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10 SECTION 2 [Sections 2 through 5 must be completed for each redevelopment project area listed in Section 1.] FY 2016 Name of Redevelopment Project Area: Lake Zurich Downtown Redevelopment Primary Use of Redevelopment Project Area*: Mixed If "Combination/Mixed" List Component Types: Retail/Residential Under which section of the Illinois Municipal Code was Redevelopment Project Area designated? (check one): Tax Increment Allocation Redevelopment Act x Industrial Jobs Recovery Law No Were there any amendments to the redevelopment plan, the redevelopment project area, or the State Sales Tax Boundary? [65 ILCS 5/ (d) (1) and 5/ (d) (1)] If yes, please enclose the amendment labeled Attachment A X Certification of the Chief Executive Officer of the municipality that the municipality has complied with all of the requirements of the Act during the preceding fiscal year. [65 ILCS 5/ (d) (3) and 5/ (d) (3)] Please enclose the CEO Certification labeled Attachment B Opinion of legal counsel that municipality is in compliance with the Act. [65 ILCS 5/ (d) (4) and 5/ (d) (4)] Please enclose the Legal Counsel Opinion labeled Attachment C Were there any activities undertaken in furtherance of the objectives of the redevelopment plan, including any project implemented in the preceding fiscal year and a description of the activities undertaken? [65 ILCS 5/ (d) (7) (A and B) and 5/ (d) (7) (A and B)] If yes, please enclose the Activities Statement labeled Attachment D Were any agreements entered into by the municipality with regard to the disposition or redevelopment of any property within the redevelopment project area or the area within the State Sales Tax Boundary? [65 ILCS 5/ (d) (7) (C) and 5/ (d) (7) (C)] If yes, please enclose the Agreement(s) labeled Attachment E X Is there additional information on the use of all funds received under this Division and steps taken by the municipality to achieve the objectives of the redevelopment plan? [65 ILCS 5/ (d) (7) (D) and 5/ (d) (7) (D)] If yes, please enclose the Additional Information labeled Attachment F X Did the municipality's TIF advisors or consultants enter into contracts with entities or persons that have received or are receiving payments financed by tax increment revenues produced by the same TIF? [65 ILCS 5/ (d) (7) (E) and 5/ (d) (7) (E)] If yes, please enclose the contract(s) or description of the contract(s) labeled Attachment G X Were there any reports or meeting minutes submitted to the municipality by the joint review board? [65 ILCS 5/ (d) (7) (F) and 5/ (d) (7) (F)] If yes, please enclose the Joint Review Board Report labeled Attachment H Were any obligations issued by municipality? [65 ILCS 5/ (d) (8) (A) and 5/ (d) (8) (A)] If yes, please enclose the Official Statement labeled Attachment I X Was analysis prepared by a financial advisor or underwriter setting forth the nature and term of obligation and projected debt service including required reserves and debt coverage? [65 ILCS 5/ (d) (8) (B) and 5/ (d) (8) (B)] If yes, please enclose the Analysis labeled Attachment J X Cumulatively, have deposits from any source equal or greater than $100,000 been made into the special tax allocation fund? 65 ILCS 5/ (d) (2) and 5/ (d) (2) If yes, please enclose Audited financial statements of the special tax allocation fund labeled Attachment K Cumulatively, have deposits of incremental taxes revenue equal to or greater than $100,000 been made into the special tax allocation fund? [65 ILCS 5/ (d) (9) and 5/ (d) (9)] If yes, please enclose a certified letter statement reviewing compliance with the Act labeled Attachment L A list of all intergovernmental agreements in effect to which the municipality is a part, and an accounting of any money transferred or received by the municipality during that fiscal year pursuant to those intergovernmental agreements. [65 ILCS 5/ (d) (10)] If yes, please enclose list only, not actual agreements labeled Attachment M X * Types include: Central Business District, Retail, Other Commercial, Industrial, Residential, and Combination/Mixed. Yes X X X X X X

11 SECTION (65 ILCS 5/ (d) (5) and 65 ILCS 5/ (d) (5)) Provide an analysis of the special tax allocation fund. FY 2016 TIF NAME: Lake Zurich Downtown Redevelopment Fund Balance at Beginning of Reporting Period $ (1,115,073) Revenue/Cash Receipts Deposited in Fund During Reporting FY: Reporting Year Cumulative* % of Total Property Tax Increment $ 1,181,485 $ 13,409,821 17% State Sales Tax Increment 0% Local Sales Tax Increment 0% State Utility Tax Increment 0% Local Utility Tax Increment 0% Interest $ 4,651 $ 555,158 1% Land/Building Sale Proceeds 0% Bond Proceeds $ 1,070,000 $ 67,656,758 87% Transfers from Municipal Sources 0% Private Sources 0% Other (identify source ; if multiple other sources, attach schedule) $ $ (3,504,710) 4% *must be completed where current or prior year(s) have reported funds Total Amount Deposited in Special Tax Allocation Fund During Reporting Period $ 2,256,136 Cumulative Total Revenues/Cash Receipts $ 78,117, % Total Expenditures/Cash Disbursements (Carried forward from Section 3.2) $ 2,599,266 Distribution of Surplus Total Expenditures/Disbursements $ 2,599,266 NET INCOME/CASH RECEIPTS OVER/(UNDER) CASH DISBURSEMENTS $ (343,130) FUND BALANCE, END OF REPORTING PERIOD* $ (1,458,203) * if there is a positive fund balance at the end of the reporting period, you must complete Section 3.3 SURPLUS*/(DEFICIT)(Carried forward from Section 3.3) $ (39,356,696)

12 SECTION 3.2 A- (65 ILCS 5/ (d) (5) and 65 ILCS 5/ (d) (5)) FY 2016 TIF NAME: Lake Zurich Downtown Redevelopment ITEMIZED LIST OF ALL EXPENDITURES FROM THE SPECIAL TAX ALLOCATION FUND (by category of permissible redevelopment cost, amounts expended during reporting period) FOR AMOUNTS >$10,000 SECTION 3.2 B MUST BE COMPLETED Category of Permissible Redevelopment Cost [65 ILCS 5/ (q) and 65 ILCS 5/ (o)] Amounts Reporting Fiscal Year 1. Costs of studies, administration and professional services Subsections (q)(1) and (o) (1) Legal 1,680 Other Professional Services - Accounting 1,093 Membership & Subscriptions Cost of marketing sites Subsections (q)(1.6) and (o)(1.6) $ 3,423 3.Property assembly: property acquisition, building demolition, site preparation and environmental site improvement costs. Subsections (q)(2), (o)(2) and (o)(3) $ - 4.Costs of rehabilitation, reconstruction, repair or remodeling of existing public or private buildings. Subsection (q)(3) and (o)(4) $ - 5. Costs of construction of public works and improvements. Subsection (q)(4) and (o)(5) $ - 6.Costs of removing contaminants required by environmental laws or rules (o)(6) - Industrial Jobs Recovery TIFs ONLY $ - $ -

13 SECTION 3.2 A PAGE 2 7. Cost of job training and retraining, including "welfare to work" programs Subsection (q)(5), (o)(7) and (o)(12) $ - 8.Financing costs related to obligations issued by the municipality. Subsection (q) (6) and (o)(8) Principal Fees 1,040,000 Interest Fees 1,077,730 Paying Agent Fees 5,691 Bond Issuance Costs 7, Approved taxing district's capital costs. Subsection (q)(7) and (o)(9) $ 2,130, Cost of Reimbursing school districts for their increased costs caused by TIF assisted housing projects. Subsection (q)(7.5) - Tax Increment Allocation Redevelopment TIFs ONLY Lake Zurich School District 464,992 $ Relocation costs. Subsection (q)(8) and (o)(10) $ 464, Payments in lieu of taxes as defined in Subsections (m) and (k). Subsection (q)(9) and (o)(11) $ Costs of job training, retraining advanced vocational or career education provided by other taxing bodies. Subsection (q)(10) and (o)(12) $ - $ -

14 SECTION 3.2 A PAGE Costs of reimbursing private developers for interest expenses incurred on approved redevelopment projects. Subsection (q)(11)(a-e) and (o)(13)(a-e) 15. Costs of construction of new housing units for low income and very low-income households. Subsection (q)(11)(f) - Tax Increment Allocation Redevelopment TIFs ONLY $ Cost of day care services and operational costs of day care centers. Subsection (q) (11.5) - Tax Increment Allocation Redevelopment TIFs ONLY $ - $ - TOTAL ITEMIZED EXPENDITURES $ 2,599,266

15 Section 3.2 B FY 2016 TIF NAME: Lake Zurich Downtown Redevelopment List all vendors, including other municipal funds, that were paid in excess of $10,000 during the current reporting year. There were no vendors, including other municipal funds, paid in excess of $10,000 during the current reporting period. Name Service Amount Lake Zurich School District #95 Impact Fee $ 464, Wells Fargo Bank Principal/Interest/Agent Fees $ 571, Bank of New York Mellon Principal/Interest/Agent Fees $ 1,552,295.55

16 SECTION (65 ILCS 5/ (d) (5) 65 ILCS (d) (5)) Breakdown of the Balance in the Special Tax Allocation Fund At the End of the Reporting Period FY 2016 TIF NAME: Lake Zurich Downtown Redevelopment FUND BALANCE, END OF REPORTING PERIOD $ (1,458,203) Amount of Original Issuance Amount Designated 1. Description of Debt Obligations TIF Alternate Revenue Bonds 2009A $ 13,901,225 $ 10,781,870 TIF Alternate Revenue Bonds 2011B $ 3,605,491 $ 43,135 TIF Alternate Revenue Bonds 2014A $ 7,453,458 $ 7,235,650 TIF Alternate Revenue Bonds 2015A $ 18,394,435 $ 18,127,838 Advance Due to General Fund $ 1,746,000 $ 1,710,000 Total Amount Designated for Obligations $ 45,100,609 $ 37,898, Description of Project Costs to be Paid Total Amount Designated for Project Costs $ TOTAL AMOUNT DESIGNATED $ 37,898,493 SURPLUS*/(DEFICIT) $ (39,356,696) * NOTE: If a surplus is calculated, the municipality may be required to repay the amount to overlapping taxing

17 SECTION 4 [65 ILCS 5/ (d) (6) and 65 ILCS 5/ (d) (6)] FY 2016 TIF NAME: Lake Zurich Downtown Redevelopment Provide a description of all property purchased by the municipality during the reporting fiscal year within the redevelopment project area. x No property was acquired by the Municipality Within the Redevelopment Project Area Property Acquired by the Municipality Within the Redevelopment Project Area Property (1): Street address: Approximate size or description of property: Purchase price: Seller of property: Property (2): Street address: Approximate size or description of property: Purchase price: Seller of property: Property (3): Street address: Approximate size or description of property: Purchase price: Seller of property: Property (4): Street address: Approximate size or description of property: Purchase price: Seller of property:

18 SECTION 5-65 ILCS 5/ (d) (7) (G) and 65 ILCS 5/ (d) (7) (G) PAGE 1 FY 2016 TIF NAME: Lake Zurich Downtown Redevelopment *Page 1 is to be included with TIF Report. Pages 2-3 are to be included ONLY if projects are listed. Box below must be filled in with either a check or number of projects, not both Check if NO projects were undertaken by the Municipality Within the Redevelopment Project Area: ENTER total number of projects undertaken by the Municipality Within the Redevelopment Project Area and list them in detail below*. TOTAL: 11/1/99 to Date Estimated Investment for Subsequent Fiscal Year 7 Total Estimated to Complete Project Private Investment Undertaken (See Instructions) $ 54,120,000 $ - $ - Public Investment Undertaken $ 18,459,493 $ - $ - Ratio of Private/Public Investment 2 41/44 0 Project 1: *IF PROJECTS ARE LISTED NUMBER MUST BE ENTERED ABOVE Promenade Private Investment Undertaken (See Instructions) $ - Public Investment Undertaken $ 997,054 Ratio of Private/Public Investment 0 0 Project 2: Streetscape Private Investment Undertaken (See Instructions) Public Investment Undertaken $ 790,487 Ratio of Private/Public Investment 0 0 Project 3: Property Acquisitions Private Investment Undertaken (See Instructions) Public Investment Undertaken $ 12,343,933 Ratio of Private/Public Investment 0 0 Project 4: Concorde Development Private Investment Undertaken (See Instructions) $ 54,000,000 Public Investment Undertaken $ 4,000,000 Ratio of Private/Public Investment 13 1/2 0 Project 5: 20 E. Main St Private Investment Undertaken (See Instructions) $ 120,000 Public Investment Undertaken $ 12,000 Ratio of Private/Public Investment 10 0 Project 6: Property Enhancements Private Investment Undertaken (See Instructions) Public Investment Undertaken $ 134,894 Ratio of Private/Public Investment 0 0

19 PAGE 2 Project 7: Building Demolitions Private Investment Undertaken (See Instructions) Public Investment Undertaken $ 181,125 Ratio of Private/Public Investment 0 0 Project 8: Private Investment Undertaken (See Instructions) Public Investment Undertaken Ratio of Private/Public Investment 0 0 Project 9: Private Investment Undertaken (See Instructions) Public Investment Undertaken Ratio of Private/Public Investment 0 0 Project 10: Private Investment Undertaken (See Instructions) Public Investment Undertaken Ratio of Private/Public Investment 0 0

20 Optional: Information in the following sections is not required by law, but would be helpful in evaluating the performance of TIF in Illinois. *even though optional MUST be included as part of complete TIF report SECTION 6 FY 2016 TIF NAME: Lake Zurich Downtown Redevlopment Provide the base EAV (at the time of designation) and the EAV for the year reported for the redevelopment project area Year redevelopment project area was designated Base EAV Reporting Fiscal Year EAV 2002 $ 12,606,191 $ 14,569,838 List all overlapping tax districts in the redevelopment project area. If overlapping taxing district received a surplus, list the surplus. x The overlapping taxing districts did not receive a surplus. Surplus Distributed from redevelopment Overlapping Taxing District project area to overlapping districts County of Lake $ Lake County Forest Preserve $ Ela Township $ Lake Zurich Community School District #95 $ College of Lake County #532 $ Ela Public Library $ Village of Lake Zurich $ $ $ $ $ $ $ $ $ SECTION 7 Provide information about job creation and retention Number of Jobs Retained Number of Jobs Created Description and Type (Temporary or Permanent) of Jobs Total Salaries Paid $ $ $ $ $ $ $ SECTION 8 Provide a general description of the redevelopment project area using only major boundaries: Optional Documents Legal description of redevelopment project area Map of District Enclosed

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22 ATTACHMENT C 20 N. Wacker Drive, Ste S. Ravinia Avenue, Ste 10 Chicago, Illinois Orland Park, Illinois T F T F DD sfuhler@ktjlaw.com sfuhler@ktjlaw.com To: Ray Keller Village Manager Village of Lake Zurich From: Klein, Thorpe & Jenkins Re: Village of Lake Zurich Downtown TIF No. 1 July 27, 2017 We have reviewed all information provided to our office by the Village staff and consultants regarding the TIF annual report for Lake Zurich TIF No. 1, said TIF established and designated March 18, It is my opinion that the Village of Lake Zurich has complied with the applicable requirements of the Illinois Tax Increment Redevelopment Allocation Act set forth thereunder for the fiscal year beginning May 1, 2015 and ending April 30, 2016, to the best of my knowledge and belief. Sincerely, Klein, Thorpe & Jenkins, Ltd. Scott F. Uhler _1

23 FINANCE DEPARTMENT 70 East Main Street Lake Zurich, Illinois (847) LakeZurich.org October 1, 2016 ATTACHMENT D Office of the Illinois Comptroller Local Government Division Suite W. Randolph Street Chicago, Illinois To Whom It May Concern: Statement of Activities Background The Village of Lake Zurich created the Tax Increment Financing (TIF) district on March 18, The TIF district is comprised of approximately a 70-acre area. It is designed to re-establish the downtown as a vibrant, mixed-use area, and strengthen the economic well-being and quality of life in the downtown by providing resources for redevelopment. Also, it provides resources for additional parking, streetscaping and landscaping to create a distinct area and to link its diverse land uses. In addition, the TIF facilitates the improvement and expansion of existing public facilities, such as parks and parking. The TIF district was originated with the following objectives: Maintain and support the distinct character of the downtown Promote a thriving commercial and residential environment Create a pedestrian-friendly environment Develop a public promenade along the waterfront Enhance accessibility to Breezewald Park Create a face of the Village along Route 22 Lake Zurich had a successful project implementation in the TIF district with the Grace- Dearborn property, an industrial land property that stood empty and uninhabited for many years. This property was reinvented and it is now an established residential community with 275 homes. The Village s downtown streetscape and lakefront promenade were renovated thanks to TIF funds. The Village created a variety of landscape and infrastructure improvements that make the lakefront the new focal point of the downtown.

24 2016 Activities As of the end of FY 2015, prior properties reported now fall under TIF #2 per the boundary change. Block A Block C Block G In August of FY 2016, Lakeland Asset management and Jade Development went before the Village Board for courtesy review of a development proposal of the land on the corner of Route 22 and South Old Rand Road, known as Block G. The proposed development consisted of a residential six-story building which would include 100 to 120 luxury apartments and underground parking, which would require TIF assistance. The Village Board motioned to move the project to Planning and Zoning Commission. However, the developers decided to not move forward with the project and the property continues to remain vacant. Future Activities Currently, there are no plans for TIF #1. The possibility of a few options may materialize during the fiscal year. The Village has not acquired any new property within the TIF during FY Financial The Village received approximately $1,186,136 in revenues for fiscal year 2016, a drop of -12% from last fiscal year. The majority of revenues, $1,181,485 was from real estate taxes. Expenditures totaled $2,599,266, a decrease of -17% from last fiscal year. Expenditures include $1,680 for legal services and $1,093 professional services for downtown redevelopment, $464,992 for school district reimbursements, as well as $2.13M for debt service due to a refunding bond series issued during the fiscal year. For fiscal year 2016, the total principal and interest for TIF debt was $2,130,851. Additionally, $1.07M was recorded as other financing use as bond proceeds were transferred to an escrow. Debt service accounts for 82% of total expenses and cash disbursements. There is currently $25.4M in outstanding principal for TIF related debt. Including scheduled interest, the total debt obligation for TIF debt is currently $36.2M. Annual payments will remain around the $1.3M to $2.2M per year mark until December of 2034, when the current debt will all be paid off. From the time of designation the frozen equalized assessed valuation (EAV) was $12,606,191. The 2014 EAV reported was $14,569,838, a decrease of about 3.5% from the 2013 EAV. The tax increment revenue has fluctuated the last few years due to the recession of All communities have been affected with revenue instability for the

25 last few years. The Village is optimistic that the restructuring of the TIF Districts will promote stable values in future years, as well as, provide focus for development activities for the TIF districts. The Village of Lake Zurich.

26 UNAPPROVED JOINT REVIEW BOARD for the VILLAGE OF LAKE ZURICH Downtown TIF #1 Redevelopment Project Area 70 East Main Street Friday, December 11, :30 pm 1. CALL TO ORDER by Atty. Kathy Orr at 1.30pm 2. ROLL CALL: Village of Lake Zurich Steve Husak. Lake County Craig Taylor Ela Township Lucy Prouty Community College District No. 532 David Hittermiller Ela Area Public Library Matt Womack Community School District No. 95 Dr. Mike Egan Also present: VOLZ Finance Dir. Jodie Hartman, VOLZ Accounting Supervisor Miriam Hernandez, VOLZ Mayor Tom Poynton, Asst. Village Manager Roy Witherow. 3. MOTION TO APPOINT PUBLIC MEMBER A motion was made by Steve Husak, seconded by Craig Taylor, to appoint Roger Poffenburger as the public member of TIF # 1 which was done by VOICE VOTE AYES: 6 NAYS: 0 ABSENT: 0 ABSTAIN: 0 MOTION CARRIED. Atty. Orr advised that that the result of the following motion would continue to the JRB TIF #2 meeting,. 4. MOTION TO APPOINT JRB CHAIRPERSON A motion was made by Craig Taylor, seconded by Steve Husak, to appoint Lucy Prouty as the JRB chairperson, which was done by VOICE VOTE AYES: 7 NAYS: 0 ABSENT: 0 ABSTAIN: 0 MOTION CARRIED. 5. PUBLIC COMMENTS: There were none. 6. APPROVAL OF MINUTES, DECEMBER 18, 2014 A motion was made by Craig Taylor, seconded by Matt Womack, to approve the minutes as presented, which was done by VOICE VOTE. AYES: 7 NAYS: 0 ABSENT: 0 ABSTAIN: 0 MOTION CARRIED.

27 7. REVIEW OF TIF #1 REPORT VOLZ Finance Dir. Jodie Hartman gave background information on the report and then Accounting Supervisor Miriam Hernandez gave the financial report of TIF #1. Staff answered the Board s questions. 8. JRB DELIBERATION AND RECOMMENDATION There was discussion about the Somerset development being taken out of the TIF districts, about the EAVs, marketing expenses and Block G which is along Rt. 22. Staff answered the questions. 9. ADJOURNMENT A motion was made by Steve Husak, seconded by Mike Egan, to adjourn the meeting, which was done by VOICE VOTE. AYES: 7 NAYS: 0 ABSENT: 0 ABSTAIN: 0 MOTION CARRIED. Meeting adjourned at 1.55pm Respectfully submitted by: Kathleen Johnson, Village Clerk, Village of Lake Zurich. Approved by: Lucy Prouty, Ela Township Date

28 VILLAGE OF LAKE ZURICH, ILLINOIS CONSOLIDATED BALANCE SHEET APRIL 30, 2016 ASSETS TIF SPECIAL TAX ALLOCATION TIF DEBT SERVICE TIF CAPITAL PROJECTS CONSOLIDATED TOTAL Cash and Investments $ 38,512 $ 212,648 $ 2,659 $ 253,819 Property Taxes Receivable 1,231, ,231,492 Accrued Interest Receivable Prepaid Expenses - 3,960 3,960 TOTAL ASSETS $ 1,270,004 $ 217,076 $ 2,659 $ 1,489,739 LIABILITIES & FUND BALANCES Accounts Payable $ 6,450 $ - $ - $ 6,450 Advance From Other Funds - 1,525, ,000 1,710,000 Deferred Property Taxes 1,231, ,231,492 TOTAL LIABILITIES & DEFERRED INFLOWS $ 1,237,942 $ 1,525,000 $ 185,000 $ 2,947,942 FUND BALANCES $ 32,062 $ (1,307,924) $ (182,341) $ (1,458,203) TOTAL LIABILITIES AND FUND BALANCES $ 1,270,004 $ 217,076 $ 2,659 $ 1,489,739

29 VILLAGE OF LAKE ZURICH, ILLINOIS CONSOLIDATED STATEMENT OF OPERATIONS APRIL 30, 2016 TIF SPECIAL TAX ALLOCATION TIF DEBT SERVICE TIF CAPITAL PROJECTS CONSOLIDATED TOTAL REVENUES Property Taxes $ 1,181,485 $ - $ - $ 1,181,485 Interest Income 1,839 2,812-4,651 TOTAL REVENUES $ 1,183,324 $ 2,812 $ - $ 1,186,136 EXPENDITURES Legal Services $ 1,680 $ - $ - $ 1,680 Other Professional Services 1, ,093 Memberships and Subscriptions School District 95 TIF Recovery Costs 464, ,992 Debt Service - Principal - 1,040,000-1,040,000 Debt Service - Interest - 1,077,730-1,077,730 Paying Agent Fees - 5,691-5,691 Bond Issuance Costs - 7,430-7,430 TOTAL EXPENDITURES $ 468,415 $ 2,130,851 $ - $ 2,599,266 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES $ 714,909 $ (2,128,039) $ - $ (1,413,130) OTHER FINANCING SOURCES (USES) Transfers (To) From $ (900,000) $ 1,970,000 - $ 1,070,000 TOTAL OTHER FINANCING SOURCES (USES) $ (900,000) $ 1,970,000 $ - $ 1,070,000 FUND BALANCES, MAY 1 $ 217,153 $ (1,149,885) $ (182,341) $ (1,115,073) FUND BALANCES, APRIL 30 $ 32,062 $ (1,307,924) $ (182,341) $ (1,458,203)

30 INDEPENDENT ACCOUNTANT S REPORT ON MANAGEMENT S ASSERTION OF COMPLIANCE The Honorable Mayor Members of the Board of Trustees Village of Lake Zurich, Illinois We have examined management s assertion, included in its representation letter dated October 20, 2016, that the Village of Lake Zurich, Illinois (the Village) complied with the provisions of subsection (q) of Section of the Illinois Tax Increment Redevelopment Allocation Act (Illinois Public Act ) during the year ended April 30, Management is responsible for the Village s assertion and for compliance with those requirements. Our responsibility is to express an opinion on management s assertion about the Village s compliance based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and, accordingly, included examining, on a test basis, evidence about the Village s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on the Village s compliance with statutory requirements. In our opinion, management s assertion that the Village of Lake Zurich complied with the aforementioned requirements for the year ended April 30, 2016 is fairly stated, in all material respects. This report is intended solely for the information and use of the Board of Trustees, management, the joint review board, the Illinois State Comptroller and the Illinois Department of Revenue and should not be used by anyone other that these specified parties. Naperville, Illinois October 20, 2016

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32 SECTION 2 [Sections 2 through 5 must be completed for each redevelopment project area listed in Section 1.] FY 2016 Name of Redevelopment Project Area: Downtown TIF #2 Primary Use of Redevelopment Project Area*: Mixed If "Combination/Mixed" List Component Types: Retail/Residential Under which section of the Illinois Municipal Code was Redevelopment Project Area designated? (check one): Tax Increment Allocation Redevelopment Act x Industrial Jobs Recovery Law Were there any amendments to the redevelopment plan, the redevelopment project area, or the State Sales Tax Boundary? [65 ILCS 5/ (d) (1) and 5/ (d) (1)] If yes, please enclose the amendment labeled Attachment A Certification of the Chief Executive Officer of the municipality that the municipality has complied with all of the requirements of the Act during the preceding fiscal year. [65 ILCS 5/ (d) (3) and 5/ (d) (3)] Please enclose the CEO Certification labeled Attachment B Opinion of legal counsel that municipality is in compliance with the Act. [65 ILCS 5/ (d) (4) and 5/ (d) (4)] Please enclose the Legal Counsel Opinion labeled Attachment C Were there any activities undertaken in furtherance of the objectives of the redevelopment plan, including any project implemented in the preceding fiscal year and a description of the activities undertaken? [65 ILCS 5/ (d) (7) (A and B) and 5/ (d) (7) (A and B)] If yes, please enclose the Activities Statement labeled Attachment D Were any agreements entered into by the municipality with regard to the disposition or redevelopment of any property within the redevelopment project area or the area within the State Sales Tax Boundary? [65 ILCS 5/ (d) (7) (C) and 5/ (d) (7) (C)] If yes, please enclose the Agreement(s) labeled Attachment E Is there additional information on the use of all funds received under this Division and steps taken by the municipality to achieve the objectives of the redevelopment plan? [65 ILCS 5/ (d) (7) (D) and 5/ (d) (7) (D)] If yes, please enclose the Additional Information labeled Attachment F Did the municipality's TIF advisors or consultants enter into contracts with entities or persons that have received or are receiving payments financed by tax increment revenues produced by the same TIF? [65 ILCS 5/ (d) (7) (E) and 5/ (d) (7) (E)] If yes, please enclose the contract(s) or description of the contract(s) labeled Attachment G Were there any reports or meeting minutes submitted to the municipality by the joint review board? [65 ILCS 5/ (d) (7) (F) and 5/ (d) (7) (F)] If yes, please enclose the Joint Review Board Report labeled Attachment H Were any obligations issued by municipality? [65 ILCS 5/ (d) (8) (A) and 5/ (d) (8) (A)] If yes, please enclose the Official Statement labeled Attachment I Was analysis prepared by a financial advisor or underwriter setting forth the nature and term of obligation and projected debt service including required reserves and debt coverage? [65 ILCS 5/ (d) (8) (B) and 5/ (d) (8) (B)] If yes, please enclose the Analysis labeled Attachment J Cumulatively, have deposits from any source equal or greater than $100,000 been made into the special tax allocation fund? 65 ILCS 5/ (d) (2) and 5/ (d) (2) If yes, please enclose Audited financial statements of the special tax allocation fund labeled Attachment K Cumulatively, have deposits of incremental taxes revenue equal to or greater than $100,000 been made into the special tax allocation fund? [65 ILCS 5/ (d) (9) and 5/ (d) (9)] If yes, please enclose a certified letter statement reviewing compliance with the Act labeled Attachment L X A list of all intergovernmental agreements in effect to which the municipality is a part, and an accounting of any money transferred or received by the municipality during that fiscal year pursuant to those intergovernmental agreements. [65 ILCS 5/ (d) (10)] If yes, please enclose list only, not actual agreements labeled Attachment M X * Types include: Central Business District, Retail, Other Commercial, Industrial, Residential, and Combination/Mixed. No X X X X X X Yes X X X X X

