Due: December 15, as further described on the inside cover page

Transcription

1 NEW ISSUE BOOK-ENTRY ONLY BANK QUALIFIED Rating: S&P: AA (Stable Outlook) BAM Insured Subject to compliance by the Village with certain covenants, in the opinion of Louis F. Cainkar, Ltd., Burbank, Illinois ( Bond Counsel ), under present law, interest on the Bonds is excludable from gross income of the owners thereof for federal income tax purposes and is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations, but such interest is taken into account in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. Interest on the Bonds is not exempt from present State of Illinois income taxes. See TAX EXEMPTION herein for a more complete discussion. The Bonds are qualified tax-exempt obligations under Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. See QUALIFIED TAX-EXEMPT OBLIGATIONS herein. Village of Willow Springs, Cook County, Illinois $3,895,000 General Obligation Refunding Bonds (Alternate Revenue Source), Series 2017A $1,000,000 General Obligation Refunding Bonds (Alternate Revenue Source), Series 2017B Dated: Date of Delivery Due: December 15, as further described on the inside cover page The General Obligation Refunding Bonds (Alternate Revenue Source), Series 2017A (the 2017A Bonds ) and General Obligation Refunding Bonds (Alternate Revenue Source), Series 2017B (the 2017B Bonds and, together with the 2017A Bonds, the Bonds ), of the Village of Willow Springs, Cook County, Illinois (the Village ), will be issued in fully registered form and will be registered initially only in the name of Cede & Co., as registered owner and nominee of The Depository Trust Company, New York, New York ( DTC ). DTC will act as securities depository for the Bonds. Purchasers of the Bonds will not receive certificates representing their interests in the Bonds purchased. Ownership by the beneficial owners of the Bonds will be evidenced by book-entry only. Payments of principal of and interest on the Bonds will be made by Amalgamated Bank of Chicago, Chicago, Illinois, as trustee for the 2017A Bonds and bond registrar and paying agent for the Bonds, to DTC, which in turn will remit such payments to its participants for subsequent disbursement to the beneficial owners of the Bonds. As long as Cede & Co. is the registered owner as nominee of DTC, payments of principal of and interest on the Bonds will be made to such registered owner, and disbursement of such payments will be the responsibility of DTC and its participants. Individual purchases of the Bonds will be made in the principal amount of $5,000 or any integral multiple thereof. The Bonds will bear interest from their dated date at the rates per annum as shown on the inside cover page. Interest on the Bonds (computed on the basis of a 360-day year consisting of twelve 30-day months) will be payable semi-annually on each June 15 and December 15, commencing December 15, Proceeds of the 2017A Bonds will be used to (a) refund all of the Village s outstanding Series 2004B and Series 2006 Bonds and (b) pay costs associated with the issuance of the 2017A Bonds. See THE REFUNDING herein. Proceeds of the 2017B Bonds will be used to (a) refund all of the Village s outstanding Series 2008A Bonds, and (b) pay costs associated with the issuance of the 2017B Bonds. See THE REFUNDING herein. The 2017A Bonds are not subject to optional redemption prior to maturity. The 2017B Bonds due on or after December 15, 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 December 15, 2026, at the redemption price of par plus accrued interest to the redemption date. See THE BONDS Redemption herein. The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under a municipal bond insurance policy (the Bond Insurance Policy ) to be issued concurrently with the delivery of the Bonds by Build America Mutual Assurance Company, New York, New York (the Insurer or BAM ). See BOND INSURANCE and APPENDIX C herein. In the opinion of Bond Counsel, the 2017A Bonds are valid and legally binding upon the Village, payable (i) together with the outstanding General Obligation Refunding Bonds (Alternate Revenue Source), Series 2009B and General Obligation Refunding Bonds (Alternate Revenue Source), Series 2012B from (a) certain Limited Incremental Property Taxes (as defined herein) and (b) the amounts on deposit in and to the credit of the Municipal Account of the Special Tax Allocation Fund (as described herein) and (ii) from ad valorem taxes as levied against all of the taxable property in the Village without limitation as to rate or amount, except that the rights of the owners of the 2017A Bonds and the enforceability of the 2017A 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. See THE BONDS Security herein. In the opinion of Bond Counsel, the 2017B Bonds are valid and legally binding upon the Village, payable from (a) revenues from the Village s nonhome rule sales tax and (b) ad valorem taxes as levied against all of the taxable property in the Village without limitation as to rate or amount, except that the rights of the owners of the 2017B Bonds and the enforceability of the 2017B 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. See THE BONDS Security herein. The Bonds are offered when, as and if issued by the Village and received by George K. Baum & Company, Chicago, Illinois (the Underwriter ), subject to prior sale, to withdrawal or modification of the offer without notice, and to the approval of legality by Louis F. Cainkar, Ltd., Burbank, Illinois, Bond Counsel, and certain other conditions. Chapman and Cutler LLP, Chicago, Illinois, will act as Disclosure Counsel to the Village. Certain legal matters will be passed on for the Village by Tressler LLP, Bolingbrook, Illinois. It is expected that beneficial interests in the Bonds will be available for delivery through the facilities of DTC on or about October 11, George K. Baum & Company as Underwriter The date of this Official Statement is October 5, as Municipal Advisor

2 Village of Willow Springs Cook County, Illinois $3,895,000 GENERAL OBLIGATION REFUNDING BONDS (ALTERNATE REVENUE SOURCE), SERIES 2017A MATURITIES, AMOUNTS, INTEREST RATES, YIELDS AND CUSIP NUMBERS MATURITY (DECEMBER 15) AMOUNT INTEREST RATE YIELD CUSIP NUMBER * (971201) 2018 $690, % 1.65% KM , % 1.80% KN , % 2.00% KP , % 2.25% KQ , % 2.50% KR , % 2.75% KS , % 2.90% KT4 $1,000,000 GENERAL OBLIGATION REFUNDING BONDS (ALTERNATE REVENUE SOURCE), SERIES 2017B MATURITIES, AMOUNTS, INTEREST RATES, YIELDS AND CUSIP NUMBERS MATURITY (DECEMBER 15) AMOUNT INTEREST RATE YIELD CUSIP NUMBER* (971201) 2018 $75, % 1.75% KU , % 1.90% KV , % 2.10% KW , % 2.35% KX , % 2.60% KY , % 2.85% KZ , % 3.00% LA , % 3.15% LB , % 3.35% LC , % 3.35% LD , % 3.50% LE6 * CUSIP data herein is provided by the CUSIP Global Services, managed on behalf of the American Bankers Association by S&P Capital IQ, a part of McGraw-Hill Companies Financial. No representations are made as to the correctness of the CUSIP numbers. These CUSIP numbers may also be subject to change after the issuance of the Bonds.

3 No dealer, broker, salesman or other person has been authorized by the Village or the Underwriter to give any information or to make any representations other than those contained in this Official Statement in connection with the offering described herein and if given or made, such other information or representations must not be relied upon as statements having been authorized by the Village, the Underwriter or any other entity. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy any securities other than the Bonds, nor shall there be any offer to sell or solicitation of an offer to buy the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. This Official Statement is submitted in connection with the sale of the securities described in it and may not be reproduced or used, in whole or in part, for any other purposes. Unless otherwise indicated, the Village is the source of all tables and statistical and financial information contained in this Official Statement. The information contained in this Official Statement concerning the Insurer and the Bond Insurance Policy has been obtained from the Insurer. The information contained in this Official Statement concerning DTC has been obtained from DTC. The other information set forth herein has been furnished by the Village or from other sources believed to be reliable. The information and opinions expressed herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Village since the date of this Official Statement. Build America Mutual Assurance Company ( BAM ) makes no representation regarding the Bonds or the advisability of investing in the Bonds. In addition, BAM has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding BAM, supplied by BAM and presented under the heading BOND INSURANCE and APPENDIX C Specimen Municipal Bond Insurance Policy. This Official Statement should be considered in its entirety and no one factor considered more or less important than any other by reason of its position in this Official Statement. Where statutes, reports or other documents are referred to herein, reference should be made to such statutes, reports or other documents for more complete information regarding the rights and obligations of parties thereto, facts and opinions contained therein and the subject matter thereof. Any statements made in this Official Statement, including the Exhibits and Appendices, involving matters of opinion or estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of such estimates will be realized. This Official Statement contains certain forward-looking statements and information that are based on the Village s beliefs as well as assumptions made by and information currently available to the Village. Such statements are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or expected. The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. IN CONNECTION WITH THE OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

4 TABLE OF CONTENTS INTRODUCTION... 1 THE BONDS... 1 Authority and Purpose... 1 General Description... 2 Registration and Transfer... 2 Redemption... 2 Tax Increment Finance District... 4 Security... 4 General Covenants Regarding the Bonds... 9 Filing with the County Clerk... 9 Abatement of Pledged Taxes... 9 Treatment of Bonds as Debt Additional Obligations Additional Bonds Subordinate Bonds Defeasance Debt Service Coverage-2017A Bonds Debt Service Coverage-2017B Bonds THE REFUNDING SOURCES AND USES RISK FACTORS Payment of the Bonds from the Pledged Moneys Finances of the State of Illinois Local Economy Loss or Change of Bond Rating Declining Equalized Assessed Valuations Concentration of Taxpayers Future Pension Plan Funding Requirements Secondary Market for the Bonds Continuing Disclosure Suitability of Investment Future Changes in Laws Factors Relating to Tax Exemption Bankruptcy BOND INSURANCE Bond Insurance Policy Build America Mutual Assurance Company THE VILLAGE General Description Economic Development Village Finances PAGE -i-

5 Village Administration Employee Union Membership and Relations Population Data FINANCIAL INFORMATION AND ECONOMIC CHARACTERISTICS OF THE VILLAGE Direct General Obligation Bonded Debt (Principal Only) Alternate Revenue Bonds (Principal Only) Debt Certificates (Principal Only) Overlapping General Obligation Bonded Debt Selected Financial Information Composition of EAV Tax Increment Financing Districts Located within the Village Trend of EAV Taxes Extended and Collected Village Tax Rates by Purpose Representative Total Tax Rates Ten Largest Taxpayers Retailers Occupation, Service Occupation and Use Tax New Property Largest Employers Unemployment Rates Specified Owner-Occupied Units Employment by Industry Employment by Occupation Median Household Income Per Capita Income SHORT-TERM BORROWING FUTURE DEBT DEFAULT RECORD REAL PROPERTY ASSESSMENT, TAX LEVY AND COLLECTION PROCEDURES Summary of Property Assessment, Tax Levy and Collection Procedures Real Property Assessment Equalization Exemptions Tax Levy Property Tax Extension Limitation Law Extensions Collections Truth in Taxation Law RETIREMENT PLANS Background Regarding Pension Plans Illinois Municipal Retirement Fund Police Pension Plan Fire Pension Plan OTHER POST-EMPLOYMENT BENEFITS BOND RATING TAX EXEMPTION ii-

6 QUALIFIED TAX-EXEMPT OBLIGATIONS 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 Future Changes to the Rule Additional Information Dissemination of Information; Dissemination Agent AUDITED FINANCIAL STATEMENTS BOOK-ENTRY ONLY SYSTEM CERTAIN LEGAL MATTERS MUNICIPAL ADVISOR NO LITIGATION UNDERWRITING AUTHORIZATION EXHIBITS Exhibit A Statement of Net Position Governmental Activities, Fiscal Years Ended April 30, Exhibit B Statement of Activities Governmental Activities, Fiscal Years Ended April 30, Exhibit C Balance Sheet General Fund, Fiscal Year Ended April 30, Exhibit D Statement of Revenues, Expenditures and Changes in Fund Balance General Fund, Fiscal Year Ended April 30, Exhibit E General Fund Revenue Sources, Fiscal Year Ended April 30, 2016 Exhibit F Budget-General Fund, Fiscal Year Ending April 30, 2018 APPENDICES Appendix A Audited Financial Statements of the Village for the Fiscal Year Ended April 30, 2016 Appendix B Proposed Forms of Opinions of Bond Counsel Appendix C Specimen Municipal Bond Insurance Policy -iii-

7 VILLAGE OF WILLOW SPRINGS COOK COUNTY, ILLINOIS One Village Circle Willow Springs, Illinois President and Board of Trustees John M. Carpino President Thomas E. Birks Mario Imbarrato Michael C. Kennedy Melissa N. Neddermeyer Kathy Stanphill Vacant Administration Brent Woods Village Administrator Mary Jane Mannella Village Clerk Erik Peck Michael Durkin Village Attorneys Professional Services Underwriter George K. Baum & Company Chicago, Illinois Bond Counsel Louis F. Cainkar, Ltd. Burbank, Illinois Disclosure Counsel Chapman and Cutler LLP Chicago, Illinois Local Counsel Tressler LLP Bolingbrook, Illinois Municipal Advisor Speer Financial, Inc. Chicago, Illinois TIF Bond Trustee, Bond Registrar, Paying Agent and Escrow Agent Amalgamated Bank of Chicago Chicago, Illinois Auditor RSM US LLP Chicago, Illinois

8 OFFICIAL STATEMENT Village of Willow Springs Cook County, Illinois $3,895,000 General Obligation Refunding Bonds (Alternate Revenue Source), Series 2017A $1,000,000 General Obligation Refunding Bonds (Alternate Revenue Source), Series 2017B INTRODUCTION The purpose of this Official Statement is to set forth certain information concerning the Village of Willow Springs, Cook County, Illinois (the Village ), in connection with the offering and sale of its General Obligation Refunding Bonds (Alternate Revenue Source), Series 2017A (the 2017A Bonds ) and General Obligation Refunding Bonds (Alternate Revenue Source), Series 2017B (the 2017B Bonds and, together with the 2017A Bonds, the Bonds ). This Official Statement contains forward-looking statements that are based upon the Village s current expectations and its projections about future events. When used in this Official Statement, the words project, estimate, intend, expect, scheduled, pro-forma and similar words identify forward-looking statements. Forward-looking statements are subject to known and unknown risks, uncertainties and factors that are outside of the control of the Village. Actual results could differ materially from those contemplated by the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Neither the Village nor any other party plans to issue any updates or revisions to these forward-looking statements based on future events. THE BONDS AUTHORITY AND PURPOSE The Bonds are being issued pursuant to the Illinois Municipal Code, the Local Government Debt Reform Act of the State of Illinois (the Debt Reform Act ), and all laws amendatory thereof and supplementary thereto, and two separate bond ordinances adopted by the President and Board of Trustees of the Village (the Board ) on the 14th day of September, 2017, as supplemented by notifications of sale (together, the Bond Ordinances ). Proceeds of the 2017A Bonds will be used to (a) refund the Village s outstanding General Obligation Refunding Bonds (Alternate Revenue Source), Series 2004B, dated December 15, 2004 (the Series 2004B Bonds ) and General Obligation Bonds (Alternate Revenue Source), Series 2006, dated September 1, 2006 (the Series 2006 Bonds ) and (b) pay costs associated with the issuance of the 2017A Bonds. See THE REFUNDING. Proceeds of the 2017B Bonds will be used to (a) refund the Village s outstanding General Obligation Refunding Bonds (Alternate Revenue Source), Series 2008A, dated September 9, 2008 (the Series 2008A Bonds and those Series 2008A Bonds, Series 2004B Bonds, Series 2006

9 Bonds being refunded, the Refunded Bonds ) and (b) pay costs associated with the issuance of the 2017B Bonds. See THE REFUNDING. GENERAL DESCRIPTION The Bonds will be dated the date of issuance thereof, will be in fully registered form, without coupons, and will be in denominations of $5,000 or any integral multiple thereof under a book-entry only system operated by The Depository Trust Company, New York, New York ( DTC ). Principal of and interest on the Bonds will be payable by Amalgamated Bank of Chicago, Chicago, Illinois (the Registrar ). The Bonds will mature as shown on the inside cover page hereof. Interest on the Bonds will be payable each June 15 and December 15, beginning December 15, The Bonds will bear interest from their dated date, or from the most recent interest payment date to which interest has been paid or provided for, computed on the basis of a 360-day year consisting of twelve 30-day months. The principal of the Bonds will be payable in lawful money of the United States of America upon presentation and surrender thereof at the principal corporate trust office of the Registrar. Interest on each Bond will be paid by check or draft of the Registrar payable upon presentation in lawful money of the United States of America to the person in whose name such Bond is registered at the close of business on the 1st day of the month of the interest payment date. REGISTRATION AND TRANSFER The Registrar will maintain books for the registration of ownership and transfer of the Bonds. Subject to the provisions of the Bonds as they relate to book-entry form, any Bond may be transferred upon the surrender thereof at the principal corporate trust office of the Registrar, together with an assignment duly executed by the registered owner or his or her attorney in such form as will be satisfactory to the Registrar. No service charge shall be made for any transfer or exchange of Bonds, but the Village or the 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 2017B Bond or 2017B Bonds for the unredeemed portion of a 2017B Bond surrendered for redemption. The Registrar shall not be required to transfer or exchange any Bond during the period beginning at the close of business on the 1st day of the month of any interest payment date on such Bond and ending at the opening of business on such interest payment date, nor to transfer or exchange any 2017B Bond after notice calling such 2017B Bond for redemption has been mailed, nor during a period of fifteen (15) days next preceding mailing of a notice of redemption of any 2017B Bonds. REDEMPTION Optional Redemption. The 2017A Bonds are not subject to optional redemption prior to maturity. The 2017B Bonds due on or after December 15, 2027, are subject to redemption prior -2-

10 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 2017B Bonds of a single maturity to be selected by the Registrar), on December 15, 2026, and on any date thereafter, at the redemption price of par plus accrued interest to the redemption date. General. The Village will, at least 45 days prior to any optional redemption date (unless a shorter time period shall be satisfactory to the Registrar), notify the Registrar of such redemption date and of the principal amount and maturity or maturities of 2017B Bonds to be redeemed. For purposes of any redemption of less than all of the outstanding 2017B Bonds of a single maturity, the particular 2017B Bonds or portions of 2017B Bonds to be redeemed shall be selected by lot by the Registrar from the 2017B Bonds of such maturity by such method of lottery as the Registrar shall deem fair and appropriate (except when the 2017B Bonds are held in a book-entry system, in which case the selection of 2017B Bonds to be redeemed will be made in accordance with procedures established by DTC or any other book-entry depository); provided that such lottery shall provide for the selection for redemption of 2017B Bonds or portions thereof in principal amounts of $5,000 and integral multiples thereof. Unless waived by any holder of 2017B Bonds to be redeemed, notice of the call for any redemption will be given by the 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 2017B 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 Registrar. Unless moneys sufficient to pay the redemption price of the 2017B Bonds to be redeemed at the option of the Village are received by the 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 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 2017B Bonds, and the 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 2017B Bonds will not be redeemed. Otherwise, prior to any redemption date, the Village will deposit with the Registrar an amount of money sufficient to pay the redemption price of all the 2017B Bonds or portions of 2017B 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 for the 2017B Bonds, and notwithstanding failure to receive such notice, the 2017B Bonds or portions of 2017B 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 2017B Bonds or portions of 2017B Bonds shall cease to bear interest. Upon surrender of such 2017B Bonds for redemption in accordance with said notice, such 2017B Bonds will be paid by the Registrar at the redemption price. -3-

11 TAX INCREMENT FINANCE DISTRICT Tax increment financing provides a means for municipalities, after the approval of a Redevelopment Plan and Project to redevelop blighted, conservation or industrial park conservation areas by pledging the anticipated increase in tax revenues resulting from using new tax revenues generated by private development and rehabilitation. Tax increment financing is authorized in Illinois by the Tax Increment Allocation Redevelopment Act, as amended (the Tax Increment Act ). In March 1999, the Village designated its Willow Springs Village Center Redevelopment Project Area (the TIF District ) pursuant to the Tax Increment Act. The TIF District consists of approximately 36.2 acres. Designation of the TIF District allows the Village to use incremental property taxes in the TIF District to fund a broad range of improvements to leverage private development within the TIF District. Pursuant to the Tax Increment Act, all property tax receipts which are the result of increases in the equalized assessed valuation ( EAV ) of each tax code located within the TIF District above their respective 1997 tax year levels are available to be used for eligible projects under the Tax Increment Act within the TIF District and will not be available for general operations of the Village or any underlying or overlapping taxing districts until the TIF District s expiration which is scheduled to occur in 2022, with final payment of incremental taxes to the Village in On September 9, 1999, the Village entered into a Redevelopment Agreement with Heritage Renaissance Partners, L.L.C. (the Developer ). Pursuant to the agreement, the Developer agreed to construct certain retail and commercial space and residential development. The development was completed in three phases. Since the execution of the agreement, the parties have executed subsequent amendments that have modified certain elements of redevelopment project components. Part of the redevelopment project components include the Heritage Developer Property (the Heritage Developer Property ) and the Gammonley Developer Property (the Gammonley Developer Property ). Pursuant to the amended agreement, the Village agreed to issue bonds and use the proceeds thereof for property acquisition and the payment of the cost of construction of certain public improvements. Since 1999, the Village has issued various series of alternate bonds (payable from certain Limited Incremental Property Taxes) (as defined below) to finance redevelopment projects within the TIF District, including bonds to refinance such bonds, such as its outstanding Series 2004B Bonds, Series 2006 Bonds, General Obligation Refunding Bonds (Alternate Revenue Source), Series 2009B (the Series 2009B Bonds ) and General Obligation Refunding Bonds (Alternate Revenue Source), Series 2012B (the Series 2012B Bonds ). SECURITY 2017A BONDS The 2017A Bonds, in the opinion of Louis F. Cainkar, Ltd., Burbank, Illinois, Bond Counsel ( Bond Counsel ), are valid and legally binding upon the Village and are payable (i) together with the outstanding Series 2009B Bonds and Series 2012B Bonds from (a) certain Limited Incremental Property Taxes and (b) the amounts on deposit in and to the credit of the -4-

12 Municipal Account of the Special Tax Allocation Fund (as described herein) (collectively, the 2017A Pledged Revenues ) and (ii) from ad valorem taxes levied against all of the taxable property in the Village without limitation as to rate or amount (the 2017A Pledged Taxes and, together with the 2017A Pledged Revenues, the 2017A Pledged Moneys ), except that the rights of the owners of the 2017A Bonds and the enforceability of the 2017A 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. The Village has also issued and has outstanding Junior Lien Bonds, Series 2006 (the Subordinate Series 2006 Bonds ), which are subordinate to the 2017A Bonds, Series 2009B Bonds, and Series 2012B Bonds. The Limited Incremental Property Taxes means not less than 75% of the incremental property taxes (the Incremental Property Taxes ) derived from the TIF District adjusted as provided in Section 17 of the Intergovernmental Tax Increment Financing Agreement approved by the Village on March 11, 1999 (as amended, the Intergovernmental Agreement ). In the Intergovernmental Agreement, the Village has agreed to pay certain Incremental Property Taxes derived from certain residential components of the TIF District to the Willow Springs Elementary School District Number 108 ( District 108 ) and the Argo Community High School District Number 217 ( District 217 and, together with District 108, the School Districts ). Pursuant to the Intergovernmental Agreement, the Village may pledge 75% of all Incremental Property Taxes to bonds issued to finance or refinance redevelopment projects within the TIF District. The Village has agreed to pay the School Districts up to 25% of the Incremental Property Taxes generated by residential development only, pursuant to a formula which takes into account the per pupil annual tuition cost for each of the School Districts. The Intergovernmental Agreement also provides for the payment of partial year tuition costs. 2017A BONDS FLOW OF FUNDS Pursuant to the Bond Ordinance for the 2017A Bonds and the bond ordinances for the Series 2009B Bonds and Series 2012B Bonds (the Prior Bond Ordinances ), the Village has appointed Amalgamated Bank of Chicago, Chicago, Illinois, as trustee (the TIF Bond Trustee ) with respect to the 2017A Bonds, Series 2009B Bonds and Series 2012B Bonds (collectively, the TIF Bonds ). The Trustee will make payments of principal of and interest on the TIF Bonds from moneys deposited in the Municipal Account of the Special Tax Allocation Fund, as further described below. SPECIAL TAX ALLOCATION FUND. In connection with the designation of the TIF District, the Village created a Special Tax Allocation Fund. Pursuant to the Bond Ordinance and the Prior Bond Ordinances, the Special Tax Allocation Fund is continued as a special fund of the Village and held and administered by the TIF Bond Trustee. The Special Tax Allocation Fund consists of the Municipal Account and the Intergovernmental Account which are hereby continued. The Municipal Account consists of several subaccounts: the Principal and Interest Account, the Heritage Sub-Account of the Municipal Account, the Gammonly Sub-Account of the Municipal Account, the Program -5-

13 Expenses Account, the Junior Lien Principal and Interest Account, the Second Subordinate Lien Principal and Interest Account, and the General Account. All of the Incremental Property Taxes shall be set aside as collected and be remitted for deposit in the Special Tax Allocation Fund. Any balances that the Village Treasurer currently has on deposit for the Intergovernmental Account, the Program Expense Account and the General Account shall be transferred to the TIF Bond Trustee not later than thirty (30) days after the close on the 2017A Bonds for the purpose of conducting the TIF Bond Trustee Accounting, as defined herein, to be made on December 1, As provided in the Tax Increment Act, the Incremental Property Taxes are to be paid to the Village Treasurer by the officers who collect or receive the Incremental Property Taxes. The Village Treasurer shall authorize such Incremental Property Taxes to be paid directly by the County Treasurer to the TIF Bond Trustee through electronic credit. Upon receipt of the Incremental Property Taxes, the TIF Bond Trustee shall credit to and deposit the same, without any further official action or direction, into the Special Tax Allocation Fund. THE MUNICIPAL ACCOUNT. Seventy-five percent (75%) of the Incremental Property Taxes (the Limited Incremental Property Taxes ) shall be paid into the Municipal Account. Monies on deposit in the Municipal Account shall be used in the following order of priority: Principal and Interest Account. First, all moneys paid into or transferred into the Municipal Account shall be credited to the Principal and Interest Account. Moneys in the Principal and Interest Account shall be used solely and only for the purpose of paying principal of and/or interest on and applicable premium on the TIF Bonds as same become due and at stated maturity, or upon mandatory redemption. Not later than December 1, commencing December 1, 2017, the TIF Bond Trustee shall conduct an accounting (the TIF Bond Trustee Accounting ) to determine the balance of Limited Incremental Property Taxes on deposit in and credited to the Principal and Interest Account including any Excess Amount (defined below) transferred from the Intergovernmental Account, if any, on such December 1. The TIF Bond Trustee shall determine the funds in the Excess Amount which represent the percentage of such aggregate Incremental Property Taxes deposited into the Special Tax Allocation Fund attributable to the Heritage Developer Property (the Heritage Percentage ); and the funds in the Excess Amount which represent the percentage of such aggregate Incremental Property Taxes deposited into the Special Tax Allocation Fund attributable to the Gammonley Developer Property (the Gammonley Percentage ). Each of the Heritage Percentage and Gammonley Percentage shall be rounded to the nearest one hundredth of a percent so that the sum of the Heritage Percentage and Gammonley Percentage equals 100%. The Village shall make every effort to have the County identify the Heritage Percentage and the Gammonley Percentage by virtue of the separation of County tax codes for those parcels which constitute the Heritage Developer Property and the Gammonley Developer Property, respectively. After completing the accounting, the TIF Bond Trustee shall deposit moneys held in the Special Tax Allocation Fund as follows: If, upon such TIF Bond Trustee Accounting, there are funds on deposit in, and to the credit of, the Principal and Interest Account in excess of the Principal Requirement and Interest Requirement (as defined below) such excess funds shall be divided and transferred by -6-

14 the TIF Bond Trustee as follows: (a) an amount equal to the Heritage Percentage of such excess funds shall be deposited into the Heritage Sub-Account of the Municipal Account; and (b) an amount equal to the Gammonley Percentage of such excess funds shall be deposited into the Gammonley Sub-Account of the Municipal Account. Heritage Sub-Account of the Municipal Account. Moneys paid into or transferred into the Heritage Sub-Account of the Municipal Account shall be used in the following order of priority: (i) The TIF Bond Trustee shall deposit the amount of $75,000 into the Program Expense Account as payment of a portion of the Program Expenses payable to the Village. (ii) To the extent not previously paid, the TIF Bond Trustee shall then pay the amount of $276, to the Village for reimbursement of previously incurred Redevelopment Project Costs as that term is defined in the Tax Increment Act. (iii) The TIF Bond Trustee shall then transfer any balance to the Heritage Sub-Account of the Junior Lien Principal and Interest Account. Gammonley Sub-Account of the Municipal Account. Moneys paid into or transferred into the Gammonley Sub-Account of the Municipal Account shall be used in the following order of priority: (i) The TIF Bond Trustee shall deposit the amount of $25,000 into the Program Expense Account as payment of a portion of the Program Expenses. Any amount of Program Expenses not paid by reason of insufficiency of funds shall be paid in subsequent years as funds become available. (ii) The TIF Bond Trustee shall then transfer any balance to the Gammonley Sub-Account of the Junior Lien Principal and Interest Account. Interest Requirement means for any TIF Bonds, additional bonds, junior lien bonds, or second subordinated lien bonds and for any bond year the aggregate amount of interest on such TIF Bonds, additional bonds, junior lien bonds or second subordinated lien bonds having a stated maturity during such bond year. Principal Requirement means for any TIF Bonds, additional bonds, junior lien bonds or second subordinated lien bonds and for any bond year the aggregate principal amount of such TIF Bonds, additional bonds, junior lien bonds or second subordinated lien bonds having a stated maturity during such bond year. Program Expenses Account. The TIF Bond Trustee shall next transfer to the Village Treasurer and the Village Treasurer shall credit to and immediately deposit into the Program Expenses Account Limited Incremental Property Taxes until the amount on deposit in and to the credit of the Program Expenses Account equals the sum of $100,000 (said amount being the Program Expense Requirement ). Amounts on deposit in and to the credit of the Program Expenses Account shall be used by the Village solely and only to pay the Program Expenses as -7-

15 permitted by the Tax Increment Act. Whenever the annual amount so transferred for deposit in and to the credit of the Program Expenses Account shall equal the Program Expenses Requirement, the TIF Bond Trustee shall next deposit the balance of the Limited Incremental Property Taxes to the Junior Lien Principal and Interest Account. Junior Lien Principal and Interest Account. The Junior Lien Principal and Interest Account shall consist of the Junior Lien Heritage Sub-Account and the Junior Lien Gammonley Sub-Account. The Subordinate Series 2006 Bonds are paid from this account. Second Subordinate Lien Principal and Interest Account. The TIF Bond Trustee shall next credit to and immediately transfer into the Second Subordinate Lien Principal and Interest Account the balance of the Limited Incremental Property Taxes, except as hereinafter provided, moneys to the credit of the Second Subordinate Lien Principal and Interest Account shall be used solely and only for the purpose of paying principal of and interest and applicable premium on the Second Subordinate Lien Bonds as the same become due at their stated maturity or upon mandatory redemption. There are no Second Subordinate Lien Bonds outstanding at this time. General Account. All moneys remaining in the Municipal Account of the Special Tax Allocation Fund, after crediting the required amounts to the Principal and Interest Account, the Program Expenses Account, the Junior Lien Principal Account and the Second Subordinate Lien Principal and Interest Account as hereinabove provided for, shall be held in the General Account. Moneys in the General Account shall be used only as authorized by written direction of a Designated Officer of the Village, and in accordance with the Tax Increment Act and the Redevelopment Plan and Project. INTERGOVERNMENTAL ACCOUNT. Up to twenty-five percent (25%) of the Incremental Property Taxes shall be paid into the Intergovernmental Account, which shall be held by the TIF Bond Trustee. On November 1 of each year, the Village Treasurer shall conduct an accounting (the Village Accounting ) to determine the aggregate amount of Incremental Property Taxes that are required to be paid to the School Districts for such year pursuant to the Intergovernmental Agreement by determining the aggregate amount of Incremental Property Taxes attributable to residential units located within the project area in which reside students enrolled in the School Districts. On or prior to November 1 of each year, the Village Treasurer shall transmit to the TIF Bond Trustee, along with written instructions to pay, requests for payments from the School Districts in connection with amounts due to the School Districts. On the earlier of December 1 of each year, or ten days after the receipt of the Village Accounting and request from the Village Treasurer, the TIF Bond Trustee shall make such payments, if any, to the School Districts. Any amount (the Excess Amount ) remaining in the Intergovernmental Account after making the payments required to be made to the School Districts (as provided above) shall be transferred by the TIF Bond Trustee to the Municipal Account and such Excess Amount shall be included by the TIF Bond Trustee when conducting the TIF Bond Trustee Accounting to be conducted on such December

16 2017B BONDS The 2017B Bonds, in the opinion of Bond Counsel, are valid and legally binding upon the Village and are payable from (a) the revenues derived from the receipts from the Village s Non- Home Rule Sales Tax (the 2017B Pledged Revenues or Sales Tax Revenues and, together with the 2017A Pledged Revenues, the Pledged Revenues ) and (b) ad valorem taxes levied against all of the taxable property in the Village without limitation as to rate or amount (the 2017B Pledged Taxes and, together with the 2017B Pledged Revenues, the 2017B Pledged Moneys ), except that the rights of the owners of the 2017B Bonds and the enforceability of the 2017B 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. GENERAL COVENANTS REGARDING THE BONDS For the purpose of providing funds required to pay the interest on the 2017A Bonds promptly when and as the same falls due, and to pay and discharge the principal thereof at maturity, the 2017A Pledged Revenues and 2017B Pledged Revenues are pledged to the payment of the 2017A Bonds and 2017B Bonds, respectively, and the Board covenants and agrees 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. 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 to levy and collect the 2017A Pledged Taxes and 2017B Pledged Taxes (collectively, 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 Ordinances and deposited in the bond funds. FILING WITH THE COUNTY CLERK The Bond Ordinances provide for the levy of the Pledged Taxes in amounts sufficient to pay, as and when due, all principal of and interest on the Bonds. The Bond Ordinances will be filed with the County Clerk of Cook County, Illinois (the County Clerk ), and will serve as authorization to the County Clerk to extend and collect the Pledged Taxes. ABATEMENT OF PLEDGED TAXES Whenever in any year lawfully available funds of the Village have been deposited into the bond funds for the Bonds (the Bond Funds ) in an amount sufficient to pay debt service on the Bonds, the Board or the officers of the Village acting with proper authority, shall direct the abatement of the Pledged Taxes to the extent such Pledged Taxes relate to the debt service paid or to be paid by the Pledged Revenues in the Bond Funds, and proper notification of such abatement shall be filed with the County Clerk, in a timely manner to effect such abatement. -9-

17 TREATMENT OF BONDS AS DEBT The 2017A Bonds and 2017B Bonds will be payable from the 2017A Pledged Moneys and 2017B Pledged Moneys, respectively, and will not constitute an indebtedness of the Village within the meaning of any constitutional or statutory limitation, unless the Pledged Taxes will have been extended pursuant to the general obligation, full faith and credit promise supporting the Bonds, in which case the amount of the outstanding Bonds 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, in accordance with the Debt Reform Act. ADDITIONAL OBLIGATIONS The 2017A Bonds are being issued on a parity with the Series 2009B Bonds and Series 2012B Bonds outstanding after the issuance of the 2017A Bonds, and the Village is authorized to issue from time to time additional obligations payable from the 2017A Pledged Revenues as permitted by law and to determine the lien priority of any such obligations. ADDITIONAL BONDS The Village is authorized to issue from time to time additional bonds payable from the Pledged Revenues as permitted by law and such additional bonds may share ratably and equally in the Pledged Revenues with the Bonds; provided, however, that no such additional bonds shall be issued except in accordance with the provisions of the Debt Reform Act. SUBORDINATE BONDS The Village reserves the right to issue bonds from time to time payable from the Pledged Revenues that are subordinate to the Bonds. DEFEASANCE Bonds which are no longer outstanding shall cease to have any lien on or right to receive or be paid from Pledged Revenues and shall no longer have the benefits of any covenant for the registered owners of outstanding bonds as set forth in the Bond Ordinances as such relates to lien and security of the Bonds in the Pledged Revenues. -10-

18 DEBT SERVICE COVERAGE-2017A BONDS FISCAL YEAR 2017A PLEDGED REVENUES (1) DEBT SERVICE ON THE SERIES 2009B BONDS DEBT SERVICE ON THE SERIES 2012B BONDS DEBT SERVICE ON THE 2017A BONDS (3) TOTAL DEBT SERVICE DEBT SERVICE COVERAGE (2) 2019 $1,633,779 $398,400 $193,863 $806,850 $1,399, x ,633, , , ,150 1,375, x ,633, ,400 71, ,900 1,426, x ,633, , , , x ,633, , , , x ,633, , , x ,633, , , x (1) Comprised of the TIF Fund Property Taxes ($560,020) multiplied by 75% plus the ending fund balance of the TIF Bond Fund ($1,213,764) (representative of a portion of the Municipal Account of the Special Tax Allocation Fund), as shown in the Village s audited financial statements for the fiscal year ended April 30, 2016 (the Audit ). There has been no assumption of growth and there is no guarantee the ending fund balance of the TIF Bond Fund will remain at the balance, stated in the Audit. (2) Alternate bonds (such as the 2017A Bonds) may be issued to refund or advance refund alternate bonds without meeting any of the conditions set forth in the Debt Reform Act, including the requirement to demonstrate pledged revenues are not less than 125% of debt service on the alternate bonds, provided that the term of the refunding bonds shall are not 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. The 2017A Bonds satisfy this savings-in-every-year exception set forth in the Debt Reform Act. (3) Net of funds deposited into bond fund at closing to pay debt service due on December 15, DEBT SERVICE COVERAGE-2017B BONDS FISCAL YEAR 2017B PLEDGED REVENUES (1) DEBT SERVICE ON THE 2017B BONDS (2) DEBT SERVICE COVERAGE 2019 $185, , x , , x , , x , , x , , x , , x , , x , , x , , x , , x , , x (1) Sales tax receipts received in the Sales Tax 1% Street Improvement Fund as provided by the Village. (2) Net of funds deposited into bond fund at closing to pay debt service due on December 15,

