are provided for by an escrow, such Bonds should remain on the list until the Bonds are paid in full. B. Facilities/Assets Subject to these Procedures Attached hereto as Appendix B-1 is a list of the facilities and assets financed, refinanced or reimbursed with proceeds of the Bonds and that are subject to Federal tax restrictions. Attached hereto as Appendix B-2 is a list of those facilities and assets that have been disposed of. The Issuer and the Compliance Officer recognize that a list of financed assets is necessary to track Private Business Use of Bond financed facilities. In order to simplify the maintenance of the list, the Compliance Officer may include entire buildings or other facilities even if only partially financed with Bonds. The list for each issue of Bonds should be completed within a reasonable period after the final allocation of Bond proceeds is made. In the case of Refunding Bonds, the list of assets financed should include the list of assets financed by the refunded obligations. C. Assignment of Responsibility to Staff The Issuer designates its Director of Finance (the "Compliance Officer") as having responsibility to keep all records required to be kept by the Issuer under these Procedures, to make all reports to the Issuer's governing body required by these Procedures, and to otherwise assure that all actions required of the Issuer hereunder be taken. The Compliance Officer may further delegate certain tasks to other officers, employees or agents of the Issuer. Such delegation shall not relieve the Compliance Officer from responsibility to assure that all tasks assigned to the Compliance Officer hereunder are completed in a timely fashion. D. Duties of the Compliance Officer 1. Maintaining List of Bonds. The Compliance Officer is charged with maintaining the list referred to in Section IIA hereof, and updating such list whenever a new issue of Bonds subject to these Procedures is issued or when an issue of Bonds subject to these Procedures is retired. 2. Maintaining List of Facilities. The Compliance Officer is charged with maintaining the list referred to in Section 1113 hereof. When an issue of Bonds financing or refinancing a subject facility is retired or redeemed, the list shall identify the retirement or redemption of the Bonds that financed or refinanced such subject facility. As proceeds of -2- Packet Pg. 68 2.G.b Bonds are spent, the Compliance Officer should update the list periodically at times convenient to the Compliance Officer. The Compliance Officer may simplify the list by including entire buildings or other facilities even if only a portion was Bond financed. 3. Recordkeeping. The Compliance Officer is hereby designated as the keeper of all records of the Issuer with respect to the Bonds and that relate to the tax-exempt or tax -advantaged status of the Bonds. The Compliance Officer shall report to the Issuer's governing body not less often than once per year concerning whether he or she has all of the required records in his or her possession, or if not, whether he or she is taking appropriate action to obtain or recover such records. The Compliance Officer should review the records related to the Bonds and shall determine what requirements the Issuer must meet in order to maintain the tax -exemption of interest paid on the Bonds or the tax -advantaged status of the Bonds. The Compliance Officer should then prepare a list of the contracts, requisitions, invoices, receipts and other information that may be needed in order to establish that (i) the interest paid on the Bonds is entitled to be excluded from gross income for federal income tax purposes or (ii) the Bonds remain tax -advantaged. Notwithstanding any other procedures of the Issuer, such retained records shall be kept for at least as long as the related issue of Bonds or any refunding obligations that may directly or indirectly refund such Bonds remain outstanding, plus three years. Such records, at a minimum, shall include the following items. a. Transcript Items. The Compliance Officer should receive, keep and maintain a true, correct and complete counterpart of each document and agreement delivered in connection with the issuance of the Bonds, including without limitation (i) the proceedings of the Issuer authorizing the Bonds, (ii) any offering document with respect to the offer and sale of the Bonds, (iii) any legal opinions with respect to the Bonds delivered by any lawyers, (iv) notices and minutes of any public hearings held with respect to the Bonds, (v) the tax documentation, including any Tax Exemption Certificate and Agreement, any Tax Compliance Certificate and Agreement and any Non -Arbitrage or Arbitrage Certificates or any tax -related covenants that may be contained in the proceedings of the Issuer authorizing the Bonds, (vi) all written representations of any person delivered in connection with the issuance and initial sale of the Bonds, and (vii) the applicable series of Series 8038 Form filed with respect to the Bonds along with proof of filing. It is likely that such transcript items will be found in the form of or included in a bound volume or compact disc delivered to the Issuer after the Bonds were issued. b. Expenditure & Investment Items. The Compliance Officer should maintain copies of: (i) account statements showing the disbursements of all Bond proceeds for their intended purposes, as well as any requisition requests and the invoices and contracts (e.g., construction contracts, third party invoices) to which the expenditure of funds relates; (ii) account statements showing all investment activity of any and all accounts in which the proceeds of the Bonds have been held; -3- Packet Pg. 69 2.G.b (iii) all bid requests and bid responses used in the acquisition of any special investments or derivative products used in connection with the Bonds, including any swaps, swaptions, or other financial derivatives entered into in order to establish that such instruments were acquired at fair market value; and (iv) copies of any subscriptions to the U.S. Treasury for the purchase of State and Local Government Series (SLGS) obligations. To the extent that such records are not in the possession of the Compliance Officer with respect to a particular issue of Bonds, investment or expenditure, the Compliance Officer should make a note that such record is not in his or her possession. In such case, the Compliance Officer should take reasonable steps to obtain such records or, if not possible, consult with counsel concerning possible alternatives. C. Records of Use. The Compliance Officer should maintain records establishing that all Bond -financed property has been used for the purposes required for interest on the Bonds to be excluded from gross income for federal income tax purposes or for the Bonds to remain tax -advantaged. Such records shall include copies of all significant contracts and agreements of the Issuer, including any leases, management contracts, research agreements, or service contracts, with respect to the use of any property owned by the Issuer and acquired or financed with the proceeds of the Bonds (excluding arm's length contracts covering 50 or fewer days). The Compliance Officer shall cause such contracts to be reviewed either by staff of the Issuer or by an outside consultant (i) to determine if such contracts cause any Private Business Use of such facilities, or (ii) if the Compliance Officer cannot reasonably determine whether such contract causes Private Business Use. If any such contract is determined to cause Private Business Use of a Bond -financed facility, the Compliance Officer should determine or cause to be determined for each year, the percentage of such facility so privately used. Such determination may be made in consultation with counsel or other consultants. d. Rebate & Yield Calculations. The Compliance Officer should maintain copies of any calculations of liability for arbitrage rebate or yield reduction payment that is or may become due with respect to the Bonds, and any calculations prepared to show that no arbitrage rebate is due, together, if applicable, with account statements or cancelled checks showing the payment of any rebate amounts to the U.S. Treasury together with any applicable IRS Form 8038-T, Arbitrage Rebate, Yield Reduction and Penalty in Lieu of Arbitrage Rebate, or Form 8038-R, Request for Recovery of Overpayments under Arbitrage Rebate Provisions, or any successor form to either of those. e. Actions under these Procedures. The Compliance Officer should retain all records, memoranda and other documents and correspondence relating to these Procedures or actions taken