33 SECTION (65 ILCS 5/ (d) (5) and 65 ILCS 5/ (d) (5)) Provide an analysis of the special tax allocation fund. FY 2016 TIF NAME: Downtown TIF #2 Fund Balance at Beginning of Reporting Period $ (39,336) Revenue/Cash Receipts Deposited in Fund During Reporting FY: Reporting Year Cumulative* % of Total Property Tax Increment 0% State Sales Tax Increment 0% Local Sales Tax Increment 0% State Utility Tax Increment 0% Local Utility Tax Increment 0% Interest $ 50 $ 65 0% Land/Building Sale Proceeds 0% Bond Proceeds 0% Transfers from Municipal Sources 0% Private Sources 0% Other (identify source ; if multiple other sources, attach schedule) $ 109,079 $ 144, % *must be completed where current or prior year(s) have reported funds Total Amount Deposited in Special Tax Allocation Fund During Reporting Period $ 109,129 Cumulative Total Revenues/Cash Receipts $ 144, % Total Expenditures/Cash Disbursements (Carried forward from Section 3.2) $ 71,692 Distribution of Surplus Total Expenditures/Disbursements $ 71,692 NET INCOME/CASH RECEIPTS OVER/(UNDER) CASH DISBURSEMENTS $ 37,437 FUND BALANCE, END OF REPORTING PERIOD* $ (1,899) * if there is a positive fund balance at the end of the reporting period, you must complete Section 3.3 SURPLUS*/(DEFICIT)(Carried forward from Section 3.3) $ (51,899)

34 FY 2016 TIF NAME: Downtown TIF #2 SECTION 3.2 A- (65 ILCS 5/ (d) (5) and 65 ILCS 5/ (d) (5)) ITEMIZED LIST OF ALL EXPENDITURES FROM THE SPECIAL TAX ALLOCATION FUND (by category of permissible redevelopment cost, amounts expended during reporting period) FOR AMOUNTS >$10,000 SECTION 3.2 B MUST BE COMPLETED Category of Permissible Redevelopment Cost [65 ILCS 5/ (q) and 65 ILCS 5/ (o)] Amounts Reporting Fiscal Year 1. Costs of studies, administration and professional services Subsections (q)(1) and (o) (1) Legal 4,830 Other Professional Services 6,999 Real Estate Taxes 3, Cost of marketing sites Subsections (q)(1.6) and (o)(1.6) $ 15,691 3.Property assembly: property acquisition, building demolition, site preparation and environmental site improvement costs. Subsections (q)(2), (o)(2) and (o)(3) Environmental Clean Up 26,152 Enhancement Reimbursement - Parking Lot 3,000 $ - 4.Costs of rehabilitation, reconstruction, repair or remodeling of existing public or private buildings. Subsection (q)(3) and (o)(4) Building Repairs 26,849 $ 29, Costs of construction of public works and improvements. Subsection (q)(4) and (o)(5) $ 26,849 6.Costs of removing contaminants required by environmental laws or rules (o)(6) - Industrial Jobs Recovery TIFs ONLY $ - $ -

35 SECTION 3.2 A PAGE 2 7. Cost of job training and retraining, including "welfare to work" programs Subsection (q)(5), (o)(7) and (o)(12) $ - 8.Financing costs related to obligations issued by the municipality. Subsection (q) (6) and (o)(8) 9. Approved taxing district's capital costs. Subsection (q)(7) and (o)(9) $ Cost of Reimbursing school districts for their increased costs caused by TIF assisted housing projects. Subsection (q)(7.5) - Tax Increment Allocation Redevelopment TIFs ONLY $ Relocation costs. Subsection (q)(8) and (o)(10) $ - 12.Payments in lieu of taxes as defined in Subsections (m) and (k). Subsection (q)(9) and (o)(11) $ Costs of job training, retraining advanced vocational or career education provided by other taxing bodies. Subsection (q)(10) and (o)(12) $ - $ -

36 SECTION 3.2 A PAGE Costs of reimbursing private developers for interest expenses incurred on approved redevelopment projects. Subsection (q)(11)(a-e) and (o)(13)(a-e) 15. Costs of construction of new housing units for low income and very low-income households. Subsection (q)(11)(f) - Tax Increment Allocation Redevelopment TIFs ONLY $ Cost of day care services and operational costs of day care centers. Subsection (q) (11.5) - Tax Increment Allocation Redevelopment TIFs ONLY $ - $ - TOTAL ITEMIZED EXPENDITURES $ 71,692

37 FY 2016 TIF NAME: Downtown TIF #2 Section 3.2 B List all vendors, including other municipal funds, that were paid in excess of $10,000 during the current reporting year. There were no vendors, including other municipal funds, paid in excess of $10,000 during the current reporting period. Name Service Amount The Real Seal Crack Repairs $ 12, Peterson Roofing Roof Replacement $ 13, Dynamic Environmental Services Environmental Cleanup $ 26,140.00

38 SECTION (65 ILCS 5/ (d) (5) 65 ILCS (d) (5)) Breakdown of the Balance in the Special Tax Allocation Fund At the End of the Reporting Period FY 2016 TIF NAME: Downtown TIF #2 FUND BALANCE, END OF REPORTING PERIOD $ (1,899) Amount of Original Issuance Amount Designated 1. Description of Debt Obligations Advance Due to General Fund $ 50,000 $ 50,000 Total Amount Designated for Obligations $ 50,000 $ 50, Description of Project Costs to be Paid Total Amount Designated for Project Costs $ - TOTAL AMOUNT DESIGNATED $ 50,000 SURPLUS*/(DEFICIT) $ (51,899) * NOTE: If a surplus is calculated, the municipality may be required to repay the amount to overlapping taxing

39 SECTION 4 [65 ILCS 5/ (d) (6) and 65 ILCS 5/ (d) (6)] FY 2016 TIF NAME: Downtown TIF #2 Provide a description of all property purchased by the municipality during the reporting fiscal year within the redevelopment project area. x No property was acquired by the Municipality Within the Redevelopment Project Area Property Acquired by the Municipality Within the Redevelopment Project Area Property (1): Street address: Approximate size or description of property: Purchase price: Seller of property: Property (2): Street address: Approximate size or description of property: Purchase price: Seller of property: Property (3): Street address: Approximate size or description of property: Purchase price: Seller of property: Property (4): Street address: Approximate size or description of property: Purchase price: Seller of property:

40 SECTION 5-65 ILCS 5/ (d) (7) (G) and 65 ILCS 5/ (d) (7) (G) PAGE 1 FY 2016 TIF NAME: Downtown TIF #2 *Page 1 is to be included with TIF Report. Pages 2-3 are to be included ONLY if projects are listed. Box below must be filled in with either a check or number of projects, not both Check if NO projects were undertaken by the Municipality Within the Redevelopment Project Area: ENTER total number of projects undertaken by the Municipality Within the Redevelopment Project Area and list them in detail below*. TOTAL: 11/1/99 to Date Estimated Investment for Subsequent Fiscal Year 3 Total Estimated to Complete Project Private Investment Undertaken (See Instructions) $ - $ - $ - Public Investment Undertaken $ 50,830 $ 40,000 $ 209,605 Ratio of Private/Public Investment 0 0 Project 1: *IF PROJECTS ARE LISTED NUMBER MUST BE ENTERED ABOVE 2 E Main - Building Improvements Private Investment Undertaken (See Instructions) $ - Public Investment Undertaken $ 26,330 $ - $ 26,330 Ratio of Private/Public Investment 0 0 Project 2: 133 W Main - Building Improvements Private Investment Undertaken (See Instructions) Public Investment Undertaken $ - $ 40,000 $ 40,000 Ratio of Private/Public Investment 0 0 Project 3: TIF District Lift Station Private Investment Undertaken (See Instructions) Public Investment Undertaken $ 24,500 $ 143,275 Ratio of Private/Public Investment 0 0 Project 4: Private Investment Undertaken (See Instructions) Public Investment Undertaken Ratio of Private/Public Investment 0 0 Project 5: Private Investment Undertaken (See Instructions) Public Investment Undertaken Ratio of Private/Public Investment 0 0 Project 6: Private Investment Undertaken (See Instructions) Public Investment Undertaken Ratio of Private/Public Investment 0 0

41 Optional: Information in the following sections is not required by law, but would be helpful in evaluating the performance of TIF in Illinois. *even though optional MUST be included as part of complete TIF report SECTION 6 FY 2016 TIF NAME: Downtown TIF #2 Provide the base EAV (at the time of designation) and the EAV for the year reported for the redevelopment project area Year redevelopment project area was designated Base EAV Reporting Fiscal Year EAV 2013 $ 8,550,934 $ 8,550,934 List all overlapping tax districts in the redevelopment project area. If overlapping taxing district received a surplus, list the surplus. The overlapping taxing districts did not receive a surplus. Overlapping Taxing District $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Surplus Distributed from redevelopment project area to overlapping districts SECTION 7 Provide information about job creation and retention Number of Jobs Retained Number of Jobs Created Description and Type (Temporary or Permanent) of Jobs Total Salaries Paid $ $ $ $ $ $ $ SECTION 8 Provide a general description of the redevelopment project area using only major boundaries: Optional Documents Legal description of redevelopment project area Map of District Enclosed

42 FINANCE DEPARTMENT 70 East Main Street Lake Zurich, Illinois (847) LakeZurich.org September 28, 2016 Re: Section 3.1 Attachment Other: Source Amount Additional Notes Rental Income $95,579 Insurance Claim 13,500 Roof Damage Reimbursement Total $109,079 Village of Lake Zurich Unit Code: 049/100/32

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44 ATTACHMENT C 20 N. Wacker Drive, Ste S. Ravinia Avenue, Ste 10 Chicago, Illinois Orland Park, Illinois T F T F DD sfuhler@ktjlaw.com sfuhler@ktjlaw.com To: Ray Keller Village Manager Village of Lake Zurich From: Klein, Thorpe & Jenkins Re: Village of Lake Zurich Downtown TIF No. 2 July 27, 2017 We have reviewed all information provided to our office by the Village staff and consultants regarding the TIF annual report for Lake Zurich TIF No. 2, said TIF established and designated January 19, It is my opinion that the Village of Lake Zurich has complied with the applicable requirements of the Illinois Tax Increment Redevelopment Allocation Act set forth thereunder for the fiscal year beginning May 1, 2015 and ending April 30, 2016, to the best of my knowledge and belief. Sincerely, Klein, Thorpe & Jenkins, Ltd. Scott F. Uhler _1

45 FINANCE DEPARTMENT 70 East Main Street Lake Zurich, Illinois (847) LakeZurich.org October 1, 2016 ATTACHMENT D Office of the Illinois Comptroller Local Government Division Suite W. Randolph Street Chicago, Illinois To Whom It May Concern: Statement of Activities Background The Village of Lake Zurich created the second Tax Increment Financing (TIF) District TIF#2, on January 19, TIF #2 was designed to restore and enhance the tax base of the taxing districts in the area by removing the undeveloped parcels of property from the original TIF district. TIF #2 is comprised of approximately a 59-acre area. It consists of a large portion of area that has remained undeveloped despite various efforts to encourage private investments. Most of the uses within this area are retail/commercial. The TIF #2 district was originated with the following primary objectives: 1. Support continued capital improvements throughout the Downtown area 2. Seek to develop guidelines that increase the availability of parking throughout the requirement of shared parking lots among developments 3. Build pedestrian character via revision of ordinances and codes 4. Promote more energy efficient site designs and layouts for developments potentially utilizing higher densities in developments to encourage more pedestrian traffic Lake Zurich established important goals for the new TIF #2 district: Provide a balance of retail opportunities that meet the needs of Village residents Promote a unified design concept with strong retail orientation for commercial areas that will ensure a distinct feel for the Village Ensure commercial/retail developments are easily and safely accessible to pedestrians

46 Limit the establishment of incompatible non-retail uses within shopping areas designed and suited to accommodate retail users 2016 Activities During FY 2015 the creation of TIF #2 was implemented and finalized. The following activities were originally reported under TIF #1. However, due to the boundary change they now fall within TIF #2. Block A In September of 2015, the Village Board voted to begin a Memorandum of Understanding with Streetscapes USA, who was interested in submitting a redevelopment proposal for detached single family homes on the aces of Village-owned property known as Block A. The Memorandum of Understanding would grant Streetscapes USA the exclusive right to produce a redevelopment proposal before December 21, However, Streetscapes USA did not submit a proposal, and Block A continued to remain vacant and be marketed for redevelopment. Block C During FY 2016, Foxford Homes continued and completed Phase II of the construction of the Somerset Townhomes of downtown Lake Zurich. Shortly after the FY 2016 ended, Phase III of construction neared completion and deposits on the townhomes were accepted. Foxford Homes plans to complete the development of Block C in the future by constructing two apartment buildings and one townhome building. Other Development After redistricting the TIF boundaries, downtown Lake Zurich saw a number of businesses locate within TIF #2. The businesses include three insurance agencies, a spa and beauty salon, a billing service, a dental clinic, and a fast casual, locally owned restaurant. The small businesses have continued to promote and enhance the character of the downtown, and have brought a variety of uses to the B-2 Central Business corridor. Future Activities Block C will continue to be developed through to completion by Foxford homes creating a more pedestrian-friendly and higher density downtown area. The Village will continue pursuing an agreement with Streetscapes USA for the development of Block A. The remaining development blocks within TIF #2 will continue to be marketed to developers at retail events and as occasions present themselves. Financial The Village received $109,129 in revenues for the fiscal year Revenue includes $95,578 for rental income and $13,500 for an insurance claim reimbursement due to roof damage. Expenditures totaled $71,692 for fiscal year 2016, this is a drop of 4% from last fiscal year. Expenditures include $4,830 for legal expenses, $26,152 for environmental clean-up costs and $26,848 for building rehabilitation costs.

47 From the time of designation the frozen equalized assessed valuation (EAV) was $8,435,358 based on the 2013 levy. First year of tax increment revenue will be 2015 levy in Based on the objectives and goals established while the TIF was created the Village will move forward seeking ways to improve for the resident of Lake Zurich. The Village is confident about creating opportunities for growth and building a thriving downtown. The Village of Lake Zurich.

48 UNAPPROVED JOINT REVIEW BOARD for the VILLAGE OF LAKE ZURICH Downtown TIF #2 Redevelopment Project Area 70 East Main Street Friday, December 11, :45 pm 1. CALL TO ORDER by Lucy Prouty at 1.55pm. 2 ROLL CALL: Village of Lake Zurich Village of Lake Zurich Steve Husak. Lake County Craig Taylor Ela Township Lucy Prouty Community College District No. 532 David Hittermiller Ela Area Public Library Matt Womack Community School District No. 95 Dr. Mike Egan Also present: VOLZ Finance Dir. Jodie Hartman, VOLZ Accounting Supervisor Miriam Hernandez, VOLZ Mayor Tom Poynton, Asst. Village Manager Roy Witherow. 3. MOTION TO APPOINT PUBLIC MEMBER A motion was made by Craig Taylor, seconded by Steve Husak, to appoint Elvira Michalek as the public member of TIF # 2, which was done by VOICE VOTE AYES: 6 NAYS: 0 ABSENT: 0 ABSTAIN: 0 MOTION CARRIED. 4. MOTION TO APPOINT JRB CHAIRPERSON Atty. Orr advised that the motion had been taken care of in the TIF #1 meeting. 5. PUBLIC COMMENTS: There were none. 6. APPROVAL OF MINUTES, DECEMBER 18, 2014 A motion was made by Craig Taylor, seconded by Lucy Prouty, to approve the minutes as presented. This was done by VOICE VOTE AYES: 7 NAYS: 0 ABSENT: 0 ABSTAIN: 0 MOTION CARRIED. 7. REVIEW OF TIF #2 REPORT Accounting Supervisor Miriam Hernandez gave the financial report of TIF #2. 8. JRB DELIBERATION AND RECOMMENDATION Asst. Village Manager Roy Witherow gave a report on development activity in TIF#2 including Block A and Block C. Staff answered the Board s questions on selling the village owned properties for a very reduced price, asking developers to cover the cost of utility line burial, the old Alpine medical building, rental fees for village owned properties. Staff shared information about a recent show they attended at Navy Pier,

49 Chicago as they marketed property in Lake Zurich, this has led to some contacts with developers. There was an update on the old Bank of America building on Main Street. Ms. Michalek requested communication between residents and the village regarding developer representatives going door-to-door about selling their property, and she was advised to contact the village when this happens as the people do not have to be registered with the police dept. 9. ADJOURNMENT A motion was made by Craig Taylor, seconded by Steve Husak, to adjourn the meeting. VOICE VOTE AYES: 7 NAYS: 0 ABSENT: 0 ABSTAIN: 0 MOTION CARRIED. Meeting adjourned at 2.34pm Respectfully submitted by: Kathleen Johnson, Village Clerk, Village of Lake Zurich. Approved by: Lucy Prouty, Ela Township Supervisor Date

50 VILLAGE OF LAKE ZURICH, ILLINOIS BALANCE SHEET DOWNTOWN TIF #2 APRIL 30, 2016 ASSETS DOWNTOWN TIF #2 Cash and Investments $ 39,384 Property Taxes Receivable 61,553 Accrued Interest Receivable 8,717 TOTAL ASSETS $ 109,654 LIABILITIES & FUND BALANCE Accounts Payable $ - Advance From Other Funds 50,000 Deferred Property Taxes 61,553 TOTAL LIABILITIES & DEFERRED INFLOWS $ 111,553 FUND BALANCE $ (1,899) TOTAL LIABILITIES AND FUND BALANCE $ 109,654

51 VILLAGE OF LAKE ZURICH, ILLINOIS STATEMENT OF OPERATIONS DOWNTOWN TIF #2 APRIL 30, 2016 REVENUES DOWNTOWN TIF #2 Interest Income $ 50 Miscellaneous 109,079 TOTAL REVENUES $ 109,129 EXPENDITURES Legal Services $ 4,830 Building & Grounds Repairs 26,849 Enhancement Reimbursement 3,000 Lake County Real Estate Taxes 3,862 Other Professional Services 33,151 TOTAL EXPENDITURES $ 71,692 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES $ 37,437 FUND BALANCE MAY 1 $ (39,336) FUND BALANCE, APRIL 30 $ (1,899)

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53 SECTION 2 [Sections 2 through 5 must be completed for each redevelopment project area listed in Section 1.] FY 2016 Name of Redevelopment Project Area: Lake Zurich Downtown Redevelopment Primary Use of Redevelopment Project Area*: Mixed If "Combination/Mixed" List Component Types: Retail/Residential Under which section of the Illinois Municipal Code was Redevelopment Project Area designated? (check one): Tax Increment Allocation Redevelopment Act x Industrial Jobs Recovery Law Were there any amendments to the redevelopment plan, the redevelopment project area, or the State Sales Tax Boundary? [65 ILCS 5/ (d) (1) and 5/ (d) (1)] If yes, please enclose the amendment labeled Attachment A Certification of the Chief Executive Officer of the municipality that the municipality has complied with all of the requirements of the Act during the preceding fiscal year. [65 ILCS 5/ (d) (3) and 5/ (d) (3)] Please enclose the CEO Certification labeled Attachment B Opinion of legal counsel that municipality is in compliance with the Act. [65 ILCS 5/ (d) (4) and 5/ (d) (4)] Please enclose the Legal Counsel Opinion labeled Attachment C Were there any activities undertaken in furtherance of the objectives of the redevelopment plan, including any project implemented in the preceding fiscal year and a description of the activities undertaken? [65 ILCS 5/ (d) (7) (A and B) and 5/ (d) (7) (A and B)] If yes, please enclose the Activities Statement labeled Attachment D Were any agreements entered into by the municipality with regard to the disposition or redevelopment of any property within the redevelopment project area or the area within the State Sales Tax Boundary? [65 ILCS 5/ (d) (7) (C) and 5/ (d) (7) (C)] If yes, please enclose the Agreement(s) labeled Attachment E Is there additional information on the use of all funds received under this Division and steps taken by the municipality to achieve the objectives of the redevelopment plan? [65 ILCS 5/ (d) (7) (D) and 5/ (d) (7) (D)] If yes, please enclose the Additional Information labeled Attachment F Did the municipality's TIF advisors or consultants enter into contracts with entities or persons that have received or are receiving payments financed by tax increment revenues produced by the same TIF? [65 ILCS 5/ (d) (7) (E) and 5/ (d) (7) (E)] If yes, please enclose the contract(s) or description of the contract(s) labeled Attachment G Were there any reports or meeting minutes submitted to the municipality by the joint review board? [65 ILCS 5/ (d) (7) (F) and 5/ (d) (7) (F)] If yes, please enclose the Joint Review Board Report labeled Attachment H Were any obligations issued by municipality? [65 ILCS 5/ (d) (8) (A) and 5/ (d) (8) (A)] If yes, please enclose the Official Statement labeled Attachment I Was analysis prepared by a financial advisor or underwriter setting forth the nature and term of obligation and projected debt service including required reserves and debt coverage? [65 ILCS 5/ (d) (8) (B) and 5/ (d) (8) (B)] If yes, please enclose the Analysis labeled Attachment J Cumulatively, have deposits from any source equal or greater than $100,000 been made into the special tax allocation fund? 65 ILCS 5/ (d) (2) and 5/ (d) (2) If yes, please enclose Audited financial statements of the special tax allocation fund labeled Attachment K Cumulatively, have deposits of incremental taxes revenue equal to or greater than $100,000 been made into the special tax allocation fund? [65 ILCS 5/ (d) (9) and 5/ (d) (9)] If yes, please enclose a certified letter statement reviewing compliance with the Act labeled Attachment L A list of all intergovernmental agreements in effect to which the municipality is a part, and an accounting of any money transferred or received by the municipality during that fiscal year pursuant to those intergovernmental agreements. [65 ILCS 5/ (d) (10)] If yes, please enclose list only, not actual agreements labeled Attachment M X * Types include: Central Business District, Retail, Other Commercial, Industrial, Residential, and Combination/Mixed. No X X X X X Yes X X X X X X X

54 SECTION (65 ILCS 5/ (d) (5) and 65 ILCS 5/ (d) (5)) Provide an analysis of the special tax allocation fund. FY 2016 TIF NAME: Lake Zurich Downtown Redevelopment Fund Balance at Beginning of Reporting Period $ (1,458,203) Revenue/Cash Receipts Deposited in Fund During Reporting FY: Reporting Year Cumulative* % of Total Property Tax Increment $ 1,231,640 $ 14,641,461 18% State Sales Tax Increment 0% Local Sales Tax Increment 0% State Utility Tax Increment 0% Local Utility Tax Increment 0% Interest $ 2,028 $ 557,186 1% Land/Building Sale Proceeds 0% Bond Proceeds $ 970,818 $ 68,627,576 85% Transfers from Municipal Sources 0% Private Sources 0% Other (identify source ; if multiple other sources, attach schedule) $ (3,504,710) -4% *must be completed where current or prior year(s) have reported funds Total Amount Deposited in Special Tax Allocation Fund During Reporting Period $ 2,204,486 Cumulative Total Revenues/Cash Receipts $ 80,321, % Total Expenditures/Cash Disbursements (Carried forward from Section 3.2) $ 1,945,110 Distribution of Surplus Total Expenditures/Disbursements $ 1,945,110 NET INCOME/CASH RECEIPTS OVER/(UNDER) CASH DISBURSEMENTS $ 259,376 FUND BALANCE, END OF REPORTING PERIOD* $ (1,198,827) * if there is a positive fund balance at the end of the reporting period, you must complete Section 3.3 SURPLUS*/(DEFICIT)(Carried forward from Section 3.3) $ (36,711,339)

55 SECTION 3.2 A- (65 ILCS 5/ (d) (5) and 65 ILCS 5/ (d) (5)) FY 2016 TIF NAME: Lake Zurich Downtown Redevelopment ITEMIZED LIST OF ALL EXPENDITURES FROM THE SPECIAL TAX ALLOCATION FUND (by category of permissible redevelopment cost, amounts expended during reporting period) FOR AMOUNTS >$10,000 SECTION 3.2 B MUST BE COMPLETED Category of Permissible Redevelopment Cost [65 ILCS 5/ (q) and 65 ILCS 5/ (o)] Amounts Reporting Fiscal Year 1. Costs of studies, administration and professional services Subsections (q)(1) and (o) (1) Accounting Services 563 Conferences 350 Memberships & Subscriptions Cost of marketing sites Subsections (q)(1.6) and (o)(1.6) $ 1,563 3.Property assembly: property acquisition, building demolition, site preparation and environmental site improvement costs. Subsections (q)(2), (o)(2) and (o)(3) $ - 4.Costs of rehabilitation, reconstruction, repair or remodeling of existing public or private buildings. Subsection (q)(3) and (o)(4) $ - 5. Costs of construction of public works and improvements. Subsection (q)(4) and (o)(5) $ - 6.Costs of removing contaminants required by environmental laws or rules (o)(6) - Industrial Jobs Recovery TIFs ONLY $ - $ -

56 SECTION 3.2 A PAGE 2 7. Cost of job training and retraining, including "welfare to work" programs Subsection (q)(5), (o)(7) and (o)(12) $ - 8.Financing costs related to obligations issued by the municipality. Subsection (q) (6) and (o)(8) Principal Fees 625,000 Interest Fees 837, Approved taxing district's capital costs. Subsection (q)(7) and (o)(9) $ 1,462, Cost of Reimbursing school districts for their increased costs caused by TIF assisted housing projects. Subsection (q)(7.5) - Tax Increment Allocation Redevelopment TIFs ONLY Lake Zurich School District 480,994 $ Relocation costs. Subsection (q)(8) and (o)(10) $ 480, Payments in lieu of taxes as defined in Subsections (m) and (k). Subsection (q)(9) and (o)(11) $ Costs of job training, retraining advanced vocational or career education provided by other taxing bodies. Subsection (q)(10) and (o)(12) $ - $ -

57 SECTION 3.2 A PAGE Costs of reimbursing private developers for interest expenses incurred on approved redevelopment projects. Subsection (q)(11)(a-e) and (o)(13)(a-e) 15. Costs of construction of new housing units for low income and very low-income households. Subsection (q)(11)(f) - Tax Increment Allocation Redevelopment TIFs ONLY $ Cost of day care services and operational costs of day care centers. Subsection (q) (11.5) - Tax Increment Allocation Redevelopment TIFs ONLY $ - $ - TOTAL ITEMIZED EXPENDITURES $ 1,945,110

58 Section 3.2 B FY 2016 TIF NAME: Lake Zurich Downtown Redevelopment List all vendors, including other municipal funds, that were paid in excess of $10,000 during the current reporting year. There were no vendors, including other municipal funds, paid in excess of $10,000 during the current reporting period. Name Service Amount Lake Zurich School District #95 Impact Fee $ 480, Chapman & Cutler Bond Issuance Fees $ 7,034, Bank of New York Mellon Principal/Interest/Agent Fees $ 1,311,820.50