19 THE REFUNDING Proceeds of the 2017A Bonds will be used to refund the Refunded Bonds, further described as follows: SERIES 2004B BONDS AMOUNT MATURITY (DECEMBER 15) ORIGINAL AMOUNT ISSUED REFUNDED BY 2017A BONDS REDEMPTION PRICE REDEMPTION DATE 2017 $275,000 $275, % 11/13/ , , % 11/13/ , , % 11/13/2017 Total $900,000 $900,000 SERIES 2006 BONDS AMOUNT MATURITY (DECEMBER 15) ORIGINAL AMOUNT ISSUED REFUNDED BY 2017A BONDS REDEMPTION PRICE REDEMPTION DATE 2017 $325,000 $325, % 11/13/ , , % 11/13/ , , % 11/13/ , , % 11/13/ , , % 11/13/ , , % 11/13/ , , % 11/13/ , , % 11/13/2017 Total $3,545,000 $3,545,

20 Proceeds of the 2017B Bonds will be used to refund the Refunded Bonds, further described as follows: SERIES 2008A BONDS AMOUNT MATURITY (DECEMBER 15) ORIGINAL AMOUNT ISSUED REFUNDED BY 2017B BONDS REDEMPTION PRICE REDEMPTION DATE 2017 $70,000 $70, % 10/12/ ,000 70, % 10/12/ ,000 75, % 10/12/ ,000 80, % 10/12/ ,000 80, % 10/12/ ,000 85, % 10/12/ ,000 90, % 10/12/ ,000 95, % 10/12/ ,000 95, % 10/12/ , , % 10/12/ , , % 10/12/ , , % 10/12/2017 Total $1,055,000 $1,055,000 Certain proceeds received from the sale of the 2017A Bonds along with lawfully available funds on hand from the Village will be deposited in an Escrow Account (the Escrow Account ) to be held by Amalgamated Bank of Chicago, Chicago, Illinois (the Escrow Agent ), under the terms of an Escrow Letter Agreement, dated as of the date of issuance of the 2017A Bonds, between the Village and the Escrow Agent. The moneys so deposited in the Escrow Account will be held in cash or applied by the Escrow Agent to purchase direct non-callable obligations of, or obligations guaranteed by the full faith and credit 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 a beginning cash deposit will be sufficient to pay when due the principal of and interest on the Series 2004B Bonds and Series 2006 Bonds up to and including the prior redemption date thereof. Certain proceeds received from the sale of the 2017B Bonds along with lawfully available funds on hand from the Village will be deposited with the paying agent for the Series 2008A Bonds on the date of issuance of the 2017B Bonds. The moneys so deposited with the paying agent for the Series 2008A Bonds will be sufficient to pay when due the principal of and interest on the Series 2008A Bonds up to and including the prior redemption date thereof. The purpose of the Refunding is to achieve interest cost savings for the Village. -13-

21 SOURCES AND USES The sources and uses of funds resulting from the Bonds and the use of lawfully available funds are shown below: SOURCES: 2017A BONDS 2017B BONDS TOTAL Principal Amount $3,895, $1,000, $4,895, Lawfully Available Funds 733, , , Net Original Issue Premium 80, , , Total Sources $4,708, $1,111, $5,820, USES: Deposit to Escrow Account $4,554, $ 0.00 $4,554, Deposit with Paying Agent for Series 2008A Bonds ,070, ,070, Deposit into bond funds to pay debt service due on December 15, 2017 for the Bonds 20, , , Costs of Issuance* 133, , , Total Uses $4,708, $1,111, $5,820, * Includes underwriter s discount, bond insurance premium and other issuance costs. RISK FACTORS The purchase of the Bonds involves certain investment risks. Accordingly, each prospective purchaser of the Bonds should make an independent evaluation of the entirety of the information presented in this Official Statement and its appendices and exhibits in order to make an informed investment decision. Certain of the investment risks are described below. The following statements, however, should not be considered a complete description of all risks to be considered in the decision to purchase the Bonds, nor should the order of the presentation of such risks be construed to reflect the relative importance of the various risks. There can be no assurance that other risk factors are not material or will not become material in the future. PAYMENT OF THE BONDS FROM THE PLEDGED MONEYS 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. Nevertheless, in such an event, the Village is obligated to extend and collect 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 -14-

22 Revenues for a complete fiscal year. See THE BONDS Treatment of Bonds as Debt above. In recent years, the Village has extended taxes to pay all or a portion of the debt service on its Series 2006, Series 2008C, Series 2009A and Series 2009B alternate revenue bonds. FINANCES OF THE STATE OF ILLINOIS The State of Illinois (the State ) has experienced adverse fiscal conditions resulting in significant shortfalls between the State s general fund revenues and spending demands. The State failed to enact a full budget for the State fiscal years ending June 30, 2016, and June 30, 2017, which had a significant, negative impact on the State s finances, although certain spending occurred through statutory transfers, statutory continuing appropriations, court orders and consent decrees, including spending for elementary and secondary education. In addition, the underfunding of the State s pension systems and a bill backlog of billions of dollars contributed to the State s poor financial health. On July 6, 2017, the General Assembly of the State enacted a budget for the State fiscal year ending June 30, 2018 (the Fiscal Year 2018 Budget ). Under current law, the State shares a portion of sales tax, income tax and motor fuel tax revenue with municipalities, including the Village. The State s general fiscal condition, the underfunding of the State s pension systems and the State s budget impasse have materially adversely affected the State s financial condition and may result in decreased or delayed revenues allocated to the Village. In addition, the Fiscal Year 2018 Budget contains a provision reducing the amount of income tax revenue to be deposited into the Local Government Distributive Fund for distribution to municipalities, like the Village, by 10%. The Fiscal Year 2018 Budget also includes a service fee of 2% of sales taxes imposed locally and collected on behalf of municipalities by the State, such as the Sales Tax Revenues. The Village cannot determine at this time the financial impact of this provision on its overall financial condition but such provisions may result in lower income tax revenues and sales tax revenues distributed to the Village. The Village can give no assurance that there will not be additional changes in applicable law modifying the manner in which local revenue sharing is allocated by the State. LOCAL ECONOMY The financial health of the Village is in part dependent on the strength of the local economy. Many factors affect the local economy, including rates of employment and economic growth and the level of residential and commercial development. It is not possible to predict to what extent any changes in economic conditions, demographic characteristics, population or commercial and industrial activity will occur and what impact such changes would have on the finances of the Village. LOSS OR CHANGE OF BOND RATING The Bonds have received a credit rating from S&P Global Ratings, New York, New York ( S&P ). The rating can be changed or withdrawn at any time for reasons both under and outside the District s control. Any change, withdrawal or combination thereof could adversely affect the ability of investors to sell the Bonds or may affect the price at which they can be sold. -15-

23 DECLINING EQUALIZED ASSESSED VALUATIONS The amount of property taxes extended for the Village is determined by applying the various operating tax rates and the bond and interest tax rate levied by the Village to the Village s EAV. The Village s EAV could decrease for a number of reasons including, but not limited to, a decline in property values or large taxpayers moving out of the Village. As detailed herein, the Village s EAV has declined in four out of the past five years. Declining EAVs and increasing tax rates (certain of which may reach their rate ceilings) could reduce the amount of taxes the Village is able to receive. CONCENTRATION OF TAXPAYERS Based on the Village s 2016 EAV (which includes TIF values), the Village s ten largest taxpayers own 10.27% of the total current EAV of taxable property in the Village. If one or more of these taxpayers were to relocate from the Village or cease operations, would be unable to pay its tax bills or was successful in challenging its assessed valuation, the timely receipt of tax dollars by the Village could be affected. The Village has the authority to levy deficiency taxes if debt service tax collections are inadequate. Notwithstanding, the value of the Bonds, the Village s ability to repay the Bonds or the timing of repayment could be adversely affected. Furthermore, if any of the largest taxpayers were to relocate or cease operations, the Village could experience a significant reduction in EAV. Any reduction in EAV could limit the amount of taxes that the Village can extend for operating purposes. FUTURE PENSION PLAN FUNDING REQUIREMENTS The Village participates in the Police Pension Plan and the Fire Pension Plan, both as hereinafter defined. As of April 30, 2016 the Police Pension Plan had a 11.52% funded ratio and the Fire Pension Plan had a 42.64% funded ratio. Under the Pension Code, the Village is required to contribute to each Plan in order to achieve a funded ratio of 90% by In order to achieve the 90% funded ratio for both Plans by 2040, it is expected that the annual employer contributions required by the Village will increase over time. Increasing annual required employer contributions for the Village could have a material adverse effect on the finances of the Village. See RETIREMENT PLANS herein for a more complete discussion. SECONDARY MARKET FOR THE BONDS No assurance can be given that a secondary market will develop for the purchase and sale of the Bonds or, if a secondary market exists, that such Bonds can be sold for any particular price. The Underwriter is not obligated to engage in secondary market trading or to repurchase any of the Bonds at the request of the owners thereof. Prices of the Bonds as traded in the secondary market are subject to adjustment upward and downward in response to changes in the credit markets and other prevailing circumstances. No guarantee exists as to the future market value of the Bonds. Such market value could be substantially different from the original purchase price. -16-

24 CONTINUING DISCLOSURE A failure by the Village to comply with the Undertaking for continuing disclosure (see CONTINUING DISCLOSURE herein) will not constitute an event of default on the Bonds. Any such failure must be reported in accordance with Rule 15c2-12 (the Rule ) adopted by the Securities and Exchange Commission (the SEC ) under the Securities Exchange Act of 1934, as amended (the Exchange Act ), and may adversely affect the transferability and liquidity of the Bonds and their market price. SUITABILITY OF INVESTMENT The interest rate borne by the Bonds is intended to compensate the investor for assuming the risk of investing in the Bonds. Furthermore, the tax-exempt feature of the Bonds is currently more valuable to high tax bracket investors than to investors that are in low tax brackets. As such, the value of the interest compensation to any particular investor will vary with individual tax rates and circumstances. Each prospective investor should carefully examine this Official Statement and its own financial condition to make a judgment as to its ability to bear the economic risk of such an investment, and whether or not the Bonds are an appropriate investment for such investor. FUTURE CHANGES IN LAWS Various state and federal laws, regulations and constitutional provisions apply to the Village and to the Bonds. The Village can give no assurance that there will not be a change in, interpretation of, or addition to such applicable laws, provisions and regulations which would have a material effect, either directly or indirectly, on the Village, or the taxing authority of the Village. For example, many elements of local government finance, including the issuance of debt and the levy of property taxes, are controlled by state government. Future actions of the State may affect the overall financial conditions of the Village, the taxable value of property within the Village, and the ability of the Village to levy property taxes or collect revenues for its ongoing operations. FACTORS RELATING TO TAX EXEMPTION As discussed under TAX EXEMPTION herein, interest on the Bonds could become includible in gross income for purposes of federal income taxation, retroactive to the date the Bonds were issued, as a result of future acts or omissions of the Village in violation of its covenants in the Bond Ordinance. Should such an event of taxability occur, the Bonds are not subject to any special redemption. There are or may be pending in the Congress of the United States legislative proposals relating to the federal tax treatment of interest on the Bonds, including some that carry retroactive effective dates, that, if enacted, could affect the market value of the Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, it would apply to Bonds issued prior to enactment. Finally, reduction or elimination of the tax-exempt status of obligations such as the Bonds could have an adverse effect on the Village s ability to access the capital markets to finance future capital or operational needs by reducing market demand for such obligations or materially increasing borrowing costs of the Village. -17-

25 The tax-exempt bond office of the Internal Revenue Service (the Service ) is conducting audits of tax-exempt bonds, both compliance checks and full audits, with increasing frequency to determine whether, in the view of the Service, interest on such tax-exempt obligations is includible in the gross income of the owners thereof for federal income tax purposes. It cannot be predicted whether the Service will commence any such audit. If an audit is commenced, under current procedures the Service may treat the Village as a taxpayer and the Bondholders may have no right to participate in such proceeding. The commencement of an audit with respect to any tax-exempt obligations of the Village could adversely affect the market value and liquidity of the Bonds, regardless of the ultimate outcome. BANKRUPTCY The rights and remedies of the Bondholders may be limited by and are subject to the provisions of federal bankruptcy laws, to other laws or equitable principles that may affect the enforcement of creditors rights, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against local governments. The various opinions of counsel to be delivered with respect to the Bonds will be similarly qualified. BOND INSURANCE BOND INSURANCE POLICY Concurrently with the issuance of the Bonds, Build America Mutual Assurance Company ( BAM ) will issue its Municipal Bond Insurance Policy for the Bonds (the Policy ). The Policy guarantees the scheduled payment of principal of and interest on the Bonds when due as set forth in the form of the Policy included as an exhibit to this Official Statement. The Policy is not covered by any insurance security or guaranty fund established under New York, California, Connecticut or Florida insurance law. BUILD AMERICA MUTUAL ASSURANCE COMPANY BAM is a New York domiciled mutual insurance corporation and is licensed to conduct financial guaranty insurance business in all fifty states of the United States and the District of Columbia. BAM provides credit enhancement products solely to issuers in the U.S. public finance markets. BAM will only insure obligations of states, political subdivisions, integral parts of states or political subdivisions or entities otherwise eligible for the exclusion of income under section 115 of the U.S. Internal Revenue Code of 1986, as amended. No member of BAM is liable for the obligations of BAM. The address of the principal executive offices of BAM is: 200 Liberty Street, 27th Floor, New York, New York 10281, its telephone number is: , and its website is located at:

26 BAM is licensed and subject to regulation as a financial guaranty insurance corporation under the laws of the State of New York and in particular Articles 41 and 69 of the New York Insurance Law. BAM s financial strength is rated AA (Stable Outlook) by S&P Global Ratings, New York, New York ( S&P ), which rating was affirmed on June 26, An explanation of the significance of the rating and current reports may be obtained from S&P at The rating of BAM should be evaluated independently. The rating reflects the S&P s current assessment of the creditworthiness of BAM and its ability to pay claims on its policies of insurance. The above rating is not a recommendation to buy, sell or hold the Bonds, and such rating is subject to revision or withdrawal at any time by S&P, including withdrawal initiated at the request of BAM in its sole discretion. Any downward revision or withdrawal of the above rating may have an adverse effect on the market price of the Bonds. BAM only guarantees scheduled principal and scheduled interest payments payable by the issuer of the Bonds on the date(s) when such amounts were initially scheduled to become due and payable (subject to and in accordance with the terms of the Policy), and BAM does not guarantee the market price or liquidity of the Bonds, nor does it guarantee that the rating on the Bonds will not be revised or withdrawn. CAPITALIZATION OF BAM BAM s total admitted assets, total liabilities, and total capital and surplus, as of June 30, 2017 and as prepared in accordance with statutory accounting practices prescribed or permitted by the New York State Department of Financial Services were $500.3 million, $68.8 million and $431.5 million, respectively. BAM is party to a first loss reinsurance treaty that provides first loss protection up to a maximum of 15% of the par amount outstanding for each policy issued by BAM, subject to certain limitations and restrictions. BAM s most recent Statutory Annual Statement, which has been filed with the New York State Insurance Department and posted on BAM s website at is incorporated herein by reference and may be obtained, without charge, upon request to BAM at its address provided above (Attention: Finance Department). Future financial statements will similarly be made available when published. BAM makes no representation regarding the Bonds or the advisability of investing in the Bonds. In addition, BAM has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding BAM, supplied by BAM and presented under the heading BOND INSURANCE. -19-

27 ADDITIONAL INFORMATION AVAILABLE FROM BAM Credit Insights Videos. For certain BAM-insured issues, BAM produces and posts a brief Credit Insights video that provides a discussion of the obligor and some of the key factors BAM s analysts and credit committee considered when approving the credit for insurance. The Credit Insights videos are easily accessible on BAM s website at buildamerica.com/creditinsights/. (The preceding website address is provided for convenience of reference only. Information available at such address is not incorporated herein by reference.) Credit Profiles. Prior to the pricing of bonds that BAM has been selected to insure, BAM may prepare a pre-sale Credit Profile for those bonds. These pre-sale Credit Profiles provide information about the sector designation (e.g., general obligation, sales tax); a preliminary summary of financial information and key ratios; and demographic and economic data relevant to the obligor, if available. Subsequent to closing, for any offering that includes bonds insured by BAM, any pre-sale Credit Profile will be updated and superseded by a final Credit Profile to include information about the gross par insured by CUSIP, maturity and coupon. BAM pre-sale and final Credit Profiles are easily accessible on BAM s website at buildamerica.com/obligor/. BAM will produce a Credit Profile for all bonds insured by BAM, whether or not a pre-sale Credit Profile has been prepared for such bonds. (The preceding website address is provided for convenience of reference only. Information available at such address is not incorporated herein by reference.) Disclaimers. The Credit Profiles and the Credit Insights videos and the information contained therein are not recommendations to purchase, hold or sell securities or to make any investment decisions. Credit-related and other analyses and statements in the Credit Profiles and the Credit Insights videos are statements of opinion as of the date expressed, and BAM assumes no responsibility to update the content of such material. The Credit Profiles and Credit Insight videos are prepared by BAM; they have not been reviewed or approved by the issuer of or the underwriter for the Bonds, and the issuer and underwriter assume no responsibility for their content. BAM receives compensation (an insurance premium) for the insurance that it is providing with respect to the Bonds. Neither BAM nor any affiliate of BAM has purchased, or committed to purchase, any of the Bonds, whether at the initial offering or otherwise. THE VILLAGE GENERAL DESCRIPTION The Village, a non-home rule municipality under the Constitution and laws of the State of Illinois, is located approximately 12 miles southwest of downtown Chicago and encompasses approximately 3.5 square miles. The Village is bordered generally by the Village of Burr Ridge to the northwest, the Village of Hodgkins on the northeast, the Villages of Justice and Hickory Hills on the east, and the Cook County Forest Preserve District property on the west and south. -20-

28 The Village is located within a significant regional transportation network, which enables residents to be linked to a number of major employment centers in the Chicago metropolitan area. Interstate 294 is located in the northeast portion of the Village and Interstate 55 is located one-half mile north of the Village. Commuter rail service is provided by METRA, a division of the Regional Transportation Authority, which maintains a commuter rail station at Market Street Willow Boulevard in the Village. Recreational opportunities are provided to residents by the Pleasantdale Park District and nearby forest preserves of the Cook County Forest Preserve District. The Village is served by District 108, Pleasantville School District Number 107, District 217, Lyons Township High School District Number 204, and Stagg High School District Number 230. The Village is served by both Moraine Valley Community College District No. 524 and DuPage Community College District No ECONOMIC DEVELOPMENT The Village has experienced a large amount of residential development over the past ten years. The Willow Ridge subdivision covers approximately 95 acres and features three sections of single-family homes and townhomes totaling 223 units. The Village Center Development is a mixed-use transit oriented development consisting of 131 townhomes, the Village Hall, a 59-unit residential condominium and retail building, a three story office building, a 7-11 gas station convenience store and a 24-unit condominium building. With respect to commercial/industrial development, the Village has experienced growth in the Willow Springs Industrial Park. Developments within the industrial park have included a gas station and car wash, an approximately 26,000 square foot auto repair facility, and an approximately 9,280 square foot office facility. In addition, the Village has approved the site plans for a 5,950 square foot warehouse within the industrial park. VILLAGE FINANCES For each of the fiscal years ended April 30, 2014, 2015 and 2016, expenditures have exceeded revenues in the General Fund. Such General Fund performance has been driven, in part, from increases in public safety costs attributable to equipment costs and pension costs. The Village is reviewing staffing levels along with existing service contracts to determine if reductions in expenses are possible for future fiscal years. In addition, the Village s fire protection services will be provided by the Tri-State Fire Protection District. The Village expects to receive savings from such arrangement and will use such savings to assist fund of the Police Pension Plan. -21-

29 VILLAGE ADMINISTRATION The Village government consists of a Village President elected every four years for a four-year term and six trustees, half of whom are elected at-large every two years for four-year terms. The Village Clerk is elected every four years for a four-year term and the Village Treasurer is appointed every year for a one-year term. OFFICER POSITION CURRENT TERM EXPIRES John M. Carpino President April 2021 Thomas E. Birks Trustee April 2021 Mario Imbarrato Trustee April 2019 Michael C. Kennedy Trustee April 2021 Melissa N. Neddermeyer Trustee April 2021 Kathy Stanphill Trustee April 2019 Vacant Trustee -22-

30 EMPLOYEE UNION MEMBERSHIP AND RELATIONS The Village currently employs 13 full-time employees. Of the total number of Village employees, 9 are represented by a union. Village personnel are organized as follows: EMPLOYEE CONTRACT UNION NUMBER OF GROUP EXPIRES AFFILIATION MEMBERS Police Dispatchers* May 2019 Fraternal Order of Police 3 Sworn Police Officers May 2019 Metropolitan Alliance of Police 6 * The Police Dispatchers employee group negotiated a new contract with the Village; however, beginning in October 2017, the contract will no longer exist as the Village has entered into a joint dispatch agreement with the Villages of Justice and Lyons, Illinois and will close its dispatch center. POPULATION DATA The U.S. Census Bureau, in its American Community Survey, estimates that the Village s current population is approximately 5,676. The estimated populations of the Village, the County and the State at the times of the last three U.S. Census surveys were as follows: NAME OF ENTITY PERCENTAGE CHANGE The Village 4,509 5,027 5, % The County 5,105,067 5,376,741 5,194,675 (3.39%) The State 11,430,602 12,419,293 12,830, % Source: U.S. Census Bureau. -23-

31 FINANCIAL INFORMATION AND ECONOMIC CHARACTERISTICS OF THE VILLAGE DIRECT GENERAL OBLIGATION BONDED DEBT (PRINCIPAL ONLY) CALENDAR YEAR SERIES 2016 BONDS TOTAL OUTSTANDING BONDS 2017 $160,000 $160, ,000 45, ,000 45, ,000 50, ,000 50, ,000 50, ,000 55, ,000 55, ,000 55, ,000 60, ,000 60, ,000 65,000 $750,000 $750,000 TOTAL (1) Taxable General Obligation Limited Tax Bonds, Series 2016, dated December 1,

32 ALTERNATE REVENUE BONDS (PRINCIPAL ONLY) (As of the issuance of the Bonds and the refunding of the Refunded Bonds) CALENDAR YEAR SERIES 2008C BONDS (1) (DECEMBER 15) SERIES 2009A BONDS (2) (DECEMBER 15) SERIES 2009B BONDS (3) (DECEMBER 15) SERIES 2012A BONDS (4) (DECEMBER 15) SERIES 2012B BONDS (3) (DECEMBER 15) PLUS: 2017A BONDS (3) (DECEMBER 15) PLUS: 2017B BONDS (5) (DECEMBER 15) TOTAL OUTSTANDING BONDS 2017 $ 25,000 $220,000 $ 340,000 $ 45,000 $ 55,000 $ 685, , ,000 50, ,000 $ 690,000 $ 75,000 1,570, , ,000 50, , ,000 80,000 1,595, , ,000 50,000 45, ,000 85,000 1,700, ,000 55, , ,000 85,000 1,280, , , ,000 90,000 1,035, , ,000 90, , , ,000 95, , , , , , , , , , , , , , ,000 80, ,000 85, ,000 90,000 TOTAL $1,095,000 $220,000 $1,800,000 $965,000 $1,165,000 $3,895,000 $1,000,000 $10,140,000 (1) Payable from utility and motor fuel taxes. (2) Payable from utility taxes. (3) Payable from tax increment revenues. (4) Payable from the annual issuance of limited tax general obligation bonds. (5) Payable from non-home rule sales taxes. -25-

33 DEBT CERTIFICATES (PRINCIPAL ONLY) CALENDAR YEAR SERIES 2002B CERTIFICATES (1) TOTAL OUTSTANDING CERTIFICATES 2017 $ 90,000 $ 90, ,000 90, ,000 95, , , , ,000 TOTAL $480,000 $480,000 (1) General Obligation Limited Tax Debt Certificates, Series 2002B, dated September 15, OVERLAPPING GENERAL OBLIGATION BONDED DEBT (As of August 9, 2017) APPLICABLE TO THE VILLAGE (1) TAXING BODY OUTSTANDING DEBT (2) PERCENT AMOUNT Cook County $3,213,141, % $3,606,595 Cook County Forest Preserve District 106,265, % 119,277 Metropolitan Water Reclamation District 2,484,843, % 2,843,233 Lemont Public Library District 2,645, % 3,523 Lemont Park District 10,570, % 13,587 Pleasant Dale Park District 1,245, % 231,362 School District Number % 0 School District Number 107 4,771, % 940,191 School District Number 108 3,715, % 3,458,468 School District Number 113A 11,486, % 14,659 High School District Number ,565, % 568,715 High School District Number ,135, % 48,820 High School District Number ,680, % 2,190,603 High School District Number ,875, % 53,262 Community College District No ,655, % 461,987 Community College District No ,465, % 387,622 Community College District No ,530, % 3,103 Community College District No ,970, % 193,393 TOTAL OVERLAPPING BONDED DEBT $14,945,005 Source: With respect to the applicable taxing bodies and the percentage of overlapping EAV, the Cook County Clerk s Office. Information regarding the outstanding indebtedness of the overlapping taxing bodies was obtained from publicly-available sources. (1) Percentages based on 2016 EAVs, the most recent available. (2) Does not include alternate revenue bonds. Under the Debt Reform Act, alternate revenue bonds do not constitute indebtedness of the overlapping taxing bodies unless the taxes levied to pay the principal of and interest on such alternate revenue bonds are extended for collection by the County Clerk. The Village provides no assurance that any of the taxes so levied have not been extended, nor can the Village predict whether any of such taxes will be extended in the future. -26-

34 SELECTED FINANCIAL INFORMATION (After the issuance of the Bonds and the refunding of the Refunded Bonds) 2016 Estimated Full Value of Taxable Property: $ 523,812, EAV of Taxable Property: $ 174,604,303 (1) Population Estimate (2) : 5,676 General Obligation Bonded Debt: $ 3,865,000 (3) Other Direct General Obligation Debt: 480,000 Total Direct General Obligation Debt: $ 4,345,000 (3) Percentage to Full Value of Taxable Property: 0.83% (3) Percentage to Equalized Assessed Valuation: 2.49% (3) Overall Debt Limit (8.625% of EAV): $ 15,059,621 Percentage of Debt Limit: 28.85% (3) Non-Referendum Debt Limit (0.5% of EAV) $ 873,021 Percentage of Non-Referendum Debt Limit 85.91% (4) Per Capita: $ General Obligation Bonded Debt $ 3,865,000 (3) Overlapping General Obligation Bonded Debt: $ 14,945,005 Total General Obligation Bonded Debt and Overlapping General Obligation Bonded Debt: $ 18,810,005 Percentage to Full Value of Taxable Property: 3.59% Percentage to Equalized Assessed Valuation: 10.77% Per Capita: $ 3, (1) Includes TIF EAV in the amount of $11,450,057. See Tax Increment Financing Districts Located Within the Village. (2) Source: U.S. Census Bureau, American Community Survey 5-Year Estimates. (3) Does not include alternate revenue bonds, such as the Bonds, which, under the Debt Reform Act, do not constitute debt of the Village unless the taxes levied to pay the principal of and interest on such alternate revenue bonds are extended for collection by the County Clerk. Does include the Series 2008C and Series 2009A alternate revenue bonds, as the Village extended property taxes to repay such bonds for levy year Does include Series 2009B alternate revenue bonds, as the Village extended property taxes to repay such bonds, and the Series 2009A bonds, for levy year (4) Includes the Series 2016 bonds. COMPOSITION OF EAV Residential $154,029,035 $143,931,100 $136,910,334 $132,367,352 $137,910,506 Commercial 4,135,261 3,383,230 9,903,430 9,753,822 10,450,960 Industrial 17,078,923 17,014,346 11,495,454 11,220,981 12,691,474 Railroad 1,390,430 1,499,146 1,482,933 1,533,115 2,101,306 Total EAV $176,633,649 $165,827,822 $159,792,151 $154,875,270 $163,154,246 Source: Cook County Clerk s Office. Note: Table does not include TIF EAV. -27-

35 TAX INCREMENT FINANCING DISTRICTS LOCATED WITHIN THE VILLAGE A portion of the Village s EAV is contained in a TIF district, as described previously herein. When a TIF district is created within the boundaries of a taxing body, such as the Village, the EAV of the portion of real property designated as a TIF district is frozen at the level of the tax year in which it was designated as such (the Base EAV ). Any incremental increases in property tax revenue produced by the increase in EAV derived from the redevelopment project area during the life of the TIF district are not provided to the Village until the TIF Village expires. See TAX INCREMENT FINANCE DISTRICT. LOCATION NAME OF TIF YEAR ESTABLISHED BASE EAV 2016 EAV INCREMENTAL EAV Willow Springs TIF 1998 $2,080,637 $13,378,371 $ 11,450,057 Total Incremental EAV $ 11,450,057 Village's Base 2016 EAV 163,154,246 Total EAV $174,604,303 Source: Cook County Clerk s Office. TREND OF EAV LEVY YEAR EAV PERCENTAGE CHANGE IN EAV FROM PREVIOUS YEAR 2012 $176,633,649 (6.57%) (1) ,827,822 (6.12%) ,792,151 (3.64%) ,875,270 (3.08%) ,154, % Source: Cook County Clerk s Office. Does not include TIF EAV. (1) Based on 2011 EAV of $189,062,

36 TAXES EXTENDED AND COLLECTED TAX LEVY YEAR/ COLLECTION YEAR TAXES EXTENDED TAXES COLLECTED AND DISTRIBUTED (1) PERCENT COLLECTED 2012/13 $2,462,273 $2,415, % 2013/14 2,426,061 2,376, % 2014/15 2,750,023 2,715, % 2015/16 2,865,192 2,839, % 2016/17 3,095,047 2,159, %* Source: Cook County Treasurer s Office. (1) Excludes interest. * In process of collection. VILLAGE TAX RATES BY PURPOSE (Per $100 EAV) PURPOSE MAXIMUM RATE (1) Corporate $ $ $ $ $ $ Bonds & Interest None Police Pension None Fire Pension None IMRF None Fire Protection Police Protection Auditing None Limited Bonds None TOTAL VILLAGE TAX RATE $ $ $ $ $ Source: Cook County Clerk s Office. (1) See REAL PROPERTY ASSESSMENT, TAX LEVY AND COLLECTION PROCEDURES Property Tax Extension Limitation Law herein for information on the operation of such maximum rates under the Limitation Law (as hereinafter defined). -29-

37 REPRESENTATIVE TOTAL TAX RATES (Per $100 EAV) TAXING AUTHORITY The Village $1.394 $1.463 $1.721 $1.850 $1.897 Cook County Cook Count Forest Preserve District Metropolitan Water Reclamation District Consolidated Elections Town Lyons General Assistance Lyons Road and Bridge Lyons Lyons Mental Health Pleasantdale Park District Tri-State Fire Protection District Des Plaines Valley Mosq. Abatement District School District Number Township High School District Number Community College District No Total Representative Tax Rate (1) $7.560 $8.069 $8.337 $9.002 $9.482 Source: Cook County Clerk s Office. (1) Based on the largest tax code in the Village. TEN LARGEST TAXPAYERS TAXPAYER NAME 2016 EAV PERCENT OF VILLAGE S TOTAL EAV Valvoline LLC $ 5,251, % Rowell Chemical Corp. 2,429, % UPS RE Dept. 2,212, % Town Center Partner LLC 1,549, % Flag Creek Development 1,351, % Verizon 1,280, % Speedway LLC 1,216, % Individual 931, % GED Bir Inc. 929, % Nexeo Solutions LLC 774, % Source: Cook County Clerk's office. Values shown include TIF increments (if any). $17,926, % (1) The above taxpayers represent 10.27% of the Village's 2016 EAV of $174,604,303 (includes TIF value). Reasonable efforts have been made to seek out and report the largest taxpayers. However, many of the taxpayers listed may own multiple parcels, and it is possible that some smaller parcels and their valuations may not be included. -30-

38 RETAILERS OCCUPATION, SERVICE OCCUPATION AND USE TAX The following table shows the distribution of the municipal portion of the Retailers Occupation, Service Occupation and Use Tax collected by the Illinois Department of Revenue (the Department ) from retailers within the Village. The table indicates the level of retail activity in the Village. CALENDAR YEAR STATE SALES TAX DISTRIBUTION (1) 2012 $207, , , , , (2) 49,140 Source: Illinois Department of Revenue. (1) 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% sales tax includes tax receipts from the sale of food and drugs, which are not taxed by the State. (2) As of First Quarter of NEW PROPERTY The following chart indicates the EAV of new property (as defined in the Limitation Law) within the Village for each of the last five levy years. LEVY YEAR NEW PROPERTY Source: Cook County Clerk s Office $4,535, ,498, , , ,

39 LARGEST EMPLOYERS Below is a listing of the largest employers within the Village: EMPLOYER PRODUCT OR SERVICE LOCATION APPROXIMATE NUMBER OF EMPLOYEES Nexeo Solutions, LLC PEKRON Consulting, Inc. Valvoline Oil Co. Air Design Systems, Inc. Rowell Chemical Corp. Chair Covers By Sylwia, Inc. Cross Tread Industries, Inc. C M S Publishing, Inc. Chemicals & solvents distribution Environmental health & safety consulting services, including OSHA & EPA compliance Motor oil Heating & air conditioning vent installation Sodium hypochlorite, chlorine, caustic soda & hydrochloric acid Table linens & runners, overlays, chair covers, ties & backs, napkins & Chiavari chairs rental services Ladder racks Non-profit newsletter publishing Willow Springs 75 Willow Springs 44 Willow Springs 27 Willow Springs 25 Willow Springs 20 Willow Springs 15 Willow Springs 10 Willow Springs 8 Willow Springs 7 Willow Springs 6 Mazur & Son Construction Co. General construction U.S. Army Corps Of Engineers, Navigable waterway monitoring, McCook Resident Office maintenance & engineering services Source: 2017 Illinois Services and 2017 Illinois Manufacturers Directories, and the Illinois Department of Commerce and Economic Opportunity. Below is a listing of the largest employers around the Village: EMPLOYER PRODUCT OR SERVICE LOCATION APPROXIMATE NUMBER OF EMPLOYEES Edward-Elmhurst Health General Hospital Naperville 4,500 Alcatel-Lucent Telecommunications Research and Development Naperville 3,000 McDonald s Corp. Fast Food Oak Brook 2,100 Electro-Motive Diesel, Inc. Diesel and electric locomotives La Grange 1,300 BP, Global Fuels Technology Div. Chemical and petrochemical research and testing Naperville 1,200 Nalco, An Ecolab Company Company Headquarters; water treatment and industrial Naperville 1,200 Amazon Fulfillment Center Retail online order fulfillment center Romeoville 1,000 Advocate Home Health Services Home healthcare Oak Brook 800 RML Specialty Hospital Long-term acute care hospital Hinsdale 800 Lewis University Education Romeoville 700 Source: 2017 Illinois Services and 2017 Illinois Manufacturers Directories, and the Illinois Department of Commerce and Economic Opportunity. -32-

40 UNEMPLOYMENT RATES The following table shows the trend in annual average unemployment rates for the Village, the County and the State. VILLAGE OF WILLOW SPRINGS COOK COUNTY STATE OF ILLINOIS 2012 Average 7.9% 9.6% 9.0% 2013 Average 7.4% 9.7% 9.1% 2014 Average 5.9% 7.5% 7.1% 2015 Average 4.9% 6.2% 5.9% 2016 Average 4.7% 6.2% 5.9% 2017 Average (6 months) N/A 4.9% 5.1% Source: State of Illinois Department of Employment Security. SPECIFIED OWNER-OCCUPIED UNITS THE VILLAGE THE COUNTY THE STATE VALUE NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT Under $50, % 48, % 240, % $50,000 to $99, % 108, % 518, % $100,000 to $149, % 157, % 533, % $150,000 to $199, % 185, % 527, % $200,000 to $299, % 261, % 648, % $300,000 to $499, % 219, % 473, % $500,000 to $999, % 99, % 188, % $1,000,000 or more % 26, % 46, % Total 1, % 1,107, % 3,177, % Median Value $312,400 $218,700 $173,800 Source: U.S. Census Bureau, American Community Survey 5-Year Estimates. -33-

41 EMPLOYMENT BY INDUSTRY THE VILLAGE THE COUNTY THE STATE CLASSIFICATION NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT Agriculture, forestry, fishing, hunting & mining % 4, % 64, % Construction % 112, % 313, % Manufacturing % 254, % 765, % Wholesale trade % 68, % 184, % Retail trade % 249, % 668, % Transportation, warehousing & utilities % 158, % 358, % Information % 56, % 123, % Finance, insurance & real estate % 199, % 446, % Professional, scientific, management, administrative & waste management % 342, % 695, % Educational, health & social services % 561, % 1,396, % Arts, entertainment, recreation, accommodations & food services % 243, % 551, % Other services % 123, % 288, % Public administration % 88, % 230, % Total 3, % 2,463, % 6,086, % Source: U.S. Census Bureau, American Community Survey 5-Year Estimates. EMPLOYMENT BY OCCUPATION THE VILLAGE THE COUNTY THE STATE CLASSIFICATION NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT Management, professional & related occupations 1, % 943, % 2,241, % Service occupations % 447, % 1,057, % Sales & office occupations % 601, % 1,493, % Natural resources, construction & maintenance occupations % 150, % 444, % Production, transportation & material moving occupation % 320, % 848, % Total 3, % 2,463, % 6,086, % Source: U.S. Census Bureau ( American Community Survey). -34-