under these Procedures. -4- Packet Pg. 70 2.G.b 4. Arbitrage Computations. The Compliance Officer should review the agreements of the Issuer with respect to each issue of Bonds and shall determine what actions are necessary or advisable to comply with the arbitrage restrictions and arbitrage rebate requirements of the Code. Some issues of Bonds may be exempt from the rebate requirement. Taking into account any applicable exemptions from the arbitrage rebate requirement for each issue of Bonds, the Compliance Officer should cause computations to be made at least once in the first five years the Bonds are outstanding (and at least once every 5-year period thereafter while the Bonds are outstanding) of the accrued arbitrage rebate amount (if any) with respect to each issue of Bonds. The Compliance Officer should, if authorized, retain a law firm or other consultant or use staff of the Issuer to prepare reports stating whether or not there is any rebate or yield reduction payment liability to the U.S. Treasury related to the Bonds, and setting forth any applicable exemptions from rebate liability that may be applicable to any funds or accounts. Such report should be updated annually. Updates will not be required if a report clearly indicates that no additional rebate or yield restriction liability will accrue. The Compliance Officer is responsible for ensuring the timely payment to the U.S. Treasury of all arbitrage rebate payments and yield reduction payments when due, including the filing of any required IRS forms. If and to the extent that any Bond proceeds are or become subject to a yield restriction requirement, the Compliance Officer is responsible for investing or directing the investment of such proceeds at a yield not in excess of the permitted yield and for making any yield reduction payments to the U.S. Treasury as are necessary. The Compliance Officer may, if authorized, retain a law firm or other consultant to assist in making such determinations. 5. Annual Review and Reports. Not less often than once per year, the Compliance Officer should conduct a review of records and other information described in these Procedures to determine whether any or all of the Bonds comply with the tax requirements applicable to such Bonds. The Compliance Officer, if authorized, may hire counsel or other consultants to assist in such review. To the extent that any violations or potential violations of tax requirements are discovered, the Compliance Officer may make recommendations or take such actions as the Compliance Officer should reasonably deem necessary to assure the timely correction of such violations or potential violations through remedial actions described in the Regulations or the Tax Exempt Bonds Voluntary Closing Agreement Program described in Treasury Notice 2008-31 or any successor guidance. The Compliance Officer should prepare a written report (which may be marked as confidential) and should present such report to the Issuer's governing body no less frequently than once per year. The annual review requirement will continue with respect to a particular Bond issue until the first review to occur after the date that all Bonds of that issue and any refunding obligations that may directly or indirectly refund such Bonds are fully paid and retired. 6. Action on the Discovery of a Potential Violation. a. Reallocation. The Issuer and the Compliance Officer recognize that, in limited circumstances, if there is a failure to spend Bond proceeds properly, such Bond -5- Packet Pg. 71 2.G.b proceeds can be reallocated to qualified costs that may be financed with Bond proceeds, provided that such reallocation occurs within specified time frames. If the Compliance Officer determines that a failure to spend Bond proceeds on qualified costs has occurred, the Compliance Officer should (with the aid of a law firm or other consultant or staff of the Issuer) determine if a reallocation of Bond proceeds is possible. b. Remediation. The Issuer and the Compliance Officer recognize that if, among other things, there is a failure to use Bond proceeds properly, a failure to spend all Bond proceeds, or a disposition of Bond -financed property or Private Business Use in excess of allowed limits, a remedial action may be required in accordance with the Code and the Regulations. The Compliance Officer should (with the aid of a law firm or other consultant or staff of the Issuer) determine if such remedial actions are required and possible. The Compliance Officer should prepare or cause to be prepared a memorandum describing any such remedial action or proposed remedial action. The memorandum should describe whether such remedial action will serve to cure any particular tax law violation. The memorandum should include a full description of such required actions of the Issuer. A copy of any such memorandum shall be given to the Issuer's governing body. Following any such remedial action, the Compliance Officer should prepare a report describing the effect of such remedial action. The list of Bond - financed property may need to be revised as a result of such remedial action and, if so, the Compliance Officer should so revise the list. C. Voluntary Closing Agreement Program. The Issuer and the Compliance Officer recognize that if there is a violation of the covenants of the Issuer related to the maintenance of the exclusion from gross income for federal income tax purposes of interest on the Bonds or a violation of the covenants of the Issuer related to the maintenance of the tax -advantaged status of the Bonds, then the Issuer may be able to enter into a voluntary closing agreement with the IRS to preserve the favorable tax status of the Bonds. The Compliance Officer should determine if a voluntary closing agreement is desirable and possible. The Compliance Officer should coordinate the Issuer's efforts in obtaining any voluntary closing agreement. The Issuer may (to the extent authorized) retain or consult with counsel to attempt to obtain a voluntary closing agreement. Following the execution of any such closing agreement, the Compliance Officer should prepare a report describing the effect of such closing agreement. The list of Bond -financed Property may need to be revised as a result of such closing agreement and, if so, the Compliance Officer should so revise the list. 7. Action on IRS Contact. a. Examination of Bonds. The Issuer and the Compliance Officer recognize that the IRS or another regulatory entity may undertake an examination of Bonds. In the event that the Issuer is notified of such an examination, the Issuer shall as quickly as possible notify the Compliance Officer. The Compliance Officer should coordinate the defense of such examination and should determine if counsel should be hired and, if so, which counsel. Except to the extent that the Issuer determines that another party -6- Packet Pg. 72 2.G.b should undertake a response, the Compliance Officer will be responsible for compiling answers to any information or document request that might be presented to the Issuer as a result of such examination. If an examination cannot be closed without a closing agreement, the Compliance Officer should use reasonable efforts to reach an acceptable closing agreement with such regulatory agency and to obtain all required Issuer approvals of such closing agreement. Regardless of how an examination of the Bonds is closed, the Compliance Officer should retain all communications with the IRS or other regulatory agency relating to such examination among the records kept under Section II.D.3. of these Procedures (Record keeping). The Compliance Officer should advise the Issuer's governing body of any such examination when, as and in such manner as the Compliance Officer may deem appropriate. b. Compliance Checks. The IRS and other regulatory agencies may conduct compliance checks from time to time. As part of such compliance check, the IRS or another regulatory agency may send questionnaires to the Issuer. The Compliance Officer may, if authorized, hire counsel to assist in the response to a compliance check. The Compliance Officer should advise the Issuer's governing body of any such compliance check promptly after receiving notice thereof. 