the sale has been postponed until april 8, 2020 (go) 20b pos.pdf · 2020. 3. 16. · the bonds due...

NOTICE OF POSTPONEMENT

FOR CITY OF ELGIN

Kane and Cook Counties, Illinois $9,645,000* General Obligation Corporate Purpose Bonds, Series 2020B

Selling on:

Wednesday, March 18, 2020 Between 10:00 and 10:15 A.M., C.D.T.

(Open Speer Auction Internet Sale)

Referencing the Official Statement and the Official Notice of Sale dated March 9, 2020, for the above referenced bond issue:

THE SALE HAS BEEN POSTPONED UNTIL APRIL 8, 2020

Revised March 16, 2020

For additional information please contact Speer Financial, Inc., Suite 4100, One North LaSalle Street, Chicago, Illinois 60602; telephone (312) 346-3700; FAX (312) 346-8833.

*Subject to change.

New Issue Investment Ratings: Date of Sale: Wednesday, March 18, 2020 S&P Global Ratings … AA+/Stable Outlook Between 10:00 and 10:15 A.M., C.D.T. Fitch Ratings … AAA/Stable Outlook (Open Speer Auction)

Official Statement

Subject to compliance by the City with certain covenants, in the opinion of Chapman and Cutler LLP, Chicago, 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. Interest on the Bonds is not exempt from present State of Illinois income taxes. See “TAX EXEMPTION” herein for a more complete discussion.

$9,645,000*

CITY OF ELGIN Kane and Cook Counties, Illinois

General Obligation Corporate Purpose Bonds, Series 2020B Dated Date of Delivery Book-Entry Due Serially December 15, 2021-2034 The $9,645,000* General Obligation Corporate Purpose Bonds, Series 2020B (the “Bonds”), are being issued by the City of Elgin, Kane and Cook Counties, Illinois (the “City”). Interest is payable semiannually on June 15 and December 15 of each year, commencing December 15, 2020. Interest is calculated based on a 360-day year of twelve 30-day months. The Bonds will be issued using a book-entry system. The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Bonds. The ownership of one fully registered Bond for each maturity will be registered in the name of Cede & Co., as nominee for DTC and no physical delivery of Bonds will be made to purchasers. The Bonds will mature on December 15 in the following years and amounts.

AMOUNTS*, MATURITIES, INTEREST RATES, YIELDS AND CUSIP NUMBERS(1)

Principal Due Interest CUSIP Principal Due Interest CUSIP

Amount* Dec. 15 Rate Yield Number(1) Amount* Dec. 15 Rate Yield Number(1)

$555,000 ...... 2021 _____% _____% __________ $695,000 ...... 2028 _____% _____% __________

575,000 ...... 2022 _____% _____% __________ 715,000 ...... 2029 _____% _____% __________

595,000 ...... 2023 _____% _____% __________ 735,000 ...... 2030 _____% _____% __________

610,000 ...... 2024 _____% _____% __________ 765,000 ...... 2031 _____% _____% __________

635,000 ...... 2025 _____% _____% __________ 790,000 ...... 2032 _____% _____% __________

650,000 ...... 2026 _____% _____% __________ 810,000 ...... 2033 _____% _____% __________

675,000 ...... 2027 _____% _____% __________ 840,000 ...... 2034 _____% _____% __________

Any consecutive maturities may be aggregated into term bonds at the option of the bidder, in which case the mandatory redemption provisions shall be on the same schedule as above.

OPTIONAL REDEMPTION

The Bonds due December 15, 2021-2027, inclusive, are non-callable. The Bonds due December 15, 2028-2034, inclusive, are callable in whole or in part on any date on or after December 15, 2027, at a price of par and accrued interest. If less than all the Bonds are called, they shall be redeemed in such principal amounts and from such maturities as determined by the City and within any maturity by lot. See “OPTIONAL REDEMPTION” herein.

PURPOSE, LEGALITY AND SECURITY

Bond proceeds will be used to (i) finance water and sewer utility projects and (ii) pay the costs of issuing the Bonds. See “THE PROJECT” herein.

In the opinion of Bond Counsel, the Bonds are valid and legally binding upon the City and are payable from any funds of the City legally available for such purpose, and all taxable property in the City is subject to the levy of taxes to pay the same without limitation as to rate or amount, except that the rights of the owners of the Bonds and the enforceability of the Bonds may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws affecting creditors’ rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion.

The Bonds are offered at public sale, subject to the approval of legality by Bond Counsel. Chapman and Cutler LLP, Chicago, Illinois, is also acting

as Disclosure Counsel to the City. Delivery of the Bonds through the facilities of DTC will be on or about April 1, 2020. This Official Statement is dated March 9, 2020, and has been prepared under the authority of the City. An electronic copy of this Official Statement

is available from the www.speerfinancial.com web site under “Debt Auction Center/Official Statements Sales Calendar/Competitive”. Additional copies may be obtained from Ms. Debra Nawrocki, Chief Financial Officer/Budget Director, City of Elgin, 150 Dexter Court, Elgin, Illinois 60120, or from the Municipal Advisors to the City:

*Subject to change.

(1) CUSIP numbers appearing in this Official Statement have been provided by the CUSIP Service Bureau, which is managed on behalf of the American Bankers Association by S&P Capital IQ, a part of McGraw Hill Financial Inc. The City is not responsible for the selection of CUSIP numbers and makes no representation as to their correctness on the Bonds or as set forth on the cover of this Official Statement. Th

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(i)

For purposes of compliance with Rule 15c2-12 of the Securities and Exchange Commission, this document, as

the same may be supplemented or corrected by the City from time to time (collectively, the “Official Statement”), may be treated as an Official Statement with respect to the Bonds described herein that is deemed near final as of the date hereof (or the date of any such supplement or correction) by the City except for the omission of certain information permitted to be omitted pursuant to such Rule.

The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates,

principal amounts and interest rates of the Bonds, together with any other information required by law or deemed appropriate by the City, shall constitute a “Final Official Statement” of the City with respect to the Bonds, as that term is defined in Rule 15c2-12. Any such addendum or addenda shall, on and after the date thereof, be fully incorporated herein and made a part hereof by reference. Alternatively, such final terms of the Bonds and other information may be included in a separate document entitled “Final Official Statement” rather than through supplementing the Official Statement by an addendum or addenda.

No dealer, broker, salesman or other person has been authorized by the City to give any information or to make

any representations with respect to the Bonds other than as contained in the Official Statement or the Final Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized by the City. Certain information contained in the Official Statement and the Final Official Statement may have been obtained from sources other than records of the City and, while believed to be reliable, is not guaranteed as to completeness. THE INFORMATION AND EXPRESSIONS OF OPINION IN THE OFFICIAL STATEMENT AND THE FINAL OFFICIAL STATEMENT ARE SUBJECT TO CHANGE, AND NEITHER THE DELIVERY OF THE OFFICIAL STATEMENT OR THE FINAL OFFICIAL STATEMENT NOR ANY SALE MADE UNDER EITHER SUCH DOCUMENT SHALL CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CITY SINCE THE RESPECTIVE DATES THEREOF.

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 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 City’s beliefs as well as assumptions made by and information currently available to the City. 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.

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.

(ii)

TABLE OF CONTENTS

BOND ISSUE SUMMARY ............................................................................................................... 1 CITY OF ELGIN ........................................................................................................................... 2 INTRODUCTION .......................................................................................................................... 2 AUTHORITY, PURPOSE AND GENERAL DESCRIPTION ..................................................................... 2 SECURITY .................................................................................................................................. 3 SOURCES AND USES ................................................................................................................... 3 OPTIONAL REDEMPTION ............................................................................................................. 3 RISK FACTORS ........................................................................................................................... 4

Construction Risks....................................................................................................................... 4 Finances of the State of Illinois ....................................................................................................... 4 Future Pension Plan Funding Requirements ........................................................................................ 5 Cybersecurity ............................................................................................................................. 5 Local Economy .......................................................................................................................... 6 Loss or Change of Bond Ratings ...................................................................................................... 6 Secondary Market for the Bonds ...................................................................................................... 6 Continuing Disclosure .................................................................................................................. 6 Suitability of Investment ................................................................................................................ 6 Future Changes in Laws ................................................................................................................ 7 Factors Relating to Tax Exemption ................................................................................................... 7 Bankruptcy ................................................................................................................................ 7

GENERAL INFORMATION ............................................................................................................ 8 City Organization and Services ........................................................................................................ 8 Western Growth Area ................................................................................................................... 9 Parks and Recreational Facilities ...................................................................................................... 9 Elgin Riverfront ......................................................................................................................... 10 Transportation ........................................................................................................................... 11 Education ................................................................................................................................ 11 Higher Education ....................................................................................................................... 12 Community Life ........................................................................................................................ 14

SOCIOECONOMIC INFORMATION ................................................................................................ 15 Population ................................................................................................................................ 15 Employment ............................................................................................................................. 16 Unemployment Rates .................................................................................................................. 17 Building Permits ........................................................................................................................ 18 Housing .................................................................................................................................. 19 Income .................................................................................................................................... 20

Commerce and Industry .................................................................................................................. 21 Industrial Activity ...................................................................................................................... 23 Retail Activity ........................................................................................................................... 24 Tax Increment Financing (TIF) Redevelopment Projects ........................................................................ 25 Riverboat Casino........................................................................................................................ 26 Business Statistics....................................................................................................................... 27 Income Tax Revenue History and Motor Fuel Tax Revenue History .......................................................... 28

THE PROJECT ............................................................................................................................ 28 Capital Projects in the Utility Fund .................................................................................................. 28 Abatement of Pledged Taxes ......................................................................................................... 29 Financial Information Regarding the Utilities ...................................................................................... 29

DEFAULT RECORD .................................................................................................................... 31 SHORT-TERM BORROWING ......................................................................................................... 31 DEBT INFORMATION .................................................................................................................. 31

(iii)

PROPERTY ASSESSMENT AND TAX INFORMATION ....................................................................... 35 REAL PROPERTY ASSESSMENT, TAX LEVY AND COLLECTION PROCEDURES .................................. 36

Summary of Property Assessment, Tax Levy and Collection Procedures .................................................... 36 Real Property Assessment and Equalization ....................................................................................... 36

Cook County ......................................................................................................................... 36 Kane County .......................................................................................................................... 39

Property Tax Exemptions ............................................................................................................. 39 Tax Levy and Collections ............................................................................................................. 40

Cook County ......................................................................................................................... 40 Kane County .......................................................................................................................... 42

Property Tax Extension Limitation Law ............................................................................................ 42 Truth in Taxation Law ................................................................................................................. 43

FINANCIAL INFORMATION ......................................................................................................... 43 No Consent or Updated Information Requested of the Auditor ................................................................. 43 Summary Financial Statements ....................................................................................................... 43 Revenues ................................................................................................................................. 48

EMPLOYEE RETIREMENT AND OTHER POSTEMPLOYMENT BENEFITS OBLIGATIONS ....................... 49 Background Regarding Pension Plans ............................................................................................... 50

The Actuarial Valuation ............................................................................................................ 50 GASB Standards ..................................................................................................................... 50 Pension Plans Remain Governed by the Pension Code ........................................................................ 51

Illinois Municipal Retirement Fund.................................................................................................. 51 Contributions ......................................................................................................................... 52 Measures of Financial Position .................................................................................................... 52 Measures of Financial Position-SLEP Plan ..................................................................................... 53

Police Pension Plan .................................................................................................................... 53 Contributions ......................................................................................................................... 53 Measures of Financial Position .................................................................................................... 54

Fire Pension Plan ....................................................................................................................... 54 Contributions ......................................................................................................................... 55 Measures of Financial Position .................................................................................................... 55

Downstate Police and Fire Pension Consolidation Bill ........................................................................... 56 Other Post-Employment Benefits ....................................................................................................... 56 REGISTRATION, TRANSFER AND EXCHANGE ............................................................................... 57 TAX EXEMPTION ....................................................................................................................... 58 CONTINUING DISCLOSURE ......................................................................................................... 60 LITIGATION .............................................................................................................................. 60 CERTAIN LEGAL MATTERS ......................................................................................................... 60 OFFICIAL STATEMENT AUTHORIZATION ..................................................................................... 60 INVESTMENT RATINGS .............................................................................................................. 61 UNDERWRITING ........................................................................................................................ 61 MUNICIPAL ADVISOR ................................................................................................................. 61 CERTIFICATION ......................................................................................................................... 62 APPENDIX A - FISCAL YEAR 2018 AUDITED FINANCIAL STATEMENTS APPENDIX B - DESCRIBING BOOK-ENTRY-ONLY ISSUANCE APPENDIX C - PROPOSED FORM OF OPINION OF BOND COUNSEL APPENDIX D - PROPOSED FORM OF CONTINUING DISCLOSURE UNDERTAKING OFFICIAL BID FORM OFFICIAL NOTICE OF SALE

City of Elgin, Kane and Cook Counties, Illinois General Obligation Corporate Purpose Bonds, Series 2020B

1

BOND ISSUE SUMMARY

This Bond Issue Summary is expressly qualified by the entire Official Statement, including the Official Notice of Sale and the Official Bid Form, which are provided for the convenience of potential investors and which should be reviewed in their entirety by potential investors. Issuer: City of Elgin, Kane and Cook Counties, Illinois. Issue: $9,645,000* General Obligation Corporate Purpose Bonds, Series 2020B. Dated Date: Date of delivery, expected to be on or about April 1, 2020. Interest Due: Each June 15 and December 15, commencing December 15, 2020. Principal Due: Serially each December 15, commencing December 15, 2021 through 2034, as detailed

on the front page of this Official Statement. Optional Redemption: Bonds maturing on or after December 15, 2028, are callable at the option of the City on

any date on or after December 15, 2027, at a price of par plus accrued interest. See “OPTIONAL REDEMPTION” herein.

Authorization: The Bonds are being issued pursuant to the home rule powers of the City under Section

6 of Article VII of the Illinois Constitution of 1970 and a bond ordinance adopted by the City Council of the City on the 18th day of March, 2020.

Security: The Bonds will constitute valid and legally binding obligations of the City payable as to

principal and interest from any funds of the City lawfully available for such purpose, and from ad valorem taxes levied against all taxable property within the City without limitation as to rate or amount.

Credit Ratings: The Bonds have been rated “AA+/Stable Outlook” by S&P Global Ratings and

“AAA/Stable Outlook” by Fitch Ratings. See “INVESTMENT RATINGS” herein. Purpose: Bond proceeds will be used to (i) finance water and sewer utility projects and (ii) pay

the costs of issuing the Bonds. See “THE PROJECT” herein. Tax Exemption: Chapman and Cutler LLP, Chicago, Illinois, will provide an opinion as to the federal

tax exemption of the interest on the Bonds as discussed under “TAX EXEMPTION” in this Official Statement. Interest on the Bonds is not exempt from present State of Illinois income taxes.

No Bank Qualification: The Bonds are not “qualified tax-exempt obligations” under Section 265(b)(3) of the

Internal Revenue Code of 1986, as amended. Bond Registrar/Paying Agent: U.S. Bank National Association, Chicago, Illinois. Delivery: The Bonds are expected to be delivered on or about April 1, 2020. Book-Entry Form: The Bonds will be registered in the name of Cede & Co. as nominee for The

Depository Trust Company (“DTC”), New York, New York. DTC will act as securities depository for the Bonds. See APPENDIX B herein.

Denomination: $5,000 or integral multiples thereof. Municipal Advisor: Speer Financial, Inc., Chicago, Illinois.

*Subject to change.


2


David J. Kaptain Mayor

City Council Members

Corey Dixon Rosamaria Martinez Carol J. Rauschenberger Terry L. Gavin Tish S. Powell Toby Shaw Baldemar Lopez F. John Steffen

___________________________________

Richard G. Kozal City Manager

Debra Nawrocki Chief Financial Officer/

Budget Director

Kimberly A. Dewis City Clerk

William A. Cogley Corporation Counsel and Chief Development Officer

INTRODUCTION The purpose of this Official Statement is to set forth certain information concerning the City of Elgin, Kane and Cook Counties, Illinois (the “City”), in connection with the offering and sale of its $9,645,000* General Obligation Corporate Purpose Bonds, Series 2020B (the “Bonds”). This Official Statement contains “forward-looking statements” that are based upon the City’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 City. 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 City nor any other party plans to issue any updates or revisions to these forward-looking statements based on future events.

AUTHORITY, PURPOSE AND GENERAL DESCRIPTION The Bonds are being issued pursuant to the home rule powers of the City under Section 6, Article VII of the 1970 Constitution of the State of Illinois (the “Illinois Constitution”) and an ordinance to be adopted by the City Council of the City (the “City Council”) on the 18th day of March, 2020 (the “Bond Ordinance”). Bond proceeds will be used to (i) finance water and sewer utility projects (the “Project”) and (ii) pay the costs of issuing the Bonds. See “THE PROJECT” herein.

*Subject to change.


3

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 U.S. Bank National Association, Chicago, Illinois (the “Registrar”). The Bonds will mature as shown on the cover page hereof. Interest on the Bonds will be payable each June 15 and December 15, beginning December 15, 2020. 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.

SECURITY

The Bonds constitute valid and legally binding full faith and credit general obligations of the City, payable from ad valorem taxes levied on all taxable property in the City, without limitation as to rate or amount. The Bond Ordinance provides for the levy of ad valorem taxes, unlimited as to rate or amount, upon all taxable property within the City in amounts sufficient to pay, as and when due, all principal of and interest on the Bonds. The Pledged Taxes will not be levied to make the payment of interest due on the Bonds on December 15, 2020, which payment will be made by the City from funds of the City on hand and lawfully available for such purpose, including user fees generated by the Waterworks and Sewerage System. See “THE PROJECT”. The Bond Ordinance will be filed with the County Clerks of The Counties of Kane and Cook, Illinois, and will serve as authorization to said County Clerks to extend and collect the property taxes as set forth in the Bond Ordinance.

SOURCES AND USES The sources and uses of funds resulting from the Bonds are shown below:

SOURCES: Principal Amount $ [Net ]Original Issue Premium [Discount] Total Sources $

USES: Deposit to Project Fund $ Costs of Issuance* Total Uses $

______________________________ * Includes underwriter’s discount and other issuance costs.

OPTIONAL REDEMPTION

The Bonds due December 15, 2021-2027, inclusive, are non-callable. The Bonds due December 15, 2028-2034, inclusive, are callable in whole or in part on any date on or after December 15, 2027, at a price of par and accrued interest. If less than all the Bonds are called, they shall be redeemed in such principal amounts and from such maturities as determined by the City and within any maturity by lot.


4

The Bond Registrar will give notice of redemption, identifying the Bonds (or portions thereof) to be redeemed,

by mailing a copy of the redemption notice by first class mail not less than thirty (30) days nor more than sixty (60) days prior to the date fixed for redemption to the registered owner of each Bond (or portion thereof) to be redeemed at the address shown on the registration books maintained by the Bond Registrar. Unless moneys sufficient to pay the redemption price of the Bonds to be redeemed at the option of the City are received by the Bond Registrar prior to the giving of such notice of redemption, such notice may, at the option of the City, state that said redemption will be conditional upon the receipt of such moneys by the Bond Registrar on or prior to the date fixed for redemption. If such moneys are not received, such notice will be of no force and effect, the City will not redeem such Bonds, and the Bond Registrar will give notice, in the same manner in which the notice of redemption has been given, that such moneys were not so received and that such Bonds will not be redeemed. Otherwise, prior to any redemption date, the City will deposit with the Bond Registrar an amount of money sufficient to pay the redemption price of all the Bonds or portions of Bonds which are to be redeemed on that date.

Subject to the provisions for a conditional redemption described above, notice of redemption having been given as described above and in the Bond Ordinance, and notwithstanding failure to receive such notice, the Bonds or portions of Bonds so to be redeemed will, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date (unless the City shall default in the payment of the redemption price) such Bonds or portions of Bonds shall cease to bear interest. Upon surrender of such Bonds for redemption in accordance with said notice, such Bonds will be paid by the Bond Registrar at the redemption price.

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. Construction Risks There are potential risks that could affect the ability of the City to timely complete the Project. While preliminary costs have been projected by the City’s consulting architects, not all of the construction contracts have been let by the City. No assurance can be given that the cost of completing the Project will not exceed available funds. Completion of the Project involves many risks common to construction projects such as shortages or delays in the availability of materials and labor, work stoppages, labor disputes, contractual disputes with contractors or suppliers, weather interferences, construction accidents, delays in obtaining legal approvals, unforeseen engineering, archeological or environmental problems and unanticipated cost increases, any of which could give rise to significant delays or cost overruns. 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 (the “General Assembly”) enacted a budget (the “Fiscal Year 2018 Budget”) for the State fiscal year ending June 30, 2018 (the “State Fiscal Year 2018”), overriding the Governor’s veto. On May 31, 2018, the General Assembly passed a budget (the “Fiscal Year 2019 Budget”) for the State for fiscal year ending June 30, 2019 (the “State Fiscal Year 2019”), and on June 4, 2018, the Governor approved the same. On June 1, 2019, the General Assembly passed a budget (the “Fiscal Year 2020 Budget”) for the State for fiscal year ending June 30, 2020 (the “State Fiscal Year 2020”), and on June 5, 2019, the Governor approved the same.


5

Under current law, the State shares a portion of sales tax, income tax and motor fuel tax revenue with municipalities, including the City. The State’s general fiscal condition and the underfunding of the State’s pension systems have materially adversely affected the State’s financial condition and may result in decreased or delayed revenues allocated to the City. In addition, the Fiscal Year 2018 Budget, the Fiscal Year 2019 Budget and the Fiscal Year 2020 Budget contain a provision reducing the amount of income tax revenue to be deposited into the Local Government Distributive Fund for distribution to municipalities, like the City, by 10% for State Fiscal Year 2018 and by 5% for State Fiscal Year 2019 and State Fiscal Year 2020. The Fiscal Year 2018 Budget, the Fiscal Year 2019 Budget and the Fiscal Year 2020 Budget also include a service fee for collection and processing of locally-imposed sales taxes. Such fee was 2% of such sales taxes for State Fiscal Year 2018 and was reduced to 1.5% of such sales taxes for State Fiscal Year 2019 and State Fiscal Year 2020. The City cannot determine at this time the financial impact of these provisions on its overall financial condition but such provisions may result in lower income tax revenues and sales tax revenues distributed to the City. The City 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. Future Pension Plan Funding Requirements The City participates in the Police Pension Plan and the Fire Pension Plan, both as hereinafter defined. Under the Illinois Pension Code, as amended (the “Pension Code”), the City is required to contribute to each plan in order to achieve a Funded Ratio of 90% by 2040. In order to achieve the 90% Funded Ratio for both plans by 2040, it is expected that the annual employer contributions required by the City will increase over time. The City also participates in the Illinois Municipal Retirement Plan, which is a defined benefit pension plan administered by the Illinois Municipal Retirement Fund (“IMRF”); employer contributions are projected by the IMRF to increase over time. Increasing annual required employer contributions for the City could have a material adverse effect on the finances of the City. The Pension Code allows the State Comptroller, after proper procedures have taken place, to divert State payments intended for the City to the Police Pension Plan and the Fire Pension Plan to satisfy contribution shortfalls by the City. If the City does not make 100% of its annual required contributions to the Police Pension Plan and Fire Pension Plan, the City may have revenues withheld by the State Comptroller. Such withholdings by the State Comptroller could adversely affect the City’s financial health and operations. See “EMPLOYEE RETIREMENT AND OTHER POSTEMPLOYMENT BENEFITS OBLIGATIONS” herein for a more complete discussion. Cybersecurity Computer networks and data transmission and collection are vital to the efficient operation of the City. Despite the implementation of network security measures by the City, its information technology and infrastructure may be vulnerable to deliberate attacks by hackers, malware, ransomware or computer virus, or may otherwise be breached due to employee error, malfeasance or other disruptions. Any such breach could compromise networks and the information stored thereon could be disrupted, accessed, publicly disclosed, lost or stolen. Although the City does not believe that its information technology systems are at a materially greater risk of cybersecurity attacks than other similarly-situated governmental entities, any such disruption, access, disclosure or other loss of information could have an adverse effect on the City’s operations and financial health. Further, as cybersecurity threats continue to evolve, the City may be required to expend significant additional resources to continue to modify and strengthen security measures, investigate and remediate any vulnerabilities, or invest in new technology designed to mitigate security risks.


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Local Economy The financial health of the City 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 City. Loss or Change of Bond Ratings The Bonds have received credit ratings from S&P Global Ratings, New York, New York, and Fitch Ratings, New York, New York. The ratings can be changed or withdrawn at any time for reasons both under and outside the City’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. 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. Continuing Disclosure

A failure by the City to comply with the Undertaking for continuing disclosure (see “CONTINUING DISCLOSURE” and “APPENDIX D - PROPOSED FORM OF CONTINUING DISCLOSURE UNDERTAKING” 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 “Commission”) 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.


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Future Changes in Laws Various state and federal laws, regulations and constitutional provisions apply to the City and to the Bonds. The City 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 City, or the taxing authority of the City. 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 City, the taxable value of property within the City, and the ability of the City 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 City 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 (“Congress”) 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 City’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 City.