42 MEDIAN HOUSEHOLD INCOME According to the U.S. Census Bureau, the Village had a median household income of $77,770. This compares to $55,251 for the County and $57,574 for the State. The following table represents the distribution of household incomes for the Village, the County and the State at the time of such survey. THE VILLAGE THE COUNTY THE STATE NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT Under $10, % 166, % 343, % $10,000 to $14, % 95, % 217, % $15,000 to $24, % 201, % 477, % $25,000 to $34, % 83, % 449, % $35,000 to $49, % 241, % 610, % $50,000 to $74, % 328, % 851, % $75,000 to $99, % 231, % 609, % $100,000 to $149, % 258, % 676, % $150,000 to $199, % 109, % 272, % $200,000 or more % 126, % 278, % Total 2, % 1,842, % 4,786, % Source: U.S. Census Bureau ( American Community Survey). PER CAPITA INCOME 2000 (1) 2015 (2) PERCENTAGE CHANGE The Village $30,394 $41, % The County 23,227 31, % The State 23,104 30, % Source: U.S. Census Bureau. (1) 2000 Census (2) American Community Survey 5-Year Estimates. SHORT-TERM BORROWING The Village has not issued tax anticipation warrants or revenue anticipation notes during the last five years to meet its short-term current year cash flow requirements. FUTURE DEBT The Village does not anticipate issuing any additional debt in the next six months, except for its annual rollover bond issuance. -35-

43 DEFAULT RECORD On May 31, 2016, the Village failed to pay an outstanding note in the amount of $750,000 (the Loan ) as the same became due on such date. The Village subsequently negotiated an extension of the maturity date of the Loan from May 31, 2016 to January 15, 2017, with the bank holding the Loan. Such Loan has since been repaid. Other than as discussed above, the Village has no record of default and has met its debt repayment obligations promptly. REAL PROPERTY ASSESSMENT, TAX LEVY AND COLLECTION PROCEDURES SUMMARY OF PROPERTY ASSESSMENT, TAX LEVY AND COLLECTION PROCEDURES A separate tax to pay the principal of and interest on the Bonds will be levied on all taxable real property within the Village. The information under this caption describes the current procedures for real property assessments, tax levies and collections in the County. There can be no assurance that the procedures described herein will not change. REAL PROPERTY ASSESSMENT The County Assessor (the Assessor ) is responsible for the assessment of all taxable real property within Cook County (the County ), including such property located within the boundaries of the Village, except for certain railroad property, pollution control facilities and low sulfur dioxide emission coal-fueled devices, which are assessed directly by the Illinois Department of Revenue (the Department of Revenue ). For triennial reassessment purposes, Cook County is divided into three Districts: west and south suburbs (the South Tri ), north and northwest suburbs (the North Tri ), and the City of Chicago (the City Tri ). The Village is located in the South Tri and was last reassessed for the 2014 tax levy year. The Village will next be reassessed for the 2017 levy year. In response to the downturn of the real estate market, the Assessor reduced the 2009 assessed value on suburban residential properties (specifically, those properties located in the South Tri and the North Tri) not originally scheduled for reassessment in For tax year 2009, each suburban township received an adjustment percentage for tax year 2009, lowering the existing assessed values of all residential properties in such township within a range of 4% to 15%, beginning with the second-installment tax bills payable in the fall of Real property in the County is separated into classes for assessment purposes. After the Assessor establishes the fair market value of a parcel of property, that value is multiplied by the appropriate classification percentage to arrive at the assessed valuation (the Assessed Valuation ) for the parcel. Such classification percentages range from 10% for certain residential, commercial and industrial property to 25% for other industrial and commercial property. Property is classified for assessment into six basic categories, each of which is assessed (beginning with the 2009 tax levy year) at various percentages of fair market value as follows: Class 1 - unimproved real estate (10%); Class 2 - residential (10%); Class 3 - rental-residential -36-

44 (16% in tax year 2009, 13% in tax year 2010, and 10% in tax year 2011 and subsequent years); Class 4 - not-for-profit (25%); Class 5a - commercial (25%); and Class 5b - industrial (25%). In addition, property may be temporarily classified into one of eight additional assessment classification categories. Upon expiration of such classification, property so classified will revert to one of the basic six assessment classifications described above. The additional assessment classifications are as follows: CLASS DESCRIPTION OF QUALIFYING PROPERTY ASSESSMENT PERCENTAGE REVERTS TO CLASS 6b C 7a/7b 7c Newly constructed industrial properties or substantially rehabilitated sections of existing industrial properties Industrial property that has undergone environmental testing and remediation Commercial property that has undergone environmental testing and remediation Newly constructed or substantially rehabilitated commercial properties in an area in need of commercial development Newly constructed or rehabilitated commercial buildings and acquisition of abandoned property and rehabilitation of buildings thereon including the land upon which the buildings are situated and the land related to the rehabilitation 8 Industrial properties in enterprise communities or zones in need of substantial revitalization Commercial properties in enterprise communities or zones in need of substantial revitalization 9 New or substantially rehabilitated multi-family residential properties in target areas, empowerment or enterprise zones S L Class 3 properties subject to Section 8 contracts renewed under the Mark up to Market option Substantially rehabilitated Class 3, 4 or 5b properties qualifying as Landmark or Contributing buildings Substantially rehabilitated Class 5a properties qualifying as Landmark or Contributing buildings 10% for first 10 years and any 10 year renewal; if not renewed, 15% in year 11, 20% in year 12 10% for first 10 years, 15% in year 11, 20% in year 12 10% for first 10 years, 15% in year 11, 20% in year 12 10% for first 10 years, 15% in year 11, 20% in year 12 10% for first 3 years and any 3 year renewal; if not renewed, 15% in year 4, 20% in year 5 10% for first 10 years and any 10-year renewal; if not renewed, 15% in year 11, 20% in year 12 10% for first 10 years, 15% in year 11, 20% in year 12 10% for first 10 years and any 10 year renewal 10% for term of Section 8 contract renewal and any subsequent renewal 10% for first 10 years and any 10-year renewal; if not renewed, 15% in year 11, 20% in year 12 10% for first 10 years, 15% in year 11, 20% in year 12 5b 5b 5a 5a 5a 5b 5a As Applicable 3 3, 4, or 5b 5a The Assessor has established procedures enabling taxpayers to contest their proposed Assessed Valuations. Once the Assessor certifies its final Assessed Valuations, a taxpayer can seek review of its assessment by appealing to the Cook County Board of Review (the Board of -37-

45 Review ), which consists of three commissioners elected by the voters of the County. The Board of Review has the power to adjust the Assessed Valuations set by the Assessor. Owners of residential property having six or fewer units are able to appeal decisions of the Board of Review to the Illinois Property Tax Appeal Board (the PTAB ), a statewide administrative body. The PTAB has the power to determine the Assessed Valuation of real property based on equity and the weight of the evidence. Taxpayers may appeal the decision of PTAB to either the Circuit Court of Cook County (the Circuit Court ) or the Illinois Appellate Court under the Illinois Administrative Review Law. As an alternative to seeking review of Assessed Valuations by PTAB, taxpayers who have first exhausted their remedies before the Board of Review may file an objection in the Circuit Court. The procedure under this alternative is similar to the judicial review procedure described in the immediately preceding paragraph, however, the standard of proof differs. In addition, in cases where the Assessor agrees that an assessment error has been made after tax bills have been issued, the Assessor can correct any factual error, and thus reduce the amount of taxes due, by issuing a Certificate of Error. Certificates of Error are not issued in cases where the only issue is the opinion of the valuation of the property. EQUALIZATION After the Assessor has established the Assessed Valuation for each parcel for a given year, and following any revisions by the Board of Review or PTAB, the Department of Revenue is required by statute to review the Assessed Valuations. The Department of Revenue establishes an equalization factor (the Equalization Factor ), commonly called the multiplier, for each county to make all valuations uniform among the 102 counties in the State. Under State law, the aggregate of the assessments within each county is equalized at 33-1/3% of the estimated fair cash value of real property located within the county prior to any applicable exemptions. One multiplier is applied to all property in the County, regardless of its assessment category, except for certain farmland property and wind energy assessable property, which are not subject to equalization. The following table sets forth the Equalization Factor for the County for the last ten tax levy years. TAX LEVY YEAR EQUALIZATION FACTOR

46 Once the Equalization Factor is established, the Assessed Valuation, as revised by the Board of Review or PTAB, is multiplied by the Equalization Factor to determine the equalized assessed valuation (the EAV ) of that parcel. The EAV for each parcel is the final property valuation used for determination of tax liability. The aggregate EAV for all parcels in any taxing body s jurisdiction, plus the valuation of property assessed directly by the Department of Revenue, constitute the total real estate tax base for the taxing body, which is used to calculate tax rates (the Assessment Base ). EXEMPTIONS The Illinois Property Tax Code, as amended (the Property Tax Code ), exempts certain property from taxation. Certain property is exempt from taxation on the basis of ownership and/or use, including, but not limited to, public parks, not-for-profit schools, public schools, churches, not-for-profit hospitals and public hospitals. In addition, the Property Tax Code provides a variety of homestead exemptions, which are discussed below. 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 $7,000 for tax year 2012 and thereafter. The Long-Time Occupant Homestead Exemption limits the increase in EAV of a taxpayer s homestead property to 10% per year if such taxpayer has owned the property for at least 10 years as of January 1 of the assessment year (or 5 years if purchased with certain government assistance) and has a household income of $100,000 or less ( Qualified Homestead Property ). If the taxpayer s annual income is $75,000 or less, the EAV of the Qualified Homestead Property may increase by no more than 7% per year. There is no exemption limit for Qualified Homestead Properties. The Homestead Improvement Exemption applies to Residential Property that has been improved and to properties that have been rebuilt in the two years following a catastrophic event, as defined in the Property Tax Code. The exemption is limited to an annual maximum amount of $75,000 for up to four years, to the extent the Assessed Valuation is attributable solely to such improvements or rebuilding. 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. The Senior Citizens Assessment Freeze Homestead Exemption freezes property tax assessments for homeowners who are 65 and older, reside in their property as their principal place of residence and receive a household income not in excess of $55,000. This exemption grants to qualifying senior citizens an exemption equal to the difference between (a) the current EAV of the residence and (b) 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. -39-

47 Beginning January 1, 2015 purchasers of certain single family homes and residences of one to six units located in certain targeted areas (as defined in the applicable section of the Property Tax Code) can apply for the Community Stabilization Assessment Freeze Pilot Program. To be eligible the purchaser must meet certain requirements for rehabilitating the property, including expenditures of at least $5 per square foot, adjusted by CPI. Upon meeting the requirements, the assessed value of the improvements is reduced by (a) 90% in the first seven years, (b) 65% in the eighth year and (c) 35% in the ninth year. The benefit ceases in the tenth year. The program will be phased out by June 30, 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. Three exemptions are available to veterans of the United States armed forces. The Veterans with Disabilities Exemption for Specially-Adapted Housing exempts up to $100,000 of the Assessed Valuation of property owned and used exclusively by veterans with a disability, their spouses or unmarried surviving spouses. Qualification for this exemption requires the veteran s disability to be of such a nature that the federal government has authorized payment for purchase of specially adapted housing under the U.S. Code as certified to annually by the Illinois Department of Veterans Affairs or for housing or adaptations donated by a charitable organization to such disabled veteran. The Standard Homestead Exemption for Veterans with Disabilities provides an annual homestead exemption to veterans with a service-connected disability based on the percentage of such disability. If the veteran has a (a) service-connected disability of 30% or more but less than 50%, the annual exemption is $2,500, (b) service-connected disability of 50% or more but less than 70%, the annual exemption is $5,000, and (c) service-connected disability of 70% or more, the property is exempt from taxation. The Returning Veterans Homestead Exemption is available for property owned and occupied as the principal residence of a veteran in the assessment year, and the year following the assessment year, in which the veteran returns from an armed conflict while on active duty in the United States armed forces. This provision grants a one-time, two-year homestead exemption of $5,

48 Finally, the Homestead Exemption for Persons with Disabilities provides an annual homestead exemption in the amount of $2,000 for property that is owned and occupied by certain disabled persons who meet State-mandated guidelines. TAX LEVY As part of the annual budgetary process of governmental units (the Units ) with power to levy taxes in the County, the designated body for each Unit annually adopts proceedings to levy real estate taxes. The administration and collection of real estate taxes is statutorily assigned to the County Clerk and the County Treasurer. After the Units file their annual tax levies, the County Clerk computes the annual tax rate for each Unit. The County Clerk computes the Unit s maximum allowable levy by multiplying the maximum tax rate for that Unit by the prior year s EAV for all property currently in the Village. The prior year s EAV includes the EAV of any new property, the current year value of any annexed property and any recovered tax increment value, minus any disconnected property for the current year under the Limitation Law. The tax rate for a Unit is computed by dividing the lesser of the maximum allowable levy or the actual levy by the current year s EAV. PROPERTY TAX EXTENSION LIMITATION LAW The Limitation Law is applied after the prior year EAV limitation. 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. 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 or are for certain refunding purposes. The use of prior year EAVs to limit the allowable tax levy may reduce tax rates for funds that are at or near their maximum rates in taxing districts with rising EAVs. These reduced rates and all other rates for those funds subject to the Limitation Law are added together, which results in the aggregate preliminary rate. The aggregate preliminary rate is then compared to the limiting rate. If the limiting rate is more than the aggregate preliminary rate, there is no further reduction in rates due to the Limitation Law. If the limiting rate is less than the aggregate preliminary rate, the aggregate preliminary rate is further reduced to the limiting rate. In all cases, taxes are extended using current year EAV under Section of the Property Tax Code. The Village has the authority to levy taxes for many different purposes. See Financial Information and Economic Characteristics of the Village - Village Tax Rates by Purpose. The ceiling at any particular time on the rate at which these taxes may be extended for the Village is either (a) unlimited (as provided by statute), (b) initially set by statute but permitted to be increased by referendum, (c) capped by statute, or (d) limited to the rate approved by referendum. The only ceiling on a particular tax rate is the ceiling set by statute, at which the rate is not permitted to be further increased by referendum or otherwise. Therefore, taxing districts (such as the Village) have 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 -41-

49 allowed to exceed the Village s limiting rate computed in accordance with the provisions of the Limitation Law. 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. Local governments, including the Village, can issue limited bonds in lieu of general obligation bonds that have otherwise been authorized by applicable law. Illinois legislators have introduced several proposals to modify the Limitation Law, including freezing property taxes and extending tax caps to all taxing bodies in the State (the Property Tax Freeze Proposal ). If the Property Tax Freeze Proposal or similar legislation were to become law, such reform may have a material impact on the finances of the Village and the ability of the Village to issue limited tax bonds. The Village cannot predict whether, or in what form, any change to the Limitation Law, including the Property Tax Freeze Proposal, may be enacted into law, nor can the Village predict the effect of any such change on the Village s finances. EXTENSIONS The County Clerk then computes the total tax rate applicable to each parcel of real property by aggregating the tax rates of all of the Units having jurisdiction over the particular parcel. The County Clerk extends the tax by entering the tax (determined by multiplying the total tax rate by the EAV of that parcel for the current assessment year) in the books prepared for the County Collector (the Warrant Books ) along with the tax rates, the Assessed Valuation and the EAV. The Warrant Books are the County Collector s authority for the collection of taxes and are used by the County Collector as the basis for issuing tax bills to all property owners. COLLECTIONS Property taxes are collected by the County Collector, who also serves as the County Treasurer, who remits to each Unit its share of the collections. Taxes levied in one year become payable during the following year in two installments, the first due on March 1 and the second on the later of August 1 or 30 days after the mailing of the tax bills. A payment due is deemed to be paid on time if the payment is postmarked on the due date. Beginning with the first installment payable in 2010, the first installment is equal to 55% of the prior year s tax bill. However, if a Certificate of Error is approved by a court or certified on or before November 30 of the preceding year and before the estimated tax bills are prepared, then the first installment is instead based on the certain percentage of the corrected prior year s tax bill. The second installment covers the balance of the current year s tax bill, and is based on the then current tax year levy, Assessed Valuation and Equalization Factor, and reflects any changes from the prior year in those factors. The first installment penalty date has been the first business day in March for each of the last ten years. However, for 2010, the first installment penalty date was established as April 1 by statute. The following table sets forth the second installment penalty date for the last ten tax levy years in the County. -42-

50 TAX LEVY YEAR SECOND INSTALLMENT PENALTY DATE 2007 November 3, December 1, December 13, November 1, August 1, August 1, August 1, August 3, August 1, August 1, 2017 It is possible that the changes to the assessment appeals process described above will cause delays similar to those experienced in past years in preparation and mailing of the second installment in future years. In the future, the County may provide for tax bills to be payable in four installments instead of two. During the periods of peak collections, tax receipts are forwarded to each Unit on a weekly basis. Upon receipt of taxes from the County Collector, the Village promptly credits the taxes received to the funds for which they were levied. Within 90 days following the second installment due date, the County Collector presents the Warrant Books to the Circuit Court and applies for a judgment for all unpaid taxes. The court orders resulting from the application for judgment provides for an Annual Tax Sale (the Annual Tax Sale ) of unpaid taxes shown on that year s Warrant Books. A public sale is held, at which time successful tax buyers pay the unpaid taxes plus penalties. In each such public sale, the collector can use any automated means. Unpaid taxes accrue penalties at the rate of 1.5% per month from their due date until the date of sale. Taxpayers can redeem their property by paying the amount paid at the sale, plus a maximum of 12% for each six-month period after the sale. If no redemption is made within the applicable redemption period (ranging from six months to two and a half years depending on the type and occupancy of the property) and the tax buyer files a petition in the Circuit Court, notifying the necessary parties in accordance with the applicable law, the tax buyer receives a deed to the property. In addition, there are miscellaneous statutory provisions for foreclosure of tax liens. If there is no sale of the tax lien on a parcel of property at the Annual Tax Sale, the taxes are forfeited and the property becomes eligible to be purchased at any time thereafter at an amount equal to all delinquent taxes and interest accrued to the date of purchase. Redemption periods and procedures are the same as applicable to the Annual Tax Sale. The Scavenger Sale (the Scavenger Sale ), like the Annual Tax Sale, is a sale of unpaid taxes. The Scavenger Sale is held every two years on all property on which two or more years taxes are delinquent. The sale price of the unpaid taxes is the amount bid at such sale, which may -43-

51 be less than the amount of delinquent taxes. Redemption periods vary from six months to two and a half years depending upon the type and occupancy of the property. 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. The provisions of the Law do not apply to levies made to pay principal of and interest on the Bonds. The Village covenanted in the Bond Ordinances that it will not take any action which would adversely affect the levy, extension, collection and application of the taxes levied by the Village for payment of principal of and interest on the Bonds, except as stated under SECURITY- ABATEMENT OF PLEDGED TAXES. The Village also covenanted that it will comply with all present and future laws concerning the levy, extension and collection of such taxes levied by the Village. RETIREMENT PLANS The Village participates in three defined benefit pension plans: (i) the Illinois Municipal Retirement Fund (the IMRF Plan ), (ii) the Police Pension Plan (the Police Pension Plan ), and (iii) the Firefighters Pension Plan (the Fire Pension Plan and, together with the IMRF Plan and the Police Plan, the Pension Plans ). The Pension Plans provide defined benefit pension benefits to the Village s employees, retirees and beneficiaries. The IMRF Plan is an agent multipleemployer public employee retirement system, and the Police Pension Plan and the Fire Pension Plan are single-employer pension plans. The Village makes certain contributions to the Pension Plans on behalf of its employees, as further described in this section. The operations of the Pension Plans, including the contributions to be made to the Pension Plans, the benefits provided by the Pension Plans, and the actuarial assumptions and methods employed in generating the liabilities and contributions of the Pension Plans, are governed by the Illinois Pension Code, as amended (the Pension Code ). This section first describes certain concepts related to pensions generally, then describes the applicable provisions of Pension Plans. These concepts are more completely described in Note 8 to the Audit, as hereinafter defined, as well as the supplementary schedules thereto, attached hereto as APPENDIX A. The Pension Code allows the State Comptroller to divert State payments intended for the Village to the Police Pension Plan and the Fire Pension Plan to satisfy contribution shortfalls by the Village pursuant to the Recapture Provisions. If the Village fails to contribute to the Police Pension Plan or the Fire Pension Plan as required by the Pension Code, the Village will be subject to a reallocation of payments of State funds to the Village if (i) the Village fails to make the required payment for 90 days past the due date, (ii) the subject retirement fund gives notice of the failure to the Village, and (iii) such retirement fund certifies to the State Comptroller that such payment has not been made. Upon the occurrence of these events, the State Comptroller will withhold payments of State funds from the Village in an amount not in excess of the delinquent payment amount in the following proportions: (i) in fiscal year 2017, two-thirds of the total amount of any payments of State funds to the Village and (ii) in fiscal year 2018 and in each fiscal -44-

52 year thereafter, 100% of the amount of any payments of State funds to the Village. Should the Recapture Provision be invoked as a result of the Village s failure to contribute all or a portion of its required contribution, a reduction in payments of State funds may have an adverse impact on the Village s finances. BACKGROUND REGARDING PENSION PLANS The Actuarial Valuation The disclosures in the Audit related to the Pension Plans are based in part on the actuarial valuations of the Pension Plans. In the actuarial valuations, the actuary for each of the Pension Plans measures the financial position of a Pension Plan, determines the amount to be contributed to a Pension Plan pursuant to statutory requirements, and produces information mandated by the financial reporting standards issued by the Governmental Accounting Standards Board ( GASB ), as described below. In producing an actuarial valuation, the actuary for a Pension Plan uses demographic data (including employee age, salary and service credits), economic assumptions (including estimated future salary and interest rates), and decrement assumptions (including employee turnover, mortality and retirement rates) and employs various actuarial methods to generate the information required to be included in such valuation. GASB Standards Prior to the fiscal year ended April 30, 2016, the applicable GASB financial reporting standards with respect to the Pension Plans were GASB Statement No. 25 and GASB Statement No. 27 (together, the Prior GASB Standards ). The Prior GASB Standards required the disclosure of an Annually Required Contribution (which was such pronouncement s method for calculating the annual amounts needed to fully fund a pension plan) and the calculation of pension funding statistics such as the unfunded actuarial accrued liability ( UAAL ), which was the shortfall of the assets held by the pension plan when compared against the liabilities of such pension plan, as actuarially determined (the Actuarial Accrued Liability ), and the Funded Ratio, which was the ratio, expressed as a percentage, derived from dividing the assets of the pension plan by the Actuarial Accrued Liability. In addition, the Prior GASB Standards allowed pension plans to prepare financial reports pursuant to various approved actuarial methods and to use an assumed investment rate of return determined by the pension plan for financial reporting purposes. Beginning with the fiscal year ended April 30, 2016, the applicable GASB financial reporting standards with respect to the Pension Plans became GASB Statement No. 67 and GASB Statement No. 68 (together, the New GASB Standards ). Unlike the Prior GASB Standards, the New GASB Standards do not establish approaches to funding pension plans, and, therefore, do not require computation of the Annually Required Contribution or a similar contribution number. Instead, the New GASB Standards provide standards solely for financial reporting and accounting related to pension plans. -45-

53 The New GASB Standards require calculation and disclosure of a Net Pension Liability or Net Pension Asset, which is the difference between the actuarial present value of projected benefit payments that is attributed to past periods of employee service calculated pursuant to the methods and assumptions set forth in the New GASB Standards (referred to in such statements as the Total Pension Liability ) and the fair market value of the pension plan s assets (referred to as the Fiduciary Net Position ). This concept is similar to the UAAL, which was calculated under the Prior GASB Standards, but most likely will differ from the UAAL on any calculation date because the Fiduciary Net Position is calculated at fair market value and because of the differences in the manner of calculating the Total Pension Liability as compared to the Actuarial Accrued Liability under the Prior GASB Standards. Furthermore, the New GASB Standards employ a rate, referred to in such statements as the Discount Rate, which is used to discount projected benefit payments to their actuarial present values. The Discount Rate is a blended rate comprised of (1) a long-term expected rate of return on a pension plan s investments (to the extent that such assets are projected to be sufficient to pay benefits), and (2) a tax-exempt municipal bond rate meeting certain specifications set forth in the New GASB Standards. Therefore, in certain cases in which the assets of a pension plan are not expected to be sufficient to pay the projected benefits of such pension plan, the Discount Rate calculated pursuant to the New GASB Standards may differ from the assumed investment rate of return used in reporting pursuant to the Prior GASB Standards. Finally, the New GASB Standards require that the Net Pension Liability be disclosed in the notes to the financial statements of the pension system and that a proportionate share of the Net Pension Liability be recognized on the balance sheet of the employer. In addition, the New GASB Standards require an expense (the Pension Expense ) to be recognized on the income statement of the Village. Pension Plans Remain Governed by the Pension Code As described above, each of the Prior GASB Standards and the New GASB Standards establish requirements for financial reporting purposes. However, the Pension Plans are ultimately governed by the provisions of the Pension Code in all respects, including, but not limited to, the amounts to be contributed by the Village to the Pension Plans in each year. ILLINOIS MUNICIPAL RETIREMENT FUND The Village participates in the IMRF Plan, which is a defined-benefit, agent multiple employer pension plan administered by the Illinois Municipal Retirement Fund (the IMRF ) that acts as a common investment and administrative agent for units of local government and school districts in Illinois. Specifically, the Village participates in an IMRF-administered plan for its regular employees (the Regular Plan ) and its Sheriff s Law Enforcement Personnel (the SLEP Plan ) for sheriffs, deputy sheriffs and selected police chiefs. Certain of the provisions of these plans are described below. The IMRF Plan is established and administered under statutes adopted by the Illinois General Assembly. The Pension Code sets the benefit provisions of the IMRF Plan, which can only be amended by the Illinois General Assembly. -46-

54 Each employer participating in the IMRF Plan, including the Village, has an employer reserve account with the IMRF Plan separate and distinct from all other participating employers (the IMRF Account ) along with a unique employer contribution rate determined by the IMRF Board, as described below. The employees of a participating employer receive benefits solely from such employer s IMRF Account. Participating employers are not responsible for funding the deficits of other participating employers. The IMRF issues a publicly available financial report that includes financial statements and required supplementary information which may be viewed at the IMRF s website. See Note 8 to the Audit for additional information on the IMRF Plan s actuarial methods and assumptions. Contributions Both employers and employees contribute to the IMRF Plan. At present, with respect to the Regular Plan, employees contribute 4.50% of their salary to the IMRF Plan, as established by statute. With respect to the SLEP Plan, employees contribute 7.50% of their salary to the IMRF Plan, as established by statute. Employers are required to make all additional contributions necessary to fund the benefits provided by the IMRF Plan to its employees. The annual rate at which an employer must contribute to the IMRF Plan is established by the IMRF Board of Trustees (the IMRF Board ). The Village s contribution rates for calendar years 2016 and 2015 were 5.07% and 5.39% of covered payroll, respectively, for the Regular Plan. The Village s contribution rates for calendar years 2016 and 2015 were 13.35% and 13.69% of covered payroll, respectively, for the SLEP Plan. For the fiscal year ended April 30, 2016, the Village contributed $33,199 to the Regular Plan and $13,798 to the SLEP Plan. Measures of Financial Position-Regular Plan The following table presents the measures of the Regular Plan s financial position as of April 30, 2015 and April 30, 2016 which are presented pursuant to the New GASB Standards. Such measures were calculated pursuant to the current Discount Rate of 7.50%. FISCAL YEAR FIDUCIARY FIDUCIARY NET POSITION ENDED TOTAL PENSION NET NET PENSION AS A % OF TOTAL APRIL 30TH LIABILITY POSITION ASSET PENSION LIABILITY 2015 $3,983,214 $4,523,600 $540, % ,126,466 4,259, , % Source: The Audit. See Note 8 to the Audit, and the related required supplementary information disclosures, for a description of the IMRF Plan, the IMRF Account, the Village s funding policy, information on the assumptions and methods used by the Actuary, and the financial reporting information required by the New GASB Standards. -47-

55 Measures of Financial Position-SLEP Plan The following table presents the measures of the SLEP Plan s financial position as of April 30, 2015 and April 30, 2016 which are presented pursuant to the New GASB Standards. Such measures were calculated pursuant to the current Discount Rate of 7.50%. FISCAL YEAR FIDUCIARY FIDUCIARY NET POSITION ENDED TOTAL PENSION NET NET PENSION AS A % OF TOTAL APRIL 30TH LIABILITY POSITION ASSET PENSION LIABILITY 2015 $215,226 $223,154 $ 7, % , ,849 13, % Source: The Audit. See Note 8 to the Audit, and the related required supplementary information disclosures, for a description of the IMRF Plan, the IMRF Account, the Village s funding policy, information on the assumptions and methods used by the Actuary, and the financial reporting information required by the New GASB Standards. POLICE PENSION PLAN The Village provides retirement, death and disability benefits to its sworn police personnel and retirees and their beneficiaries through the Police Pension Plan. The Police Pension Plan is a single-employer defined benefit plan. The benefits provided by the Police Pension Plan and the amount of employer and employee contributions to the Police Pension Plan are governed by the Pension Code and may only be amended by the General Assembly. As of April 30, 2016, the Police Pension Fund had a membership of 21. Contributions As stated above, both the Village and its participating employees make contributions to the Police Pension Plan. At present, employees contribute 9.91% of their salary to the Police Pension Plan. The Village is required to make all additional contributions necessary to fund the benefits provided by the Police Pension Plan to its members. The Pension Code requires that the Village contribute annually the amount necessary to fund the normal cost of the Police Pension Plan for such year plus an amount sufficient to bring the total assets of the Police Pension Plan up to 90% of the total actuarial liabilities of the Police Pension Plan by the end of fiscal year 2040, as determined by an actuary (the Funding Requirement ). The Pension Code provides a levy of a separate tax annually by the Village to generate the funds necessary to make this contribution. As the Funding Requirement represents an amortization of the unfunded portion of the actuarial liabilities of the Police Pension Plan over a closed period of time, the Village s required contributions to the Police Pension Plan are expected to increase, possibly by a significant margin, during the period of fiscal years leading up to The Village expects to use savings from the -48-

56 arrangement with the Tri-State Fire Protection District for fire protection services, as described in the section to follow, along with additional revenues, where possible, to assist in funding the Police Pension Plan in future years. For the fiscal year ended April 30, 2016, the statutory minimum which the Village was required to contribute was $603,565, or 91.89% of member payroll, to the Police Pension Plan. Measures of Financial Position The following table provides statistical information produced pursuant to the New GASB Standards with respect to the Police Pension Plan for each of the last two fiscal years. The Total Pension Liability as of April 30, 2016, was calculated pursuant to the current Discount Rate of 3.92%: FISCAL YEAR TOTAL PENSION ENDED APRIL 30 LIABILITY FIDUCIARY NET POSITION NET PENSION LIABILITY FIDUCIARY NET POSITION AS A % OF TOTAL PENSION LIABILITY 2015 $11,868,159 $1,305,494 $10,562, % ,175,316 1,517,421 11,657, % Source: The Audit. See Note 8 to the Audit, and the related required supplementary information disclosures, for a description of the Police Pension Plan, the Village s funding policy, information on the assumptions and methods used by the actuary for the Police Pension Plan, and the financial reporting information required by the New GASB Standards. Litigation Relating to Police Pension Plan The Police Pension Plan is governed by a five-member Board of Trustees (the Police Board ). Two members of the Police Board are appointed by the Village s President, one member is elected by pension beneficiaries and two members are elected by active police employees. The Village is currently in litigation with the Police Board. The Police Board has filed suit against the Village and is seeking approximately $1.8 million from the Village for unfunded Police Pension Plan contributions for previous fiscal years. The Village is currently in settlement negotiations with the Police Board. The lawsuit is expected to either be settled or decided by a court decision possibly by the end of calendar year The Village cannot determine the final amount of any liability regarding the lawsuit at this time. FIRE PENSION PLAN The Village provides retirement, death and disability benefits to its sworn fire personnel and retirees and their beneficiaries through the Fire Pension Plan. The Fire Pension Plan is a single-employer defined benefit plan. The benefits provided by the Fire Pension Plan and the amount of employer and employee contributions to the Fire Pension Plan are governed by the Pension Code and may only be amended by the General Assembly. -49-

57 On March 15, 2016, the residents of the Village passed a referendum to join the Tri-State Fire Protection District. On April 11, 2016, the Board of Trustees of the Tri-State Fire Protection District passed a resolution accepting the Village into the fire district and a court order was signed in DuPage County Court on April 12, 2016 making the annexation official. The annexation and having the Tri-State Fire Protection District serve the Village s fire service needs going forward could result in a lower Fire Pension Plan liability for the Village in future fiscal years. As of April 30, 2016, the Fire Pension Plan membership consisted of one inactive plan member or beneficiary that currently receives benefits. Contributions As stated above, both the Village and its participating employees make contributions to the Fire Pension Plan. At present, covered employees contribute 9.455% of their salary to the Fire Pension Plan. The Village is required to make all additional contributions necessary to fund the benefits provided by the Fire Pension Plan to its members. The Pension Code requires that the Village contribute annually the Funding Requirement, the same being the amount necessary to fund the normal cost of the Fire Pension Plan for such year plus an amount sufficient to bring the total assets of the Fire Pension Plan up to 90% of the total actuarial liabilities of the Fire Pension Plan by the end of fiscal year 2040, as determined by an actuary. The Pension Code provides a levy of a separate tax annually by the Village to generate the funds necessary to make this contribution. As the Funding Requirement represents an amortization of the unfunded portion of the actuarial liabilities of the Fire Pension Plan over a closed period of time, the Village s required contributions to the Fire Pension Plan are expected to increase, possibly by a significant margin, during the period of fiscal years leading up to For the fiscal year ended April 30, 2016, the statutory minimum which the Village was required to contribute was $19,885 to the Fire Pension Plan. Actual contributions made by the Village were $33,935. Measures of Financial Position The following table provides statistical information produced pursuant to the New GASB Standards with respect to the Fire Pension Plan for each of the last three fiscal years. The Total Pension Liability as of April 30, 2016, was calculated pursuant to the current Discount Rate of 4.00%: FIDUCIARY NET POSITION FISCAL YEAR ENDED APRIL 30 TOTAL PENSION LIABILITY FIDUCIARY NET POSITION NET PENSION LIABILITY AS A % OF TOTAL PENSION LIABILITY 2015 $575,316 $245,145 $330, % , , , % Source: The Audit. -50-

58 See Note 8 to the Audit, and the related required supplementary information disclosures, for a description of the Fire Pension Plan, the Village s funding policy, information on the assumptions and methods used by the actuary for the Fire Pension Plan, and the financial reporting information required by the New GASB Standards. OTHER POST-EMPLOYMENT BENEFITS In addition to providing the pension benefits described above, the Village provides postemployment healthcare benefits ( OPEB ) for eligible retired employees and their dependents (the OPEB Plan ). Dependents are provided access to coverage on a fully contributory basis. For additional information regarding the OPEB Plan, see Note 10 to the Audit. The Village does not currently fund the cost of benefits due under the OPEB Plan in advance of the payment of such expenses. The Village funds the OPEB Plan on a pay-as-you-go basis. Pay-as-you-go funding refers to the fact that assets are not accumulated or dedicated to fund these obligations. Instead, the Village contributes the amount necessary to fund its share of the current year costs of providing such benefits. For the fiscal year ended April 30, 2016 the Village contributed $19,551 to the OPEB Plan. The Village s contributions to the OPEB Plan in each of the last three years are as follows: FISCAL YEAR Source: The Audit. ENDED APRIL 30 CONTRIBUTION 2014 $10, , ,551 For additional information on the Village s post-employment benefits other than pensions, see Note 10 and the required supplementary information to the Audit. BOND RATING S&P is expected to assign the Bonds a rating of AA (Stable Outlook). The AA (Stable Outlook) rating on the Bonds is based on the insurance policy by the Insurer. The rating reflects only the views of such organization and any explanation of the significance of such ratings may only be obtained from the rating agency. Certain information concerning the Bonds and the Village not included in this Official Statement was furnished to S&P and the Insurer by the Village. There is no assurance that the rating will be maintained for any given period of time or that they may not be changed by S&P if, in such rating agency s judgment, circumstances so warrant. Any downward change in or withdrawal of the rating may have an adverse effect on the market price of the Bonds. -51-

59 Except as may be required by the Undertaking described below under the heading CONTINUING DISCLOSURE, neither the Village nor the Underwriter undertakes responsibility to bring to the attention of the owners of the Bonds any proposed change in or withdrawal of the rating or to oppose any such revision or withdrawal. TAX EXEMPTION Federal tax law contains a number of requirements and restrictions which apply to the Bonds, including investment restrictions, periodic payments of arbitrage profits to the United States, requirements regarding the proper use of bond proceeds and the facilities financed therewith, and certain other matters. The Village has covenanted to comply with all requirements that must be satisfied in order for the interest on the Bonds to be excludable from gross income for federal income tax purposes. Failure to comply with certain of such covenants could cause interest on the Bonds to become includible in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. Subject to the Village s compliance with the above-referenced covenants, under present law, in the opinion of Bond Counsel, interest on the Bonds is excludable from the gross income of the owners thereof for federal income tax purposes and is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations, but interest on the Bonds is taken into account, however, in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. In rendering its opinion, Bond Counsel will rely upon certifications of the Village with respect to certain material facts within the Village s knowledge. Bond Counsel s opinion represents its legal judgment based upon its review of the law and the facts that it deems relevant to render such opinion and is not a guarantee of a result. The Internal Revenue Code of 1986, as amended (the Code ), includes provisions for an alternative minimum tax ( AMT ) for corporations in addition to the regular corporate tax in certain cases. The AMT, if any, depends upon the corporation s alternative minimum taxable income ( AMTI ), which is the corporation s taxable income with certain adjustments. One of the adjustment items used in computing the AMTI of a corporation (with certain exceptions) is an amount equal to 75% of the excess of such corporation s adjusted current earnings over an amount equal to its AMTI (before such adjustment item and the alternative tax net operating loss deduction). Adjusted current earnings would include certain tax-exempt interest, including interest on the Bonds. Ownership of the Bonds may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, corporations subject to the branch profits tax, financial institutions, certain insurance companies, certain S corporations, individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry tax-exempt obligations. Prospective purchasers of the Bonds should consult their tax advisors as to applicability of any such collateral consequences. -52-