8. Training. The Compliance Officer should undertake to maintain a reasonable level of knowledge concerning the rules related to tax-exempt and tax -advantaged bonds so that he or she may fulfill his or her duties hereunder. The Compliance Officer may consult with counsel, attend conferences and presentations of trade groups, read materials posted on various web sites, including the web site of the Tax -Exempt Bond function of the IRS, and use other means to maintain such knowledge. Recognizing that the Compliance Officer may not be fully knowledgeable in this area, such officer may consult with in-house or outside counsel, consultants and experts to assist in exercising his or her duties under these Procedures. The Compliance Officer should endeavor to make sure that other staff of the Issuer is aware of the need for continuing compliance and coordinate appropriate training and education of other personnel of the Issuer. The Compliance Officer should provide copies of relevant Bond documents and these Procedures to other staff members who may be responsible for taking actions described in the Bond documents and in particular to any person who is expected to be a successor Compliance Officer. The Compliance Officer should assist in the education of any new Compliance Officer and the transition of the duties under these Procedures. The Compliance Officer should review the Bond documents and these Procedures periodically to determine if there are portions that need further explanation and, if so, will attempt to obtain such explanation from counsel or other experts or consultants or staff. E. Changes to the Manual The Procedures contained herein may be revised and amended from time to time as the Issuer and the Compliance Officer deem necessary to comply with the requirements of the -7- Packet Pg. 73 2.G.b Code and Regulations. The Issuer and the Compliance Officer may, from time to time and upon the issuance of new Bonds, contact outside counsel to determine whether the Procedures contained herein adequately address the post -issuance responsibilities of the Issuer as required by the Code and Regulations. F. Specific Procedures for Special Cases The Procedures contained herein specifically address post -issuance compliance procedures with respect to tax-exempt governmental bonds issued for capital projects under Section 103 of the Code. The Issuer and the Compliance Officer recognize that these Procedures may be inadequate for other types of tax-exempt obligations (including TIF financings), tax -credit or direct pay obligations, for which additional procedures may be required. In the event that the Issuer issues private activity tax-exempt obligations, tax- exempt obligations funding a significant amount of working capital, tax increment financing bonds, tax -credit bonds, or direct pay bonds, the Issuer receives an indication from counsel that additional procedures are required, or the Issuer enters into any derivative products, these Procedures should be revised to reflect any specific rules and requirements and post - issuance responsibilities applicable to such type of tax advantaged obligations and derivative products. G. Authorization and Expense This Compliance Manual is not intended to provide authorization to the Compliance Officer to enter into contracts for service or to spend Issuer funds. To the extent that the Compliance Officer determines that such contracts or expenditures are desirable and are not otherwise authorized, the Compliance Officer should obtain such authorization before entering into such contracts and spending such Issuer funds. -8- Packet Pg. 74 2.G.b NAME OF ISSUE Tax -Exempt Installment Purchase Agreement Schedule 1 General Obligation Corporate Purpose Bonds, Series 2012 General Obligation Refunding Bonds, Series 2010A and General Obligation Corporate Purpose Bonds, Series 2010B APPENDIX A LIST OF BONDS FINAL DATE OF ISSUANCE MATURITY DATE March 27, 2015 06/01/2029 August 27, 2012 12/30/2030 May 6, 2010 12/30/2025 A-1 Packet Pg. 75 (salollod leloueul=l 06ellln a;epdn : aso lenueyg eouellduaoo aouenssl-;sod :;uQwLIoelly N w � QQ w w r24 U W Q 0 Ile a Q sti rti iti A z 1 w as N Act z F" a s� o `� � of to o on to o z ¢ aA UO cn a '� w w �� • � a� o-0 a Ocz Q H cd � � cz � W W W o o -6 o�� 10 a� al o O � F-+A�rl�E-�P-��/1E-+A-�rJ�L7U0. 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Private Business Use includes any formal or informal arrangement with any person other than a state or local governmental unit that conveys special legal entitlements to any portion of Bond -financed property that is available for use by the general public or that conveys to any person other than a state or local governmental unit any special economic benefit with respect to any portion of the Bond -financed property that is not available for use by the general public. Use by a natural person not engaged in any trade or business is not private use. Any use by the federal government or by a corporation is Private Business Use. Examples of common uses of Bond -financed property that may create Private Business Use include the following: • Management contracts with private companies or individuals to manage all or a portion of a Bond -financed facility (e.g., a contract with a private company to manage a Bond -financed cafeteria, convention center, recreation center, etc.) • A lease of space in a Bond -financed facility to a non -governmental person (e.g., a lease of space in a Bond -financed municipal building to Starbucks or McDonalds) • Rental arrangements whereby individuals, non-profit organizations or private businesses rent space in a Bond -financed facility There are certain exceptions to Private Business Use. For example, a "qualified management contract" following certain guidelines set forth in Revenue Procedure 97-13 does not create Private Business Use. In addition, under appropriate circumstances, short-term rentals and other uses of up to 50 days (or in some cases 100 days or 200 days) are permitted. Arbitrage & Arbitrage Rebate Arbitrage generally is the earnings that an issuer will earn when it invests proceeds of the Bonds in investments with a yield above the yield on the Bonds. Generally, an issuer is required to make payments of any arbitrage it earns as a result of the investment of the proceeds of the Bonds above the yield on the Bonds to the IRS, which is known as "arbitrage rebate." There are certain exceptions to the requirement to make arbitrage rebate payments to the IRS (e.g., small issuer exceptions, spending exceptions, bona fide debt service fund exceptions). C-1 Packet Pg. 80 2.G.b Yield Restriction and Yield Reduction Payments Yield restriction is the requirement that an issuer not invest Gross Proceeds (defined below) of the Bonds at a yield higher than Bond yield. Generally, in a capital project financing, an issuer will have a 3-year "temporary period" during which it can invest proceeds of the Bonds in its project fund above the yield on the Bonds. After such time, moneys are yield restricted and cannot be invested above the yield on the Bonds (plus a de minimis percentage). Additionally, after the expiration of the temporary period, proceeds generally cannot be invested in federally guaranteed investments (including FDIC -insured accounts), other than certain de minimis amounts. If an issuer invests amount above the yield on the Bonds after the expiration of a temporary period, it may still be able to achieve yield compliance by making a yield reduction payment to the IRS, which is a rebate payment or any other amount paid to the United States in the same manner as rebate amounts are required to be paid or at such other time or in such manner as IRS may prescribe that will be treated as a reduction in Yield of an investment under the Regulations. Yield reduction payments may only be made in limited circumstances, and do not work for all investments above Bond yield. Gross Proceeds "Gross Proceeds" generally means (i) sale proceeds of the Bonds and investment earnings thereon and (ii) amounts reasonably expected to be used directly or indirectly to pay principal or interest on the Bonds. In addition, a pledged fund may also constitute gross proceeds. A pledge is any amount that is directly or indirectly pledged to pay the principal of or interest on the bonds. A pledge by the issuer must provide reasonable assurance that such moneys will be available to pay the debt service on the bonds even if the issuer has financial difficulties. Gross proceeds may also arise if Bonds are outstanding longer than reasonably necessary for their governmental purpose. Typically, Gross Proceeds will be contained in a project fund, escrow fund (if the Bond issue is a refunding issue), costs of issuance fund, bond fund and debt service reserve fund (if applicable). If moneys or investments are pledged or otherwise set aside for payment of principal of or interest on the Bonds, any amounts are derived from the sale of any right that is part of the terms of a Bond or is otherwise associated with a Bond (e.g., a redemption right), or the