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 City 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 City 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 opinion of Bond Counsel to be delivered with respect to the Bonds will be similarly qualified.


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GENERAL INFORMATION

Located along the Fox River, the City lies approximately 38 miles northwest of downtown Chicago and covers an area of approximately 38 square miles. Neighboring communities include Sleepy Hollow, West Dundee and East Dundee to the north, Hoffman Estates and Streamwood to the east, Bartlett to the southeast, and South Elgin to the south. Immediately west of the City is unincorporated Kane County. Approximately one-fifth of the current equalized assessed valuation (the “EAV”) lies in Cook County and four-fifths lies in Kane County. A special census in March 2008 reported a population of 104,939, the 2010 Census population is reported at 108,188, and the 2018 Census estimated the population at 113,023. The Chicago Metropolitan Agency for Planning (“CMAP”) estimates the City’s population could be 168,207 by 2040. The City’s location at the north end of the growing “Fox Valley” region and along the Interstate 90 Northwest Tollway’s “Golden Corridor” has contributed to substantial residential, commercial and industrial growth in the City in recent years.

Annexation activity over the past two decades has been substantial. During the three years beginning in 2000

and ending in 2002, approximately 488 acres were annexed for constructing a combination of business parks and residential subdivisions. A total of 6,995 acres have been annexed in 2003 through 2006. In 2007 the City annexed 623.68 acres. Larger residential annexations include HPI Elgin West Assemblage South Portion (332 acres), Trinity Chase (111.58 acres) and Weseman Property (80.00 acres). In 2008 the City annexed 73.65 acres. Larger annexations included Tall Oaks Unit 4 (5.27 acres), Randall Commons (6.9 acres), HRT Medical Office Property (2.74 acres), Henrikson Property (2.99 acres) and Burnidge Property/Eagles Club (55.75 acres). In 2009 the City annexed 55.21 acres. Larger residential annexations include McKay/Nava Properties (3.61 acres) and Capitani Parcel – Ponds of Stony Creek (50 acres). There were no annexations related to property development in 2010. In 2011 the City annexed 9.67 acres, on which sits the Second Baptist Church of Elgin. There were no annexations related to property development in 2012. In 2013 the City annexed 5.83 acres, in which now resides the Brilliance Elgin Subaru Dealership. In 2014 the City annexed a total of 64.80. Larger annexations include Daching Business Park (60.33 acres) and the 2561 Big Timber Industrial Park (4.47 acres). In 2015, 4.35 acres were annexed at 3191 U.S. Route 20. There were no annexations related to property development in 2016-2019. City Organization and Services

The City was incorporated under a special charter from the State in 1854, and is a home rule unit under the Illinois Constitution. The City operates under the Council-Manager form of government with a Mayor and six City Council members elected at large for four-year staggered terms. The City Council appoints a City Manager and Treasurer, and the Mayor appoints a Clerk who is confirmed by the City Council. All City employees, approximately 649 full-time employees, report to the City Manager, who is responsible for the daily operations of the City. The Fiscal Services Department is responsible for preparing an operating budget subject to approval by the City Council. The City provides a Police Department of 183 full-time officers, and a Fire Department which operates 7 fire stations and has 133 full-time employees of which 103 are certified paramedics.

Various non-supervisory City employees are members of collective bargaining units. These units have multi-year contracts of varying length. The Policeman’s Benevolent Association Unit 54 contract was settled in 2016 and expired on December 31, 2019. The contract is currently under negotiation. The International Association of Firefighter’s contract will expire on December 31, 2021. The new contract was finalized in December of 2019. The negotiations resulted in a 2.5% increase for each year. The Clerical Technical Employees and the Public Works Employees Group are both represented by the Services Employee Union International. The Public Works Employers Group contract will expire on December 31, 2021. The new contract was finalized in April of 2018. The negotiations resulted in a 2.5% increase for each of the years 2018 and 2019 (with wage reopeners for 2020 and 2021). The Clerical Technical Employees contract expired December 31, 2019. The contract is currently under negotiation. City officials consider their labor relations with employees to be excellent. Current agreements prohibit strikes and there has been no history of strikes.


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The City provides water treatment and distribution services to residents and also currently sells water to the Village of Sleepy Hollow, a separate unit of local government. The City formerly had a similar agreement with the Village of Bartlett which terminated in May, 2019. The rate for the adjoining jurisdictions is 125% of the City’s rate. During 1990 the City became responsible for the ownership and maintenance of the sewer interceptor system within its corporate limits. The Fox River Water Reclamation District continues to be responsible for sewage treatment. The City has a rating of four for Building Code Effectiveness from the Insurance Service Office (“ISO”). The rating system assesses a community’s standards and implementation of codes related to high quality, safe new construction. With a rating scale ranging from one to ten, with one being the best, the City received one of the highest ratings in the region. Additionally, the City has attained a rating of two for its Fire Service from the ISO. Western Growth Area The City adopted a new comprehensive plan in 2018, and that plan continues the commitment by the City to quality land resource management for tens of thousands of acres on the City’s western edge. The plan puts forth growth management policies that direct a balance between the need to develop, the cost of development, and conservation of the natural environment. Development within the City’s western growth area will continue to demonstrate the use of innovative architecture, site planning, and land design of such quality as to set a standard of excellence for subsequent development. Currently, the City includes more than 23,700 acres of land, but another 47,500 unincorporated acres are within the City planning area, mostly within the western growth area. The vast majority of undeveloped land in the City’s western growth area will develop residentially. The prices for new homes being built in the western growth area range from about $200,000 to over $530,000. The vision of the western growth area is to develop healthy, vibrant neighborhoods which offer qualitatively better places for people to live, shop, work, and recreate; places where people can connect with nature and feel a sense of community; have the freedom to choose their means of transportation, choose from a variety of housing types and recreation amenities, and participate in civic activities. Parks and Recreational Facilities The City's Parks and Recreation Department (the “Park Department”) oversees some 1,711 acres of parks and open space. In total, the City currently has 75 parks. Wing Park, the regional park on the City’s near west side, has a large family aquatic center, seven baseball fields, a band shell, two shelters, a golf course, basketball courts, and tennis courts. Lords Park, the regional park on the City's east side, also has a family aquatic center, basketball courts, a zoo, nine baseball fields, two picnic shelters, natural history museum, pavilion, three lagoons, and tennis courts. Hawthorne Hill Nature Center and Park is a 66-acre natural area with interpretive trails, fishing ponds, and a 4,800 square foot nature center. Trout Park, on the City's northeast side, has a nature preserve, baseball field, and a picnic shelter. The City, along with the Kane County Forest Preserve District, owns Jack Cook Park and Forest Preserve, a 224-acre parcel on the City's far-west side. A Phase I development took place in 2013 and included two soccer fields, tennis and basketball courts, a shelter, roadway and parking lot. Phase II development was completed in 2017 and included expansion of the parking lot to accommodate 100 vehicles.


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The Park Department manages three City-owned golf courses. The Wing Park Golf Course, a nine-hole course that is very popular with beginners and senior golfers, is the oldest publicly owned golf course in the State. The Highlands of Elgin (the “Highlands”), an eighteen-hole championship course, is noted by Chicagoland Golf as one of the best golfing values in all of the State. The Highlands’ beautiful prairie style clubhouse compliments the golf course’s links design. The clubhouse includes a program room for winter activities, a golf simulator with 3D technology and 60 different courses, and the Grumpy Goat Tavern and Restaurant. Bowes Creek Country Club opened in 2009 and provides golfers all the amenities associated with a private country club experience at a public golf course price. The clubhouse features Porter's Pub with seating for over 250 patrons. The pub's design creates the feeling of an authentic English pub with crafted tin ceilings, tile floors, and a Brunswick Bar. The Highlands and Bowes Creek Country Club made the top ten "Golfweek Best Courses You Can Play in Illinois" list at number 2 and number 8, respectively, establishing the City as a true golf destination city. Residents and visitors to the City benefit from The Edward Schock Centre of Elgin (“The Centre”), a state-of-the-art recreation facility located in the City’s downtown. The $41.1 million facility was opened November 25, 2002. This 185,000 square foot facility is a monumental addition to the quality of life and a community enhancement for the downtown. The Centre is comprised of a full service fitness center, three indoor pools, a field house with three basketball courts, a 1/8 mile walking track, racquetball courts, free-standing climbing wall, birthday party rooms, preschool center, recreation programming rooms, meeting rooms and a 300-seat banquet facility. Since the opening of The Centre: 4,700 kids birthday parties have been hosted and 700 weddings and quinceañeras; 3,100 children have received early childhood education; 3,600 children have participated in youth dance; 15,000 children have played in the youth basketball program; 40,000 children have been taught how to swim. The walking track is free for all who wish to pursue a healthy lifestyle. In total, visitors and users of The Centre average over 800,000 yearly. The Eastside Recreation Center (“ERC”) is a 40,000 square foot facility located on the City’s east side. The ERC provides a low cost alternative to The Centre. In 2011, the City was awarded a $1.6 million grant to renovate the facility to make it more energy efficient, safer, more comfortable and functional. The renovation was completed in 2013 and has resulted in an increase in fitness memberships and program participants. The Park Department also provides a wide variety of general recreation programs, which take place throughout the City. These programs include athletic leagues, art and dance, fitness, swimming, preschool, camps, boxing, martial arts, special events, enrichment and educational programs. These programs are provided for all age groups and ability levels, from infants to senior citizens. The Elgin Sports Complex is comprised of ten lighted softball fields, 11 soccer fields, two sand volleyball courts and one of the only BMX tracks in the State. During the weekdays, residents enjoy the sports complex as they participate in many different active leagues and events. On the weekends, from early April to late October, the Elgin Sports Complex hosts approximately thirty different tournaments. These tournaments bring approximately 1,600 teams and their fans to the sports complex, resulting in 300,000 estimated visitors. Many of these teams come from out of the area, and out of state, which benefits the local economy. Elgin Riverfront Part of the City's riverfront, specifically Riverside Drive, was designated a River Edge Redevelopment Zone (RERZ) in 2009 by the Illinois Department of Commerce and Economic Opportunity (DCEO). The RERZ program was developed to “revive and redevelop environmentally challenged properties adjacent to rivers in Illinois.” Inclusion in this zone provides additional funding opportunities for the City to revitalize this riverfront area located within the central business district.


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In October 2010, the City was awarded a River’s Edge Redevelopment Grant to reconstruct Riverside Drive. The funding is provided by Illinois Jobs Now! Capital plan, administered by DCEO for the demolition of the existing Riverside Drive decking and the construction of a new environmentally sensitive structure creating the Riverside Drive Promenade. Construction began in June 2012 and was completed in fall 2014. Features of the Riverside Drive Promenade include permeable pavers, bio-swales, traffic calming devices and bicycle paths consistent with existing riverfront improvements in Elgin’s downtown. Transportation The City is ideally positioned with highway access to all points in the Chicago metropolitan area. To the east, Interstate 90 connects the City to O’Hare International Airport and downtown Chicago. Three, full-service interchanges on Interstate 90 serve residents, businesses and visitors at the major north-south transportation corridors of Illinois Route 31, Illinois Route 25 and Randall Road. Illinois Routes 19 and 58 and U.S. Route 20 are the additional east-west transportation corridors serving the City residents. The Elgin-O’Hare Expressway comprises a portion of U.S. Route 20 and is continuing to be developed as a western access to O’Hare International Airport. The Elgin-O’Hare Expressway will ultimately serve as the City’s second connection to O’Hare International Airport. Commuter rail transportation is available through the Metropolitan Rail’s Milwaukee Road (Metra) line. The City has three commuter train stations for passengers commuting to the Chicago business district. Bus service connects with all three commuter train stations. Air transportation is available from O’Hare International Airport, approximately 22 miles southeast of the City along Interstate 90. Commercial trucking and rail freight services are also available. Bus transportation for the City and neighboring communities is provided by the State-funded Pace Suburban Bus Service of the Regional Transportation Authority (RTA). Dial-a-Ride services are also provided by Pace and is available for those who are unable to use regular bus service, such as the elderly or physically challenged. The service operates on a door-to-door basis during weekdays. There is motor coach bus service available daily from the City to O’Hare International Airport, Chicago, Rockford, Madison, Wisconsin and Dubuque, Iowa. Education The City is a regional center for learning as is evidenced from the descriptions of the schools below. School District Number U-46 (“District U-46”) is the second largest district in the State, serving nearly 39,000 students in 11 communities, including the City. District U-46 offers a well-rounded and rigorous preK-12 education for students at two early learning centers, forty elementary schools, eight middle schools, five high schools, and two alternative programs for middle and high school students. About 47 percent, or 18,250, of the students in District U-46 are residents of the City. District U-46 has 4,754 full-time equivalent employees, including 2,587 teachers. More than 2,000 City residents are employed by District U-46, and about 23 percent of the teachers are City residents.


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The State designated 45 of District U-46’s 53 K-12 schools as “Commendable” in 2018, and District U-46 ranked 20th among the nation’s 200 largest school districts for academic growth according to a study by Stanford University. All elementary schools offer a full-day play-based kindergarten program to prepare students for success in elementary school. Nearly 11,000 students are on their way to becoming bilingual and biliterate through their participation in the District U-46’s award-winning Dual Language program. District U-46 is home to 67 National Board Certified Teachers, the highest credential available to American educators. The Academy programs at each of the five high schools, including the Gifted and Talented Academy at Elgin High School and the Visual and Performing Arts Academy at Larkin High School, provide engaging hands-on learning opportunities. As a large unit school district, District U-46 offers students a variety of extracurricular activities from sports to fine arts programs and performance venues, WEPS 88.9 FM radio station, and a planetarium that includes the 1901 Elgin National Watch Company Observatory. The Elgin Academy (the “Academy”), founded in 1839, is the oldest independent, co-ed, college-preparatory day school in the Chicago area. The Academy serves Preschool through 12th grade with an enrollment of approximately 340 students. The school occupies an eighteen-acre campus in the Historical District of the City. The Academy is committed to academic excellence and developing the full potential of each student. Higher Education Since 1949, Elgin Community College (“ECC”) has been dedicated to improving lives through learning. As a regionally accredited institution, ECC continues to offer some of the best programs in the region. In addition to offering six associate’s degree programs, the college also offers more than 150 career-oriented occupational degrees and certificates, corporate and continuing education programs, and a full complement of pre-collegiate courses and initiatives. ECC’s 360 square-mile district is home to approximately 447,800 residents, 19,990 businesses, four public school districts, and 33 communities. The U.S. Department of Education has designated ECC a Hispanic-serving institution. ECC has also been distinguished as a military-friendly institution. ECC is a nine-time recipient of the Government Finance Officers Association’s Certificate for Excellence in Financial Reporting. The national certificate acknowledges and encourages ECC’s efforts in making its reports transparent and accessible to the public. ECC also maintains an excellent credit rating from Moody’s Investors Service (“Moody’s”), a world-recognized credit rating agency. ECC has held an Aaa credit rating from Moody’s since 2009. The Moody’s rating is the highest credit rating available. Affordability, accountability and accessibility remain core foundations at ECC. Tuition remains low while the college continues to offer financial aid assistance.


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Over 20,000 credit and non-credit students are currently enrolled and the number of degrees and certificates awarded by ECC has increased 32 percent over the past decade. Additionally, an estimated 70,000 community members enjoy performances, lectures and gallery shows through the college’s arts and humanities centers. The following currently have formal agreements in place with ECC:

• Columbia College of Missouri • Northern Illinois University, DeKalb • Roosevelt University, Schaumburg and Chicago Campuses • Western Illinois University, Macomb • Judson University, Elgin • Indiana University in Bloomington, Indiana • Franklin University, Columbus, Ohio • California University of Pennsylvania • Global Campus through University of Illinois – Chicago • Kaplan University – Online • University of Wisconsin, Green Bay • DeVry University • Indiana Wesleyan-online • Robert Morris University, Chicago • University of St. Francis, Joliet • Northeastern Illinois University, Chicago • Chicago State University, Chicago • Governor’s State University, University Park • Argosy University • Bradley University, Peoria • DePaul University, Chicago • Illinois Institute of Art – Schaumburg • Iowa Wesleyan University • Kendall College • Lexington College • National Louis University, Elgin • Northwood University, Glen Ellyn • Rockford College • Southern Illinois University, Carbondale • University of Phoenix

Also located in the City is Judson University, a four-year liberal arts college established in 1963. The university has an enrollment of approximately 1,300 people, and is located on a 90 acre campus along the Fox River. Judson University offers more than 60 undergraduate majors, minors and pre-professional programs and is currently the only evangelical Christian university to offer an accredited architecture program. Judson University’s adult undergraduate offerings include Management and Leadership (also available online); Human Services; Human Resource Management; Criminal Justice and Management Technology Systems. Graduate programs include the Master of Architecture, Master of Education and Master of Organizational Leadership with more graduate programs under consideration. Judson’s 90-acre campus of woods and spacious lawns is nestled along the Fox River. Judson is an active member of the City and is committed to serving the City’s needs through strong partnerships with businesses, schools and non-profit agencies. Established more than 125 years ago, National Louis University (“NLU”) is one of Chicago’s oldest private universities and a leader in providing a quality education for the adult learner. NLU is a nonprofit, non-denominational university serving more than 8,000 students in three colleges: National College of Education; College of Arts & Sciences; and College of Management and Business. It offers bachelors, masters and doctoral degrees in 60 fields including education, management, human services, counseling, and other community-serving disciplines. NLU’s reach is national with five campus locations in Illinois: Downtown Chicago, Elgin, Lisle, North Shore, and Wheeling. NLU first opened its academic center in the City in 1979, and currently resides in an 18,900 square foot building located in the Leslie Oaks Business Center.


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Devry University and Robert Morris College also have satellite campuses in the City. Additional opportunities for higher education are available to City residents from the various colleges and universities throughout the Chicago metropolitan area. Community Life The City is a regional health care center serving area residents with two state-of-the-art health care facilities, Presence Saint Joseph Hospital and Advocate Sherman Hospital. Founded in 1902, Amita Health Saint Joseph Hospital (the “Hospital”), is a 184 bed full-service hospital with a Level II Trauma Center. The Hospital offers services from inpatient care, outpatient services, surgical care, emergency and urgent care, wound and non-healing wound care using the Elgin area's only hyperbaric oxygen chamber, compassionate adult and adolescent behavioral (mental) health (psychiatric) care services and more. The Hospital also has a state-of-the-art cancer center with the area's only Cancer Rehab Program and Lymphedema treatment program, a nationally-recognized heart & vascular institute providing the highest rated heart surgery, the area's only Women's Heart Center and a new patient tower. With more than 400 physicians on staff, 1,200 associates, 184 beds and 300 volunteers, the Hospital is known for providing leading-edge care and technologies to the communities they serve. Advocate Sherman Hospital (“Sherman Health”) is an acute care facility with highly skilled physicians and clinical professionals offering a comprehensive range of health care services. Since 1888, Sherman Health has provided quality, compassionate care to its patients and communities, and is a leader in delivering the most advanced technologies and services available in the northwest suburbs. U.S. News & World Report has named Sherman Health a 2018-2019 Best Regional Hospital. In addition, Sherman Health has ranked high performing in aortic valve surgery, congestive heart failure, colon cancer surgery, COPD, diabetes and endocrinology, gastroenterology and GI surgery, geriatrics, hip replacement, knee replacement and pulmonology. Sherman Hospital employs more than 2,200 individuals and has more than 600 dedicated physicians on its medical staff. Named “Orchestra of the Year” an unprecedented four times by the Illinois Council of Orchestras, (1988,1999, 2005 and 2016) and winner of a 2010 Elgin Image Award, the Elgin Symphony Orchestra (“ESO”), now in its 67th season, is respected for exceptional performance, innovative education programs, and community outreach initiatives. Founded in 1950 by Douglas Steensland at ECC, the ESO has benefited from the contributions of many talented conductors and musicians during its sixty-three year history. ESO is unmatched for quality music and a fun, relaxing, cultural experience. In addition to magnificent music performed by some of the best musicians in the region, patrons can enjoy a drink, time with friends and even shop at the Elgin Symphony League Boutique in the lobby of the Hemmens Cultural Center. From start to finish – the ESO brings world class, big city entertainment without the hassles of the big city. The Music Heals program with Alexian Brothers Health System, which began in December 2013, sees musicians perform twice per month for patients, families and staff at Alexian Brothers Medical Center, Alexian Brothers Women and Children’s Hospital, and St. Alexius Medical Center. In 2014, the ESO partnered with Gail Borden Public Library to provide free Family Concerts, and extended its Listeners Club to the Greenfields of Geneva. Library services are available to City residents from the Gail Borden Public Library District (the “Library”), which is a separate, non-component unit of government. The Library records over 1,000,000 visits annually. Approximately 99,637 of the 144,597 individuals living within the Library’s boundaries are registered Library patrons. Small portions of the City are also served by the Bartlett Public Library District and the Dundee Township Public Library District.


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Serving and collaborating with the local community since 1874, the Library’s main prairie style building along the Fox River was completed in 2003. Its first branch opened just west of Randall and Bowes in 2009. The beautiful sustainable Rakow Branch situated adjacent to wetlands earned the rare gold status from U.S. Green Building Council and is a living educational classroom for visitors. The Library opened a second branch in South Elgin in 2016. The Library offers books, eBooks, streaming movies and classes, dynamic programming with Science, Technology, Engineering and Math (“STEM”) and technology themes, as well as special events such as job and career expos, technology fairs and new-parent initiatives. Unique museum-quality exhibits have featured life-size dinosaurs, interactive exhibits such as Adventures with Clifford The Big Red Dog™ and the history of space, which gave local students the opportunity to chat live with an astronaut aboard the International Space Station. The Library’s partnerships with the community have helped bring a diverse array of literacy initiatives to residents of all ages. The Library works regularly with District U-46 and local private schools to ensure student participation in the annual summer reading program to maintain student reading skills over the summer. One library card promotion resulted in 8,000 residents signing up for library cards in one month. The Library’s outreach initiatives bring storytelling, programming and materials to many in the community. The Library and its staff members have been recognized as leaders across the State as well as on a national level. Among its numerous awards, the Library received the nation’s highest honor for the industry, the National Medal for Museum and Library Service in 2009.

SOCIOECONOMIC INFORMATION The following statistics pertain principally to the City. Additional comparisons are made with Kane and Cook

Counties and the State. Population

The City continues to see progressive gains in population, as summarized below.

City Population Trends(1)

The City Kane County Cook County

Percentage Percentage Percentage

Year Population Growth Population Growth Population Growth

1950 Census ...... 44,223 — 150,388 — 4,508,792 —

1960 Census ...... 49,447 11.81% 208,246 38.47% 5,129,725 13.77%

1970 Census ...... 55,691 12.63% 251,005 20.53% 5,492,369 7.07%

1980 Census ...... 63,668 14.32% 278,405 10.92% 5,253,655 (4.35%)

1990 Census ...... 77,010 20.96% 314,934 13.12% 5,105,067 (2.83%)

1996 Census ...... 85,068 10.46% N/A N/A N/A N/A

2000 Census ...... 94,487 11.07% 404,119 28.32% 5,376,741 5.32%

2008 Census ...... 104,939 11.06% N/A N/A 5,294,664 (1.53%)

2010 Census ...... 108,188 3.10% 515,269 27.50% 5,194,675 (1.89%)

2040(2) .......... 168,207 55.48%(3) 802,231 55.69%(3) 6,182,487 19.02%(3)

Notes: (1) Source: U.S. Bureau of the Census.

(2) Source: CMAP.

(3) Percentage growth based on projections by the CMAP.


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Employment

Elgin is the employment center for northern Kane County. The City has a highly diversified, well-balanced economy and is not dominated by any single commercial or industrial sector.

Below is a list of large employers located in the City.

Major City Employers(1)

Approximate

Company Product/Service Employment

District U-46 ........................... Public School District ......................................................... 4,754

Chase ................................... Credit Card Processing ......................................................... 2,500

Advocate Sherman Health ................. General Hospital ............................................................... 2,200

Elgin Mental Health Center .............. State Hospital ................................................................. 1,300

The Hospital ............................ General Hospital ............................................................... 1,300

Elgin Riverboat Resort .................. Gaming ......................................................................... 1,200

John B. Sanfilippo & Son, Inc. .......... Corporate Headquarters and Snack Foods ......................................... 1,200

ECC ..................................... Community College .............................................................. 1,088

American NTN Bearing Mfg. Corp. ......... Precision Ball Bearings ........................................................ 675

LSI ..................................... Corporate Headquarters, Credit Union, Banking and Mortgage Services ............. 610

Capsonic Automotive, Inc. ............... Plastic Parts, and DIP Switches for Business Machine and Industrial Markets ..... 600

Colony, Inc. ............................ Metal Products and Fabrication ................................................. 450

Elgin Sweeper Co. ....................... Street Sweepers ................................................................ 400

SKF USA, Inc. ........................... Automotive, Aerospace and Industrial Seals ..................................... 400

Note: (1) Source: 2020 Illinois Manufacturers Directory, 2020 Illinois Services Directory, and a selected telephone survey.

City residents also have substantial employment opportunities in surrounding communities, as well as

throughout the Chicago Metropolitan area. The following list shows selected large private employers located in communities immediately surrounding the City.