60 The issue price ( Issue Price ) for each maturity of the Bonds is the price at which a substantial amount of such maturity of the Bonds is first sold to the public. The Issue Price of a maturity of the Bonds may be different from the price set forth, or the price corresponding to the yield set forth, on the cover page hereof. If the Issue Price of a maturity of the Bonds is less than the principal amount payable at maturity, the difference between the Issue Price of each such maturity, if any, of the Bonds (the OID Bonds ) and the principal amount payable at maturity is original issue discount. For an investor who purchases an OID Bond in the initial public offering at the Issue Price for such maturity and who holds such OID Bond to its stated maturity, subject to the condition that the Village complies with the covenants discussed above, (a) the full amount of original issue discount with respect to such OID Bond constitutes interest which is excludable from the gross income of the owner thereof for federal income tax purposes; (b) such owner will not realize taxable capital gain or market discount upon payment of such OID Bond at its stated maturity; (c) such original issue discount is not included as an item of tax preference in computing the alternative minimum tax for individuals and corporations under the Code, but is taken into account in computing an adjustment used in determining the alternative minimum tax for certain corporations under the Code, as described above; and (d) the accretion of original issue discount in each year may result in an alternative minimum tax liability for corporations or certain other collateral federal income tax consequences in each year even though a corresponding cash payment may not be received until a later year. Based upon the stated position of the Department under Illinois income tax law, accreted original issue discount on such OID Bonds is subject to taxation as it accretes, even though there may not be a corresponding cash payment until a later year. Owners of OID Bonds should consult their own tax advisors with respect to the state and local tax consequences of original issue discount on such OID Bonds. Owners of Bonds who dispose of Bonds prior to the stated maturity (whether by sale, redemption or otherwise), purchase Bonds in the initial public offering, but at a price different from the Issue Price or purchase Bonds subsequent to the initial public offering should consult their own tax advisors. If a Bond is purchased at any time for a price that is less than the Bond s stated redemption price at maturity or, in the case of an OID Bond, its Issue Price plus accreted original issue discount (the Revised Issue Price ), the purchaser will be treated as having purchased a Bond with market discount subject to the market discount rules of the Code (unless a statutory de minimis rule applies). Accrued market discount is treated as taxable ordinary income and is recognized when a Bond is disposed of (to the extent such accrued discount does not exceed gain realized) or, at the purchaser s election, as it accrues. Such treatment would apply to any purchaser who purchases an OID Bond for a price that is less than its Revised Issue Price. The applicability of the market discount rules may adversely affect the liquidity or secondary market price of such Bond. Purchasers should consult their own tax advisors regarding the potential implications of market discount with respect to the Bonds. An investor may purchase a Bond at a price in excess of its stated principal amount. Such excess is characterized for federal income tax purposes as bond premium and must be amortized -53-

61 by an investor on a constant yield basis over the remaining term of the Bond in a manner that takes into account potential call dates and call prices. An investor cannot deduct amortized bond premium relating to a tax-exempt bond. The amortized bond premium is treated as a reduction in the tax-exempt interest received. As bond premium is amortized, it reduces the investor s basis in the Bond. Investors who purchase a Bond at a premium should consult their own tax advisors regarding the amortization of bond premium and its effect on the Bond s basis for purposes of computing gain or loss in connection with the sale, exchange, redemption or early retirement of the Bond. There are or may be pending in the Congress of the United States legislative proposals, including some that carry retroactive effective dates, that, if enacted, could alter or amend the federal tax matters referred to above or affect the market value of the Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, it would apply to bonds issued prior to enactment. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal tax legislation. Bond Counsel expresses no opinion regarding any pending or proposed federal tax legislation. The Service has an ongoing program of auditing tax-exempt obligations to determine whether, in the view of the Service, interest on such tax-exempt obligations is includible in the gross income of the owners thereof for federal income tax purposes. It cannot be predicted whether or not the Service will commence an audit of the Bonds. If an audit is commenced, under current procedures the Service may treat the Village as a taxpayer and the Bondholders may have no right to participate in such procedure. The commencement of an audit could adversely affect the market value and liquidity of the Bonds until the audit is concluded, regardless of the ultimate outcome. Payments of interest on, and proceeds of the sale, redemption or maturity of, tax-exempt obligations, including the Bonds, are in certain cases required to be reported to the Service. Additionally, backup withholding may apply to any such payments to any Bond owner who fails to provide an accurate Form W-9 Request for Taxpayer Identification Number and Certification, or a substantially identical form, or to any Bond owner who is notified by the Service of a failure to report any interest or dividends required to be shown on federal income tax returns. The reporting and backup withholding requirements do not affect the excludability of such interest from gross income for federal tax purposes. 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. QUALIFIED TAX-EXEMPT OBLIGATIONS Subject to the Village s compliance with certain covenants, in the opinion of Bond Counsel, the Bonds are qualified tax-exempt obligations under the small issuer exception provided under Section 265(b)(3) of the Code, which affords banks and certain other financial -54-

62 institutions more favorable treatment of their deduction for interest expense than would otherwise be allowed under Section 265(b)(2) of the Code. 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 the Rule. 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 statement of other terms of the Undertaking, including termination, amendment and remedies, are set forth below in THE UNDERTAKING. The Village failed to file its audited financial statements and annual financial information for fiscal years ending April 30, 2012, April 30, 2013, April 30, 2014, April 30, 2015 and April 30, 2016 within the time periods required under previous continuing disclosure undertakings. Such information has since been filed. In addition, the Village failed to file notice of rating changes regarding certain outstanding obligations within the time period required under previous continuing disclosure undertakings. Such failures to file financial information and rating changes were due to administrative oversight. The Village has retained third party professional assistance to assure that future filings are done on a timely basis. A failure by the Village to comply with the Undertaking will not constitute a default under the Bond Ordinances and beneficial owners of the Bonds are limited to the remedies described in the Undertaking. 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. 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. At present, such dissemination is made through the MSRB s Electronic Municipal Market Access system, referred to as EMMA ( EMMA ). The Village is required to deliver such information within 210 days after the last day of the Village s fiscal year (currently April 30), beginning with the fiscal year ended April 30, If Audited Financial Statements are not available when the Financial Information is filed, the Village will submit Audited Financial Statements to EMMA within 30 days after availability to the Village. -55-

63 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 information of the type contained in the following headings, subheadings and exhibits of the Final Official Statement: THE BONDS Alternate Revenue Bonds (Debt Service Coverage) FINANCIAL INFORMATION AND ECONOMIC CHARACTERISTICS Direct General Obligation Bonded Debt (Principal Only) Debt Certificates (Principal Only) Alternate Revenue Bonds (Principal Only) Selected Financial Information (only as it relates to direct debt) Composition of Equalized Assessed Valuation Trend of Equalized Assessed Valuation Taxes Extended and Collected Village Tax Rates by Purpose Exhibit D Combined Statement of Revenues, Expenditures and Changes in Fund Balance Audited Financial Statements means the combined financial statements of the Village prepared in accordance with accounting principles generally accepted in the United States of America. 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 or the State 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: Principal and interest payment delinquencies Non-payment related defaults, if material Unscheduled draws on debt service reserves reflecting financial difficulties Unscheduled draws on credit enhancements reflecting financial difficulties Substitution of credit or liquidity providers, or their failure to perform 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 Modifications to the rights of security holders, if material Bond calls, if material, and tender offers Defeasances Release, substitution or sale of property securing repayment of the securities, if material Rating changes -56-

64 Bankruptcy, insolvency, receivership or similar event of the Village * 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 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 Ordinances, 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. AMENDMENT; WAIVER Notwithstanding any other provision of the Undertaking, the Village by resolution 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 * This event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the District 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 District, 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 District. -57-

65 (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 Ordinances. The Village shall give notice to the MSRB in a timely manner if this paragraph is applicable. FUTURE CHANGES TO THE RULE Notwithstanding anything in the Undertaking to the contrary, in the event the Commission, the MSRB or other regulatory authority approves or requires changes to the requirements of the Rule, the Village is permitted, but is not be required, to unilaterally modify the covenants in of the Undertaking, without complying with the requirements described in Termination of Undertaking above, in order to comply with, or conform to, such changes. In the event of any such modification of the Undertaking, the Village will file a copy of the Undertaking, as revised, on EMMA in a timely manner. 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 EMMA for municipal securities disclosure or through any other electronic format or system prescribed by the MSRB for purposes of the Rule. -58-

66 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. AUDITED FINANCIAL STATEMENTS The audited financial statements of the Village for the fiscal year ended April 30, 2016 (the Audit ), contained in Appendix A, including the independent auditor s report accompanying the Audit, has been prepared by RSM US LLP, Chicago, Illinois (the Auditor ), and approved by formal action of the Board. The Village has not requested the Auditor to update information contained in the Audit nor has the Village requested that the Auditor consent to the use of the Audit in this Official Statement. Other than as expressly set forth in this Official Statement, the financial information contained in the Audit has not been updated since the date of the Audit. The inclusion of the Audit in this Official Statement in and of itself is not intended to demonstrate the fiscal condition of the Village since the date of the Audit. Specific questions or inquiries relating to the financial information of the Village since the date of the Audit should be directed to John Carpino, President of the Village. BOOK-ENTRY ONLY SYSTEM DTC will act as securities depository for the Bonds. The Bonds 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 Bond certificate will be issued for each maturity of the Bonds, in the aggregate principal amount of such maturity, and will be deposited with DTC. 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 Exchange Act. 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 -59-

67 Participants ). DTC has an S&P rating of AA+. The DTC Rules applicable to its Participants are on file with the SEC. More information about DTC can be found at Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC s records. The ownership interest of each actual purchaser of each Bond ( 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 Bonds 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 Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds 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 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts such Bonds 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. 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 Bonds may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds 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. Redemption notices shall be sent to DTC. If less than all of the Bonds 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. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds 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 the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). -60-

68 Redemption proceeds, distributions, and dividend payments on the Bonds 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 detailed information from the Village or Registrar, 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 Registrar, 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 Registrar, 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. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the Village or the Registrar. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. The Village may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC s book-entry system has been obtained from DTC, and the Village takes no responsibility for the accuracy thereof. The Village will have no responsibility or obligation to any Securities Depository, any Participants in the Book-Entry System or the Beneficial Owners with respect to (a) the accuracy of any records maintained by the Securities Depository or any Participant; (b) the payment by the Securities Depository or by any Participant of any amount due to any Beneficial Owner in respect of the principal amount or redemption price of, or interest on, any Bonds; (c) the delivery of any notice by the Securities Depository or any Participant; (d) the selection of the Beneficial Owners to receive payment in the event of any partial redemption of the Bonds; or (e) any other action taken by the Securities Depository or any Participant. CERTAIN LEGAL MATTERS Certain legal matters incident to the authorization, issuance and sale of the Bonds are subject to the approving legal opinion of Louis F. Cainkar, LTD., Burbank, Illinois, who has been retained by, and acts as, Bond Counsel to the Village. Tressler LLP, Bolingbrook, Illinois, will pass on certain matters for the Village. Chapman and Cutler LLP, Chicago, Illinois has been retained by the Village to serve as Disclosure Counsel to the Village with respect to the Bonds. Although as Disclosure Counsel to the Village, Chapman and Cutler has assisted the Village with certain disclosure matters, Chapman and Cutler has not undertaken to independently verify the accuracy, completeness or fairness of this Official Statement or other offering material -61-

69 related to the Bonds and does not guarantee the accuracy, completeness or fairness of such information. Chapman and Cutler s engagement as Disclosure Counsel was undertaken solely at the request and for the benefit of the Village, to assist it in discharging its responsibility with respect to the Official Statement, and not for the benefit of any other person (including any person purchasing Bonds from the Underwriter), and did not include any obligation to establish or confirm factual matters, forecasts, projections, estimates or any other financial or economic information in connection therewith. Further, Chapman and Cutler makes no representation as to the suitability of the Bonds for investment by any investor. MUNICIPAL ADVISOR Speer Financial, Inc., Chicago, Illinois, has been retained as municipal advisor (the Municipal Advisor ) in connection with the issuance of the Bonds. To the Municipal Advisor s knowledge, the information contained in this Official Statement is true and accurate. However, the Municipal Advisor has not been engaged, nor has it undertaken, to independently verify the accuracy, completeness or fairness of any of the statements contained in this Official Statement or other offering material related to the Bonds and does not guarantee the accuracy, completeness or fairness of such information. The Municipal Advisor s duties, responsibilities, and fees arise solely from the position of municipal advisor for the Village with respect to the Bonds. NO LITIGATION No litigation is now pending or threatened restraining the issuance, sale, execution or delivery of the Bonds, or in any way contesting or affecting the validity or enforceability of the Bonds or any proceedings of the Village taken with respect to the issuance or sale thereof. A certificate to this effect will be delivered by the Village with the other customary closing papers when the Bonds are delivered. UNDERWRITING Pursuant to the terms of a Bond Purchase Agreement (the Agreement ) between the Village and George K. Baum & Company, Chicago, Illinois (the Underwriter ), the Underwriter has agreed to purchase the Series 2017A Bonds at an aggregate purchase price of $3,935, The purchase price will produce an underwriting spread of 1.02% of principal amount if all Series 2017A Bonds are sold at the initial offering prices. Pursuant to the terms of the Agreement between the Village and the Underwriter, the Underwriter has agreed to purchase the Series 2017B Bonds at an aggregate purchase price of $1,006, The purchase price will produce an underwriting spread of 1.02% of principal amount if all Series 2017B Bonds are sold at the initial offering prices. The Agreement provides that the obligation of the Underwriter is subject to certain conditions precedent and that the Underwriter will be obligated to purchase all of the Bonds if any -62-

70 of the Bonds are purchased. The Bonds may be offered and sold to certain dealers (including dealers depositing such Bonds into investment trusts, accounts or funds) and others at prices different than the initial public offering price. After the initial public offering, the public offering price of the Bonds may be changed from time to time by the Underwriter. AUTHORIZATION This Official Statement has been approved by the Village for distribution to prospective purchasers of the Bonds. The Board, acting through authorized officers, will provide to the Underwriter at the time of delivery of the Bonds, a certificate confirming that, to the best of its knowledge and belief, the Official Statement with respect to the Bonds, together with any supplements thereto, at the time of the adoption of the Bond Ordinances, and at the time of delivery of the Bonds, was true and correct in all material respects and did not at any time contain an untrue statement of a material fact or omit to state a material fact required to be stated where necessary to make the statements therein in light of the circumstances under which they were made, not misleading. October 5, 2017 /s/ Brent Woods Village Administrator Village of Willow Springs, Cook County, Illinois -63-

71 EXHIBITS Exhibits A and B show the Village s recent financial history of its Governmental Activities. Exhibits C and D show the Village s recent financial history of the General Fund. Exhibit E provides information on the sources of the Village s General Fund revenues for the fiscal year ended April 30, EXHIBIT A STATEMENT OF NET POSITION GOVERNMENTAL ACTIVITIES, FISCAL YEARS ENDED APRIL 30, (Unaudited) ASSETS Cash and Investments $ 7,512,150 $ 8,744,603 $ 8,005,445 $ 6,371,953 $ 5,202,460 $ 4,757,686 Receivables Property Taxes 1,826,474 2,087,059 1,956,359 2,099,162 2,113,777 2,063,416 Accounts 33,838 35,976 41,659 92,804 33,588 33,341 Intergovernmental 410, , , , , ,020 Fines & Forfeitures Other 246, , , , ,913 9,600 Internal Balances (428,699) (428,699) (428,699) (428,699) (85,109) 130,763 Due from Fiduciary Funds (331,404) Prepaid Expenses 80,912 56,568 21,225 41,546 35,293 0 Deferred Charges 390, , ,340 Capital Assets: Non-Depreciable 431, , , , , ,603 Depreciable, Net 7,476,594 7,589,736 7,407,750 7,404,940 7,403,307 7,403,307 Net pension asset , ,725 Total Assets $17,979,258 $19,268,314 $17,835,413 $16,489,660 $15,737,295 $ 14,994,396 DEFERRED OUTFLOWS OF RESOURCES: Deferred Loss on Refundings $ 0 $ 0 $ 50,826 $ 36,465 $ 22,210 $ 22,210 Pension Related Amounts ,062,078 1,062,078 Total Deferred Outflows of Resources $ 0 $ 0 $ 50,826 $ 36,465 $ 1,084,288 $ 1,084,288 Total Assets and Deferred Outflows of Resources $17,979,258 $19,268,314 $17,886,239 $16,526,125 $16,821,583 $ 16,078,684 LIABILITIES: Accounts payable $ 129,979 $ 457,200 $ 131,733 $ 476,981 $ 1,210,598 $ 1,036,540 Accrued Payroll and Payroll Liabilities 96, ,335 95,294 87,689 89,349 95,895 Accrued Interest Payable 269, , , , , ,608 Note Payable 0 21,043 22,296 23, ,073 1,200,146 Line of Credit 687, Other Liabilities 85,043 40,879 3,509 3,509 3, ,622 Due to Fiduciary Funds 69,919 42,167 53,798 53,761 55,429 0 Unearned/Deferred Revenues 1,950,610 2,066,471 58,928 9,151 31,065 2,330,604 Long-term Obligations Due Within One Year 1,519,371 1,594,521 1,643,197 1,560,314 1,658,440 1,658,440 Long-term Obligations Net Pension Obligation 2,038,809 2,360,986 2,498,989 2,524,912 11,993,620 11,993,620 Other Postemployment Benefits 10,715 26,572 43,746 63,982 65,537 65,537 Note Payable 0 645, , , Due in More Than One Year 20,287,286 19,141,778 17,962,697 16,591,514 15,133,364 14,603,649 Total Liabilities $27,144,208 $26,782,219 $23,397,975 $22,237,502 $31,063,592 $ 33,339,661 DEFERRED INFLOWS OF RESOURCES: Deferred Property Taxes $ 0 $ 0 $ 1,982,930 $ 2,085,784 $ 2,051,577 $ 0 Total Deferred Inflows of Resources $ 0 $ 0 $ 1,982,930 $ 2,085,784 $ 2,051,577 $ 0 NET POSITIONS: Invested in Capital Assets, Net of Related Debt $ 2,771,877 $ 3,152,259 $ 3,206,588 $ 3,843,193 $ 4,157,405 $ 4,157,405 Restricted For: Debt Service 501, , , , ,582 2,568,133 Highways and Streets 463, , , , ,900 92,624 Employee Retirement 0 1,080, , ,287 80,670 80,670 Public Safety 1,464,478 1,169,268 1,143,425 1,077,574 1,022,745 0 Motor Fuel Tax 114, , ,791 38,825 74, , Services 85,316 96,098 58,850 46,187 23,021 (36,849) Capital Projects 1,040,563 2,615,784 2,060,049 1,748, , ,165 Unrestricted (15,606,675) (16,544,110) (15,692,499) (16,107,800) (23,189,971) (24,751,040) Total Net Position $(9,164,950) $(7,513,905) $(7,494,666) $(7,817,161) $(16,293,586) $(17,260,977) Total Liabilities, Deferred Inflows of Resources and Net Position $17,979,258 $19,268,314 $17,886,239 $16,526,125 $ 16,821,583 $ 16,078,684 Source: Audited financial statements for fiscal years ending April 30, 2012-April 30, Unaudited fiscal year 2017 information provided by the Village.

72 EXHIBIT B STATEMENT OF ACTIVITIES GOVERNMENTAL ACTIVITIES, FISCAL YEARS ENDED APRIL 30, (Unaudited) Governmental Activities General Government $ 688,715 $ (526,147) $ (984,178) $(1,266,847) $ (1,135,063) $ (1,662,061) Public Safety (2,977,363) (2,731,237) (2,867,199) (3,047,240) (3,478,428) (2,437,873) Highways and Streets (50,966) (77,492) (104,301) (169,374) (172,081) (563,633) Municipal Building (85,319) (63,318) (87,419) (98,196) (20,588) (40,820) Refuse 44,722 59,326 (18,607) (60,359) (57,374) 18,794 Community Development (275,918) (353,267) (312,827) (316,899) (346,408) 0 Interest and Fiscal Charges (874,582) (785,706) (756,054) (668,853) (636,051) (1,293,331) Total Governmental Activities $ (3,530,711) $(4,477,841) $(5,130,585) $(5,627,768) $ (5,845,993) $ (5,978,923) General Revenues Taxes: Property $ 3,290,495 $ 4,300,317 $3,693,214 $ 3,510,424 $ 3,425,592 $ 3,213,359 Sales 392, , , , , ,928 Road and Bridge 36,606 36,687 36,912 38,521 36,062 41,445 Utility 465, , , , , ,892 Other 156, , , , ,359 7,606 Intergovernmental State Income Tax 434, , , , , ,048 Replacement Tax 37,307 34,263 36,071 37,131 34,181 37,968 Other Investment Income 1,877 3,910 1,549 1,256 2,569 4,858 Miscellaneous 126,232 68,446 77,370 81, , ,201 Bond Proceeds ,852 Transfers 225, , , , , ,180 Total General Revenues & Transfers $ 5,166,715 $ 6,128,886 $5,486,731 $5,305,273 $ 5,223,018 $ 6,730,338 Change in Net Assets $ 1,646,004 $ 1,651,045 $ 356,146 $ (322,495) $ (622,975) $ 751,415 Net Position, May 1 (10,810,954) (9,164,950) (7,850,812) (7,494,666) (15,670,611) (1) (16,293,586) Net Position, April 30 $ (9,164,950) $(7,513,905) $(7,494,666) $(7,817,161) $(16,293,586) $(15,542,171) Source: Audited financial statements for fiscal years ending April 30, 2012-April 30, Unaudited fiscal year 2017 information provided by the Village. (1) Beginning Fund Balance Restated to record the effect of the net pension liability, deferred inflows of resources and deferred outflows of resources.

73 EXHIBIT C BALANCE SHEET GENERAL FUND, FISCAL YEAR ENDED APRIL 30, ASSETS: (Unaudited) Cash and Investments $1,718,468 $2,480,853 $2,117,065 $1,574,048 $ 513,126 $ 346,023 Receivables: Property Taxes 1,015, , ,381 1,137,823 1,079, ,146 Other 151, , , , , ,763 Accounts Receivable 33,838 35,976 41,659 92,804 33,588 0 Fines and Forfeitures 38,919 20,687 16,350 9,469 10,185 9,600 Intergovernmental 244, , , , , ,594 Internal Balance (1,043,313) Due From Other Funds 186,933 43,286 59, , ,781 0 Due From Fiduciary Funds Prepaids 79,662 55,394 21,225 37,783 35,293 27,340 TOTAL ASSETS $3,469,471 $3,916,817 $3,580,122 $3,326,394 $2,247,756 $ 526,152 LIABILITIES: Accounts Payable $ 89,080 $ 132,547 $ 82,567 $ 439,898 $ 318,879 $ 126,219 Accrued Payroll and Payroll Liabilities 96, ,335 91,936 87,689 89,349 91,468 Line of Credit/Short-term Notes Payable 687, , , , , ,073 Due to Other Funds 1,128,320 1,128,320 1,128,320 1,128, ,585 0 Unearned Revenue , ,053 Deferred Revenue 1,212,076 1,090,763 58,928 29,151 0 Due to Fiduciary Funds 69,919 42,167 53,798 53,761 55,429 0 Other Liabilities 85,043 40,879 3,509 3,509 3,509 0 Total Liabilities $3,367,822 $3,213,969 $2,064,969 $2,365,939 $1,929,889 $1,742,813 DEFERRED INFLOWS OF RESOURCES: Deferred Property Taxes $ 0 $ 0 $1,014,738 $1,128,507 $1,063,712 $ 0 Deferred Intergovernmental Revenue ,244 41,801 65,873 0 Total Deferred Inflows of Resources $ 0 $ 0 $1,052,982 $1,170,308 $1,129,585 $ 0 FUND BALANCES: Prepaid Items $ 79,662 $ 55,394 $ 21,225 $ 37,783 $ 35,293 $ 0 Restricted $0 $1,080,000 $705,287 $ 705,287 $ 80,670 $ 0 Unassigned 21,987 (432,546) (264,341) (952,923) (927,681) (1,216,662) Total Fund Balance $ 101,649 $ 702,848 $ 462,171 $ 209,853) $ (811,718) $(1,216,662) TOTAL LIABILITIES AND FUND BALANCE $3,469,471 $3,916,817 $3,580,122 $3,326,394 $2,247,756 $ 526,152 Source: Audited financial statements for fiscal years ending April 30, 2012-April 30, Unaudited fiscal year 2017 information provided by the Village.

74 EXHIBIT D STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GENERAL FUND, FISCAL YEAR ENDED APRIL 30, * REVENUES: Property Taxes $1,877,107 $1,960,649 $1,964,231 $1,859,189 $2,088,391 Other Taxes 860, , , , ,785 Intergovernmental 491, , , , ,566 Licenses, Permits and Fees 633, , , , ,899 Fines and Traffic Violation 381, , , , ,523 Charges for Services 769, , , , ,753 Interest Other 54,087 68,446 68,258 81, ,853 TOTAL REVENUES $5,067,745 $5,691,391 $5,113,030 $5,175,231 $5,186,562 EXPENDITURES Current: General Government $1,250,495 $1,288,529 $1,350,191 $1,678,877 $1,504,425 Public Safety 2,504,016 2,608,678 2,900,325 2,988,338 3,073,003 Public Works 45,490 49,917 72,082 62, ,302 Municipal Building 77,518 55,540 76,669 87,634 19,051 Refuse Services 614, , , , ,142 Municipal Indebtedness 68,385 39,295 38,319 37,066 35,828 Capital Outlay 59, ,415 9,486 4,613 1,236 TOTAL EXPENDITURES $4,619,815 $4,884,738 $5,129,938 $5,634,690 $5,566,987 Excess (Deficiency) of Revenues Over (Under) Expenditures $ 447,930 $ 806,653 $ (16,908) $(459,459) $(380,425) OTHER FINANCING SOURCES (USES): Transfers In $ 0 $ 20,774 $ 0 $ 0 $ 0 Transfers Out (336,185) (226,228) (224,169) (225,065) (221,440) Bond Issuance 1,100, Premium on Bond Issuance 7, Sale of Assets ,500 0 Total Other Sources (Uses) $ 771,246 $(205,454) $ (223,769) $(212,565) $(221,440) Net Change in Fund Balance $1,219,176 $ 601,199 $ (240,677) $(672,024) $(601,865) Fund Balance - Beginning of Year (1,117,527) 101, , ,171 (209,853) Fund Balance - Ending of Year $ 101,649 $ 702,848 $ 462,171 $(209,853) $(811,718) Source: Audited financial statements for fiscal years ending April 30, 2012-April 30, * Unaudited fiscal year ended April 30, 2017 financial information is not provided for this chart as such information was not available from the Village at this time.

75 EXHIBIT E GENERAL FUND REVENUE SOURCES, FISCAL YEAR ENDED APRIL 30, 2016 FISCAL YEAR 2016 AMOUNT PERCENT OF TOTAL INCREASE (DECREASE) FROM FISCAL YEAR 2015 REVENUES: Property Taxes $2,088, % $229,202 Other Taxes 766, % (35,362) Intergovernmental 608, % 5,636 Licenses, Permits and Fees 682, % (155,419) Fines and Traffic Violation 109, % (88,037) Charges for Services 828, % 35,699 Interest % 526 Other 100, % 19,086 TOTAL REVENUES $5,186, % $11,331 Source: The audited financial statements of the Village for the fiscal year ended April 30, 2016.

76 EXHIBIT F BUDGET-GENERAL FUND, FISCAL YEAR ENDING APRIL 30, 2018 REVENUES: Taxes $3,494,144 Licenses and Permits 302,025 Interest Income 500 Property Rental and Sales 9,500 Fines and Forfeitures 214,500 Intergovernmental 741,667 Refunds and Reimbursement 50,000 Video Gaming 7,000 Vehicle Stickers 134,500 Plan Commission Hearing 5,100 Events 4,000 Miscellaneous 6,975 TOTAL REVENUES $4,969,911 EXPENDITURES: Administration $2,015,211 Fire Department 42,680 Police Department 2,428,925 Public Works 110,936 Municipal Building 51,000 Debt Service 114,910 TOTAL EXPENDITURES $4,763,662 Source: Budget for Fiscal Year Ending April 30, 2018 as provided by the Village.

77 APPENDIX A AUDITED FINANCIAL STATEMENTS OF THE VILLAGE FOR THE FISCAL YEAR ENDED APRIL 30, 2016

78 Annual Financial Report Year Ended April 30, 2016

79 Contents Financial Section Independent Auditor s Report 1 2 Required Supplementary Information Management s Discussion and Analysis (MD&A) 3 8 Basic Financial Statements Government-Wide Financial Statements (GWFS) Statement of Net Position (Deficit) 9 Statement of Activities 10 Fund Financial Statements (FFS) Balance Sheet - Governmental Funds 11 Reconciliation of the Balance Sheet - Governmental Funds to the Statement of Net Position (Deficit) 12 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 13 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Statement of Net Position - Enterprise Funds 16 Statement of Revenues, Expenses and Changes in Net Position - Enterprise Funds 17 Statement of Cash Flows - Enterprise Funds 18 Statement of Net Position - Fiduciary Funds 19 Statement of Changes in Net Position - Fiduciary Funds - Pension Trust Funds 20 Notes to Basic Financial Statements Required Supplementary Information Schedule of Funding Progress - Postemployment Healthcare Plan 65 Schedule of Changes in Net Position Liability (Asset), Total Pension Liability and Related Ratios and Investment Returns Illinois Municipal Retirement Fund - Regular Plan 66 Schedule of Changes in Net Position Liability (Asset), Total Pension Liability and Related Ratios and Investment Returns Illinois Municipal Retirement Fund - SLEP Plan 67 Schedule of Changes in Net Pension Liability, Total Pension Liability and Related Ratios and Investment Returns Police Pension Plan 68 Schedule of Changes in Net Position Liability, Total Pension Liability and Related Ratios and Investment Returns Firefighters Pension Plan 69 Schedule of Contributions Pension Plans 70 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Police Seizure Fund 81 Notes to Required Supplementary Information Supplementary Information Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual TIF Fund 85 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual TIF Bond Fund 86 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Debt Service Fund 87 Governmental Funds Combining Balance Sheet - Nonmajor Governmental Funds 88

80 Contents Financial Section (Continued) Supplementary Information (Continued) Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds 89 Combining Balance Sheet - Nonmajor Special Revenue Funds 90 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Special Revenue Funds 91 Schedules of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Nonmajor Special Revenue Funds 92 Combining Balance Sheet - Nonmajor Capital Projects Funds 93 Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Deficits) - Nonmajor Capital Projects Funds 94 Schedule of Operating and Nonoperating Revenues, Expenses, and Transfers - Budget and Actual - Sewer Fund - Enterprise Fund 95 Schedule of Operating Expenses - Budget and Actual - Sewer Fund - Enterprise Fund Schedule of Operating Revenues and Expenses - Budget and Actual - Commuter Parking Lot - Enterprise Fund 98 Schedule of Operating Expenses - Budget and Actual - Commuter Parking Lot - Enterprise Fund 99 Combining Statement of Net Position - Pension Trust Funds - Fiduciary Funds 100 Combining Statement of Changes in Net Position - Pension Trust Funds - Fiduciary Funds 101 Statement of Changes in Assets and Liabilities - Agency Fund 102 Other Information Bond Payment Requirements Six-Year Summary of Assessed Valuations, Tax Rates and Extensions 113 Property Tax Extensions - Collections and Taxes Receivable 114

81 Independent Auditor s Report The Honorable President and Members of the Board of Trustees Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the, (Village) as of and for the year ended April 30, 2016, and the related notes to the financial statements, which collectively comprise the Village s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Willow Springs Police Pension Fund, which represent 42%, 46% and 59%, respectively, of the assets, fund balances/net position and additions/revenues of the aggregate remaining fund information. Those financial statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for the Willow Springs Police Pension Fund, is based solely on the report of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified and unmodified audit opinions. Basis for Qualified Opinions on Governmental Activities, Business-Type Activities and the Sewer Fund As discussed in Note 1 to the financial statements, the does not maintain adequate records of the historical cost and related depreciation of its capital assets. Accounting principles generally accepted in the United States of America require that capital assets to be recorded at historical cost (or fair value if donated), and depreciated over their useful lives in financial statements reported on the accrual basis of accounting. The Village s capital assets at historical cost and accumulated depreciation are stated at $17,018,298 and $9,103,388, respectively, for Governmental Activities and $4,209,756 and $1,200,540, respectively, for the Sewer Fund and Business-Type Activities, as of April 30, Additionally, depreciation expense is stated at $469,027 for Governmental Activities and $94,056 for the Sewer Fund and Business-Type Activities, for the year ended April 30, We were unable to obtain sufficient appropriate audit evidence about the historical cost, accumulated depreciation and depreciation expense of the Village s capital assets because the records are incomplete. Consequently, we were unable to determine whether any adjustments to these amounts were necessary. 1

82 Qualified Opinions In our opinion, except for the matter described in the "Basis for Qualified Opinions on Governmental Activities, Business-Type Activities and the Sewer Fund " paragraph above, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities and the Sewer Fund of the, as of April 30, 2016, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Unmodified Opinions In our opinion, based on our audit and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the General Fund, the TIF Fund, the TIF Bond Fund, Police Seizure Fund, and the Debt Service Fund, and the aggregate remaining fund information of the Village of Willow Springs, Illinois, as of April 30, 2016, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 1 to the financial statements, during the fiscal year ended April 30, 2016, the Village adopted the reporting and disclosure requirements of Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pension Plans an Amendment of GASB Statement No. 27 and GASB No. 71, Pension Transition for Contributions Made Subsequent to Measurement Date an Amendment of GASB Statement No. 68. The implementation of these statements resulted in a restatement of opening May 1, 2015 net position. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis (pages 3-8), pension and postemployment related information (pages 64-69) and budgetary schedule and related notes (pages 70-82) be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We and other auditors have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquires of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the basic financial statements that collectively comprise the basic financial statements. The accompanying supplementary information, as listed in the table of contents, and the other information, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America by us and other auditors. In our opinion, based on our audit, the procedures performed as described above, and the report of other auditors, except for the effects on the supplementary information of the incomplete capital asset records, the supplementary information is fairly stated in all material respects in relation to the basic financial statements as a whole. The other information, as listed in the table of contents, has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we express no opinion or provide any assurance on it. Chicago, Illinois March 3,

83 Management s Discussion and Analysis April 30, 2016 The management of the Village of Willow Springs (Village) is providing this overview and analysis of the financial activities of the Village for the fiscal year ended April 30, Please read it in conjunction with the financial statements in this report. Financial Highlights During the fiscal year, the Village adopted the reporting and disclosure requirements of Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pension Plans an Amendment of GASB Statement No. 27 and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date an Amendment of GASB Statement No. 68. The implementation resulted in a restatement of opening May 1, 2015 net position. This is further discussed in Note 1 to the financial statements. In total, net position (deficit) decreased by approximately $450,000 from $(12.7) million to $(13.1) million. General revenues accounted for $5.2 million in revenue, or 68% of all governmental and business-type revenues. Program specific revenues in the form of charges for services and grants accounted for $2.4 million, or 32% of total governmental and business-type revenues of $7.6 million. As of the close of the current fiscal year, the Village s governmental funds reported combined ending fund balances of $3.5 million, a decrease of approximately $1.6 million from the prior year. At the end of the current fiscal year, the General Fund had a fund balance (deficit) of approximately $(812,000) compared to a (deficit) of $(210,000) in the prior year. Overview of the Financial Statements This discussion and analysis is intended to be an introduction to the Village s basic financial statements. The basic financial statements are comprised of three components: government-wide financial statements, fund financial statements and notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements. Government-wide financial statements. The government-wide financial statements provide a broad overview of the Village s finances in a manner similar to a private-sector business. The government s current financial resources are combined and consolidated with capital assets and long-term obligations using the accrual basis of accounting. The statement of net position presents information on all of the Village s assets, deferred outflows of resources, liabilities, and deferred inflows of resources with the difference reported as net position. In the future, the increase or decrease in net position may be a useful indicator of whether the Village s financial position is improving or deteriorating. The statement of activities presents information showing how the Village s net position changed during the most recent fiscal year. All changes in net position are reported as soon as they occur, regardless of the timing of cash flow. Therefore, revenues and expenses are reported for some items that will result in cash flows in future fiscal periods. The costs of various governmental services and any subsidy to business activities are presented. Both of these government-wide financial statements distinguish the functions of the Village that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or most of their costs through user fees and charges (business- 3

84 Management s Discussion and Analysis April 30, 2016 type activities). The Village s governmental activities include general services, public works, and public safety. Property, sales, utility and income taxes pay for most of those activities. The Village s businesstype activities include sewer operations and commuter parking lot operations. Fund financial statements. A fund is a grouping of related accounts used to maintain control over resources that have been segregated for specific activities. Fund accounting is used to ensure and demonstrate compliance with finance-related legal requirements. The Village funds are divided into three categories: governmental funds, proprietary funds and fiduciary funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. Unlike government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of expendable resources, as well as on balances of expendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government s near-term financing requirements. Because the focus of governmental fund statements is narrower than that of the government-wide financial statements, it may be useful to compare similar information to better understand the long-term impact of the government s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate the comparison between governmental funds and governmental activities. The Village maintains 12 individual governmental funds. This year, information is presented separately in the governmental fund statement of revenues, expenditures, and changes in fund balances for five major funds: General Fund, TIF Fund, TIF Bond Fund, Police Seizure Fund and Debt Service Fund. Data from the other 7 governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements in this report. The Village adopts an annual appropriated budget for all of its funds. Budgetary comparison schedules have been provided where appropriate to demonstrate compliance with this budget. One type of proprietary fund is an enterprise fund. The Village maintains two enterprise funds to report the same functions presented as business-type activities in the government-wide financial statements, only in more detail. This function is the sewer operations and commuter parking lot. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the Village s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. Infrastructure assets. The Village depreciates assets over their estimated useful lives. If a road project is considered maintenance a recurring cost that does not extend the road s original useful life or expand its capacity the cost of the project will be expensed. An overlay of a road will be considered maintenance whereas a rebuild of a road will be capitalized. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the Village s progress in funding its obligation to provide pension benefits to its employees, as well as budget to actual comparisons. The combining statements, referred to earlier in connection with non-major governmental funds, are presented immediately following the required supplementary information. 4