Issuer enters into any agreement to maintain certain levels of types of assets for the benefit of a holder of a bond or any credit enhancement with respect to the Bonds, such amounts may also constitute Gross Proceeds. Further, if any Bond -financed property is sold or otherwise disposed of any amounts received from such sale or other disposition may also constitute Gross Proceeds. Remediation The Code prescribes three self-help mechanisms that an issuer may use to remediate non -qualified Bonds as a result of violation of Private Business Use covenants. These include redemption or defeasance of non -qualified bonds, alternative use of a facility (e.g., if a 501(c)(3) organization leases a Bond -financed municipal facility) or alternative use of disposition proceeds (e.g., if Bond -financed property is sold, the proceeds of the sale are used for other governmental purposes that would have qualified for tax-exempt financing). Prior to taking such remedial C-2 Packet Pg. 81 2.G.b actions, the issuer must satisfy certain pre -conditions. In addition, remedial actions are only able to be taken within a specified time frame before or after the action causing Private Business Use. Voluntary Closing Agreement Program Through the Voluntary Closing Agreement Program (VCAP), issuers of Bonds can voluntarily resolve violations of the Code and applicable Regulations (through closing agreements with the IRS). VCAP can be used when a remedial action (described under "Remediation") is unavailable or there is another violation of the Code or Regulations that cannot be fixed through self-help mechanisms. The incentive for an issuer to go to VCAP is that, generally, a settlement in VCAP will be more favorable to the issuer than if the violation were discovered in an examination. C-3 Packet Pg. 82 2.G.c VILLAGE OF BUFFALO GROVE - REVENUE COLLECTION POLICY 1. Purpose The purpose of this document is to serve as a guide to identify major revenue sources, the method of collection, and the process of improving compliance rates. The ability of Village to influence the success of collection is discussed with each category. 2. Scope The scope of this document will be to explore all defined and ordinary revenue streams of the Village. Revenues will be identified by category, which will correspond directly to the budget document. Within each category a discussion of each type or similar type revenue will be addressed. This document will not discuss each revenue line item in the budget, nor will it go in depth about miscellaneous one time or non -recurring revenue. 3. Overview Listed below is an overview of each revenue category that includes a short synopsis of the system of collection of major revenues and the influence the Village has on the collection of the revenue. It also includes a collection plan to improve collection of the revenue. 4. Revenue Sources 4.1 Real Estate Taxes Real estate property tax revenues are one of the most stable as collections typically exceed ninety-nine percent of the amount levied each year. Once the counties are directed to extend the levy, the Village has no ability to either control the timing of the tax bill mailings or the collection of the amount due. The counties control the revenue distribution dates to the Village. The counties do add late fees to late payments. In the event the property tax is not collected from a parcel the property will be sold at a judicial sale to recoup the amount owed. The Village does have an option to allow each county to overextend the levy to offset loss in collections. Lake County allows for an over -extension of two percent on the debt service levies. Cook County allows for an overextension of three percent on corporate purpose and pension levies and five percent on debt service levies. Historically, with strong rates of collection, the Village opts out of the over -extension option through resolution. 4.2 Utility Billing Enterprise The Village directly bills all water utility customers for the amount of water consumed and for a storm water management fee. The storm water fee is charged as a flat amount Page 1 Packet Pg. 83 2.G.c to residential properties and based upon square footage for commercial/industrial properties. In order to create efficiencies in billing, the Village also bills all Lake County sanitary sewer fees to Lake County properties. Over ninety-three percent of the water billing revenue due is paid on time. The entire Village is billed over a two month period. Commercial, industrial and multifamily properties are billing monthly. Lake County single family households are billed on odd months and Cook County single family households are billed on even months. The Village uses a combination of penalties including late fees and service interruption fees to reduce the number of delinquent service accounts. Late fees are assessed to service accounts that fail to pay the amount due by the due date. Water utility customers have approximately twenty-one days to pay the Village. The late fee is charged at a rate of 1.5 percent per month on the balance due. For those accounts that fall into delinquency past sixty days, the account is subject to be shut off. A warning notice is mailed to the service address with the date of the impending service interruption. Once the water is turned off, the customer must pay a service interruption charge to reinstate service. At any point in the billing and collection process, up to water being shut off, a resident can enter into a payment plan for past due balances. Upon a successful completion of the terms of the plan, the customer will avoid losing water service. A utility customer is limited to one payment plan arrangement per year. All customers are required to pay the entire water bill balance, current and outstanding, before a real estate transfer tax stamp is issued. 4.3 State Taxes The State is responsible for collecting and remitted base sales taxes (1%), home rule sales tax (1%), income and use tax (per capita), telecommunications tax (6%) and motor fuel tax (per capita). Enforcement of revenue collection is handled by the Illinois Department of Revenue (IDOR). Payments are made to the village on a monthly basis. Staff monitors the IDOR website to ensure timely remittances from the State of Illinois. 4.4 Locally Collected Taxes/Fees The Village collects certain tax revenues, defined by state or local ordinance, directly from the taxpayer. These types of taxes include natural gas ($.05/therm), electricity (sliding usage scale — maximum by statute), and cable franchise (5%). The finance department currently monitors these taxes on a monthly basis for the utility taxes and bi-monthly for the cable franchise fees. Page 2 Packet Pg. 84 2.G.c Upon a new property being established in the Village, that address is forwarded to the utility companies including, ComEd, NiCOR or Northshore Gas, Comcast and/or AT&T to establish tax collections. Staff is provided with an annual list of accounts by the utility companies to cross reference with the Village's GIS data. 4.5 Village Imposed Taxes The Village imposes taxes related to locally generated revenue from specific businesses. These taxes are defined by ordinance. These taxes include prepared food and beverage tax(1%) and hotel/motel tax (5%). Staff reviews the State of Illinois tax filings (ST-1) to compare to the amount paid to the Village. The Village requires state tax documentation to be remitted with the payment of these taxes for auditing purposes. The Village reserves the right to audit a businesses' tax records if staff determines that the business may either be underreporting taxable income or not submitting taxes on a timely basis. Real estate transfer taxes ($3/$1,000 sales consideration) are collected when homes are sold. The real estate transfer tax stamp will not be issued unless all obligations owed the Village are satisfied. 