Major Area Employers(1)

Approximate

Location Company Business or Product Employment

Arlington Heights ... Northwest Community Healthcare ......... Community Hospital .......................................... 4,000

Hoffman Estates ..... Transform Holdco, LLC.................. Holding Company Headquarters; Retail Department Store Chain .. 3,200

Arlington Heights ... Allied Building Products Corp. ......... Wholesale Building Products ................................. 3,000

Schaumburg .......... Zurich North America................... Company Headquarters and Commercial Property

and Casualty Insurance ..................................... 2,500

Hoffman Estates ..... St. Alexius Medical Center ............. Full Service Hospital ....................................... 2,045

Schaumburg .......... Nation Pizza Products L.P. ............. Frozen Pizzas and Crusts .................................... 2,000

Rolling Meadows ..... Northrop Grumman Corp.................. Divisional Headquarters and Electronic Countermeasures ...... 1,900

Schaumburg .......... Motorola Solutions, Inc. ............... Corporate Headquarters and Wireless

and Broadband Communications ............................... 1,600

Arlington Heights ... HSBC Finance Corp. .................... Consumer Financial Services ................................. 1,500

Arlington Heights ... Clearbrook ............................ Developmentally Disabled Rehabilitation Services ............ 1,000

Rolling Meadows ..... Arthur J. Gallagher & Co. .............. Company Headquarters; Insurance Sales ....................... 825

Schaumburg .......... OptumRx, Inc. ......................... Pharmacy Software and Automation Services ................... 800

Schaumburg .......... Paylocity ............................. Corporate Headquarters; Software Development

and Payroll Processing Services ............................ 800

Rolling Meadows ..... Gallagher-Bassett Services, Inc. ....... Global Risk Management Services ............................. 675

Hoffman Estates ..... CDK Global ............................ Dealer Management Systems for the Automotive Retail Market... 600

Schaumburg .......... Experian Information Solutions, Inc. ... Direct Marketing Computer and Information Services .......... 600

Note: (1) Source: 2020 Illinois Manufacturers Directory, 2020 Illinois Services Directory, and a selected telephone survey.


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The following tables show employment by industry and by occupation for the City, Kane County, Cook

County and the State as reported by the 2014-2018 American Community Survey 5-Year estimates from the U.S. Bureau of the Census (the “2014-2018 ACS”).

Employment By Industry(1)

The City Kane County Cook County The State

Classification Number Percent Number Percent Number Percent Number Percent

Agriculture, Forestry, Fishing and Hunting,

and Mining ........................................ 242 0.4% 1,406 0.5% 4,403 0.2% 66,259 1.1%

Construction ....................................... 2,995 5.3% 17,139 6.4% 119,212 4.7% 328,620 5.3%

Manufacturing ...................................... 11,068 19.8% 44,367 16.7% 247,352 9.7% 753,276 12.1%

Wholesale Trade .................................... 1,895 3.4% 9,692 3.6% 72,063 2.8% 188,536 3.0%

Retail Trade ....................................... 6,249 11.2% 29,396 11.0% 248,700 9.8% 669,968 10.8%

Transportation and Warehousing, and Utilities ...... 3,391 6.1% 15,302 5.8% 180,343 7.1% 394,511 6.3%

Information ........................................ 1,020 1.8% 4,776 1.8% 55,804 2.2% 120,002 1.9%

Finance and Insurance, and Real Estate and Rental

and Leasing ....................................... 3,233 5.8% 18,349 6.9% 205,038 8.0% 453,391 7.3%

Professional, Scientific, and Management,

and Administrative and Waste Management Services .. 6,289 11.2% 33,497 12.6% 371,057 14.6% 735,339 11.8%

Educational Services and Health Care and

Social Assistance ................................. 10,624 19.0% 50,100 18.8% 578,789 22.7% 1,426,656 22.9%

Arts, Entertainment and Recreation and

Accommodation and Food Services ................... 5,425 9.7% 24,321 9.1% 251,206 9.9% 568,457 9.1%

Other Services, Except Public Administration ....... 2,471 4.4% 11,155 4.2% 125,739 4.9% 294,078 4.7%

Public Administration .............................. 1,090 1.9% 6,613 2.5% 89,290 3.5% 226,871 3.6%

Total ............................................ 55,992 100.0% 266,113 100.0% 2,548,996 100.0% 6,225,964 100.0%

Note: (1) Source: U. S. Bureau of the Census, American Community Survey, 2014-2018 estimates.

Employment By Occupation(1)



Management, Business, Science and Arts ............ 15,948 28.5% 93,175 35.0% 1,019,892 40.0% 2,370,095 38.1%

Service ........................................... 10,773 19.2% 44,130 16.6% 455,103 17.9% 1,072,423 17.2%

Sales and Office ................................. 12,304 22.0% 61,465 23.1% 564,569 22.1% 1,393,893 22.4%

Natural Resources, Construction, and Maintenance .. 4,169 7.4% 20,622 7.7% 151,460 5.9% 448,917 7.2%

Production, Transportation, and Material Moving .... 12,798 22.9% 46,721 17.6% 357,972 14.0% 940,636 15.1%

Total ............................................ 55,992 100.0% 266,113 100.0% 2,548,996 100.0% 6,225,964 100.0%


Unemployment Rates The table below shows unemployment trends for the City, Kane and Cook Counties, and the State.

Annual Average Unemployment Rates(1)

Calendar The Kane Cook The

Year City County County State

2009 ............ 13.2% 10.5% 10.5% 10.2%

2010 ............ 13.0% 11.0% 10.9% 10.4%

2011 ............ 11.8% 9.8% 10.4% 9.7%

2012 ............ 10.5% 8.9% 9.6% 9.0%

2013 ............ 10.1% 8.7% 9.6% 9.0%

2014 ............ 8.1% 6.8% 7.5% 7.1%

2015 ............ 6.7% 5.7% 6.2% 6.0%

2016 ............ 6.4% 5.5% 6.0% 5.8%

2017 ............ 5.6% 4.9% 5.1% 4.9%

2018 ............ 5.4% 4.9% 4.0% 4.3%

2019(2) ......... 6.0% 4.5% 2.9% 3.5%

Notes: (1) Source: Illinois Department of Employment Security.

(2) Preliminary rates for the month of December 2019.


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Building Permits

The City continues to be among the leading suburban communities for new housing starts. Since at least the first quarter of 2017, the City has ranked in the top ten of communities in the State for the number of housing starts, and for the third quarter of 2019, the City was ranked fifth.

Based on the trend of the last six years, it is anticipated that approximately 200 new housing units will be added to the City’s housing stock each year within new developments primarily on its west side. These developments are well under way and include Bowes Creek Country Club Subdivision by Toll Brothers, a 604-acre development containing 688 single-family homes, 277 townhouses, and an 18-hole championship golf course; Highland Woods by Crown Community Development, a 577-acre development containing 591 single-family homes and 309 townhouses; the Ponds of Stony Creek by Lennar, a 278-acre development containing 504 single-family homes; Tall Oaks by Wyndham Deerpoint and DR Horton, a 201-acre development containing 334 single-family homes and 123 townhouses; and West Point Gardens, a 172-acre development containing 384 single-family homes and 44 townhouses.

In addition, the City has permitted for new developments by (i) Reyes Holdings, which is building a $20

million facility for Great Lakes Coca-Cola bottling (239,000 square feet building expected to generate 240 new jobs) and (ii) an extended stay hotel.

Two notable subdivisions were completed within the past three years, including Providence by Town and Country Homes, a 456-acre development containing 857 single-family homes and 212 townhouses and Edgewater, an active adult community by Pulte/Del Webb on 408 acres containing 1,068 single-family homes.

One other large development anticipated on the west side is Pingree Creek Subdivision by Shodeen, Inc. This mixed-use project includes plans for 1,768 single-family homes, 120 townhouses, 883 apartments, and 25 acres of commercial on 780 acres.

The success of the City’s industries and businesses at the turn-of-the-19th century allowed the City to flourish which was reflected in the City’s older neighborhoods. The homes in these areas, some dating back to the mid-1800’s, exhibit a wide variety of styles, size and uniqueness that have established the City as a preservation destination. Many of these homes and areas are recognized for their historic and architectural significance through local and national designation as individual landmarks or as historic districts.

In addition to its 22 individual landmarks, the City designated five historic districts which include: the Elgin Historic District (established 1981); the Spring-Douglas Historic District (established 1996); the Elgin National Watch Historic District (established 1997); the David C. Cook – Lovell Area Historic District (established 2007); and the Elgin Bungalow Thematic Historic District (established 2015).

The Elgin Historic District contains 774 properties and is the earliest area of the City platted by the City’s founder, James T. Gifford in 1842. The Spring-Douglas Historic District contains 286 structures and belonged to the City's most prominent business leaders involved in manufacturing, banking and retail, and quickly nicknamed the City’s “Gold Coast.” Both of these districts are also listed in the National Register of Historic Places. The Elgin National Watch Historic District contains 585 structures and was associated with workers and executives of the Elgin National Watch Company. The D. C. Cook-Lovell Area Historic District has 89 structures, many of which were built at the beginning of the 20th century due to the relocation of the David C. Cook Publishing Company in 1901, another prominent and successful business that provided the City more notoriety. The most recent district is the Elgin Bungalow Thematic Historic District containing seven residences. It is a district that is based on a theme, the bungalow, has no district boundaries but is city-wide and inclusion is voluntary.

The efforts to restore, preserve and promote the City’s rich heritage through tireless efforts of passionate property owners, professional contractors and dedicated volunteers have greatly contributed to the beautification of the City.


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The average construction value of single-family home building permits is approximately $170,000, excluding

the value of land improvements. In addition to the increase in housing construction, continuing growth is also occurring in industrial and commercial permits.

The City’s construction activity over the past ten years is shown by the building permit data below. The total

annual permit valuations averaged over $91,074,842 and $91,705,891 the past five and ten years, respectively. During calendar year 2019, the City experienced its largest permitting for commercial and industrial uses during the last ten years.

City Building Permits(1)

Commercial

Calendar Single Family Multi-Family and Total

Year Units(2) Value(2) Number Value Industrial All Other Value

2010 ............... 182 $18,199,020 0 $ 0 $12,762,850 $62,599,313 $ 93,561,183

2011 ............... 145 16,180,765 0 0 15,712,004 42,018,244 73,911,013

2012 ............... 201 22,420,897 0 0 2,053,136 45,239,551 84,865,489

2013 ............... 374 38,783,153 0 0 9,425,000 53,161,036 101,369,189

2014 ............... 369 36,826,746 1 3,049,545 10,563,461 57,538,070 107,977,822

2015 ............... 293 24,507,671 0 0 14,913,000 94,842,849 134,263,520

2016 ............... 184 19,589,633 0 0 13,074,026 55,962,183 88,625,842

2017 ............... 141 16,778,794 0 0 3,678,000 48,658,164 69,114,958

2018 ............... 193 20,234,345 5 7,500,000 3,937,430 43,951,232 75,623,007

2019 ............... 149 15,131,553 12 7,499,000 31,698,470 33,417,862 87,746,885

Notes: (1) Source: the City.

(2) Does not include HVAC, electrical or plumbing permits.

Housing

According to figures provided by the U.S. Census Bureau, median home values in the City have been

increasing at a rate which compares favorably with Kane County, Cook County and exceeds the State. The 2014-2018 ACS is the most current statistical information available.

Median Home Values

1970-

2014- 2014-2018 ACS

2018 Percent

1970(1) 1980(1) 1990(1) 2000(1) 2010(1) ACS(2) Increase

The City ........................... $20,700 $60,600 $ 96,800 $141,400 $212,700 $177,500 857.49%

Kane County ........................ 20,700 60,500 102,500 160,400 245,000 232,000 1120.77%

Cook County ........................ 24,400 62,100 102,100 157,700 265,800 237,200 972.13%

The State .......................... 19,800 52,800 80,900 130,800 202,500 187,200 945.45%

Notes: (1) Source: U.S. Bureau of the Census.

(2) Source: U.S. Bureau of the Census, American Community Survey, 2014-2018 estimates.


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Mortgage Status(1)



Housing Units with a Mortgage ...................... 18,128 72.4% 93,326 71.3% 730,775 65.4% 2,034,106 63.8%

Housing Units without a Mortgage ................... 6,912 27.6% 37,501 28.7% 385,984 34.6% 1,154,929 36.2%

Total ............................................ 25,040 100.0% 130,827 100.0% 1,116,759 100.0% 3,189,035 100.0%


Income

Per Capita Personal Income for the Highest Income Counties in the State(1)

Rank County 2014-2018

1 ...................... Lake County ................. $44,287

2 ...................... DuPage County ............... 43,982

3 ...................... Monroe County ............... 39,988

4 ...................... McHenry County .............. 38,047

5 ..................... Cook County ................. 35,575

6 ...................... Will County ................. 35,259

7 ...................... Woodford County ............. 35,104

8 ..................... Kane County ................. 34,924

9 ...................... Sangamon County ............. 34,548

10 ..................... Menard County ............... 34,495

11 ..................... Kendall County .............. 34,423

12 ..................... Putnam County ............... 34,144

Note: (1) Source: U.S. Bureau of the Census, American

Community Survey, 2014-2018 estimates.

The following shows a ranking of median family income for the Chicago metropolitan area from the 2014-2018 ACS.

Ranking of Median Family Income(1)

Family

County Income Rank

DuPage County ............. $108,865 1

Lake County ............... 105,329 2

Kendall County ............ 99,365 3

McHenry County ............ 97,998 4

Monroe County ............. 97,965 5

Will County ............... 97,733 6

Kane County ............... 90,558 7

Cook County ............... 76,327 21

Note: (1) Source: U. S. Bureau of the Census,

American Community Survey, 2014-2018

estimates.


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According to the 2014-2018 ACS, the City had a median family income of $76,444. This compares to $90,558 for Kane County, $76,327 for Cook County and $79,747 for the State. The following table represents the distribution of family incomes for the City, Kane County, Cook County and the State at the time of the 2014-2018 ACS.

Family Income(1)


Income Number Percent Number Percent Number Percent Number Percent

Under $10,000 .................................... 862 3.2% 3,323 2.5% 54,063 4.6% 118,179 3.8%

$10,000 to $14,999 ............................... 432 1.6% 2,092 1.6% 30,998 2.6% 70,168 2.3%

$15,000 to $24,999 ............................... 1,374 5.2% 5,506 4.2% 83,940 7.1% 186,491 6.0%

$25,000 to $34,999 ............................... 2,128 8.0% 7,776 5.9% 92,649 7.8% 216,864 7.0%

$35,000 to $49,999 ............................... 3,372 12.7% 13,642 10.3% 131,608 11.1% 340,169 10.9%

$50,000 to $74,999 ............................... 4,834 18.1% 22,289 16.9% 190,037 16.1% 538,213 17.3%

$75,000 to $99,999 ............................... 4,255 16.0% 18,298 13.9% 151,271 12.8% 444,134 14.2%

$100,000 to $149,999 ............................. 5,086 19.1% 28,167 21.4% 205,838 17.4% 598,534 19.2%

$150,000 to $199,999 ............................. 2,647 9.9% 14,985 11.4% 107,166 9.1% 286,266 9.2%

$200,000 or more ................................. 1,662 6.2% 15,776 12.0% 136,236 11.5% 318,315 10.2%

Total .......................................... 26,652 100.0% 131,854 100.0% 1,183,806 100.0% 3,117,333 100.0%


According to the 2014-2018 ACS, the City had a median household income of $67,029. This compares to $76,912 for Kane County, $62,088 for Cook County and $63,575 for the State. The following table represents the distribution of household incomes for the City, Kane County, Cook County and the State at the time of the 2014-2018 ACS.

Household Income(1)


Income Number Percent Number Percent Number Percent Number Percent

Under $10,000 .................................... 1,706 4.7% 6,844 3.8% 150,136 7.6% 314,802 6.5%

$10,000 to $14,999 ............................... 1,047 2.9% 4,761 2.7% 82,860 4.2% 194,284 4.0%

$15,000 to $24,999 ............................... 2,670 7.3% 11,705 6.6% 185,110 9.4% 431,405 8.9%

$25,000 to $34,999 ............................... 3,271 8.9% 12,687 7.1% 169,860 8.7% 415,960 8.6%

$35,000 to $49,999 ............................... 5,165 14.1% 20,373 11.4% 227,406 11.6% 577,213 12.0%

$50,000 to $74,999 ............................... 6,380 17.4% 30,459 17.1% 318,622 16.2% 828,597 17.2%

$75,000 to $99,999 ............................... 5,520 15.0% 23,738 13.3% 234,678 12.0% 613,917 12.7%

$100,000 to $149,999 ............................. 6,254 17.0% 33,541 18.8% 289,976 14.8% 751,099 15.6%

$150,000 to $199,999 ............................. 2,613 7.1% 16,612 9.3% 136,558 7.0% 335,066 6.9%

$200,000 or more ................................. 2,056 5.6% 17,330 9.7% 167,864 8.6% 367,695 7.6%

Total .......................................... 36,682 100.0% 178,050 100.0% 1,963,070 100.0% 4,830,038 100.0%


COMMERCE AND INDUSTRY The City has traditionally been a center for commerce and industry. A major reason for this strength is

diversity of businesses, location and access to a large labor supply. The City has a well-balanced economy that is not dominated by any single business sector. Dun & Bradstreet lists over 5,500 businesses in the City. The City is also home to a robust manufacturing sector located in some 23 business parks including Burnidge Industrial Park, Randall Road Executive and Corporate Centers, Fox River Business Center, Fox Bluff Corporate Center, Northwest and Corporate Parks, Windsor Commerce Center, Miller-Davis Industrial Park, and others. Diversification of businesses has strengthened the City’s economy and has made it more resilient to downturns in the overall economy.


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The City’s advantage of transportation infrastructure connects the City to such major routes as I-90, Routes 20,

25, and 31. Elgin’s location near Chicago, proximity to O’Hare and access to a Chicago metropolitan area labor force of nearly 5 million people all work together to make the City an ideal location in which to locate a business. Foreign Direct Investment has also played a major role in recent years in the expansion of the area economy. Businesses from Germany, Japan, Canada, Switzerland, Austria, China and Italy have decided to locate operations in the City. Companies such as SureWerx, Faber-Castell, Harting, American NTN Bearing and others recognize Elgin’s advantages and are making a footprint on Elgin’s landscape.

In 2016, new industrial and commercial construction soared to 1.3 million square feet. By the end of 2018,

almost all of that space was fully occupied. In 2018, the City had a net absorption of nearly 1.5 million square feet of industrial space. Some 40 new manufacturing, warehouse and distribution businesses either expanded, located or renewed leases in 2018. The construction of more than 1.1 million square feet of new industrial space started in 2019.

Development along Randall Road and the I-90 interchange has been zoned for use as an office, research and

industrial corridor. The 455,000 square foot Fisher Corporate Center and John B. Sanfilippo & Sons, Inc. corporate headquarters have major investments in facilities. The Randall Road corridor also includes over 100 retail businesses, new car dealers, significant industrial and office buildings and a major hospital. The corridor serves a larger area for people moving through the City that frequent the businesses found along Randall Road.

Randall Point Executive Center is a major development located at the northeast corner of I-90 and Randall

Road. The Center currently offers more than 780,000 square feet of office space on a 60-acre campus space as well as a 74-room hotel and 9,900 square foot restaurant with seating capacity of 350. A nature preserve of approximately four acres has been dedicated at the northeast quadrant, which will provide a park for the executive center. Fabricators and Manufacturers Association (“FMA”) recently opened its new headquarters in a distinctive building in the Randall Point Executive Center. FMA is a professional association devoted to improving the metal processing, forming, and fabricating industries. It relocated its headquarters to the City from Rockford.

Randall Point West, near the auto mall at I-90 and Randall Road, is a 40-acre Class A business park. Japan’s

MAZAK Optonics Corporation became the first company in the park when it built its new $10 million North American headquarters complex in 2009. In 2014, Newhaven Display International constructed a 30,000 square foot building to house its headquarters. Currently, Newhaven Display is undergoing an $8 million, 40,000 square foot expansion of its facility, while adding 25 to 30 employees to its current 50 employee staff.

The 86-acre Auto Mall at Randall Road and I-90 saw its first auto dealer in 2010 when McGrath Honda built a

dealership. Brilliance Subaru opened a new dealership off of Randall Road in 2013. In 2015, a 36,000 square foot state-of-the-art Volkswagen dealership opened. Four lots have recently been sold to yet another automotive group. Two interior lots, totaling 76.8 acres, have been recently rezoned to accommodate the construction of a new 257,313 square foot Class A industrial building by the Zilber Property Group. The entire space was leased to iHerb, a California ecommerce distribution company, that began operations in late 2018 and hired 350 employees.

The City is a major medical care center. Sherman Health has completed and opened a new state-of-the-art 353

bed, 645,000 square foot, $325 million hospital off Randall Road near the intersection of I-90. The 154-acre campus features a 15-acre geothermal lake used to heat and cool the facility. The Hospital completed a 163,000 square foot expansion to its main hospital adding 99 private rooms and a state-of-the-art cardiac institute and cancer care center. Senior Lifestyle Corporation has recently built a 90,000 square foot facility on North McLean Boulevard with 64 age restricted apartments and 32 Alzheimer care units.


23

Industrial Activity The City’s success in attracting and keeping both domestic and international business of all sizes and types is

reflected in the industries that comprise its diversified economy. The City’s industrial market remains one of the strongest in the Interstate-90 Northwest Corridor. The industrial market size is 33 million square feet and the total vacancy rate was 2.58 percent in the third quarter of 2019. There are over 400 properties, 22.7 million square feet of existing industrial space and nearly two million square feet of industrial space under speculative construction. Numerous companies, representing some 10 countries, have City facilities, including their U.S. and North American headquarters.

American NTN Bearing Manufacturing Corporation (“NTN”), a Japanese company, owns a variety of

companies and manufacturing plants worldwide. Since coming to the City in 1976, NTN has expanded its facilities several times, most recently adding 130,000 square feet and 80,000 square feet. NTN is now one of the City’s largest employers with nearly 675 employees.

Flender, a Siemens Company, is a global leader in the manufacturing of wind turbine gearboxes and

components as well as industrial drive systems opened a 170,000 square foot facility in 2009. Another German owned firm, Harting Electronics, manufactures electric and electronic connectors for telecommunications worldwide. GEKA Brush, a German multinational firm, established its first operation in the United States in 2009. GEKA Brush manufactures brushes for the retail cosmetic industry. Japan’s Amano Enzyme, doubled its North American operations in the City in 2013 with a new 45,000 square foot facility which features a research lab, along with offices and warehouse space. Amano supplies the dietary supplements, pharmaceutical and food industries with high quality enzymes.

Fabric Images, Inc., recognized as a leading edge manufactures of lightweight, digitally printed fabric

architecture, has expanded its Elgin operation by occupying an approximately 155,000 square foot existing facility. Fabric Images has been in the City since 1992 and has facilities in Milan, Italy and Mexico City. The India-based Suzlon Wind Energy Corporation (“Suzlon“) chose the City for a new 65,000 square foot North American training center. Suzlon is one of the largest wind energy companies in the world. The training center, which opened in October 2010, brings 20 people to town every two weeks for instructions on how to maintain Suzlon and other manufacturers’ wind turbines.

John B. Sanfilippo & Sons, Inc. (“Sanfilippo”), maker of Fisher Nuts, consolidated and moved its world

headquarters to the City in 2005. Its peanuts are the most well-known, but the company also produces Evon’s nuts and Flavor Tree sesame sticks and snack food. The City’s location of this business employs approximately 1,200 employees in a one million square foot building. Mueller & Co., a certified public accounting and manufacturing consulting firm, decided in 2012 to continue to keep its headquarters in the City by relocating to the Fisher Corporate Center at I-90 and Randall Road. The new headquarters allowed Mueller & Co. to move its St. Charles operations to the City. The consolidation resulted in 80 persons working in the City office, including 15 partners. Mueller & Co. is the 15th largest accounting firm in the Chicago region.

With over 1.3 million square feet of new commercial and industrial construction, 2016 proved to be a banner

year for the City. Included in the 2016 square foot total were four major Class A speculative building, including 1380 Madeline lane at 158,982 square foot; 2601 Galvin Drive at 385,398 square foot; 2650 Auto Mall Drive at 257,344 square foot; and 2801 Alft Lane at 307,840 square foot. Joining the list of leading international companies relocating to the City include Radicon U.S.A. (India) and SureWerx (Canada). A recent significant domestic project includes Motorola Solutions spending $18 million to open its only North American manufacturing and training facility at 2580 Galvin Drive. The 300,000 square foot facility employs over 400 workers and manufacturers radios and communications systems for customers in over 100 countries.


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After a relatively tepid start, commercial activity surged in late 2017. Some of the leasing activity included

Kabat American relocating from Arkansas at 21,071 square foot; Munch’s Supply Company at 44,988 square foot; Convenience Concepts at 71,150 square foot; Victory Movers at 18,370 square foot; and St. Charles Trading Company purchase of a 110,035 square foot building. Other significant company moves in 2017 to the City included Nova Transportation, Norman Mechanical, Ulta Polishing, and Deutz U.S.A. Corporation. MKD Electric expanded in the City by purchasing a 72,928 square foot building at 2590 Alft Lane and moved in late 2018.