85 Management s Discussion and Analysis April 30, 2016 Government-Wide Financial Analysis The following tables are the condensed Village s Statements of Net Position as of April 30, 2016 and Governmental Business-Type Total Primary April 30, 2016 Activities Activities Government Current and other assets $ 7,773,138 $ 76,599 $ 7,849,737 Interfund balances (85,109) 85,109 - Due to fiduciary funds Net pension asset 133,725 12, ,575 Capital assets (net) 7,914,910 3,009,216 10,924,126 Total assets 15,737,295 3,183,774 18,921,069 Deferred outflows of resources 1,084,288 22,740 1,107,028 Current liabilities 3,871,071 40,742 3,911,813 Non-current liabilities 27,192,521-27,192,521 Total liabilities 31,063,592 40,742 31,104,334 Deferred inflows of resources 2,051,577-2,051,577 Net position (deficit): Net investment in capital assets 4,157,405 3,009,216 7,166,621 Restricted 2,738,980-2,738,980 Unrestricted (deficit) (23,189,971) 156,556 (23,033,415) Total net position (deficit) $ (16,293,586) $ 3,165,772 $ (13,127,814) Governmental Business-Type Total Primary April 30, 2015 Activities Activities Government Current and other assets $ 9,001,816 $ 728,591 $ 9,730,407 Interfund balances (428,699) 428,699 - Net pension asset 514,474 48, ,694 Capital assets (net) 7,916,543 2,089,316 10,005,859 Total assets 17,004,134 3,294,826 20,298,960 Deferred outflows of resources 36,465-36,465 Current liabilities 2,477, ,113 2,779,130 Non-current liabilities 28,148,409-28,148,409 Total liabilities 30,625, ,113 30,927,539 Deferred inflows of resources 2,085,784-2,085,784 Net position (deficit): Net investment in capital assets 3,843,193 2,089,316 5,932,509 Restricted 4,447,446-4,447,446 Unrestricted (deficit) (23,961,250) 903,397 (23,057,853) Total net position (deficit) $ (15,670,611) $ 2,992,713 $ (12,677,898) 5

86 Management s Discussion and Analysis April 30, 2016 As of April 30, 2016, $7.2 million of the Village s net position is invested in capital assets that are used to provide services to the citizens of the Village. Although they are reported net of debt, it should be noted that the resources needed to repay any debt must be provided from other sources since these capital assets cannot be liquidated to retire liabilities. The Village s restricted net position decreased from approximately $4.4 million in 2015 to $2.7 million in 2016 due mainly to a decrease in the TIF Fund. The following tables are the condensed Village s Statements of Activities for the Fiscal Years Ended April 30, 2016 and Governmental Business-Type Total Primary April 30, 2016 Activities Activities Government Revenues: Program revenues: Charges for services $ 1,703,514 $ 557,228 $ 2,260,742 Operating grants and contributions Capital grants and contributions 155, ,394 General revenues: Property taxes 3,425,592-3,425,592 Other taxes 1,584,473-1,584,473 Miscellaneous 100,853 95, ,873 Transfers in (out) 112,100 (112,100) - Total revenues 7,081, ,148 7,622,074 Expenses: General government 1,666,742-1,666,742 Public safety 3,817,695-3,817,695 Highways and streets 318, ,123 Municipal building 20,588-20,588 Refuse 899, ,294 Community development 346, ,408 Sewer - 334, ,639 Commuter parking lot - 32,450 32,450 Interest and fiscal charges 636, ,051 Total expenses 7,704, ,089 8,071,990 Change in net position (622,975) 173,059 (449,916) Net position (deficit) May 1, 2015, as restated (15,670,611) 2,992,713 (12,677,898) Net position (deficit) April 30, 2016 $ (16,293,586) $ 3,165,772 $ (13,127,814) 6

87 Management s Discussion and Analysis April 30, 2016 Governmental Business-Type Total Primary April 30, 2015 Activities Activities Government Revenues: Program revenues: Charges for services $ 1,935,596 $ 563,043 $ 2,498,639 Operating grants and contributions Capital grants and contributions 193, ,053 General revenues: Property taxes 3,510,424-3,510,424 Other taxes 1,600,557-1,600,557 Miscellaneous 81, ,868 Transfers in (out) 112,525 (112,525) - Total revenues 7,433, ,619 7,884,541 Expenses: General government 1,875,845-1,875,845 Public safety 3,574,659-3,574,659 Highways and streets 353, ,148 Municipal building 98,196-98,196 Refuse 868, ,817 Community development 316, ,899 Sewer - 331, ,303 Community parking lot - 17,516 17,516 Interest and fiscal charges 668, ,853 Total expenses 7,756, ,819 8,105,236 Change in net position (322,495) 101,800 (220,695) Net position (deficit) May 1, 2015 (7,494,666) 2,842,693 (4,651,973) Effect of implementation of GASB 68 and 71 (7,853,450) 48,220 (7,805,230) Net position (deficit) April 30, 2015 $ (15,670,611) $ 2,992,713 $ (12,677,898) Approximately 48% of governmental activities are funded by property tax. This strong reliance on property tax and property tax caps limit Village spending. The Village has continued to provide the same level of services for its residents by continuing to adhere to its prescribed fiscal controls. The challenges presented by limited revenue have been met through sound budget planning. Each year this becomes more challenging. Property tax revenue decreased from fiscal year 2015 to 2016 by approximately $85,000. This was mainly due to a decrease in incremental tax revenues in the TIF Fund. Business-type activities are to be funded through charges for related services. This year, operating income in the business-type activities was approximately $190,000. For fiscal year 2015, the businesstype activities operating income was approximately $214,000. Financial Analysis of the Government s Funds Governmental funds provide information on near term inflows, outflows and balances of expendable resources. Unassigned fund balance may serve as a useful measure of a government s net resources available for spending at the end of a fiscal year. The governmental funds, in total, ended the year with an overall operating deficit (before other financing sources and uses) of $(1,824,334) in 2016 compared to an operating deficit of $(2,042,583) in At the end of the current fiscal year, the Village s governmental funds reported combined ending fund balances of $3,540,283, while governmental fund balances were $5,152,802 at the end of The decrease in fund balances is mainly attributable to negative performances of the General Fund and the TIF Fund. The Village s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Net position of the Sewer Fund was $2,949,964 at the end of the current fiscal year and $2,767,517 for fiscal year

88 Management s Discussion and Analysis April 30, 2016 General Fund Budgetary Highlights Actual General Fund revenues were lower than budgeted revenues by $141,210 in 2016 and lower than budgeted revenues by $175,017 in In 2016, actual General Fund expenditures were lower than budgeted expenditures by $128,311 and lower than budgeted expenditures by $63,621 in The decrease of $601,865 in the fund balance during 2016 is mainly attributable to an unexpected decrease of revenues. Major Fund Highlights The Village has four additional major funds TIF Fund, TIF Bond Fund, Police Seizure Fund, and Debt Service Fund. The TIF Fund had a decrease in fund balance of approximately $788,000 in This decrease is the result of both lower than anticipated property tax collections as well as a transfer out to the TIF Bond Fund during The fund balance in the TIF Bond Fund increased approximately $125,000 from 2016 as a result of a transfer in from the TIF Fund. The Police Seizure Fund had a decrease in fund balance of approximately $55,000 from 2015 to Revenues in this fund were lower than the previous year due to increased seizure activities during 2015 which were not present in Finally, the Debt Service Fund had an increase in fund balance of approximately $109,000 from 2015 to The increase is a result of higher than anticipated property tax collections. Capital Asset and Debt Administration The Village s investment in capital assets for its governmental and business-type activities as of April 30, 2016 and 2015 amounts to $10,924,126 and $10,005,859, net of depreciation, respectively. This investment in capital assets includes land, buildings, building improvements, equipment, and infrastructure. The Village has elected to depreciate these assets over their useful lives. At the end of the current year, the Village had total bond debt of $3,779,715 in general obligation bonds, $8,370,000 in tax increment financing bonds, $3,573,880 in junior lien bonds, and $565,000 of debt certificates. Requests for Information This financial report is designed to provide a general overview of the Village of Willow Springs finances for all those with an interest in the government s operations. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Willow Springs Village Finance Director, One Village Circle, Willow Springs, IL

89 BASIC FINANCIAL STATEMENTS

90 Statement of Net Position (Deficit) April 30, 2016 Governmental Business-Type Activities Activities Total Assets Cash and investments $ 5,202,460 $ - $ 5,202,460 Receivables Property taxes 2,113,777-2,113,777 Accounts 33,588 76, ,187 Intergovernmental 213, ,107 Other 174, ,913 Internal balances (85,109) 85,109 - Due from fiduciary funds Prepaid items 35,293-35,293 Capital assets Capital assets not being depreciated 511, ,603 Capital assets (net of accumulated depreciation) 7,403,307 3,009,216 10,412,523 Net pension asset 133,725 12, ,575 Total assets 15,737,295 3,183,774 18,921,069 Deferred Outflows of Resources Deferred loss on refundings 22,210-22,210 Pension related amounts 1,062,078 22,740 1,084,818 Total deferred outflows of resources 1,084,288 22,740 1,107,028 Total assets and deferred outflows of resources $ 16,821,583 $ 3,206,514 $ 20,028,097 Liabilities Accounts payable $ 1,210,598 $ 36,906 $ 1,247,504 Accrued payroll 89,349 3,836 93,185 Unearned revenue 31,065-31,065 Accrued interest payable 222, ,608 Note payable 600, ,073 Other liabilities 3,509-3,509 Due to fiduciary funds 55,429-55,429 Long-term obligations due within one year, net 1,658,440-1,658,440 Long-term obligations Net pension liability 11,993,620-11,993,620 Other postemployment benefits 65,537-65,537 Due in more than one year, net 15,133,364-15,133,364 Total liabilities 31,063,592 40,742 31,104,334 Deferred Inflows of Resources Deferred property taxes 2,051,577-2,051,577 Net Position (Deficit) Net investment in capital assets 4,157,405 3,009,216 7,166,621 Restricted for: Pension 80,670-80,670 Debt service 327, ,582 Capital outlay 804, ,217 Road improvements 405, ,900 Motor fuel tax 74,845-74, services 23,021-23,021 Public safety 1,022,745-1,022,745 Unrestricted (deficit) (23,189,971) 156,556 (23,033,415) Total net position (deficit) (16,293,586) 3,165,772 (13,127,814) Total liabilities, deferred inflows of resources and net position $ 16,821,583 $ 3,206,514 $ 20,028,097 See Notes to Basic Financial Statements. 9

91 Statement of Activities Year Ended April 30, 2016 Net (Expense), Revenue and Program Revenues Changes in Net Position Capital Charges for Grants and Governmental Business-Type Functions/Programs Expenses Services Contributions Activities Activities Total Governmental activities General government $ 1,666,742 $ 522,327 $ 9,352 $ (1,135,063) $ - $ (1,135,063) Public safety 3,817, ,267 - (3,478,428) - (3,478,428) Highway and streets 318, ,042 (172,081) - (172,081) Municipal building 20, (20,588) - (20,588) Refuse 899, ,920 - (57,374) - (57,374) Community development 346, (346,408) - (346,408) Interest and fiscal charges 636, (636,051) - (636,051) Total governmental activities 7,704,901 1,703, ,394 (5,845,993) - (5,845,993) Business-type activities Sewer 334, , , ,527 Commuter parking lot 32,450 23, (9,388) (9,388) Total business-type activities 367, , , ,139 Total $ 8,071,990 $ 2,260,742 $ 155,394 (5,845,993) 190,139 (5,655,854) General revenues and transfers Taxes Property 3,425,592-3,425,592 Sales tax 394, ,707 Road and bridge 36,062-36,062 Utility 414, ,562 Other 137, ,359 Intergovernmental State income tax 565, ,033 Replacement tax 34,181-34,181 Interest income 2, ,589 Miscellaneous 100,853 95, ,853 Transfers 112,100 (112,100) - Total general revenues and transfers 5,223,018 (17,080) 5,205,938 Change in net position (622,975) 173,059 (449,916) See Notes to Basic Financial Statements. Net position, May 1, 2015, as restated (15,670,611) 2,992,713 (12,677,898) Net position (deficit), April 30, 2016 $ (16,293,586) $ 3,165,772 $ (13,127,814) 10

92 Balance Sheet - Governmental Funds April 30, 2016 TIF Police Debt Nonmajor Total General TIF Bond Seizure Service Governmental Governmental Fund Fund Fund Fund Fund Funds Funds Assets Cash and investments $ 513,126 $ 1,166,833 $ 1,212,105 $ 1,059,635 $ 512,069 $ 738,692 $ 5,202,460 Receivables Property taxes 1,079, ,870 1, ,128-2,113,777 Other 123, , ,728 Accounts receivable 33, ,588 Fines and forfeitures 10, ,185 Intergovernmental 200, , ,107 Due from other funds 251, , ,247 1,037,379 Due from fiduciary funds Prepaid items 35, ,293 Total assets $ 2,247,756 $ 1,800,703 $ 1,213,764 $ 1,059,635 $ 945,548 $ 1,543,742 $ 8,811,148 Liabilities Accounts payable $ 318, ,423 $ - $ 22,827 $ 1,587 $ 8,882 $ 1,210,598 Accrued payroll 89, ,349 Unearned revenue 31, ,065 Note payable 600, ,073 Due to other funds 831, ,061-14, ,779 1,122,488 Due to fiduciary funds 55, ,429 Other liabilities 3, ,509 Total liabilities 1,929, ,484-36,890 1, ,661 3,112,511 Deferred Inflows of Resources Deferred property taxes 1,063, , ,771-2,076,521 Deferred intergovernmental revenue 65, ,960 81,833 Total deferred inflows of resources 1,129, , ,771 15,960 2,158,354 Fund Balances Nonspendable - prepaid items 35, ,293 Restricted 80, ,181-1,022, ,190 1,072,842 2,945,628 Committed - - 1,213, ,707 1,625,471 Unassigned (927,681) (138,428) (1,066,109) Total fund balances (811,718) 219,181 1,213,764 1,022, ,190 1,346,121 3,540,283 Total liabilities, deferred inflows of resources and fund balances $ 2,247,756 $ 1,800,703 $ 1,213,764 $ 1,059,635 $ 945,548 $ 1,543,742 $ 8,811,148 See Notes to Basic Financial Statements. 11

93 Reconciliation of the Balance Sheet - Governmental Funds to the Statement of Net Position (Deficit) April 30, 2016 Total fund balances-governmental funds $ 3,540,283 Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in governmental funds are not financial resources and, therefore, are not reported in the funds. 7,914,910 State revenue is deferred in the fund financial statements because it is not available but is recognized as revenue in the government-wide financial statements. 81,835 Property tax revenue is deferred in the fund financial statements because it is not available but is recognized as revenue in the government-wide financial statements, up to one half of the levied amount. 24,942 Bond premiums that are other financing sources in the fund financial statements are a liability that is amortized over the life of the bonds and is netted with the bonds in the government-wide financial statements. (334,484) Deferred losses on refundings that are other financing uses in the fund financial statements are deferred outflows of resources that are amortized over the life of the bonds in the government-wide financial statements. 22,210 Deferred outflows and deferred inflows of resources related to pensions, which will be recognized as an increase or reduction to pension expense in future reporting periods: Deferred outflows due to pensions 1,062,078 Net pension asset on the governmental funds is not a financial resource and, therefore, is not reported in the funds. 133,725 Some liabilities reported in the Statement of Net Position do not require the use of current financial resources and, therefore, are not reported as liabilities in governmental funds. These liabilities consist of: Bonds and notes payable (12,149,715) Debt certificates (565,000) Junior lien bonds (3,573,880) Compensated absences (168,725) Net pension liability (11,993,620) Other post employment benefits (65,537) Accrued interest (222,608) Net position (deficit) of governmental activities $ (16,293,586) See Notes to Basic Financial Statements. 12

94 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds Year Ended April 30, 2016 TIF Police Debt Nonmajor Total General TIF Bond Seizure Service Governmental Governmental Fund Fund Fund Fund Fund Funds Funds Revenues Property taxes $ 2,088,391 $ 560,020 $ - $ - $ 752,239 $ - $ 3,400,650 Other taxes 766, , ,684 Licenses, permits and fees 682, ,899 Intergovernmental 608, , ,608 Charges for services 828, , ,831 Fines and forfeitures 109, , ,784 Investment income , ,569 Miscellaneous 100, ,853 Total revenues 5,186, , , , ,631 6,922,878 Expenditures Current General government 1,504, ,504,461 Public safety 3,073, , ,393 3,246,632 Highway and streets 101, , ,060 Municipal building 19, ,051 Refuse 832, ,142 Community development - 346, ,408 Debt service Principal , ,815-1,399,815 Interest and fees 35, , , ,916 Bond issuance costs ,500-9,500 Capital outlay 1, , , ,227 Total expenditures 5,566, ,408 1,345,270 93, , ,317 8,747,212 Excess (deficiency) of revenues over (under) expenditures (380,425) 213,685 (1,345,218) (54,829) 24,139 (281,686) (1,824,334) Other financing sources (uses) Bond issuance ,715-99,715 Transfers in - - 1,469, , ,923,474 Transfers (out) (221,440) (1,001,429) - - (468,327) (120,178) (1,811,374) Total other financing sources (uses) (221,440) (1,001,429) 1,469,756-84,441 (119,513) 211,815 Net change in fund balances (601,865) (787,744) 124,538 (54,829) 108,580 (401,199) (1,612,519) Fund balances - beginning (209,853) 1,006,925 1,089,226 1,077, ,610 1,747,320 5,152,802 Fund balances - ending $ (811,718) $ 219,181 $ 1,213,764 $ 1,022,745 $ 550,190 $ 1,346,121 $ 3,540,283 See Notes to Basic Financial Statements. 13

95 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year Ended April 30, 2016 Net change in fund balances-total governmental funds $ (1,612,519) Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlay as expenditures while governmental activities report depreciation expense to allocate those expenditures over the lives of the assets. Capital outlay 467,394 Depreciation (469,027) Items related to pension expense are reported as deferred outflows and deferred inflows on the government-wide financial statements, but not on the fund financial statements: Deferred outflows of resources related to pension expense 1,083,068 Property tax revenues that are deferred in the fund financial statements because they are not available but are recognized up to one half of the levy in the government-wide financial statements. 24,942 Some general operations were financed through the issuance of long-term debt. In the fund financial statements, long-term debt is considered other financing sources, but in the Statement of Net Position, debt is reported as a liability. In the current period, proceeds were received from: General obligation bonds (99,715) The following are expenditures in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Position. These are the amounts in the current period. General obligation bonds 429,815 Tax increment financing bonds 890,000 Debt certificates 80,000 Premiums on bonds are recorded as other financing sources in the fund financial statements, but the premium is netted with the bonds in the Statement of Net Position and is amortized over the life of the bonds. This is the amount in the current period. Amortization of bond premiums 68,150 Losses on refunded debt are recorded as expenditures in the fund financial statements, but the loss is recorded as a deferred outflow of resources in the Statement of Net Position and is amortized over the life of the bonds. This is the amount in the current period. Amortization of deferred loss (14,255) (Continued) 14

96 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities (Continued) Year Ended April 30, 2016 Some expenses in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. These activities consist of: (Increase) in compensated absences $ (8,226) Decrease in accrued interest 19,470 (Decrease) in net pension asset (401,739) (Increase) in net pension liability (1,100,784) (Increase) in other postemployment benefits (1,555) Some revenues not collected as of the year-end are not considered available revenues in the governmental funds. This is the amount that was not considered available in the current year. 22,006 Change in net position (deficit) of governmental activities $ (622,975) See Notes to Basic Financial Statements. 15

97 Statement of Net Position Enterprise Funds April 30, 2016 Business-Type Activities Nonmajor Commuter Sewer Fund Parking Lot Fund Total Assets Current assets Cash and cash equivalents $ - $ - $ - Accounts receivable 76,599-76,599 Total current assets 76,599-76,599 Noncurrent assets Due from other funds 131, ,964 Net pension asset 12,850-12,850 Capital assets (net of accumulated depreciation) Equipment and furniture 41,520-41,520 Infrastructure 2,704, ,451 2,967,696 Total noncurrent assets 2,890, ,451 3,154,030 Total assets 2,967, ,451 3,230,629 Deferred Outflows of Resources Pension related amounts 22,740-22,740 Liabilities Accounts payable 36, ,906 Accrued payroll 3,836-3,836 Due to other funds - 46,855 46,855 Total liabilities 39,954 47,643 87,597 Net Position Net investment in capital assets 2,745, ,451 3,009,216 Unrestricted 204,199 (47,643) 156,556 Total net position $ 2,949,964 $ 215,808 $ 3,165,772 See Notes to Basic Financial Statements. 16

98 Statement of Revenues, Expenses and Changes in Net Position Enterprise Funds Year Ended April 30, 2016 Business-Type Activities Nonmajor Commuter Sewer Fund Parking Lot Total Operating revenues: Sewer services $ 526,974 $ - $ 526,974 Sewer fines 7,192-7,192 Parking fees - 23,062 23,062 Total operating revenues 534,166 23, ,228 Operating expenses: Operations 254,449 18, ,033 Depreciation 80,190 13,866 94,056 Total operating expenses 334,639 32, ,089 Operating income (loss) 199,527 (9,388) 190,139 Non-operating revenue: Miscellaneous income 95,000-95,000 Interest income Non-operating revenue 95,020-95,020 Income (loss) before transfers 294,547 (9,388) 285,159 Transfers (out) (112,100) - (112,100) Change in net position 182,447 (9,388) 173,059 Net position - May 1, 2015, as restated 2,767, ,196 2,992,713 Net position - April 30, 2016 $ 2,949,964 $ 215,808 $ 3,165,772 See Notes to Basic Financial Statements. 17

99 Statement of Cash Flows Enterprise Funds Year Ended April 30, 2016 Business-Type Activities Nonmajor Commuter Sewer Fund Parking Lot Total Cash flows from operating activities Cash received for services $ 679,056 $ 23,062 $ 702,118 Payment to employees (94,170) - (94,170) Payment to suppliers (452,416) (19,881) (472,297) Net cash provided by operating activities 132,470 3, ,651 Cash flows from noncapital financing activities Increase in due to other funds - 46,855 46,855 Decrease in due from other funds 156, , ,735 Transfers (out) (112,100) - (112,100) Net cash provided by financing activities 44, , ,490 Cash flows from capital and related financing activities Capital assets purchased (737,206) (277,317) (1,014,523) Cash flows from investing activities Cash receipts from interest income Net (decrease) in cash and cash equivalents (559,909) (87,453) (647,362) Cash and cash equivalents - beginning 559,909 87, ,362 Cash and cash equivalents - ending $ - $ - $ - Reconciliation of operating income (loss) to net cash provided by operating activities Operating income (loss) $ 199,527 $ (9,388) $ 190,139 Adjustments to reconcile operating income (loss) to net cash provided by operating activities Depreciation 80,190 13,866 94,056 Changes in assets, liabilities and deferred outflows: Accounts receivable 4,560-4,560 Prepaid items Accounts payable (115,864) (1,297) (117,161) Net pension asset (12,850) - (12,850) Pension deferred outflows (22,740) - (22,740) Accrued payroll (423) - (423) Total adjustments (67,057) 12,569 (54,488) Net cash provided by operating activities $ 132,470 $ 3,181 $ 135,651 See Notes to Basic Financial Statements. 18

100 Statement of Net Position - Fiduciary Funds April 30, 2016 Pension Agency Trusts Fund Assets Cash and cash equivalents $ 4,550 $ 27,200 Investments Money market mutual funds 479,506 - Corporate bonds 486,182 - State and local securities 121,132 - U.S. government and agencies 512,631 - Equity mutual funds 149,299 - Commodities 2,264 - Interest receivable 14,944 - Prepaid items 2,997 - Due from general fund 1,037 54,392 Total assets 1,774,542 81,592 Liabilities Accounts payable 6,950 - Due to general fund Landscaping/road bond deposits - 81,592 Total liabilities 7,581 81,592 Net Position Held in trust for pension benefits $ 1,766,961 $ - See Notes to Basic Financial Statements. 19

101 Statement of Changes in Net Position - Fiduciary Funds Pension Trust Funds Year Ended April 30, 2016 Additions Contributions Employer $ 614,474 Plan members 52, ,886 Interest and dividends 60,861 Net change in fair value of investments (29,250) Less investment expenses (6,471) Net investment income 25,140 Total additions 692,026 Deductions Administration 56,334 Benefits and refunds 419,370 Total deductions 475,704 Change in net position 216,322 Net position - beginning 1,550,639 Net position - ending $ 1,766,961 See Notes to Basic Financial Statements. 20

102 Notes to Basic Financial Statements Note 1. Nature of Activities Summary of Significant Accounting Policies The Village of Willow Springs (Village) was incorporated in The Village is a non home-rule municipality, under the 1970 Illinois Constitution, located in Cook County, Illinois. The Village operates under a President-Trustee form of government and provides the following services as authorized by its charter: public safety (police and fire protection), highways and streets, sanitation (sewer), public improvements, planning and zoning, and general administrative services. The accounting policies of the Village conform to accounting principles generally accepted in the United States of America as applicable to governments. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the Village s accounting policies are described below. (a) Financial Reporting Entity As defined by generally accepted accounting principles established by the GASB, the financial reporting entity consists of the primary government, as well as component units, which are legally separate organizations for which elected officials of the primary government are financially accountable. Financial accountability is defined as: (1) Appointment of a voting majority of the component unit s board, and either (a) the ability to impose will by the primary government, or (b) the possibility that the component unit will provide a financial benefit to, or impose a financial burden on, the primary government; or (2) Fiscal dependency on the primary government. Financial benefit or financial burden is created if any one of the following relationships exists: (1) The primary government is legally entitled to or has access to the component unit s resources. (2) The primary government is legally required or has assumed the obligation to finance the deficits of, provide support to, the component unit. (3) The primary government is obligated in some manner for the other component unit s debt. Based upon the application criteria, no component units have been included within the reporting entity. The Police Pension Employees Retirement System (PPERS) is established for the Village s police employees. The Village and the PPERS participants are obligated to fund all PPERS costs based upon actuarial valuations. The State of Illinois is authorized to establish benefit levels and the Village is authorized to approve the actuarial assumptions used in the determination of contribution levels. Although it possesses many characteristics of a legally separate government, PPERS is reported as if it were part of the primary government because its sole purpose is to finance and administer the pensions of the Village s police employees and because of the fiduciary nature of such activities. PPERS is reported as a pension trust fund. Complete financial statements may be obtained at the entity s administrative offices: Police Pension Board, One Village Circle, Willow Springs, Illinois

103 Notes to Basic Financial Statements Note 1. (a) Summary of Significant Accounting Policies (Continued) Financial Reporting Entity (Continued) The Firefighters Pension Employees Retirement System (FPERS) is established for the Village s firefighters. The Village and the FPERS participants are obligated to fund all FPERS costs based upon actuarial valuations. The State of Illinois is authorized to establish benefit levels and the Village is authorized to approve the actuarial assumptions used in the determination of contribution levels. Although it possesses many of the characteristics of a legally separate government, FPERS is reported as if it were part of the primary government because its sole purpose is to finance and administer the pensions of the Village s firefighters because of the fiduciary nature of such activities. FPERS is reported as a pension trust fund. No separate annual financial report is issued for the FPERS. (b) Government-Wide and Fund Financial Statements Government-Wide Financial Statements: The government-wide Statement of Net Position and Statement of Activities report the overall financial activity of the Village. Eliminations have been made to minimize the double-counting of internal activities of the Village. The financial activities of the Village consist of governmental activities, which are primarily supported by taxes and intergovernmental revenues, and business-type activities, which rely to a significant extent on fees and charges for services. The Statement of Net Position presents the Village s non-fiduciary assets and liabilities with the difference reported in three categories: Net investment in capital assets consists of capital assets, net of accumulated depreciation and reduced by outstanding balances for bonds and other debt that are attributable to the acquisition, construction, or improvement of those assets. Restricted net position, if applicable, result when constraints placed on net position use are either externally imposed by creditors, grantors, contributors, and the like, or imposed by law through constitutional provisions or enabling legislation. Unrestricted net position consist of net position that do not meet the criteria of the two preceding categories. When both restricted and unrestricted resources are available for use, it is generally the Village s policy to use restricted resources first to finance qualifying activities, then unrestricted resources as they are needed. The Statement of Activities demonstrates the degree to which the direct expenses of a given function (i.e. general government, public safety, etc.) are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. Program revenues include (a) charges paid by the recipients of goods or services offered by the programs (including fines and fees), and (b) grants and contributions that are restricted to meeting the operational requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. 22

104 Notes to Basic Financial Statements Note 1. (b) Summary of Significant Accounting Policies (Continued) Government-Wide and Fund Financial Statements (Continued) Fiduciary funds are excluded from the government-wide financial statements. Fund Financial Statements: Separate financial statements are provided for governmental funds, proprietary funds and fiduciary (agency) funds, even though the latter are excluded from the governmentwide financial statements. The fund financial statements provide information about the Village s funds. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. All remaining governmental funds are aggregated and reported as nonmajor governmental funds. The Village reports the following major governmental funds: General Fund: accounts for the Village s primary operating activities. It is used to account for all financial resources not accounted for in another fund. TIF Fund: is a capital projects fund for the Tax Increment Financing District (TIF). It accounts for all financial resources of the TIF, except those required to be accounted for in the TIF Bond Fund. TIF Bond Fund: accounts for the accumulation of monies for payment of bonds associated with the Village s Tax Increment Financing District. Police Seizure Fund: accounts for the accumulation of monies associated with seizure activities of the police department. Debt Service Fund: accounts for the accumulation of monies for payment of bonds associated with the governmental bonds. The Village reports the following major enterprise fund: Sewer Fund: accounts for activities of the Village s sewer system. Additionally, the Village administers fiduciary funds for assets held by the Village in a fiduciary capacity on behalf of certain public safety employees and agency funds, which account for assets held as custodian or agent for others. (c) Measurement Focus and Basis of Accounting and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flow takes place. Nonexchange transactions, in which the Village gives (or receives) value without directly receiving (or giving) equal value in exchange, include various taxes, State shared revenues and various State, Federal and local grants. On an accrual basis, revenues from taxes are recognized when the Village has a legal claim to the resources. Grants, entitlements, State shared revenues and similar items are recognized in the fiscal year in which all eligibility requirements imposed by the provider have been met. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Village considers revenues to be available if they are collected within approximately 60 days of the end of the current fiscal year. 23

105 Notes to Basic Financial Statements Note 1. (c) Summary of Significant Accounting Policies (Continued) Measurement Focus and Basis of Accounting Financial Statement Presentation (Continued) Significant revenue sources which are susceptible to accrual include property taxes, other taxes, grants, charges for services, and interest. All other revenue sources are considered to be measurable and available only when cash is received. Expenditures generally are recorded when the liability is incurred, as under accrual accounting. However, compensated absences are recorded only when payment is due (upon employee retirement or termination). General capital asset acquisitions are reported as expenditures in governmental funds. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services in connection with the proprietary fund s principal ongoing operations. (d) Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position or Fund Balances 1. Cash and Cash Equivalents The Village considers cash and cash equivalents to be all cash on hand, demand deposits, time deposits and all highly liquid investments with an original maturity of three months or less when purchased. 2. Investments Investments are generally reported at fair value. Fair value is based on quoted market prices. Short-term investments are reported at cost, which approximates fair value. 3. Interfund Receivables, Payables and Activity The Village has the following types of transactions between funds: Loans amounts provided with a requirement for repayment. Interfund loans are reported as due from other funds in lender funds and due to other funds in borrower funds for short-term borrowings and advances to other funds in lender funds and advances from other funds in borrower funds for long-term borrowings. Amounts are reported as internal balances in the government-wide statement of net position. Reimbursements repayments from the funds responsible for particular expenditures or expenses to the funds that initially paid for them. Reimbursements are reported as expenditures in the reimbursing fund and as a reduction of expenditures in the reimbursed fund. Transfers flows of assets (such as cash or goods) without equivalent flows of assets in return and without a requirement for repayment. In governmental funds, transfers are reported as other financing uses in the funds making transfers and as other financing sources in the funds receiving transfers. In proprietary funds, transfers in/out are reported as a separate category after non-operating revenues and expenses. 24

106 Notes to Basic Financial Statements Note 1. (d) Summary of Significant Accounting Policies (Continued) Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position or Fund Balances (Continued) 4. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. 5. Capital Assets Capital assets, which include buildings, equipment, infrastructure, and building improvements are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined as assets with an initial cost of more than $1,000 and an estimated useful life in excess of one year. All capital assets are valued at historical cost, or estimated historical cost if actual amounts are unavailable. Donated capital assets are recorded at their estimated fair value at the date of donation. Additions to and replacements of capital assets of business-type activities are recorded at original cost, which includes material, labor, overhead, and an allowance for the cost of funds used during construction when significant. For tax-exempt debt, the amount of interest capitalized equals the interest expense incurred during construction netted against any interest revenue from temporary investment of borrowed fund proceeds. No interest was capitalized during the current year. The cost of renewals and betterments relating to retirement units is added to plant accounts. The cost of property replaced, retired or otherwise disposed of, is deducted from plant accounts and, generally, together with removal costs less salvage, is charged to accumulated depreciation. Depreciation of all exhaustible capital assets is recorded as an allocated expense in the statement of activities, with accumulated depreciation reflected in the statement of net position. Depreciation is provided over the assets estimated useful lives using the straight-line method of depreciation. The range of estimated useful lives by type of asset is as follows: Buildings Building improvements Equipment Infrastructure 75 years 20 years 5-20 years years In the fund financial statements, capital assets used in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. Capital assets used in proprietary fund operations are accounted for the same way as in the government-wide statements. The Village of Willow Springs does not maintain detailed records of capital assets purchased prior to Therefore, the historical cost, accumulated depreciation, and depreciation expense of the capital assets purchased prior to 2009 are estimated by management for the governmental and business-type activities. 25

107 Notes to Basic Financial Statements Note 1. (d) Summary of Significant Accounting Policies (Continued) Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position or Fund Balances (Continued) 6. Deferred Inflows or Deferred Outflows of Resources and Unearned Revenue Deferred inflows of resources are the acquisition of net position or fund balance that is applicable to future reporting periods. Property taxes that are received or recorded as receivables prior to the period the levy is intended to finance are recorded as deferred inflows of resources on both the fund financial statements and government-wide financial statements. Potential grant revenue is recorded as deferred inflows of resources on the fund financial statements when it has not yet met both the measurable and available criteria for recognition in the current period. Deferred outflows of resources are the consumption of net position that is applicable to reporting periods. The net difference between projected and actual earnings on pension plan investments, changes in proportion and differences between employer contributions and proportionate share of contributions, as well as pension payments made subsequent to the pension liability measurement date are reported as deferred outflows or inflows of resources on the government-wide financial statements. See Note 8 for pension related disclosures. Unearned revenues arise when resources are received by the Village before it has a legal claim to them, In subsequent periods, when revenue recognition criteria are met or when the Village has a legal claim to the resources, the liability for unearned revenue is removed from the financial statements and revenue is recognized. 7. Compensated Absences Under terms of employment, employees are granted sick leave and vacations in varying amounts. Only benefits considered to be vested are disclosed in these statements. Employees earn a specified amount of vacation and sick leave each year in January. Vacations must be taken in the calendar year following the year in which earned. Sick leave may be accumulated for future use, but employees are not compensated for unused sick leave upon termination. All vested vacation and sick leave pay is accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements, and are payable with expendable resources. 8. Long-Term Obligations In the government-wide financial statements and proprietary fund financial statements, long-term debt and other long-term obligations, including compensated absences, are reported as liabilities in the applicable governmental or business-type activities and proprietary fund Statement of Net Position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. Deferred losses on refunding are amortized over the life of the bonds and are reported as deferred outflows of resources. Debt issuance costs are reported as expenses in the period incurred. In the fund financial statements, governmental funds recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Debt service funds are specifically established to account for and service the long-term obligations for the governmental funds debt. Enterprise funds individually account for and service the applicable debt that benefits those funds. Long-term debt is recognized as a liability in a governmental fund when due, or when resources have been accumulated for payment early in the following year. 26

108 Notes to Basic Financial Statements Note 1. (d) Summary of Significant Accounting Policies (Continued) Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position or Fund Balances (Continued) 9. Fund Balances Within the governmental fund types, the Village s fund balances are reported in one of the following classifications: Nonspendable includes amounts that cannot be spent because they are either a) not in spendable form; or b) legally or contractually required to be maintained intact. Restricted includes amounts that are restricted to specific purposes, that is, when constraints placed on the use of resources are either: a) externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments; or b) imposed by law through constitutional provisions or enabling legislation. Committed includes amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the Village s highest level of decision-making authority. Committed amounts cannot be used for any other purpose unless the Village removes or changes the specified use by taking the same type of action it employed to previously commit those amounts. The Village s highest level of decision-making authority rests with the Village s Board of Trustees. The Village passes formal resolutions to commit their fund balances. Assigned Includes amounts that are constrained by the Village s intent to be used for specific purposes, but that are neither restricted nor committed. Intent is expressed by: a) the Village s Board of Trustees itself; or b) a body or official to which the Board of Trustees has delegated the authority to assign amounts to be used for specific purposes. The Village s Board of Trustees has authorized management to assign amounts for specific purpose within the General Fund. Within the other governmental fund types (special revenue, debt service, capital projects) resources are assigned in accordance with the established fund purpose and approved budget/appropriation. Residual fund balances in these fund types that are not restricted or committed are reported as assigned. Within these same funds, a residual deficit, if any, is reported as unassigned. At April 30, 2016, the Village has no assigned fund balances. Unassigned includes the residual fund balance that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the General Fund. It is the Village s policy for the General Fund to consider restricted resources to have been spent first when an expenditure is incurred for which both restricted and unrestricted (i.e. committed, assigned or unassigned) fund balances are available, followed by committed and then assigned fund balances. Unassigned amounts are used only after the other resources have been used. For all other governmental funds, it is the Village s policy to consider unrestricted resources (i.e. committed, assigned) to have been spent first, followed by restricted resources. 27