4.6 Licensing Fees Business, tobacco, liquor, vending machine, chauffer, alarm, and pet licenses are minor revenue sources and renew annually. The major licensing efforts are for business licenses that are due January 15t and liquor licenses due May 15t when the renewal period ends the Community Development will send the inspector out to ensure those businesses that did not renew, or the new businesses that did not obtain the proper licenses are no longer conducting business. Businesses found to be without the appropriate licensing will be closed until the license fee and all associated fines for operating without a license are paid. Gaining compliance for pet licensing is a perennial challenge. For animal licensing, the Village will attempt to work with the counties to obtain rabies certificate data. Those residences with a pet that received a rabies inoculation, but did not purchase an animal tag, will receive a notice about the Village ordinance requiring a tag. 4.7 Community Development Revenue and Fees Building development, engineering, contractor registration, plan review, filing, inspection, and permits fees are easy to collect based upon the conditional nature of the Page 3 Packet Pg. 85 2.G.c fee. Without the payment of the fee work cannot proceed. The Community Development Department performs random inspections of neighborhoods to ensure all work is being completed under permit and to the specifications of adopted building codes. To improve compliance, the Village doubles the cost of permit fees when work is completed without a permit. 4.8 Fines and Administrative Fees Fines and administrative fees are an important revenue into the Village of Buffalo Grove. Certain line items like accident reports, impounding fees, DUI assessments, subpoena fees, and bail fees have a high rate of collection because the user has a direct need as a result of paying those fees. Other items Village ordinance fines, false alarm fees, and paramedic services are more volatile. Paramedic Service fees are collected less than billed due to insurance reductions and in some cases the timeliness is stretched out over a long period of time due to the fact that users do not pay and these fees are ultimately collected through a collection agency or written off. Village ordinance fines are more difficult to collect. There is an escalating penalty based on the length a ticket remains unpaid. There are also two programs in place to recapture unpaid fines. One was mentioned previously, a resident cannot sell a home until all financial obligations are met The second program is the Village's participation in the Illinois Debt Recovery Program. This program collects any debt due the Village through a garnishment from the debtors pay check or tax refund. This will be an additional part of the regular collection process for the Village of Buffalo Grove. After the debt has been outstanding for seven years it is no longer eligible for the Illinois debt recovery program it will be sent to a collection agency to be recouped. The Village also collects a portion of tickets that go to Cook and Lake County. The Village adopted an Administrative Adjudication Program. Local ordinance violations are sent to administrative adjudication to be heard. Upon the disposition of the hearing, the adjudicate must pay the fine prior to leaving Village Hall. 4.9 Golf Revenues The Village owns and operates two 18 hole golf courses. Fees are charges to play daily golf, use the driving range, to obtain a membership, and purchase merchandise. Collection rates are not an issue as a service or product is not received without payment. Both golf courses are home to restaurant facilities that are required to pay rent for use of the Village owned facilities. Both tenants currently pay 5 percent of the net earnings from their restaurant operations back to the village. The funds are due by the 151" of Page 4 Packet Pg. 86 2.G.c the concurring month. The rent payment is to be accompanied by the state of Illinois sales tax submission document to ensure the appropriate amount is paid to the Village as an internal audit of the process. Within the lease agreement is the option for Village staff to inspect financial records. 4.10 Investment Income The Village has implemented a strategy of purchasing A+ or higher municipal step bonds and other securities backed by FDIC, insurance, or the full faith in credit of the United States Government. The terms will be staggered to take advantage of better interest rates on longer term investments, while concurrently investing in short term ventures that yield a competitive term and make funds available as the Village needs them based on the cash flow analysis completed by the finance department. The collection of this revenue is highly reliable and therefore there is no plan to improve collections. The Village will look for opportunities to increase revenue by continuous reviewing collection patterns of revenue and examine methods to increase the compliance rates. The policy will be reviewed annually and amended with new sources of revenue and/or changes in the strategies to collect the revenue. Page 5 Packet Pg. 87 2.G.d VILLAGE OF BUFFALO GROVE INVESTMENT POLICY I. Policy: The Village of Buffalo Grove, as a public agency, has an inherent fiduciary responsibility to properly account for and manage public funds. Public funds are to be considered current operating funds, special funds, debt service and other funds of any kind or character belonging to or in the custody of any public agency (Chapter 30, paragraph 235/1 through 235/7, Public Funds Investment Act, Illinois Complied Statutes II. Scope: This investment policy applies to all financial assets of the Village of Buffalo Grove except for the Police and Firefighters Pension Funds which are subject to those individual fund boards. 1. Pooling of Funds Except for cash in certain restricted and special funds, the Village of Buffalo Grove will consolidate and reserve balances from all funds to maximize investment earnings and to increase efficiencies with regard to investment pricing, safekeeping and administration. Investment income will be allocated to the various funds based on their respective participation and in accordance with generally accepted accounting principles. III. General Objectives: The primary objectives, in priority order, of investment activities shall be safety, liquidity, and yield: 1. Safety Safety of principal is the foremost objective of the investment program. Investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. The objective will be to mitigate credit risk and interest rate risk (a). Credit Risk The Village of Buffalo Grove will minimize credit risk, which is the risk of loss due to the failure of the security issuer or backer, by: • Limiting investment to the types of securities listed in Section VII of this Investment Policy. • Pre -qualifying the financial institutions, broker/dealers, intermediaries, and adviser with which the Village of Buffalo Grove will do business in accordance with Section V. • Diversifying the investment portfolio so that the impact of potential losses from any one type of security or from any one individual issuer will be minimized. (b). Interest Rate Risk The Village of Buffalo Grove will minimize interest rate risk, which is the risk that the marker values of securities in the portfolio will fall due to changes in market interest rates, by: • Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity • Investing operating funds primarily in shorter -term securities, money market mutual funds, or similar investment pools and limiting the average maturity of the portfolio in accordance with this policy (see section Vill). Packet Pg. 88 2.G.d 2. Liquidity The investment portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. This is accomplished by structuring the portfolio so that securities mature concurrent with cash needs to meet anticipated demands (static liquidity). Furthermore, since all possible cash demands cannot be anticipated, the portfolio should consist largely of securities with active secondary or resale markets (dynamic liquidity). Alternatively, a portion of the portfolio may be placed in money market mutual funds or local government investment pools which offer same day liquidity for short-term funds. 3. Yield The investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the investment risk constraints and liquidity needs. Return on investment is of secondary importance compared to the safety and liquidity objectives described above. The core of investments is limited to 2 relatively low risk securities in anticipation of earning a fair return relative to the risk being a° assumed. Securities shall generally be held until maturity with the following exceptions: • A security with declining credit may be sold early to minimize loss of principal. U • A security swap would improve the quality, yield, or target duration in the portfolio. • Liquidity needs of the portfolio require that the security be sold. • LL a� as IV. Standards of Care: I.Prudence c� The standard of prudence to be used by investment officials shall be the "prudent person" CL standard and shall be applied in the context of managing the overall portfolio. Investment officers acting in accordance with written procedures and this investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk or LO market price changes, provided deviations from expectations are reported in a timely fashion and the liquidity and the sale of securities are carried out in accordance with the terms of this >% policy. 