In 2018, the demand for industrial space saw the City’s vacancy rate drop to 5.6% at the end of the year, while

the net positive absorption climbed to a historic 1.47 million square feet by the year’s end. Contributing to the absorption were primarily six major projects including Box Partners leasing 385,000 square feet at 2601 Galvin Drive, Amazon leasing 105,000 square feet at 2450 Northwest Parkway, iHerb leasing 257,000 square feet at 2640 Auto Mall Drive, Fleet Pride leasing 150,000 square feet at 2770 Alft Court, Endries International leasing 96,000 square feet at 2770 Alft Court, and Heritage Travelware leasing 220,000 square feet at 2300 Galvin Drive and 2500 Northwest Parkway.

In addition, there were two high profile projects announced in 2018. Faber-Castell Cosmetics (“Faber-

Castell”), a German company dating back to 1761, decided on a 44,853 square foot Elgin location after conducting an exhaustive national search. Faber-Castell Cosmetics operates through a global network of production sites in Germany and Brazil with sales organizations in 13 different countries. The production sites offer full vertical integration – a material flow from its own harvested wood, tooling, injection molding, filling and assembly, decorating, packing and logistics. Faber-Castell, in June 2019, opened its first US-manufacturing plant in the City. Faber-Castell’s $10 million investment includes the creation of 30 new jobs. Harting announced an initial $6 million expansion of its Elgin North American headquarters that will add 50 new jobs. Both companies have long-term plans to expand in the City, with a capital investment of approximately $125 million, while adding 270 additional employees.

Retail Activity The City offers a variety of shopping experiences throughout the community with nine primary shopping

corridors representing nearly 1,000 businesses. Major retail corridors include Randall Road, McLean Boulevard, Downtown Central Business District, Chicago Street, Larkin Avenue, Summit Street, Dundee Avenue, State Street, and the U.S. Route 20/Nesler Road area. Shopping centers within these corridors include Randall Crossing, Otter Creek, Town & Country, Tyler Creek, Clocktower Plaza, Valley Creek, and Fox River Business Center. These retail centers are anchored by stores such as Meijer Superstore, Target, Menards, Burlington, Home Depot, Butera, Jewel/Osco, and Fresh Market. Walmart relocated to the south side of the City and sold its former store to Russo Power Equipment Company, which sells a wide variety of commercial and residential power equipment. Lowe’s abandoned its Elgin location, but was occupied by Blains Farm & Fleet. These nine shopping corridors are historically unique and serve specific populations of people in the City and the region.

The City is home to many new and used automobile dealerships including Biggers Chevrolet, Biggers Mazda,

Brilliance Subaru, Napelton Kia, Ron Hopkins Ford, Feeny Chrysler-Jeep-Dodge, and McGrath Honda. In 2015, there was an addition of a new car dealership, Elgin Volkswagen. Many new and used dealers have reinvested in their dealerships with new facades and service center upgrades to attract additional customers. Automobile dealerships are important contributors of sales tax revenue to the City.

The City’s retail market has a low vacancy rate, stable lease rates, and favorable demographics. The retail

vacancy rate in the City stands at approximately 3.8%. Total retail space is at four million square-feet of which approximately 200,000 square-feet is vacant. The City’s vacancy rate is lower than other surrounding and comparable cities such as St. Charles (4.8%), Naperville (8.4%), and Aurora (7.9%). With little new retail construction since 2011, and a low vacancy rate, demand for new retail construction is building. The City’s retail market is stable, showing average spending and low leakage in most categories according to Dun & Bradstreet’s ESRI research division.


25

Downtown Elgin’s revitalization continues to grow. First and foremost, the $10.5 million Riverside Drive

Promenade project has been completed and enjoyed its official ribbon cutting and grand opening in August 2013. This stretch, Chicago to Prairie Street, along the scenic Fox River has created beauty, recreation and outdoor dining experiences for all that visit. Bicyclists, walkers and runners, alike, can also take advantage of the stretch of the Fox River Bike Trail that was newly paved and improved.

The iconic Elgin Tower Building recent $13 million dollar renovation converted the building into 45

one-and-two bedroom apartments, bringing new life to the historically designated property in downtown Elgin. The landmark Elgin Tower Building will give more options to those seeking to live in the downtown neighborhood. Elgin’s City Center has been experiencing a low retail vacancy rate, 3.2%, and a surge in activity. A revival of downtown buildings and activity has seen thousands of visitors to the area that dine and shop at local establishments, while staying in the local hotels. Elgin’s downtown has become a destination spot that is enjoying an increased economic vitality. Tax Increment Financing (TIF) Redevelopment Projects

Tax Increment Financing (“TIF”) districts encourage re-development of special need areas by financing redevelopment project costs with incremental property tax revenues. The use of the incremental property taxes permits the City to implement and coordinate public improvements and activities to stimulate private investment within the TIF area. The City’s three existing TIF districts include the Central Area TIF, established in 2002; U.S. Route 20 TIF, created in 2004; and, the Bluff City Quarry TIF District, enacted in 2011. The Central Area TIF District is the City’s largest and most successful tax increment finance district. The Central Area TIF project includes the City’s central historic core which includes a variety of commercial, office, industrial, public, residential and mixed uses. The area contains 1,927 buildings and encompasses approximately 1,070 acres.

The Central Area TIF redevelopment project and plan’s objectives include, but are not limited to the following:

strengthen the economic well-being of the project area; encourage and support the preservation and rehabilitation of the project area’s historically significant properties; improve and upgrade existing surface infrastructure, including streets, curbs, gutters, sidewalks, lighting and alleys; and create an environment that stimulates private investment in the upgrading and expansion of existing businesses and the construction of new businesses, residential, retail and commercial facilities. The $51 million construction of the Fountain Square residential development completed in 2009 created 211 dwelling units, a two-level parking structure and 11,000 square feet of commercial space in the City's downtown. In 2018, the Elgin Tower, a fifteen-story structure added to the National Register of Historic Places in 2002 in recognition of its distinctive Art Deco architecture, completed a $16.75 million renovation that created a mix of 44 one- and two-bedroom apartments to the City's downtown.

Arts-related economic development initiatives serve as an integral high-impact component of the City's Center City revitalization efforts. The Artspace Project fosters and preserves affordable living and working space for artists. The $14.5 million development transformed a former legacy department store into an arts facility featuring 55 units of affordable live/work space for artists and 6,000 square feet of retail and community space for arts-related businesses and nonprofit organizations.

The Bluff City Quarry TIF District was established in 2011. The developer of the Bluff City Quarry TIF District proposes to redevelop the area with various commercial and industrial uses. The developer's proposed redevelopment of the property within the TIF district is expected to generate tax increment approximating $64,918,000 over the 23 year TIF district term.


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Riverboat Casino

The Grand Victoria Riverboat Casino began operating on the Fox River on October 6, 1994. The 74,397

square foot floating casino has a capacity for 1,200 gaming positions. Eldorado Resorts, Inc. (“Eldorado”) acquired the Grand Victoria Casino in 2018 for $327.5 million. Eldorado

has more than 25 properties located primarily outside of Las Vegas. The company has grown through a series of acquisitions of smaller casino operations. Those purchases included Grand Victoria Casino’s Elgin Riverboat Resort in 2018, Isle of Capri Casinos Inc. in 2016, and Galleon Inc.’s Silver Legacy Resort Casino and Circus Casinos Inc., a subsidiary of MGM Resorts International, in 2015. In aggregate, Eldorado’s properties feature approximately 21,000 slot machines and video lottery terminals and 600 table games, and over 7,000 hotel rooms.

In June 2019, Eldorado agreed to buy its larger rival Caesars Entertainment Corp. for about $8.58 billion in

cash and stock to create the largest U.S. casino operator by venue count. In 2018, Caesars recorded $8.39 billion in revenue while Eldorado had $2.06 billion in revenue. Eldorado expects to realize about $500 million in savings from cost cuts and other initiatives in the first year after the deal closes, which is expected in the first half of 2020.

Eldorado’s acquisition of Caesars Entertainment bodes well for the Grand Victoria Casino’s competitiveness in

the Chicago metropolitan area. Casino loyalty programs play a major role in a traveler’s decision about which hotel to stay at, where to shop and where to eat. Caesars has been a generous program for non-gamblers due to generous promotions and availability of high-level Diamond elite status through non-gaming avenues. This marketing advantage, coupled with the Arlington Race Track’s decision not to pursue casino gaming, positions the Grand Victoria Casino for continuing competitiveness in the market.

The Grand Victoria Casino has commenced work on studies analyzing the market for an adjoining hotel to the

gaming facility and has conducted several meetings with the City on the development it is considering.

Riverboat revenue has been programmed to re-establish a prudent cash balance, fund capital improvements for neighborhoods, provide strategic infrastructure improvements, and furnish needed equipment replacements to make City operations more effective and efficient. The riverboat proceeds for 2018 were about $10.3 million, funded by one dollar for each casino visitor and five percent of the operation’s gaming receipts.

The Riverboat Fund has been serving as a major supplemental revenue stream since 1995. Riverboat Fund

revenue is derived from the Grand Victoria Casino’s operations. A five percent tax on the Grand Victoria Casino’s gaming receipts plus a one dollar per patron admissions tax is deposited in the Riverboat Fund. The City receives an annual lease payment from the casino in the amount of $1 million because the City owns the land on which the Grand Victoria Casino’s pavilion and parking areas are located.

The Riverboat Fund generated $14.1 million during their first full year of revenues in 1995 with annual revenue

peaking at $29.5 million in 2001. The 2011 opening of the Rivers Casino in Des Plaines, combined with the introduction of video gaming in taverns across the State in 2012 and the still weakened economy, have substantially impacted the Riverboat Fund’s revenue stream. The 2017 Riverboat Fund revenues of $10.7 million were consistent with the budget of $10.7 million. The 2018 Riverboat Fund revenues were $10.3 million compared to the budget of $10.7 million and 2019 budgeted revenues remain at $10.9 million with expenditures of $14.1 million and drawing on reserves in the amount of $3.2 million. The Riverboat Fund balance at December 31, 2019, carrying over to fiscal year 2020, is estimated to be $15.3 million. The fiscal year 2020 Riverboat Fund budget plans for revenues of $11.8 million (which includes $1.0 million in grant revenue), expenditures of $24.1 million and drawing on reserves in the amount of $13.4 million. The Riverboat Fund balance at December 31, 2020, carrying over to fiscal year 2021, is estimated to be $2.9 million.

Projecting gaming revenue in the Chicago metropolitan area gaming market has become increasingly difficult

since the introduction of the Rivers Casino and video gaming. This volatility has prompted the City to adopt a financial plan for the Riverboat Fund that will continue until the Chicago area gaming market has stabilized.


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Business Statistics

Following is a summary of the City’s sales tax receipts as collected and disbursed by the State.

Retailers’ Occupation, Service Occupation and Use Tax(1)

State Fiscal Year State Sales Tax Annual Percent

Ending June 30 Distributions(2) Change +(-)

2010 ......................... $10,173,693 (5.36%)(3)

2011 ......................... 11,252,083 10.60%

2012 ......................... 11,584,390 2.95%

2013 ......................... 12,427,310 7.28%

2014 ......................... 13,220,352 6.38%

2015 ......................... 14,177,662 7.24%

2016 ......................... 14,322,875 1.02%

2017 ......................... 14,662,161 2.37%

2018 ......................... 15,227,441 3.86%

2019 ......................... 16,151,944 6.07%

Growth from 2010 to 2019 .............................. 58.76%

Notes: (1) Source: Illinois Department of Revenue (the “Department”).

(2) Tax distributions are based on records of the Department

relating to the 1% municipal portion of the Retailers’

Occupation, Service Occupation and Use Tax, collected on

behalf of the City, less a State administration fee. The

municipal 1% includes tax receipts from the sale of food

and drugs which are not taxed by the State.

(3) Based on 2009 sales tax receipts of $10,750,111.

Public Act 101-0009, effective June 5, 2019, included the “Leveling the Playing Field for Illinois Retailers Act.” This legislation requires certain remote retailers to collect and remit state and locally-imposed sales taxes for the jurisdiction where the product is delivered (destination) starting on July 1, 2020. Information from the Illinois Municipal League (“IML”) indicates that “local governments could receive $92 million per state fiscal year.” There will, however, be a decrease in collections of Use Tax. Ultimately, the IML anticipates that municipalities will experience a net increase as a result of Public Act 101-0009.

The remainder of this page was left blank intentionally.


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Income Tax Revenue History and Motor Fuel Tax Revenue History

The following table shows the distribution of the municipal portion of the State Income Tax collected by the

State and distributed through the Local Government Distributive Fund by the State Comptroller. The tables indicates the amount of Income Tax Revenues received by the City as well as the amount of Motor Fuel Tax (“MFT”) collected by the City over the past several years.

Fiscal Income Tax Revenues MTF Revenues

Year Distribution(1) Distribution(2)

2013 ............ $10,308,190 $3,207,341

2014 ............ 10,358,332 3,696,098

2015 ............ 11,511,549 2,749,615

2016 ............ 10,531,456 2,859,387

2017 ............ 9,936,978 2,811,161

2018 ............ 10,360,740 2,923,061

______________________________

Source: The City’s audited financial statements.

Notes: (1) The Fiscal Year 2018 Budget, the Fiscal Year 2019 Budget and the Fiscal Year 2020 Budget contain a provision reducing

the amount of income tax revenue to be deposited into the Local Government Distributive Fund for distribution to

municipalities, like the City, by 10% (for State Fiscal Year 2018) and by 5% (for State Fiscal Year 2019 and State

Fiscal Year 2020). The City cannot determine at this time the financial impact of this provision on its overall

financial condition for the future.

(2) P.A. 101-32, effective June 28, 2019, increased the MFT in order to fund capital projects. Beginning July 1, 2019,

the MFT consists of a) $0.38 per gallon of gasoline, a 19-cent increase; and b) $0.455 per gallon of diesel fuel, a

24-cent increase. Increasing the MFT will also increase the portion of the MFT remitted to municipalities. The

increase in MFT is estimated to generate an additional $1,400,000 for the City for MFT eligible street projects.

THE PROJECT Bond proceeds will be used to (i) finance the Project, which includes improvements to water mains, water treatment plant improvements, modifications to City wells, and other water distribution system improvements within the City, and (ii) pay the costs of issuing the Bonds. The City expects that the debt service payments on the Bonds will be paid through utility user fees and the property taxes levied for the payment of the Bonds (the “Pledged Taxes”) to the Bonds will be abated. Capital Projects in the Utility Fund

As described above, a portion of the proceeds of the Bonds will be used to finance various capital projects with respect to the City’s waterworks and sewerage systems (together, the “Utilities”). Such capital projects represent a portion of the City’s five-year capital plan with respect to the Utilities (the “Utilities Capital Plan”). The Utilities Capital Plan, which is described in the City’s fiscal year 2020 enacted budget, provides a path to completing the projects necessary to provide for the treatment and distribution of high quality drinking water for the City’s residents and businesses. The Utilities Capital Plan included $13.9 million of capital projects for fiscal year 2019, $14.2 million of capital projects for fiscal year 2020, a portion of which will be funded with the proceeds of the Bonds and the balance of which will be financed with other revenues generated by the Utilities and by transfers from the Capital Projects Fund.

As set forth in the fiscal year enacted budget, the City expects to issue additional bonds, and to annually transfer moneys from the Capital Projects Fund, to finance certain of the projects set forth in the Utilities Capital Plan during each of the next four fiscal years. Additional information regarding the implementation of the Utilities Capital Plan during the next four fiscal years is set forth in the 2020 enacted budget, which is available on the City’s website, provided, however, that the contents of such website are not incorporated herein by such reference.


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The following is a brief description of certain of the specific projects comprising the Project, all of which are part

of the Utilities Capital Plan, and the estimated cost of such projects to be financed during fiscal year 2020:

• Separation of the City’s combined sewers (sewers that carry waste and storm water runoff) in order to comply with the requirements of the Environmental Protection Agency (the “EPA”), which must be complete by 2031 (the City will allocate $3 million annually under the Utilities Capital Plan for this purpose, including $3 million during fiscal year 2020);

• Upgrading the electrical system at the Leo Nelson water treatment plant ($2,000,000); • Modifications to the water treatment trains that carry water between the City’s water treatment

basins ($950,000); • Modifications to the City’s deep wells that provide a significant supply of source water separate

from the Fox River ($1,000,000); • Upgrades to residential water mains that are undersized or have a history of breaks (an annual

program; $3.2 million for fiscal year 2020); • Upgrades to the sanitary sewer system in areas that are considered for resurfacing,

reconstruction or combined sewer separation (an annual program; $420,000 for fiscal year 2020);

• Modifications to the West Zone pump ($700,000); • Lining of sewer mains ($800,000); • Modifications to river intake system to replace devices that screen debris from the Fox River

($820,000); • Airlite Water Treatment Plant Well Installations, the addition of five wells will be considered to

increase treatment capacity. A feasibility study will be done in 2020 and actual well construction in later years of the five year financial plan ($165,000); and

• Retrofit of sewer detention facilities designed for flood control ($145,000). Abatement of Pledged Taxes

The City expects to pay the principal of and interest on the Bonds with user fees generated by the utilities. The Bond Ordinance provides that whenever other funds from any lawful source are made available for the purpose of paying any principal of or interest on the Bonds so as to enable the abatement of the Pledged Taxes, the City Council will direct the deposit of such funds into the Bond Fund (as defined in the Bond Ordinance) and direct the abatement of the Pledged Taxes by the amount so deposited. Financial Information Regarding the Utilities

The finances of the Utilities are accounted for in the Utility Fund, which is an enterprise fund resulting from the combination of the water and sewer enterprise fund budgets (which occurred in 2013). With sewer fees being dependent on water usage, the interdependence between the sewer and water funds is better demonstrated by combining these operations into a single fund that provides a comprehensive view of the City’s water distribution system. Consolidating the sewer and water funds into the single Utility Fund also affords the City a greater degree of flexibility when setting user rates and financing the infrastructure improvements necessary for maintaining a reliable and high-functioning water distribution system.

The Utility Fund derives its revenues from service charges and user fees instead of general tax dollars. The City treats and distributes water to the residents and business of the City, and also supplies water on a contractual basis to Sleepy Hollow. The services within the Utility Fund operate on a “pay-as-you-use” service delivery model.


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The Utility Fund is managed so that all operating costs, including debt service, are paid without assistance from other City funds. Financing strategic system improvements and service expansion needs must also be factored into the cash flow required for annual operations. Capital improvements are financed by the City’s issuance of bonds with the annual debt service for those bonds being paid from revenue generated by user fees and service charges.

The following table provides information on the historical revenues and expenditures of the Utility Fund:

STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION UTILITY FUND

FISCAL YEARS ENDED DECEMBER 31, 2016-2018

2016 2017 2018

OPERATING REVENUES:

Charges for Services ............................. $ 1,018,561 $ 559,451 $ 1,105,383

Charges for Commodities .......................... 28,236,344 29,828,256 31,190,563

Miscellaneous .................................... 92,270 94,365 267,682

Total Operating Revenues ....................... $ 29,347,175 $ 30,482,072 $ 32,563,628

OPERATING EXPENSES:

Administration ................................... $ 1,853,350 $ 2,036,920 $ 2,036,920

Personal Services ................................ 8,111,676 9,128,898 8,949,475

Commodities ...................................... 2,909,341 2,891,550 2,871,216

Contractual Services ............................. 6,252,235 6,083,885 5,073,847

Insurance ........................................ 183,810 183,810 183,810

Miscellaneous .................................... 765,109 329,972 693,611

Total Operating Expenses ....................... $ 20,075,521 $ 20,655,035 $ 19,808,879

Operating Income (Loss) Before Depreciation ...... $ 9,271,654 $ 9,827,037 $ 12,754,749

Depreciation ..................................... $ 7,275,830 $ 7,317,043 $ 7,394,945

Operating Income (Loss) .......................... $ 1,995,824 $ 2,509,994 $ 5,359,804

Non-Operating Revenues (Expenses):

Investment Income ................................ $ 188,334 $ 343,764 $ 651,211

Interest Expense and Fiscal Charges .............. (2,433,575) (1,999,313) (1,764,315)

Total Non-Operating Revenues (Expenses) ........ $ (2,245,241) $ (1,655,549) $ (1,113,104)

Net Income (Loss) Before Transfers ............... $ (249,417) $ 854,445 $ 4,246,700

Transfers:

Transfers in ..................................... $ 5,552 $ 10,655 $ 51,251

Transfers (Out)(1) ............................... (1,108,970) (1,285,400) (1,285,400)

Total Transfers ................................ $ (1,103,418) $ (1,274,745) $ (1,234,149)

Contributions .................................... $ 2,644,545 $ 2,571,525 $ 361,150

Change in Net Position ........................... $ 1,291,710 $ 2,151,225 $ 3,373,701

Net Position, January 1 .......................... $258,573,898 $261,007,828 $262,736,395

Change in Accounting Principle ................... 1,142,220 0 (1,053,745)

Prior Period Adjustment .......................... 0 (422,658) 0

Net Position, December 31 ........................ $261,007,828 $262,736,395 $265,056,351

______________________________

Source: The Comprehensive Annual Financial Reports of the City for the fiscal years ended

December 31, 2016 through 2018. Represents the combination of the Statement of

Revenues, Expenses and Changes in Fund Balance for the Water Fund and the Sewer Fund.

Note: (1) Represents transfers to the various funds of the City to reflect the cost of

services provided by other portions of City government.


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With respect to the City’s fiscal year ended December 31, 2018, Utility Fund revenues (on a cash basis)

increased by 6.0%, expenditures (including debt service) decreased by approximately 7%, and the Utility Fund had net revenues in excess of expenditures (excluding depreciation) of $1.9 million.

The City’s Utility Fund budget for the fiscal year ending December 31, 2019, projects a decrease in revenues of approximately $1.5 million from the fiscal year 2018 estimate, along with a decrease in projected expenditures of approximately $800,000 for a projected deficit of approximately $400,000. The fiscal year 2019 estimate has been developed based on an assumption that the City will see average water usage, and also recognizes the impact of the conclusion of the water supply agreement with Bartlett. The City increased its water and sewer rates by 6% and 5%, respectively.

With respect to the City’s fiscal year ended December 31, 2019, the City had expected to draw on reserves, however, the City's preliminary estimates (on a cash basis) indicate that Utility Fund revenues decreased by approximately 4%, expenditures (including debt service) decreased by approximately 6%, and the Utility Fund will have net revenues in excess of expenditures (excluding depreciation) of approximately $2.5 million.

The City's Utility Fund budget for the fiscal year ended December 31, 2020, projects a decrease in revenues of

approximately $1.1 million from the fiscal year 2019 estimated, along with an increase in projected expenditures of approximately $3.5 million for a projected deficit of approximately $2.1 million. The fiscal year 2020 estimate has been developed using the assumption that the area will see average water usage which is consistent with prior years. Effective January 1, 2020, water rates increased by 6% and sewer rates increased by 2% over the prior year, which follows increases of 6% and 5% for fiscal year 2019. The increased rates will ensure water and sewer operations maintain expected service levels and infrastructure repairs continue in a timely manner. The Utilities Capital Plan calls for increases in these rates during each year under the plan, but the City reevaluates the need for such increases each year prior to implementing such an increase. The City’s financial plan with respect to the Utility Fund includes a planned draw down of reserves each year with the expectation that the reserve balance level will remain at at least 25% of expenditures. The planned draw down during Fiscal Year 2019 would leave the fund at approximately 48% of expenditures.

DEFAULT RECORD The City has no record of default and has met its debt repayment obligations promptly.

SHORT-TERM BORROWING The City 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.

DEBT INFORMATION

The City currently has outstanding $76,495,000* principal amount of general obligation debt (giving effect to the issuance of the Bonds). Approximately 79% of this indebtedness, $60,205,000* (including the Bonds), is expected to be retired from sources other than City-wide general taxes, principally water system and sewer system revenues, utility revenues and lease payments. The City repays its debt rapidly; all tax supported debt is scheduled to be retired within ten years. The City has no outstanding revenue bonds, installment purchase contracts or leases. The outstanding principal amount for the City’s special service area bonds is approximately $412,000 per the City’s 2018 Audit (as hereinafter defined).

The City is a home rule unit under the Illinois Constitution and, as such, has no general obligation debt limit, is

not required to seek referendum approval for the issuance of the Bonds, and has no statutory tax rate limitations for any purpose.

*Subject to change.


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The proposed fiscal year 2020 budget for the City’s Utility Fund includes issuing approximately $9.5 million in

new debt. With revenue from the Riverboat Fund covering most street improvement projects, the City’s five-year capital plan (2020 to 2024) forecasts issuing approximately $10 million per year in new tax supported debt to support utility projects that are expected to be paid from utility fees.