109 Notes to Basic Financial Statements Note 1. Summary of Significant Accounting Policies (Continued) (d) Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position or Fund Balances (Continued) 9. Fund Balances (Continued) At April 30, 2016, the Village s fund balance restrictions were for the following purposes: TIF Police Debt Nonmajor General TIF Bond Seizure Service Governmental Fund Fund Fund Fund Fund Funds Total Nonspendable: Prepaid Items $ 35,293 $ - $ - $ - $ - $ - $ 35,293 Restricted: Pension 80, ,670 Road Improvements , ,940 Motor Fuel Tax ,845 74, Services ,021 23,021 Police Safety ,022, ,022,745 Capital Projects , ,036 Debt Service , ,190 Community Development - 219, ,181 80, ,181-1,022, ,190 1,072,842 2,945,628 Committed: Debt Service - - 1,213, ,213,764 Capital Projects , , ,213, ,707 1,625,471 Unassigned (927,681) (138,428) (1,066,109) Total Fund Balances $ (811,718) $ 219,181 $ 1,213,764 $ 1,022,745 $ 550,190 $ 1,346,121 $ 3,540,283 Pursuant to Ordinances , , , , and , the Village has committed $1,213,764 in the TIF Bond Fund for debt service, and $411,707 in the Infrastructure Capital Improvements Fund for capital projects. 28

110 Notes to Basic Financial Statements Note 1. (d) Summary of Significant Accounting Policies (Continued) Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position or Fund Balances (Continued) 10. Accounting Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, deferred outflows, liabilities, and deferred inflows and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenditures/expenses during the period. Actual results could differ from these estimates. 11. Reclassifications and Eliminations In the process of aggregating data for the Government-Wide Statements, some amounts reported as interfund activity and/or interfund balances in the Fund Financial Statements are eliminated or reclassified. 12. Restatement The Governmental Accounting Standards Board (GASB) has issued Statement No. 68, Accounting and Financial Reporting for Pensions, and Statement No. 71, Pension Transition for Contributions Made Subsequent to Measurement Date An Amendment of GASB Statement No. 68 which was adopted by the Village for the year ended April 30, GASB 68 improves accounting and financial reporting by state and local governments for pensions. This statement replaces the requirements of Statement No. 27, Accounting for Pensions by State and Local Governmental Employers, as well as the requirements of Statement No. 50, Pension Disclosures, as they are related to pensions that are provided through pension plans administered as trusts or equivalent arrangements that meet certain criteria. GASB 71 eliminates the source of a potential significant understatement of restated beginning net position and expense in the first year of implementation of GASB 68. The restatement is to record the effect of the net pension liability, deferred inflows of resources and deferred outflows of resources. The effect of the restatement on net position as of May 1, 2015 is shown below: Governmental Business-Type Activities Activities Sewer Fund Net position, May 1, 2015 $ (7,817,161) $ 2,944,493 $ 2,719,297 Restatement amount related to the implementation of GASB 68 and 71 (7,853,450) 48,220 48,220 Net position, as restated, May 1, 2015 $ (15,670,611) $ 2,992,713 $ 2,767,517 The restatement of the beginning net position adjusts the beginning deferred outflows of resources for pension contributions made subsequent to the measurement date of the beginning net pension liability. Restatement of the beginning balances for other deferred outflows (inflows) of resources related to pensions was not done because it was not practical to determine all such amounts. 29

111 Notes to Basic Financial Statements Note 2. Cash and Investments Cash and investments are held separately and in pools by several Village funds. The Village maintains various cash and investment pools that are available for use by all funds. Income from pooled investments is allocated to the funds based on their proportional share of their investment balance. The deposits and investments of the Police and Fire Pension Funds (Pension Funds) are held separately. The Village s investments are made in accordance with the Public Funds Investment Act (30 ILCS 235/1) (the Act) and the Village s investment policy. The Police and Firefighters Pension Funds investments are made in accordance with the Illinois Pension Code (40 ILCS 5/ to ) and each respective pension funds investment policy. The Village is authorized to invest in obligations of the U.S. Treasury and U.S. agencies, obligations of states and their political subdivisions, repurchase agreements (under certain statutory restrictions), commercial paper rated within the three highest classifications by at least two standard rating agencies, the Illinois Funds and the Illinois Metropolitan Investment Fund. The Police and Firefighters Pension Funds investments are made in accordance with the Illinois Pension Code (40 ILCS 5/ to ) and each respective pension funds investment policy. Deposits Custodial Credit Risk - Deposits Custodial credit risk is the risk that in the event of a financial institution failure, the Village s deposits may not be returned. The Village s investment policy requires that deposits that exceed the amount insured by FDIC insurance protection be collateralized. As of April 30, 2016, the carrying amount of the Village s deposits was $4,365,156, with bank balances totaling $4,818,521 all of which are fully insured and collateralized. The Village also had $2,176 in petty cash on hand at April 30, As of April 30, 2016, the Village had $866,878 with Illinois Funds. The Illinois Funds Investment Pool is not registered with the SEC. The Pool is sponsored by the State of Illinois, in accordance with State law. The fair value of the position in the Pool is the same as the value of the Pool shares. 30

112 Notes to Basic Financial Statements Note 2. Investments Cash and Investments (Continued) As of April 30, 2016, the Village had the following investments and maturities all of which were held by the Fiduciary Funds: Investment Maturities (in Years) Fair Less Greater Not Investment Type Value Than than 10 Applicable * Fiduciary Activities: Police Pension Fund: Money Market Mutual Funds $ 434,818 $ - $ - $ - $ - $ 434,818 State and Local Securities 104,678-78,499 26, U.S. Treasury Notes 1,192-1, U.S. Agencies - GNMA U.S. Agencies - FFCB 189, ,600 55, U.S. Agencies - FHLB 224,979 71,874 53,694 99, U.S. Agencies - FHLMC 15,623 15, Corporate Bonds 405, , , Equity Mutual Funds 125, ,983 Total Police Pension Fund 1,502,993 87, , , ,801 Fire Pension Fund: Money Market Mutual Funds 44, ,688 State and Local Securities 16,454-16, U.S. Agencies - FHLB 32,518-32, U.S. Agencies - FFCB 48,263-48, Corporate Bonds 80,518-48,262 32, Mutual Funds - Equity 23, ,316 Commodities 2, ,264 Total Fire Pension Fund 248, ,497 32,256-70,268 Total Fiduciary Activities $ 1,751,014 $ 87,497 $ 658,602 $ 373,846 $ - $ 631,069 * Not subject to interest rate risk. Interest Rate Risk - Interest rate risk is the risk that the fair value of investments will decrease as a result of an increase in interest rates. The Village s investment policies do not specifically limit the length of maturity of investments as a means of managing its exposure to fair value losses from increasing interest rates. Custodial Credit Risk - Custodial credit risk is the risk that, in the event of the failure of the counterparty, the Village will not be able to recover the value of its investments or collateral securities that are in the possession of a third party. The investment policies for the Village and the Pension Funds require investment securities be held by an authorized custodial bank pursuant to a written custodial agreement. As of April 30, 2016, the Village does not have any investments exposed to custodial credit risk. Credit Risk State statutes authorize the Village to invest in obligations of the U.S. Treasury and U.S. agencies, obligations of states and their political subdivisions, repurchase agreements (under certain statutory restrictions), commercial paper rated within the three highest classifications by at least two standard rating services, the Illinois Funds and the Illinois Metropolitan Investment Fund. Pension funds may invest investments as allowed by Illinois Compiled Statutes. The Village s, Police Pension and Firefighters Pension investment policies do not address credit risk. As of April 30, 2016, investments in Illinois Funds were rated AAA by Standard and Poor s. 31

113 Notes to Basic Financial Statements Note 2. Cash and Investments (Continued) The Police Pension Fund s Investments in securities of State and Local Obligations were all rated AA or better, U.S. Government Agencies were all rated AAA, and Corporate Bonds were all rated BBB or better by Standard and Poor s or Moody s Investor Services, or were small issues that were unrated or underrated. Unrated (N/A) and underrated investments are listed in the following table: Standard and Moody's Investor Investment Par Value Interest Rate Maturity Date Poor's Services North Barington, IL Municipal Bond $ 10, % February 1, 2019 N/A A1 The Fire Pension Fund s investments in U.S. Agencies were rated AA+ by Standard and Poor s and AAA by Moody s Investor Services. Its investments in Corporate Bonds were rated A1 ($10,908), A3 ($37,610) and Baa1 ($32,000) by Moody s Investor Services. The investment in State and Local Securities ($16,454) was rated A1 by Moody s Investor Services. Concentration of Credit Risk - Concentration of credit risk is the Village s risk when more than 5 percent of diversified investments to eliminate the risk of loss resulting in over concentration in a specific issuer or class of securities. The diversification can be by type of investment, number or institutions invested in, and length of maturity. More than 5 percent of the Fire Pension Fund investments are within State and Local Securities, FHLBs, FFCBs and Corporate Bonds. The State and Local Securities, FHLB, FFCB, Corporate Bond investments over 5% are 6.6%, 8.9%, 19.5%, and 18.2%, respectively, of the Fund s total investments. The Police Pension Fund does not have any individual investments greater than 5 percent of total investments. Foreign Currency Risk - Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of an investment or deposit. As of April 30, 2016, neither the Village nor Pension Funds held any funds subject to foreign currency risk. A summary of cash and investments as of April 30, 2016, is as follows: Fiduciary Activities Governmental Police Firefighters' and Business- Pension Pension Agency type Activities Fund Fund Fund Total Petty Cash $ 2,176 $ - $ - $ - $ 2,176 Demand Deposits 4,333,406 4,550-27,200 4,365,156 Illinois Funds 866, ,878 Money Market Mutual Funds - 434,818 44, ,506 Corporate Bonds 405,664 80, ,182 State and Local Securities - 104,678 16, ,132 U.S. Government Agencies - 431,850 80, ,631 Equity Mutual Funds - 125,983 23, ,299 Commodities - - 2,264-2,264 Total $ 5,202,460 $ 1,507,543 $ 248,021 $ 27,200 $ 6,985,224 32

114 Notes to Basic Financial Statements Note 3. Property Taxes The Village annually establishes a legal right to the property tax assessments upon the enactment of a tax levy ordinance by the Village Board. These tax assessments are levied in December and attach as an enforceable lien on the previous January 1. Tax bills are prepared by the County and issued on or about February 1 and July 1, and are payable in two installments which become due on or about March 1 and August 1. The County collects such taxes and periodically remits them to the Village. A reduction for collection losses based on historical collection experience has been provided to reduce the taxes receivable to the estimated amount to be collected. The Village recognizes one-half of the levy in the current fiscal year as revenue with the second half to be recognized the following fiscal year. Accordingly, the second half amount is reflected as deferred revenue this year. That portion of the property taxes receivable which is not expected to be collected within sixty (60) days after the year-end is not considered available to pay current liabilities and is, therefore, shown as deferred revenue in the governmental fund financial statements. Note 4. Capital Assets Capital asset activity for the year ended April 30, 2016, was as follows: Balance, Balance, May 1, 2015 Additions Deletions April 30, 2016 Governmental Activities Capital assets not being depreciated: Land $ 511,603 $ - $ - $ 511,603 Total capital assets not being depreciated 511, ,603 Capital assets being depreciated: Buildings 4,642, ,642,954 Building improvements 2,836, ,836,215 Equipment 6,428, ,634-6,582,471 Infrastructure 2,131, ,760-2,445,055 16,039, ,394-16,506,695 Less accumulated depreciation for: Buildings 967,722 61,906-1,029,628 Building improvements 2,707,969 11,951-2,719,920 Equipment 4,796, ,931-5,143,457 Infrastructure 162,144 48, ,383 8,634, ,027-9,103,388 Total capital assets being depreciated, net 7,404,940 (1,633) - 7,403,307 Governmental activities capital assets, net $ 7,916,543 $ (1,633) $ - $ 7,914,910 Depreciation expense was charged to functions as follows: Governmental activities General government $ 121,407 Public safety 261,899 Highways and streets 17,032 Municipal building 1,537 Refuse 67,152 Total depreciation expense - governmental activities $ 469,027 33

115 Notes to Basic Financial Statements Note 4. Capital Assets (Continued) Balance, Balance, May 1, 2015 Additions Deletions April 30, 2016 Business-type Activities Capital assets being depreciated: Equipment $ 243,107 $ - $ 565 $ 242,542 Furniture 2, ,598 Infrastructure 2,950,095 1,014,521-3,964,616 Total capital assets being depreciated 3,195,800 1,014, ,209,756 Less accumulated depreciation for: Equipment 189,763 11, ,021 Furniture 2, ,598 Infrastructure 914,123 82, ,921 1,106,484 94,056-1,200,540 Total capital assets being depreciated, net 2,089, , ,009,216 Business-type activities capital assets, net $ 2,089,316 $ 920,465 $ 565 $ 3,009,216 Depreciation expense was charged to functions as follows: Business-type Activities Sewer $ 94,056 34

116 Notes to Basic Financial Statements Note 5. Other Financial Disclosures (FFS Level Only) (a) Due To/From Other Funds Individual interfund balances for the Village at April 30, 2016, are shown as follows: Due From Fund Other Funds Major Governmental Fund: General Fund: TIF Fund $ 104,061 Police Seizure Fund 14,063 Fiduciary Fund 631 Nonmajor Governmental Funds 86,802 Nonmajor Business-Type Fund 46,855 Debt Service Fund, Nonmajor Governmental Funds 34,351 Major Business-Type Fund, Sewer Fund, General Fund 131,964 Nonmajor Government Funds: General Fund 699,621 Other Nonmajor Governmental Funds 51,626 Fiduciary Funds: General Fund 55,429 Total $ 1,225,403 35

117 Notes to Basic Financial Statements Note 5. Other Financial Disclosures (FFS Level Only) (Continued) Due To Fund Other Funds Major Governmental Fund: General Fund, Nonmajor Governmental Funds $ 699,621 Sewer Fund 131,964 Fiduciary Funds 55,429 TIF Fund General Fund 104,061 Police Seizure Fund General Fund 14,063 Nonmajor Governmental Funds: General Fund 86,802 Debt Service Fund 34,351 Other Nonmajor Governmental Funds 51,626 Nonmajor Business-Type Fund General Fund 46,855 Fiduciary Funds General Fund 631 Total $ 1,225,403 Interfund receivables and payables are used as loans to fund short-term cash needs of individual funds. It is not anticipated that these loans will be paid in the next fiscal year. 36

118 Notes to Basic Financial Statements Note 5. Other Financial Disclosures (FFS Level Only) (Continued) (b) Transfers In/Out The interfund transfers in and out for the year ended April 30, 2016, are as follows: Fund Transfers In Major Governmental Funds: TIF Bond Fund, TIF Fund $ 1,001,429 Debt Service Fund 468,327 Debt Service Fund: General Fund 221,440 Nonmajor Governmental Funds 119,513 Sewer Fund 112,100 Nonmajor Governmental Funds: Other Nonmajor Governmental Funds 665 Total $ 1,923,474 Fund Transfers Out Major Governmental Funds: General Fund, Debt Service Fund $ 221,440 TIF Fund, TIF Bond Fund 1,001,429 Debt Service Fund, TIF Bond Fund 468,327 Nonmajor Governmental Funds: Debt Service Fund 119,513 Other Nonmajor Governmental Funds 665 Major Business-Type Fund, Sewer Fund Debt Service Fund 112,100 Total $ 1,923,474 Transfers are used to (a) move receipts from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them; (b) move receipts restricted to debt service from the fund collecting the receipts to the debt service fund; and (c) use unrestricted revenues collected in the General Fund to finance various programs accounted for in accordance with budgetary authorizations. (c) Deficit Fund Balance As of April 30, 2016, the following funds had deficit fund balances: Fund Amount General Fund $ 811,718 Equipment Capital Improvements 138,428 37

119 Notes to Basic Financial Statements Note 5. Other Financial Disclosures (FFS Level Only) (Continued) Management s plan to eliminate the deficit fund balances in future years is highly dependent on the Village s ability to implement cost saving strategies which include, among other things, consolidation of shared services and continued focus on reducing expenditures. Note 6. Note Payable In a previous year, the Village issued a note payable to fund current operations. A note was issued in the amount of $702,915 at the rate of 5.75% with a maturity date of January 15, Activity for the year ended April 30, 2016, was as follows: Beginning Ending Due Within Balance Borrowing Payments Balance One Year Note payable $ 623,611 $ - $ 23,538 $ 600,073 $ 600,073 Note 7. Long-Term Obligations Long-term obligations activity for the year ended April 30, 2016, was as follows: Balance Balance Due Within May 1, 2015 Additions Reductions April 30, 2016 One Year Governmental activities Bonds and notes payable General obligation debt $ 4,109,815 $ 99,715 $ 429,815 $ 3,779,715 $ 444,715 Tax increment financing bonds 9,260, ,000 8,370, ,000 Debt certificates 645,000-80, ,000 85,000 Junior lien bonds 3,573, ,573,880 - Add (subtract) for (discounts) premiums 402,634-68, ,484 - Total bond and notes payable 17,991,329 99,715 1,467,965 16,623,079 1,489,715 Other liabilities Vested compensated absences* 160, , , , ,725 Net pension liability* 10,892,836 1,317, ,322 11,993,620 - Other postemployment benefits* 63,982 21,106 19,551 65,537 - Total other liabilities 11,117,317 1,506, ,372 12,227, ,725 Total governmental activities $ 29,108,646 $ 1,606,652 $ 1,864,337 $ 28,850,961 $ 1,658,440 *The obligation will be repaid by the General Fund. On December 2, 2015, the Village issued $99,715 in general obligation debt, Series 2015, with an interest rate of 2.25% to finance certain capital improvements. The Village s legal debt margin of $643,277 is based on 8.625% of the 2015 equalized assessed valuation of $154,875,270 less general obligation debt of $3,779,715, tax increment financial bonds of $8,370,000 and debt certificates of $565,

120 Notes to Basic Financial Statements Note 7. Long-Term Obligations (Continued) General Obligation Debt All general obligation notes and bonds payable are backed up by the full faith and credit of the Village. Notes and bonds in the governmental funds will be retired by future property tax levies or tax increments accumulated by the debt service fund. Date of Final Interest Original Balance, Issue Maturity Rates Indebtedness April 30, 2016 Series 2008A 09/09/ /01/ %-4.85% $ 1,520,000 $ 1,120,000 Series 2008C 09/09/ /01/ %-4.45% 1,220,000 1,120,000 Series 2009A 12/17/ /15/ %-4.45% 1,495, ,000 Series 2012A 03/08/ /01/ %-5.25% 1,100,000 1,010,000 Series /02/ /15/ % 99,715 99,715 Total $ 3,779,715 Debt service requirements to maturity are as follows: Governmental Activities Year Ending April 30, Principal General Obligation Debt Interest Total 2017 $ 444,715 $ 180,052 $ 624, , , , , , , , , , , , , ,025, ,149 1,338, , , , ,000 4,725 94,725 $ 3,779,715 $ 1,114,019 $ 4,893,734 The 2008A, 2008C, and 2009A bonds are to be paid from sales taxes, utility taxes, and motor fuel taxes. These pledges will remain until all bonds are paid. The amount of the pledges remaining as of April 30, 2016 is as follows: Pledge Commitment Percentage of Debt Issue Pledged Revenue Source Remaining End Date Revenue Pledged 2008A Sales Tax $ 1,519,486 12/15/ % 2008C Utility and Motor Fuel Taxes 1,335,804 12/15/ % 2009A Utility and Motor Fuel Taxes 456,000 12/15/ % A comparison of the pledged revenues collected and the principal and interest expenditure for fiscal year 2016 is as follows: Pledged Principal and Debt Issue Pledged Revenue Source Revenue Interest Retired 2008A Sales Tax $ 205,559 $ 119, C Utility and Motor Fuel Taxes 534,507 69, A Utility and Motor Fuel Taxes 534, ,200 39

121 Notes to Basic Financial Statements Note 7. Long-Term Obligations (Continued) Tax Increment Financing Bonds Tax increment financing bonds are payable from incremental taxes derived from a separately created tax increment financing district. The tax increment financing bonds are backed by the full faith and credit of the Village. Tax increment financing bonds at April 30, 2016, consist of the following: Date of Final Interest Original Balance, Issue Maturity Rates Indebtedness April 30, 2016 Series 2004B 12/15/ /15/ %-4.15% $ 2,585,000 $ 1,165,000 Series /15/ /15/ %-6.50% 5,000,000 3,855,000 Series 2009B 12/17/ /15/ %-4.00% 2,970,000 2,030,000 Series 2012B 03/08/ /15/ %-3.25% 1,765,000 1,320,000 Total Tax Increment Financing Bonds $ 8,370,000 Debt service requirements to maturity are as follows: Governmental Activities Year Ending Tax Increment Financing Bonds April 30, Principal Interest Total 2017 $ 960,000 $ 417,495 $ 1,377, , ,456 1,369, ,135, ,356 1,462, ,165, ,241 1,440, ,275, ,638 1,494, ,840, ,719 3,217,719 $ 8,370,000 $ 1,991,905 $ 10,361,905 The 2004B, 2006, 2009B, and 2012B bonds are to be paid from incremental property tax revenue of the TIF Fund. These pledges will remain until all bonds are retired. The amount of the pledges remaining as of April 30, 2016, is as follows: Pledge Commitment Percentage of Debt Issue Pledged Revenue Source Remaining End Date Revenue Pledged 2004B Property Taxes $ 1,288,484 12/15/ % 2006 Property Taxes 5,239,500 12/15/ % 2009B Property Taxes 2,318,800 12/15/ % 2012B Property Taxes 1,515,121 12/15/ % 40

122 Notes to Basic Financial Statements Note 7. Long-Term Obligations (Continued) A comparison of the pledged revenues collected and the principal and interest expenditure for fiscal year 2016 is as follows: Pledged Principal and Debt Issue Pledged Revenue Source Revenue Interest Retired 2004B Property Taxes $ 560,020 $ 285, Property Taxes 560, , B Property Taxes 560, , B Property Taxes 560, ,875 Debt Certificates Debt certificates have been issued to provide funds for governmental activities. Debt certificates are direct obligations and pledge the full faith and credit of the Village. Debt certificates at April 30, 2016, consist of the following: Date of Final Interest Original Balance, Issue Maturity Rates Indebtedness April 30, 2016 Series /15/ /15/ %-4.80% $ 1,380,000 $ 565,000 Debt service requirements to maturity are as follows: Governmental Activities Year Ending April 30, Principal Debt Certificates Interest Total 2017 $ 85,000 $ 25,980 $ 110, ,000 22, , ,000 18, , ,000 14, , ,000 9, , ,000 5, ,040 Junior lien bonds at April 30, 2016, consist of the following: $ 565,000 $ 96,075 $ 661,075 Date of Final Interest Original Balance, Issue Maturity Rates Indebtedness April 30, /1/2006 N/A 7.25% $ 4,791,467 $ 3,573,880 41

123 Notes to Basic Financial Statements Note 7. Long-Term Obligations (Continued) The junior lien bonds are subordinated to all other tax revenue bonds. Principal and interest payments on the junior lien bonds will be made only to the extent that property taxes are available after the required payments on the senior lien bonds have been made and the debt service reserve requirement has been met. The amount of pledge remaining as of April 30, 2016, is as follows: Pledge Commitment Percentage of Debt Issue Pledged Revenue Source Remaining End Date Revenue Pledged 2006 Property Taxes $ 3,573,880 12/31/ % A comparison of the pledged revenue collected and the principal and interest expenditure for fiscal year 2016 is as follows: Pledged Principal and Debt Issue Pledged Revenue Source Revenue * Interest Retired 2006 Property Taxes $ - $ - * - The Village did not have any property taxes that exceeded the funding requirements for the non-junior lien bonds. Note 8. Employees Retirement System 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 single-employer pension plan; and the Firefighters Pension Plan which is a single-employer pension plan. Illinois Municipal Retirement Fund Plan Description. The Village participates in the Regular Plan and the Sheriff s Law Enforcement Personnel (SLEP) Plan. The Village s defined benefit pension plan for regular and SLEP employees provides retirement and disability benefits, post-retirement increases, and death benefits to plan members and beneficiaries. The Village s plan is managed by the Illinois Municipal Retirement Fund (IMRF), the administrator of an agent multi-employer public pension fund. A summary of IMRF s pension benefits is provided in the Benefits Provided section of this document. Details of all benefits are available from IMRF. Benefit provisions are established by statute and may only be changed by the General Assembly of the State of Illinois. IMRF issues a publicly available Comprehensive Annual Financial Report that includes financial statements, detailed information about the pension plan s fiduciary net position, and required supplementary information. The report is available for download at IMRF has two benefit plans. The vast majority of IMRF members participate in the Regular Plan. The Sheriff s Law Enforcement Personnel (SLEP) Plan is for sheriffs, deputy sheriffs, and selected police chiefs. Benefits Provided. Both IMRF benefit plans have two tiers. Employees hired before January 1, 2011, are eligible for Tier 1 benefits. Tier 1 employees are vested for pension benefits when they have at least eight years of qualifying service credit. Tier 1 employees who retire at age 55 (at reduced benefits) or after age 60 (at full benefits) with eight years of service are entitled to an annual retirement benefit, payable monthly for life, in an amount equal to 1-2/3% of the final rate of earnings for the first 15 years of service credit, plus 2% for each year of service credit after 15 years to a maximum of 75% of their final rate of earnings. Final rate of earnings is the highest total earnings during any consecutive 48 months within the last 10 years of service, divided by 48. Under Tier 1, the pension is increased by 3 percent of the original amount on January 1 every year after retirement. 42

124 Notes to Basic Financial Statements Note 8. Employees Retirement System (Continued) 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 employees who retire at age 62 (at reduced benefits) or after age 67 (at full benefits) with ten years of service are entitled to an annual retirement benefit, payable monthly for life, in an amount equal to 1-2/3% of the final rate of earnings for the first 15 years of service credit, plus 2% for each year of service credit after 15 years to a maximum of 75% of their final rate of earnings. Final rate of earnings is the highest total earnings during any 96 consecutive months within the last 10 years of service, divided by 96. Under Tier 2, the pension is increased on January 1 every year after retirement, upon reaching age 67, by the lesser of: 3% of the original pension amount, or 1/2 of the increase in the Consumer Price Index of the original pension amount. Employees Covered by Benefit Terms. As of December 31, 2015, the following employees were covered by the benefit terms: Regular Plan SLEP Plan Inactive Plan members or beneficiaries currently receiving benefits 10 1 Inactive Plan members entitled to but not yet receiving benefits 27 2 Active plan members 13 1 Total members 50 4 Contributions. As set by statute, the Village s Regular Plan Members and SLEP Plan Members are required to contribute 4.5% and 7.5%, respectively, of their annual covered salary. The statute requires employers to contribute the amount necessary, in addition to member contributions, to finance the retirement coverage of its own employees. For the Regular Plan Members, the Village s annual contribution rate for calendar years 2016 and 2015 were 5.07% and 5.39%, respectively. For the SLEP Plan Members, the Village s annual contribution rate for calendar years 2016 and 2015 were 13.35% and 13.69%, respectively. For the fiscal year ended April 30, 2016, the Village contributed $33,199 and $13,798 to the Regular Plan and SLEP Plan, respectively. The contributions for the year ended April 30, 2016 are reported in the financial statements as follows: Regular Plan SLEP Plan Total Governmental Activities $ 30,004 $ 13,798 $ 43,802 Business-Type Activities and Sewer Fund 3,195-3,195 Total $ 33,199 $ 13,798 $ 46,997 The Village also contributes for disability benefits, death benefits, and supplemental retirement benefits, all of which are pooled at the IMRF level. Contribution rates for disability and death benefits are set by IMRF s Board of Trustees, while the supplemental retirement benefits rate is set by statute. Net Pension Liability. The Village s net pension liability was measured as of December 31, The total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. 43

125 Notes to Basic Financial Statements Note 8. Employees Retirement System (Continued) Actuarial Assumptions. The following are the methods and assumptions used to determine the total pension liability for the Regular Plan and SLEP Plan at December 31, 2015: The Actuarial Cost Method used was Entry Age Normal. The Asset Valuation Method used was Market Value of Assets. The Inflation Rate was assumed to be 2.75%. Salary Increases were expected to be 3.75%to 14.50%, including inflation. The Investment Rate of Return was assumed to be 7.50%. Projected Retirement Age was from the Experience-based Table of Rates, specific to the type of eligibility condition, last updated for the 2014 valuation according to an experience study from years 2011 to For non-disabled retirees, an IMRF specific mortality table was used with fully generational projection scale MP-2014 (base year 2014). The IMRF specific rates were developed from the RP-2014 Blue Collar Health Annuitant Mortality Table with adjustments to match current IMRF experience. For Disabled Retirees, an IMRF-specific mortality table was used with fully generational projection scale MP-2014 (base year 2014). The IMRF-specific rates were developed from the RP-2014 Disabled Retirees Mortality Table, applying the same adjustments that were applied for non-disabled lives. For Active Members, an IMRF-specific mortality table was used with fully generational projection scale MP-2014 (base year 2014). The IMRF-specific rates were developed from the RP-2014 Employee Mortality Table with adjustments to match current IMRF experience. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense, and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return to the target asset allocation percentage and adding expected inflation. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: Portfolio Target Percentage Long-Term Expected Real Rate of Return Domestic Equity 38% 7.60% International Equity 17% 7.80% Fixed Income 27% 3.00% Real Estate 8% 6.15% Alternative Investments 9% 5.25% % Cash Equivalents 1% 2.25% Total 100% Single Discount Rate. A Single Discount Rate of 7.50% was used to measure the total pension liability for each plan. The projection of cash flow used to determine this Single Discount Rate assumed that the plan members contributions will be made at the current contribution rate, and that employer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. The Single Discount Rate reflects: 1. The long-term expected rate of return on pension plan investments (during the period in which the fiduciary net position is projected to be sufficient to pay benefits), and 44

126 Notes to Basic Financial Statements Note 8. Employees Retirement System (Continued) 2. The tax-exempt municipal bond rate based on an index of 20-year general obligation bonds with an average AA credit rating (which is published by the Federal Reserve) as of the measurement date (to the extent that the contributions for use with the long-term expected rate of return are not met). For the purpose of the most recent valuations, the expected rate of return on plan investments is 7.50%, the municipal bond rate is 3.57%, and the resulting single discount rate is 7.50%. IMRF Regular Plan Changes in the Net Pension Liability (Asset). The following table shows the components of the Village s annual pension liability and related plan fiduciary net position for the year ended April 30, 2016: Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (Asset) Balance at April 30, 2015 $ 3,983,214 $ 4,523,600 $ (540,386) Changes for the year: Service Cost 56,248-56,248 Interest on the total pension liability 292, ,544 Difference between expected and actual experiences of the total pension liability 15,967-15,967 Changes of assumptions Contributions - employer - 35,538 (35,538) Contributions - employee - 29,670 (29,670) Net investment income - 22,227 (22,227) Benefit payment, including refunds - of employee contributions (221,507) (221,507) - Other (net transfer) - (129,541) 129,541 Balance at December 31, April 30, 2016 $ 4,126,466 $ 4,259,987 $ (133,521) Sensitivity of the Net Pension Liability (Asset) to Changes in the Discount Rate. The following presents the plan s net pension liability (asset), calculated using a single discount rate of 7.50%, as well as what the plan s net pension liability (asset) would be if it were calculated using a single discount rate that is 1.0% lower or 1.0% higher: Current 1% Decrease Discount Rate 1% Increase 6.50% 7.50% 8.50% Net pension liability (asset) - Regular Plan $ 435,066 $ (133,521) $ (593,376) 45

127 Notes to Basic Financial Statements Note 8. Employees Retirement System (Continued) Pension Expense, Deferred Outflows of Resources, and Deferred Inflows or Resources Related to Pensions: For the year ended April 30, 2016, the Village recognized pension expense of $189,226 for the regular plan. At April 30, 2016, the Village reported deferred outflows of resources and deferred inflows of resources related to the IMRF regular plan pension liability from the following sources: Deferred Deferred Outflows of Inflows of Deferred Amounts Related to Pensions Resources Resources Difference between expected and actual experience $ 8,118 $ - Changes of assumptions - - Net difference between projected and actual earnings on investments 245,059 - Subtotal 253,177 - Contributions subsequent to the measurement date $ 8, ,938 $ - The Village reported $8,761 as deferred outflows of resources related to pensions resulting from employer contributions subsequent to the measurement date and will be recognized as a reduction of the net pension liability in the reporting year ended April 30, Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense in future periods as follows: Year Ended April 30: Net Deferred Ouflows of Resources 2017 $ 69, , , $ 61, ,177 46

128 Notes to Basic Financial Statements Note 8. IMRF SLEP Plan Employees Retirement System (Continued) Changes in the Net Pension Liability (Asset). The following table shows the components of the Village s annual pension liability and related plan fiduciary net position of the IMRF SLEP plan for the year ended April 30, 2016: Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (Asset) Balance at April 30, 2015 $ 215,226 $ 223,154 $ (7,928) Changes for the year: Service Cost 15,453-15,453 Interest on the total pension liability 16,721-16,721 Difference between expected and actual experiences of the total pension liability (19,605) - (19,605) Changes of assumptions Contributions - employer - 11,954 (11,954) Contributions - employee - 6,549 (6,549) Net investment income - 1,162 (1,162) Benefit payment, including refunds - of employee contributions Other (net transfer) - (1,970) 1,970 Balance at April 30, 2016 $ 227,795 $ 240,849 $ (13,054) Sensitivity of the Net Pension Liability (Asset) to Changes in the Discount Rate. The following presents the plan s net pension liability (asset), calculated using a single discount rate of 7.50%, as well as what the plan s net pension liability (asset) would be if it were calculated using a single discount rate that is 1.0% lower or 1.0% higher: Current 1% Decrease Discount Rate 1% Increase 6.50% 7.50% 8.50% Net pension liability/(asset) $ 13,212 $ (13,054) $ (34,899) Pension Expense, Deferred Outflows of Resources, and Deferred Inflows or Resources Related to Pensions: For the year ended April 30, 2016, the Village recognized pension expense (income) of $(1,926). At April 30, 2016, the Village reported deferred outflows of resources and deferred inflows of resources related to the IMRF SLEP pension liability from the following sources: Deferred Deferred Outflows of Inflows of Deferred Amounts Related to Pensions Resources Resources Difference between expected and actual experience $ - $ 4,202 Changes of assumptions - - Net difference between projected and actual earnings on investments 12,956 - Subtotal 12,956 4,202 Contributions subsequent to the measurement date 5,124 - $ 18,080 $ 4,202 47

129 Notes to Basic Financial Statements Note 8. Employees Retirement System (Continued) Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense in future periods as follows: Year Ended April 30: Net Deferred Ouflows of Resources 2017 $ (963) , , $ 3,239 8,754 The total net pension asset of $146,575 ($133,521 for IMRF Regular and $13,054 for IMRF SLEP) is reported on the financial statements as follows: Business-Type Activities/Sewer Fund $ 12,850 Governmental Activities 133,725 $ 146,575 The total deferred outflows of resources of $270,692 as of April 30, 2016 ($261,938 for IMRF Regular and $8,754 for IMRF SLEP) is reported in the financial statements a follows: Business-Type Activities/Sewer Fund $ 22,740 Governmental Activities 247,952 $ 270,692 Police Pension Fund Summary of Significant Accounting Policies Basis of Accounting: The financial statements for the Police Pension Fund are prepared using the accrual basis of accounting. Employee and employer contributions are recognized as revenues in the period in which employee services are performed. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. Administrative costs are financed through investment earnings. Stand-alone statements are issued for the defined benefit pension plan. 48

130 Notes to Basic Financial Statements Note 8. Employees Retirement System (Continued) Police Pension Fund (Continued) Plan Description Plan administration: The Police Pension Plan is a single-employer defined benefit pension plan that covers all sworn police personnel. The defined benefits and employee and minimum employer contribution levels are governed by Illinois Compiled Statutes (40 ILCS 513-l) and may be amended only by the Illinois legislature. The Village accounts for the Fund as a pension trust fund. The Fund 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 police emplovees. Plan Membership: At April 30, 2016, the Police Pension Plan membership consisted of: Membership Inactive Plan members or beneficiaries currently receiving benefits 11 Inactive Plan members entitled to but not yet receiving benefits 1 Active plan members 9 Total members 21 Benefits provided: The Police Pension Plan provides retirement benefits through two tiers as well as death and disability benefits. Covered employees hired before January 1, 2011 (Tier 1), attaining the age of 50 or more with 20 or more years of creditable service are entitled to receive an annual retirement benefit of 1/2 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% of such salary. Employees with at least eight years but less than 20 years of credited services 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% of the original pension and 3% compounded annually thereafter. Covered employees hired on or after January 1, 2011 (Tier 2), attaining the age of 55 or older with ten or more years of creditable service are entitled to receive an annual retirement benefit based on the average annual 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. This average annual salary is multiplied by 2.5% for each year of creditable service up to a maximum of 75% of such salary, to determine the initial annual retirement benefit. Police officer salary for the pension purposes is capped at $106,800 for the calendar year or 2011, plus the lesser of 1/2 of the annual change in the Consumer Price Index or 3%, compounded. Employees with at least ten years may retire at or after age 50 and receive a reduced benefit (i.e. 1/2% for each month under 55). The monthly benefit of a Tier 2 police officer shall be increased annually at age 60 on the January 1st after the police office retires, or the first anniversary of the pension starting date, whichever is later. Non-compounding increases occur annually, effective each January 1st thereafter. The increase is the lesser of 3% of 1/2 of the change in the Consumer Price Index for the proceeding calendar year. 49