59 FY 2016 SECTION (65 ILCS 5/ (d) (5) 65 ILCS (d) (5)) Breakdown of the Balance in the Special Tax Allocation Fund At the End of the Reporting Period TIF NAME: Lake Zurich Downtown Redevelopment FUND BALANCE, END OF REPORTING PERIOD $ (1,198,827) Amount of Original Issuance Amount Designated 1. Description of Debt Obligations TIF Alternate Revenue Bonds 2009A $ 13,901,225 $ 1,435,665 TIF Alternate Revenue Bonds 2014A $ 7,453,458 $ 6,447,150 TIF Alternate Revenue Bonds 2015A $ 18,394,435 $ 17,714,151 TIF Alternate Revenue Bonds 2016A $ 8,305,546 $ 8,305,546 Advance Due to General Fund $ 1,746,000 $ 1,610,000 Total Amount Designated for Obligations $ 49,800,664 $ 35,512, Description of Project Costs to be Paid Total Amount Designated for Project Costs $ - TOTAL AMOUNT DESIGNATED $ 35,512,512 SURPLUS*/(DEFICIT) $ (36,711,339) * NOTE: If a surplus is calculated, the municipality may be required to repay the amount to overlapping taxing

60 SECTION 4 [65 ILCS 5/ (d) (6) and 65 ILCS 5/ (d) (6)] FY 2016 TIF NAME: Lake Zurich Downtown Redevelopment Provide a description of all property purchased by the municipality during the reporting fiscal year within the redevelopment project area. x No property was acquired by the Municipality Within the Redevelopment Project Area Property Acquired by the Municipality Within the Redevelopment Project Area Property (1): Street address: Approximate size or description of property: Purchase price: Seller of property: Property (2): Street address: Approximate size or description of property: Purchase price: Seller of property: Property (3): Street address: Approximate size or description of property: Purchase price: Seller of property: Property (4): Street address: Approximate size or description of property: Purchase price: Seller of property:

61 SECTION 5-65 ILCS 5/ (d) (7) (G) and 65 ILCS 5/ (d) (7) (G) PAGE 1 FY 2016 TIF NAME: Lake Zurich Downtown Redevelopment *Page 1 is to be included with TIF Report. Pages 2-3 are to be included ONLY if projects are listed. Box below must be filled in with either a check or number of projects, not both Check if NO projects were undertaken by the Municipality Within the Redevelopment Project Area: ENTER total number of projects undertaken by the Municipality Within the Redevelopment Project Area and list them in detail below*. TOTAL: 11/1/99 to Date Estimated Investment for Subsequent Fiscal Year Total Estimated to Complete Project Private Investment Undertaken (See Instructions) $ 54,120,000 $ - $ - Public Investment Undertaken $ 18,459,493 $ - $ - Ratio of Private/Public Investment 2 41/44 0 Project 1: *IF PROJECTS ARE LISTED NUMBER MUST BE ENTERED ABOVE Promenade Private Investment Undertaken (See Instructions) $ - Public Investment Undertaken $ 997,054 Ratio of Private/Public Investment 0 0 Project 2: Streetscape Private Investment Undertaken (See Instructions) Public Investment Undertaken $ 790,487 Ratio of Private/Public Investment 0 0 Project 3: Propety Acquisitions Private Investment Undertaken (See Instructions) Public Investment Undertaken $ 12,343,933 Ratio of Private/Public Investment 0 0 Project 4: Concorde Development Private Investment Undertaken (See Instructions) $ 54,000,000 Public Investment Undertaken $ 4,000,000 Ratio of Private/Public Investment 13 1/2 0 Project 5: 20 E Main St Private Investment Undertaken (See Instructions) $ 120,000 Public Investment Undertaken $ 12,000 Ratio of Private/Public Investment 10 0 Project 6: Property Enhancements Private Investment Undertaken (See Instructions) Public Investment Undertaken $ 134,894 Ratio of Private/Public Investment 0 0

62 PAGE 2 Project 7: Building Demolitions Private Investment Undertaken (See Instructions) Public Investment Undertaken $ 181,125 Ratio of Private/Public Investment 0 0 Project 8: Private Investment Undertaken (See Instructions) Public Investment Undertaken Ratio of Private/Public Investment 0 0 Project 9: Private Investment Undertaken (See Instructions) Public Investment Undertaken Ratio of Private/Public Investment 0 0 Project 10: Private Investment Undertaken (See Instructions) Public Investment Undertaken Ratio of Private/Public Investment 0 0

63 Optional: Information in the following sections is not required by law, but would be helpful in evaluating the performance of TIF in Illinois. *even though optional MUST be included as part of complete TIF report SECTION 6 FY 2016 TIF NAME: Lake Zurich Downtown Redevelopment Provide the base EAV (at the time of designation) and the EAV for the year reported for the redevelopment project area Year redevelopment project area was designated Base EAV Reporting Fiscal Year EAV 2002 $ 3,032,709 $ 18,357,077 List all overlapping tax districts in the redevelopment project area. If overlapping taxing district received a surplus, list the surplus. x The overlapping taxing districts did not receive a surplus. Surplus Distributed from redevelopment Overlapping Taxing District project area to overlapping districts County of Lake $ - Lake County Forest Preserve $ - Ela Township $ - Ela Township Road District $ - Lake Zurich Community School District #95 $ - College of Lake County #532 $ - Ela Public Library $ - Village of Lake Zurich $ - $ - $ - $ - $ - $ - $ - $ - SECTION 7 Provide information about job creation and retention Number of Jobs Retained Number of Jobs Created Description and Type (Temporary or Permanent) of Jobs Total Salaries Paid $ $ $ $ $ $ $ SECTION 8 Provide a general description of the redevelopment project area using only major boundaries: Optional Documents Legal description of redevelopment project area Map of District Enclosed

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65 ATTACHMENT C 20 N. Wacker Drive, Ste S. Ravinia Avenue, Ste 10 Chicago, Illinois Orland Park, Illinois T F T F DD sfuhler@ktjlaw.com sfuhler@ktjlaw.com To: Ray Keller Village Manager Village of Lake Zurich From: Klein, Thorpe & Jenkins Re: Village of Lake Zurich Downtown TIF No. 1 July 27, 2017 We have reviewed all information provided to our office by the Village staff and consultants regarding the TIF annual report for Lake Zurich TIF No. 1, said TIF established and designated March 18, It is my opinion that the Village of Lake Zurich has complied with the applicable requirements of the Illinois Tax Increment Redevelopment Allocation Act set forth thereunder for the fiscal year beginning May 1, 2016 and ending December 31, 2016, to the best of my knowledge and belief. Sincerely, Klein, Thorpe & Jenkins, Ltd. Scott F. Uhler _1

66 FINANCE DEPARTMENT 70 East Main Street Lake Zurich, Illinois (847) LakeZurich.org May 31, 2017 ATTACHMENT D Office of the Illinois Comptroller Local Government Division Suite W. Randolph Street Chicago, Illinois To Whom It May Concern: Background Statement of Activities The Village of Lake Zurich created the Tax Increment Financing (TIF) district on March 18, The TIF district is now comprised of approximately a 55-acre area. It is designed to re-establish the downtown as a vibrant, mixed-use area, and strengthen the economic well-being and quality of life in the downtown by providing resources for redevelopment. Also, it provides resources for additional parking, streetscaping and landscaping to create a distinct area and to link its diverse land uses. In addition, the TIF facilitates the improvement and expansion of existing public facilities, such as parks and parking. The TIF district was originated with the following objectives: Village of Lake Zurich Maintain and support the distinct character of the downtown Promote a thriving commercial and residential environment Create a pedestrian-friendly environment Develop a public promenade along the waterfront Enhance accessibility to Breezewald Park Create a face of the Village along Route 22 Lake Zurich had a successful project implementation in the TIF district with the Grace-Dearborn property, an industrial land property that stood empty and uninhabited for many years. This property was reinvented and it is now an established residential community with 275 homes. The Village s downtown streetscape and lakefront promenade were renovated thanks to TIF funds. The Village created a variety of landscape and infrastructure improvements that make the lakefront the new focal point of the downtown.

67 During FY 2015 an innovative plan was formulated in order to save the downtown TIF from decreasing property values and high debt payments. The Village succeeded in receiving approval from local taxing bodies and state legislators to restructure the TIF district. The original 70-acre TIF district was restructured. The approval allowed the Village to remove undevelopable parcels that were hurting property tax increases. Of the original 576 parcels, 302 parcels were removed. The downtown TIF district now sits on the southeast corner of the lake, most parcels between Main St and Route 22. The restructuring allowed the Village to spread the $1 million in debt payments the Village was facing. The approval of the restructuring effectively added an additional 12 years of life to the original TIF district and in turn spread the debt over the new longer life. A new TIF district, TIF #2 was added from 181 parcels, most of which were removed from the original TIF district. 2016B Activities As of the end of FY 2015, prior properties reported now fall under TIF #2 per the boundary change. Block A Block C Block G Corner of Route 22 and Old Rand Road Private negotiations between the various landowners of Block G began during FY 2016B, as well as discussions on the viability of different land uses at the location. Staff anticipates an eventual development proposal that will enhance the character of Route 22 corridor. Future Activities Currently, there are no concrete plans for the development of properties within TIF #1. The remaining properties within TIF #1, including Block G will continue to be highlighted to developers. The Village has not acquired any new property within the TIF during FY 2016B. Financial This was an eight-month fiscal year as the Village transitions to a calendar year fiscal year for 2017 forward. The Village received approximately $1,233,668 in revenues for fiscal year 2016B, an increase of 4% from last fiscal year. The majority of revenues, $1,231,640 was from real estate taxes. Expenditures totaled $1,945,110, a decrease of -25% from last fiscal year. Expenditures include $650 for memberships and $913 professional services for downtown redevelopment, $480,994 for school district reimbursements, as well as $1.5M for debt service due to a refunding bond series issued during the fiscal year. For fiscal year 2016B, the total principal and interest for TIF debt was $1,462,553. Additionally, $970,818 was recorded as other financing source as bond proceeds were transferred to an escrow. Debt service accounts for 75% of total expenses and cash disbursements. There is currently $25.5M in outstanding principal for TIF related debt. Including scheduled interest, the total debt obligation for TIF debt is currently $33.9M. Annual payments will remain around the Village of Lake Zurich Unit Code: 049/100/32 2

68 $1.3M to $2.2M per year mark until December of 2034, when the current debt will all be paid off. While the original frozen equalized assessed valuation (EAV) was $12,606,191 the removal of 302 parcels reduced the frozen EAV to $3,032,709. The 2015 EAV reported was $18,357,077, an increase of about 4.3% from the 2014 EAV. The tax increment revenue has fluctuated the last few years due to the recession of All communities have been affected with revenue instability for the last few years. The Village is pleased the restructuring of the TIF Districts is promoting stable values as well as providing focus for development activities for the TIF districts. The Village of Lake Zurich. Village of Lake Zurich Unit Code: 049/100/32 3

69 New Issue Final Official Statement Dated May 16, 2016 Investment Ratings: Standard & Poor's AAA/Stable Interest on the Bonds is includible in gross income of the owners thereof for federal income tax purposes. Interest on the Bonds is not exempt from present State of Illinois income taxes. See CERTAIN FEDERAL INCOME TAX CONSIDERATIONS herein for a more complete discussion $6,785,000 VILLAGE OF LAKE ZURICH Lake County, Illinois Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A Dated Date of Delivery Book-Entry Due Serially February 1, The $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A (the Bonds ), are being issued by the Village of Lake Zurich, Lake County, Illinois (the Village ). Interest is payable semiannually on February 1 and August 1 of each year, commencing February 1, Interest is calculated based on a 360-day year of twelve 30-day months. The Bonds will be issued using a book-entry system. The Depository Trust Company ( DTC ), New York, New York, will act as securities depository for the Bonds. The ownership of one fully registered Bond for each maturity will be registered in the name of Cede & Co., as nominee for DTC and no physical delivery of Bonds will be made to purchasers. The Bonds will mature on February 1, in the years and amounts as detailed below. AMOUNTS, MATURITIES, INTEREST RATES, YIELDS AND CUSIP NUMBERS (1) Principal Due Interest Yield or CUSIP Principal Due Interest Yield or CUSIP Amount Feb. 1 Rate Price Number(1) Amount Feb. 1 Rate Price Number(1) $120, % 1.100% QZ7 $695, % 2.400% RF0 120, % 1.350% RA1 715, % 2.600% RG8 120, % 1.600% RB9 725, % 2.750% RH6 635, % 1.750% RC7 750, % 2.850% RJ2 655, % 2.050% RD5 775, % 2.950% RK9 680, % 2.250% RE3 795, % 3.050% RL7 OPTIONAL REDEMPTION The Bonds due on and after February 1, 2027, are subject to redemption prior to maturity at the option of the Village, as a whole or in part, on any date on or after February 1, 2026, at the redemption price of par plus accrued interest to the redemption date. See OPTIONAL REDEMPTION herein. PURPOSE, LEGALITY AND SECURITY Bond proceeds will be used to (a) fund an escrow to advance refund certain of the Village s outstanding Taxable General Obligation Funding Bonds (Alternate Revenue Source), Series 2009A dated April 15, 2009, (the 2009A Bonds ) and (b) pay the costs of issuance of the Bonds. See PLAN OF FINANCING herein. In the opinion of Bond Counsel, the Bonds will constitute valid and legally binding obligations of the Village payable both as to principal and interest from: (a) ratably and equally with certain heretofore issued and now outstanding 2009A Bonds not being refunded, General Obligation Refunding Bonds (Sales Tax Alternate Revenue Source), Series 2014A (the 2014A Bonds), and Taxable General Obligation Refunding Bonds (Sales Tax Alternate Revenue Source), Series 2015A (the 2015A Bonds together with the 2009A Bonds and 2014A Bonds, the Parity Bonds ), collections distributed to the Village from those taxes imposed by the State of Illinois (the State ) pursuant to the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act and the Retailers Occupation Tax Act, each as supplemented and amended from time to time, or substitute taxes therefore as provided by the State in the future (the Pledged Sales Tax Revenues ), (b) from the proceeds received by the Village from time to time from the issuance of its general obligation limited tax bonds or notes to the fullest extent permitted by law, including Section of the Illinois Municipal Code, as amended, (the Limited Tax Proceeds ), (c) ratably and equally with the 2009A Bonds not being refunded, certain incremental property taxes as paid in the Lake Zurich Tax Increment Finance District Number 1 (the TIF ) and received and deposited by the Village into the Special Tax Allocation Fund of the TIF, (the Incremental Taxes and together with the Pledged Sales Tax Revenues and the Limited Tax Proceeds, the Pledged Revenues ), and in the event the aforesaid Pledged Revenues shall be insufficient, (d) the levy and collection of ad valorem property taxes upon all taxable property within the Village without limitation as to rate or amount, except that the rights of the owners of the Bonds and the enforceability of the Bonds may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting creditor s rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion. See DESCRIPTION OF THE BONDS herein. The Bonds are offered when, as and if issued and received by Robert W. Baird & Co. Incorporated, Naperville, Illinois (the Underwriter ), subject to the approving legal opinion of Chapman and Cutler LLP, Chicago, Illinois, Bond Counsel, and certain other conditions. It is expected that the Bonds will be made available for delivery on or about June 15, BAIRD (1) CUSIP numbers appearing in this Final Official Statement have been provided by the CUSIP Service Bureau, which is managed on behalf of the American Bankers Association by Standard & Poor's, a division of the McGraw-Hill Companies, Inc. The Village is not responsible for the selection of CUSIP numbers and makes no representation as to their correctness on the Bonds or as set forth on the cover of this Final Official Statement.

70 No dealer, broker, salesman or other person has been authorized by the Village to give any information or to make any representations with respect to the Bonds other than as contained in the Official Statement or the Final Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized by the Village. Certain information contained in the Official Statement and the Final Official Statement may have been obtained from sources other than records of the Village and, while believed to be reliable, is not guaranteed as to completeness. THE INFORMATION AND EXPRESSIONS OF OPINION IN THE OFFICIAL STATEMENT AND THE FINAL OFFICIAL STATEMENT ARE SUBJECT TO CHANGE, AND NEITHER THE DELIVERY OF THE OFFICIAL STATEMENT OR THE FINAL OFFICIAL STATEMENT NOR ANY SALE MADE UNDER EITHER SUCH DOCUMENT SHALL CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE VILLAGE SINCE THE RESPECTIVE DATES THEREOF. References herein to laws, rules, regulations, ordinances, resolutions, agreements, reports and other documents do not purport to be comprehensive or definitive. All references to such documents are qualified in their entirety by reference to the particular document, the full text of which may contain qualifications of and exceptions to statements made herein. Where full texts have not been included as appendices to the Official Statement or the Final Official Statement they will be furnished on request. This Final Official Statement does not constitute an offer to sell, or solicitation of an offer to buy, any securities to any person in any jurisdiction where such offer or solicitation of such offer would be unlawful. (i)

71 TABLE OF CONTENTS BOND ISSUE SUMMARY... 1 VILLAGE OF LAKE ZURICH... 2 DESCRIPTION OF THE BONDS... 2 Security: Alternate Revenue Sources and Tax Levy... 2 Highlights of Alternate Bonds... 3 Abatement of Pledged Taxes... 4 Additional Bonds... 4 Bond Fund... 4 Filing with County Clerk... 4 Certain Risk Factors... 4 Lake Zurich Tax Increment Finance District Number THE VILLAGE... 7 Village Government and Services... 7 Transportation... 7 Community Life... 7 Education... 8 Economy... 8 SOCIOECONOMIC INFORMATION... 8 Employment... 8 Building Permits Housing Income Sales Tax Trend PLAN OF FINANCING DEBT INFORMATION PROPERTY ASSESSMENT AND TAX INFORMATION REAL PROPERTY ASSESSMENT, TAX LEVY AND COLLECTION PROCEDURES Tax Levy and Collection Procedures Exemptions Property Tax Extension Limitation Law Truth in Taxation Law FINANCIAL INFORMATION Budgetary Information Investments Financial Reports No Consent or Updated Information Requested of the Auditor Summary Financial Information EMPLOYEE RETIREMENT AND OTHER POSTEMPLOYMENT BENEFITS OBLIGATIONS EMPLOYEE RETIREMENT SYSTEMS Plan Descriptions Illinois Municipal Retirement Fund Police Pension Plan Plan Administration Plan Membership Benefits Provided Contributions Investment Policy Investment Valuations Investment Rate of Return Deposits with Financial Institutions Credit Risk Custodial Credit Risk Net Pension Liability Actuarial Assumptions Discount Rate Discount Rate Sensitivity (ii)

72 Firefighters Pension Plan Plan Administration Plan Membership Benefits Provided Contributions Investment Policy Concentrations Rate of Return Deposits with Financial Institutions Interest Rate Risk Credit Risk Custodial Credit Risk Net Pension Liability Actuarial Assumptions Discount Rate Discount Rate Sensitivity Annual Pension Costs Funded Status Funded Status and Funding Progress Schedule of Funding Progress OTHER POST-EMPLOYMENT BENEFITS Plan Description Benefits Provided Membership Funding Policy Annual OPEB Costs and Net OPEB Obligation Funded Status and Funding Progress Schedule of Funding Progress Actuarial Methods and Assumptions REGISTRATION, TRANSFER AND EXCHANGE CERTAIN FEDERAL INCOME TAX CONSIDERATIONS CONTINUING DISCLOSURE THE UNDERTAKING Annual Financial Information Disclosure Reportable Events Disclosure Consequences of Failure of the Village to Provide Information Amendment; Waiver Termination of Undertaking Additional Information Dissemination of Information; Dissemination Agent OPTIONAL REDEMPTION LITIGATION CERTAIN LEGAL MATTERS FINAL OFFICIAL STATEMENT AUTHORIZATION INVESTMENT RATING UNDERWRITING MUNICIPAL ADVISOR CERTIFICATION APPENDIX A - FISCAL YEAR 2015 AUDITED FINANCIAL STATEMENTS APPENDIX B - DESCRIBING BOOK-ENTRY-ONLY ISSUANCE APPENDIX C - PROPOSED FORM OF OPINION OF BOND COUNSEL APPENDIX D - CONTINUING DISCLOSURE UNDERTAKING (iii)

73 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A BOND ISSUE SUMMARY This Bond Issue Summary is expressly qualified by the entire Final Official Statement, which is provided for the convenience of potential investors and which should be reviewed in their entirety by potential investors. Issuer: Issue: Village of Lake Zurich, Lake County, Illinois (the Village ). $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A (the Bonds ). Dated Date: Date of delivery (expected to be on or about June 15, 2016). Interest Due: Each February 1 and August 1, commencing February 1, Principal Due: Optional Redemption: Authorization: Security: Credit Rating: Purpose: Tax Treatment: Serially each February 1, commencing February 1, 2018 through 2029, as detailed on the front page of this Final Official Statement. The Bonds due on and after February 1, 2027, are subject to redemption prior to maturity at the option of the Village, as a whole or in part, on any date on or after February 1, 2026, at the redemption price of par plus accrued interest to the redemption date. See OPTIONAL REDEMPTION herein. By vote of the President and Board of Trustees of the Village and pursuant to the provisions of the Illinois Municipal Code, as amended, and Section 15 of the Local Government Debt Reform Act of the State of Illinois, as amended. The Bonds will constitute valid and legally binding obligations of the Village payable both as to principal and interest from: (a) ratably and equally with certain heretofore issued and now outstanding 2009A Bonds not being refunded, General Obligation Refunding Bonds (Sales Tax Alternate Revenue Source), Series 2014A (the 2014A Bonds), and Taxable General Obligation Refunding Bonds (Sales Tax Alternate Revenue Source), Series 2015A (the 2015A Bonds together with the 2009A Bonds and 2014A Bonds, the Parity Bonds ), collections distributed to the Village from those taxes imposed by the State of Illinois (the State ) pursuant to the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act and the Retailers Occupation Tax Act, each as supplemented and amended from time to time, or substitute taxes therefore as provided by the State in the future (the Pledged Sales Tax Revenues ), (b) from the proceeds received by the Village from time to time from the issuance of its general obligation limited tax bonds or notes to the fullest extent permitted by law, including Section of the Illinois Municipal Code, as amended, (the Limited Tax Proceeds ), (c) ratably and equally with the 2009A Bonds not being refunded, certain incremental property taxes as paid in the Lake Zurich Tax Increment Finance District Number 1 (the TIF ) and received and deposited by the Village into the Special Tax Allocation Fund of the TIF, (the Incremental Taxes and together with the Pledged Sales Tax Revenues and the Limited Tax Proceeds, the Pledged Revenues ), and in the event the aforesaid Pledged Revenues shall be insufficient, (d) the levy and collection of ad valorem property taxes upon all taxable property within the Village without limitation as to rate or amount, except that the rights of the owners of the Bonds and the enforceability of the Bonds may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting creditor s rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion. See DESCRIPTION OF THE BONDS herein. The Bonds are rated AAA/Stable by Standard & Poor s, a Division of the McGraw-Hill Companies, New York, New York. See INVESTMENT RATING herein Bond proceeds will be used to (a) fund an escrow to advance refund certain of the Village s outstanding Taxable General Obligation Funding Bonds (Alternate Revenue Source), Series 2009A dated April 15, 2009, (the 2009A Bonds ) and (b) pay the costs of issuance of the Bonds. See PLAN OF FINANCING herein. Interest on the Bonds is includible in gross income of the owners thereof for federal income tax purposes. Interest on the Bonds is not exempt from present State of Illinois income taxes No Bank Qualification: The Bonds are not qualified tax-exempt obligations under Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. Bond Registrar/Paying Agent/ Escrow Agent: Verification Agent: The Bank of New York Mellon Trust Company, National Association, Chicago, Illinois. Sikich LLP, Certified Public Accountants, Naperville, Illinois. Delivery: The Bonds are expected to be delivered on or about June 15, Book-Entry Form: Denomination: Municipal Advisor: Underwriter: The Bonds will be registered in the name of Cede & Co. as nominee for The Depository Trust Company ( DTC ), New York, New York. DTC will act as securities depository of the Bonds. See APPENDIX B herein. $5,000 or integral multiples thereof. Speer Financial, Inc., Chicago, Illinois. Robert W. Baird & Co. Incorporated, Naperville, Illinois. 1

74 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A VILLAGE OF LAKE ZURICH Lake County, Illinois Thomas Poynton Village President Village Trustees John Beaudoin John Shaw Jonathan Sprawka Jeffrey Halen Marc Spacone Dan Stanovich Officials Jodie K. Hartman Ray Keller Kathleen Johnson Director of Finance/Village Treasurer Village Manager Village Clerk Security: Alternate Revenue Sources and Tax Levy DESCRIPTION OF THE BONDS The Bonds will constitute valid and legally binding obligations of the Village payable both as to principal and interest from: (a) ratably and equally with certain heretofore issued and now outstanding 2009A Bonds not being refunded, General Obligation Refunding Bonds (Sales Tax Alternate Revenue Source), Series 2014A (the 2014A Bonds), and Taxable General Obligation Refunding Bonds (Sales Tax Alternate Revenue Source), Series 2015A (the 2015A Bonds together with the 2009A Bonds and 2014A Bonds, the Parity Bonds ), collections distributed to the Village from those taxes imposed by the State of Illinois (the State ) pursuant to the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act and the Retailers Occupation Tax Act, each as supplemented and amended from time to time, or substitute taxes therefore as provided by the State in the future (the Pledged Sales Tax Revenues ), (b) from the proceeds received by the Village from time to time from the issuance of its general obligation limited tax bonds or notes to the fullest extent permitted by law, including Section of the Illinois Municipal Code, as amended, (the Limited Tax Proceeds ), (c) ratably and equally with the 2009A Bonds not being refunded, certain incremental property taxes as paid in the Lake Zurich Tax Increment Finance District Number 1 (the TIF ) and received and deposited by the Village into the Special Tax Allocation Fund of the TIF, (the Incremental Taxes and together with the Pledged Sales Tax Revenues and the Limited Tax Proceeds, the Pledged Revenues ), and in the event the aforesaid Pledged Revenues shall be insufficient, (d) the levy and collection of ad valorem property taxes upon all taxable property within the Village without limitation as to rate or amount, except that the rights of the owners of the Bonds and the enforceability of the Bonds may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting creditor s rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion. Pursuant to the Local Government Debt Reform Act of the State of Illinois, as amended (the Debt Reform Act ), the Village will pledge such monies to the payment of the Bonds and shall covenant to provide for and apply such Pledged Revenues to the payment of the Bonds and the provision of not less than an additional 0.25 times debt service, which pledge and covenant shall constitute a continuing obligation of the Village and continuing appropriation of the amounts received. For the prompt payment of the Bonds, the full faith, credit and resources of the Village are irrevocably pledged. 2

75 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A In the ordinance authorizing the Bonds (the Bond Ordinance ), the Village covenants and agrees with the purchasers and the owners of the Bonds that so long as any of the Bonds remain outstanding, the Village will take no action or fail to take any action which in any way would adversely affect the ability of the Village to collect the Pledged Revenues or, except for abatement of tax levies as permitted in the Bond Ordinance, to levy and collect the Pledged Taxes. The Village and its officers will comply with all present and future applicable laws in order to assure that the Pledged Revenues will be available and that the Pledged Taxes will be levied, extended and collected as provided in the Bond Ordinance and deposited in the bond fund created under the Bond Ordinance in connection with the Bonds (the Bond Fund ). The Bonds are issued on a parity with the Parity Bonds. Highlights of Alternate Bonds Section 15 of the Debt Reform Act provides that whenever revenue bonds have been duly authorized, a local government unit may issue its general obligation bonds in lieu of such revenue bonds as authorized, and such general obligation bonds may be referred to as alternate bonds. The Debt Reform Act also provides that whenever there exists a revenue source, a local government unit may issue alternate bonds. Such bonds are general obligation debt payable from the pledged alternate revenues with the general obligation of the issuer acting as back-up security. The Debt Reform Act prescribes several conditions that must be met before alternate bonds may be issued. First, alternate bonds must be issued for a lawful corporate purpose. If issued payable from a revenue source, which revenue source is limited in its purposes or applications, then the alternate bonds can only be issued for such limited purposes or applications. Second, the question of issuance must be submitted to referendum if, within thirty (30) days after publication of an authorizing ordinance and notice of intent to issue alternate bonds, a petition signed by the greater of (i) 7.5% of the registered voters in the government unit; or (ii) 200 of those registered voters or 15%, whichever is less, is filed. Third, the issuer must determine that the pledged revenue source or sources are sufficient in each year to final maturity to provide not less than 1.25 times debt service of the alternate bonds payable from such revenue source previously issued and outstanding and the alternate bonds proposed to be issued. The sufficiency of the revenue source must be supported by the most recent audit of the governmental unit. The audit must be for a fiscal year ending not earlier than 18 months prior to the issuance of the alternate bonds. If the audit does not adequately show such revenue source or if such source of revenue is shown to be insufficient, then the determination of sufficiency must be supported by the report of an independent accountant or feasibility analyst, the latter having a national reputation for expertise in such matters. Such report must demonstrate the sufficiency of the revenues and explain how the revenues will be greater than those shown in the audit. Whenever such sufficiency is demonstrated by a higher tax imposition for a revenue source, such higher taxes must be imposed by an ordinance adopted prior to the delivery of the alternate bonds. Fourth, the revenue source must be pledged to the payment of the alternate bonds. Last, the governmental unit must covenant to provide for, collect and apply the revenue source to the payment of the alternate bonds and to provide for an amount equal to not less than an additional.25 times debt service. Alternate bonds (such as the Bonds) may be issued to refund or advance refund alternate bonds without meeting any of the conditions set forth above, except that the term of the refunding bonds shall not be longer than the term of the refunded bonds and that the debt service payable in any year on the refunding bonds shall not exceed the debt service payable in such year on the refunded bonds. 3