General Obligation Debt Outstanding - By Issue(1)

(Principal Only)

Property Tax Supported Amount

General Obligation Bonds (Corporate Purpose Portion), Series 2012A ............................ $ 1,285,000

General Obligation Corporate Purpose Bonds (Radio Project Portion), Series 2013B ............... 2,305,000

Local Government Program Revenue Bonds (Radio Project Portion), Series 2013C .................. 115,000

General Obligation Bonds (Corporate Purpose Portion), Series 2016 ............................. 11,370,000

General Obligation Refunding Bonds (Radio Project Portion), Series 2020A ...................... 1,215,000

Total Property Tax Supported ................................................................ $16,290,000

Self-Supporting(2)

General Obligation Bonds (Sewer Portion), Series 2010A ........................................ $ 560,000

General Obligation Refunding Bonds (Sherman Wellness Center Portion), Series 2010C ............. 390,000

General Obligation Refunding Bonds (Water Portion), Series 2010C .............................. 120,000

General Obligation Refunding Bonds (Sewer Portion), Series 2010C .............................. 120,000

General Obligation Bonds (Water Portion), Series 2011 ......................................... 420,000

General Obligation Bonds (Sewer Portion), Series 2011 ......................................... 70,000

General Obligation Refunding Bonds (Sewer Portion), Series 2012 ............................... 1,225,000

General Obligation Refunding Bonds (Water Portion), Series 2012 ............................... 3,765,000

General Obligation Bonds (Water Portion), Series 2012A ........................................ 3,255,000

General Obligation Refunding Bonds (Sewer Portion), Series 2012B .............................. 1,905,000

General Obligation Refunding Bonds (Water Portion), Series 2013A .............................. 2,135,000

General Obligation Refunding Bonds (Sewer Portion), Series 2013A .............................. 4,140,000

General Obligation Corporate Purpose Bonds (Water Portion), Series 2013B ...................... 300,000

General Obligation Corporate Purpose Bonds (Sewer Portion), Series 2013B ...................... 105,000

Local Government Program Revenue Bonds (Water Portion), Series 2013C .......................... 315,000

Local Government Program Revenue Bonds (Sewer Portion), Series 2013C .......................... 80,000



General Obligation Bonds (Utilities Portion), Series 2016 ..................................... 7,625,000

General Obligation Corporate Purpose Bonds (Sewer Portion), Series 2019 ....................... 935,000

General Obligation Corporate Purpose Bonds (Water Portion), Series 2019 ....................... 8,065,000



General Obligation Corporate Purpose Bonds (Sewer Portion), Series 2020B ...................... 1,200,000(3)

General Obligation Corporate Purpose Bonds (Water Portion), Series 2020B ...................... 8,445,000(3)

Total Self-Supporting ....................................................................... $60,205,000(3)

Total Outstanding General Obligation Debt ................................................... $76,495,000(3)

Notes: (1) Source: the City.

(2) Aside from the Local Government Program Revenue Bonds issued in 2013, the City has

levied a property tax to repay series of bonds set forth below which will be used to

repay such bonds if the revenue source expected to repay such bonds are insufficient to

repay such bonds. The City is not required to apply such revenues to the repayment of

these bonds.

(3) Subject to change.

*Subject to change.


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General Obligation Bonded Retirement Schedule(1) (Principal Only)

Prior

Water, Sewer &

Payable Property Recreation Center Total Total Principal Retired

Jan. 1 Tax Supported Self-Supporting The Outstanding Property Tax- (Tax Supported)

Year(2) Principal Principal(3) Bonds(4) Principal(4) Supported Amount Percent

2021 ........ $ 2,345,000 $ 6,565,000 $ 0 $ 8,910,000 $ 2,345,000 $ 2,345,000 14.40%

2022 ........ 2,405,000 6,560,000 555,000 9,520,000 2,405,000 4,750,000 29.16%

2023 ........ 2,430,000 6,450,000 575,000 9,455,000 2,430,000 7,180,000 44.08%

2024 ........ 995,000 6,130,000 595,000 7,720,000 995,000 8,175,000 50.18%

2025 ........ 1,105,000 5,265,000 610,000 6,980,000 1,105,000 9,280,000 56.97%

2026 ........ 1,125,000 4,470,000 635,000 6,230,000 1,125,000 10,405,000 63.87%

2027 ........ 1,155,000 3,760,000 650,000 5,565,000 1,155,000 11,560,000 70.96%

2028 ........ 1,175,000 3,230,000 675,000 5,080,000 1,175,000 12,735,000 78.18%

2029 ........ 1,195,000 2,900,000 695,000 4,790,000 1,195,000 13,930,000 85.51%

2030 ........ 1,170,000 1,460,000 715,000 3,345,000 1,170,000 15,100,000 92.69%

2031 ........ 1,190,000 1,515,000 735,000 3,440,000 1,190,000 16,290,000 100.00%

2032 ........ 0 730,000 765,000 1,495,000 0

2033 ........ 0 750,000 790,000 1,540,000 0

2034 ........ 0 775,000 810,000 1,585,000 0

2035 ........ 0 0 840,000 840,000 0

Total ..... $16,290,000 $50,560,000 $9,645,000 $76,495,000 $16,290,000

Notes: (1) Source: the City. Does not include various special assessment bonds, special service area bonds and public benefit debt. Includes the

Bonds.

(2) All debt including general obligation bonds payable on December 15 are treated as payable in the year ended January 1.

(3) Comprised of the water portion of the 2012A Bonds, the water and sewer portions of the 2010C, 2011, 2012, 2013A, 2013B, 2013C, 2015A, 2016,

2019 and 2020A Bonds, the sewer portion of the 2010A and 2012B Bonds and the Sherman Wellness Center portion of the 2010C Bonds.



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Detailed Overlapping Bonded Debt(1) (As of October 16, 2019)

Outstanding Applicable to City

Debt Percent(2) Amount

Schools:

District U-46 ................................................................... $ 237,542,304 35.56% $ 84,476,231

CUSD Number 300 ................................................................. 247,257,030 9.76% 24,132,052

CUSD Number 301 ................................................................. 45,808,189 50.72% 23,233,769

CUSD Number 303 ................................................................. 38,045,000 0.004%(3) 1,440

ECC ............................................................................. 167,446,226 16.61% 27,813,079

Total Schools ......................................................................................................... $159,656,571

Others:

Kane County ..................................................................... $ 28,140,000 14.12% $ 3,972,434

Kane County Forest Preserve District ............................................ 144,415,000 14.12% 20,386,607

Cook County ..................................................................... 2,950,121,750 0.25% 7,516,245

Cook County Forest Preserve District ............................................ 131,815,000 0.25% 335,835

Metropolitan Water Reclamation District ......................................... 2,377,123,381 0.03% 688,022

Campton Township ................................................................ 26,940,000 0.02% 4,205

Bartlett Park District .......................................................... 21,460,000 0.15% 31,625

Dundee Township Park District ................................................... 16,035,000 19.06% 3,056,637

Gail Borden Public Library District ............................................. 7,480,000 68.28% 5,107,053

Bartlett Public Library District ................................................ 0 1.01% 0

Total Others .......................................................................................................... $ 41,098,663

Total Schools and Other Overlapping Bonded Debt ....................................................................... $200,755,234

Notes: (1) Source: Cook and Kane Counties.

(2) Overlapping debt percentages based on 2018 EAV for Kane County and Cook County, the most current available.

(3) Less than .01 percent.

Statement of Bonded Indebtedness(1)

Ratio To Per Capita

Amount Equalized Estimated (2014-2018 ACS

Applicable Assessed Actual Pop. 113,023)

City EAV of Taxable Property, 2018(2) ......................... $2,427,542,900 100.00% 33.33% $21,478.31

Estimated Actual Value, 2018(2) ............................... $7,282,628,700 300.00% 100.00% $64,434.93

Direct Bonded Debt(3) ......................................... $ 76,495,000 3.15% 1.05% $ 676.81

Less: Self-Supporting Debt(3) ................................ (60,205,000) (2.48%) (0.83%) (532.68)

Net Direct Debt(3) .......................................... $ 16,290,000 0.67% 0.22% $ 144.13

Overlapping Bonded Debt(4):

Schools ....................................................... $ 159,656,571 6.58% 2.19% $ 1,412.60

All Others .................................................... 41,098,663 1.69% 0.56% 363.63

Total Overlapping Bonded Debt ............................... $ 200,755,234 8.27% 2.75% $ 1,776.23

Total Direct and Overlapping Bonded Debt(3) ................. $ 217,045,234 8.94% 2.97% $ 1,920.36

Notes: (1) Source: Kane and Cook Counties.

(2) Based on 2018 EAV for Kane and Cook Counties, the most current available.


(3) Overlapping debt as of October 16, 2019.


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PROPERTY ASSESSMENT AND TAX INFORMATION

Kane County represents approximately 83% and Cook County represents approximately 17% of the City’s 2018 EAV. The total 2018 EAV for Kane and Cook Counties is comprised of approximately 67.98% residential, 15.50% commercial, 16.38% industrial, 0.10% farm and 0.04% railroad property valuation. Though the final EAV for levy year 2019 has not been released as of the date hereof, Kane County has informed the City that its preliminary calculation of the increase in EAV for the Kane County portion of the City is approximately 9.3%. The City has not yet received an estimate of the increase in the Cook County portion of its EAV.

City EAV(1)

Levy Year

2014 2015 2016 2017 2018

Total By Class:

Residential ...................... $1,255,774,896 $1,315,021,553 $1,477,894,296 $1,580,941,480 $1,650,180,075

Farm ............................. 2,182,503 2,345,236 2,233,896 2,321,558 2,408,025

Commercial ....................... 322,301,370 336,871,019 359,022,578 372,598,188 376,226,927

Industrial ....................... 283,762,775 326,547,036 361,285,501 384,119,759 397,710,348

Railroad ......................... 776,617 932,322 963,197 950,034 1,017,525

Total .......................... $1,864,798,161 $1,981,717,166 $2,201,399,468 $2,340,931,019 $2,427,542,900

Total By County:

Cook County ...................... $ 356,806,130 $ 346,865,396 $ 403,011,577 $ 411,282,228 $ 404,192,105

Kane County ...................... 1,507,992,031 1,634,851,770 1,798,387,891 1,929,648,791 2,023,350,795

Total .......................... $1,864,798,161 $1,981,717,166 $2,201,399,468 $2,340,931,019 $2,427,542,900

Percentage Growth ................ (0.70%)(2) 6.27% 11.09% 6.34% 3.70%

Notes: (1) Source: Cook and Kane Counties.

(2) Based on 2013 EAV of $1,878,024,399.

Representative Tax Rates(1) (Per $100 EAV)

Levy Years

City Rates: 2014 2015 2016 2017 2018

Corporate(2) ......................................... $ 1.4121 $ 1.3663 $ 1.2498 $ 1.1688 $1.1129

Debt Service ......................................... 0.1530 0.2236 0.1380 0.1550 0.1463

Pensions(3) .......................................... 0.5770 0.6937 0.7466 0.7242 0.6677

Social Security ...................................... 0.1139 0.1082 0.1051 0.1014 0.0972

Prior Year Adjustment ................................ 0.0658 0.0192 0.0000 0.0000 0.0000

Total City Rates(4) ................................ $ 2.3218 $ 2.4110 $ 2.2396 $ 2.1494 $2.0240

Kane County .......................................... $ 0.4684 $ 0.4479 $ 0.4201 $ 0.4025 $0.3877

Kane County Forest Preserve District ................. 0.3126 0.2944 0.2253 0.1658 0.1607

District U-46 ........................................ 8.0229 7.1238 6.5487 6.3696 6.1237

ECC .................................................. 0.6076 0.5609 0.5296 0.4999 0.5075

Elgin Township ....................................... 0.1160 0.1102 0.1020 0.1192 0.1164

Fox River Reclamation District ....................... 0.0409 0.0339 0.0315 0.0302 0.0291

Gail Borden Library District ......................... 0.5796 0.5294 0.4898 0.4729 0.4630

Elgin Township Road and Bridge ....................... 0.0893 0.0849 0.0785 0.0758 0.0745

Total Rates(5) ..................................... $12.5591 $11.5963 $10.6651 $10.2854 $9.8866

Notes: (1) Source: Kane County.

(2) Includes Public Benefit Rate.

(3) Includes Police, Fire and Illinois Municipal Retirement Fund pensions.

(4) The City is a home rule unit under the Illinois Constitution and, as such, has no statutory tax rate limitation.

(5) Representative tax rates for other government units are from Elgin Township tax code 05, which represents the

largest portion of the City's 2018 EAV, the most current available.


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Tax Extensions and Collections(1)

(City Purposes Only) Levy Coll. Taxes Current Collections(2) Total Collections Year Year Extended(3) Amount Percent Amount Percent 2009 ....... 2010 ...... $49,952,580 $48,593,559 97.28% $49,072,744 98.24% 2010 ....... 2011 ...... 48,959,925 47,029,918 96.06% 47,863,925 97.76% 2011 ....... 2012 ...... 45,977,843 45,642,535 99.29% 45,652,516 99.29% 2012 ....... 2013 ...... 41,006,495 39,852,071 97.18% 39,852,071 97.18% 2013 ....... 2014 ...... 41,513,676 41,164,524 99.16% 41,185,264 99.21% 2014 ....... 2015 ...... 43,669,081 43,260,630 99.06% 43,269,727 99.09% 2015 ....... 2016 ...... 48,979,910 48,546,784 99.12% 48,546,784 99.12% 2016 ....... 2017 ...... 49,816,064 49,319,516 99.00% 49,319,516 99.00% 2017 ....... 2018 ...... 51,124,360 50,393,320 98.57% 50,393,320 98.57% 2018 ....... 2019(4) ... 50,443,459 49,358,061 97.85% 49,358,061 97.85% Notes: (1) Source: Kane and Cook Counties and the City. (2) Current collections in both Kane and Cook Counties include taxes paid under

protest. (3) Taxes extended have been adjusted for abatements in Kane County only. (4) Collections through October 30, 2019.

Principal City Taxpayers(1)

Name County Business/Service 2018 EAV(2) TLF Northwest Business Park VII LLC .................. Kane ...................... Real Property ........................... $ 21,346,076 John B. Sanfilippo & Son ............................. Kane ...................... Nuts .................................... 17,917,695 MHC Deanza Financing Limited Partnership ............. Kane ...................... Real Property ........................... 9,857,193 Adventus US Realty #1 LP ............................. Kane ...................... Real Property ........................... 9,190,408 Hunter Ridge Apartments LLC(3) ....................... Kane ...................... Apartment Complex ....................... 7,872,487 Sherman Hospital ..................................... Kane ...................... Health Care ............................. 7,294,054 DCT 305-325 Corporate LLC ............................ Kane ...................... Real Property ........................... 7,231,139 CHI IND I LLC ........................................ Kane ...................... Real Property ........................... 7,022,610 BPREP Randall Point LLC .............................. Kane ...................... Real Property ........................... 6,746,505 MP Holdings LLC ...................................... Kane ...................... Real Property ........................... 6,695,879 Total .................................................................................................................. $101,174,046 Ten Largest as a percent of City's 2018 EAV ($2,427,542,900) ........................................................... 4.17% Notes: (1) Source: Kane and Cook Counties. (2) Every effort has been made to seek out and report the largest taxpayers. However, many of the taxpayers listed

contain multiple parcels and it is possible that some parcels and their valuations have been overlooked. Based on 2018 EAV for Kane County and Cook County, the most current available.

(3) Previously Willo Arms Associates Limited II Et Al.

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 certain interest on the Bonds will be levied on all taxable real property within the City. The information under this caption describes the current procedures for real property assessments, tax levies and collections in the Counties. Certain procedures for assessment, levy and collection differ between Cook County and Kane County. Such differences are noted in this section. There can be no assurance that the procedures described herein will not change. Real Property Assessment and Equalization Cook County

The Cook County Assessor (the “Assessor”) is responsible for the assessment of all taxable real property within

Cook County, including that in the City, except for certain railroad property, pollution control facilities and low sulfur dioxide emission coal-fueled devices, which are assessed directly by the Department. 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 City is located in the South Tri and was reassessed for the 2017 tax levy year.


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Real property in Cook 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 at various percentages of fair market value as follows: Class 1 - unimproved real estate (10%); Class 2 - residential (10%); Class 3 - rental-residential (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 Newly constructed industrial properties or substantially rehabilitated sections of existing industrial properties

10% for first 10 years and any 10 year renewal; if not renewed, 15% in year 11, 20% in year 12

5b

C

Industrial property that has undergone environmental testing and remediation

10% for first 10 years, 15% in year 11, 20% in year 12

5b

Commercial property that has undergone environmental testing and remediation


5a

7a/7b Newly constructed or substantially rehabilitated commercial properties in an area in need of commercial development


5a

7c 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

10% for first 3 years and any 3 year renewal; if not renewed, 15% in year 4, 20% in year 5

5a

8

Industrial properties in enterprise communities or zones in need of substantial revitalization

10% for first 10 years and any 10-year renewal; if not renewed, 15% in year 11, 20% in year 12

5b

Commercial properties in enterprise communities or zones in need of substantial revitalization


5a

9 New or substantially rehabilitated multi-family residential properties in target areas, empowerment or enterprise zones

10% for first 10 years and any 10 year renewal

As Applicable

S Class 3 properties subject to Section 8 contracts renewed under the “Mark up to Market” option

10% for term of Section 8 contract renewal and any subsequent renewal

3

L

Substantially rehabilitated Class 3, 4 or 5b 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

3, 4, or 5b

Substantially rehabilitated Class 5a properties qualifying as “Landmark” or “Contributing” buildings


5a


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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 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.

After the County 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 is required by statute to review the Assessed Valuations. The Department 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 to be 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 Cook County, regardless of its assessment category, except for some farmland property and wind energy assessable property which are not subject to equalization.

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 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, constitutes the total real estate tax base for the taxing body and is the figure used to calculate tax rates (the “Assessment Base”). The following table sets forth the Equalization Factor for Cook County for the last 10 tax levy years. TAX LEVY YEAR EQUALIZATION FACTOR 2009 3.3701 2010 3.3000 2011 2.9706 2012 2.8056 2013 2.6621 2014 2.7253 2015 2.6685 2016 2.8032 2017 2.9627 2018 2.9109


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Kane County In Kane County, the local assessment officers determine the assessed valuation of taxable real property and

railroad property not held or used for railroad operations. The Department assesses certain other types of taxable property, including railroad property held or used for railroad operations. Local assessment officers’ valuation determinations are subject to review at the county level and then, in general, to equalization by the Department. Such equalization is achieved by applying to each county’s assessments a multiplier determined by the Department. The purpose of equalization is to provide a common basis of assessments among counties by adjusting assessments toward the statutory standard of 33-1/3% of fair cash value. Farmland is assessed according to a statutory formula which takes into account factors such as productivity and crop mix. Taxes are extended against the assessed values after equalization. Property Tax 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 (1) up to a maximum reduction of $6,000 in Kane County and (2) up to a maximum reduction of $7,000 for tax years 2012 through 2016, and $10,000 for tax years 2017 and thereafter in Cook County.

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 value is attributable solely to such improvements or rebuilding.

In Cook County, 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 Senior Citizens Homestead Exemption annually reduces the EAV on residences owned and occupied by

senior citizens. In Kane County, beginning with tax year 2013, the maximum exemption is $5,000. In Cook County, the maximum exemption is $5,000 for tax years 2013 through 2016 and $8,000 for tax years 2017 and thereafter.

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 the maximum income limitation. The maximum income limitation is $55,000 for assessment year 2008 through assessment year 2017 in Kane County and $55,000 through assessment year 2016 in Cook County. Beginning in assessment year 2018 in Kane County and assessment year 2017 in Cook County, the maximum income limitation is $65,000. 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. Beginning in tax year 2017 in Cook County, the amount of the exemption is equal to the greater of the amount calculated as described in the previous sentence (as more completely set forth in the Property Tax Code) or $2,000.


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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 the Consumer Price Index (“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, 2029.

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 EAV 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 $5,000.

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 and Collections Cook County

As part of the annual budgetary process of governmental units (the “Units”) with power to levy taxes in Cook County, proceedings are adopted by the designated body for each Unit each year in which it determines to levy real estate taxes. The administration and collection of real estate taxes is statutorily assigned to the Cook County Clerk and the Cook County Treasurer. After the Units file their annual tax levies, the Cook County Clerk computes the annual tax rate for each Unit. The Cook County Clerk uses the prior year’s EAV to compute the taxing district’s maximum allowable levy. The maximum levy that can be raised for a Unit is the maximum tax rate for that Unit multiplied by the prior year EAV for all property currently in the Unit. The prior year’s EAV includes the prior year’s EAV plus 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 (as hereinafter defined). 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.


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The Cook 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 Cook 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 Cook County Collector (the “Warrant Books”) along with the tax rates, the Assessed Valuation and the EAV. The Warrant Books are the Cook County Collector’s authority for the collection of taxes and are used by the Cook County Collector as the basis for issuing tax bills to all property owners.

Property taxes are collected by the Cook County Collector, who is also the Cook 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. The first installment is equal to one-half of the prior year’s tax bill; beginning in collection year 2010, this estimated amount was raised 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 of the corrected prior year’s tax bill. The second installment is for the balance of the current year’s tax bill, and is based on the then current tax year levy, assessed value and Equalization Factor, and reflects any changes from the prior year in those factors. The following table sets forth the second installment penalty date for the last 10 tax levy years in Cook County; the first installment penalty date has been March 1 for all such years; however for 2010, the first installment penalty date was established as April 1 by statute.

SECOND INSTALLMENT TAX LEVY YEAR PENALTY DATE 2009 December 13, 2010 2010 November 1, 2011 2011 August 1, 2012 2012 August 1, 2013 2013 August 1, 2014 2014 August 3, 2015 2015 August 1, 2016 2016 August 1, 2017 2017 August 1, 2018 2018 August 1, 2019

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. Cook County may provide for tax bills to be payable in four installments instead of two. However, Cook County has not required payment of tax bills in four installments. During the periods of peak collections, tax receipts are forwarded to each Unit on a weekly basis. Upon receipt of taxes from the Cook County Collector, the City promptly credits the taxes received to the funds for which they were levied.

At the end of each collection year, the Cook 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 one-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.


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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 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. Kane County

Property tax levies are filed in the office of the County Clerk of Kane County (the “Kane County Clerk”). The Kane County Clerk computes the rates and amount of taxes applicable to taxable property subject to the tax levies of each taxing body and determines the dollar amount of taxes attributable to each respective parcel of taxable property. The Kane County Clerk then supplies to the appropriate collecting officials within the county the information needed to bill the taxes attributable to the various parcels therein. After the taxes have been collected, the collecting officials distribute to the various taxing bodies their respective shares of the taxes collected. Taxes levied in one calendar year are due and payable in two installments during the next calendar year. Taxes that are not paid when due, or that are not paid by mail and postmarked on or before the due date, are subject to a penalty of 1-1/2% per month until paid. Unpaid property taxes, together with penalties, interest and costs, constitute a lien against the property subject to the tax. Property Tax Extension Limitation Law

The Property Tax Extension Limitation Law (the “Limitation Law”) limits the amount of the annual increase in property taxes to be extended for certain Illinois non-home rule units of government. In general, the Limitation Law restricts the amount of such increases to the lesser of 5% or the percentage increase in the CPI during the calendar year preceding the levy year. Currently, the Limitation Law applies only to and is a limitation upon all non-home rule taxing bodies in Cook County, the five collar counties (DuPage, Kane, Lake, McHenry and Will) and several downstate counties.

Home rule units, including the City, are exempt from the limitations contained in the Limitation Law. If the

Limitation Law were to apply in the future to the City, the limitations set forth therein will not apply to any taxes levied by the City to pay the principal of and interest on the Bonds.

Illinois legislators have introduced 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 City and the ability of the City to issue non-referendum bonds. The City 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 City predict the effect of any such change on the City’s finances.


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Truth in Taxation Law

The Truth in Taxation Law (the “Truth in Taxation 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 Truth in Taxation 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 Truth in Taxation Law do not apply to levies made to pay principal of and certain interest on the Bonds. The City covenanted in the Bond Ordinance that it will not take any action or fail to take any action which would adversely affect the ability of the City to levy and collect the taxes levied by the City for payment of principal of and interest on the Bonds. The City also covenanted that it will comply with all present and future applicable laws to assure that such taxes will be levied, extended, collected and deposited as provided in the Bond Ordinance.