0 2. Ethics and Conflicts of Interest a m Officers and employees involved in the investment process shall refrain from personal business E activity that could conflict with the proper execution and management of the investment program, or that could impair their ability to make impartial decisions. Employees and 'c investment officials shall disclose any material interests in financial institutions with which they — conduct business. They shall further disclose any personal financial/investment positions that could be related to the performance of the investment portfolio. Employees and officers shall refrain from undertaking personal investment transactions with the same individual with whom E business is conducted on behalf of the Village of Buffalo Grove. U 3. Delegation of Authority a Authority to mange the Village of Buffalo Grove's investment program is derived from the following: The establishment of investmentpolicies is the responsibility of the Village Board. Management and administrative responsibility for the investment program is hereby delegated to the Finance Director who, under the direction of the Village Manager, shall establish written procedures for the operation of the investment program consistent with this investment policy. Procedures should include references to: safekeeping, delivery vs. payment, investment accounting, repurchase agreements, wire transfer agreements, collateral/depository agreements and banking service contracts. Such procedures shall include explicit delegation of authority to Packet Pg. 89 2.G.d persons responsible for investment transactions. No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the Finance Director. The Finance Director shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials. The Finance Director may from time to time amend the written procedures in a manner not inconsistent with this policy or state statutes. The responsibility for investment activities of the Police and Firefighter Pension Funds rest with the trustees of the respective fund boards. V. Authorized Financial Institutions, Depositories and Broker/Dealers: The Finance Director will maintain a list of financial institutions authorized to provide investment services. In addition, a list will be maintained of approved security broker/dealers selected by credit worthiness. These may include "primary" dealers or regional dealers that qualify under Securities and Exchange Commission (SEC) Rule 150-1 (uniform net capital rule). No public deposit shall be made except at a qualified public depository as established by state statutes. All financial institutions and broker/dealers who desire to become qualified become qualified bidders for investment transactions must supply the Finance Director with the following: • Audited financial statements demonstrating compliance with state and federal capacity adequacy guidelines • Proof of National Association of Security Dealers (NASD) certification (not applicable to Certificate of Deposit counterparties) • Proof of state registration • Completed broker/dealer questionnaire • Certification of having read the Village's Investment Policy VI. Safekeeping and Custody: All trades of marketable securities will be executed by delivery vs. payment (DVP) to ensure that securities are deposited in an eligible financial institution prior to the release of funds. Securities will be held by an independent third -party custodian selected by the Village as evidenced by safekeeping receipts in the Village's name. The safekeeping institution shall annually provide a copy of their most recent report on internal controls (Statement of Auditing Standard No. 70, or SAS 70). 1. Internal Controls The Finance Director is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the Village of Buffalo Grove are protected from loss, theft or misuse. Details of the internal controls system shall be documented in an investment procedures manual and shall be reviewed and updated annually. The internal control structure shall be designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived and (2) the valuation of costs and benefits requires estimates and judgments by management. The internal controls structure shall address the following points: • Control of collusion • Separation of transaction authority from accounting and recordkeeping • Custodial safekeeping • Avoidance of physical delivery securities • Clear delegation of authority to subordinate staff members • Written confirmation of transactions for investments and wire transfers • Dual authorizations of wire transfers • Development of a wire transfer agreement with the lead bank and third -party custodian Packet Pg. 90 2.G.d Accordingly, the Finance Director shall establish a process for annual independent review by an external auditor to assure compliance with policies and procedures. VII. Suitable and Authorized Investments: The Village may invest in any type of the security allowed for in Illinois Compile Statutes (30 ILCS 235/2) regarding the investment of public funds. Approved investments include: • Bonds, notes, certificates of indebtedness, treasury bill, or any other securities now or hereafter issued, which are guaranteed by the full faith and credit of the United States of American as to principal and interest; • Bonds, notes, debentures or other similar obligations of the United States of America or its agencies; • Interest -bearing savings accounts, interest -bearing certificates of deposit or interest - bearing time deposits or any other investments constituting direct obligations of any bank defined by the Illinois Banking Act; is insured by the Federal Deposit Insurance as and Corporation; 2 • Short-term obligations of corporations organized in the United States with assets a° exceeding $500,000,000 if (i) such obligations are rated at the time of purchase at one of the three highest classifications established by at least two standard rating services and which mature not later than 180 days for the date of (ii) such do not purchase, purchases exceed 10% of the corporation's outstanding obligations and (iii) no more than 25% of the Village's funds may be investing in short-term obligations of corporations; • Illinois Public Treasurer's Investment Pool (Illinois Funds), and the Illinois Metropolitan a, Investment Fund (IMET) • Short-term discount obligations of the Federal National Mortgage Association (FNMA) or 1 j shares of other forms of securities or other allowable investments legally issued by savings and loan associations incorporated under the laws of this state or any other state or under the laws of the United States. Investments may be made only in those savings and loan associations of which the shares or investment certificates are insured by the Federal Deposit Insurance Corporation (FDIC). N • Investment options suitable under ILCS including Fixed Rate General Obligation Municipal LO Bonds whose credit quality is restrict to "AA" or better. 1. Collateralization: 2 It is the policy of the Village of Buffalo Grove and in accordance with the GFOA's Recommended 0 a Practices on the Collateralization of Public Deposits (attachment #2), the Village requires that a funds on deposit in excess of FDIC limits be secured with some form of collateral, including E surety bonds or letters of credit. The Village will accept any of the following assists as collateral: • Government Securities c • Obligations of Federal Agencies • Obligations of Federal Instrumentalities • Fixed Rate General Obligation Municipal Bonds rated "AA" or better s • Obligations of the State of Illinois (The Village reserves the right to accept/reject any form of the above named securities.) a The amount of collateral provided will not be less than 103% of the fair market value of the net amount of public funds secured. The ratio of fair market value of collateral to the amount of funds secured will be reviewed monthly, and additional collateral will be required when the ratio declines below the level required and collateral will be released if the fair market value exceeds the required level. Pledged collateral will be held in safekeeping by an independent third party depository designated by the Village of Buffalo Grove and evidenced by a safekeeping agreement. Collateral agreements will preclude the release of the pledged assets without an authorized signature from the Village of Buffalo Grove. The Village realizes that there is a cost factor involved with collateralization and the Village will pay any reasonable and customary fees related to collateralization. Packet Pg. 91 2.G.d VIII. Investment Parameters: 1. Diversification In order to reduce the risk of default, the investment portfolio of the Village of Buffalo Grove shall be diversified by: • Limiting investments to avoid over -concentration in securities from a specific issuer or business sector (U.S. Treasury and Agency securities), - Monies deposited at a financial institution shall not exceed 75% of the capital stock and surplus of that institution. - Commercial paper shall not exceed 33% of the Village's investment portfolio. - Brokered certificates of deposit shall not exceed 25%of the Village's investment portfolio. • Investing in securities with varying maturities, and • Continuously investing a portion of the portfolio in readily available funds such as local government investment pools (LGIPs), money market funds or overnight repurchase agreements to ensure that appropriate liquidity is maintained in orderto meet ongoing obligations. 