76 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A Abatement of Pledged Taxes Whenever funds are available to pay any principal of or interest on the Bonds when due, the Village will direct the deposit of such funds into the Pledged Revenues Account of the Bond Fund for the Bonds, created solely for such purpose. The Village pledges to abate the levy for the Bonds only upon full funding of the Pledged Revenues Account of the Bond Fund for the Bonds, in the appropriate levy amount. Additional Bonds The Village is authorized to issue from time to time additional obligations payable from the Pledged Revenues as permitted by the Debt Reform Act and to determine the lien priority of any such obligations. Additional obligations shall be on a parity with or have a lien on the Pledged Revenues subordinate to the lien of the Bonds and the Parity Bonds. Bond Fund The Village will make payments on the Bonds from the Pledged Revenues as set forth in the Bond Ordinance. The Village will deposit the appropriate Pledged Revenues in the Pledged Revenues Account of the Bond Fund for the Bonds and will deposit the Pledged Taxes (if extended) into the Pledged Taxes Account of the Bond Fund for the Bonds, which is a trust fund established for the purpose of carrying out the covenants, terms and conditions imposed upon the Village by the Bond Ordinance. The Bonds are secured by a pledge of all of the monies on deposit in the Bond Fund, and such pledge is irrevocable until the Bonds have been paid in full or until the obligations of the Village are discharged under the Bond Ordinance. The Pledged Revenues are pledged to the payment of the Bonds and the President and Board of Trustees of the Village covenant and agree to provide for, budget, collect and apply the Pledged Revenues to the payment of the Bonds and the provision of not less than an additional.25 times debt service. Filing with County Clerk The Bond Ordinance provides for the levy of the Pledged Taxes in amounts sufficient to pay, as and when due, all principal of and interest on the Bonds. Such Bond Ordinance will be filed with the County Clerk of Lake County, Illinois (the County Clerk ), and will serve as authorization to the County Clerk to extend and collect the property taxes as set forth in such Bond Ordinance to pay the Bonds. The Pledged Taxes may be abated as set forth above. Certain Risk Factors The ability of the Village to pay the Bonds from the Pledged Revenues may be limited by circumstances beyond the control of the Village. There is no guarantee that the Pledged Revenues will continue to be available at current levels. To the extent that Pledged Revenues may be insufficient to pay the Bonds, the Bonds are to be paid from the Pledged Taxes. If the Pledged Taxes are ever extended for the payment of the Bonds, the amount of the Bonds then outstanding will be included in the computation of indebtedness of the Village for purposes of all statutory provisions or limitations until such time as an audit of the Village shows that the Bonds have been paid from the Pledged Revenues for a complete fiscal year. 4

77 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A Estimated Debt Service Coverage Table(1) (Sales Tax Revenues) Calendar Sales Tax Taxable Taxable Taxable Outstanding The Mandatory Year Revenues(2) Series 2009A Series 2011B(3) Series 2014A Series 2015A Total Bonds Total Coverage Amount(4) $6,658,825 $ 616,116 $43,135 $ 788,500 $ 413,685 $ 1,861,436 $ 0 $ 1,861, x $2,326, ,658, , , ,685 1,856, ,909 2,046, x 2,557, ,658, , , ,685 1,901, ,733 2,188, x 2,736, ,658, , , ,685 1,937, ,263 2,223, x 2,779, ,658, , , ,685 1,975, ,493 2,259, x 2,824, ,658, , ,685 1,229, ,976 2,022, x 2,528, ,658, , ,685 1,227, ,706 2,028, x 2,535, ,658, , ,685 1,220, ,343 2,031, x 2,539, ,658, , ,685 1,242, ,353 2,053, x 2,566, ,658, ,223,685 1,223, ,718 2,036, x 2,545, ,658, ,227,360 1,227, ,454 2,030, x 2,538, ,658, ,235,060 1,235, ,798 2,042, x 2,553, ,658, ,246,623 1,246, ,679 2,057, x 2,571, ,658, ,256,428 1,256, ,124 2,063, x 2,579, ,658, ,638,958 1,638, ,638, x 2,048, ,658, ,636,008 1,636, ,636, x 2,045, ,658, ,650,068 1,650, ,650, x 2,062, ,658, ,646,048 1,646, ,646, x 2,057, ,658, ,644,438 1,644, ,644, x 2,055,547 Total... $3,451,190 $43,135 $7,235,650 $18,127,838 $28,857,812 $8,305,546 $37,163,358 Notes: (1) Does not include bonds being refunded. (2) Source: Comprehensive Annual Financial Report for Fiscal Year Ended April 30, 2015; does not include non-home rule sales tax. (3) 2015 Rollover pays principal and interest (4) Equal to the 125% mandatory rate covenant. 5

78 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A Historical Sales Tax Receipts(1) Annual Percent Year Amount Change + (-) $5,296, %(2) ,458, % ,592, % ,476,150 (2.07%) ,793, % ,878, % ,060, % ,234, % ,658, % Growth from 2007 to % Notes: (1) Source: Comprehensive Annual Financial Reports of the Village. Does not include special voted tax. (2) 2007 percent change based on 2006 sales tax receipts of $5,050,385. Lake Zurich Tax Increment Finance District Number 1 The outstanding 2009A Bonds not being refinanced are additionally secured by revenues, if any, from the TIF. Historical tax receipts are shown below. Lake Zurich Tax Increment Finance District Number 1 Incremental Valuation and Incremental Property Taxes(1) State Taxes Equalized Levy Collection Taxes Taxes Assessed Value(2) Year Year Extended Distributed(3) $25,004, $1,502,011 $1,498, ,024, ,502,452 1,504, ,145, ,476,684 1,473, ,716, ,351,386 1,340, ,776, ,336,400 1,296, ,102, ,225,907 1,213, ,569, ,194,562 1,181,485 Notes: (1) Source: Offices of the Lake County Clerk and Lake County Treasurer. (2) EAV that determines the amount of taxes to be paid to the TIF special allocation fund. (3) As of January 13, Section of the Illinois Municipal Code was amended in a manner that allows for the completion dates of the redevelopment projects and retirement dates of obligations issued to finance redevelopment project costs (including refunding bonds) to be extended to December 31, Such extension applies specifically to the Village because the ordinance approving the redevelopment project area was adopted by the Village on March 18,

79 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A THE VILLAGE The Village, incorporated on September 19, 1896, is located in southwestern Lake County approximately 37 miles from downtown Chicago, Illinois. Nearby communities include North Barrington to the west, Deer Park to the south, Kildeer to the southeast and east, and Hawthorn Woods to the north. The Village encompasses an area of 6.9 square miles. The 2010 Census reported a population of 19,631 which was an increase of 8.4% over the 2000 Census of 18,104. Village Government and Services The Village is a non-home rule community that operates under the management form of municipal government as provided in Chapter 65, Article 5 of the Illinois Compiled Statutes. The Village is governed by a President and Board of six trustees, all of whom are elected on an at-large basis to four year overlapping terms. Policy-making and legislative authority are vested in the Village Board. The Board is responsible for passing ordinances, adopting the budget, appointing committees, and hiring both the Village Manager and Village Attorney. The Board is elected on a non partisan basis. Board members serve four year staggered terms, with three Board members elected every two years. The Village President and Clerk are elected to serve a four year term. An appointed Village Manager is charged with the day-to-day responsibility of administering Board policy and supervising approximately 160 full time, several part time, and seasonal employees. The Village provides a full range of services, including administrative, financial, police and fire protection, public works, water and sewer utilities, recreational activities, building and zoning inspections, economic development, and cultural events. There are four unions active in the Village with contracts as follow: Bargaining Unit Expiration Police Officers... June 30, 2017 Telecommunicators... April 30, 2018 Public Works Employees (Local 150)... April 30, 2019 Firefighters... April 30, 2017 Transportation Residents of the Village have access to two major roads U.S. Route 12 and State Route 22. Air transportation is available at O Hare International Airport approximately 30 miles from the Village and Amtrak offers rail service in nearby Glenview about 17 miles away. Commuter service to Chicago is also available in Barrington five miles west of the Village. Community Life The Village s Park and Recreation Department maintains 32 parks including two beaches, one sprayground, 22 playgrounds, nature parks and pathways, preschool facilities, athletic fields, rental facilities, and fitness and dance rooms. The Ela Area Public Library District (the District ) provides books, e-books, audio materials, video materials, databases, print serial subscriptions and electronic subscriptions to the residents of the Village. In total, the District serves a population of over 35,000 that also includes Hawthorn Woods, Kildeer, North Barrington, Long Grove, Echo Lake and Forest Lake. 7

80 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A There are three acute care hospitals within 11 miles of the Village. Advocate Good Shepherd Hospital is in Barrington; Advocate Condell Medical Center is in Libertyville; and Northwest Community Hospital is in Arlington Heights. Education Lake Zurich Community Unit School District Number 95 meets the elementary and secondary education needs of the majority of residents while Kildeer Countryside Consolidated School District Number 96 and Stevenson High School District Number 125 serve a minor portion of the Village. Opportunities for higher education can be found at several community colleges. Among those are: Harper College in Palatine; College of Lake County in Grayslake; and Oakton Community College in Des Plaines. Economy The Village s retail sales tax base is located primarily on Rand Road where stores such as Costco, Home Depot, Walmart and Target are located. The Village contains the following shopping centers: Village Square Shopping Center, First Executive Retail Center Shopping Center, Lake Zurich Shopping Center, Lake Zurich Retail Center Shopping Center, Bank One Plaza Shopping Center, Northlake Commons Shopping Center, and Oakwood Commons Shopping Center. Employment SOCIOECONOMIC INFORMATION Substantial employment is available in surrounding communities and throughout the Chicago metropolitan area. Numerous employers are located within the Village and in surrounding communities. Following are lists of large employers located in the Village and in the surrounding area. Major Village Employers(1) Approximate Name Business/Service Employment Dovenmuehle Mortgage, Inc.... Mortgage Services... 1,000 B&B Maintenance, Inc.... Janitorial Services ECHO, Inc.... Corporate Headquarters: Outdoor Power, Lawn and Garden Equipment Lake Zurich Community Unit School District Education Fresenius Kabi USA, LLC... Pharmaceuticals Peapod... Food Service ACCO Brands Corp... Lawn and Garden Equipment Termax Corp.... Metal Stampings and Fasteners Smalley Steel Ring Co.... Spiral Retaining Rings, Snap Rings, Springs Fenwal, Inc.... Automated Blood Collection Equipment and Supplies YMCA... Charitable Organization Tredegar Film Products... Polyethylene and Polypropylene Films Food Equipment Technologies Co.... Eco-friendly Industrial Coffee Brewers D&W Fine Pack... Packaging Solutions Village of Lake Zurich... Government All American Exterior Solutions... Roofing, Siding and Sheetmetal Contractors Insight Beverages... Custom Beverage Manufacturer and Distributor RightSize Health & Nutrition LLC... Beverages Note: (1) Source: 2016 Illinois Manufacturers Directory, 2016 Illinois Services Directory and a selective telephone survey. 8

81 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A Major Area Employers(1) Approximate Location Name Product/Service Employment Arlington Heights... Northwest Community Hospital... Company Headquarters; Community Hospital... 4,000 Mundelein... Medline Industries, Inc.... Corporate Headquarters; Medical Products and Garments... 3,000 Wheeling... Durable Packaging International, Inc... Aluminum Foil and Foil Products... 2,000 Arlington Heights... Clearbrook... Developmentally Disabled Rehabilitation Services... 1,000 Wheeling... Handi-Foil Corp.... Aluminum Foil Cooking Containers Cary... Sage Products, Inc.... Disposable Medical Products Wheeling... Segerdahl Corp.... Lithographic Printing Wheeling... National-Louis University... Branch Campus, Private University Arlington Heights... Paddock Publications, Inc.... Corporate Headquarters; Daily Printed and Online Newspaper Publishing Arlington Heights... Paylocity... Software Development Arlington Heights... AMITA Health... Company Headquarters; Health Care Services and Medical Center Arlington Heights... Dex One Corp.... Telephone Directory Publishing Wheeling... Crothall Laundry System... Eco-friendly Hospital Linen Laundry Services Arlington Heights... Level 3 Communications, LLC... Data and Voice Communications Services Wheeling... Shure, Inc.... Microphones and Electric Components and Audio Products Arlington Heights... Kroeschell, Inc.... Industrial, Institutional and Commercial Heating, Air Conditioning, Etc. Contractors Arlington Heights... Village of Arlington Heights, Economic Development... Municipal Economic Development Organization Cary... Aptar BH... Finger Spray Pumps and Aerosol Valves Note: (1) Source: 2016 Illinois Manufacturers Directory, 2016 Illinois Services Directory and a selective telephone survey. The following tables show employment by industry and by occupation for the Village, Lake County and the State of Illinois as reported by the U.S. Census Bureau American Community Survey 5-year estimated values. Employment By Industry(1) The Village Lake County State of Illinois Classification Number Percent Number Percent Number Percent Agriculture, Forestry, Fishing and Hunting, and Mining % % 63, % Construction % 16, % 308, % Manufacturing... 1, % 53, % 756, % Wholesale Trade % 14, % 181, % Retail Trade... 1, % 39, % 663, % Transportation and Warehousing, and Utilities % 12, % 353, % Information % 6, % 124, % Finance and Insurance, and Real Estate and Rental and Leasing... 1, % 26, % 442, % Professional, Scientific, and Management, and Administrative and Waste Management Services... 1, % 45, % 681, % Educational Services and Health Care and Social Assistance... 2, % 65, % 1,391, % Arts, Entertainment and Recreation and Accommodation and Food Services % 31, % 544, % Other Services, Except Public Administration % 14, % 288, % Public Administration % 9, % 232, % Total... 10, % 335, % 6,032, % Note: (1) Source: U.S. Bureau of the Census, American Community Survey 5-year estimates 2010 to

82 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A Employment By Occupation(1) The Village Lake County State of Illinois Classification Number Percent Number Percent Number Percent Management, Business, Science, and Art... 5, % 140, % 2,204, % Service... 1, % 51, % 1,048, % Sales and Office... 2, % 85, % 1,500, % Natural Resources, Construction, and Maintenance % 19, % 441, % Production, Transportation, and Material Moving % 37, % 837, % Total... 10, % 335, % 6,032, % Note: (1) Source: U.S. Bureau of the Census, American Community Survey 5-year estimates 2010 to Annual Average Unemployment Rates(1) Calendar The Lake State of Year Village County Illinois % 4.2% 4.5% % 5.0% 5.0% % 6.6% 6.4% % 9.8% 10.1% % 10.5% 10.5% % 9.4% 9.8% % 8.8% 8.9% % 8.7% 9.2% % 6.5% 7.1% % 5.5% 5.9% 2016(2)... NA 6.7% 6.8% Notes: (1) Source: Illinois Department of Employment Security. (2) Preliminary rates for the month of March Building Permits Village Building Permits(1) (Excludes the Value of Land) New Single Family Homes Number Value Year of Permits of Permits $ 1,710, ,642, , ,941, ,268, ,589, ,545, ,167,000 Note: (1) Source: the Village. 10

83 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A Housing The U.S. Census Bureau 5-year estimated values reported that the median value of the Village s owneroccupied homes was $316,500. This compares to $247,300 for Lake County and $175,700 for the State of Illinois. The following table represents the five year average market value of specified owner-occupied units for the Village, Lake County and the State of Illinois at the time of the American Community Survey. Home Values(1) The Village Lake County State of Illinois Value Number Percent Number Percent Number Percent Under $50, % 6, % 243, % $50,000 to $99, % 12, % 508, % $100,000 to $149, % 24, % 525, % $150,000 to $199, % 28, % 533, % $200,000 to $299, , % 37, % 663, % $300,000 to $499, , % 38, % 486, % $500,000 to $999, % 27, % 188, % $1,000,000 or more % 6, % 45, % Total... 5, % 181, % 3,194, % Note: (1) Source: U.S. Bureau of the Census, American Community Survey 5-year estimates 2010 to Mortgage Status(1) The Village Lake County State of Illinois Number Percent Number Percent Number Percent Housing Units with a Mortgage... 4, % 134, % 2,146, % Housing Units Without a Mortgage.. 1, % 46, % 1,048, % Total... 5, % 181, % 3,194, % Note: (1) Source: U.S. Bureau of the Census, American Community Survey 5-year estimates 2010 to Income Per Capita Personal Income for the Highest Income Counties in the State(1) Rank DuPage County... $38, Lake County... 38, McHenry County... 33, Monroe County... 33, Piatt County... 31, Kendall County... 31, Will County... 30, McLean County... 30, Kane County... 30, Sangamon County... 30, Cook County... 30,468 Note: (1) Source: U.S. Bureau of the Census American Community 5-Year Estimates. 11

84 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A The following shows the median family income for counties in the Chicago metropolitan area. Ranking of Median Family Income(1) Ill. Family Ill. County Income Rank DuPage County... $96,330 1 Lake County... 92,910 2 Kendall County... 92,794 3 McHenry County... 88,699 4 Will County... 87,503 5 Kane County... 81,273 8 Cook County... 66, Note: (1) Source: U. S. Bureau of the Census, American Community Survey, estimates. The U.S. Census Bureau 5-year estimated values reported that the Village had a median family income of $122,507. This compares to $92,910 for Lake County and $70,967 for the State of Illinois. The following table represents the distribution of family incomes for the Village, Lake County and the State of Illinois at the time of the American Community Survey. Family Income(1) The Village Lake County State of Illinois Value Number Percent Number Percent Number Percent Under $10, % 5, % 138, % $10,000 to $14, % 3, % 84, % $15,000 to $24, % 8, % 222, % $25,000 to $34, % 9, % 252, % $35,000 to $49, % 16, % 376, % $50,000 to $74, % 28, % 577, % $75,000 to $99, % 24, % 465, % $100,000 to $149, , % 35, % 553, % $150,000 to $199, , % 20, % 230, % $200,000 or more % 26, % 231, % Total... 5, % 179, % 3,131, % Note: (1) Source: U.S. Bureau of the Census, American Community Survey 5-year estimates 2010 to The U.S. Census Bureau 5-year estimated values reported that the Village had a median household income of $108,294. This compares to $77,873 for Lake County and $57,166 for the State of Illinois. The following table represents the distribution of household incomes for the Village, Lake County and the State of Illinois at the time of the American Community Survey. Household Income(1) The Village Lake County State of Illinois Value Number Percent Number Percent Number Percent Under $10, % 10, % 341, % $10,000 to $14, % 6, % 218, % $15,000 to $24, % 16, % 479, % $25,000 to $34, % 17, % 455, % $35,000 to $49, % 26, % 614, % $50,000 to $74, % 39, % 852, % $75,000 to $99, % 31, % 612, % $100,000 to $149, , % 41, % 671, % $150,000 to $199, , % 22, % 265, % $200,000 or more % 29, % 267, % Total... 6, % 241, % 4,778, % Note: (1) Source: U.S. Bureau of the Census, American Community Survey 5-year estimates 2010 to

85 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A Sales Tax Trend The table below shows the distribution of the municipal portion of the Retailers Occupation, Service Occupation and Use Tax ( Sales Tax ) collected by the State Department of Revenue from retailers within the Village. The table indicates the level of retail activity in the Village. Retailers Occupation, Service Occupation and Use Tax(1) State Fiscal Year State Sales Tax Annual Percent Ending June 30 Distributions(2) Change + (-) $5,050, %(3) ,332, % ,458, % ,592, % ,476,150 (2.07%) ,793, % ,877, % ,060, % ,225, % ,653, % Growth from 2006 to % Notes: (1) Source: Illinois Department of Revenue. (2) Tax distributions are based on records of the Illinois Department of Revenue relating to the 1% municipal portion of the Retailers Occupation, Service Occupation and Use Tax, collected on behalf of the Village, less a State administration fee. The municipal 1% includes tax receipts from the sale of food and drugs which are not taxed by the State. (3) 2006 percent change based on 2005 sales tax receipts of $5,021,100. The Village enacted a non-home rule sales tax effective July 1, 2011 to be used for capital project needs. Non-home Rule Sales Tax(1) State Fiscal Year State Sales Tax Annual Percent Ended June 30 Distributions Change + (-) $1,347, ,867, % ,907, % ,981, % Note: (1) Source: Illinois Department of Revenue. 13

86 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A PLAN OF FINANCING The Bond proceeds will be used to fund an escrow to advance refund a portion of the Village s outstanding 2009A Bonds (the "Refunded Bonds"), as listed below, and to pay the costs of issuance of the Bonds. The Refunded Bonds Outstanding Amount Redemption Redemption Maturities Amount Refunded Price Date 2/1/ $ 240,000 $ 0 NA NA 2/1/ ,000 0 NA NA 2/1/ ,000 0 NA NA 2/1/ ,000 0 NA NA 2/1/ , , % 2/1/2019 2/1/ , , % 2/1/2019 2/1/ , , % 2/1/2019 2/1/ , , % 2/1/2019 2/1/ , , % 2/1/2019 2/1/ , , % 2/1/2019 2/1/ , , % 2/1/2019 2/1/ , , % 2/1/2019 2/1/ , , % 2/1/2019 Total... $7,285,000 $5,990,000 Certain of the bond proceeds will be used to purchase direct non-callable full faith and credit obligations of the United States of America (the Government Securities ) and to provide an initial cash deposit. The Government Securities together with interest earnings thereon and the beginning cash deposit will be sufficient to pay when due the principal of and interest on the Refunded Bonds up to and including the prior redemption date thereof. The Government Securities will be held in an escrow account (the Escrow Account ) created pursuant to an escrow agreement (the Escrow Agreement ), dated as of the date of issuance of the Bonds, between the Village and The Bank of New York Mellon Trust Company, National Association, Chicago, Illinois, as Escrow Agent (the Escrow Agent ). The accuracy of the mathematical computations regarding the adequacy of the maturing principal of and interest earnings on the Government Securities together with the initial cash deposit in the Escrow Account to pay the debt service described above on the Refunded Bonds will be verified by Sikich LLP, Certified Public Accountants, Naperville, Illinois (the Verification Agent ). Such verification shall be based upon information supplied by the Village. 14

87 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A DEBT INFORMATION After issuance of the Bonds and refunding of the Refunded Bonds, the Village will have outstanding $1,885,000 principal amount of general obligation debt and $28,535,000 principal amount of general obligation alternate revenue source debt. The Village has $2,622,051 in IEPA loans. In addition, the Village issues a local bank general obligation note/bond on an annual basis; the 2017 local bank general obligation bond which will sell in the near future will be approximately $1,000,000. The Village does not intend to issue additional general obligation debt for the next twelve months. Prior to the Sale of the Bonds Outstanding General Obligation Bonded Debt(1) (Principal Only) Series 2008A Taxable Series Series 2013A Series 2014A Taxable Series Less: Cumulative Calendar Refunding 2009A Funding Water/Sewer Refunding 2015A Refunding Outstanding The Refunded Total Principal Retired Year Bonds Bonds (ARS)(2) (ARS)(3) (ARS)(4) Bonds (ARS)(4) Debt Bonds(2) Bonds Debt Amount Percent $ 435,000 $ 240,000 $ 400,000 $ 645,000 $ 0 $ 1,720,000 $ 0 $ 0 $ 1,720,000 $ 1,720, % , , , , ,850, , ,970,000 3,690, % , , , , ,955, , ,075,000 5,765, % , , , , ,045, , ,165,000 7,930, % , , , ,690, ,000 (515,000) 1,810,000 9,740, % , , , ,700, ,000 (550,000) 1,805,000 11,545, % , , , ,750, ,000 (590,000) 1,840,000 13,385, % , , ,430, ,000 (625,000) 1,500,000 14,885, % , ,000 1,470, ,000 (660,000) 1,525,000 16,410, % , ,000 1,535, ,000 (695,000) 1,565,000 17,975, % , ,000 1,615, ,000 (740,000) 1,625,000 19,600, % , ,000 1,700, ,000 (785,000) 1,690,000 21,290, % , ,000 1,785, ,000 (830,000) 1,750,000 23,040, % ,370,000 1,370, ,370,000 24,410, % ,415,000 1,415, ,415,000 25,825, % ,480,000 1,480, ,480,000 27,305, % ,530,000 1,530, ,530,000 28,835, % ,585,000 1,585, ,585,000 30,420, % Total... $1,885,000 $7,285,000 $2,990,000 $5,690,000 $11,775,000 $29,625,000 $6,785,000 $(5,990,000) $30,420,000 Notes: (1) Source: the Village. (2) Payable from limited tax bonds or notes, state sales tax and TIF revenues. (3) Payable from water and sewer revenues. (4) Payable from state sales taxes. 15

88 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A Illinois Environmental Protection Agency (IEPA) Loans(1) (Principal Only) Cumulative Calendar Principal Retired(2) Year Total Debt Amount Percent $ 97,497 $ 81,449 $ 178,946 $ 178, % ,950 83, , , % ,464 85, , , % ,042 87, , , % ,684 89, , , % ,393 92, ,615 1,143, % ,170 94, ,712 1,351, % ,017 96, ,937 1,564, % ,935 99, ,293 1,782, % , , ,785 2,006, % , , ,414 2,235, % , , ,762 2,456, % , ,740 2,566, % ,901 55,901 2,622, % Total... $1,332,925 $1,289,126 $2,622,051 Note: (1) Source: the Village. Detailed Overlapping Bonded Debt(1) Outstanding Applicable to Village Debt(2) Percent(3) Amount Schools: Kildeer Countryside Consolidated School District Number $ 405, % $ 11,421 Stevenson High School District Number ,420, % 354,252 Lake Zurich Community Unit School District Number ,288, % 8,744,480 College of Lake County Number ,220, % 2,578,254 Total Schools... $11,688,407 Others(3): Lake County... $190,055, % $ 6,442,865 Lake County Forest Preserve District ,615, % 9,648,449 Ela Area Public Library District... 3,195, % 1,424,970 Total Others... $17,516,283 Total School and Others Overlapping Bonded Debt... $29,204,690 Notes: (1) Source: Lake County Clerk. (2) As of March 17, (3) Overlapping debt percentages are based on 2015 EAV, the most current available. 16

89 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A Statement of Bonded Indebtedness(1) Ratio To Per Capita Amount Equalized Estimated (2010 Census Applicable Assessed Actual 19,631) Village EAV of Taxable Property, $ 794,190, % 33.33% $ 40, Estimated Actual Value, $2,382,571, % % $121, Total Net Direct Bonded Debt(2)... $ 1,885, % 0.08% $ Overlapping Bonded Debt(3): Schools... $ 11,688, % 0.49% $ Other... 17,516, % 0.74% Total Overlapping Bonded Debt... $ 29,204, % 1.23% $ 1, Total Net Direct and Overlapping Bonded Debt... $ 31,089, % 1.30% $ 1, Notes: (1) Source: Lake County Clerk. (2) Excludes alternate revenue source bonds. (3) As of March 17, Legal Debt Margin(1) 2015 Village Equalized Assessed Valuation... $794,190,580 Statutory Debt Limitation (8.625% of EAV)... $ 68,498,938 General Obligation Bonded Debt: Series 2008A Bonds...$ 1,885,000 Series 2009A Bonds(2)(3)... 1,295,000 Series 2013A Bonds(2)... 2,990,000 Series 2014A(2)... 5,690,000 Series 2015A(2)... 11,775,000 The Bonds(2)... 6,785,000 Total...$ 30,420,000 Less: Alternate Revenue Source Bonds...$(28,535,000) Total Applicable Debt... $ 1,885,000 Legal Debt Margin... $ 66,613,938 Notes: (1) Source: the Village. (2) As general obligation "alternate bonds" under the Illinois statutes, all outstanding general obligation alternate bonded debt does not count against either the overall 8.625% of EAV debt limit or the non-referendum 0.500% of EAV debt limit for general obligation bonded debt, as long as the debt service levy for such bonds is abated annually and not extended. (3) Does not include bonds expected to be refunded by the Bonds. 17