FINANCIAL INFORMATION The City reports all Governmental Funds and the Expendable Trust Fund using the modified accrual basis of accounting. Under this method, revenues are recognized when they become measurable and available, as net current assets and expenditures are generally recognized when the related fund liability is incurred. All Proprietary Funds and Non-expendable Trust and Pension Trust Funds are accounted for using the accrual basis of accounting. Under this method, revenues are recognized when they are earned, and expenses are recognized when they are incurred. No Consent or Updated Information Requested of the Auditor

The tables contained in this “FINANCIAL INFORMATION” section (the “Excerpted Financial Information”)

are from the audited financial statements of the City, including the audited financial statements for the fiscal year ended December 31, 2018 (the “2018 Audit”), which was approved by formal action of the City Council and prepared by Sikich LLP, Naperville, Illinois (“the “Auditor”). The 2018 Audit is attached to this Official Statement as APPENDIX A. The City has not requested the Auditor to update information contained in the Excerpted Financial Information or the 2018 Audit; nor has the City requested that the Auditor consent to the use of the Excerpted Financial Information or the 2018 Audit in this Official Statement. Other than as expressly set forth in this Official Statement, the financial information contained in the Excerpted Financial Information and 2018 Audit has not been updated since the date of the 2018 Audit. The inclusion of the Excerpted Financial Information and 2018 Audit in this Official Statement in and of itself is not intended to demonstrate the fiscal condition of the City since the date of the 2018 Audit. Questions or inquiries relating to financial information of the City since the date of the 2018 Audit should be directed to the City. Summary Financial Statements The financial statements of the City are audited annually by certified public accountants and are prepared in conformity with generally accepted accounting principles as applied to governments. The City has received the Certificate of Achievement for Excellence in Financial Reporting for 38 consecutive years, through the fiscal year 2017 Comprehensive Annual Financial Report, from the Government Finance Officers Association. The following reports are summaries and do not purport to be complete audits, copies of which are available upon request. See also APPENDIX A for the City’s 2018 Audit.


44

Statement of Net Assets(1) Governmental Activities

Audited Fiscal Year Ending December 31

2014 2015(2) 2016(2) 2017(2) 2018(2)

ASSETS:

Cash and Investments ..................................... $123,015,189 $ 113,976,783 $ 119,062,757 $ 111,545,169 $ 127,002,903

Receivables:

Property Taxes .......................................... 43,750,992 49,445,780 50,660,670 51,960,970 51,423,120

Accounts ................................................ 439,295 463,142 471,740 458,674 518,742

Accrued Interest ........................................ 126,396 123,945 100,605 198,082 598,335

Other ................................................... 3,601,750 3,880,652 4,241,943 4,063,696 5,609,111

Prepaid Expenses ......................................... 535,700 457,259 445,527 1,002,429 509,350

Inventories .............................................. 127,307 130,062 136,259 133,070 129,274

Due From Other Governments ............................... 11,658,626 11,385,827 11,225,671 9,997,881 10,914,598

Due From (To) Other Funds ................................ 0 0 0 0 0

Due From Fiduciary Funds ................................. 43,434 1,869 24,422 0 0

Advances From (To) Other Funds/Internal Balances ......... (3,349,127) (1,098,782) (2,653,836) (363,786) (304,283)

Property Held For Resale ................................. 167,984 67,867 67,867 0 0

Net Pension Asset ........................................ 11,122,743 0 225,712 234,788 2,030,725

Capital Assets:

Non-Depreciable ......................................... 88,706,430 92,016,146 93,003,183 93,880,616 94,799,826

Depreciable, Net ........................................ 487,142,197 478,269,126 474,276,775 450,528,085 429,647,392

Total Assets ........................................... $767,088,916 $ 749,119,676 $ 751,289,295 $ 723,639,674 $ 722,879,093

DEFERRED OUTFLOWS OF RESOURCES:

Unamortized Loss On Refunding ............................ $ 421,252 $ 198,452 $ 149,938 $ 99,175 $ 56,702

OPEB Items ............................................... 0 0 0 0 836,591

Pension Items – IMRF ..................................... 0 12,322,763 14,922,260 10,777,040 2,947,446

Pension Items - IMRF (SLEP) .............................. 0 0 116,480 91,453 0

Pension Items - Police Pension ........................... 0 16,118,679 12,089,009 6,859,568 16,759,283

Pension Items - Firefighters' Pension .................... 0 12,007,678 11,727,030 7,293,173 17,778,901

Total Assets and Deferred Outflows of Resources ........ $767,510,168 $ 789,767,248 $ 790,294,012 $ 748,760,083 $ 761,258,016

LIABILITIES:

Accounts Payable ......................................... $ 4,876,344 $ 6,217,204 $ 8,322,864 $ 8,684,246 $ 6,650,562

Accrued Payroll .......................................... 5,061,278 4,389,406 2,551,772 2,972,795 3,648,186

Retainage Payable ........................................ 378,652 166,031 2,079,400 796,349 462,523

Deposits Payable ......................................... 16,753,867 15,730,894 9,153,886 9,455,193 9,961,105

Claims Payable ........................................... 4,190,574 5,429,787 4,809,673 4,837,186 5,895,424

Unearned Revenue ......................................... 2,861,960 2,191,237 2,295,785 2,307,156 2,512,445

Due To Fiduciary Funds ................................... 0 15,246 0 0 0

Long-Term Liabilities:0

Due Within One Year ..................................... 8,791,416 5,249,626 5,790,622 5,741,613 5,924,829

Due In More Than One Year ............................... 27,206,200 259,051,646 264,956,142 231,283,261 259,425,332

Total Liabilities ...................................... $ 70,120,291 $ 298,441,077 $ 299,960,144 $ 266,077,799 $ 294,480,406

DEFERRED INFLOWS OF RESOURCES:

Deferred Revenue ......................................... $ 43,749,380 $ 49,445,780 $ 50,660,670 $ 51,960,970 $ 51,423,120

OPEB Items ............................................... 0 0 0 0 1,273,617

Pension Items – IMRF ..................................... 0 0 0 1,573,351 11,582,790

Pension Items - IMRF (SLEP) .............................. 0 0 0 0 125,462

Pension Items - Police Pension ........................... 0 0 7,540,960 20,855,161 16,684,705

Pension Items - Firefighters' Pension .................... 0 1,063,901 5,327,199 13,593,130 6,805,567

Total Liabilities and Deferred Inflows of Resources .... $113,869,671 $ 348,950,758 $ 363,488,973 $ 354,060,411 $ 382,375,667

NET ASSETS:

Invested in Capital Assets, Net .......................... $553,444,727 $ 554,592,394 $ 541,856,090 $ 520,374,530 $ 503,534,676

Restricted ............................................... 16,794,950 16,938,214 15,245,603 14,331,839 19,974,101

Unrestricted ............................................. 83,400,820 (130,714,118) (130,296,654) (140,006,697) (144,626,428)

Total Net Position ..................................... $653,640,497 $ 440,816,490 $ 426,805,039 $ 394,699,672 $ 378,882,349

Notes: (1) Source: the City's audited financial statements for years ending December 31, 2014-2018.

(2) Change in accounting principle.


45

Statement of Activities(1) Governmental Activities


2014 2015(2) 2016(2) 2017(2) 2018(2)

Functions/Programs:

Governmental Activities:

General Government ........................ $ (6,845,035) $ (6,491,147) $ (5,930,280) $ (8,020,181) $ (6,633,460)

Public Safety ............................. (66,087,965) (86,796,442) (82,642,101) (78,971,878) (82,835,601)

Highways and Streets ...................... (30,740,745) (26,711,993) (35,556,497) (41,079,779) (32,225,480)

Health and Welfare ........................ (3,071,334) (161,331) (76,267) (132,239) (96,952)

Culture and Recreation .................... (4,943,794) (8,062,137) (7,744,042) (7,760,425) (6,984,696)

Economic Development ...................... (1,851,051) (2,039,588) (2,035,435) (8,343,984) (2,721,315)

Sanitation ................................ (157,452) (512,260) (92,181) (535,709) 35,707

Interest .................................. (870,259) (588,833) (681,323) (637,911) (544,850)

Total Governmental Activities ........... $(114,567,635) $(131,363,731) $(134,758,126) $(145,482,106) $(132,006,647)

General Revenues:

Taxes:

Property ................................. $ 43,258,079 $ 44,740,472 $ 50,623,985 $ 52,099,180 $ 53,245,175

Road and Bridge .......................... 854,460 881,621 918,861 936,928 974,468

Hotel/Motel .............................. 461,220 490,865 498,346 494,382 959,254

Sales .................................... 26,338,972 27,610,851 27,875,322 29,233,891 32,591,567

Income ................................... 10,358,332 11,511,549 10,531,456 9,936,978 10,360,740

Utility .................................. 10,368,821 9,367,779 9,147,568 8,828,028 9,088,808

Other .................................... 1,292,273 1,481,427 1,339,472 1,382,972 2,233,273

Gaming ................................... 10,078,400 10,125,667 9,702,764 10,007,419 9,571,074

Investment Income ......................... 164,917 205,210 520,153 997,557 1,714,217

Miscellaneous ............................. 4,923,567 3,530,408 3,524,347 3,376,358 3,417,212

Gain (Loss) on Sale of Capital Assets ..... (249,243) 0 0 0 0

Transfers In (Out) ......................... 1,468,228 1,467,145 1,103,418 1,274,745 1,234,149

Special Item ............................... 0 0 0 0 0

Total General Revenues .................. $ 109,318,026 $ 111,412,994 $ 115,785,692 $ 118,568,438 $ 125,389,937

Change In Net Assets ....................... (5,249,609) (19,950,737) (18,972,434) (26,913,668) (6,616,710)

Net Assets, Beginning of the Year .......... 657,236,652 653,640,497 440,816,490 426,805,039 394,699,672

Change in Accounting Principle .......... 0 0 0 0 (9,200,613)(4)

Prior Period Adjustment .................... 1,653,454 (192,873,270)(3) 4,960,983 (5,191,699) 0

Net Assets, End of the Year ................ $ 653,640,497 $ 440,816,490 $ 426,805,039 $ 394,699,672 $ 378,882,349


(2) Change in accounting principle.

(3) Implementation of GASB No. 68, Accounting and Financial Reporting for Pensions.

(4) Implementation of GASB No. 75, Accounting and Financial Reporting for Postemployment Benefits other than

Pensions.



46

General Fund(1) Balance Sheet


2014 2015 2016 2017 2018

ASSETS:

Cash and Investments ........................ $ 81,625,484 $ 74,399,772 $ 68,932,121 $ 67,512,725 $ 78,471,186

Property Taxes .............................. 38,105,000 40,940,830 43,133,830 43,652,000 43,637,570

Due from Other Governments .................. 9,247,932 9,497,624 9,385,258 8,249,188 9,278,256

Prepaid Items ............................... 218,964 11,830 10,000 508,785 26,238

Due from Other Funds ........................ 11,307 1,671,832 1,659,080 119,682 333,819

Due from Fiduciary Funds .................... 0 0 608 0 0

All Other ................................... 3,713,210 3,937,104 4,264,670 3,731,978 5,505,330

Total Assets .............................. $132,921,897 $130,458,992 $127,385,567 $123,774,358 $137,252,399

LIABILITIES:

Accounts Payable and Accrued Expenses ....... $ 3,229,668 $ 4,510,500 $ 3,682,331 $ 3,756,337 $ 5,198,653

Deferred Revenues .......................... 814,446 823,784 836,566 861,708 888,422

Accrued Payroll ............................ 4,791,452 4,237,581 2,443,099 2,836,331 3,490,084

Due to Other Funds(2) ...................... 304,258 1,131,082 800,000 80,822 1,128,429

Due to Fiduciary Funds ..................... 0 15,181 0 0 0

Deposits Payable(3) ........................ 16,642,106 15,616,448 9,050,688 9,126,107 9,334,996

Retainage Payable .......................... 247,488 159,663 693,728 714,750 271,291

Total Liabilities ......................... $ 26,029,418 $ 26,494,239 $ 17,506,412 $ 17,376,055 $ 20,311,875

DEFERRED INFLOWS OF RESOURCES:

Unavailable Revenue ......................... $ 38,105,000 $ 40,940,830 $ 43,133,830 $ 43,652,000 $ 43,637,570

Total Liabilities

and Deferred Inflows of Resources ........ $ 64,134,418 $ 67,435,069 $ 60,640,242 $ 61,028,055 $ 63,949,445

FUND BALANCE:

Nonspenable ................................. $ 218,964 $ 11,830 $ 10,000 $ 508,785 $ 26,238

Unrestricted ................................ 19,740,046 16,285,075 7,203,250 5,352,265 4,502,793

Unassigned .................................. 48,828,469 46,727,018 59,532,075 56,885,253 68,773,923

Total Fund Balance ........................ $ 68,787,479 $ 63,023,923 $ 66,745,325 $ 62,746,303 $ 73,302,954

Total Liabilities, Deferred Inflows

of Resources and Fund Balance ............ $132,921,897 $130,458,992 $127,385,567 $123,774,358 $137,252,399


(2) Due to Other Funds principally represents monies owed to capital improvements and internal service funds.

(3) Deposits payable represents developer impact fees for specific park and road improvements awaiting expenditure.



47

General Fund(1)(2)

Revenues and Expenditures


2014 2015 2016 2017 2018

REVENUES:

Property Taxes .............................. $ 34,134,694 $ 37,524,347 $ 39,769,930 $ 41,847,247 $ 42,192,320

Sales Taxes ................................. 15,982,352 16,902,401 17,050,571 17,720,398 19,374,212

Local Option Sales Tax ...................... 6,213,972 6,425,070 6,494,851 6,908,096 8,438,365

Other Taxes ................................. 2,660,935 2,900,405 2,968,749 2,996,945 3,093,092

State Income Taxes .......................... 10,358,332 11,511,549 10,531,456 9,936,978 10,360,740

Utility Taxes ............................... 7,106,287 6,221,044 6,196,315 6,057,398 6,568,379

Other Intergovernmental Taxes ............... 15,635,186 15,092,480 14,380,573 14,992,778 15,483,204

Fines and Forfeitures ....................... 1,785,253 1,712,225 1,659,099 1,719,374 1,747,366

Charges for Services ........................ 9,680,696 9,248,746 9,951,587 10,102,856 12,543,009

Investment Income ........................... 143,558 184,827 376,235 770,730 1,347,893

Licenses and Permits ........................ 2,572,904 2,445,889 2,821,463 1,866,686 2,348,217

Miscellaneous ............................... 4,305,282 4,954,598 10,264,321 3,363,147 3,536,538

Total Revenues ............................ $110,579,451 $115,123,581 $122,465,150 $118,282,633 $127,033,335

EXPENDITURES:

General Government .......................... $ 8,360,268 $ 7,983,219 $ 8,009,737 $ 7,787,055 $ 8,233,994

Public Safety ............................... 71,447,779 74,543,344 73,552,035 77,342,749 78,317,482

Highways and Streets ........................ 13,935,392 14,536,686 13,233,807 14,023,466 14,047,297

Sanitation .................................. 5,555,868 5,825,952 6,104,343 6,766,654 6,863,022

Culture and Recreation ...................... 322,791 360,116 1,372,189 216,085 268,700

Economic Development ........................ 896,247 1,186,390 1,278,010 1,209,799 2,026,217

Miscellaneous ............................... 4,068,232 5,664,564 11,844,836 2,164,068 1,654,948

Capital Outlay .............................. 8,470,296 8,273,326 3,966,284 13,074,030 5,489,994

Total Expenditures ........................ $113,056,873 $118,373,597 $119,361,241 $122,583,906 $116,901,654(5)

Excess of Revenues Over (Under)

Expenditures ............................... $ (2,477,422) $ (3,250,016) $ 3,103,909 $ (4,301,273) $ 10,131,681

Other Financing Sources (Uses):

Sale of Fixed Assets ....................... $ 0 $ 0 $ 0 $ 0 $ 0

Transfers In(3) ............................ 5,668,147 5,607,000 5,298,083 5,317,941 5,400,660

Transfers Out(4) ........................... (8,060,920) (8,120,540) (4,680,590) (5,015,690) (4,975,690)

Total Other Financing Sources ............. $ (2,392,773) $ (2,513,540) $ 617,493 $ 302,251 $ 424,970

Excess (Deficiency) of Revenues and Other

Sources Over (Under) Expenditures .......... $ (4,870,195) $ (5,763,556) $ 3,721,402 $ (3,999,022) $ 10,556,651

Beginning Fund Balance ...................... 73,657,674 68,787,479 63,023,923 66,745,325 62,746,303

Prior Period Adjustment ..................... 0 0 0 0 0

Ending Fund Balance ......................... $ 68,787,479 $ 63,023,923 $ 66,745,325 $ 62,746,303 $ 73,302,954


(2) The General Fund includes the Riverboat Fund. The City began to include the Riverboat Fund in the General Fund

in fiscal year 2011 and it is treated by the City as a purely capital projects fund. However, the revenue in

the Riverboat Fund can be used for general operations. In fiscal year 2017, approximately 9% of General Fund

revenue came from gaming and casino taxes collected in the Riverboat Fund. In fiscal year 2017, the City spent

approximately $12.4 million on capital projects out of the General Fund using revenue from the Riverboat Fund.

The City had planned to spend the rest of its Riverboat Fund reserves on capital projects in fiscal year 2018

but delayed work on several street projects that will be completed in fiscal years 2019 and 2020. The City

plans to carry over $6 million in reserves for capital projects going into fiscal year 2020. Going forward the

City expects to have approximately $10 million annually from riverboat revenues for capital expenditures on

street improvements.

(3) Includes routine interfund transfers from pension fund, administrative support allocations, and other

miscellaneous transfers.

(4) Transfers Out represents monies for capital improvements and for debt service.

(5) The decline in expenditures in fiscal year 2018, when compared to fiscal year 2017, is in the capital outlay

category. In fiscal year 2016, the City issued $15.0 million in debt for street improvements and did not

utilize riverboat revenues for street work. As such, in fiscal year 2017, the City was able to do additional

street work from the Riverboat Fund. Expenditures in fiscal year 2018 reflect normal spending.


48

Revenues

In fiscal year 2018, the City’s property tax receipts constituted 33% of total General Fund revenues. As part of a strategy to reduce reliance on the property tax, four new revenue streams were introduced in the 2012 budget. These alternate sources of revenue have helped to diversify the City’s General Fund revenues and provide for a more stable financial environment.

The new sources of revenue included a monthly refuse fee to recover the City’s cost of providing refuse collection; an alcoholic beverage tax of 3% on all alcohol purchases (this includes liquor served at bars and restaurants and packaged liquor sold in stores); an electricity tax based on usage and a natural gas tax of 5% or 3 cents per therm. Collection of refuse fees began on January 1, 2012 while the alcoholic beverage, natural gas and electricity taxes began July 1, 2012.

Since the City is a home rule municipality, it has the flexibility to implement new local option revenue sources.

During fiscal year 2018, the City Council took four measures to diversify revenues and keep general property tax levies flat. Those measures include (1) increasing the home rule sales tax 0.25% effective July 1, 2018; (2) implementing a new local motor fuel tax of 4 cents per gallon effective July 1, 2018; (3) increasing the hotel-motel tax from 4% to 8% effective January 1, 2018; and (4) increasing ambulance fees charged to non-residents effective January 1, 2018. The City Council also increased its property tax levy by 2.6% to pay police and fire pension contributions and debt service on bonds issued for capital improvement projects.

Fiscal Year 2019 Results and Fiscal Year 2020 Budget For the fiscal year ended December 31, 2019 (“Fiscal Year 2019”), the City budgeted for general fund revenues of $120.4 million and expenses of $121.4 million. Based on the City’s estimates, the City’s actual revenues for Fiscal Year 2019 were approximately $127.4 million. Such increase is due primarily to sales tax received (by approximately $2.6 million), income taxes received (by approximately $1.5 million), investment income (by approximately $1.1 million), permits by approximately $0.5 million) and ambulance fees. With respect to Fiscal Year 2019 expenses, the City expects expenditures to exceed the budget by approximately $2 million. Such increase is primarily due to a decision by the City to fund $4 million of fiscal year 2020 public safety pension contributions in advance to manage future property tax rates. The 2020 budget once again maintains a flat property tax levy. The General Fund 2020 budget plans to draw on reserves in the amount of $1.4 million. General Fund reserves are estimated to be 43% of annual expenditures, well above the reserve fund policy of 30% of annual expenditures. See “EMPLOYEE RETIREMENT AND OTHER POSTEMPLOYMENT BENEFITS OBLIGATIONS” for more information.



49

General Fund Budget and Estimated Financial Information

Budget Estimated Budget

Twelve Months Twelve Months Twelve Months

Ending Ending Ending

12/31/19 12/31/19 12/31/20

REVENUES:

Property Tax .................................... $ 27,800,000 $ 27,400,620 $ 27,800,000

Roads and Bridges ............................... 900,000 966,950 900,000

Other Taxes ..................................... 3,380,000 2,986,310 2,960,000

Sales Tax ....................................... 26,800,000 29,535,300 28,600,000

Refuse Fee ...................................... 5,900,000 5,878,950 6,487,680

Electricity Fee ................................. 4,400,000 4,336,600 4,400,000

Natural Gas Tax ................................. 2,000,000 2,091,260 2,000,000

Alcoholic Beverage Tax .......................... 1,400,000 1,409,380 1,400,000

Local Motor Fuel Tax ............................ 1,600,000 1,834,800 1,800,000

Licenses ........................................ 430,710 513,720 635,160

Permits ......................................... 1,728,000 2,368,820 1,516,000

Fines ........................................... 1,463,000 1,734,370 1,525,350

State Income Tax ................................ 10,000,000 11,515,430 11,000,000

Other Governmental .............................. 1,767,070 2,149,170 2,149,800

Charges for Services ............................ 5,257,000 6,322,110 6,188,270

Miscellaneous Revenue ........................... 2,833,600 2,881,360 2,827,200

Investment Income ............................... 500,000 1,629,220 760,000

Transfers In .................................... 7,349,490 7,204,930 8,023,690

Police and Fire Pension ......................... 14,937,570 14,735,410 14,807,660

Total Revenues ................................ $120,446,440 $127,494,710 $125,780,810

EXPENDITURES:

Legislative ..................................... $ 565,550 $558,840 $604,990

General Government .............................. 22,306,840 17,747,520 23,242,440

Public Safety ................................... 75,177,850 76,273,950 77,216,390

Streets and Highways ............................ 11,582,410 12,650,110 12,105,020

Sanitation ...................................... 6,542,260 6,464,300 6,986,480

Advance Pension Funding ......................... 0 4,000,000 0

Transfers Out ................................... 5,225,690 5,942,140 7,100,000

Total Expenditures ............................ $121,400,600 $123,636,860 $127,255,320

Excess (Deficiency) of Revenues Over (Under)

Expenditures .................................. $ (954,160) $ 3,857,850 $ (1,474,510)

EMPLOYEE RETIREMENT AND OTHER POSTEMPLOYMENT BENEFITS OBLIGATIONS The City 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 City’s employees, retirees and beneficiaries. The IMRF Plan is an agent multiple-employer public employee retirement system, and the Police Pension Plan and the Fire Pension Plan are single-employer pension plans. The City 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 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 12 to the 2018 Audit, as well as the supplementary schedules thereto, attached hereto as APPENDIX A.


50

The Pension Code allows the State Comptroller to divert State payments intended for the City to the Police

Pension Plan and the Fire Pension Plan to satisfy contribution shortfalls by the City (the “Recapture Provisions”). If the City fails to contribute to the Police Pension Plan or the Fire Pension Plan as required by the Pension Code, the City will be subject to a reallocation of payments of State funds to the City if (i) the City 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 City, 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 City in an amount not in excess of the delinquent payment amount in the proportion of 100% of the amount of any payments of State funds to the City. Should the Recapture Provision be invoked as a result of the City’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 City’s finances.

Based upon the 2019 actuarial review, the required contributions to the police and fire pension funds for 2020

have increased approximately $4.0 million compared to 2019 required contributions. However, the City Council approved advance funding of the $4.0 million increase from General Fund reserves. The advance payment was made to the pension funds in September 2019 and was made for the purpose of managing the tax rate. As a result of the advance payment, the 2019 property tax levy (collected in 2020), will be flat for public safety pensions when compared to the prior year.

The decision to make this advance payment was the result of two considerations. First, 2018 actual results for

the General Fund exceeded estimates and increased reserves by $4.0 million more than the 2019 budget and three-year financial plan anticipated. Secondly, this decision will allow the City to have a flat overall property tax levy for the second year in a row.

Background Regarding Pension Plans The Actuarial Valuation

The disclosures in the 2018 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 December 31, 2015, 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.


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Beginning with the fiscal year ended December 31, 2015, 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.

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 City.

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 City to the Pension Plans in each year.

Illinois Municipal Retirement Fund The City participates in the IMRF Plan, which is a defined-benefit, agent multiple employer pension plan

administered by the IMRF that acts as a common investment and administrative agent for units of local government and school districts in the State. Specifically, the City 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. The IMRF Plan is established and administered under statutes adopted by the General Assembly. The Pension Code sets the benefit provisions of the IMRF Plan, which can only be amended by the General Assembly.

Each employer participating in the IMRF Plan, including the City, 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 of Trustees (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.


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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 12 to the 2018 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. The City’s contribution rate for calendar year 2018 was 11.18% of covered payroll for the Regular Plan. The City’s contribution rate for calendar year 2018 was 0.00% of covered payroll for the SLEP Plan. For the fiscal year ended December 31, 2018, the City contributed $3,309,929 to the Regular Plan and $0.00 to the SLEP Plan. Measures of Financial Position

The following table presents the measures of the Regular Plan’s financial position as of December 31 of the

years 2014 through 2017 which are presented pursuant to the New GASB Standards. Such measures were calculated pursuant to the current Discount Rate of 7.50%.