2. Maximum Maturities To the extent possible, the Village of Buffalo Grove will attempt to match its investments with anticipated cash flow requirements. Unless matched to a specific cash flow, the Village will not directly invest in securities maturing more than three years from the date of purchase. Reserve funds and other funds with longer -term investment horizons may be invested in securities exceeding three year if the maturities of such investments are made to coincide as nearly as practicable with the expected use of funds. Because of inherent difficulties in accurately forecasting cash flow requirements, a portion of the portfolio should be continuously invested in readily available funds such as LGIPs, money market funds, or overnight repurchase agreements to ensure that appropriate liquidity is maintained to meet ongoing obligations. IX. Reporting: The Finance Director shall prepare as investment report at least quarterly, including a management summary that provides an analysis of the status of the current investment portfolio. This management summary will be prepared in a manner which will allow the Village to ascertain whether investment activities during the reporting period have conformed to the investment policy. This report should be provided to the Village Manager and Village Board. The report will include the following: • Listing of individual securities held, by fund, at the end of the reporting period. • Average weighted yield to maturity of portfolio. • Listing of investments by maturity date. • Percentage of total portfolio which each type of investment represents. 1. Performance Standards The investment portfolio will be managed in accordance with the parameters specified within this policy. The portfolio should obtain a market average rate of return during a market/economic environment of stable interest rates. Portfolio performance should be compared to appropriate benchmarks on a regular basis. The benchmarks shall be reflective of the actual securities being purchased and risks undertaken, and the benchmark shall have similar weighted average as the portfolio. Packet Pg. 92 2.G.d 2. Market Yield The Village's investment strategy is passive. Given this strategy, the basis used by the Finance Director to determine whether market yield are being achieved shall be the six-month U.S. Treasury Bill. 3. Marking to Market The market value of the portfolio shall be calculated at least quarterly and a statement of the market value of the portfolio shall be issued at least quarterly. This will ensure that review of the investment portfolio, in terms of value and price volatility, has been performed consistent with the GFOA recommended Practices on "Mark -to -Market Practices for State and Local Government Investment Portfolios and Investment Pools" (attachment #3). In defining market value, considerations should be given to the GASB Statement 31 pronouncement. X. Investment Policy Adoption: The Village of Buffalo Grove's investment policy shall be adopted by resolution of the Village Board of Trustees. This policy shall be reviewed on an annual basis by the Finance Director and any modifications thereto must be approved by the Village Board of Trustees. XI. Glossary: AGENCIES: Informal name that refers to securities issued by the United States government and U.S. government sponsored instrumentalities. ASKED: The trading price proposed by the prospective seller of securities. Also called the offer or offered price. BANKERS' ACCEPTANCE (BA): A short-term financial instrument that is the unconditional obligation of the accepting bank. BASIS POINT (BP): A unit of measurement for interest rates or yields that are expressed in percentages. (One hundred basis points equal 1 percent.) BID: The trading price acceptable to a prospective buyer of securities. BOND EQUIVALENT YIELD (BEY): An annual yield, expressed as a percentage, describing the return provided to bond holders. The BEY is a way to compare yields available from discount securities such as Treasury bills and BAs with yields available from coupon securities. BROKER: A party who brings buyers and sellers together. Brokers do not take ownership of the property being traded. They are compensated by commissions. They are not the same as dealers; however, the same individuals and firms that act as brokers in some transactions may act as dealers in other transactions. BROKERED AND NEGOTIABLE CERTIFICATES OF DEPOSIT: Short-term (2 to 52 weeks) large denomination ($100,000 minimum). Certificate of Deposit that is issued at a discount on its par value, or at a fixed interest rate payable at maturity and are freely traded in secondary markets. Packet Pg. 93 2.G.d CERTIFICATE OF DEPOSIT (CD): A deposit of funds, in a bank or savings and loan association, for a specific term that earns interest at a specified rate or rate formula. CDs may be secured or unsecured, may be in negotiable or nonnegotiable form and may be issued in either physical or book entry form. COLLATERAL: Securities, evidence of deposit or other property which a borrower pledges to secure repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public monies. COMMERCIAL PAPER (CP): Unsecured, short-term promissory notes issued by corporations for specific amounts and with specific maturity dates. COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR): The official annual report for the Village of Glenview. It includes five combined statements and basic financial statements for each individual fund and account group prepared in conformity with GAAP. It also includes supporting schedules necessary to demonstrate compliance with finance -related legal and contractual provisions, extensive introductory material, and a detailed Statistical Section. COUPON: (a) The annual rate of interest that a bond's issuer promises to pay the bondholder on the bond's face value. (b) A certificate attached to a bond evidencing interest due on a payment date. DEALER: A firm or individual who buys and sells for their own account. Dealers have ownership between a purchase from one party and a sale to another party. Dealers are compensated by the spread between the price they pay and the price they receive. DEBENTURE: A bond secured only by the general credit of the issuer. DELIVERY VERSUS PAYMENT (DVP): The simultaneous exchange of securities and cash. The safest method of settling either the purchase or sale of a security. In a DVP settlement, the funds are wired from the buyer's account and the security is delivered from the seller's account in simultaneous independent wires. DISCOUNT: The amount by which the price for a security is less than its par. DISCOUNT SECURITIES: Securities that do not pay periodic interest. Investors earn the difference between the discount issue price and the full face value paid at maturity. Treasury bills, bankers' acceptances and zero coupon bonds are discount securities. DIVERSIFICATION: Dividing investment funds among a variety of securities offering independent returns. FEDERAL CREDIT AGENCIES: Agencies of the Federal Government set up to supply credit to various classes of institutions and individuals, e.g., S & L's, small business firms, students, farmers, farm Packet Pg. 94 2.G.d cooperatives, and exporters. FEDERAL DEPOSIT OF INSURANCE CORPORATION (FDIC): A federal agency that insures bank deposits, currently up to $100,000 per deposit. FEDERAL FUNDS RATE: The rate for which overnight federal funds are traded. FEDERAL HOME LOAN BANKS (FHLB): The institutions that regulate and lend to savings and loan associations. The Federal Home Loan Banks play a role analogous to that played by the Federal Reserve