90 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A PROPERTY ASSESSMENT AND TAX INFORMATION For the 2015 levy year, the Village s EAV was comprised of approximately 72% residential, 12% industrial, 15% commercial, and less than 1% farm and railroad valuations. Village Equalized Assessed Valuation(1) Levy Years Property Class Residential... $632,206,825 $586,107,063 $554,924,634 $553,285,740 $579,562,017 Farm... 1, , , , ,757 Commercial ,966, ,231, ,836, ,181, ,893,692 Industrial... 96,366,465 94,706,335 92,439,153 95,722,702 96,798,005 Railroad , , , , ,109 Total... $839,863,132 $792,516,257 $756,892,029 $768,979,731 $794,190,580 Percent Change + (-)... (3.70%)(2) (5.64%) (4.50%) 1.60% 3.28% Notes: (1) Source: Lake County Clerk. (2) The 2011 percent change is based on a 2010 EAV of $872,121,444. Representative Tax Rates(1) (Per $100 EAV) Levy Years Village Rates: Ambulance Service... $0.016 $0.018 $0.019 $0.020 $0.020 Bonds Corporate Fire Protection Firefighter Pension IMRF Police Pension Police Protection Recreation for Handicapped Total Village Rates... $0.907 $0.998 $1.132 $1.144 $1.131 Lake County Lake County Forest Preserve District Ela Township(2) Unit School District Number Ela Library District Lake County Community College District Number Total Rates(3)... $6.854 $7.518 $8.117 $8.199 $8.044 Notes: (1) Source: Lake County Clerk. (2) Includes Road and Bridge. (3) Representative tax rates for other governmental units are from Ela Township tax code 15059, which represents approximately 87% of the Village's 2015 EAV. Village Tax Extensions and Collections(1) (Includes Road and Bridge Levy) Levy Coll. Taxes Total Collections Year Year Extended Amount Percent $7,465,360 $7,445, % ,617,559 7,608, % ,909,312 7,803, % ,594,806 8,554, % ,794,144 8,783, %(2) ,979, In Collection----- Notes: (1) Source: the Lake County Clerk and the Village. (2) As of January 13,

91 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A Major Village Taxpayers(1) Taxpayer Name Business/Service 2014 EAV(2) Village Square Retail Center LLC...Shopping Center and Office Buildings... $ 6,518,409 Deerpath Commons Retail Center LLC...Retail... 6,195,337 Individual...Shopping Center and Office Buildings... 6,117,655 Echo Incorporated...Power Outdoor Equipment... 5,556,952 Deerpath Court Retail Center LLC...Retail... 5,167,427 Costco Wholesale Corp...Discount Retail Store... 3,858,072 Walmart Stores Inc...Retail... 3,767,660 Liberty Realty Lake Zurich LLC...Realty... 3,259,711 Target Corporation T Discount Retail Store... 2,990,964 HD Development of Maryland, Inc....Commercial Properties... 2,900,516 Total... $46,332,703 Largest Taxpayers as Percent of Village's 2014 EAV ($768,979,731) % Notes: (1) Source: Lake County Assessor. (2) Every effort has been made to seek out and report the largest taxpayers. However, many of the taxpayers listed contain multiple parcels and it is possible that some parcels and their valuations have been overlooked. The 2014 EAV is the most current available. REAL PROPERTY ASSESSMENT, TAX LEVY AND COLLECTION PROCEDURES Tax Levy and Collection Procedures Local assessment officers determine the assessed valuation of taxable real property and railroad property not held or used for railroad operations. The Illinois Department of Revenue (the Department ) assesses certain other types of taxable property, including railroad property held or used for railroad operations. Local assessment officers valuation determinations are subject to review at the county level and then, in general, to equalization by the Department. Such equalization is achieved by applying to each county s assessments a multiplier determined by the Department. The purpose of equalization is to provide a common basis of assessments among counties by adjusting assessments toward the statutory standard of 33-1/3% of fair cash value. Farmland is assessed according to a statutory formula which takes into account factors such as productivity and crop mix. Taxes are extended against the assessed values after equalization. Property tax levies of each taxing body are filed in the office of the county clerk of each county in which territory of that taxing body is located. The county clerk computes the rates and amount of taxes applicable to taxable property subject to the tax levies of each taxing body and determines the dollar amount of taxes attributable to each respective parcel of taxable property. The county clerk then supplies to the appropriate collecting officials within the county the information needed to bill the taxes attributable to the various parcels therein. After the taxes have been collected, the collecting officials distribute to the various taxing bodies their respective shares of the taxes collected. Taxes levied in one calendar year are due and payable in two installments during the next calendar year. Taxes that are not paid when due, or that are not paid by mail and postmarked on or before the due date, are subject to a penalty of 1-1/2% per month until paid. Unpaid property taxes, together with penalties, interest and costs, constitute a lien against the property subject to the tax. Exemptions An annual General Homestead Exemption provides that the EAV of certain property owned and used for residential purposes ( Residential Property ) may be reduced by the amount of any increase over the 1977 EAV, up to a maximum reduction of $6,000 for tax year 2012 and thereafter. The Homestead Improvement Exemption applies to Residential Properties that have been improved or rebuilt in the 2 years following a catastrophic event. The exemption is limited to $45,000 through December 31, 2003, and $75,000 per year beginning January 1, 2004 and thereafter, to the extent the assessed value is attributable solely to such improvements or rebuilding. 19

92 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A The Senior Citizens Homestead Exemption annually reduces the EAV on residences owned and occupied by senior citizens. Beginning with tax year 2013, the maximum exemption is $5,000. A Senior Citizens Assessment Freeze Homestead Exemption freezes property tax assessments for homeowners, who are 65 and older and receive a household income not in excess of the maximum income limitation. The maximum income limitation is $35,000 for years prior to 1999, $40,000 for assessment years 1999 through 2003, $45,000 for assessment years 2004 and 2005, $50,000 from assessment years 2006 and 2007 and for assessments year 2008 and after, the maximum income limitation is $55,000. In general, the Senior Citizens Assessment Freeze Homestead Exemption limits the annual real property tax bill of such property by granting to qualifying senior citizens an exemption as to a portion of the valuation of their property. For those counties with a population of less than 3,000,000, the Senior Citizens Assessment Freeze Homestead Exemption is as follows: through assessment year 2005 and for assessment year 2007 and later, the exempt amount is the difference between (i) the current EAV of their residence and (ii) the base amount, which is the EAV of a senior citizen s residence for the year prior to the year in which he or she first qualifies and applies for the Exemption (plus the EAV of improvements since such year). For assessment year 2006, the amount of the Senior Citizens Assessment Freeze Homestead Exemption phases out as the amount of household income increases. The amount of the Senior Citizens Assessment Freeze Homestead Exemption is calculated by using the same formula as above, and then multiplying the resulting value by a ratio that varies according to household income. The Natural Disaster Homestead Exemption (the Natural Disaster Exemption ) applies to homestead properties containing a residential structure that has been rebuilt following a natural disaster occurring in taxable year 2012 or any taxable year thereafter. A natural disaster is an occurrence of widespread or severe damage or loss of property resulting from any catastrophic cause including but not limited to fire, flood, earthquake, wind, or storm. The Natural Disaster Exemption is equal to the equalized assessed value of the residence in the first taxable year for which the taxpayer applies for the exemption minus the base amount. To be eligible for the Natural Disaster Exemption, the residential structure must be rebuilt within two years after the date of the natural disaster, and the square footage of the rebuilt residential structure may not be more than 110% of the square footage of the original residential structure as it existed immediately prior to the natural disaster. The Natural Disaster Exemption remains at a constant amount until the taxable year in which the property is sold or transferred. Another exemption available to disabled veterans operates annually to exempt up to $100,000 of the assessed valuation of property owned and used exclusively by such veterans or their spouses for residential purposes. Also, certain property is exempt from taxation on the basis of ownership and/or use, such as public parks, not-for-profit schools and public schools, churches, and not-for-profit hospitals and public hospitals. However, individuals claiming exemption under the Disabled Persons Homestead Exemption or the Disabled Veterans Standard Homestead Exemption cannot claim the aforementioned exemption. Furthermore, beginning with assessment year 2007, the Disabled Persons Homestead Exemption provides an annual homestead exemption in the amount of $2,000 for property that is owned and occupied by certain persons with a disability. However, individuals claiming exemption as a disabled veteran or claiming exemption under the Disabled Veterans Standard Homestead Exemption cannot claim the aforementioned exemption. In addition, the Disabled Veterans Standard Homestead Exemption provides disabled veterans an annual homestead exemption starting with assessment year 2015 and thereafter. Specifically, (i) those veterans with a serviceconnected disability of 30% or more but less than 50% are granted an exemption of $2,500, (ii) those veterans with a service-connected disability of 50% or more but less than 70% are granted an exemption of $5,000 and (iii) if the veteran has a service-connected disability of 70% or more then the property is exempt from taxation under the code. Furthermore, the veteran s surviving spouse is entitled to the benefit of the exemption, provided that the spouse has legal or beneficial title of the homestead, resides permanently on the homestead and does not remarry. However, individuals claiming exemption as a disabled veteran or claiming exemption under the Disabled Persons Homestead Exemption cannot claim the Disabled Veterans Standard Homestead Exemption. 20

93 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A Beginning with assessment year 2007, the Returning Veterans Homestead Exemption is available for property owned and occupied as the principal residence of a veteran in the assessment year the veteran returns from an armed conflict while on active duty in the United States armed forces. This provision grants a homestead exemption of $5,000, which is applicable in all counties. In order to apply for the Returning Veterans Homestead Exemption, the individual must pay real estate taxes on the property, own the property or have either a legal or an equitable interest in the property, or a leasehold interest of land on which a single family residence is located, which is occupied as a principle residence of a veteran returning from an armed conflict involving the armed forces of the United States who has an ownership interest therein, legal, equitable or as a lessee, and on which the veteran is liable for the payment of property taxes. Those individuals eligible for the Returning Veterans Homestead Exemption may claim the Returning Veterans Homestead Exemption, in addition to other homestead exemptions, unless otherwise noted. Property Tax Extension Limitation Law The Property Tax Extension Limitation Law, as amended (the Limitation Law ), limits the annual growth in the amount of property taxes to be extended for certain Illinois non-home-rule units, including the Village. In general, the annual growth permitted under the Limitation Law is the lesser of 5% or the percentage increase in the Consumer Price Index during the calendar year preceding the levy year. Taxes can also be increased due to new construction, referendum approval of tax rate increases, mergers and consolidations. The effect of the Limitation Law is to limit the amount of property taxes that can be extended for a taxing body. In addition, general obligation bonds, notes and installment contracts payable from ad valorem taxes unlimited as to rate and amount cannot be issued by the affected taxing bodies unless they are approved by referendum, are alternate bonds (such as the Bonds) or are for certain refunding purposes. The Village has the authority to levy taxes for many different purposes. See the table entitled Representative Tax Rates under PROPERTY ASSESSMENT AND TAX INFORMATION herein. The ceiling at any particular time on the rate at which these taxes may be extended for the Village is either (i) unlimited (as provided by statute), (ii) initially set by statute but permitted to be increased by referendum, (iii) capped by statute, or (iv) limited to the rate approved by referendum. Public Act , effective June 30, 2006, provides that the only ceiling on a particular tax rate is the ceiling set by statute above, at which the rate is not permitted to be further increased by referendum or otherwise. Therefore, taxing districts (such as the Village) will have increased flexibility to levy taxes for the purposes for which they most need the money. The total aggregate tax rate for the various purposes subject to the Limitation Law, however, will not be allowed to exceed the Village s limiting rate computed in accordance with the provisions of the Limitation Law. Truth in Taxation Law Legislation known as the Truth in Taxation Law (the Law ) limits the aggregate amount of certain taxes which can be levied by, and extended for, a taxing district to 105% of the amount of taxes extended in the preceding year unless specified notice, hearing and certification requirements are met by the taxing body. The express purpose of the Law is to require published disclosure of, and hearing upon, an intention to adopt a levy in excess of the specified levels. 21

94 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A Budgetary Information FINANCIAL INFORMATION Budgets are adopted on a basis consistent with generally accepted accounting principles. All departments of the Village submit requests for budgets to the Village Manager so that a budget may be prepared. The budget is prepared by fund, function, and activity, and includes information on the past year, current year estimates, and requested appropriations for the next fiscal year. The proposed budget is presented to the governing body for review. The governing body holds public hearings and may add to, subtract from, or change budgeted amounts, but may not change the form of the budget. Prior to May 1, the budget, which by State law also serves as the appropriation ordinance, is adopted by the Board of Trustees and constitutes the legal budget of the Village. The Village Manager is authorized to transfer budgeted amounts between departments within any fund; however, the governing body must approve any revisions that alter the total expenditures of any fund. State statutes establish that expenditures may not legally exceed budgeted appropriations at the fund level. Appropriations lapse at the end of the fiscal year. Investments The Village maintains a cash and investment pool that is available for use by all funds, except the pension trust funds. Statutes authorize the Village to make deposits/invest in commercial banks, savings and loan institutions, obligations of the U.S. Treasury and U.S. Agencies, obligations of States and their political subdivisions, credit union shares, repurchase agreements, commercial paper rated within the three highest classifications by at least two standard rating services, Illinois Funds, and the Illinois Metropolitan Investment Fund. Financial Reports The Village s financial statements are audited annually by certified public accountants. The Village s financial statements are prepared in accordance with generally accepted accounting principles applicable to government entities. In the government-wide Statement of Net Assets and Statement of Activities, both governmental and business-like activities use the accrual basis of accounting. In the fund financial statements, government funds use the modified accrual basis of accounting. See APPENDIX A for more detail. No Consent or Updated Information Requested of the Auditor The tables contained in this FINANCIAL INFORMATION section (the Excerpted Financial Information ) are from the audited financial statements of the Village, including the audited financial statements for the fiscal year ended April 30, 2015 (the 2015 Audit ), which was approved by formal action of the Village Trustees and attached to this Final Official Statement as APPENDIX A. The Village has not requested the Auditor to update information contained in the Excerpted Financial Information or the 2015 Audit; nor has the Village requested that the Auditor consent to the use of the Excerpted Financial Information or the 2015 Audit in this Final Official Statement. Other than as expressly set forth in this Final Official Statement, the financial information contained in the Excerpted Financial Information and 2015 Audit has not been updated since the date of the 2015 Audit. The inclusion of the Excerpted Financial Information and 2015 Audit in this Final Official Statement in and of itself is not intended to demonstrate the fiscal condition of the Village since the date of the 2015 Audit. Questions or inquiries relating to financial information of the Village since the date of the 2015 Audit should be directed to the Village. Summary Financial Information The following tables are summaries and do not purport to be the complete audits, copies of which are available upon request. See APPENDIX A for excerpts of the Village s 2015 fiscal year audit. 22

95 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A Statement of Net Assets/Net Position(1) Governmental Activities Audited as of April ASSETS: Current Assets: Cash and Investments... $ 8,301,612 $ 9,224,520 $ 12,886,927 $ 13,538,006 $ 13,289,783 Receivables - Net... 9,445,658 11,026,710 10,568,622 10,555,465 11,352,444 Due from Other Governments... 1,528,723 2,711,013 2,045,318 2,274,373 3,257,325 Due To/From Other Funds , Due To/From Fiduciary Funds (30,345) (14,716) Deposits , Prepaids ,403 1,012, , , ,937 Inventory ,456 18,163 19,853 15,243 Unamortized Bond Issuance Costs , Inventory - Land Held for Resale... 12,343,933 12,343,933 12,343,933 4,833,090 4,833,090 Total Current Assets... $ 32,808,441 $ 36,623,589 $ 38,465,732 $ 31,930,288 $ 33,303,374 Noncurrent Assets: Capital Assets: Nondepreciable... $ 30,463,170 30,463,170 $ 30,486,445 $ 30,545,831 $ 30,868,874 Depreciable... 84,687, Accumulated Depreciation... (33,048,550) Net of Accumulated Depreciation ,431,526 51,726,214 52,000,305 52,468,187 Total Noncurrent Assets... $ 82,101,869 $ 81,894,696 $ 82,212,659 $ 82,546,136 $ 83,337,061 Total Assets... $114,910,310 $118,518,285 $120,678,391 $114,476,424 $116,640,435 DEFERRED OUTFLOWS OF RESOURCES(2): Unamortized loss on refunding... $ 0 $ 0 $ 1,621,491 $ 1,519,085 $ 2,834,344 Total Assets and Deferred Outflows of Resources... $ 0 $ 0 $122,299,882 $115,995,509 $119,474,779 LIABILITIES: Current Liabilities: Accounts Payable... $ 604,020 $ 644,633 $ 613,420 $ 740,998 $ 693,898 Accrued Payroll , , , , ,050 Other Payables , ,471 Claims Payable , ,860 Interest Payable , , , , ,214 Unearned/Deferred Revenues... 9,155,811 10,300,857 59,743 74, ,945 Current Portion of Long-Term Debt , ,900,401 Noncurrent Liabilities(1): Due Within One Year ,265 2,060,757 2,134,141 0 Due in More Than One Year ,338,822 36,559,328 34,401,737 34,796,052 Total Liabilities... $ 11,270,847 $ 48,914,363 $ 40,186,052 $ 38,873,476 $ 39,530,891 DEFERRED INFLOWS OF RESOURCES(2): Unearned Property Taxes... $ 0 $ 0 $ 9,237,735 $ 9,775,564 $ 9,969,924 Total Liabilities and Deferred Inflows of Resources.. $ 0 $ 0 $ 49,423,787 $ 48,649,040 $ 49,500,815 Noncurrent Liabilities(2): Compensated Absences Payable... $ 1,122,907 Net Pension Obligation Payable... 5,350,984 Net Other Postemployment Benefit Payable... 80,011 Notes Payable... 0 Installment Contracts Payable... 0 General Obligation Bonds Payable... 3,455,000 Alternate Revenue Bonds Payable... 20,388,331 TIF Revenue Bonds Payable... 7,915,000 Unamortized Gain on Refunding... (1,879,798 Unamortized Premium on Debt Issuance... 0 Total Noncurrent Liabilities... $ 36,432,435 Total Liabilities... $ 47,703,282 NET ASSETS/NET POSITION(1): Invested in Capital Assets - Net of Related Debt... $ 51,703,336 $ 76,652,153 $ 76,983,201 $ 79,846,136 $ 80,503,360 Restricted... 3,222,374 17,592,724 18,839,037 10,192,895 10,960,283 Unrestricted... 12,281,318 (24,640,955) (22,946,143) (22,692,562) (21,489,679) Total Net Assets/Net Position(1)... $ 67,207,028 $ 69,603,922 $ 72,876,095 $ 67,346,469 $ 69,973,964 Notes: (1) Change in reporting format from Net Assets to Net Position in (2) Change in reporting format. 23

96 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A Statement of Activities Governmental Activities Statement of Net (Expenses) Revenue and Changes in Net Assets/Net Position(1)(2) Audited Fiscal Years Ending April GOVERNMENTAL ACTIVITIES(3): General Government... $ (1,428,432) $ (2,221,702) $ (652,667) $ (1,057,226) $ (1,138,205) Public Safety... (10,885,674) (11,024,613) (11,245,993) (11,458,699) (11,992,585) Highways and Streets... (2,302,346) (2,809,898) (3,162,856) (3,547,870) (4,019,007) Culture and Recreation... (689,116) (670,830) (605,412) (580,721) (529,796) Economic Development... (1,098,934) (838,107) (478,586) (940,077) (1,051,955) Interest on Long-Term Debt... (1,233,206) (1,045,608) (1,254,435) (1,409,508) (1,738,490) Total Governmental Activities... $(17,637,708) $(18,610,758) $(17,399,949) $(18,994,101) $(20,470,038) GENERAL REVENUES: Taxes: Property Taxes... $ 8,841,223 $ 9,060,819 $ 9,096,330 $ 9,342,465 $ 9,927,632 Utility ,535 44, ,222 Telecommunications ,055,231 1,026, , ,497 Other ,749 8,328 30,037 Municipal Sales Taxes... 5,793, Intergovernmental: Illinois State Income Taxes... 1,541,627 1,601,915 1,769,156 1,912,965 1,922,554 Replacement ,242 56,224 63,764 62,696 Sales ,375,471 7,940,113 8,145,378 8,640,078 Local Use , , , ,340 Other Taxes ,484 6, Interest Income... 48,447 86,173 69,478 17,587 69,306 Miscellaneous , , , , ,171 Transfer - Internal Activity , (26,291) 0 Total General Revenues... $ 18,244,405 $ 20,406,567 $ 20,975,287 $ 20,975,319 $ 23,097,533 Special Item... $ 0 $ 0 $ 0 $ (7,018,317) $ 0 Change in Net Assets/Net Position(2)... $ 606,697 $ 1,795,809 $ 3,575,338 $ 1,981,218 $ 2,627,495 Net Assets/Net Position Beginning(2)... 66,600,331 67,808,113(4) 69,603,922 72,383,568(4) 67,346,469 Net Assets/Net Position Ending(2)... $ 67,207,028 $ 69,603,922 $ 73,179,260 $ 67,346,469 $ 69,973,964 Notes: (1) Source: The Village's Audited Financial Statements for the fiscal year ended April 30, (2) Change in reporting format from Net Assets to Net Position in (3) Expenses net of program revenues of Charges for Services and Operating Grants/Contributions (4) Restated. 24

97 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A General Fund Balance Sheet(1) Audited as of April ASSETS: Cash and Investments... $ 3,180,554 $ 2,596,385 $ 5,713,257 $ 6,718,488 $ 5,740,717 Receivables (Net): Property Taxes... 6,449,713 6,572,156 6,825,927 6,957,034 7,159,710 Accounts ,171 1,992, , , ,402 Interest ,279 4,592 7,532 Due From Other Funds ,775 75,787 60, Advance to Other Funds ,344,911 1,270,000 1,470,000 1,821,000 Due From Other Governments... 1,528,723 2,285,864 2,045,318 2,274,373 2,783,201 Prepaid Items ,403 1,012, ,581 62,295 38,495 Inventory ,456 18,163 19,853 15,243 Deposits , Total Assets... $12,707,209 $16,106,219 $17,385,171 $17,839,159 $18,370,480 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES(2) LIABILITIES: Accounts Payable... $ 452,023 $ 455,785 $ 456,603 $ 454,476 $ 280,695 Accrued Payroll , , , , ,458 Other Payables , ,649 Claims Payable ,859 0 Due to Other Funds ,642 31,121 Unearned/Deferred Revenues... 6,668,478 7,909,083 59,743 66, ,302 Total Liabilities... $ 7,545,533 $ 8,833,116 $ 973,470 $ 1,313,601 $ 1,572,225 DEFERRED INFLOWS OF RESOURCES(2): Unavailable Property Taxes... $ 0 $ 0 $ 6,825,927 $ 6,957,034 $ 7,159,710 Total Liabilities and Deferred Inflows of Resources.. $ 0 $ 0 $ 7,799,397 $ 8,270,635 $ 8,731,935 Fund Balances: Reserved... $ 1,137,365 $ 0 $ 0 $ 0 $ 0 Unreserved... 4,024, Nonspendable ,551,175 1,888,744 1,552,148 1,874,738 Restricted , , , ,061 Unrestricted ,382,483 7,368,345 7,667,560 7,329,746 Total Municipal Equity/Fund Balances(3)... $ 5,161,676 $ 7,273,103 $ 9,585,774 $ 9,568,524 $ 9,638,545 Total Liabilities and Fund Balances... $12,707,209 $16,106,219 Total Liabilities, Deferred Inflows of Resources and Fund Balances(2)... $17,385,171 $17,839,159 $18,370,480 Notes: (1) Source: The Village's Audited Financial Statements for the fiscal year ended April 30, (2) Change in reporting format. (3) Reporting format changed from Municipal Equity to Fund Balances in

98 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A General Fund Statement of Revenues, Expenditures and Changes in Fund Balance(1) Audited Fiscal Years Ending April REVENUES: Taxes... $12,039,223 $ 7,909,415 $ 7,868,762 $ 8,041,309 $ 9,110,072 Licenses and Permits... 1,639, , , ,173 1,030,867 Intergovernmental... 2,372,801 8,397,435 9,875,107 13,665,885 14,241,235 Charges for Services... 5,804,830 6,170,629 6,491,618 1,395,081 1,587,616 Fines and Forfeits , , , , ,685 Interest... 10,248 12,888 16,881 19,619 45,598 Miscellaneous , ,761 1,063, ,751 77,837 Total Revenues... $23,212,117 $24,686,028 $26,739,040 $25,159,987 $26,878,910 EXPENDITURES: Current: General Government... $ 2,933,904 $ 2,978,971 $ 2,962,663 $ 1,976,053 $ 2,465,288 Public Safety... 15,670,720 17,184,405 18,362,605 18,518,888 19,036,526 Highway and Streets... 2,665,408 1,491,661 2,372,585 2,722,322 2,431,534 Culture and Recreation... 1,115,371 1,086, , , ,710 Economic Development... 19,945 15,550 28, , ,392 Total Expenditures... $22,405,348 $22,757,347 $24,678,261 $24,634,875 $25,521,450 Excess (Deficiency) of Revenues Over (Under) Expenditures... $ 806,769 $ 1,928,681 $ 2,060,779 $ 525,112 $ 1,357,460 Other Financing Sources (Uses): Capital Lease Obligation, at Par... $ 0 $ 0 $ 251,892 $ 7,031 $ 129,856 Proceeds from Sale of Capital Assets ,705 Transfers Net ,000(2) 0 0 (549,393) (1,442,000) Total Other Financing Sources (Uses)... $ 837,000 $ 0 $ 251,892 $ (542,362) $(1,287,439) Net Change in Fund Balances... $ 1,643,769 $ 1,928,681 $ 2,312,671 $ (17,250) $ 70,021 Fund Balances - Beginning... 3,517,907 5,344,422(3) 7,273,103 9,585,774 9,568,524 Fund Balances - Ending... $ 5,161,676 $ 7,273,103 $ 9,585,774 $ 9,568,524 $ 9,638,545 Notes: (1) Source: The Village's Audited Financial Statements for the fiscal year ended April 30, (2) Transfer from Water and Sewer Fund of $500,000; transfer from the Village's General Capital Improvement Fund of $337,000 representing a Board approved transfer of telecommunications revenue to the General Fund. (3) Restated. 26