FISCAL YEAR

ENDED

DECEMBER 31 TOTAL PENSION

LIABILITY FIDUCIARY

NET POSITION

NET PENSION

LIABILITY/ (ASSET)

FIDUCIARY NET POSITION

AS A % OF TOTAL PENSION

LIABILITY

2014 $176,389,148 $165,772,016 $10,617,132 93.98% 2015 185,335,822 163,412,459 21,923,363 88.17% 2016 189,414,215 170,166,039 19,248,176 89.84% 2017 190,363,132 192,348,824 (1,985,692) 101.04%

______________________________ Source: The 2018 Audit.

See Note 12 to the 2018 Audit, and the related required supplementary information disclosures, for a

description of the IMRF Plan, the IMRF Account, the City’s funding policy, information on the assumptions and methods used by the actuary, and the financial reporting information required by the New GASB Standards.


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Measures of Financial Position-SLEP Plan The following table presents the measures of the SLEP Plan’s financial position as of December 31 of the years

2014 through 2017 which are presented pursuant to the New GASB Standards. Such measures were calculated pursuant to the current Discount Rate of 7.50%.

FISCAL YEAR

ENDED


LIABILITY

FIDUCIARY

NET

POSITION

NET PENSION

LIABILITY/ (ASSET)

FIDUCIARY NET POSITION

AS A % OF TOTAL PENSION

LIABILITY

2014 $1,555,863 $1,840,645 $(284,782) 118.30% 2015 1,550,696 1,776,408 (225,712) 114.56% 2016 1,543,657 1,778,445 (234,788) 115.21% 2017 1,480,986 1,954,208 (473,222) 131.95%

______________________________ Source: The 2018 Audit.


description of the IMRF Plan, the IMRF Account, the City’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 City 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 contribution 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 December 31, 2018, the Police Pension Fund had a membership of 332.

Contributions As stated above, both the City 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 City 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 City 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 City to generate the funds necessary to make this contribution, and the proceeds of such tax levy are sent directly by the County Clerks to the Police Pension Plan.

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 City’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 2040.


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The City’s contribution was 45.50% of covered payroll for the fiscal year ended December 31, 2018. The

City’s statutorily required pension contributions and contributions with respect to such contributions for the last four fiscal years were as follows:

FISCAL YEAR ENDED

DECEMBER 31

STATUTORY

REQUIRED

CONTRIBUTION ACTUAL CONTRIBUTION PERCENTAGE

CONTRIBUTED 2015 $6,553,044 $8,937,885 136.39% 2016 7,549,368 7,991,936 105.86% 2017 8,891,497 8,812,140 99.11% 2018 8,708,536 8,604,338 98.80%

______________________________ Source: The Actuarial Valuations of the Police Pension Plan for the Fiscal Years ended December 31, 2015 through

December 31, 2018. 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 four fiscal years. Such measures were calculated pursuant to the current Discount Rate of 7.00%.

FISCAL YEAR

ENDED


LIABILITY FIDUCIARY NET

POSITION NET PENSION

LIABILITY

FIDUCIARY NET

POSITION AS A % OF

TOTAL PENSION

LIABILITY

2015 $221,022,518 $90,447,559 $130,574,959 40.92% 2016 225,145,635 100,109,597 125,036,038 44.46% 2017 225,450,971 118,084,277 107,366,694 52.38% 2018 238,199,303 114,600,024 123,599,279 48.11%

______________________________ Source: The 2018 Audit.


description of the Police Pension Plan, the City’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.

Fire Pension Plan The City 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 contribution 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. As of December 31, 2018, the Fire Pension Plan had a membership of 244.


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Contributions

As stated above, both the City and its participating employees make contributions to the Fire Pension Plan. At

present, employees contribute 9.455% of their salary to the Fire Pension Plan. The City 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 City 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 City to generate the funds necessary to make this contribution, and the proceeds of such tax levy are sent directly by the County Clerks to the Fire Pension Plan.

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 City’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 2040.

The City’s contribution was 46.48% of covered payroll for the fiscal year ended December 31, 2018. The

City’s statutorily required pension contributions and contributions with respect to such contributions for the last four fiscal years were as follows:

FISCAL YEAR ENDED

DECEMBER 31

STATUTORY

REQUIRED

CONTRIBUTION ACTUAL CONTRIBUTION PERCENTAGE

CONTRIBUTED 2015 $4,454,657 $6,875,628 154.35% 2016 5,366,457 5,824,657 108.54% 2017 6,167,330 6,111,021 99.09% 2018 6,268,458 6,193,093 98.80%

______________________________ Source: The Actuarial Valuations of the Fire Pension Plan for the Fiscal Years ended December 31, 2015 through

December 31, 2018.

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 four fiscal years. The Total Pension Liability as of December 31, 2018, was calculated pursuant to the current Discount Rate of 7.00%.

FISCAL YEAR

ENDED


LIABILITY FIDUCIARY

NET POSITION

NET PENSION

LIABILITY

FIDUCIARY NET

POSITION AS A % OF

TOTAL PENSION

LIABILITY

2015 $155,248,913 $68,127,744 $87,121,169 43.88% 2016 160,497,772 73,728,714 86,769,058 45.94% 2017 162,734,049 87,045,501 75,688,548 53.49% 2018 179,901,016 83,039,067 96,861,949 46.16%

______________________________ Source: The 2018 Audit.

See Note 12 to the 2018 Audit, and the related required supplementary information disclosures, for a description of the Fire Pension Plan, the City’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.


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Downstate Police and Fire Pension Consolidation Bill Public Act 101-0610 (“PA 101-610”) authorizes the consolidation of more than 650 police and firefighter pension funds that provide benefits to police and firefighters located outside the boundaries of the City of Chicago, Illinois, into two statewide funds: The Police Officers’ Pension Investment Fund (the “Consolidated Police Pension Fund”) and The Firefighters’ Pension Investment Fund (the “Consolidated Firefighters’ Pension Fund,” and together with the Consolidated Police Pension Fund, the “Consolidated Pension Funds”). Upon consolidation, the Consolidated Police Pension Fund and the Consolidated Firefighters’ Pension Fund will have in excess of $8 billion and $6 billion in assets, respectively. The purpose of consolidating local pension funds into the Consolidated Pension Funds is to invest assets more efficiently and to reduce administrative costs in order to generate higher investment returns. The Consolidated Pension Funds are to be governed by their respective 9-member board of trustees and managed by their respective executive directors. The Consolidated Pension Funds are established with the authority to manage the reserves, funds, assets, securities, properties and moneys of the participating police and fire pension funds which will make up the Consolidated Pension Funds.

Under PA 101-610, each underlying police and fire pension fund will maintain an individual and separate

account within the newly established Consolidated Pension Funds. Therefore, no assets or liabilities of any individual police or fire pension fund can be shifted from one pension fund to another. Further, investment returns earned by the Consolidated Pension Funds will be allocated and distributed pro rata among each participating pension fund account in accordance with the value of the pension fund assets attributable to each fund.

The City cannot determine at this time the financial impact PA 101-610 will have on its pension funds. The

effectiveness of PA 101-610 in reducing costs and generating additional investment returns may not be determinable for several years.

OTHER POST-EMPLOYMENT BENEFITS

In addition to providing the pension benefits described above, the City provides post-employment healthcare

benefits (“OPEB”) for eligible retired employees and their dependents (the “OPEB Plan”). The benefits, benefit levels, employee contributions and employer contributions are governed by the City Council and can be amended by the City through its personnel manual and union contracts. As of December 31, 2018, the OPEB Plan had a membership of 662. As of December 31, 2018, the City’s OPEB Plan had a Total OPEB Liability of $32,270,938, a Plan Fiduciary Net Position of $11,447,459 and a Net OPEB Liability of $20,823,479. For additional information regarding the OPEB Plan, see Note 11 to the 2018 Audit.

The City’s contributions to the OPEB Plan in each of the last three years are as follows:

FISCAL YEAR

ENDED

DECEMBER 31 CONTRIBUTION

2016 $1,620,559 2017 1,602,106 2018 1,627,171

______________________________ Source: The 2018 Audit.

For additional information on the City’s post-employment benefits other than pensions, see Note 11 and the required supplementary information to the 2018 Audit.


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REGISTRATION, TRANSFER AND EXCHANGE

See also APPENDIX B for information on registration, transfer and exchange of book-entry bonds. The Bonds will be initially issued as book-entry bonds.

The City shall cause books for the registration and for the transfer of the Bonds to be kept at the principal corporate trust office of the Bond Registrar in Chicago, Illinois. The City will authorize to be prepared, and the Bond Registrar shall keep custody of, multiple bond blanks executed by the City for use in the transfer and exchange of Bonds.

Any Bond may be transferred or exchanged, but only in the manner, subject to the limitations, and upon payment of the charges as set forth in the Bond Ordinance. Upon surrender for transfer or exchange of any Bond at the principal corporate trust office of the Bond Registrar, duly endorsed by, or accompanied by a written instrument or instruments of transfer in form satisfactory to the Bond Registrar and duly executed by the registered owner or such owner’s attorney duly authorized in writing, the City shall execute and the Bond Registrar shall authenticate, date and deliver in the name of the registered owner, transferee or transferees (as the case may be) a new fully registered Bond or Bonds of the same maturity of authorized denominations for a like aggregate principal amount.

The execution by the City of any fully registered Bond shall constitute full and due authorization of such Bond, and the Bond Registrar shall thereby be authorized to authenticate, date and deliver such Bond, provided, however, the principal amount of outstanding Bonds of each maturity authenticated by the Bond Registrar shall not exceed the authorized principal amount of Bonds for such maturity less Bonds previously paid. The 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 Bond after notice calling such Bond for redemption has been mailed, nor during a period of fifteen (15) days next preceding mailing of a notice of redemption of any Bonds. The person in whose name any Bond shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of the principal of or interest on any Bonds shall be made only to or upon the order of the registered owner thereof or such owner’s legal representative. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid.

No service charge shall be made for any transfer or exchange of Bonds, but the City or the Bond Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Bonds, except in the case of the issuance of a Bond or Bonds for the unredeemed portion of a Bond surrendered for redemption.



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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 City 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 City’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 under the Internal Revenue Code of 1986, as amended (the “Code”).

In rendering its opinion, Bond Counsel will rely upon certifications of the City with respect to certain material

facts within the City’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.

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.

The issue price for original issue discount (as further discussed below) and market discount purposes (the “OID

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 (excluding bond houses and brokers and similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The OID 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 OID Issue Price of a maturity of the Bonds is less than the principal amount payable at maturity, the

difference between the OID 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 OID Issue Price for such

maturity and who holds such OID Bond to its stated maturity, subject to the condition that the City 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 under the Code; and (d) the accretion of original issue discount in each year may result in certain 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 State 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 OID Issue Price or purchase Bonds subsequent to the initial public offering should consult their own tax advisors.


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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 OID 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 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 Congress 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 City 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.

See APPENDIX C for a proposed form of opinion of Bond Counsel for the Bonds.


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CONTINUING DISCLOSURE

The City 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 City, has undertaken, or is otherwise expected, to provide continuing disclosure with respect to the Bonds. The information to be provided on an annual basis, the events which will be noticed on an occurrence basis and a summary of other terms of the Undertaking, including termination, amendment and remedies, are set forth in the form of the Undertaking, attached hereto as APPENDIX D.

The City has adopted disclosure policies and procedures, which specifically include additional procedures to be followed by the City in relation to the two new reportable events added to the list of reportable events for which the City must provide notice to the EMMA website.

There have been no instances in the previous five years in which the City failed to comply, in all material

respects, with any undertaking previously entered into by it pursuant to the Rule. A failure by the City to comply with the Undertaking will not constitute a default under the Bond Ordinance and beneficial owners of the Bonds are limited to the remedies described in the Undertaking. The City 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.

LITIGATION

There is no litigation of any nature now pending or threatened restraining or enjoining the issuance, sale, execution or delivery of the Bonds, or in any way contesting or affecting the validity of the Bonds or any proceedings of the City taken with respect to the issuance or sale thereof. There is no litigation now pending, or to the knowledge of the City, threatened against the City that is expected to materially impact the financial condition of the City.

CERTAIN LEGAL MATTERS

Certain legal matters incident to the authorization, issuance and sale of the Bonds are subject to the approving legal opinion of Chapman and Cutler LLP, Chicago, Illinois (“Chapman and Cutler”), Bond Counsel, who has been retained by, and acts as, Bond Counsel to the City. Chapman and Cutler has also been retained by the City to serve as Disclosure Counsel to the City with respect to the Bonds. Although as Disclosure Counsel to the City, Chapman and Cutler has assisted the City with certain disclosure matters, Chapman and Cutler has not 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. Chapman and Cutler’s engagement as Disclosure Counsel was undertaken solely at the request and for the benefit of the City, to assist it in discharging its responsibility with respect to this 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.

OFFICIAL STATEMENT AUTHORIZATION

This Official Statement has been authorized for distribution to prospective purchasers of the Bonds. All statements, information, and statistics herein are believed to be correct but are not guaranteed by the consultants or by the City, and all expressions of opinion, whether or not so stated, are intended only as such.


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INVESTMENT RATINGS The Bonds have been rated “AA+/Stable Outlook” by S&P Global Ratings and “AAA/Stable Outlook” by

Fitch Ratings. The City has supplied certain information and material concerning the Bonds and the City to the rating services shown on the cover page, including certain information and materials which may not have been included in this Official Statement, as part of its application for investment ratings on the Bonds. Ratings reflect only the views of the rating agencies assigning such ratings and an explanation of the significance of such ratings may be obtained from such rating agencies. Generally, such rating services base their ratings on such information and material, and also on such investigations, studies and assumptions that it may undertake independently. There is no assurance that such ratings will continue for any given period of time or that such ratings may not be lowered or withdrawn entirely by such rating services if, in their judgment, circumstances so warrant. Any such downward change in or withdrawal of such ratings may have an adverse effect on the secondary market price of the Bonds. An explanation of the significance of the investment ratings may be obtained from the rating agencies: S&P Global Ratings, 55 Water Street, New York, New York 10041, telephone 212-438-2000. Fitch Ratings, One State Street Plaza, New York, New York 10004, telephone 800-753-4824. The City will provide appropriate periodic credit information to the rating services to maintain a rating on the Bonds.

UNDERWRITING

The Bonds were offered for sale by the City at a public, competitive sale on March 18, 2020. The best bid submitted at the sale was submitted by ____________________ (the “Underwriter”). The City awarded the contract for sale of the Bonds to the Underwriter at a price of $___________. The Underwriter has represented to the City that the Bonds have been subsequently re-offered to the public initially at the yields set forth in the Final Official Statement to this Official Statement.

MUNICIPAL ADVISOR

The City has engaged Speer Financial, Inc. as municipal advisor (the “Municipal Advisor”) in connection with the issuance and sale of the Bonds. The Municipal Advisor is a Registered Municipal Advisor in accordance with the rules of the MSRB. The Municipal Advisor will not participate in the underwriting of the Bonds. The financial information included in the Official Statement has been compiled by the Municipal Advisor. Such information does not purport to be a review, audit or certified forecast of future events and may not conform with accounting principles applicable to compilations of financial information. The Municipal Advisor is not a firm of certified public accountants and does not serve in that capacity or provide accounting services in connection with the Bonds. The Municipal Advisor is not obligated to undertake any independent verification of or to assume any responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement, nor is the Municipal Advisor obligated by the City’s continuing disclosure undertaking.


62

CERTIFICATION We have examined this Official Statement dated March 9, 2020, for the $9,645,000* General Obligation Corporate Purpose Bonds, Series 2020B, believe it to be true and correct and will provide to the purchaser of the Bonds at the time of delivery a certificate confirming to the purchaser that to the best of our knowledge and belief information in the Official Statement was at the time of acceptance of the bid for the Bonds and, including any addenda thereto, was at the time of delivery of the Bonds true and correct in all material respects and does not include any untrue statement of a material fact, nor does it omit the statement of any material fact required to be stated therein, or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. /s/ DEBRA NAWROCKI /s/ RICHARD G. KOZAL Chief Financial Officer/Budget Director City Manager CITY OF ELGIN CITY OF ELGIN Kane and Cook Counties, Illinois Kane and Cook Counties, Illinois *Subject to change.

APPENDIX A

CITY OF ELGIN KANE AND COOK COUNTIES, ILLINOIS

FISCAL YEAR 2018 AUDITED FINANCIAL STATEMENTS

Co

mp

reh

ensi

ve A

nn

ual

Fi

nan

cial

Rep

ort

For

Th

e F

isca

l Y

ea

r E

nd

ed

De

cem

be

r 3

1, 2

01

8

ILL

INO

IS

C

ITY

OF

EL

GIN

, IL

LIN

OIS

CO

MPR

EHEN

SIV

E A

NN

UA

L FI

NA

NC

IAL

REP

OR

T

For t

he Y

ear E

nded

D

ecem

ber 3

1, 2

018

Pr

epar

ed b

y th

e Fi

nanc

e D

epar

tmen

t

Deb

ra N

awro

cki

Chi

ef F

inan

cial

Off

icer

CIT

Y O

F E

LG

IN, I

LL

INO

IS

TAB

LE O

F C

ON

TEN

TS

Page

(s)

IN

TR

OD

UC

TO

RY

SE

CT

ION

Pr

inci

pal O

ffic

ials

......

......

......

......

......

......

......

......

......

......

......

......

......

......

......

......

......

...

i O

rgan

izat

iona

l Cha

rt ...

......

......

......

......

......

......

......

......

......

......

......

......

......

......

......

......

.. ii

Cer

tific

ate

of A

chie

vem

ent f

or E

xcel

lenc

e i

n Fi

nanc

ial R

epor

ting.

......

......

......

......

......

......

......

......

......

......

......

......

......

......

......

......

iii

Le

tter o

f Tra

nsm

ittal

.....

......

......

......

......

......

......

......

......

......

......

......

......

......

......

......

......

iv

-xxi

FIN

AN

CIA

L S

EC

TIO

N

IND

EPEN

DEN

T A

UD

ITO

R’S

REP

OR

T ...

......

......

......

......

......

......

......

......

......

......

.....

1-3

GEN

ERA

L PU

RPO

SE E

XTE

RN

AL

FIN

AN

CIA

L ST

ATE

MEN

TS

M

anag

emen

t’s D

iscu

ssio

n an

d A

naly

sis .

......

......

......

......

......

......

......

......

......

......

..... M

D&

A 1

-17

B

asic

Fin

anci

al S

tate

men

ts

Gov

ernm

ent-W

ide

Fina

ncia

l Sta

tem

ents

Stat

emen

t of N

et P

ositi

on ...

......

......

......

......

......

......

......

......

......

......

......

......

....

4-5

St

atem

ent o

f Act

iviti

es ..

......

......

......

......

......

......

......

......

......

......

......

......

......

...

6-7

Fund

Fin

anci

al S

tate

men

ts

Gov

ernm

enta

l Fun

ds

Bala

nce

Shee

t ....

......

......

......

......

......

......

......

......

......

......

......

......

......

......

......

.. 8-

9

Re

conc

iliat

ion

of F

und

Bala

nces

of G

over

nmen

tal F

unds

to th

e

G

over

nmen

tal A

ctiv

ities

in th

e St

atem

ent o

f Net

Pos

ition

......

......

......

......

. 10

St

atem

ent o

f Rev

enue

s, Ex

pend

iture

s and

Cha

nges

in F

und

Bala

nces

......

.. 11

Re

conc

iliat

ion

of th

e G

over

nmen

tal F

unds

Sta

tem

ent o

f Rev

enue

s,

E

xpen

ditu

res a

nd C

hang

es in

Fun

d Ba

lanc

es to

the

Gov

ernm

enta

l

A

ctiv

ities

in th

e St

atem

ent o

f Act

iviti

es ...

......

......

......

......

......

......

......

......

...

12

CIT

Y O

F E

LG

IN, I

LL

INO

IS

TAB

LE O

F C

ON

TEN

TS (C

ontin

ued)

Page

(s)

FI

NA

NC

IAL

SE

CT

ION

(Con

tinue

d)

GEN

ERA

L PU

RPO

SE E

XTE

RN

AL

FIN

AN

CIA

L ST

ATE

MEN

TS (C

ontin

ued)

Basic

Fin

anci

al S

tate

men

ts (C

ontin

ued)

Fu

nd F

inan

cial

Sta

tem

ents

(Con

tinue

d)

Pr

oprie

tary

Fun

ds

Stat

emen

t of N

et P

ositi

on ...

......

......

......

......

......

......

......

......

......

......

......

......

...

13-1

4

St

atem

ent o

f Rev

enue

s, Ex

pens

es a

nd C

hang

es in

Net

Pos

ition

......

......

......

15

St

atem

ent o

f Cas

h Fl

ows .

......

......

......

......

......

......

......

......

......

......

......

......

......

16

-17

Fi

duci

ary

Fund

s

St

atem

ent o

f Fid

ucia

ry N

et P

ositi

on ..

......

......

......

......

......

......

......

......

......

.....

18

Stat

emen

t of C

hang

es in

Fid

ucia

ry N

et P

ositi

on ..

......

......

......

......

......

......

....

19

Not

es to

the

Fina

ncia

l Sta

tem

ents

.....

......

......

......

......

......

......

......

......

......

......

......

20

-80

R

equi

red

Supp

lem

enta

ry In

form

atio

n

Sc

hedu

le o

f Rev

enue

s, Ex

pend

iture

s and

Cha

nges

i

n Fu

nd B

alan

ce -

Bud

get a

nd A

ctua

l

Gen

eral

Fun

d ...

......

......

......

......

......

......

......

......

......

......

......

......

......

......

......

.....

81

Not

es to

Req

uire

d Su

pple

men

tary

Info

rmat

ion

......

......

......

......

......

......

......

......

.. 82

Sc

hedu

le o

f Em

ploy

er C

ontri

butio

ns

Ill

inoi

s Mun

icip

al R

etire

men

t Fun

d ...

......

......

......

......

......

......

......

......

......

......

83

Illin

ois M

unic

ipal

Ret

irem

ent F

und

- SLE

P ....

......

......

......

......

......

......

......

.....

84

Po

lice

Pens

ion

Fund

.....

......

......

......

......

......

......

......

......

......

......

......

......

......

....

85

Fi

refig

hter

s’ P

ensi

on F

und

......

......

......

......

......

......

......

......

......

......

......

......

.....

86

R

etire

e H

ealth

Insu

ranc

e Fu

nd ...

......

......

......

......

......

......

......

......

......

......

......

.. 87

Sc

hedu

le o

f Cha

nges

in th

e Em

ploy

er’s

Net

Pen

sion

Lia

bilit

y

a

nd R

elat

ed R

atio

s

Illin

ois M

unic

ipal

Ret

irem

ent F

und

......

......

......

......

......

......

......

......

......

......

...

88

Ill

inoi

s Mun

icip

al R

etire

men

t Fun

d - S

LEP .

......

......

......

......

......

......

......

......

.. 89

Polic

e Pe

nsio

n Fu

nd ..

......

......

......

......

......

......

......

......

......

......

......

......

......

......

. 90

-91

Fi

refig

hter

s’ P

ensi

on F

und

......

......

......

......

......

......

......

......

......

......

......

......

.....

92-9

3

Sc

hedu

le o

f Cha

nges

in th

e Em

ploy

er’s

Net

OPE

B L

iabi

lity

and

Rel

ated

Rat

ios

R

etire

e H

ealth

Insu

ranc

e Fu

nd ...

......

......

......

......

......

......

......

......

......

......

......

.. 94

CIT

Y O

F E

LG

IN, I

LL

INO

IS

TAB

LE O

F C

ON

TEN

TS (C

ontin

ued)

Page

(s)

FIN

AN

CIA

L S

EC

TIO

N (C

ontin

ued)

GEN

ERA

L PU

RPO

SE E

XTE

RN

AL

FIN

AN

CIA

L ST

ATE

MEN

TS (C

ontin

ued)

Req

uire

d Su

pple

men

tary

Info

rmat

ion

(Con

tinue

d)

Sche

dule

of I

nves

tmen

t Ret

urns

Polic

e Pe

nsio

n Fu

nd ..

......

......

......

......

......

......

......

......

......

......

......

......

......

......

. 95

Fire

fight

ers’

Pen

sion

Fun

d ...

......

......

......

......

......

......

......

......

......

......

......

......

.. 96

Ret

iree

Hea

lth In

sura

nce

Fund

......

......

......

......

......

......

......

......

......

......

......

.....

97

C

OM

BIN

ING

AN

D IN

DIV

IDU

AL

FUN

D

FIN

AN

CIA

L ST

ATE

MEN

TS A

ND

SC

HED

ULE

S

NO

NM

AJO

R G

OV

ERN

MEN

TAL

FUN

DS

Com

bini

ng B

alan

ce S

heet

......

......

......

......

......

......

......

......

......

......

......

......

......

.....

98-9

9

C

ombi

ning

Sta

tem

ent o

f Rev

enue

s, Ex

pend

iture

s and

C

hang

es in

Fun

d B

alan

ces .

......

......

......

......

......

......

......

......

......

......

......

......

......

. 10

0

N

onm

ajor

Spe

cial

Rev

enue

Fun

ds

C

ombi

ning

Bal

ance

She

et ..

......

......

......

......

......

......

......

......

......

......

......

......

....

101-

104

C

ombi

ning

Sta

tem

ent o

f Rev

enue

s, Ex

pend

iture

s and

Cha

nges

in F

und

Bal

ance

s ....