131 Notes to Basic Financial Statements Note 8. Employees Retirement System (Continued) Police Pension Fund (Continued) Contributions: Covered employees are required to contribute 9.91% of their base salary to the plan. If an employee leaves covered employment with less than 20 years of service, accumulated employee contributions may be refunded without interest. Per state statute (40 ILCS 5/ ) an employee who meets certain criteria and leaves employment to participate in another Article 3 fund may request his contribution plus 6% compounded interest be transferred to the Article 3 fund for which he is currently a member. In addition to the employee s contribution plus interest, an equal amount which represents the employer s contribution is to be transferred. Participation in the Village s fund will terminate upon transfer. The Illinois Pension Code (40 ILCS 5/Art. 3) establishes the contribution requirements of the Village. The annual requirement is equal to (1) the normal cost of the pension fund for the year plus (2) an amount sufficient to bring the total assets of the pension fund up to 90% of the actuarial liabilities of the pension fund by April 30, Only the State legislature can amend the contribution requirements. For the year ended April 30, 2016, the statutory minimum which the Village was required to contribute was $603,565, or 91.89% of member payroll, to the Police Pension Fund. Investments Investment policy: The Pension Fund s investment policy in accordance with Illinois Compiled Statutes (ILCS) establishes the following target allocation across asset classes: Long-Term Expected Real Asset Class Target Rate of Return Fixed Income 90.00% 4.30% % Equities 10.00% 7.50% % Cash and Cash Equivalents 0.00% 0.00% The long-term expected rate of return on the Fund s investments of 5.0% was determined using an asset allocation study conducted by MB Wealth Management as of December 2014 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 the expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the Fund s target asset allocation as of April 30, 2016 are listed in the table above. Method Used to Value Investments: Investments are reported at fair value. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Investments that do not have an established market are reported at estimated fair value. 50

132 Notes to Basic Financial Statements Note 8. Employees Retirement System (Continued) Police Pension Fund (Continued) Significant investments: Information on significant investments is presented in Note 2 under Concentration of Credit Risk. Rate of return: For the year ended April 30, 2016, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was 1.74%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Net Pension Liability of the Village The components of the net pension liability of the Village at April 30, 2016, are as follows: Total pension liability $ 13,175,316 Plan fiduciary net position 1,517,421 Village's net pension liability $ 11,657,895 Plan fiduciary net position as a percentage of the total pension liability 11.52% The total pension liability was determined by an actuarial valuation as of April 30, 2016, using the following methods and actuarial assumptions, applied to all periods included in the measurement: Methods and Assumptions Valuation date April 30, 2016 Actuarial cost method Entry Age Normal Amortization method Level Percentage of Pay Long-Term Expected Rate of Return on Plan Assets 5.00% Discount Rate 3.92% Salary Increases 3.50% % Projected Increase in Total Payroll 3.25% Consumer Price Index (Urban) 2.50% Inflation 2.50% Actuarial assumptions: Mortality Table Lauterbach & Amen (L&A) 2016 Illinois Police Mortality Rates Retirement Rates L&A 2016 Illinois Police Retirement Rates Capped at 60 Disability Rates L&A 2016 Illinois Police Disability Rates Termination Rates L&A 2016 Illinois Police Termination Rates Percent Married 80% The actuarial assumptions used in the April 30, 2016 valuation were based on the results of an actuarial assumption study for the period including various municipal fiscal years ending December 2009-June The study was performed by Lauterbach and Amen LLP (L&A), which provides a variety of accounting and actuarial services to Police and Firefighter Pension Funds across the State of Illinois. 51

133 Notes to Basic Financial Statements Note 8. Employees Retirement System (Continued) Police Pension Fund (Continued) Discount rate: A Single Discount Rate of 3.92% was used to measure the total pension liability. The projection of cash flow used to determine this Single Discount Rate assumed that the plan members contributions will be made at the current contribution rate, and that employer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the Police Pension Plan s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members for the next 26 years, Therefore, the long-term expected rate of return on pension plan investments was applied only to those years and for the remaining years the municipal bond rate was used. For the purpose of the most recent valuation, the expected rate of return on the plan investments is 5.00%, the municipal bond rate is 3.32%, and the resulting single discount rate is 3.92%. Change in Net Pension Liability: The following table shows the components of the Village s annual pension liability and related plan fiduciary net position for the fiscal year ended April 30, 2016: Total Pension Plan Fiduciary Net Pension Liability Net Position Liability Balance at April 30, 2015 $ 11,868,159 $ 1,305,494 $ 10,562,665 Changes for the year: Service Cost 266, ,544 Interest on the total pension liability 457, ,658 Difference between expected and actual experiences of the total pension liability 283, ,964 Changes of assumptions 685, ,421 Contributions - employer - 580,539 (580,539) Contributions - employee - 52,412 (52,412) Net investment income - 21,690 (21,690) Benefit payment, including refunds of employee contributions (386,430) (386,430) - Other (net transfer) - (56,284) 56,284 Balance at April 30, 2016 $ 13,175,316 $ 1,517,421 $ 11,657,895 The actuarial assumptions for the years ended April 30, 2016 and 2015 were different. For April 30, 2016, the assumed rate on tax-exempt G.O. Bonds was changed from 3.62% to 3.32%. Additionally, the discount rate used in determination of the total pension liability was changed from 3.91% to 3.92%. Finally, changes to demographic assumptions for mortality rates, mortality improvement rates, retirement rates, disability rates, and termination rates were made based on a study of Police Officers and Police Pension Funds in Illinois. Sensitivity of the net pension liability to changes in the discount rate: The following presents the net pension liability of the Village, calculated using the discount rate of 3.92%, as well as what the Village s net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (2.92%) or 1-percentage-point higher (4.92%) than the current rate. Current 1% Decrease Discount Rate 1% Increase 2.92% 3.92% 4.92% Net pension liability $ 14,260,100 $ 11,657,895 $ 9,636,436 52

134 Notes to Basic Financial Statements Note 8. Employees Retirement System (Continued) Police Pension Fund (Continued) The schedule of changes in net pension liability, total pension liability and related ratios and investment returns and the schedule of contributions are presented as Required Supplementary Information (RSI) following the notes to the financial statements. Pension Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources Related to Pensions: For the year ended April 30, 2016, the Village recognized pension expense $893,677. At April 30, 2016, the Village reported deferred outflows or resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows of Resources Deferred amounts to be recognized in pension expense in future periods Differences between expected and actual experience 217,771 Deferred Inflows of Resources $ $ - Changes in assumptions 525,649 - Net difference between projected and actual earnings on pension plan investments 38,672 - Total deferred amounts related to pensions $ 782,092 $ - Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense in future periods as follows: Net Deferred Outflows of Year ending April: Resources 2017 $ 235, , , , $ 782,092 The schedule of changes in total pension liability, net pension liability and related ratios and investment returns and the schedule of contributions are presented as Required Supplementary Information (RSI) following the notes to the financial statements. Firefighters Pension Fund Summary of Significant Accounting Policies Basis of Accounting: The financial statements for the Firefighters Pension Fund are prepared using the accrual basis of accounting. Employee and employer contributions are recognized as revenues in the period in which employee services are performed. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. Administrative costs are financed through investment earnings. No stand-alone statements are issued for the defined benefit pension plan. 53

135 Notes to Basic Financial Statements Note 8. Employees Retirement System (Continued) Firefighters Pension Fund (Continued) Plan Description Plan administration: Firefighter-sworn personnel are covered by the Firefighters Pension Plan, which is a defined benefit single-employer pension plan. Although this is a single-employer pension plan, the defined benefits and employee and employer contribution levels are governed by Article 3 of the Illinois Pension Code and may be amended only by the Illinois legislature. The plan provides retirement benefits as well as death and disability benefits. The Village presents the plan as a pension trust fund. An actuarial valuation was performed as of April 30, 2016, and, accordingly, the most recent available information has been presented. Plan Membership: At April 30, 2016, the Firefighters Pension Plan membership consisted of: Membership Inactive Plan members or beneficiaries currently receiving benefits 1 Inactive Plan members entitled to but not yet receiving benefits - Active plan members - Total members 1 Benefits provided: The Illinois Pension Code (40 ILCS 5/Art. 3) is the authority under which pension benefit terms are established. The maximum salary cap is indexed for inflation thereafter. Covered employees hired before January 1, 2011 attaining the age of 50 or more 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, and 1% of such salary for each additional year of service over 30 years, to a maximum of 75% of such salary. Covered employees hired on or after January 1, 2011 attaining the age of 55 or more with 10 or more years of creditable service are entitled to receive an annual retirement benefit of 2.5% of final average salary for each year of service, with a maximum salary cap of $106,800 as of January 1, The maximum salary cap increases each year thereafter. The monthly benefit of a police officer hired before January 1, 2011, who retired with 20 or more years of services 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% of the original pension and 3% compounded annually thereafter. The monthly pension of a police officer hired on or after January 1, 2011, shall be increased annually, following the later of the first anniversary date of retirement or the month following the attainment of age 60, but the lessor of 3% or one half of the consumer price index. Employees with at least 10 years but less than 20 years of credited service may retire at or after age 60 and receive a reduced benefit. Contributions: Covered employees are required to contribute 9.45% of their base salary to the plan. If an employee leaves covered employment with less than 20 years of service, accumulated employee contributions may be refunded without accumulated interest. The Illinois Pension Code (40 ILCS 5/Art. 3) establishes the contribution requirements of the Village. The annual requirement is equal to (1) the normal cost of the pension fund for the year plus (2) an amount sufficient to bring the total assets of the pension fund up to 90% of the actuarial liabilities of the pension fund by April 30, Only the State legislature can amend the contribution requirements. For the year ended April 30, 2016, the statutory minimum which the Village was required to contribute was $19,885, or 0% of member payroll, to the Firefighters Pension Fund. Actual contributions were $33,

136 Notes to Basic Financial Statements Note 8. Employees Retirement System (Continued) Firefighters Pension Fund (Continued) Investments Investment policy: The pension plan s policy in regard to the allocation of invested assets are established and may be amended by the Firefighters Pension Board by a majority vote of its members. It is the policy of the Firefighters Pension Board to pursue an investment strategy that preserves capital and minimizes risk through the prudent diversification of the portfolio across a broad selection of distinct asset classes as allowed under Illinois Statutes (40 ILCS 5/ to 113.4a). The Firefighters Pension s investment policy encourages maintaining adequate liquidity to meet the pension fund s obligations. The investment policy implies that funds not needed to meet liquidity requirements should be invested with diversity between asset classes and types of investments. Fiduciary objectives toward maintenance of Public Trust and Prudence dictate that dramatic shifts in asset class allocations over short time spans are discouraged and should be avoided where possible. The following represents the Board s current asset allocation goals as of April 30, 2016: Minimum Maximum Target Target Asset Class Asset Allocation Asset Allocation Cash and Cash Equivalents 2% 20% Fixed Income 33% 68% Equities 20% 55% The long-term expected rate of return of 4.0% on pension plan investments was determined using a building-block method. The best estimate of future real rates of return are developed for each of the major classes. Future real rates of return are weighted based on the target asset allocation as established by the Board in accordance with the investment policy. Expected inflation is added back in. Adjustment is made to reflect geometric returns. The following are the long-term expected arithmetic real rates of return by asset class as of April 30, 2016: Long-Term Long-Term Long-Term Expected Rate Inflation Expected Real Asset Class of Return Expectations Rate of Return Fixed Income Corporate Bonds 5.00% 2.50% 2.50% US Government Obligations 4.30% 2.50% 1.80% Equities US Large-Cap Equities 7.50% 2.50% 1.50% US Mid-Cap Equities 7.80% 2.50% 5.30% US Small-Cap Equities 7.50% 2.50% 5.00% Method used to value investments: Investments are reported at fair value. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Investments that do not have an established market are reported at estimated fair value. Significant Investments Information on significant investments is presented in Note 2 under Concentration of Credit Risk. 55

137 Notes to Basic Financial Statements Note 8. Employees Retirement System (Continued) Firefighters Pension Fund (Continued) Investments (Continued) Rate of return: For the year ended April 30, 2016, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was 1.43%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Net Pension Liability of the Village The components of the net pension liability of the Village at April 30, 2016, are as follows: Total pension liability $ 585,265 Plan fiduciary net position 249,540 Village's net pension liability $ 335,725 Plan fiduciary net position as a percentage of the total pension liability 42.64% The total pension liability was determined by an actuarial valuation as of April 30, 2016, using the following methods and actuarial assumptions, applied to all periods included in the measurement: Methods and Assumptions Valuation date April 30, 2016 Actuarial cost method Entry Age Normal Amortization method Level Percentage of Payroll Discount Rate 4.00% Long-Term Expected Rate of Return on Plan Assets 4.00% High Quality 20-Year Tax-Exempt G.O. Bond Rate (based on the Bond Buyer 20-Bond GO Index) 3.32% Projected Individual Salary Increases 0.00% Inflation Rate Included 2.50% Actuarial assumptions: Mortality Table RP2014 Mortality Table (BCHA) projected to 2016 using improvement scale MP-2015 Retirement Rates 2012 Illinois Department of Insurance, 100% by age 70 Disability Rates 2012 Illinois Department of Insurance Termination Rates 2012 Illinois Department of Insurance Mortality rates were based on the RP2014 Mortality Table (BCHA) projected to 2016 using improvement scale MP The other non-economic actuarial assumptions used in the April 30, 2016 valuation were based on the results of an actuarial assumption study based on the results of an actuarial experience study conducted by the Illinois Department of Insurance dated September 26, The study was performed by the Illinois Department of Insurance, which provides a variety of actuarial and other services to Police and Firefighter Pension Funds across the State of Illinois. 56

138 Notes to Basic Financial Statements Note 8. Employees Retirement System (Continued) Firefighters Pension Fund (Continued) Change in Net Pension Liability: The following table shows the components of the Village s annual pension liability and related plan fiduciary net position for the year ended April 30, 2016: Total Pension Plan Fiduciary Net Pension Liability Net Position Liability Balance at April 30, 2015 $ 575,316 $ 245,145 $ 330,171 Changes for the year: Service Cost Interest on the total pension liability 22,354-22,354 Difference between expected and actual experiences of the total pension liability 1,182-1,182 Changes of assumptions 19,353-19,353 Contributions - employer - 33,935 (33,935) Contributions - employee Net investment income - 3,450 (3,450) Benefit payment, including refunds of employee contributions (32,940) (32,940) - Other - (50) 50 Balance at April 30, 2016 $ 585,265 $ 249,540 $ 335,725 Discount rate: The discount rate used to measure the total pension liability is 4.0%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that Village contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Cash flow projections are used to determine the extent to which the Plan s future net position will be able to cover future benefit payments. To the extent future benefit payments are covered by the Plan s projected net position, the expected longterm rate of return on plan assets is used to determine the portion of the net pension liability associated with those payments. To the extent future benefit payments are not covered by the Plan s projected net position, the municipal bond rate is used to determine the portion of the net pension liability associated with those payments. The Plan s projected net position is expected to cover future benefit payments in full for the current members for the entire projected period. Therefore, the long-term expected rate of return on pension plan assets was applied to all years. The actuarial assumptions for the years ended April 30, 2016 and 2015 were different. For April 30, 2016, the mortality rates have been change to the RP Mortality Table (BCHA) projected to 2016 using improvement scale MP Sensitivity of the net pension liability to changes in the discount rate: The following presents the net pension liability of the Village, calculated using the discount rate of 4.0%, as well as what the Village s net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (3.0%) or 1-percentage-point higher (5.0%) than the current rate. Current 1% Decrease Discount Rate 1% Increase 3.00% 4.00% 5.00% Net pension liability $ 420,947 $ 335,725 $ 267,208 57

139 Notes to Basic Financial Statements Note 8. Employees Retirement System (Continued) Firefighters Pension Fund (Continued) The schedule of changes in net pension liability, total pension liability and related ratios and investment returns and the schedule of contributions are presented as Required Supplementary Information (RSI) following the notes to the financial statements. Pension Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources Related to Pensions: For the year ended April 30, 2016, the Village recognized pension expense of $12,579. At April 30, 2016, the Village reported deferred outflows or resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Deferred amounts to be recognized in pension expense in future periods Differences between expected and actual experience $ 1,182 $ - Changes in assumptions 19,353 - Net difference between projected and actual earnings on pension plan investments 6,375 - Total deferred amounts related to pensions $ 26,910 $ - Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense in future periods as follows: Net Deferred Outflows of Year ending April: Resources 2017 $ 21, , , , ,275 $ 26,910 The schedule of changes in net pension liability, total pension liability and related ratios and investment returns and the schedule of contributions are presented as Required Supplementary Information (RSI) following the notes to the financial statements. 58

140 Notes to Basic Financial Statements Note 8. Employees Retirement System (Continued) Pension Segment Information Net Position Pension Trust Police Firefighters' Pension Pension Total Assets Cash and cash equivalents $ 4,550 $ - $ 4,550 Investments Money market mutual funds 434,818 44, ,506 Corporate bonds 405,664 80, ,182 State and local securities 104,678 16, ,132 U.S. government agencies 431,850 80, ,631 Equity mutual funds 125,983 23, ,299 Commodities - 2,264 2,264 Interest receivable 12,794 2,150 14,944 Prepaid items 2,997-2,997 Due from general fund 1,037-1,037 Total assets 1,524, ,171 1,774,542 Liabilities Accounts payable 6,950-6,950 Due to general fund Total liabilities 6, ,581 Net position Restricted for pension benefits (a schedule of funding progress is presented in required supplementary information) $ 1,517,421 $ 249,540 $ 1,766,961 59

141 Notes to Basic Financial Statements Note 8. Employees Retirement System (Continued) Pension Segment Information Changes in Plan Net Position Pension Trust Police Firefighters' Pension Pension Total Additions Contributions Employer $ 580,539 $ 33,935 $ 614,474 Plan members 52,412-52,412 Total contributions 632,951 33, ,886 Interest and dividends 51,353 9,508 60,861 Net change in fair value of investments (25,192) (4,058) (29,250) Total investment income 26,161 5,450 31,611 Less: investment expense (4,471) (2,000) (6,471) Net investment income 21,690 3,450 25,140 Total additions 654,641 37, ,026 Deductions Administration 56, ,334 Benefits and refunds 386,430 32, ,370 Total deductions 442,714 32, ,704 Change in net position 211,927 4, ,322 Net position - beginning 1,305, ,145 1,550,639 Net position - ending $ 1,517,421 $ 249,540 $ 1,766,961 Note 9. Risk Management The Village is exposed to various risks of loss related to torts; theft of, damage to, or destruction of assets; errors and omissions; workers compensation; and healthcare of its employees. All of these risks are covered through the purchase of commercial insurance, with minimal deductibles. Settled claims have not exceeded the commercial coverage in any of the past three years. There were no significant reductions in coverage compared to the prior year. Note 10. Postemployment Healthcare Plan Plan Description. The Village of Willow Springs (Village) provides employer paid retiree medical (including prescription drugs) to current and future eligible retirees until the age of 65 or until their death (whichever is earlier). Dependents are provided access to coverage on a fully contributory basis. This is a single-employer plan. The Retiree Health Plan does not issue a publicly available financial report. Funding Policy. The required contribution is based on projected pay-as-you-go financing requirements. Retirees receive coverage under the Village s health plan with an employer contribution rate of 40% of the premiums for the coverage elected by the employee. For fiscal year 2016, the Village contributed $19,551 to the plan. Annual OPEB Cost and Net OPEB Obligation. The Village s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. 60

142 Notes to Basic Financial Statements Note 10. Postemployment Healthcare Plan (Continued) The following table shows the components of the Village s annual OPEB cost for the year ended April 30, 2016, the amount actually contributed to the plan, and changes in the Village s net OPEB obligation to the plan: Annual required contribution $ 21,986 Interest on net OPEB obligation 2,879 Adjustment to annual required contribution (3,759) Annual OPEB cost (expense) 21,106 Contributions made 19,551 Increase in net OPEB obligation 1,555 Net OPEB obligation, beginning of year 63,982 Net OPEB obligation, end of year $ 65,537 The Village s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2016 and the two preceding years were as follows: Three-Year Trend Information for the Regular Plan Percentage Fiscal Annual of Annual OPEB Year Pension Cost Net OPEB Ending Cost (APC) Contributed Obligation 4/30/2016 $ 21, % $ 65,537 4/30/ , % 63,982 4/30/ , % 43,746 Funded Status and Funding Progress. As of May 1, 2015, the most recent actuarial valuation date, the plan was not funded. The actuarial accrued liability for benefits was $269,406 and the actuarial value of assets was $0, resulting in an unfunded actuarial liability (UAAL) of $269,406. The covered payroll (annual payroll of active employees covered by the plan) was $1,583,225, and the ratio of the UAAL to the covered payroll was percent. 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 the future employment, mortality, and the healthcare cost trend. Amounts determined for reporting the funded status of the plan and the annual required 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, presented as required supplementary information following the notes to the financial statements presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Actuarial Methods and Assumptions. Entry Age Under this cost method, the costs attributable to past service and the current year s service are determined by prorating overall years of service the benefits expected to be paid from the plan. The normal cost for any year is determined equal to the present value of the current year s portion of the employer s expected postretirement medical benefit. The current year s portion is equal to the expected postretirement medical benefit divided by the total credited service at the anticipated retirement date. The accrued liability is determined equal to the present value of the past year s portion of the employee s expected postretirement medical benefit. The past year s portion is equal to the expected postretirement medical benefit times the ratio of the participant s credited service to the total credited service at the anticipated retirement date. The sum of these values for all employees determines the normal cost and the accrued liability for the plan. 61

143 Notes to Basic Financial Statements Note 10. Postemployment Healthcare Plan (Continued) Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the 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 the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the May 1, 2015 actuarial valuation, the entry age normal actuarial cost method was used. The actuarial assumptions included a 4.5% investment rate of return, which is the expected long-term investment returns on the employer s own investments calculated based on the funded level of the plan at the valuation date and an annual healthcare cost trend rate of 6.8% initially, reduced by decrements to an ultimate rate of 5%. The actuarial value of assets was determined using techniques that spread the effects of short-term volatility in the market value of investments over a five-year period. The UAAL is being amortized as a level percentage of projected payroll on a closed basis. The remaining amortization period at April 30, 2016, was 27 years. Note 11. Litigation The Village is a defendant in various lawsuits. Although the outcome of those lawsuits is not presently determinable, the Village has determined that the resolution of these matters will not have an adverse effect on the financial condition of the Village. Note 12. Pronouncements Issued But Not Yet Adopted The Governmental Accounting Standards Board (GASB) recently issued the following statements: GASB Statement No. 72, Fair Value Measurement and Application, will be effective for the Village beginning with its year ending April 30, This statement addresses accounting and financial reporting issues related to fair value measurements. The definition of fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This statement provides guidance for determining a fair value measurement for financial reporting purposes. This statement also provides guidance for applying fair value to certain investments and disclosures related to all fair value measurements. GASB Statement No. 73, Accounting and Financial Reporting for Pension and Related Assets That Are Not Within the Scope of GASB Statement No. 68, and Amendments to Certain Provisions of GASB Statement Nos. 67 and 68, will be effective for the Village beginning with its year ending April 30, 2017, except those provisions that address employers and governmental nonemployer contributing entities for pensions that are not within the scope of GASB Statement No. 68, which are effective for the Village beginning with its year ending April 30, This statement will establish requirements for those pension and pension plans that are not administered through a trust meeting specified criteria. GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, will be effective for the Village beginning with its year ending April 30, This statement will establish rules on reporting by OPEB plans that administer benefits on behalf of governments. GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (Employer), will be effective for the Village beginning with its year ending April 30, This statement outlines accounting and financial reporting by governments that provide OPEB to their employees and for governments that finance OPEB for employees of other governments. 62

144 Notes to Basic Financial Statements Note 12. Pronouncements Issued But Not Yet Adopted (Continued) GASB Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments, will be effective for the Village beginning with its year ending April 30, This statement reduces the GAAP hierarchy to two categories of authoritative GAAP from the four categories under GASB Statement No. 55, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. The first category of authoritative GAAP consists of GASB Statements of Governmental Accounting Standards. The second category comprises GASB Technical Bulletins and Implementation Guides, as well as guidance from the AICPA that is cleared by the GASB. The statement also addresses the use of authoritative and nonauthoritative literature in the event that the accounting treatment for a transaction or other event is not specified within a source of authoritative GAAP. GASB Statement No. 77, Tax Abatement Disclosures, will be effective for the Village beginning with its year ending April 30, This statement requires state and local governments, for the first time, to disclose information about tax abatement agreements. It requires governments to disclose information about their own tax abatements separately from information about tax abatements that are entered into by other governments and reduce the reporting government s tax revenues. GASB Statement No. 78, Pension Provided through Certain Multiple-Employer Defined Benefit Pension Plans, will be effective for the Village beginning with its year ending April 30, The objective of this statement is to address a practice issue regarding the scope and applicability of Statement No. 68, Accounting and Financial Reporting for Pensions. This issue is associated with pensions provided through certain multiple-employer defined benefit pension plans and to state or local governmental employers whose employees are provided with such pensions. GASB Statement No. 79, Certain External Investment Pools and Pool Participants, will be effective for the Village beginning with its year ending April 30, This statement addresses accounting and financial reporting for certain investment pools and pool participants. GASB Statement No. 80, Blending Requirements for Certain Component Units an amendment of GASB Statement No. 14, will be effective for the Village beginning with its year ending April 30, This statement is to improve financial reporting by clarifying the financial statement presentation requirements for certain component units. This statement amends the blending requirements established in paragraph 53 of Statement No. 14, The Financial Reporting Entity, as amended. GASB Statement No. 81, Irrevocable Split-Interest Agreements, will be effective for the Village beginning with its year ending April 30, This statement is to improve accounting and financial reporting for irrevocable split-interest agreements by providing recognition and measurement guidance for situations in which a government is a beneficiary of the agreement. GASB Statement No. 82, Pension Issues an amendment of GASB No. 67, No. 68, and No. 73, will be effective for the Village beginning with its year ending April 30, 2018 except for the requirement of paragraph 7 in a circumstance in which an employer s pension liability is measured as of a date other than the employer s most recent fiscal year-end. In that circumstance, the requirements of the pension liability is on or after June 15, This statement addresses issues regarding (1) the presentation of payroll-related measures in required supplementary information, (2) the selection of assumptions and the treatment of deviations from the guidance in an Actuarial Standard of Practice for financial reporting purposes, and (3) the classification of payments made by employers to satisfy employee (plan member) contribution requirements. GASB Statement No. 83, Certain Asset Retirement Obligations, will be effective for the Village beginning with its year ending April 30, This statement establishes criteria for determining the timing and pattern of recognition of a liability and a corresponding deferred outflow of resources for asset retirement obligations. GASB Statement No. 84, Fiduciary Activities, will be effective for the Village beginning with its year ending April 30, This statement establishes standards of accounting and financial reporting for fiduciary activities. 63

145 Notes to Basic Financial Statements Note 12. Pronouncements Issued But Not Yet Adopted (Continued) Management has not currently determined what impact, if any, the above Statements will have on the financial position and results of operations of the Village, however, the impact of GASB Statement No. 75 will likely be material to the statements, footnotes, and required supplementary information of the Village. 64

146 REQUIRED SUPPLEMENTARY INFORMATION

147 Required Supplementary Information - GASB Statement No. 45 Schedule of Funding Progress Postemployment Healthcare Plan Actuarial Accrued UAAL as a Actuarial Liability Unfunded Percentage of Actuarial Value of (AAL) AAL Funded Covered Covered Valuation Assets Entry Age (UAAL) Ratio Payroll Payroll Date (a) (b) (b-a) (a/b) (c) ((b-a)/c) 4/30/2015 $ - $ 269,406 $ 269,406 - $ 1,583, /30/ , ,217-1,637, /30/ , ,433-1,398, Note: The Village obtains triennial valuations. Information is presented for as many years as available. 65

148 Illinois Municipal Retirement Fund - Regular Plan Schedule of Changes in Net Pension Liability (Asset), Total Pension Liability and Related Ratios and Investment Returns Fiscal year ending April 30, 2016 Total pension liability Service cost $ 56,248 Interest on the total pension liability 292,544 Changes in benefit terms - Differences between expected and actual experience 15,967 Changes in assumptions - Benefit payments (221,507) Net change in total pension liability 143,252 Total pension liability beginning 3,983,214 Total pension liability ending (a) $ 4,126,466 Plan fiduciary net position Contributions - Employer $ 35,538 Contributions - Member 29,670 Pension plan net investment income 22,227 Benefit payments (221,507) Pension plan administrative expense (129,541) Net change in plan fiduciary net position (263,613) Plan fiduciary net position beginning 4,523,600 Plan fiduciary net position ending (b) $ 4,259,987 Net pension liability (asset) - ending (a) - (b) $ (133,521) Plan fiduciary net position as a percentage of the total pension liability (asset) % Covered-Employee Payroll $ 659,341 Employer net pension liability (asset) as a percentage of covered-employee payroll % Notes to Schedule: This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is complied, information is presented for those years for which information is available. 66

149 Illinois Municipal Retirement Fund - SLEP Plan Schedule of Changes in Net Pension Liability (Asset), Total Pension Liability and Related Ratios and Investment Returns Fiscal year ending April 30, 2016 Total pension liability Service cost $ 15,453 Interest on the total pension liability 16,721 Changes in benefit terms - Differences between expected and actual experience (19,605) Changes in assumptions - Benefit payments - Net change in total pension liability 12,569 Total pension liability beginning 215,226 Total pension liability ending (a) $ 227,795 Plan fiduciary net position Contributions - Employer $ 11,954 Contributions - Member 6,549 Pension plan net investment income 1,162 Benefit payments - Pension plan administrative expense (1,970) Net change in plan fiduciary net position 17,695 Plan fiduciary net position beginning 223,154 Plan fiduciary net position ending (b) $ 240,849 Net pension liability (asset) - ending (a) - (b) $ (13,054) Plan fiduciary net position as a percentage of the total pension liability (asset) % Covered-Employee Payroll $ 87,322 Employer net pension liability (asset) as a percentage of covered-employee payroll % Notes to Schedule: This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is complied, information is presented for those years for which information is available. 67

150 Police Pension Plan Schedule of Changes in Net Pension Liability, Total Pension Liability and Related Ratios and Investment Returns Fiscal year ended April 30, Total pension liability Service cost $ 266,544 $ 317,410 Interest on the total pension liability 457, ,852 Changes in benefit terms - - Differences between expected and actual experience 283,964 - Changes in assumptions 685,421 - Benefit payments (386,430) (436,491) Net change in total pension liability 1,307, ,771 Total pension liability beginning 11,868,159 11,544,388 Total pension liability ending (a) $ 13,175,316 $ 11,868,159 Plan fiduciary net position Contributions - Employer $ 580,539 $ 543,580 Contributions - Member 52,412 80,194 Pension plan net investment income 21,690 39,204 Benefit payments (386,430) (436,491) Pension plan administrative expense (56,284) (67,532) Net change in plan fiduciary net position 211, ,955 Plan fiduciary net position beginning 1,305,494 1,146,539 Plan fiduciary net position ending (b) $ 1,517,421 $ 1,305,494 Net pension liability - ending (a) - (b) $ 11,657,895 $ 10,562,665 Plan fiduciary net position as a percentage of the total pension liability 11.52% 11.00% Covered-Employee Payroll $ 631,758 $ 652,391 Employer net pension liability as a percentage of covered-employee payroll % % Annual money-weighted rate of return, net of investment expense 1.74% 3.48% Notes to Schedule: This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is complied, information is presented for those years for which information is available. 68

151 Firefighters' Pension Plan Schedule of Changes in Net Pension Liability, Total Pension Liability and Related Ratios and Investment Returns Fiscal year ended April 30, Total pension liability Service cost $ - $ - Interest on the total pension liability 22,354 30,818 Changes in benefit terms - - Differences between expected and actual experience 1,182 (135,025) Changes in assumptions 19,353 79,638 Benefit payments (32,940) (32,940) Net change in total pension liability 9,949 (57,509) Total pension liability beginning 575, ,825 Total pension liability ending (a) $ 585,265 $ 575,316 Plan fiduciary net position Contributions - Employer $ 33,935 $ 81,830 Contributions - Member - - Pension plan net investment income 3,450 4,489 Benefit payments (32,940) (32,940) Pension plan administrative expense (50) (74) Net change in plan fiduciary net position 4,395 53,305 Plan fiduciary net position beginning 245, ,840 Plan fiduciary net position ending (b) $ 249,540 $ 245,145 Net pension liability - ending (a) - (b) $ 335,725 $ 330,171 Plan fiduciary net position as a percentage of the total pension liability 42.64% 42.61% Covered-Employee Payroll $ - $ - Employer net pension liability as a percentage of covered-employee payroll N/A N/A Annual money-weighted rate of return, net of investment expense 1.43% 2.11% Notes to Schedule: This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is complied, information is presented for those years for which information is available. 69

152 Required Supplementary Information Schedule of Contributions Police Pension Plan Actuarially Determined Contribution $ 603,565 $ 534,710 Contributions in Relation to the Actuarial Determined Contribution 580, ,580 Contribution Deficiency (excess) $ 23,026 $ (8,870) Covered-Employee Payroll $ 631,758 $ 652,391 Contributions as a Percentage of Covered-Employee Payroll 91.89% 83.32% Firefighters' Pension Plan Actuarially Determined Contribution $ 29,399 $ 29,399 Contributions in Relation to the Actuarial Determined Contribution 33,935 81,830 Contribution Deficiency (excess) $ (4,536) $ (52,431) Covered-Employee Payroll $ - $ - Contributions as a Percentage of Covered-Employee Payroll N/A N/A Illinois Municipal Retirement Fund - Regular Plan 2015 Actuarially Determined Contribution $ 35,538 Contributions in Relation to the Actuarial Determined Contribution 35,538 Contribution Deficiency (excess) $ - Covered-Employee Payroll $ 659,341 Contributions as a Percentage of Covered-Employee Payroll 5.39% Illinois Municipal Retirement Fund - SLEP Plan 2015 Actuarially Determined Contribution $ 11,954 Contributions in Relation to the Actuarial Determined Contribution 11,954 Contribution Deficiency (excess) $ - Covered-Employee Payroll $ 87,322 Contributions as a Percentage of Covered-Employee Payroll 13.69% Note: Information is presented for as many years as available. 70

153 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund Year Ended April 30, 2016 Original and Final Budget Actual Variance Revenues Property taxes General $ 2,002,887 $ 2,088,391 $ 85,504 Other taxes Utility taxes 500, ,465 (111,535) Foreign fire insurance tax - 9,183 9,183 Local use tax 107, ,516 19,885 Sales tax 220, ,559 (14,441) Road and bridge tax 37,000 36,062 (938) Total other taxes 864, ,785 (97,846) Licenses, permits and fees Health inspection fees 4,500 3,330 (1,170) Liquor licenses 31,000 36,384 5,384 Vehicle license fees 150, ,960 (16,040) Franchise fees 75,000 77,704 2,704 Business licenses 35,000 31,949 (3,051) Animal licenses 2,500 1,940 (560) Vending machines 2,500 - (2,500) Building permit fees 150, ,040 (5,960) Tank permit fees 22,000 21,155 (845) Sign permits 10,000 8,000 (2,000) Contractor licenses 24,000 20,808 (3,192) Plan examination fees 2,000 5,007 3,007 Reimbursement for professional fees 75,000 33,482 (41,518) Dispatching services 78, ,140 87,140 Total licenses, permits and fees 661, ,899 21,399 Intergovernmental State income tax 549, ,033 15,781 Personal property replacement tax 35,000 34,181 (819) Capital grants - 9,352 9,352 Total intergovernmental 584, ,566 24,314 See Notes to Required Supplementary Information. (Continued) 71

154 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund (Continued) Year Ended April 30, 2016 Original and Final Budget Actual Variance Revenues (Continued) Charges for services Garbage services $ 817,550 $ 828,753 $ 11,203 Fines and forfeitures Vehicle sticker penalties 4,000 4, Service fee DEA reimbursement Refuse penalties 15,000 13,167 (1,833) Court fines 300,000 91,788 (208,212) Total fines and forfeitures 319, ,523 (209,477) Investment income Miscellaneous 77, ,853 23,453 Total revenues 5,327,772 5,186,562 (141,210) Expenditures General government Personnel President salary 3,000 3,000 - Liquor control commissioner Trustee's salary 14,400 9,900 4,500 Village clerk/collector salary 43,285 43,804 (519) Village administrator 63,654 63,927 (273) Planning commission 2, ,050 Treasurer 21,000 9,142 11,858 Clerical 24,438 30,283 (5,845) Health insurance 86,141 93,569 (7,428) Social security/medicare 13,156 12, IMRF pension 11,000 7,076 3,924 Total personnel 282, ,952 8,322 See Notes to Required Supplementary Information. (Continued) 72

155 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund (Continued) Year Ended April 30, 2016 Original and Final Budget Actual Variance Expenditures (Continued) General government (Continued) Contractual services Legal fees $ 232,000 $ 502,998 $ (270,998) Building inspector 20,000 82,624 (62,624) Electrical inspector 8,000-8,000 Plumbing inspector 3,000 3,450 (450) Tank/elevator inspector 2,000-2,000 Engineering services 53,000 98,364 (45,364) Audit and accounting 45,000 53,350 (8,350) Other professional services 29,500 25,285 4,215 Maintenance - building 28,560 14,688 13,872 Maintenance - office equipment 1, Maintenance - vehicles 1, Postage 8,500 9,025 (525) Dues 16,000 15, Travel Seminars and meetings 4,000 2,537 1,463 Publications 2,500 5,057 (2,557) Conference 2, ,795 Insurance 225, ,003 8,997 Training 3, ,602 Other 109,000 54,286 54,714 Bank fees 2,000 2,754 (754) Printing 22,000 21, Telephone 53,000 62,938 (9,938) Unemployment insurance 40,000-40,000 Total contractual 910,560 1,171,726 (261,166) (Continued) See Notes to Required Supplementary Information. 73