99 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A General Fund Budget Interim and Financial Information Amended Original Amended Budget Budget Budget Projected Twelve Months Twelve Months Twelve Months Twelve Months Ending Ending Ending Ending 4/30/2015 4/30/2016 4/30/2016 4/30/2016 REVENUES: Taxes... $ 9,154,842 $ 9,706,847 $ 9,665,489 $ 9,709,795 Licenses and Permits... 1,177, ,644 1,072,031 1,064,506 Intergovernmental... 14,085,343 14,675,640 14,536,391 14,426,233 Charges for Services... 1,148,547 1,170,338 1,348,338 1,362,497 Fines and Forfeits , , , ,000 Interest... 13,000 14,000 46,000 40,000 Miscellaneous , , , ,233 Total Revenues... $26,459,692 $27,705,729 $27,379,009 $27,260,264 EXPENDITURES: General Government... $ 1,959,488 $ 2,767,707 $ 2,691,262 $ 1,737,804 Public Safety... 19,459,361 20,335,299 20,101,426 19,988,766 Highway and Streets... 3,188,070 3,188,223 2,950,323 2,978,997 Culture and Recreation , , , ,158 Economic Development , ,461 Total Expenditures... $26,370,101 $27,192,479 $26,665,290 $26,500,186 Excess (Deficiency) of Revenues Over (Under) Expenditures... $ 89,591 $ 513,250 $ 713,719 $ 760,078 EMPLOYEE RETIREMENT AND OTHER POSTEMPLOYMENT BENEFITS OBLIGATIONS EMPLOYEE RETIREMENT SYSTEMS (1) The Village contributes to three defined benefit pension plans, the Illinois Municipal Retirement Fund ( IMRF ), an agent multiple-employer public employee retirement system; the Police Pension Plan, which is a singleemployer pension plan; and the Firefighters Pension Plan, which is also a single-employer pension plan. The benefits, benefit levels, employee contributions and employer contributions for all three plans are governed by Illinois Compiled Statutes ( ILCS ) and can only be amended by the Illinois General Assembly. Neither of the pension funds issue separate reports on the pension plans. However, IMRF does issue a publicly available report that includes financial statements and supplementary information for the plan as a whole, but not for individual employers. That report can be obtained from IMRF, 2211 York Road, Suite 500, Oak Brook, Illinois Plan Descriptions Illinois Municipal Retirement Fund All employees (other than those covered by the Police or Firefighters Pension Plans) hired in positions that meet or exceed the prescribed annual hourly standard must be enrolled in IMRF as participating members. IMRF provides two tiers of pension benefits. Employees hired prior to January 1, 2011, are eligible for Tier 1 benefits. For Tier 1 employees, pension benefits vest after eight years of service. Participating members who retire at age 55 (reduced benefits) or after age 60 (full benefits) with eight years of credited service are entitled to an annual retirement benefit, payable monthly for life, in an amount equal to 1 2/3% of their final rate of earnings, for each year of credited service up to 15 years, and 2.0% for each year thereafter. (1) Source: The Village s Comprehensive Annual Financial Report for the fiscal year ended April 30,

100 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A Employees hired on or after January 1, 2011, are eligible for Tier 2 benefits. For Tier 2 employees, pension benefits vest after ten years of service. Participating members who retire at age 62 (reduced benefits) or after 67 (full benefits) with ten years of credited service are entitled to an annual retirement benefit, payable monthly for life, in an amount equal to 1 2/3% of their final rate of earnings, for each year of credited service up to 15 years, and 2.0% for each year thereafter. IMRF also provides death and disability benefits. These benefit provisions and all other requirements are established by state statute. Participating members are required to contribute 4.5% of their annual salary to IMRF. The Village is required to contribute the remaining amounts necessary to fund IMRF as specified by statute. The employer contribution and required employer contribution for 2014 was 13.32% of covered payroll. Police Pension Plan Plan Administration Police sworn personnel are covered by the Police Pension Plan. Although this is a single-employer pension plan, the defined benefits and employee and employer contribution levels are governed by ILCS (40 ILCS 5/3-1) and may be amended only by the Illinois legislature. The Village accounts for the Police Pension Plan as a pension trust fund. The plan is governed by a five-member Board of Trustees. Two members of the Board of Trustees are appointed by the Village s Mayor, one member is elected by pension beneficiaries and two members are elected by active police employees. Plan Membership At April 30, 2015, the membership date, membership consisted of: Inactive plan members currently receiving benefits Inactive plan members entitled to but not yet receiving benefits... - Active plan members Vested Nonvested... 6 Total Benefits Provided The Police Pension Plan provides retirement benefits through two tiers of benefits as well as death and disability benefits. Tier 1 employees (those hired prior to January 1, 2011) attaining the age of 50 or older with 20 or more years of creditable service are entitled to receive an annual retirement benefit equal to one-half of the salary attached to the rank held on the last day of service, or for one year prior to the last day, whichever is greater. The annual benefit shall be increased by 2.5% of such salary for each additional year of service over 20 years up to 30 years to a maximum of 75.0% of such salary. Employees with at least eight years but less than 20 years of credited service may retire at or after age 60 and receive a reduced benefit. The monthly benefit of a police officer who retired with 20 or more years of service after January 1, 1977 shall be increased annually, following the first anniversary date of retirement and be paid upon reaching the age of at least 55 years, by 3.0% of the original pension and 3.0% compounded annually thereafter. 28

101 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A Tier 2 employees (those hired on or after January 1, 2011) attaining the age of 55 or older with ten or more years of creditable service are entitled to receive an annual retirement benefit equal to the average monthly salary obtained by dividing the total salary of the police officer during the 96 consecutive months of service within the last 120 months of service in which the total salary was the highest by the number of months of service in that period. Police officers salary for pension purposes is capped at $106,800, plus the lesser of ½ of the annual change in the Consumer Price Index ( CPI ) or 3.0% compounded. The annual benefit shall be increased by 2.5% of such salary for each additional year of service over 20 years up to 30 years to a maximum of 75.0% of such salary. Employees with at least ten years may retire at or after age 50 and receive a reduced benefit (i.e., ½% for each month under 55). The monthly benefit of a Tier 2 police officer shall be increased annually at age 60 on the January 1 st after the police officer retires, or the first anniversary of the pension starting date, whichever is later. Noncompounding increases occur annually, each January thereafter. The increase is the lesser of 3.0% or ½ of the change in the CPI for the proceeding calendar year. Contributions Employees are required by ILCS to contribute 9.91% of their base salary to the Police Pension Plan. If an employee leaves covered employment with less than 20 years of service, accumulated employee contributions may be refunded without accumulated interest. The Village is required to contribute the remaining amounts necessary to finance the Police Pension Plan and the administrative costs as actuarially determined by an enrolled actuary. Effective January 1, 2011, the Village has until the year 2040 to fund 90% of the past service cost for the Police Pension Plan. For the year ended April 30, 2015, the Village s contribution was 45.8% of covered payroll. Investment Policy ILCS limit the Police Pension Fund s (the Fund) investments to those allowable by ILCS and require the Fund s Board of Trustees to adopt an investment policy which can be amended by a majority vote of the Board of Trustees. The Fund s investment policy authorizes the Fund to make deposits/invest in insured commercial banks, savings and loan institutions, obligations of the U.S. Treasury and U.S. agencies, money market mutual funds with portfolios of securities issued or guaranteed by the United States Government or agreements to repurchase these same obligations, direct obligations of the State of Israel, investment grade corporate bonds and Illinois Funds. The Fund may also invest in certain non-u.s. obligations; interest-bearing bonds of the State of Illinois; interest-bearing bonds or tax anticipation warrants of any county, township or municipal corporation of the State of Illinois; mutual funds; and corporate equity securities and real estate investment trusts. During the year, there were no changes to the Fund s investment policy. class: The Fund s investment policy in accordance with ILCS establishes the following target allocation across asset Asset Class Target Long-Term Expected Rate of Return Fixed income 45.00% 2.10% Large cap domestic equities 38.50% 6.90% Small cap domestic equities 11.00% 9.00% International equities 5.50% 7.10% Cash and cash equivalents 0.00% 0.00% ILCS limit the Fund s investments in equities, mutual funds and variable annuities to 65%. Securities in any one company should not exceed 5% of the total fund. 29

102 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A The long-term expected rate of return on the Fund s investments was determined using an asset allocation study conducted by the Fund s investment management consultant in March 2015 in which best estimate ranges of expected future real rates of return (net of pension plan investment expense and inflation) were developed for each major asset class. These ranges were combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates or arithmetic real rates of return excluding inflation for each major asset class included in the Fund target asset allocation as of April 30, 2015 are listed in the table above. Investment Valuations All investments in the plan are stated at fair value and are recorded as of trade date. Fair value is based on quoted market prices at April 30 for debt securities, equity securities and mutual funds and contract values for insurance contracts. Illinois Funds, an investment pool created by the state legislature under the control of the State Treasurer, is a money market mutual fund that maintains a $1 per share value. Investment Rate of Return For the year ended April 30, 2015, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was 8.08%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Deposits with Financial Institutions Custodial credit risk for deposits with financial institutions is the risk that in the event of a bank s failure, the Fund s deposits may not be returned to them. The Fund s investment policy requires all bank balances to be covered by federal depository insurance. Interest Rate Risk The following table presents the investments and maturities of the Fund s debt securities as of April 30, 2015: Investment Maturities in Years Investment Type Fair Value Less than Greater than 10 U.S. Treasury obligations $1,186,545 $ 126,905 $ 955,452 $ 104,188 $ - U.S. agency securities 4,983, ,808 1,522,081 2,759, ,151 State and local obligations 1,112, , ,721 62,085 TOTAL $7,282,436 $ 328,713 $3,038,004 $3,353,483 $ 562,236 Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. In accordance with its investment policy, the Fund limits its exposure to interest rate risk by structuring the portfolio to provide liquidity for operating funds and maximizing yields for funds not needed for expected current cash flows. The investment policy does not limit the maximum maturity length of investments in the Fund. 30

103 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A Credit Risk The fund limits its exposure to credit risk, the risk that the issuer of a debt security will not pay its par value upon maturity, by primarily investing in obligations guaranteed by the United State Government, securities issued by agencies of the United States Government that are explicitly or implicitly guaranteed by the United States Government and investment grade corporate bonds rated at or above BBB- by Standard and Poor s, Baa3 by Moody s and BBB- by Fitch by at least two of the three rating agencies. The municipal bonds are rated at or above AA+ by Standard and Poor s and Baa1 or above by Moody s. Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to the investment, the Fund will not be able to recover the value of its investments that are in possession of an outside party. To limit its exposure, the Fund requires all security transactions that are exposed to custodial credit risk to be processed on a delivery versus payment (DVP) basis with the underlying investments held by a third party acting as the Fund s agent separate from where the investment was purchased in the Fund s name. The money market mutual funds and equity mutual funds are not subject to custodial credit risk. Net Pension Liability The components of the net pension liability of the Police Pension Plan as of April 30, 2015, calculated in accordance with GASB Statement No. 67 were as follows: Total pension liability $38,484,991 Plan fiduciary net pension 17,356,857 Village s net pension liability 21,128,134 Plan fiduciary net position as a percentage of the total pension liability 45.10% Actuarial Assumptions The total pension liability above was determined by an actuarial valuation performed as of April 30, 2015 using the following actuarial methods and assumptions. Actuarial valuation date April 30, 2015 Actuarial cost method Entry-age normal Assumptions Inflation 3.00% Salary increases 3.50% Interest rate 6.75% Cost of living adjustments 3.00% Asset valuation method Market Mortality rates were based on the RP-2000 CHBCA Mortality Table. The actuarial assumptions used in the April 30, 2015 valuation were based on the results of an actuarial experience study conducted by the Illinois Department of Insurance dated September 26,

104 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A Discount Rate The discount rate used to measure the total pension liability was 6.75%. The projection of cash flows used to determine the discount rate assumed that member contributions will be made at the current contribution rate and that the Village contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the Fund s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Discount Rate Sensitivity The following is a sensitive analysis of the net pension liability to changes in the discount rate. The table below presents the net pension liability of the Village calculated using the discount rate of 6.75% as well as what the Village s net pension liability would be if it were calculated using a discount rate that is 1 percentage lower (5.75%) or 1 percentage point higher (7.75%) than the current rate: 1% 1% Decrease (5.75%) Current Discount Rate (6.75%) Increase (7.75%) Net pension liability $26,630,409 $21,128,134 $16,609,926 Firefighters Pension Plan Plan Administration Firefighter sworn personnel are covered by the Firefighters Pension Plan, a single-employer defined benefit pension plan sponsored by the Village. The defined benefits and employee and minimum employer contribution levels are governed by ILCS (40 ILCS 5/4-101) and may be amended only by the Illinois legislature. The Village accounts for the Firefighters Pension Plan as a pension trust fund. The plan is governed by a five-member Board of Trustees. Two members of the Board are appointed by the Village s Mayor, one member is elected by pension beneficiaries and two members are elected by active firefighter employees. Plan Membership At April 30, 2015, the measurement date, membership consisted of: Inactive plan members currently receiving benefits Inactive plan members entitled to but no yet receiving benefits... 4 Active plan members Vested Nonvested Total

105 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A Benefits Provided The following is a summary of the Firefighters Pension Plan as provided for in ILCS. The Firefighters Pension Plan provides retirement benefits as well as death and disability benefits. Tier 1 employees (those hired prior to January 1, 2011) attaining the age of 50 or older with 20 or more years of creditable service are entitled to receive an annual retirement benefit equal to one-half of the salary attached to the rank held at the date of retirement. The annual benefit shall be increased by 2.5% of such salary for each additional year of service over 20 years up to 30 years to a maximum of 75.0% of such salary. Employees with at least ten years but less than 20 years of credited service may retire at or after age 60 and receive a reduced benefit. The monthly benefit of a covered employee who retired with 20 or more years of service after January 1, 1977 shall be increased annually, following the first anniversary date of retirement and be paid upon reaching the age of at least 55 years, by 3.0% of the original pension and 3.0% compounded annually thereafter. Tier 2 employees (those hired on or after January 1, 2011) attaining the age of 55 or older with ten or more years of creditable service are entitled to receive an annual retirement benefit equal to the average monthly salary obtained by dividing the total salary of the firefighter during the 96 consecutive months of service within the last 120 months of service in which the total salary was the highest by the number of months of service in that period. Firefighters salary for pension purposes is capped at $106,800, plus the lesser of ½ of the annual change in the CPI or 3.0% compounded. The annual benefit shall be increased by 2.5% of such salary for each additional year of service over 20 years up to 30 years to a maximum of 75.0% of such salary. Employees with at least ten years may retire at or after age 50 and receive a reduced benefit (i.e., ½% for each month under 55). The monthly benefit of a Tier 2 firefighter shall be increased annually at age 60 on the January 1 st after the firefighter retires, or the first anniversary of the pension starting date, whichever is later. Non-compounding increases occur annually, each January thereafter. The increase is the lesser of 3.0% or ½ of the change in the CPI for the proceeding calendar year. Contributions Employees are required by ILCS to contribute 9.455% of their base salary to the Firefighters Pension Plan. If an employee leaves covered employment with less than 20 years of service, accumulated employee contributions may be refunded without accumulated interest. The Village is required to contribute the remaining amounts necessary to finance the plan, as actuarially determined by an enrolled actuary. However, effective January 1, 2011, ILCS requires the Village to contribute a minimum amount annually calculated using the projected unit credit actuarial cost method that will result in the funding of 90% of the past service cost by the year For the year ended April 30, 2015, the Village s contribution was 37.6% of covered payroll. Investment Policy ILCS limit the Firefighters Pension Fund s (the Fund) investments to those allowable by ILCS and require the Fund s Board of Trustees to adopt an investment policy which can be amended by a majority vote of the Board of Trustees. The Fund s investment policy authorizes the Fund to make deposits/invest in insured commercial banks, savings and loan institutions, obligations of the U.S. Treasury and U.S. agencies, money market mutual funds with portfolios of securities issued or guaranteed by the United States Government or agreements to repurchase these same obligations, investment grade corporate bonds and Illinois Funds. The Fund may also invest in certain non-u.s. obligations; interest-bearing bonds of the State of Illinois; interest-bearing bonds or tax anticipation warrants of any county, township or municipal corporation of the State of Illinois; mutual funds; and corporate equity securities and real estate investment trusts. During the year, the following changes to the investment policy were approved by the Board of Trustees: long-term expected rates of return. 33

106 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A class: The Fund s investment policy in accordance with ILCS establishes the following target allocation across asset Asset Class Target Long-Term Expected Rate of Return Fixed income 40.00% 2.00% Domestic equities 35.00% 5.00% International equities 14.00% 5.25% Real estate 6.00% 4.25% Blended 4.00% 5.00% Cash and cash equivalents 1.00% 0.00% ILCS limit the Fund s investments in equities, mutual funds and variable annuities to 65%. Securities in any one company should not exceed 5% of the total fund. The blended asset class is comprised of all other asset classes to allow for rebalancing the portfolio. The long-term expected rate of return on the Fund s investments was determined using an asset allocation study conducted by the Fund s investment management consultant in which best estimate ranges of expected future real rates of return (net of pension plan investment expense and inflation) were developed for each major asset class. These ranges were combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates or arithmetic real rates of return excluding inflation for each major asset class included in the Fund target asset allocation as of April 30, 2015 are listed in the table above. Concentrations There are no significant investments (other than U.S. Government guaranteed obligations) in any one organization that represent 5% or more of the Fund s investment. Rate of Return For the year ended April 30, 2015, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was 6.53%. The money-weighted rate of return expresses performance, net of investment expense, adjusted for the changing amounts actually invested. Deposits with Financial Institutions Custodial credit risk for deposits with financial institutions is the risk that in the event of a bank s failure, the Fund s deposits may not be returned to them. The Fund s investment policy requires all bank balances to be covered by federal depository insurance. 34

107 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A Interest Rate Risk The following table presents the investments and maturities of the Fund s debt securities as of April 30, 2015: Investment Maturities in Years Investment Type Fair Value Less than Greater than 10 U.S. Treasury obligations $ 613,114 $ 67,281 $ 545,833 $ - $ - U.S. agency securities 4,088, ,087 2,272,706 1,337,549 6,210 State and local obligations 1,224, , ,224 - Corporate bonds 4,902, ,723 2,433,109 2,100,363 - TOTAL $10,828,515 $ 908,091 $5,590,078 $4,324,136 $ 6,210 Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. In accordance with its investment policy, the Fund limits its exposure to interest rate risk by structuring the portfolio to provide liquidity for cash flows. The investment policy does not limit the maximum maturity length of investments in the Fund. Credit Risk The fund limits its exposure to credit risk, the risk that the issuer of a debt security will not pay its par value upon maturity, by primarily investing in obligations guaranteed by the United State Government, securities issued by agencies of the United States Government that are explicitly or implicitly guaranteed by the United States Government and investment grade corporate bonds rated at or above BBB- by Standard and Poor s, Baa3 by Moody s and BBB- by Fitch by at least two of the three rating agencies. The municipal bonds are rated at or above AA- by Standard and Poor s and Aa2 or above by Moody s. The corporate bonds are rated at or above BBB- by Standard and Poor s and Baa2 or above by Moody s. Custodial Credit Risk Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to the investment, the Fund will not be able to recover the value of its investments that are in possession of an outside party. To limit its exposure, the Fund requires all security transactions that are exposed to custodial credit risk to be processed on a delivery versus payment (DVP) basis with the underlying investments held by a third party acting as the Fund s agent separate from where the investment was purchased in the Fund s name. The money market mutual funds and mutual funds are not subject to custodial credit risk. Net Pension Liability The components of the net pension liability of the Police Pension Plan as of April 30, 2015 were as follows: Total pension liability $44,602,130 Plan fiduciary net pension 25,561,981 Village s net pension liability 19,012,981 Plan fiduciary net position as a percentage of the total pension liability 57.31% 35

108 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A Actuarial Assumptions The total pension liability above was determined by an actuarial valuation performed as of April 30, 2015 using the following actuarial methods and assumptions. Actuarial valuation date April 30, 2015 Actuarial cost method Entry-age normal Assumptions Inflation 3.00% Salary increases 3.50% Interest rate 6.75% Cost of living adjustments 3.00% Asset valuation method Market Mortality rates were based on the RP-2000 CHBCA Mortality Table. The actuarial assumptions used in the April 30, 2015 valuation were based on the results of an actuarial experience study conducted by the Illinois Department of Insurance dated September 26, Discount Rate The discount rate used to measure the total pension liability was 6.75%. The projection of cash flows used to determine the discount rate assumed the member contributions will be made at the current contribution rate and that the Village contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the Fund s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments of 6.75% Discount Rate Sensitivity The following is a sensitive analysis of the net pension liability to changes in the discount rate. The table below presents the net pension liability of the Village calculated using the discount rate of 6.75% as well as what the Village s net pension liability would be if it were calculated using a discount rate that is 1 percentage lower (5.75%) or 1 percentage point higher (7.75%) than the current rate: 1% 1% Decrease (5.75%) Current Discount Rate (6.75%) Increase (7.75%) Net pension liability $25,736,066 $19,012,641 $13,470,084 36

109 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A Annual Pension Costs The annual required employer contributions have been determined as follows: IMRF Police Pension Firefighters Pension Actuarial valuation date December 31, 2012 April 30, 2014 April 30, 2014 Actuarial cost method Entry-Age Normal Entry-Age Entry-Age Asset valuation method 5 Year Smoothed Market Market Amortization Method Level % of Payroll Level % of Payroll Level % of Payroll Amortization Period 29 Years, Open 26 Years, Closed 26 Years, Closed Significant Actuarial Assumptions a) Rate of return on present and future assets b) Projected salary increase attributable to inflation c) Additional projected salary increases seniority/merit 7.50% Compounded Annually 4.00% Compounded Annually 6.75% Compounded Annually 3.50% Compounded Annually 6.75% Compounded Annually 3.50% Compounded Annually 0.4% to 10.0% 3.0% 3.0% Employer annual pension costs (APC), actual contributions and the net pension obligation (NPO) are as follows. The NPO is the cumulative difference between the APC and the contributions actually made. Fiscal Year IMRF Police Pension Firefighters Pension Annual pension cost (APC) 2013 $ 715,341 $ 1,176,564 $ 1,332, ,757 1,294,313 1,494, ,319 1,426,253 1,649,002 Actual contributions 2013 $ 715,341 $1,142,537 $1,461, ,757 1,258,410 1,724, ,319 1,398,130 1,931,996 Percentage of APC contributed % 97.14% % % 97.22% % % 98.03% % NPO liability 2013 $ - $ 2,732,136 $ 2,618, ,768,039 2,387, ,796,162 2,104,984 37

110 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A The Village s NPO at April 30, 2015 has been calculated as follows: Police Pension Firefighters Pension Annual required contribution $ 1,392,968 $ 1,620,287 Interest on net pension obligation 186, ,189 Adjustment to annual required contribution (153,558) (132,474) Annual pension cost 1,426,253 1,649,002 Contributions made 1,398,130 1,931,996 Increase in net pension obligation 28,123 (282,994) Net pension obligation beginning of year 2,768,039 2,387,978 NET PENSION OBLIGATION END OF YEAR $ 2,796,162 $ 2,104,984 The NPO is reported as a liability in the Village s governmental activities column the government-wide financial statements at April 30, Funded Status The funded status of the plans as of December 31, 2014 for IMRF and April 30, 2015 for the Police and Firefighters Pension Plans, based on actuarial valuations performed as of the same date, is as follows. The actuarial assumptions used to determine the funded status of the plans are the actuarial assumptions used to determine the employer APC of the plans as disclosed. Funded Status and Funding Progress The funded status of the plans as of December 31, 2014 for IMRF and April 30, 2015 for the Police and Firefighters Pension Plans, based on actuarial valuations performed as of the same date, is as follows. The actuarial assumptions used to determine the funded status of the plans are the same actuarial assumptions used to determine the employer APC of the plans as disclosed herein. IMRF Police Pension Firefighters Pension Actuarial accrued liability (AAL) $17,035,199 $38,484,991 $44,602,130 Actuarial value of plan assets 12,711,240 17,356,857 25,589,489 Unfunded actuarial accrued liability (UAAL) 4,323,959 21,128,134 19,012,641 Funded ratio (actuarial value of plan assets/aal) 74.62% 45.10% 57.37% Covered payroll (active plan members) $5,144,872 $3,053,408 $5,140,563 UAAL as a percentage of covered payroll 84.0% 692.0% 369.9% 38

111 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A Schedule of Funding Progress Actuarial Valuation Date December 31, Illinois Municipal Retirement Fund Actuarial Accrued Liability (AAL) Entry-Age Unfunded (Overfunded) AAL (UAAL) Annual Covered Payroll UAAL as a % of Covered Payroll Actuarial Value of Assets % Funded 2009 $11,916,709 $15,697, % $3,780,546 $5,433, % ,205,690 15,480, ,274,945 5,237, ,403,258 15,307, ,904,391 5,133, ,656,525 16,499, ,842,487 5,395, ,833,200 15,868, ,034,963 5,127, ,711,240 17,035, ,323,959 5,144, Plan Description OTHER POST-EMPLOYMENT BENEFITS (1) In addition to providing pension benefits described, the Village provides postemployment health care benefits (OPEB) for retired employees through a single-employer defined benefit plan. The benefits, benefit levels, employee contributions and employer contributions are governed by the Village and can be amended by the Village through its personnel manual and union contracts. The plan is not accounted for as a trust fund, as an irrevocable trust has not been established to account for the plan. The plan does not issue a separate report. The activity of the plan is reported in the Village s governmental and business-type activities. Benefits Provided The Village provides postemployment health care benefits to its retirees. To be eligible for benefits, an employee must qualify for retirement under one of the Village s retirement plans. Elected officials are eligible for benefits if they qualify for retirement through the IMRF. All health care benefits are provided through the Village s health insurance plan. The benefit levels are the same as those afforded to active employees. Benefits include general inpatient and outpatient medical services; mental, nervous, and substance abuse care; vision care; dental care and prescriptions. Upon a retiree reaching 65 years of age, Medicare becomes the primary insurer and the Village s plan becomes secondary. All retirees contribute 100% of the actuarially determined premium to the plan. For the fiscal year ending April 30, 2015, retirees contributed $148,823. Active employees do not contribute to the plan until retirement. (1) Source: The Village s Comprehensive Annual Financial Report for the fiscal year ended April 30,

112 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A Membership At April 30, 2014 (the most recent valuation performed), membership consisted of: Retirees and beneficiaries currently receiving benefits Terminated employees entitled to benefits but not yet receiving them... - Active employees Total Participating employers... 1 Funding Policy The Village is not required to and currently does not advance fund the cost of benefits that will become due and payable in the future. Active employees do not contribute to the plan until retirement. Annual OPEB Costs and Net OPEB Obligation The Village first had an actuarial valuation performed for the plan as of May 1, 2009 to determine the funded status of the plan as of that date as well as the employer s annual required contribution (ARC) for the fiscal year ended April 30, The Village s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net OPEB obligation for the last three years was as follows: Fiscal Year Ended Percentage of Annual OPEB Cost Contributed Annual OPEB Cost Employer Contributions Net OPEB Obligation 2013 $97,169 $63, % $138, ,394 63, , , , ,424 The net OPEB obligation as of April 30, 2015 was calculated as follows: Annual required contribution $ 154,997 Interest on Net OPEB obligation Adjustment to annual required contribution (5,747) Annual OPEB cost 156,146 Contributions made 132,120 Increase in net OPEB obligation 24,026 Net OPEB obligation beginning of year 172,398 NET OPEB OBLIGATION END OF YEAR $ 196,424 40

113 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A Funded Status and Funding Progress The funded status of the plan as of April 30, 2014 was as follows (the most recent valuation performed): Actuarial accrued liability (AAL) $2,583,239 Actuarial value of plan assets - Unfunded actuarial accrued liability (UAAL) 2,583,239 Funded ratio (actuarial value of plan assets/aal) 0.00% Covered payroll (active plan members) N/A UAAL as a percentage of covered payroll N/A Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality and the healthcare cost contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress below presents multi-year trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the AAL for benefits. Schedule of Funding Progress Actuarial Valuation Date April 30, Actuarial Value of Assets Actuarial Accrued Liability (AAL) Entry-Age Unfunded (Overfunded) AAL (UAAL) UAAL as a % of Covered Payroll % Funded Annual Covered Payroll 2010 $ - N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A $1,512, % $1,512,374 $14,410, % N/A N/A N/A N/A N/A ,583, ,583,239 N/A N/A N/A N/A N/A N/A N/A Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in AAL and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the April 30, 2014 actuarial valuation (most recent valuation date), the entry age normal actuarial cost method was used. The actuarial assumptions included 4.0% investment rate of return and a healthcare cost trend rate of 7.0% with an ultimate rate of 5.0%. Both rates include a 3.0% inflation assumption and a 4.0% wage inflation assumption. The actuarial value of assets was not determined as the Village has not advance funded its obligation. The plan s UAAL is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at April 30, 2015 was 30 years. 41