Banks vis-a-vis member commercial banks. FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA or FANNIE MAE): FNMA is a federal corporation working under the auspices of the Department of Housing & Urban Development, HUD. It is the largest single provider of residential mortgage funds in the United States. Fannie Mae, as the corporation is called, is a private stockholder -owned corporation. The corporation's purchases include a variety of adjustable mortgages and second loans in addition to fixed-rate mortgages. FNMA assumes and guarantees that all security holders will receive timely payment of principal and interest. FEDERAL OPEN MARKET COMMITTEE (FOMC): Consists of seven members of the Federal Reserve Board and five of the twelve Federal Reserve Bank Presidents. The President of the New York Federal Reserve Bank is a permanent member while the other Presidents serve on a rotation basis. The Committee periodically meets to set Federal Reserve guidelines regarding purchases and sales of Government Securities in the open market as a means of influencing the volume of bank credit and money. FEDERAL RESERVE SYSTEM: The central bank of the United States created by Congress and consisting of a seven member Board of Governors in Washington, D.C., 12 regional banks and about 5,700 commercial banks that are members of the system. GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA OR GINNIE MAE): GNMA, like FNMA, was chartered under the Federal National Mortgage Association Act of 1938. Securities guaranteed by GNMA and issued by mortgage bankers, commercial banks, savings and loan associations and other institutions. Security holder is protected by full faith and credit of the U.S. Government. Ginnie Mae securities are backed by FHA, VA or FMHM mortgages. The term passthroughs is often used to describe Ginnie Maes. LIQUIDITY: A liquid asset is one that can be readily converted to cash through sale in an active secondary market. 11 Packet Pg. 95 2.G.d LOCAL GOVERNMENT INVESTMENT POOL (LGIP): Pools through which governmental entities may invest short term cash. Examples of LGIP's are the Illinois Funds, administered by the Illinois State Treasurer and the Illinois Metropolitan Investment Fund. MARKET VALUE: The price at which a security could presumably be purchased or sold. MARK TO MARKET: The process of restating the carrying value of an asset or liability to equal its current market value. MASTER REPURCHASE AGREEMENT: A written contract covering all future transactions between parties. The agreement establishes each party's right in the transaction. Repurchase Agreements (REPO's) are a form of short-term borrowing for dealers in government securities. The dealer sells the government securities to investors, usually on an overnight basis, and then buys them backthe following day. For the party selling the security (and agreeing to repurchase it in the future), it is a repo; for the party on the other end of the transaction (buying the security and agreeing to sell in the future), it is a reverse repurchase agreement. A master agreement will often specify, among other things, the right to liquidate the underlying securities in the event of default. MATURITY: The date upon which the principal or stated value of an investment becomes due and payable. MONEY MARKET: The aggregation of buyers and sellers actively trading money market instruments. OFFER OF OFFERED PRICE: The trading price proposed by the prospective seller of securities (also called the asked or asking price). OPEN MARKET OPERATIONS: Purchases and sales of government and certain other securities in the open market by the New York Federal Reserve Bank as directed by the FOMC in order to influence the volume of money and credit in the economy. Purchases inject reserves into the bank system and stimulate growth of money and credit; sales have the opposite effect. Open market operations are the Federal Reserve's most important and most flexible monetary policy tool. PORTFOLIO: Collection of financial assets belonging to a single owner. PREMIUM: The amount by which the price for a security is greater than its par amount. PRIMARY DEALER: A group of government securities dealers that submit daily reports of market activity and positions and monthly financial statements to the Federal Reserve Bank of New York and are subject to its informal oversight. Primary dealers include Securities and Exchange Packet Pg. 96 2.G.d Commission (SEC) -registered securities broker -dealers, banks, and a few unrelated firms. PRUDENT PERSON RULE: An investment standard. In some states the law requires that a fiduciary, such as a trustee, may invest money only in a list of securities selected by the state - the so-called legal list. In other states the trustee may invest in a security if it is one which would be bought by a prudent person of discretion and intelligence who is seeking a reasonable income and preservation of capital. QUALIFIED PUBLIC DEPOSITORIES: A financial institution which does not claim exemption from the payment of any sales or compensating use or ad valorem taxes under the laws of this state, which has segregated for the benefit of the commission eligible collateral having a value of not less than its maximum liability and which has been approved by the Public Deposit Protection Commission to hold public deposits. RATE OF RETURN: The yield obtainable on a security based on its purchase price or its current market price. This may be the amortized yield to maturity on a bond or the current income return. REINVESTMENT RISK: The risk that all or part of the principal may be received when interest rates are lower than when the security was originally purchased, so that the principal must be reinvested at a lower rate than the rate originally received by the investor. REPURCHASE AGREEMENT (RP OR REPO): See Master Repurchase Agreement. SAFEKEEPING: A service rendered by banks whereby securities and valuables of all types and descriptions are held by the bank. SEC RULE 150-1: See uniform net capital rule. SECONDARY MARKET: Markets for the purchase and sale of any previously issued financial instrument. SECURITIES & EXCHANGE COMMISSION (SEC): The federal agency with responsibility for regulating financial exchanges for cash instruments. SPREAD OVER TREASURIES: The difference between the bond equivalent yield for any investment and the bond equivalent yield for a Treasury investment with the same maturity. TREASURY BILLS (T-BILLS): Short-term obligations issued by the U.S. Treasury for maturities of one year or less. They do not pay interest but are issued on a discount basis instead. to Packet Pg. 97 2.G.d TREASURY BONDS (T-BONDS): Long-term obligations issued by the U.S. Treasury with initial maturities of more than ten years. TREASURY NOTES (T-NOTES): Medium -term obligations issued by the U.S. Treasury with initial maturities of from one to ten years. UNIFORM NET CAPITAL RULE: Securities and Exchange Commission requirement that member firms as well as non-member broker dealers in securities maintain a maximum ratio of indebtedness to liquid capital of 15 to 1; also called net capital rule and net capital ratio. Indebtedness covers all money owed to a firm including margin loans and commitments to purchase securities, one reason new public issues are spread among members of underwriting syndicate. Liquid capital includes cash and assets easily converted to cash. YIELD: Loosely refers to the annual return on an investment expressed as a percentage on an annual basis. For interest -bearing securities, the yield is a function of the rate, the purchase price, the income that can be earned from the reinvestment of income received priorto maturity, call or sale. Different formulas or methods are used to calculate yields. Dated November 25, 1998 Amended October 6, 2008 Amended April 18, 2016 11 Packet Pg. 98 2.H Information Item : Debt Issuance Update ........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ Recommendation of Action Staff recommends discussion. Based upon direction received at the December 7th Committee of the Whole Meeting, staff is working with Speer Financial and Chapman & Cutler to issue $6.3 million in general obligation bonds to fund street and infrastructure improvements. Staff will be presenting the auction results and bond ordinance to the board during the April 18th Village Board Meeting. The anticipated closing will be May 2nd. In the interim, staff will be meeting with both bond rating houses and completing the Official Statement. Trustee Liaison Johnson Monday, April 4, 2016 Staff Contact Scott Anderson, Finance Updated: 3/29/2016 10:52 AM Page 1 Packet Pg. 99