156 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund (Continued) Year Ended April 30, 2016 Original and Final Budget Actual Variance Expenditures (Continued) General government (Continued) Commodities Maintenance - supplies - building $ 2,500 $ 2,540 $ (40) Maintenance - supplies - equipment Maintenance - supplies - other 2,000 3,224 (1,224) Office supplies 6,000 5, Fuel 3,000 1,258 1,742 Events 14,000 25,097 (11,097) Other 29,500 21,297 8,203 Total commodities 57,500 58,747 (1,247) Total general government 1,250,334 1,504,425 (254,091) Public safety Police department Personnel Police chief salary 91,669 92,063 (394) Public safety director 82,502 52,714 29,788 Sergeants' salary 158, ,609 10,088 Police officers' salary 485, ,143 84,491 Radio operators 150, ,884 (70,884) Crossing guards 16,975 12,258 4,717 Clerical 7,749 7, Part-time salaries 307, , ,758 Overtime salaries 10, ,290 (99,290) Mechanic salary 20,817 14,929 5,888 Health Insurance 301, ,578 (694) Social security/medicare 107,623 99,556 8,067 IMRF pension 27,025 31,432 (4,407) Uniform allowance 20,000 10,232 9,768 Holiday pay (367) Sick pay/bonus 15,000 9,980 5,020 Education allowance 2,500-2,500 Pension payment-police 537, ,538 (43,081) Total personnel 2,343,132 2,288,485 54,647 See Notes to Required Supplementary Information. (Continued) 74

157 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund (Continued) Year Ended April 30, 2016 Original and Final Budget Actual Variance Expenditures (Continued) Public safety (Continued) Police department (Continued) Contractual services (Continued) Maintenance - equipment $ 10,000 $ 18,072 $ (8,072) Maintenance - vehicles 35,000 20,128 14,872 Janitorial services 9,000 7,610 1,390 Postage 3,000 1,776 1,224 Printing 4, ,656 Network 10 13,000 6,000 7,000 Dues 2,000 3,375 (1,375) Travel 1, Training 9,000 8, Seminars and meetings Publications 1, Commission testing 2,000 2,601 (601) Animal control Consultants 4,000-4,000 Telephone 12,000 10,687 1,313 Utilities 3,500 1,654 1,846 Service contracts 25,200 16,149 9,051 Other 30,000-30,000 Total contractual services 164,700 97,886 66,814 Commodities Maintenance supplies - vehicles 15,000 13,911 1,089 Building supplies 15,000 3,832 11,168 Office supplies 5,000 3,545 1,455 Operating supplies 10,000 4,166 5,834 Fuel/oil 70,000 33,049 36,951 Prisoner meals 1, Miscellaneous 2,000 1, Total commodities 118,000 60,916 57,084 Total police department 2,625,832 2,447, ,545 (Continued) See Notes to Required Supplementary Information. 75

158 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund (Continued) Year Ended April 30, 2016 Original and Final Budget Actual Variance Expenditures (Continued) Public safety (Continued) Fire department Personnel Public safety director $ 4,583 $ 2,047 $ 2,536 Social security/medicare IMRF Pension payment - fire 47,429 33,935 13,494 Total personnel 52,676 36,409 16,267 Contractual services Service contracts 575, ,167 15,833 Maintenance - buildings 10,000 7,131 2,869 Maintenance - vehicles 5,000 4, Utilities 5,000 4, Hazardous incident team 4,000 3, Total contractual services 599, ,791 20,209 Commodities Maintenance supplies - building 3,000 1,476 1,524 Maintenance supplies - equipment 1,500-1,500 Maintenance supplies - vehicles 3, ,727 Foreign fire insurance - 8,729 (8,729) Fuel/oil 3,000-3,000 Fire prevention Total commodities 11,250 10, Total fire department 662, ,716 37,210 Total public safety 3,288,758 3,073, ,755 See Notes to Required Supplementary Information. (Continued) 76

159 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund (Continued) Year Ended April 30, 2016 Original and Final Budget Actual Variance Expenditures (Continued) Highways and streets Personnel Public safety director $ 1,522 $ 680 $ 842 Part-time salaries 13,740 12, Social security/medicare 1,167 1, IMRF pension Total personnel 17,404 15,397 2,007 Contractual services Engineering services 1,000-1,000 Utilities 7,500 2,651 4,849 Maintenance - equipment 2,000 1, Maintenance - vehicle 5,000 3,468 1,532 Maintenance - streets 5,000 3,156 1,844 Snow Removal 70,000 49,360 20,640 Physicals Training/safety Maintenance of land 2,000 9,915 (7,915) Contingent 3,200 2, Total contractual services 96,700 73,353 23,347 See Notes to Required Supplementary Information. (Continued) 77

160 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund (Continued) Year Ended April 30, 2016 Original and Final Budget Actual Variance Expenditures (Continued) Highways and streets (Continued) Commodities Clothing gear $ 1,200 $ 529 $ 671 Maintenance - street 1, Safety 5,500 2,008 3,492 Operating supplies 8,000 3,642 4,358 Building Supplies 2,000 1, Fuel/oil 8,000 3,499 4,501 Rental of equipment 1, Miscellaneous (332) Total commodities 27,400 12,552 14,848 Total highways and streets 141, ,302 40,202 Municipal building Contractual services Utilities - 9,973 (9,973) Maintenance - building - 3,698 (3,698) Maintenance - janitorial - 4,929 (4,929) Total contractual services - 18,600 (18,600) Commodities Maintenance supplies - building (451) Total municipal building - 19,051 (19,051) (Continued) See Notes to Required Supplementary Information. 78

161 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund (Continued) Year Ended April 30, 2016 Original and Final Budget Actual Variance Expenditures (Continued) Refuse Personnel Public safety director $ 1,531 $ 1,096 $ 435 Part-time/temporary 214,421 22, ,893 Overtime 333 8,244 (7,911) Treasurer 7,000 3,047 3,953 Village administrator 7,957 7,991 (34) Clerical 18,758 18, Public works maintenance 12,747 11, Foreman 14,997 9,248 5,749 Social security 7,324 6, IMRF pension 6,118 4,175 1,943 Health insurance 25,000 11,717 13,283 Total personnel 316, , ,231 Contractual services Audit Fees 6,000 6,000 - Data processing 3,000 3,609 (609) Utilities 2,000-2,000 Garbage collection 369, ,716 (8,716) Garbage disposal 92, ,781 (14,531) Landscaping 85, ,297 (44,297) Weed and tree removal 20,000 23,522 (3,522) Maintenance - equipment 5,000 7,240 (2,240) Postage 2,000 1, Printing Training Unemployment Insurance 1,000-1,000 Bank fees 2,000 2,754 (754) Other contractual services 2,000 1, Total contractual services 590, ,654 (70,204) Commodities Maintenance supplies - equipment 25,000 25,688 (688) Maintenance supplies - vehicles 25,000 33,435 (8,435) Clothing gear 2,000 1, Uniform allowance Office supplies Building Supplies 5,000 1,170 3,830 Rental of equipment 5, ,886 Operating supplies 2, ,255 Fuel/oil 8,000 3,544 4,456 Total commodities 72,700 66,533 6,167 Total refuse 979, , ,194 See Notes to Required Supplementary Information. (Continued) 79

162 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund (Continued) Year Ended April 30, 2016 Original and Final Budget Actual Variance Expenditures (Continued) Capital Outlay Equipment $ 15,000 $ 1,236 $ 13,764 Debt service Interest and fees 20,366 35,828 (15,462) Total expenditures 5,695,298 5,566, ,311 Excess (deficiency) of revenues over (under) expenditures (367,526) (380,425) (12,899) Other financing sources (uses) Transfers (out) (224,440) (221,440) 3,000 Bond issuance 300,000 - (300,000) Total other financing sources (uses) 75,560 (221,440) (297,000) Net change in fund balance $ (291,966) (601,865) $ (309,899) Fund balance: Beginning (209,853) Ending $ (811,718) See Notes to Required Supplementary Information. 80

163 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Police Seizure Fund Year Ended April 30, 2016 Original and Final Budget Actual Variance Revenues Fines and forfeitures $ - $ 37,261 $ 37,261 Investment income - 1,007 1,007 Total revenues - 38,268 38,268 Expenditures Public safety Computers and communication 75,000 71,516 3,484 Training and travel 5, ,300 Bank fees - 20 (20) Other - 1,000 (1,000) Overtime 90,000-90,000 Tax 6,885-6,885 Audit 10,000-10,000 Computer support 6,000-6,000 Maintenance and improvement 20,000-20,000 Public information 5,000-5,000 Community based programs 5,000-5,000 Seizure expense 100, ,000 Total public safety 322,885 73, ,649 Capital Outlay General 650,000 19, ,139 Total capital outlay 650,000 19, ,139 Total expenditures 972,885 93, ,788 Net change in fund balance $ (972,885) (54,829) $ 918,056 Fund balance: Beginning 1,077,574 Ending $ 1,022,745 81

164 Notes to Required Supplementary Information Note 1. Budgetary Information Budgetary Basis of Accounting Budgetary information is derived from the annual operating budget and is presented on a basis consistent with generally accepted accounting principles. Budget Process The Village Council follows these procedures in establishing the budgetary data reflected in the financial statements: 1. The Village Finance Chairman submits to the Village board a proposed operating budget for the fiscal year. With the help of the budget, the Village prepares an Appropriation Ordinance. 2. A public hearing is conducted to obtain taxpayer comments on the Appropriation Ordinance. Within the first quarter of the fiscal year the Appropriation Ordinance is legally enacted by board action. 3. Appropriation Ordinances for the General Fund, certain Special Revenue Funds, and all Enterprise Funds are adopted on a basis consistent with generally accepted accounting principles. 4. Budgets/Appropriation authority lapses at year-end. 5. State law requires that expenditures may not exceed appropriations. Transfers may be made between line items, departments and funds. The level of legal control is the fund level. 6. Budgeted amounts are originally adopted, or as amended. During fiscal 2016 no supplemental budgetary appropriations were necessary. The Village did not budget for the Equipment Capital Improvements Fund, the Street Improvements Fund, the Capital Improvements Fund, the Infrastructure Capital Improvements Fund for the year ended April 30,

165 Notes to Required Supplementary Information Note 2. Pension Contributions The following methods and assumptions were utilized to measure the actuarially determined contribution (ADC) for each applicable pension plan. Police Pension Plan Methods and Assumptions Valuation date April 30, 2016 Actuarial cost method Entry Age Normal Actuarial Value of Assets 5 Year Smoothed Market Value Remaining Amortization Period 26 Years Investment rate of return 5.00% Projected Individual Salary Increases 3.50% % Cost of Living Adjustments 2.50% Inflation Rate Included 2.50% Mortality Table 2016 Lauterbach & Amen Assumptions Study Firefighters' Pension Plan Methods and Assumptions Valuation date April 30, 2016 Actuarial cost method Entry Age Normal Actuarial Value of Assets 5 Year Smoothed Market Value Remaining Amortization Period 26 Years Investment rate of return 4.00% Projected Individual Salary Increases 0.00% Cost of Living Adjustments 2.50% Inflation Rate Included 2.50% Mortality Table RP2014 Mortality Table (BCHA) Projected to 2016 Using Improvement Scale MP

166 Notes to Required Supplementary Information Note 2. Penson Contributions (Continued) Illinois Municipal Retirement Fund Methods and Assumptions Valuation date December 31, 2015 Actuarial cost method Entry Age Normal Asset valuation method 5 Year Smoothed Market Value, 20% corridor Amortization method Level Percentagee of Payroll Closed Remaining Amortization Period 28-year period until remaining period reaches 15 years (then 15-year rolling period) SLEP supplemental liabilities attributable to Public Act were financed over 23 years for most employers. Investment rate of return 7.50% Wage growth 4.40% % Projected Increase in Total Payroll 4.00% Price inflation 3.00% - approximate Retirment Age Experience-based table of rates that are specific to the type of eligibility condition. Last update for the 2011 valuation pursuant. to an experience study of the period Mortality Table RP-2000 Combined Healthy Mortality Table, adjusted for mortality improvements to 2020 using projection scale AA. For men 120% of the table rates were used. For women 92% of the table rates were used. For disabled lives, the mortality rates are the rates applicable to non-disabled lives set forward 10 years. 84

167 SUPPLEMENTARY INFORMATION

168 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - TIF Fund Year Ended April 30, 2016 Original and Final Budget Actual Variance Revenues Property taxes $ 1,422,837 $ 560,020 $ (862,817) Investment income (137) Total revenues 1,423, ,093 (862,954) Expenditures Community Development School payment 290, ,735 18,265 Legal 25,000-25,000 Audit expense 5,000-5,000 Administrative costs 10,000 16,000 (6,000) Other contractual services 60,000 58,673 1,327 Total community development 390, ,408 43,592 Total expenditures 390, ,408 43,592 Excess (deficiency) of revenues over (under) expenditures 1,033, ,685 (819,362) Other financing sources (uses) Transfers (out) (1,033,047) (1,001,429) 31,618 Net change in fund balance $ - (787,744) $ (787,744) Fund balance: Beginning 1,006,925 Ending $ 219,181 85

169 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - TIF Bond Fund Year Ended April 30, 2016 Original and Final Budget Actual Variance Revenues Investment income (98) Total revenues (98) Expenditures Debt Service Principal Payment 890, ,000 - Interest 227, ,270 (227,635) Total expenditures 1,117,635 1,345,270 (227,635) Excess (deficiency) of revenues over (under) expenditures (1,117,485) (1,345,218) (227,733) Other financing sources (uses) Transfers in 1,117,485 1,469, ,271 Net change in fund balance $ - 124,538 $ 124,538 Fund balance: Beginning 1,089,226 Ending $ 1,213,764 86

170 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Debt Service Fund Year Ended April 30, 2016 Original and Final Budget Actual Variance Revenues Property taxes $ 178,979 $ 752,239 $ 573,260 Investment income Total revenues 178, , ,293 Expenditures Bond Principal 509, ,815 - Interest 203, ,770 (1) Fees 10,000 5,048 4,952 Issuance Costs 10,000 9, Total Bond 733, ,133 5,451 Total expenditures 733, ,133 5,451 Excess (deficiency) of revenues over (under) expenditures (554,605) 24, ,744 Other financing sources (uses) Transfers in 458, ,053 (5,527) Transfers (out) - (468,327) (468,327) Bond proceeds 102,000 99,715 (2,285) Total other financing sources (uses) 560,580 84,441 (476,139) Net change in fund balance $ 5, ,580 $ 102,605 Fund balance: Beginning 441,610 Ending $ 550,190 87

171 Combining Balance Sheet Nonmajor Governmental Funds April 30, 2016 Total Special Capital Nonmajor Revenue Projects Governmental Funds Funds Funds Assets Cash and investments $ 458,845 $ 279,847 $ 738,692 Receivables: Other taxes 41,231-41,231 Intergovernmental 12,572-12,572 Due from other funds - 751, ,247 Total assets $ 512,648 $ 1,031,094 $ 1,543,742 Liabilities Accounts payable $ 8,882 $ - $ 8,882 Due to other funds - 172, ,779 Total liabilities 8, , ,661 Deferred Inflows of Resources Deferred intergovernmental revenue 15,960-15,960 Fund Balances Restricted 487, ,036 1,072,842 Committed - 411, ,707 Unassigned - (138,428) (138,428) Total fund balances 487, ,315 1,346,121 Total liabilities, deferred inflows of resources, and fund balances $ 512,648 $ 1,031,094 $ 1,543,742 88

172 Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds Year Ended April 30, 2016 Total Special Capital Nonmajor Revenue Projects Governmental Funds Funds Funds Revenues: Other taxes $ 193,899 $ - $ 193,899 Intergovernmental 146, ,042 Charges for services 45,078-45,078 Investment income Total revenues 385, ,631 Expenditures: Current: General government Public safety 69,507 30, ,393 Highway and streets 109, ,758 Capital outlay 298, , ,130 Total expenditures 477, , ,317 Excess (deficiency) of revenues over (under) expenditures (91,971) (189,715) (281,686) Other financing source (use) Transfers in Transfers (out) (120,178) - (120,178) Total other financing (uses) (120,178) 665 (119,513) Net change in fund balances (212,149) (189,050) (401,199) Fund balances: Beginning 699,955 1,047,365 1,747,320 Ending $ 487,806 $ 858,315 $ 1,346,121 89

173 Combining Balance Sheet Nonmajor Special Revenue Funds April 30, % Sales Motor Tax Fuel Tax 911 Total Assets Cash and investments $ 364,669 $ 68,245 $ 25,931 $ 458,845 Prepaid items Receivables Other taxes 41, ,231 Intergovernmental - 12,572-12,572 Total assets $ 405,900 $ 80,817 $ 25,931 $ 512,648 Liabilities Accounts payable $ - $ 5,972 $ 2,910 $ 8,882 Deferred Inflows of Resources Deferred intergovernmental revenue 15, ,960 Fund Balances Restricted 389,940 74,845 23, ,806 Total fund balances 389,940 74,845 23, ,806 Total liabilities, deferred inflows of resources, and fund balances $ 405,900 $ 80,817 $ 25,931 $ 512,648 90

174 Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Special Revenue Funds Year Ended April 30, % Sales Motor Tax Fuel Tax 911 Total Revenues Other taxes $ 193,899 $ - $ - $ 193,899 Intergovernmental - 146, ,042 Charges for services ,078 45,078 Investment income Total revenues 194, ,145 45, ,489 Expenditures Current Public safety ,507 69,507 Highway and streets , ,758 Capital outlay 297, ,195 Total expenditures 297, ,125 69, ,460 Excess (deficiency) of revenues over (under) expenditures (103,562) 36,020 (24,429) (91,971) Other financing use Transfers out (120,178) - - (120,178) Change in fund balance (223,740) 36,020 (24,429) (212,149) Fund balances - beginning 613,680 38,825 47, ,955 Fund balances - ending $ 389,940 $ 74,845 $ 23,021 $ 487,806 91

175 Schedules of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Nonmajor Special Revenue Funds Year Ended April 30, % Sales Tax Motor Fuel Tax 911 Total Budget Actual Budget Actual Budget Actual Budget Actual Revenues Other taxes $ 200,000 $ 193,899 $ - $ - $ - $ - $ 200,000 $ 193,899 Intergovernmental , , , ,042 Charges for services ,000 45,078 85,000 45,078 Investment income Total revenues 200, , , ,145 85,000 45, , ,489 Expenditures Current Public safety ,346 69, ,346 69,507 Highway and streets , , , ,758 Capital outlay 300, , , ,195 Total expenditures 300, , , , ,346 69, , ,460 Excess (deficiency) of revenues over (under) expenditures (99,900) (103,562) (3,958) 36,020 (49,346) (24,429) (153,204) (91,971) Other financing (uses) Transfers (out) (121,038) (120,178) (121,038) (120,178) Change in fund balance $ (220,938) (223,740) $ (3,958) 36,020 $ (49,346) (24,429) $ (274,242) (212,149) Fund balances - beginning 613,680 38,825 47, ,955 Fund balances - ending $ 389,940 $ 74,845 $ 23,021 $ 487,806 92

176 Combining Balance Sheet Nonmajor Capital Projects Funds April 30, 2015 Equipment Infrastructure Capital Street Capital Capital Improvements Improvements Improvements Improvements Total Assets Cash and investments $ - $ - $ 225,415 $ 54,432 $ 279,847 Due from other funds , , ,247 Total assets $ - $ - $ 585,036 $ 446,058 $ 1,031,094 Liabilities Accounts payable $ - $ - $ - $ - $ - Due to other funds 138, , ,779 Total liabilities 138, , ,779 Fund Balances (Deficits) Restricted , ,036 Committed , ,707 Unassigned (138,428) (138,428) Total fund balances (deficits) (138,428) - 585, , ,315 Total liabilities and fund balances (deficits) $ - $ - $ 585,036 $ 446,058 $ 1,031,094 93

177 Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Deficits) Nonmajor Capital Projects Funds Year Ended April 30, 2015 Revenues Equipment Infrastructure Capital Street Capital Capital Improvements Improvements Improvements Improvements Total Investment income $ - $ - $ 63 $ 79 $ 142 Expenditures Current General government Public safety 30, ,886 Capital outlay , ,935 Total expenditures 30, , ,857 Excess (deficiency) of revenues over (under) expenditures (30,886) - (158,872) 43 (189,715) Other financing source Transfer in Change in fund balance (deficit) (30,886) 665 (158,872) 43 (189,050) Fund balances (deficits) - beginning (107,542) (665) 743, ,664 1,047,365 Fund balances (deficits) - ending $ (138,428) $ - $ 585,036 $ 411,707 $ 858,315 94

178 Schedule of Operating and Nonoperating Revenues, Expenses and Transfers - Budget and Actual Sewer Fund Year Ended April 30, 2016 Original and Final Budget Actual Operating revenues: Sewer services $ 520,000 $ 526,974 Sewer fines 10,000 7,192 Total operating revenues 530, ,166 Operating expenses, other than depreciation 760, ,449 Operating income (loss) before depreciation (230,431) 279,717 Depreciation - 80,190 Operating income (loss) (230,431) 199,527 Nonoperating revenues: Miscellaneous income - 95,000 Interest income Nonoperating revenues ,020 Income (loss) before transfers (230,331) 294,547 Transfer (out) (113,100) (112,100) Change in net position $ (343,431) 182,447 Net position: May 1, 2015, as restated 2,767,517 April 30, 2016 $ 2,949,964 95

179 Schedule of Operating Expenses - Budget and Actual Sewer Fund - Enterprise Fund Year Ended April 30, 2015 Original and Final Budget Actual Variance Personal services: Village clerk $ 5,411 $ 5,267 $ 144 Village administrator 7,957 7,991 (34) Treasurer 7,000 3,047 3,953 Public safety director 1,531 1, Clerical salaries 13,347 13,368 (21) Clerical part time 20,415 21,297 (882) Public works maintenance 10,926 2,996 7,930 Foreman 12,854 7,927 4,927 Overtime (97) Part-time salaries 6,188-6,188 Health insurance 25,000 10,510 14,490 Social security/medicare 6,576 4,909 1,667 IMRF pension 5,493 15,825 (10,332) Total personal services 123,031 94,663 28,368 Contractual services: Legal fees 5,000 5,891 (891) Engineering 15,000 44,911 (29,911) Audit 6,000 6,000 - Data processing 4,000 3, Utility 15,000 13,787 1,213 Maintenance of equipment 15, ,237 Maintenance of sewers 20,000 26,877 (6,877) Postage 2,500 1, Printing Training Julie service 1,000 1,480 (480) Unemployment insurance 10,000-10,000 Other contractual services 5,000 2,398 2,602 Interest and fees 3,000 2, Total contractual services 102, ,807 (8,107) (Continued) 96

180 Schedule of Operating Expenses - Budget and Actual Sewer Fund - Enterprise Fund (Continued) Year Ended April 30, 2016 Original and Final Budget Actual Variance Commodities: Clothing gear $ 700 $ 496 $ 204 Maintenance supplies - equipment 3, ,605 Maintenance supplies - sewers 5,000 3,389 1,611 Operating supplies 1,500-1,500 Miscellaneous 1, Fuel 8,000 3,499 4,501 Small tools Building supplies/janitorial 5,000-5,000 Total commodities 24,700 8,382 16,318 Capital outlay: Sewer system 500, ,803 (277,803) Equipment 10,000-10,000 Total capital outlay 510, ,803 (267,803) Total $ 760, ,655 $ (231,224) Less capitalized items (737,206) Total operating expenses $ 254,449 97

181 Schedule of Operating Revenues and Expenses - Budget and Actual Commuter Parking Lot - Enterprise Fund Year Ended April 30, 2016 Original and Final Budget Actual Operating revenues: Parking fees $ 27,000 $ 23,062 Operating expenses, other than depreciation 111,000 18,584 Operating income before depreciation (84,000) 4,478 Depreciation - 13,866 Change in net position $ (84,000) (9,388) Net position: Beginning 225,196 Ending $ 215,808 98

182 Schedule of Operating Expenses - Budget and Actual Commuter Parking Lot - Enterprise Fund Year Ended April 30, 2016 Original and Final Budget Actual Variance Contractual services: Maintenance $ 7,000 $ - $ 7,000 Land lease 12,000 6,000 6,000 Maintenance supplies and equipment (7,000) 11,925 (18,925) Total contractual services 12,000 17,925 (5,925) Commodities, Operating supplies (1,000) 509 (1,509) Capital outlay: Improvements 100, ,000 Signage (150) Total capital outlay 100, ,850 Total operating expenses $ 111,000 $ 18,584 $ 92,416 99

183 Combining Statement of Net Position - Pension Trust Funds Fiduciary Funds April 30, 2016 Police Firefighters' Pension Pension Total Assets Cash and cash equivalents $ 4,550 $ - $ 4,550 Investments Money market mutual funds 434,818 44, ,506 Corporate Equity 405,664 80, ,182 State and local securities 104,678 16, ,132 U.S. Treasury and government agencies 431,850 80, ,631 Equity mutual funds 125,983 23, ,299 Commodities - 2,264 2,264 Interest receivable 12,794 2,150 14,944 Prepaid items 2,997-2,997 Due from general fund 1,037-1,037 Total assets 1,524, ,171 1,774,542 Liabilities Accounts payable 6,950-6,950 Due to general fund Total liabilities 6, ,581 Net Position Restricted for pension benefits $ 1,517,421 $ 249,540 $ 1,766,

184 Combining Statement of Changes in Net Position - Pension Trust Funds Fiduciary Funds Year Ended April 30, 2016 Police Firefighters' Pension Pension Totals Additions Contributions Employer $ 580,539 $ 33,935 $ 614,474 Plan members 52,412-52, ,951 33, ,886 Interest and dividends 51,353 9,508 60,861 Net change in fair value of investments (25,192) (4,058) (29,250) Less investment expenses (4,471) (2,000) (6,471) 21,690 3,450 25,140 Total additions 654,641 37, ,026 Deductions Administration 56, ,334 Benefits and refunds 386,430 32, ,370 Total deductions 442,714 32, ,704 Change in net position 211,927 4, ,322 Net position - beginning 1,305, ,145 1,550,639 Net position - ending $ 1,517,421 $ 249,540 $ 1,766,

185 Statement of Changes in Assets and Liabilities Agency Fund Year Ended April 30, 2016 Balances Balances May 1, 2015 Additions Deductions April 30, 2016 Assets Cash and cash equivalents $ 25,250 $ 1,950 $ - $ 27,200 Due from other funds 54, ,392 Total assets $ 79,642 $ 1,950 $ - $ 81,592 Liabilities Accounts payable $ 2,250 $ (2,250) $ - $ - Landscape/road bond deposits 77,392 4,200-81,592 Total liabilities $ 79,642 $ 1,950 $ - $ 81,

186 OTHER INFORMATION

187 Tax Increment Redevelopment Project Area Funds Bond Payment Requirements Tax Increment Financing Bond, Series 2004B Issued December 15, 2004 April 30, 2016 Bonds Bonds Bonds Year Issued Paid Outstanding 2006 $ 25,000 $ 25,000 $ ,000 25, ,000 25, ,000 30, , , , , , , , , , , , , , , , , , , , , , ,000 $ 2,585,000 $ 1,420,000 $ 1,165,000 Interest is payable at 2.25% to 4.15% on June 15 and December 15 of each year commencing on June 15, Paying Agent: Amalgamated Bank 103

188 Tax Increment Redevelopment Project Area Funds Bond Payment Requirements Tax Increment Financing Bond, Series 2006 Issued September 15, 2006 April 30, 2016 Bonds Bonds Bonds Year Issued Paid Outstanding 2011 $ 65,000 $ 65,000 $ , , , , , , , , , , , , , , , , , , , , , , , , , , , ,000 $ 5,000,000 $ 1,145,000 $ 3,855,000 Interest is payable at 3.75% to 6.50% on June 15 and December 15 of each year commencing on December 15, Paying Agent: Amalgamated Bank 104

189 Tax Increment Redevelopment Project Area Funds Bond Payment Requirements Tax Increment Financing Bond, Series 2009B Issued December 17, 2009 April 30, 2016 Bonds Bonds Bonds Year Issued Paid Outstanding 2012 $ 65,000 $ 65,000 $ , , , , , , , , , , , , , , , , , ,000 $ 2,970,000 $ 940,000 $ 2,030,000 Interest is payable at 2.50% to 4.00% on June 15 and December 15 of each year commencing on June 15, Paying Agent: Amalgamated Bank 105

190 Tax Increment Redevelopment Project Area Funds Bond Payment Requirements General Obligation Refunding Bonds (Alternate Revenue Source), Series 2012B Issued March 8, 2012 April 30, 2016 Bonds Bonds Bonds Year Issued Paid Outstanding 2013 $ 105,000 $ 105,000 $ , , ,000 70, , , , , ,000-55, , , , , ,000-45, , , , ,000 $ 1,765,000 $ 445,000 $ 1,320,000 Interest is payable at 2.25% to 3.25% on June 15 and December 15 of each year commencing on December 15, Paying Agent: Amalgamated Bank 106

191 Corporate Bond Payment Requirements General Obligation Bonds (Alternative Revenue Source), Series 2008A Issued September 9, 2008 April 30, 2016 Bonds Bonds Bonds Year Issued Paid Outstanding 2010 $ 50,000 $ 50,000 $ ,000 55, ,000 55, ,000 55, ,000 60, ,000 60, ,000 65, ,000-65, ,000-70, ,000-70, ,000-75, ,000-80, ,000-80, ,000-85, ,000-90, ,000-95, ,000-95, , , , , , ,000 $ 1,520,000 $ 400,000 $ 1,120,000 Interest is payable at 2.85% to 4.85% on June 15 and December 15 of each year commencing on December 15, Paying Agent: Amalgamated Bank 107

192 Corporate Bond Payment Requirements General Obligation Bonds (Alternative Revenue Source), Series 2008C Issued September 9, 2008 April 30, 2016 Bonds Bonds Bonds Year Issued Paid Outstanding 2010 $ 5,000 $ 5,000 $ ,000 15, ,000 15, ,000 15, ,000 15, ,000 15, ,000 20, ,000-25, ,000-25, , , , , , , , ,000 $ 1,220,000 $ 100,000 $ 1,120,000 Interest is payable at 2.10% to 4.45% on June 15 and December 15 of each year commencing on December 15, Paying Agent: Amalgamated Bank 108

193 Corporate Bond Payment Requirements General Obligation Bonds (Alternative Revenue Source), Series 2009A Issued December 17, 2009 April 30, 2016 Bonds Bonds Bonds Year Issued Paid Outstanding 2011 $ 115,000 $ 115,000 $ , , , , , , , , , , , , , ,000 $ 1,495,000 $ 1,065,000 $ 430,000 Interest is payable at 2.10% to 4.45% on June 15 and December 15 of each year commencing on June 15, Paying Agent: Amalgamated Bank 109

194 Corporate Bond Payment Requirements General Obligation Limited Tax Bonds, Series 2012A Issued March 8, 2012 April 30, 2016 Bonds Bonds Bonds Year Issued Paid Outstanding 2015 $ 45,000 $ 45,000 $ ,000 45, ,000-45, ,000-45, ,000-50, ,000-50, ,000-50, ,000-55, ,000-55, ,000-60, ,000-60, ,000-65, ,000-70, ,000-75, ,000-75, ,000-80, ,000-85, ,000-90,000 $ 1,100,000 $ 90,000 $ 1,010,000 Interest is payable at 3.00% to 5.25% on June 15 and December 15 of each year commencing on December 15, Paying Agent: Amalgamated Bank 110

195 Corporate Bond Payment Requirements General Obligation Limited Tax Bonds, Series 2014A Issued December 5, 2014 April 30, 2016 Bonds Bonds Bonds Year Issued Paid Outstanding 2016 $ 99,815 $ 99,815 $ - Principal and interest is payable at 2.25% on October 15, Paying Agent: First Merit Bank 111

196 Corporate Bond Payment Requirements General Obligation Limited Tax Bonds, Series 2015 Issued December 2, 2015 April 30, 2016 Bonds Bonds Bonds Year Issued Paid Outstanding 2017 $ 99,715 $ - $ 99,715 Principal and interest is payable at 2.25% on October 15, Paying Agent: First Merit Bank 112

197 Six-Year Summary of Assessed Valuations, Tax Rates and Extensions April 30, 2016 Assessed valuation Total valuation $ 232,276,048 $ 189,062,267 $ 176,633,649 $ 165,827,822 $ 159,792,151 $ 154,875,270 Tax rates Corporate Fire protection Police protection Bond and interest Limited bonds Police pension Fire pension IMRF Total Tax extensions Corporate $ 686,840 $ 598,571 $ 628,992 $ 725,497 $ 664,575 $ 627,709 Fire protection 479, , , , , ,092 Police protection 536, , , , , ,833 Bond and interest 193, , ,757 68, , ,423 Limited bonds 180, , , , , ,678 Police pension 104, , , , , ,867 Fire pension 52,958 50,479 65,531 77,250 48,896 43,365 IMRF ,116 Total $ 2,234,906 $ 2,441,327 $ 2,462,142 $ 2,425,876 $ 2,749,164 $ 2,865,

198 Property Tax Extensions Collections and Taxes Receivable April 30, 2016 Tax Property Gross Taxes Collected Gross Provision Net Levy Tax Prior April 30, Collected Percent Taxes for Loss Taxes Year Extension Years 2016 to Date Collected Receivable and Cost Receivable 2010 $ 2,234,906 $ 2,184,870 $ - $ 2,184, % $ 50,036 $ (50,036) $ ,441,327 2,388,828-2,388, % 52,499 (52,499) ,462,142 2,407,603-2,407, % 54,539 (54,539) ,425,876 2,378,321 (10,837) 2,367, % 58,392 (58,392) ,749,164 1,230,438 1,475,635 2,706, % 43,091 (43,091) ,865,083-1,395,358 (1) 1,395, % 1,469,725 (96,464) 1,373,261 (1) Represents the collection of the first installment of the tax levy. The second (final) installment will be collected during the Village's next fiscal year. 114

199 APPENDIX B PROPOSED FORMS OF OPINIONS OF BOND COUNSEL [LETTERHEAD OF LOUIS F. CAINKAR, LTD.] [TO BE DATED CLOSING DATE]

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204 APPENDIX C SPECIMEN MUNICIPAL BOND INSURANCE POLICY

205 ! MUNICIPAL BOND INSURANCE POLICY! ISSUER: [NAME OF ISSUER] Policy No: MEMBER: [NAME OF MEMBER] BONDS: $ in aggregate principal amount of [NAME OF TRANSACTION] [and maturing on] Effective Date: Risk Premium: $ Member Surplus Contribution: $ Total Insurance Payment: $ BUILD AMERICA MUTUAL ASSURANCE COMPANY ( BAM ), for consideration received, hereby UNCONDITIONALLY AND IRREVOCABLY agrees to pay to the trustee (the Trustee ) or paying agent (the Paying Agent ) for the Bonds named above (as set forth in the documentation providing for the issuance and securing of the Bonds), for the benefit of the Owners or, at the election of BAM, directly to each Owner, subject only to the terms of this Policy (which includes each endorsement hereto), that portion of the principal of and interest on the Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Issuer. On the later of the day on which such principal and interest becomes Due for Payment or the first Business Day following the Business Day on which BAM shall have received Notice of Nonpayment, BAM will disburse (but without duplication in the case of duplicate claims for the same Nonpayment) to or for the benefit of each Owner of the Bonds, the face amount of principal of and interest on the Bonds that is then Due for Payment but is then unpaid by reason of Nonpayment by the Issuer, but only upon receipt by BAM, in a form reasonably satisfactory to it, of (a) evidence of the Owner s right to receive payment of such principal or interest then Due for Payment and (b) evidence, including any appropriate instruments of assignment, that all of the Owner s rights with respect to payment of such principal or interest that is Due for Payment shall thereupon vest in BAM. A Notice of Nonpayment will be deemed received on a given Business Day if it is received prior to 1:00 p.m. (New York time) on such Business Day; otherwise, it will be deemed received on the next Business Day. If any Notice of Nonpayment received by BAM is incomplete, it shall be deemed not to have been received by BAM for purposes of the preceding sentence, and BAM shall promptly so advise the Trustee, Paying Agent or Owner, as appropriate, any of whom may submit an amended Notice of Nonpayment. Upon disbursement under this Policy in respect of a Bond and to the extent of such payment, BAM shall become the owner of such Bond, any appurtenant coupon to such Bond and right to receipt of payment of principal of or interest on such Bond and shall be fully subrogated to the rights of the Owner, including the Owner s right to receive payments under such Bond. Payment by BAM either to the Trustee or Paying Agent for the benefit of the Owners, or directly to the Owners, on account of any Nonpayment shall discharge the obligation of BAM under this Policy with respect to said Nonpayment. Except to the extent expressly modified by an endorsement hereto, the following terms shall have the meanings specified for all purposes of this Policy. Business Day means any day other than (a) a Saturday or Sunday or (b) a day on which banking institutions in the State of New York or the Insurer s Fiscal Agent (as defined herein) are authorized or required by law or executive order to remain closed. Due for Payment means (a) when referring to the principal of a Bond, payable on the stated maturity date thereof or the date on which the same shall have been duly called for mandatory sinking fund redemption and does not refer to any earlier date on which payment is due by reason of call for redemption (other than by mandatory sinking fund redemption), acceleration or other advancement of maturity (unless BAM shall elect, in its sole discretion, to pay such principal due upon such acceleration together with any accrued interest to the date of acceleration) and (b) when referring to interest on a Bond, payable on the stated date for payment of interest. Nonpayment means, in respect of a Bond, the failure of the Issuer to have provided sufficient funds to the Trustee or, if there is no Trustee, to the Paying Agent for payment in full of all principal and interest that is Due for Payment on such Bond. Nonpayment shall also include, in respect of a Bond, any payment made to an Owner by or on behalf of the Issuer of principal or interest that is Due for Payment, which payment has been recovered from such Owner pursuant to the United States Bankruptcy Code in accordance with a final, nonappealable order of a court having competent jurisdiction. Notice means delivery to BAM of a notice of claim and certificate, by certified mail, or telecopy as set forth on the attached Schedule or other acceptable electronic delivery, in a form satisfactory to BAM, from and signed by an Owner, the Trustee or the Paying Agent, which notice shall specify (a) the person or entity making the claim, (b) the Policy Number, (c) the claimed amount, (d) payment instructions and (e) the date such claimed amount becomes or became Due for Payment. Owner means, in respect of a Bond, the person or entity who, at the time of Nonpayment, is entitled under the terms of such Bond to payment thereof, except that Owner shall not include the Issuer, the Member or any other person or entity whose direct or indirect obligation constitutes the underlying security for the Bonds.!