114 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A REGISTRATION, TRANSFER AND EXCHANGE See also APPENDIX B for information on registration, transfer and exchange of book-entry bonds. The Bonds will be initially issued as book-entry bonds. The Village shall cause books (the Bond Register ) for the registration and for the transfer of the Bonds to be kept at the principal corporate trust office maintained for such purpose of The Bank of New York Mellon Trust Company, National Association, Chicago, Illinois (the Bond Registrar ) in Chicago, Illinois. The Village will authorize to be prepared, and the Bond Registrar shall keep custody of, multiple bond blanks executed by the Village for use in the transfer and exchange of Bonds. Any Bond may be transferred or exchanged, but only in the manner, subject to the limitations, and upon payment of the charges as set forth in the Bond Ordinance. Upon surrender for transfer or exchange of any Bond at the principal corporate trust office maintained for the purpose of the Bond Registrar, duly endorsed by, or accompanied by a written instrument or instruments of transfer in form satisfactory to the Bond Registrar and duly executed by the registered owner or such owner s attorney duly authorized in writing, the Village shall execute and the Bond Registrar shall authenticate, date and deliver in the name of the registered owner, transferee or transferees (as the case may be) a new fully registered Bond or Bonds of the same maturity and interest rate of authorized denominations, for a like aggregate principal amount. The execution by the Village of any fully registered Bond shall constitute full and due authorization of such Bond, and the Bond Registrar shall thereby be authorized to authenticate, date and deliver such Bond, provided, however, the principal amount of outstanding Bonds of each maturity authenticated by the Bond Registrar shall not exceed the authorized principal amount of Bonds for such maturity less Bonds previously paid. The Bond Registrar shall not be required to transfer or exchange any Bond following the close of business on the 15 th day of the month next preceding any interest payment date on such Bond (known as the record date) and ending at the opening of business on such interest payment date, nor to transfer or exchange any Bond after notice calling such Bond for redemption has been mailed, nor during a period of fifteen (15) days next preceding mailing of a notice of redemption of any Bonds. The person in whose name any Bond shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of the principal of or interest on any Bonds shall be made only to or upon the order of the registered owner thereof or such owner s legal representative. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid. No service charge shall be made for any transfer or exchange of Bonds, but the Village or the Bond Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Bonds except in the case of the issuance of a Bond or Bonds for the unredeemed portion of a Bond surrendered for redemption. CERTAIN FEDERAL INCOME TAX CONSIDERATIONS Interest on the Bonds is includible in gross income of the owners thereof for federal income tax purposes. Ownership of the Bonds may result in other federal income tax consequences to certain taxpayers. Bondholders should consult their tax advisors with respect to the inclusion of interest on the Bonds in gross income for federal income tax purposes and any collateral tax consequences. Interest on the Bonds is not exempt from present State income taxes. Ownership of the Bonds may result in other state and local tax consequences to certain taxpayers. Bond Counsel expresses no opinion regarding any such collateral consequences arising with respect to the Bonds. Prospective purchasers of the Bonds should consult their tax advisors regarding the applicability of any such state and local taxes. 42

115 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A CONTINUING DISCLOSURE The Village will enter into a Continuing Disclosure Undertaking (the Undertaking ) for the benefit of the beneficial owners of the Bonds to send certain information annually and to provide notice of certain events to the Municipal Securities Rulemaking Board (the MSRB ) pursuant to the requirements of Section (b)(5) of Rule 15c2-12 (the Rule ) adopted by the Securities and Exchange Commission (the Commission ) under the Securities Exchange Act of No person, other than the Village, has undertaken, or is otherwise expected, to provide continuing disclosure with respect to the Bonds. The information to be provided on an annual basis, the events which will be noticed on an occurrence basis and a summary of other terms of the Undertaking, including termination, amendment and remedies, are set forth below under THE UNDERTAKING herein. The Village failed to file certain material event disclosures within the time periods specified in its continuing disclosure undertakings pursuant to the Rule. The events are listed below. The Sales Tax and Tax Increment Allocation Revenue Bonds, Series 2005A (the "2005A Bonds") refunded in 2015 and the Sales Tax and Tax Increment Allocation Revenue Bonds, Taxable Series 2005B (the "2005B Bonds") matured in 2014 of the Village were insured by Ambac Assurance Corp. ("AMBAC") thereby carrying an insured rating based on the creditworthiness of AMBAC. Since the issuance of the 2005A Bonds and the 2005B Bonds, Standard & Poor's ("S&P") has downgraded AMBAC from an initial "AAA" to nonrated. The General Obligation Bonds, Series 2006 (the "2006 Bonds") that matured in 2014 and the General Obligation Refunding Bonds, Series 2008A (the "2008A Bonds") of the Village were insured by Financial Security Assurance ("FSA") thereby carrying an insured rating based on the creditworthiness of FSA as well as an underlying rating based on the creditworthiness of the Village. Since the issuance of the Series 2006 Bonds and the Series 2008A Bonds, Moody's Investors Service, Inc. (Moody's) has downgraded FSA from an initial "Aaa" to"a2". S&P initially rated FSA a AAA ; it was downgraded to AA+ in 2010 and then to AA- in 2011; in 2014, it was upgraded to AA. The Village replaced Moody's with S&P for its underlying general obligation bond ratings March 25, At that time, S&P assigned a rating of "AA" to the general obligation bonds of the Village. On December 20, 2013, S&P upgraded the Village's general obligation bond rating from "AA" to "AAA". The Village currently is rated "AAA" by S&P. On July 9, 2014, a material event notice was filed with the MSRB through EMMA regarding insured ratings and the S&P upgrade. The Village failed to file audited financial statements and annual financial information and operating data for fiscal years 2012 and 2013 under CUSIP number CUSIP number identifies the Sales Tax and Tax Increment Allocation Revenue Bonds. The audited financial statements and annual financial and operating data were filed on time under the general obligation bond CUSIP number (The Village has several CUSIP numbers assigned to its securities.) On July 28, 2014, the audited financial statements and annual financial and operating data for fiscal years 2012 and 2013 were transferred from CUSIP number to CUSIP number The Village failed to file audited financial statements and annual financial information and operating data for fiscal years 2014 and 2015 under CUSIP number These documents were filed under CUSIP number as was done previously. On April 19, 2016, these documents were transferred from CUSIP number to CUSIP number The General Obligation Bonds, Series 2003B (the "2003B Bonds") which matured May 1, 2011 of the Village were insured by National Public Finance Guarantee Corp. ("National") formerly Municipal Bond Investors Assurance Corporation ("MBIA") thereby carrying an insured rating based on the creditworthiness of National. Since the issuance of the 2003B Bonds, Moody's Investors Service ("Moody's") has revised National s rating several times to its current "A3". S&P also revised its rating on National several times to the current AA-. The General Obligation Bonds, Series 2002A (the "2002A Bonds"), the Taxable General Obligation Bonds, Series 2002 (the "Taxable 2002 Bonds"), and the General Obligation Bonds, Series 2002 (the "2002 Bonds") of the Village were insured by Financial Guaranty Insurance Co. ("FGIC") thereby carrying an insured rating based on the creditworthiness of FGIC. The 2002A Bonds and the Taxable 2002 Bonds were refunded on April 21, 2011 and the 2002 Bonds matured on December 15, Since the issuance of the 2002A Bonds, the Taxable 2002 Bonds and the 2002 Bonds, Moody's downgraded the rating of FGIC several times. In 2009, both S&P and Moody's withdrew their ratings on FGIC. On August 1, 2014, a material event notice was filed with the MSRB through EMMA regarding insured ratings. The Village may not have filed other insured rating changes within the time period specified in prior continuing disclosure undertakings. 43

116 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A The Village failed to include in its annual disclosure filings updated information with respect to certain statements contained in the Final Official Statement on the Series 2005A Bonds and the Series 2005B Bonds. The specific information relates to incremental valuation and incremental property taxes for the Lake Zurich Tax Increment Finance District Number 1. On August 1, 2014, such information for the years 2008 to 2013 was filed with the MSRB. A failure by the Village to comply with the Undertaking will not constitute a default under the Bond Ordinance and beneficial owners of the Bonds are limited to the remedies described in the Undertaking. See THE UNDERTAKING - Consequences of Failure of the Village to Provide Information. The Village must report any failure to comply with the Undertaking in accordance with the Rule. Any broker, dealer or municipal securities dealer must consider such report before recommending the purchase or sale of the Bonds in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of the Bonds and their market price. Bond Counsel expresses no opinion as to whether the Undertaking complies with the requirements of Section (b)(5) of the Rule. THE UNDERTAKING The following is a brief summary of certain provisions of the Undertaking of the Village and does not purport to be complete. The statements made under this caption are subject to the detailed provisions of the Undertaking, a copy of which is available upon request from the Village. Annual Financial Information Disclosure The Village covenants that it will disseminate its Annual Financial Information and its Audited Financial Statements, if any (as described below) to the MSRB in such manner and format and accompanied by identifying information as is prescribed by the MSRB or the Commission at the time of delivery of such information. The Village is required to deliver such information within 210 days after the last day of the Village s fiscal year (currently on April 30), beginning with the fiscal year ended April 30, If Audited Financial Statements are not available when the Annual Financial Information is filed. The Village will submit Audited Financial Statements to the MSRB s Electronic Municipal Market Access ( EMMA ) system within 30 days after availability to the Village. MSRB Rule G-32 requires all EMMA filings to be in word-searchable PDF format. This requirement extends to all documents to be filed with EMMA, including financial statements and other externally prepared reports. Annual Financial Information means 1. The table under the heading of Retailers Occupation, Service Occupation and Use Tax within this Final Official Statement; 2. All of the tables under the heading PROPERTY ASSESSMENT AND TAX INFORMATION within this Final Official Statement; 3. All of the tables under the heading DEBT INFORMATION within this Final Official Statement; and 4. All of the tables under the heading FINANCIAL INFORMATION (Excluding Budget and Interim Financial Information) within this Final Official Statement. Audited Financial Statements means financial statements of the Village as audited annually by independent certified public accountants. Audited Financial Statements are expected to continue to be prepared according to Generally Accepted Accounting Principles as applicable to governmental units (i.e., as subject to the pronouncements of the Governmental Accounting Standards Board and subject to any express requirements of State law). 44

117 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A Reportable Events Disclosure The Village covenants that it will disseminate in a timely manner (not in excess of ten business days after the occurrence of the Reportable Event) Reportable Events Disclosure to the MSRB in such manner and format and accompanied by identifying information as is prescribed by the MSRB or the Commission at the time of delivery of such information. MSRB Rule G-32 requires all EMMA filings to be in word-searchable PDF format. This requirement extends to all documents to be filed with EMMA, including financial statements and other externally prepared reports. The Events are: 1. Principal and interest payment delinquencies 2. Non-payment related defaults, if material 3. Unscheduled draws on debt service reserves reflecting financial difficulties 4. Unscheduled draws on credit enhancements reflecting financial difficulties 5. Substitution of credit or liquidity providers, or their failure to perform 6. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security 7. Modifications to the rights of security holders, if material 8. Bond calls, if material, and tender offers 9. Defeasances 10. Release, substitution or sale of property securing repayment of the securities, if material 11. Rating changes 12. Bankruptcy, insolvency, receivership or similar event of the Village* 13. The consummation of a merger, consolidation, or acquisition involving the Village or the sale of all or substantially all of the assets of the Village, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material 14. Appointment of a successor or additional trustee or the change of name of a trustee, if material. Consequences of Failure of the Village to Provide Information The Village shall give notice in a timely manner to the MSRB of any failure to provide disclosure of Annual Financial Information and Audited Financial Statements when the same are due under the Undertaking. In the event of a failure of the Village to comply with any provision of the Undertaking, the beneficial owner of any Bond may seek mandamus or specific performance by court order, to cause the Village to comply with its obligations under the Undertaking. A default under the Undertaking shall not be deemed a default under the Bond Ordinance, and the sole remedy under the Undertaking in the event of any failure of the Village to comply with the Undertaking shall be an action to compel performance. * This event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the Village in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Village, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Village. 45

118 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A Amendment; Waiver Notwithstanding any other provision of the Undertaking, the Village by ordinance authorizing such amendment or waiver, may amend the Undertaking, and any provision of the Undertaking may be waived, if: (a) (i) The amendment or the waiver is made in connection with a change in circumstances that arises from a change in legal requirements, including, without limitation, pursuant to a no-action letter issued by the Commission, a change in law, or a change in the identity, nature, or status of the Village, or type of business conducted; or (ii) The Undertaking, as amended, or the provision, as waived, would have complied with the requirements of the Rule at the time of the primary offering, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (b) The amendment or waiver does not materially impair the interests of the beneficial owners of the Bonds, as determined by parties unaffiliated with the Village (such as Bond Counsel). In the event that the Commission or the MSRB or other regulatory authority approves or requires Annual Financial Information or notices of a Reportable Event to be filed with a central post office, governmental agency or similar entity other than the MSRB or in lieu of the MSRB, the Village shall, if required, make such dissemination to such central post office, governmental agency or similar entity without the necessity of amending the Undertaking. Termination of Undertaking The Undertaking shall be terminated if the Village shall no longer have any legal liability for any obligation on or relating to repayment of the Bonds under the Bond Ordinance. The Village shall give notice to the MSRB in a timely manner if this paragraph is applicable. Additional Information Nothing in the Undertaking shall be deemed to prevent the Village from disseminating any other information, using the means of dissemination set forth in the Undertaking or any other means of communication, or including any other information in any Annual Financial Information or Audited Financial Statements or notice of occurrence of a Reportable Event, in addition to that which is required by the Undertaking. If the Village chooses to include any information from any document or notice of occurrence of a Reportable Event in addition to that which is specifically required by the Undertaking, the Village shall have no obligation under the Undertaking to update such information or include it in any future disclosure or notice of occurrence of a Reportable Event. Dissemination of Information; Dissemination Agent When filings are required to be made with the MSRB in accordance with the Undertaking, such filings are required to be made through its EMMA system for municipal securities disclosure or through any other electronic format or system prescribed by the MSRB for purposes of the Rule. The Village may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under the Undertaking, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. 46

119 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A OPTIONAL REDEMPTION The Bonds due on and after February 1, 2027, are subject to redemption prior to maturity at the option of the Village as a whole or in part in integral multiples of $5,000 in any order of their maturity as determined by the Village (less than all of the Bonds of a single maturity to be selected by the Bond Registrar), on February 1, 2026, and on any date thereafter, at the redemption price of par plus accrued interest to the redemption date. Unless waived by any holder of Bonds to be redeemed, notice of the call for any redemption will be given by the Bond Registrar on behalf of the Village by mailing the redemption notice by first-class mail at least 30 days and not more than 60 days prior to the date fixed for redemption to each registered owner of the Bonds to be redeemed at the address shown on the Register or at such other address as is furnished in writing by such registered owner to the Bond Registrar. Unless moneys sufficient to pay the redemption price of the Bonds to be redeemed at the option of the Village are received by the Bond Registrar prior to the giving of such notice of redemption, such notice may, at the option of the Village, state that said redemption will be conditional upon the receipt of such moneys by the Bond Registrar on or prior to the date fixed for redemption. If such moneys are not received, such notice will be of no force and effect, the Village will not redeem such Bonds, and the Bond Registrar will give notice, in the same manner in which the notice of redemption has been given, that such moneys were not so received and that such Bonds will not be redeemed. Otherwise, prior to any redemption date, the Village will deposit with the Bond Registrar an amount of money sufficient to pay the redemption price of all the Bonds or portions of Bonds which are to be redeemed on that date. Subject to the provisions for a conditional redemption described above, notice of redemption having been given as described above and in the Bond Ordinance, and notwithstanding failure to receive such notice, the Bonds or portions of Bonds so to be redeemed will, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date (unless the Village shall default in the payment of the redemption price) such Bonds or portions of Bonds shall cease to bear interest. Upon surrender of such Bonds for redemption in accordance with said notice, such Bonds will be paid by the Bond Registrar at the redemption price. LITIGATION There is no litigation of any nature now pending or threatened restraining or enjoining the issuance, sale, execution or delivery of the Bonds, or in any way contesting or affecting the validity of the Bonds or any proceedings of the Village taken with respect to the issuance or sale thereof. CERTAIN LEGAL MATTERS Certain legal matters incident to the authorization, issuance and sale of the Bonds are subject to the approving legal opinion of Chapman and Cutler LLP, Chicago, Illinois, as Bond Counsel (the Bond Counsel ), who has been retained by, and acts as, Bond Counsel to the Village. Bond Counsel has not been retained or consulted on disclosure matters and has not undertaken to review or verify the accuracy, completeness or sufficiency of this Final Official Statement or other offering material relating to the Bonds and assumes no responsibility for the statements or information contained in or incorporated by reference in this Final Official Statement, except that in its capacity as Bond Counsel, Chapman and Cutler LLP, has, at the request of the Village, reviewed only those portions of this Final Official Statement involving the description of the Bonds, the security for the Bonds (excluding forecasts, projections, estimates or any other financial or economic information in connection therewith) and the description of the federal tax treatment of interest on the Bonds. This review was undertaken solely at the request and for the benefit of the Village and did not include any obligation to establish or confirm factual matters set forth herein. 47

120 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A FINAL OFFICIAL STATEMENT AUTHORIZATION This Final Official Statement has been authorized for distribution to prospective purchasers of the Bonds. All statements, information, and statistics herein are believed to be correct but are not guaranteed by the consultants or by the Village, and all expressions of opinion, whether or not so stated, are intended only as such. INVESTMENT RATING The Bonds are rated AAA/Stable by Standard & Poor s, a Division of the McGraw-Hill Companies, New York, New York. No application was made to any other rating agency for the purpose of obtaining an additional rating on the Bonds. Generally, rating agencies base their ratings on such information and materials and investigations, studies and assumptions by the respective rating agency. There is no assurance that such rating will continue for any given period of time or that it will not be revised downward or withdrawn entirely by such rating agency if, in its judgment, circumstances so warrant. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Bonds. The Village and the Underwriters have undertaken no responsibility either to bring to the attention of the registered owners of the Bonds any proposed change in or withdrawal of such rating or to oppose any such revision or withdrawal (other than to comply with any applicable continuing disclosure requirements). An explanation of the significance of investment ratings may be obtained from the rating agency: Standard & Poor s, 55 Water Street, New York, New York 10041, telephone UNDERWRITING Robert W. Baird & Co. Incorporated, Naperville, Illinois (the Underwriter ) has agreed to purchase all but not less than all of the Bonds at a price of $6,728, (reflecting the par amount of $6,785,000, and less an Underwriter s Discount of $56,237.30). It is anticipated that delivery of the Bonds will occur on the date shown on the cover page. The Bonds may be offered and sold to certain dealers (including the Underwriter or other dealers depositing Bonds into investment trusts) at prices or yields other than such public offering prices or yields shown on the front page of this Final Official Statement, and such public offering prices or yields may be changed, from time to time, by the Underwriter. MUNICIPAL ADVISOR The Village has engaged Speer Financial, Inc. as municipal advisor (the Municipal Advisor ) in connection with the issuance and sale of the Bonds. The Municipal Advisor is a Registered Municipal Advisor in accordance with the rules of the MSRB. The Municipal Advisor will not participate in the underwriting of the Bonds. The financial information included in the Final Official Statement has been compiled by the Municipal Advisor. Such information does not purport to be a review, audit or certified forecast of future events and may not conform with accounting principles applicable to compilations of financial information. The Municipal Advisor is not obligated to undertake any independent verification of or to assume any responsibility for the accuracy, completeness or fairness of the information contained in this Final Official Statement, nor is the Municipal Advisor obligated by the Village s continuing disclosure undertaking. 48

121 Village of Lake Zurich, Lake County, Illinois $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A CERTIFICATION We have examined this Final Official Statement dated May 16, 2016, for the $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A, believe it to be true and correct and will provide to the purchaser of the Bonds at the time of delivery a certificate confirming to the purchaser that to the best of our knowledge and belief information in the Official Statement was at the time of acceptance of the bid for the Bonds and, including any addenda thereto, was at the time of delivery of the Bonds true and correct in all material respects and does not include any untrue statement of a material fact, nor does it omit the statement of any material fact required to be stated therein, or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. /s/ THOMAS POYNTON /s/ JODIE K. HARTMAN Village President Director of Finance/Village Treasurer VILLAGE OF LAKE ZURICH VILLAGE OF LAKE ZURICH Lake County, Illinois Lake County, Illinois 49

122 APPENDIX A VILLAGE OF LAKE ZURICH, LAKE COUNTY, ILLINOIS FISCAL YEAR 2015 AUDITED FINANCIAL STATEMENTS

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127 VillageofLakeZurich OrganizationChartforFiscalYear2015 ResidentsofLake Zurich VillageTrustees Village President VillageClerk Village Manager AssistantVillage Manager Administration Finance Technology Park& Recreation Police Community Fire/ Services Rescue Public Works Building& Zoning - ii -

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131 - ix - Jodie Hartman - x -

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133 Financial Reporting for Pension Plans Required Supplementary Information Other Information - 2 -

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135 Statement of Net Position Statement of Activities Statement of Net Positionthe Statement of Activities Governmental Funds The General Fund

136 The TIF (#1) Tax Allocation Fund The Downtown TIF #2 Special Revenue Fund The Debt Service Fund The TIF Debt Service Fund The Capital ImprovementsFund The Downtown TIF Capital Projects Fund Proprietary Funds Fiduciary Funds Notes to the Financial Statements Other Information Amendments to Budget Governmental Activities Business-type Activities Total Village Wide

137 Change in Net Position For the Fiscal Years Ended April 30, 2015 and 2014 Governmental Business-type Activities Activities Total Village Wide

138 Revenues Expenditures

139 Governmental Funds Proprietary Funds Fiduciary Funds

140 General Fund General Fund Budgetary Highlights Fiscal Year Ended April 30, 2015 Final Budget Actual Revenues & Other Financing Sources Taxes $ 9,154,842 $ 9,110,072 Licenses and permits 918,625 1,030,867 Intergovernmental 14,085,343 14,241,235 Charges for services 1,407,402 1,587,616 Fines and forfeits 809, ,685 Other revenue 136, ,435 Sub-total revenues $ 26,512,192 $ 26,878,910 Other financing sources 17, ,561 Total Revenues and Other Financing Sources $ 26,529,692 $ 27,033,471 Expenditures and Other Financing Uses General government $ 2,338,829 $ 2,465,288 Public safety 19,481,361 19,036,526 Highways and streets 2,655,729 2,431,534 Culture and recreation 940, ,710 Economic development 826, ,392 Sub-total expenditures $ 26,243,101 $ 25,521,450 Other financing uses Transfers to Other Funds 1,442,000 1,442,000 Total Expenditures and Other Financing Sources $ 27,685,101 $ 26,963,450 Change in Fund Balance $ (1,155,409) $ 70,021

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166 Plan Administration Plan Membership

167 Benefits Provided Contributions Investment Policy

168 Investment Policy Investment Valuations Investment Rate of Return Deposits with Financial Institutions Interest Rate Risk Credit Risk Custodial Credit Risk

169 Net Pension Liability Actuarial Assumptions Discount Rate Discount Rate Sensitivity Plan Administration

170 Plan Administration Plan Membership Benefits Provided Benefits Provided Contributions Investment Policy

171 Investment Policy Concentrations Rate of Return Deposits with Financial Institutions Interest Rate Risk

172 Credit Risk Custodial Credit Risk Net Pension Liability Actuarial Assumptions Discount Rate

173 Discount Rate Sensitivity

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175 (See independent auditor's report.)

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203 (See independent auditor's report.) Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year.

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219 APPENDIX B DESCRIBING BOOK-ENTRY-ONLY ISSUANCE 1. The Depository Trust Company ( DTC ), New York, New York, will act as securities depository for the Bonds (the Securities ). The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC. 2. DTC, the world s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has Standard & Poor s rating: AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at 3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC s records. The ownership interest of each actual purchaser of each Security ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued. 4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC s records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. B-1

220 5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. 6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. 7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Village as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts upon DTC s receipt of funds and corresponding detail information from the Village or the Paying Agent, on payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC, the Paying Agent, or the Village, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Village or the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. 9. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to any Tender/Remarketing Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant s interest in the Securities, on DTC s records, to any Tender/Remarketing Agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC s records and followed by a book-entry credit of tendered Securities to any Tender/Remarketing Agent s DTC account. 10. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to the Village or the Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. 11. The Village may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC. 12. The information in this section concerning DTC and DTC s book-entry system has been obtained from sources that the Village believes to be reliable, but the Village takes no responsibility for the accuracy thereof. B-2

221 APPENDIX C PROPOSED FORM OF OPINION OF BOND COUNSEL PROPOSED FORM OF OPINION OF BOND COUNSEL [LETTERHEAD OF CHAPMAN AND CUTLER LLP] [TO BE DATED CLOSING DATE] We hereby certify that we have examined certified copy of the proceedings (the Proceedings ) of the President and Board of Trustees of the Village of Lake Zurich, Lake County, Illinois (the Village ) passed preliminary to the issue by the Village of its fully registered Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A (the Bonds ), to the amount of $6,785,000, dated the date hereof, due serially on February 1 of the years and in the amounts and bearing interest as follows: 2018 $120, % , % , % , % , % , % , % , % , % , % , % , % the Bonds due on and after February 1, 2027, being subject to redemption prior to maturity at the option of the Village as a whole or in part in any order of their maturity as determined by the Village (less than all of the Bonds of a single maturity to be selected by the Bond Registrar), on February 1, 2026, or on any date thereafter, at the redemption price of par plus accrued interest to the redemption date, as provided in the Proceedings, and we are of the opinion that the Proceedings show lawful authority for said issue under the laws of the State of Illinois now in force. We further certify that we have examined the form of bond prescribed for said issue and find the same in due form of law, and in our opinion said issue, to the amount named, is valid and legally binding upon the Village and is payable (a)(i) ratably and equally with the Village s outstanding Taxable General Obligation Funding Bonds (Alternate Revenue Source), Series 2009A, General Obligation Refunding Bonds (Sales Tax Alternate Revenue Source), Series 2014A and Taxable General Obligation Refunding Bonds (Sales Tax Alternate Revenue Source), Series 2015A, from collections distributed to the Village from those taxes imposed by the State of Illinois (the State ) pursuant to the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act and the Retailers Occupation Tax Act, each as supplemented and amended from time to time, or substitute taxes therefor as provided by the State in the future, C B.doc

222 (ii) from the proceeds received by the Village from time to time from the issuance of its general obligation limited tax bonds or notes to the fullest extent permitted by law, including Section of the Illinois Municipal Code, as amended, and (iii) ratably and equally with the Village s outstanding Taxable General Obligation Funding Bonds (Alternate Revenue Source), Series 2009A, from certain incremental property taxes as paid in the Lake Zurich Tax Increment Finance District Number 1 (the TIF ) and received and deposited by the Village into the Special Tax Allocation Fund of the TIF, and (b) from the levy and collection of ad valorem property taxes upon all taxable property in the Village without limitation as to rate or amount, and all taxable property in the Village is subject to the levy of such taxes, except that the rights of the owners of the Bonds and the enforceability of the Bonds may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting creditors rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion. It is our opinion that under present law, interest on the Bonds is includible in gross income of the owners thereof for federal income tax purposes. Ownership of the Bonds may result in other federal income tax consequences to certain taxpayers. Bondholders should consult their own tax advisors concerning tax consequences of ownership of the Bonds. We express no opinion herein as to the accuracy, adequacy or completeness of any information furnished to any person in connection with any offer or sale of the Bonds. In rendering this opinion, we have relied upon certifications of the Village with respect to certain material facts within the Village s knowledge. Our opinion represents our legal judgment based upon our review of the law and the facts that we deem relevant to render such opinion and is not a guarantee of a result. This opinion is given as of the date hereof and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. -2- C-2

223 APPENDIX D CONTINUING DISCLOSURE UNDERTAKING CONTINUING DISCLOSURE UNDERTAKING FOR THE PURPOSE OF PROVIDING CONTINUING DISCLOSURE INFORMATION UNDER SECTION (b)(5) OF RULE 15c2-12 This Continuing Disclosure Undertaking (the Agreement ) is executed and delivered by the Village of Lake Zurich, Lake County, Illinois (the Village ) in connection with the issuance of $6,785,000 Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016A (the Bonds ). The Bonds are being issued pursuant to a bond ordinance, as adopted by the President and Board of Trustees of the Village on the 16th day of May, 2016 (the Ordinance ). In consideration of the issuance of the Bonds by the Village and the purchase of such Bonds by the beneficial owners thereof, the Village covenants and agrees as follows: 1. PURPOSE OF THIS AGREEMENT. This Agreement is executed and delivered by the Village as of the date set forth below, for the benefit of the beneficial owners of the Bonds and in order to assist the Participating Underwriters in complying with the requirements of the Rule (as defined below). The Village represents that it will be the only obligated person with respect to the Bonds at the time the Bonds are delivered to the Participating Underwriters and that no other person is expected to become so committed at any time after issuance of the Bonds. 2. DEFINITIONS. The terms set forth below shall have the following meanings in this Agreement, unless the context clearly otherwise requires. Annual Financial Information is defined in the Official Statement. Annual Financial Information Disclosure means the dissemination of disclosure concerning Annual Financial Information and the dissemination of the Audited Financial Statements as set forth in Section 4. Audited Financial Statements means the audited financial statements of the Village prepared pursuant to the standards and as described in Exhibit I. Commission means the Securities and Exchange Commission. Dissemination Agent means any agent designated as such in writing by the Village and which has filed with the Village a written acceptance of such designation, and such agent s successors and assigns. EMMA means the MSRB through its Electronic Municipal Market Access system for municipal securities disclosure or through any other electronic format or system prescribed by the MSRB for purposes of the Rule. Exchange Act means the Securities Exchange Act of 1934, as amended B.doc D-1

224 MSRB means the Municipal Securities Rulemaking Board. Official Statement means the Final Official Statement, dated May 16, 2016, and relating to the Bonds. Participating Underwriter means each broker, dealer or municipal securities dealer acting as an underwriter in the primary offering of the Bonds. Reportable Event means the occurrence of any of the Events with respect to the Bonds set forth in Exhibit II. Reportable Events Disclosure means dissemination of a notice of a Reportable Event as set forth in Section 5. Rule means Rule 15c2-12 adopted by the Commission under the Exchange Act, as the same may be amended from time to time. State means the State of Illinois. Undertaking means the obligations of the Village pursuant to Sections 4 and CUSIP NUMBERS. The CUSIP Numbers of the Bonds as set forth in Exhibit III. The Village will include the CUSIP Numbers in all disclosure described in Sections 4 and 5 of this Agreement. 4. ANNUAL FINANCIAL INFORMATION DISCLOSURE. Subject to Section 8 of this Agreement, the Village hereby covenants that it will disseminate its Annual Financial Information and its Audited Financial Statements (in the form and by the dates set forth in Exhibit I) to EMMA in such manner and format and accompanied by identifying information as is prescribed by the MSRB or the Commission at the time of delivery of such information and by such time so that such entities receive the information by the dates specified. MSRB Rule G-32 requires all EMMA filings to be in word-searchable PDF format. This requirement extends to all documents to be filed with EMMA, including financial statements and other externally prepared reports. If any part of the Annual Financial Information can no longer be generated because the operations to which it is related have been materially changed or discontinued, the Village will disseminate a statement to such effect as part of its Annual Financial Information for the year in which such event first occurs. If any amendment or waiver is made to this Agreement, the Annual Financial Information for the year in which such amendment or waiver is made (or in any notice or supplement provided to EMMA) shall contain a narrative description of the reasons for such amendment or waiver and its impact on the type of information being provided. -2- D-2

225 5. REPORTABLE EVENTS DISCLOSURE. Subject to Section 8 of this Agreement, the Village hereby covenants that it will disseminate in a timely manner (not in excess of ten business days after the occurrence of the Reportable Event) Reportable Events Disclosure to EMMA in such manner and format and accompanied by identifying information as is prescribed by the MSRB or the Commission at the time of delivery of such information. MSRB Rule G-32 requires all EMMA filings to be in word-searchable PDF format. This requirement extends to all documents to be filed with EMMA, including financial statements and other externally prepared reports. Notwithstanding the foregoing, notice of optional or unscheduled redemption of any Bonds or defeasance of any Bonds need not be given under this Agreement any earlier than the notice (if any) of such redemption or defeasance is given to the Bondholders pursuant to the Ordinance. 6. CONSEQUENCES OF FAILURE OF THE VILLAGE TO PROVIDE INFORMATION. The Village shall give notice in a timely manner to EMMA of any failure to provide Annual Financial Information Disclosure when the same is due hereunder. In the event of a failure of the Village to comply with any provision of this Agreement, the beneficial owner of any Bond may seek mandamus or specific performance by court order, to cause the Village to comply with its obligations under this Agreement. A default under this Agreement shall not be deemed a default under the Ordinance, and the sole remedy under this Agreement in the event of any failure of the Village to comply with this Agreement shall be an action to compel performance. 7. AMENDMENTS; WAIVER. Notwithstanding any other provision of this Agreement, the Village by ordinance authorizing such amendment or waiver, may amend this Agreement, and any provision of this Agreement may be waived, if: (a) (i) The amendment or waiver is made in connection with a change in circumstances that arises from a change in legal requirements, including without limitation, pursuant to a no-action letter issued by the Commission, a change in law, or a change in the identity, nature, or status of the Village, or type of business conducted; or (ii) This Agreement, as amended, or the provision, as waived, would have complied with the requirements of the Rule at the time of the primary offering, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (b) The amendment or waiver does not materially impair the interests of the beneficial owners of the Bonds, as determined either by parties unaffiliated with the Village (such as Bond Counsel). In the event that the Commission or the MSRB or other regulatory authority shall approve or require Annual Financial Information Disclosure or Reportable Events Disclosure to be made to a central post office, governmental agency or similar entity other than EMMA or in lieu of EMMA, the Village shall, if required, make such dissemination to such central post office, governmental agency or similar entity without the necessity of amending this Agreement. -3- D-3

226 8. TERMINATION OF UNDERTAKING. The Undertaking of the Village shall be terminated hereunder if the Village shall no longer have any legal liability for any obligation on or relating to repayment of the Bonds under the Ordinance. The Village shall give notice to EMMA in a timely manner if this Section is applicable. 9. DISSEMINATION AGENT. The Village may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. 10. ADDITIONAL INFORMATION. Nothing in this Agreement shall be deemed to prevent the Village from disseminating any other information, using the means of dissemination set forth in this Agreement or any other means of communication, or including any other information in any Annual Financial Information Disclosure or notice of occurrence of a Reportable Event, in addition to that which is required by this Agreement. If the Village chooses to include any information from any document or notice of occurrence of a Reportable Event in addition to that which is specifically required by this Agreement, the Village shall have no obligation under this Agreement to update such information or include it in any future disclosure or notice of occurrence of a Reportable Event. 11. BENEFICIARIES. This Agreement has been executed in order to assist the Participating Underwriters in complying with the Rule; however, this Agreement shall inure solely to the benefit of the Village, the Dissemination Agent, if any, and the beneficial owners of the Bonds, and shall create no rights in any other person or entity. 12. RECORDKEEPING. The Village shall maintain records of all Annual Financial Information Disclosure and Reportable Events Disclosure, including the content of such disclosure, the names of the entities with whom such disclosure was filed and the date of filing such disclosure. 13. ASSIGNMENT. The Village shall not transfer its obligations under the Ordinance unless the transferee agrees to assume all obligations of the Village under this Agreement or to execute an Undertaking under the Rule. -4- D-4

227 14. GOVERNING LAW. This Agreement shall be governed by the laws of the State. VILLAGE OF LAKE ZURICH LAKE COUNTY, ILLINOIS Date: June 15, 2016 President Village of Lake Zurich, Lake County, Illinois -5- D-5

228 EXHIBIT I ANNUAL FINANCIAL INFORMATION AND TIMING AND AUDITED FINANCIAL STATEMENTS All or a portion of the Annual Financial Information and the Audited Financial Statements as set forth below may be included by reference to other documents which have been submitted to EMMA or filed with the Commission. If the information included by reference is contained in a Final Official Statement, the Final Official Statement must be available on EMMA; the Final Official Statement need not be available from the Commission. The Village shall clearly identify each such item of information included by reference. Annual Financial Information exclusive of Audited Financial Statements will be submitted to EMMA by 210 days after the last day of the Village s fiscal year (currently April 30), beginning with the fiscal year ended April 30, Audited Financial Statements should be filed at the same time as the Annual Financial Information. If Audited Financial Statements are not available when the Annual Financial Information is filed, Audited Financial Statements will be submitted to EMMA within 30 days after availability to the Village. Audited Financial Statements will be prepared in accordance with the accounting principles described in the Official Statement. If any change is made to the Annual Financial Information as permitted by Section 4 of the Agreement, the Village will disseminate a notice of such change as required by Section 4. EXHIBIT I D-6

229 EXHIBIT II EVENTS WITH RESPECT TO THE BONDS FOR WHICH REPORTABLE EVENTS DISCLOSURE IS REQUIRED 1. Principal and interest payment delinquencies 2. Non-payment related defaults, if material 3. Unscheduled draws on debt service reserves reflecting financial difficulties 4. Unscheduled draws on credit enhancements reflecting financial difficulties 5. Substitution of credit or liquidity providers, or their failure to perform 6. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security 7. Modifications to the rights of security holders, if material 8. Bond calls, if material, and tender offers 9. Defeasances 10. Release, substitution or sale of property securing repayment of the securities, if material 11. Rating changes 12. Bankruptcy, insolvency, receivership or similar event of the Village 13. The consummation of a merger, consolidation, or acquisition involving the Village or the sale of all or substantially all of the assets of the Village, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material 14. Appointment of a successor or additional trustee or the change of name of a trustee, if material This event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the Village in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Village, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Village. EXHIBIT II D-7

230 EXHIBIT III CUSIP NUMBERS YEAR OF MATURITY CUSIP NUMBER (511444) 2018 QZ RA RB RC RD RE RF RG RH RJ RK RL7 EXHIBIT III D-8

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283 ATTACHMENT K VILLAGE OF LAKE ZURICH, ILLINOIS CONSOLIDATED BALANCE SHEET DECEMBER 31, 2016 ASSETS TIF SPECIAL TAX ALLOCATION TIF DEBT SERVICE TIF CAPITAL PROJECTS CONSOLIDATED TOTAL Cash and Investments $ 50,220 $ 358,344 $ 2,659 $ 411,223 Property Taxes Receivable 1,230, ,230,451 Accrued Interest Receivable Prepaid Expenses TOTAL ASSETS $ 1,280,671 $ 358,881 $ 2,659 $ 1,642,211 LIABILITIES & FUND BALANCES Accounts Payable $ - $ 629 $ - $ 629 Advance From Other Funds - 1,425, ,000 1,610,000 Deferred Property Taxes 1,230, ,230,409 TOTAL LIABILITIES & DEFERRED INFLOWS $ 1,230,409 $ 1,425,629 $ 185,000 $ 2,841,038 FUND BALANCES $ 50,262 $ (1,066,748) $ (182,341) $ (1,198,827) TOTAL LIABILITIES AND FUND BALANCES $ 1,280,671 $ 358,881 $ 2,659 $ 1,642,211 Village of Lake Zurich Unit Code: 049/100/32

284 ATTACHMENT K VILLAGE OF LAKE ZURICH, ILLINOIS CONSOLIDATED STATEMENT OF OPERATIONS DECEMBER 31, 2016 TIF SPECIAL TAX ALLOCATION TIF DEBT SERVICE TIF CAPITAL PROJECTS CONSOLIDATED TOTAL REVENUES Property Taxes $ 1,231,640 $ - $ - $ 1,231,640 Interest Income 1, ,028 TOTAL REVENUES $ 1,232,757 $ 911 $ - $ 1,233,668 EXPENDITURES Legal Services $ - $ - $ - $ - Other Professional Services Memberships and Subscriptions School District 95 TIF Recovery Costs 480, ,994 Debt Service - Principal - 625, ,000 Debt Service - Interest - 837, ,553 Paying Agent Fees Bond Issuance Costs TOTAL EXPENDITURES $ 482,557 $ 1,462,553 $ - $ 1,945,110 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES $ 750,200 $ (1,461,642) $ - $ (711,442) OTHER FINANCING SOURCES (USES) Transfers (To) From $ (732,000) $ 732,000 - $ - Proceeds from bond issuance, at par - 7,861,000 7,861,000 Payment to escrow agent - (6,890,182) (6,890,182) TOTAL OTHER FINANCING SOURCES (USES) $ (732,000) $ 1,702,818 $ - $ 970,818 FUND BALANCES, MAY 1 $ 32,062 $ (1,307,924) $ (182,341) $ (1,458,203) FUND BALANCES, DECEMBER 31 $ 50,262 $ (1,066,748) $ (182,341) $ (1,198,827) Village of Lake Zurich Unit Code: 049/100/32

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286 SECTION 2 [Sections 2 through 5 must be completed for each redevelopment project area listed in Section 1.] FY 2016 Name of Redevelopment Project Area: Downtown TIF #2 Primary Use of Redevelopment Project Area*: Mixed If "Combination/Mixed" List Component Types: Retail/Residential Under which section of the Illinois Municipal Code was Redevelopment Project Area designated? (check one): Tax Increment Allocation Redevelopment Act x Industrial Jobs Recovery Law Were there any amendments to the redevelopment plan, the redevelopment project area, or the State Sales Tax Boundary? [65 ILCS 5/ (d) (1) and 5/ (d) (1)] If yes, please enclose the amendment labeled Attachment A Certification of the Chief Executive Officer of the municipality that the municipality has complied with all of the requirements of the Act during the preceding fiscal year. [65 ILCS 5/ (d) (3) and 5/ (d) (3)] Please enclose the CEO Certification labeled Attachment B Opinion of legal counsel that municipality is in compliance with the Act. [65 ILCS 5/ (d) (4) and 5/ (d) (4)] Please enclose the Legal Counsel Opinion labeled Attachment C Were there any activities undertaken in furtherance of the objectives of the redevelopment plan, including any project implemented in the preceding fiscal year and a description of the activities undertaken? [65 ILCS 5/ (d) (7) (A and B) and 5/ (d) (7) (A and B)] If yes, please enclose the Activities Statement labeled Attachment D Were any agreements entered into by the municipality with regard to the disposition or redevelopment of any property within the redevelopment project area or the area within the State Sales Tax Boundary? [65 ILCS 5/ (d) (7) (C) and 5/ (d) (7) (C)] If yes, please enclose the Agreement(s) labeled Attachment E Is there additional information on the use of all funds received under this Division and steps taken by the municipality to achieve the objectives of the redevelopment plan? [65 ILCS 5/ (d) (7) (D) and 5/ (d) (7) (D)] If yes, please enclose the Additional Information labeled Attachment F Did the municipality's TIF advisors or consultants enter into contracts with entities or persons that have received or are receiving payments financed by tax increment revenues produced by the same TIF? [65 ILCS 5/ (d) (7) (E) and 5/ (d) (7) (E)] If yes, please enclose the contract(s) or description of the contract(s) labeled Attachment G Were there any reports or meeting minutes submitted to the municipality by the joint review board? [65 ILCS 5/ (d) (7) (F) and 5/ (d) (7) (F)] If yes, please enclose the Joint Review Board Report labeled Attachment H Were any obligations issued by municipality? [65 ILCS 5/ (d) (8) (A) and 5/ (d) (8) (A)] If yes, please enclose the Official Statement labeled Attachment I Was analysis prepared by a financial advisor or underwriter setting forth the nature and term of obligation and projected debt service including required reserves and debt coverage? [65 ILCS 5/ (d) (8) (B) and 5/ (d) (8) (B)] If yes, please enclose the Analysis labeled Attachment J Cumulatively, have deposits from any source equal or greater than $100,000 been made into the special tax allocation fund? 65 ILCS 5/ (d) (2) and 5/ (d) (2) If yes, please enclose Audited financial statements of the special tax allocation fund labeled Attachment K Cumulatively, have deposits of incremental taxes revenue equal to or greater than $100,000 been made into the special tax allocation fund? [65 ILCS 5/ (d) (9) and 5/ (d) (9)] If yes, please enclose a certified letter statement reviewing compliance with the Act labeled Attachment L X A list of all intergovernmental agreements in effect to which the municipality is a part, and an accounting of any money transferred or received by the municipality during that fiscal year pursuant to those intergovernmental agreements. [65 ILCS 5/ (d) (10)] If yes, please enclose list only, not actual agreements labeled Attachment M X * Types include: Central Business District, Retail, Other Commercial, Industrial, Residential, and Combination/Mixed. No X X X X X X X Yes X X X X

287 SECTION (65 ILCS 5/ (d) (5) and 65 ILCS 5/ (d) (5)) Provide an analysis of the special tax allocation fund. FY 2016 TIF NAME: Downtown TIF #2 Fund Balance at Beginning of Reporting Period $ (1,899) Revenue/Cash Receipts Deposited in Fund During Reporting FY: Reporting Year Cumulative* % of Total Property Tax Increment $ 61,034 $ 61,034 22% State Sales Tax Increment 0% Local Sales Tax Increment 0% State Utility Tax Increment 0% Local Utility Tax Increment 0% Interest $ 70 $ 135 0% Land/Building Sale Proceeds 0% Bond Proceeds 0% Transfers from Municipal Sources 0% Private Sources 0% Other (identify source ; if multiple other sources, attach schedule) Refer to Schedule $ 69,355 $ 213,434 78% *must be completed where current or prior year(s) have reported funds Total Amount Deposited in Special Tax Allocation Fund During Reporting Period $ 130,459 Cumulative Total Revenues/Cash Receipts $ 274, % Total Expenditures/Cash Disbursements (Carried forward from Section 3.2) $ 83,143 Distribution of Surplus Total Expenditures/Disbursements $ 83,143 NET INCOME/CASH RECEIPTS OVER/(UNDER) CASH DISBURSEMENTS $ 47,316 FUND BALANCE, END OF REPORTING PERIOD* $ 45,417 * if there is a positive fund balance at the end of the reporting period, you must complete Section 3.3 SURPLUS*/(DEFICIT)(Carried forward from Section 3.3) $ 45,417

288 FY 2016 TIF NAME: Downtown TIF #2 SECTION 3.2 A- (65 ILCS 5/ (d) (5) and 65 ILCS 5/ (d) (5)) ITEMIZED LIST OF ALL EXPENDITURES FROM THE SPECIAL TAX ALLOCATION FUND (by category of permissible redevelopment cost, amounts expended during reporting period) FOR AMOUNTS >$10,000 SECTION 3.2 B MUST BE COMPLETED Category of Permissible Redevelopment Cost [65 ILCS 5/ (q) and 65 ILCS 5/ (o)] Amounts Reporting Fiscal Year 1. Costs of studies, administration and professional services Subsections (q)(1) and (o) (1) Legal Services 14,078 Real Estate Taxes 2,711 Accounting Services 563 Business Meetings 30 Engineering Services 23, Cost of marketing sites Subsections (q)(1.6) and (o)(1.6) $ 41,024 3.Property assembly: property acquisition, building demolition, site preparation and environmental site improvement costs. Subsections (q)(2), (o)(2) and (o)(3) Environmental Clean Up 8,356 $ - 4.Costs of rehabilitation, reconstruction, repair or remodeling of existing public or private buildings. Subsection (q)(3) and (o)(4) Building Repairs 13,763 $ 8, Costs of construction of public works and improvements. Subsection (q)(4) and (o)(5) Dry Utility Relocation 20,000 $ 13,763 6.Costs of removing contaminants required by environmental laws or rules (o)(6) - Industrial Jobs Recovery TIFs ONLY $ 20,000 $ -

289 SECTION 3.2 A PAGE 2 7. Cost of job training and retraining, including "welfare to work" programs Subsection (q)(5), (o)(7) and (o)(12) $ - 8.Financing costs related to obligations issued by the municipality. Subsection (q) (6) and (o)(8) 9. Approved taxing district's capital costs. Subsection (q)(7) and (o)(9) $ Cost of Reimbursing school districts for their increased costs caused by TIF assisted housing projects. Subsection (q)(7.5) - Tax Increment Allocation Redevelopment TIFs ONLY $ Relocation costs. Subsection (q)(8) and (o)(10) $ - 12.Payments in lieu of taxes as defined in Subsections (m) and (k). Subsection (q)(9) and (o)(11) $ Costs of job training, retraining advanced vocational or career education provided by other taxing bodies. Subsection (q)(10) and (o)(12) $ - $ -

290 SECTION 3.2 A PAGE Costs of reimbursing private developers for interest expenses incurred on approved redevelopment projects. Subsection (q)(11)(a-e) and (o)(13)(a-e) 15. Costs of construction of new housing units for low income and very low-income households. Subsection (q)(11)(f) - Tax Increment Allocation Redevelopment TIFs ONLY $ Cost of day care services and operational costs of day care centers. Subsection (q) (11.5) - Tax Increment Allocation Redevelopment TIFs ONLY $ - $ - TOTAL ITEMIZED EXPENDITURES $ 83,143

291 FY 2016 TIF NAME: Downtown TIF #2 Section 3.2 B List all vendors, including other municipal funds, that were paid in excess of $10,000 during the current reporting year. There were no vendors, including other municipal funds, paid in excess of $10,000 during the current reporting period. Name Service Amount Commonwealth Edison Dry Utilities Relocation $ 20, Kathleen Field Orr & Associates Legal Fees $ 10, Manhard Consulting Block A Engineering $ 21, Martin Enterprises HVAC - 2 E. Main St $ 12,921.00

292 SECTION (65 ILCS 5/ (d) (5) 65 ILCS (d) (5)) Breakdown of the Balance in the Special Tax Allocation Fund At the End of the Reporting Period FY 2016 TIF NAME: Downtown TIF #2 FUND BALANCE, END OF REPORTING PERIOD $ 45, Description of Debt Obligations Amount of Original Issuance $ Amount Designated - Total Amount Designated for Obligations $ - $ - 2. Description of Project Costs to be Paid Total Amount Designated for Project Costs $ - TOTAL AMOUNT DESIGNATED $ - SURPLUS*/(DEFICIT) $ 45,417 * NOTE: If a surplus is calculated, the municipality may be required to repay the amount to overlapping taxing

293 SECTION 4 [65 ILCS 5/ (d) (6) and 65 ILCS 5/ (d) (6)] FY 2016 TIF NAME: Downtown TIF #2 Provide a description of all property purchased by the municipality during the reporting fiscal year within the redevelopment project area. x No property was acquired by the Municipality Within the Redevelopment Project Area Property Acquired by the Municipality Within the Redevelopment Project Area Property (1): Street address: Approximate size or description of property: Purchase price: Seller of property: Property (2): Street address: Approximate size or description of property: Purchase price: Seller of property: Property (3): Street address: Approximate size or description of property: Purchase price: Seller of property: Property (4): Street address: Approximate size or description of property: Purchase price: Seller of property:

294 SECTION 5-65 ILCS 5/ (d) (7) (G) and 65 ILCS 5/ (d) (7) (G) PAGE 1 FY 2016 TIF NAME: Downtown TIF #2 *Page 1 is to be included with TIF Report. Pages 2-3 are to be included ONLY if projects are listed. Box below must be filled in with either a check or number of projects, not both Check if NO projects were undertaken by the Municipality Within the Redevelopment Project Area: ENTER total number of projects undertaken by the Municipality Within the Redevelopment Project Area and list them in detail below*. TOTAL: 11/1/99 to Date Estimated Investment for Subsequent Fiscal Year Total Estimated to Complete Project Private Investment Undertaken (See Instructions) $ - $ - $ - Public Investment Undertaken $ 63,751 $ 40,000 $ 183,275 Ratio of Private/Public Investment 0 0 Project 1: *IF PROJECTS ARE LISTED NUMBER MUST BE ENTERED ABOVE 2 E Main St - Building Improvements Private Investment Undertaken (See Instructions) $ - Public Investment Undertaken $ 39,251 Ratio of Private/Public Investment 0 0 Project 2: 133 W Main St - Building Improvements Private Investment Undertaken (See Instructions) Public Investment Undertaken $ 40,000 $ 40,000 Ratio of Private/Public Investment 0 0 Project 3: TIF District Lift Station Private Investment Undertaken (See Instructions) Public Investment Undertaken $ 24,500 $ 143,275 Ratio of Private/Public Investment 0 0 Project 4: Private Investment Undertaken (See Instructions) Public Investment Undertaken Ratio of Private/Public Investment 0 0 Project 5: Private Investment Undertaken (See Instructions) Public Investment Undertaken Ratio of Private/Public Investment 0 0 Project 6: Private Investment Undertaken (See Instructions) Public Investment Undertaken Ratio of Private/Public Investment 0 0

295 Optional: Information in the following sections is not required by law, but would be helpful in evaluating the performance of TIF in Illinois. *even though optional MUST be included as part of complete TIF report SECTION 6 FY 2016 TIF NAME: Downtown TIF #2 Provide the base EAV (at the time of designation) and the EAV for the year reported for the redevelopment project area Year redevelopment project area was designated Base EAV Reporting Fiscal Year EAV 2013 $ 8,426,108 $ 9,192,058 List all overlapping tax districts in the redevelopment project area. If overlapping taxing district received a surplus, list the surplus. The overlapping taxing districts did not receive a surplus. Surplus Distributed from redevelopment Overlapping Taxing District project area to overlapping districts County of Lake $ - Lake County Forest Preserve $ - Ela Township $ - Ela Township Road District $ - Lake Zurich Community School District #95 $ - College of Lake County #532 $ - Ela Public Library $ - Village of Lake Zurich $ - $ - $ - $ - $ - $ - $ - $ - SECTION 7 Provide information about job creation and retention Number of Jobs Retained Number of Jobs Created Description and Type (Temporary or Permanent) of Jobs Total Salaries Paid $ $ $ $ $ $ $ SECTION 8 Provide a general description of the redevelopment project area using only major boundaries: Optional Documents Legal description of redevelopment project area Map of District Enclosed

296 FINANCE DEPARTMENT 70 East Main Street Lake Zurich, Illinois (847) LakeZurich.org June 8, 2017 Re: Section 3.1 Attachment Other: Source Amount Additional Notes Rental Income $67,340 Miscellaneous Revenue 2,015 Non-refundable deposit Total $69,355 Village of Lake Zurich Unit Code: 049/100/32

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298 ATTACHMENT C 20 N. Wacker Drive, Ste S. Ravinia Avenue, Ste 10 Chicago, Illinois Orland Park, Illinois T F T F DD sfuhler@ktjlaw.com sfuhler@ktjlaw.com To: Ray Keller Village Manager Village of Lake Zurich From: Klein, Thorpe & Jenkins Re: Village of Lake Zurich Downtown TIF No. 2 July 27, 2017 We have reviewed all information provided to our office by the Village staff and consultants regarding the TIF annual report for Lake Zurich TIF No. 2, said TIF established and designated January 19, It is my opinion that the Village of Lake Zurich has complied with the applicable requirements of the Illinois Tax Increment Redevelopment Allocation Act set forth thereunder for the fiscal year beginning May 1, 2016 and ending December 31, 2016, to the best of my knowledge and belief. Sincerely, Klein, Thorpe & Jenkins, Ltd. Scott F. Uhler _1

299 FINANCE DEPARTMENT 70 East Main Street Lake Zurich, Illinois (847) LakeZurich.org May 31, 2017 ATTACHMENT D Office of the Illinois Comptroller Local Government Division Suite W. Randolph Street Chicago, Illinois To Whom It May Concern: Statement of Activities Background The Village of Lake Zurich created the second Tax Increment Financing (TIF) District TIF#2, on January 19, TIF #2 was designed to restore and enhance the tax base of the taxing districts in the area. TIF #2 is comprised of approximately a 59-acre area. It consists of a large portion of area that has remained undeveloped despite various efforts to encourage private investments. Most of the uses within this area are retail/commercial. The TIF #2 district was originated with the following primary objectives: 1. Support continued capital improvements throughout the Downtown area 2. Seek to develop guidelines that increase the availability of parking throughout the requirement of shared parking lots among developments 3. Build pedestrian character via revision of ordinances and codes 4. Promote more energy efficient site designs and layouts for developments potentially utilizing higher densities in developments to encourage more pedestrian traffic Lake Zurich established important goals for the new TIF #2 district: Provide a balance of retail opportunities that meet the needs of Village residents Promote a unified design concept with strong retail orientation for commercial areas that will ensure a distinct feel for the Village Ensure commercial/retail developments are easily and safely accessible to pedestrians Village of Lake Zurich Unit Code 049/100/32