......

......

......

......

......

......

......

......

......

......

......

......

10

5-10

6

Sche

dule

of R

even

ues,

Expe

nditu

res a

nd

C

hang

es in

Fun

d B

alan

ce -

Bud

get a

nd A

ctua

l

C

omm

unity

Dev

elop

men

t Gra

nt F

und

......

......

......

......

......

......

......

......

......

10

7

N

SP G

rant

Fun

d ....

......

......

......

......

......

......

......

......

......

......

......

......

......

......

. 10

8

M

otor

Fue

l Tax

Fun

d ....

......

......

......

......

......

......

......

......

......

......

......

......

.....

109

Illin

ois M

unic

ipal

Ret

irem

ent F

und.

......

......

......

......

......

......

......

......

......

....

110

Dru

g A

sset

For

feitu

re F

und .

......

......

......

......

......

......

......

......

......

......

......

....

111

Rec

reat

ion

Cen

ter F

und

......

......

......

......

......

......

......

......

......

......

......

......

.....

112

Emer

genc

y Te

leph

one

Syst

em F

und

......

......

......

......

......

......

......

......

......

...

113

Cen

tral A

rea

Tax

Allo

catio

n Fu

nd ..

......

......

......

......

......

......

......

......

......

....

114

Rou

te 2

0 Ta

x A

lloca

tion

Fund

.....

......

......

......

......

......

......

......

......

......

......

. 11

5

B

luff

City

Tax

Allo

catio

n Fu

nd ...

......

......

......

......

......

......

......

......

......

......

.. 11

6

C

emet

ery

Fund

......

......

......

......

......

......

......

......

......

......

......

......

......

......

......

. 11

7

N

onm

ajor

Cap

ital P

roje

cts F

unds

Com

bini

ng B

alan

ce S

heet

.....

......

......

......

......

......

......

......

......

......

......

......

......

. 11

8-11

9

Com

bini

ng S

tate

men

t of R

even

ues,

Expe

nditu

res a

nd

C

hang

es in

Fun

d B

alan

ces .

......

......

......

......

......

......

......

......

......

......

......

......

...

120-

121

CIT

Y O

F E

LG

IN, I

LL

INO

IS

TAB

LE O

F C

ON

TEN

TS (C

ontin

ued)

Page

(s)

FI

NA

NC

IAL

SE

CT

ION

(Con

tinue

d)

CO

MB

ININ

G A

ND

IND

IVID

UA

L FU

ND

F

INA

NC

IAL

STA

TEM

ENTS

AN

D S

CH

EDU

LES

(Con

tinue

d)

N

ON

MA

JOR

GO

VER

NM

ENTA

L FU

ND

S (C

ontin

ued)

N

onm

ajor

Cap

ital P

roje

cts F

unds

(Con

tinue

d)

Sc

hedu

le o

f Rev

enue

s, Ex

pend

iture

s and

Cha

nges

in

Fund

Bal

ance

- B

udge

t and

Act

ual

Park

Dev

elop

men

t Fun

d ...

......

......

......

......

......

......

......

......

......

......

......

......

. 12

2

Ty

ler C

reek

Fun

d ....

......

......

......

......

......

......

......

......

......

......

......

......

......

.....

123

Cap

ital I

mpr

ovem

ent F

und .

......

......

......

......

......

......

......

......

......

......

......

.....

124

2016

Cor

pora

te B

ond

Fund

.....

......

......

......

......

......

......

......

......

......

......

......

12

5

NO

NM

AJO

R E

NTE

RPR

ISE

FUN

D

Sche

dule

of R

even

ues a

nd E

xpen

ses -

Bud

get a

nd A

ctua

l

Gol

f Cou

rse

Fund

.....

......

......

......

......

......

......

......

......

......

......

......

......

......

......

.. 12

6

INTE

RN

AL

SER

VIC

E FU

ND

S

C

ombi

ning

Sta

tem

ent o

f Net

Pos

ition

......

......

......

......

......

......

......

......

......

......

.....

127

Com

bini

ng S

tate

men

t of R

even

ues,

Expe

nses

and

C

hang

es in

Net

Pos

ition

......

......

......

......

......

......

......

......

......

......

......

......

......

......

12

8

C

ombi

ning

Sta

tem

ent o

f Cas

h Fl

ows .

......

......

......

......

......

......

......

......

......

......

.....

129-

130

Sche

dule

of O

pera

ting

Rev

enue

s and

Exp

ense

s - B

udge

t and

Act

ual

Eq

uipm

ent R

epla

cem

ent F

und

......

......

......

......

......

......

......

......

......

......

......

.....

131

R

isk

Man

agem

ent F

und .

......

......

......

......

......

......

......

......

......

......

......

......

......

...

132

M

edic

al In

sura

nce

Fund

.....

......

......

......

......

......

......

......

......

......

......

......

......

....

133

FI

DU

CIA

RY

FU

ND

S

C

ombi

ning

Sta

tem

ent o

f Net

Pos

ition

-

Pen

sion

and

Oth

er E

mpl

oyee

Ben

efit

Trus

t Fun

ds ...

......

......

......

......

......

......

....

134

Com

bini

ng S

tate

men

t of C

hang

es in

Pla

n N

et P

ositi

on -

Pen

sion

and

Oth

er E

mpl

oyee

Ben

efit

Trus

t Fun

ds ...

......

......

......

......

......

......

....

135

Com

bini

ng S

tate

men

t of C

hang

es in

Ass

ets a

nd

Lia

bilit

ies -

Age

ncy

Fund

s ....

......

......

......

......

......

......

......

......

......

......

......

......

....

136-

137

SU

PPLE

MEN

TAL

DA

TA

Gen

eral

Fun

d

Com

bini

ng B

alan

ce S

heet

.....

......

......

......

......

......

......

......

......

......

......

......

......

. 13

8

Com

bini

ng S

ched

ule

of R

even

ues,

Expe

nditu

res

a

nd C

hang

es in

Fun

d B

alan

ces .

......

......

......

......

......

......

......

......

......

......

......

.. 13

9

CIT

Y O

F E

LG

IN, I

LL

INO

IS

TAB

LE O

F C

ON

TEN

TS (C

ontin

ued)

Page

(s)

FI

NA

NC

IAL

SE

CT

ION

(Con

tinue

d)

CO

MB

ININ

G A

ND

IND

IVID

UA

L FU

ND

F

INA

NC

IAL

STA

TEM

ENTS

AN

D S

CH

EDU

LES

(Con

tinue

d)

SU

PPLE

MEN

TAL

DA

TA (C

ontin

ued)

G

ener

al F

und

(Con

tinue

d)

Sc

hedu

le o

f Rev

enue

s - B

udge

t and

Act

ual .

......

......

......

......

......

......

......

......

.. 14

0-14

1

Sche

dule

of E

xpen

ditu

res -

Bud

get a

nd A

ctua

l .....

......

......

......

......

......

......

.....

142

Sc

hedu

le o

f Det

aile

d Ex

pend

iture

s - B

udge

t and

Act

ual .

......

......

......

......

......

14

3-14

7

Sc

hedu

le o

f Rev

enue

s, Ex

pend

iture

s and

Cha

nges

in

Fun

d B

alan

ce -

Bud

get a

nd A

ctua

l

Elgi

n R

iver

boat

Fun

d ...

......

......

......

......

......

......

......

......

......

......

......

......

......

....

148

G

rand

Vic

toria

Lea

se F

und

......

......

......

......

......

......

......

......

......

......

......

......

....

149

D

ebt S

ervi

ce F

und

......

......

......

......

......

......

......

......

......

......

......

......

......

......

......

15

0

Sc

hedu

le o

f Rev

enue

s and

Exp

ense

s - B

udge

t and

Act

ual

W

ater

Fun

d ...

......

......

......

......

......

......

......

......

......

......

......

......

......

......

......

......

.. 15

1

Sew

er F

und .

......

......

......

......

......

......

......

......

......

......

......

......

......

......

......

......

....

152

Sche

dule

of B

onde

d D

ebt ..

......

......

......

......

......

......

......

......

......

......

......

......

......

....

153

Con

solid

ated

Yea

r End

Fin

anci

al R

epor

t .....

......

......

......

......

......

......

......

......

......

. 15

4

STA

TIS

TIC

AL

SE

CT

ION

Fi

nanc

ial T

rend

s

Net

Pos

ition

by

Com

pone

nt ..

......

......

......

......

......

......

......

......

......

......

......

......

......

......

...

155-

156

C

hang

e in

Net

Pos

ition

......

......

......

......

......

......

......

......

......

......

......

......

......

......

......

......

. 15

7-16

0

Fund

Bal

ance

s of G

over

nmen

tal F

unds

......

......

......

......

......

......

......

......

......

......

......

.....

161-

162

Ch

ange

s in

Fund

Bal

ance

s of G

over

nmen

tal F

unds

......

......

......

......

......

......

......

......

....

163-

164

Reve

nue

Capa

city

Ass

esse

d V

alue

and

Act

ual V

alue

of T

axab

le P

rope

rty ..

......

......

......

......

......

......

......

.. 16

4

Prop

erty

Tax

Rat

es -

Dire

ct a

nd O

verla

ppin

g G

over

nmen

ts ...

......

......

......

......

......

......

16

6

Prin

cipa

l Pro

perty

Tax

paye

rs ...

......

......

......

......

......

......

......

......

......

......

......

......

......

......

16

7

Prop

erty

Tax

Lev

ies a

nd C

olle

ctio

ns ...

......

......

......

......

......

......

......

......

......

......

......

......

16

8

Sale

s Tax

by

Cate

gory

- K

ane

Coun

ty ...

......

......

......

......

......

......

......

......

......

......

......

....

169

Sa

les T

ax b

y Ca

tego

ry -

Cook

Cou

nty .

......

......

......

......

......

......

......

......

......

......

......

......

17

0

Dire

ct a

nd O

verla

ppin

g Sa

les T

ax R

ates

.....

......

......

......

......

......

......

......

......

......

......

....

171

Deb

t Cap

acity

Ratio

s of O

utsta

ndin

g D

ebt b

y Ty

pe ...

......

......

......

......

......

......

......

......

......

......

......

......

. 17

2

Ratio

s of G

ener

al B

onde

d D

ebt O

utsta

ndin

g ....

......

......

......

......

......

......

......

......

......

.....

173

D

irect

and

Ove

rlapp

ing

Gov

ernm

enta

l Act

iviti

es D

ebt ..

......

......

......

......

......

......

......

...

174

Le

gal D

ebt M

argi

n ...

......

......

......

......

......

......

......

......

......

......

......

......

......

......

......

......

....

175

Pl

edge

d-Re

venu

e Co

vera

ge -

Wat

er R

even

ue B

onds

......

......

......

......

......

......

......

......

.. 17

6

Pled

ged-

Reve

nue

Cove

rage

- Se

wer

Rev

enue

Bon

ds ..

......

......

......

......

......

......

......

.....

177

CIT

Y O

F E

LG

IN, I

LL

INO

IS

TAB

LE O

F C

ON

TEN

TS (C

ontin

ued)

Page

(s)

ST

AT

IST

ICA

L S

EC

TIO

N (C

ontin

ued)

D

emog

raph

ic a

nd E

cono

mic

Info

rmat

ion

D

emog

raph

ic a

nd E

cono

mic

Info

rmat

ion .

......

......

......

......

......

......

......

......

......

......

......

. 17

8

Maj

or A

rea

Empl

oyer

s ....

......

......

......

......

......

......

......

......

......

......

......

......

......

......

......

...

179

Ope

ratin

g In

form

atio

n

Full-

Tim

e Eq

uiva

lent

Em

ploy

ees..

......

......

......

......

......

......

......

......

......

......

......

......

......

. 18

0

Ope

ratin

g In

dica

tors

......

......

......

......

......

......

......

......

......

......

......

......

......

......

......

......

.....

181

Ca

pita

l Ass

et S

tatis

tics .

......

......

......

......

......

......

......

......

......

......

......

......

......

......

......

......

18

2

INT

RO

DU

CT

OR

Y

INTRODUCTORY

For

Th

e F

isca

l Y

ea

r E

nd

ed

De

cem

be

r 3

1, 2

01

8

Com

preh

ensi

ve A

nnua

l Fin

anci

al R

epor

t

i

CIT

Y O

F EL

GIN

, ILL

INO

IS

PRIN

CIP

AL

OFF

ICIA

LS

Dec

embe

r 31,

201

8

LEG

ISLA

TIV

E

May

orD

avid

Kap

tain

Cou

ncil

Mem

bers

F. Jo

hn S

teff

en

Tish

S. P

owel

l To

by S

haw

Te

rry

Gav

in

Cor

ey D

. Dix

on

Car

ol R

ausc

henb

erbe

r R

osam

aria

Mar

tinez

__

____

____

____

____

____

____

____

____

_

AD

MIN

ISTR

ATI

VE

Ric

hard

G. K

ozal

C

ity M

anag

er

Deb

ra N

awro

cki

Will

iam

A. C

ogle

y

Chi

ef F

inan

cial

Off

icer

C

orpo

ratio

n C

ounc

il an

d

Chi

ef D

evel

opm

ent O

ffic

er

Kim

Dew

is

Ana

Z L

alle

y C

ity C

lerk

Po

lice

Chi

ef

Gai

l Coh

en

Dav

id S

chm

idt

Hum

an R

esou

rce

Dire

ctor

Fi

re C

hief

OR

GA

NIZ

ATIO

NA

L C

HA

RT

CIT

Y O

F E

LG

IN

Citi

zens

Advi

sory

Gro

ups

Boar

ds a

nd

Com

mis

sion

sC

ity C

ounc

il

City

Man

ager

’s Offi

ce

Gen

eral

Ad

min

istra

tion

Publ

ic S

afet

yPu

blic

Ser

vice

s

Nei

ghbo

rhoo

d Se

rvic

es

•31

1 C

onta

ctC

ente

r

•C

ode

Com

plia

nce

•Po

lice

•Fi

re

•Em

erge

ncy

Man

agem

ent

•Pu

blic

Wor

ks

•U

tiliti

es

•Fl

eet

•En

gine

erin

g

•Fo

rest

ry

•In

form

atio

nTe

chno

logy

Serv

ices

•Fi

nanc

e

•C

ity C

lerk

•Le

gal S

ervi

ces

•H

uman

Reso

urce

s

Com

mun

ity

Enga

gem

ent

•Sp

ecia

lEv

ents

and

Cul

tura

l Arts

•Pa

rks

and

Recr

eatio

n

Com

mun

ity

Deve

lopm

ent

•Pl

anni

ng

•Bu

ildin

g an

dDe

velo

pmen

t

ii

FIN

AN

CIA

L

FINANCIAL

For

Th

e F

isca

l Y

ea

r E

nd

ed

De

cem

be

r 3

1, 2

01

8

Com

preh

ensi

ve A

nnua

l Fin

anci

al R

epor

tFo

r T

he

Fis

cal

Ye

ar

En

de

d D

ece

mb

er

31

, 20

18

Com

preh

ensi

ve A

nnua

l Fin

anci

al R

epor

t

IND

EPEN

DEN

T

AU

DIT

OR

’S R

EPO

RT

For

Th

e F

isca

l Y

ea

r E

nd

ed

De

cem

be

r 3

1, 2

01

8

Com

preh

ensi

ve A

nnua

l Fin

anci

al R

epor

t

- 1 -

1415

Wes

t Die

hl R

oad,

Sui

te 4

00

Nap

ervi

lle, I

L 60

563

630.

566.

8400

IN

DE

PEN

DE

NT

AU

DIT

OR

’S R

EPO

RT

Th

e H

onor

able

May

or

Mem

bers

of t

he C

ity C

ounc

il C

ity o

f Elg

in, I

llino

is

We

have

aud

ited

the

acco

mpa

nyin

g fin

anci

al s

tate

men

ts o

f th

e go

vern

men

tal

activ

ities

, th

e bu

sine

ss-ty

pe ac

tiviti

es, e

ach

maj

or fu

nd an

d th

e ag

greg

ate

rem

aini

ng fu

nd in

form

atio

n of

the

City

of

Elg

in, I

llino

is (t

he C

ity) a

s of

and

for t

he y

ear e

nded

Dec

embe

r 31,

201

8 an

d th

e re

late

d no

tes

to fi

nanc

ial s

tate

men

ts, w

hich

col

lect

ivel

y co

mpr

ise

the

City

’s b

asic

fina

ncia

l sta

tem

ents

as l

iste

d in

the

tabl

e of

con

tent

s.

Man

agem

ent’

s Res

pons

ibili

ty fo

r th

e Fi

nanc

ial S

tate

men

ts

Man

agem

ent i

s re

spon

sibl

e fo

r the

pre

para

tion

and

fair

pres

enta

tion

of th

ese

finan

cial

sta

tem

ents

in

acc

orda

nce

with

acc

ount

ing

prin

cipl

es g

ener

ally

acc

epte

d in

the

Uni

ted

Stat

es o

f Am

eric

a; th

is

incl

udes

the d

esig

n, im

plem

enta

tion

and

mai

nten

ance

of i

nter

nal c

ontro

l rel

evan

t to

the p

repa

ratio

n an

d fa

ir pr

esen

tatio

n of

fina

ncia

l sta

tem

ents

that

are

free

from

mat

eria

l mis

stat

emen

t, w

heth

er d

ue

to fr

aud

or e

rror

. A

udito

r’s R

espo

nsib

ility

O

ur r

espo

nsib

ility

is to

exp

ress

opi

nion

s on

thes

e fin

anci

al s

tate

men

ts b

ased

on

our

audi

t. W

e co

nduc

ted

our a

udit

in a

ccor

danc

e w

ith a

uditi

ng st

anda

rds g

ener

ally

acc

epte

d in

the

Uni

ted

Stat

es

of A

mer

ica

and

the

stan

dard

s ap

plic

able

to f

inan

cial

aud

its c

onta

ined

in G

over

nmen

t Aud

iting

St

anda

rds,

issu

ed b

y th

e C

ompt

rolle

r Gen

eral

of t

he U

nite

d St

ates

. Tho

se s

tand

ards

requ

ire th

at

we

plan

and

per

form

the

aud

it to

obt

ain

reas

onab

le a

ssur

ance

abo

ut w

heth

er t

he f

inan

cial

st

atem

ents

are

free

of m

ater

ial m

isst

atem

ent.

An

audi

t in

volv

es p

erfo

rmin

g pr

oced

ures

to

obta

in a

udit

evid

ence

abo

ut t

he a

mou

nts

and

disc

losu

res i

n th

e fin

anci

al st

atem

ents

. The

pro

cedu

res s

elec

ted

depe

nd o

n th

e au

dito

r’s j

udgm

ent,

incl

udin

g th

e as

sess

men

t of t

he ri

sks o

f mat

eria

l mis

stat

emen

t of t

he fi

nanc

ial s

tate

men

ts, w

heth

er

due

to f

raud

or

erro

r. In

mak

ing

thos

e ris

k as

sess

men

ts, t

he a

udito

r co

nsid

ers

inte

rnal

con

trol

rele

vant

to th

e City

’s p

repa

ratio

n an

d fa

ir pr

esen

tatio

n of

the f

inan

cial

stat

emen

ts in

ord

er to

des

ign

audi

t pro

cedu

res

that

are

app

ropr

iate

in th

e ci

rcum

stan

ces,

but n

ot fo

r the

pur

pose

of e

xpre

ssin

g an

opi

nion

on

the

effe

ctiv

enes

s of

the

City

’s in

tern

al c

ontro

l. A

ccor

ding

ly, w

e ex

pres

s no

suc

h op

inio

n. A

n au

dit a

lso

incl

udes

eva

luat

ing

the

appr

opria

tene

ss o

f acc

ount

ing

polic

ies u

sed

and

the

reas

onab

lene

ss o

f sig

nific

ant a

ccou

ntin

g es

timat

es m

ade b

y m

anag

emen

t, as

wel

l as e

valu

atin

g th

e ov

eral

l pre

sent

atio

n of

the

finan

cial

stat

emen

ts.

- 2 -

We b

elie

ve th

at th

e aud

it ev

iden

ce w

e hav

e obt

aine

d is

suff

icie

nt an

d ap

prop

riate

to p

rovi

de a

basi

s fo

r our

aud

it op

inio

ns

Opi

nion

s In

our

opi

nion

, the

fina

ncia

l sta

tem

ents

refe

rred

to a

bove

pre

sent

fai

rly, i

n al

l mat

eria

l res

pect

s, th

e re

spec

tive

finan

cial

pos

ition

of t

he g

over

nmen

tal a

ctiv

ities

, the

bus

ines

s-ty

pe a

ctiv

ities

, eac

h m

ajor

fun

d an

d th

e ag

greg

ate

rem

aini

ng f

und

info

rmat

ion

of t

he C

ity o

f El

gin,

Illi

nois

, as

of

Dec

embe

r 31,

201

8, a

nd th

e re

spec

tive

chan

ges

in fi

nanc

ial p

ositi

on a

nd, w

here

app

licab

le, c

ash

flow

s the

reof

for t

he y

ear t

hen

ende

d in

acc

orda

nce

with

acc

ount

ing

prin

cipl

es g

ener

ally

acc

epte

d in

the

Uni

ted

Stat

es o

f Am

eric

a.

Cha

nge

in A

ccou

ntin

g Pr

inci

ple

The

City

ad

opte

d G

ASB

St

atem

ent

No.

75

, Ac

coun

ting

and

Fina

ncia

l Re

port

ing

for

Poste

mpl

oym

ent B

enef

its O

ther

than

Pen

sion

s, w

hich

est

ablis

hed

stan

dard

s fo

r m

easu

ring

and

reco

gniz

ing

liabi

litie

s, de

ferr

ed i

nflo

ws

and

outfl

ows

of r

esou

rces

, an

d ex

pens

es f

or O

PEB

lia

bilit

ies;

mod

ified

cer

tain

dis

clos

ures

in

the

note

s to

fin

anci

al s

tate

men

ts;

and

the

requ

ired

supp

lem

enta

ry in

form

atio

n. O

ur o

pini

on is

not

mod

ified

with

resp

ect t

o th

ese

mat

ters

. O

ther

Mat

ters

Re

quir

ed S

uppl

emen

tary

Info

rmat

ion

A

ccou

ntin

g pr

inci

ples

gen

eral

ly a

ccep

ted

in t

he U

nite

d St

ates

of

Am

eric

a re

quire

tha

t th

e m

anag

emen

t’s d

iscu

ssio

n an

d an

alys

is a

nd th

e re

quire

d su

pple

men

tary

info

rmat

ion

liste

d in

the

tabl

e of

con

tent

s be

pre

sent

ed to

sup

plem

ent t

he b

asic

fin

anci

al s

tate

men

ts. S

uch

info

rmat

ion,

al

thou

gh n

ot a

par

t of t

he b

asic

fina

ncia

l sta

tem

ents

, is r

equi

red

by th

e G

over

nmen

tal A

ccou

ntin

g St

anda

rds B

oard

, who

cons

ider

s it t

o be

an es

sent

ial p

art o

f fin

anci

al re

porti

ng fo

r pla

cing

the b

asic

fin

anci

al st

atem

ents

in an

appr

opria

te o

pera

tiona

l, ec

onom

ic o

r his

toric

al co

ntex

t. W

e hav

e app

lied

certa

in li

mite

d pr

oced

ures

to th

e re

quire

d su

pple

men

tary

info

rmat

ion

in a

ccor

danc

e w

ith a

uditi

ng

stan

dard

s ge

nera

lly a

ccep

ted

in t

he U

nite

d St

ates

of

Am

eric

a, w

hich

con

sist

ed o

f in

quiri

es o

f m

anag

emen

t abo

ut th

e m

etho

ds o

f pre

parin

g th

e in

form

atio

n an

d co

mpa

ring

the

info

rmat

ion

for

cons

iste

ncy

with

man

agem

ent’s

resp

onse

s to

our i

nqui

ries,

the b

asic

fina

ncia

l sta

tem

ents

and

othe

r kn

owle

dge

we

obta

ined

dur

ing

our a

udit

of th

e ba

sic

finan

cial

sta

tem

ents

. We

do n

ot e

xpre

ss a

n op

inio

n or

pro

vide

any

assu

ranc

e on

the i

nfor

mat

ion

beca

use t

he li

mite

d pr

oced

ures

do

not p

rovi

de

us w

ith su

ffic

ient

evi

denc

e to

exp

ress

an

opin

ion

or p

rovi

de a

ny a

ssur

ance

. O

ther

Info

rmat

ion

O

ur a

udit

was

con

duct

ed f

or th

e pu

rpos

e of

for

min

g op

inio

ns o

n th

e fin

anci

al s

tate

men

ts th

at

colle

ctiv

ely

com

pris

e th

e C

ity’s

bas

ic fi

nanc

ial s

tate

men

ts. T

he in

trodu

ctor

y se

ctio

n, c

ombi

ning

an

d in

divi

dual

fun

d fin

anci

al s

tate

men

ts a

nd s

ched

ules

and

sta

tistic

al s

ectio

n ar

e pr

esen

ted

for

purp

oses

of a

dditi

onal

ana

lysi

s an

d ar

e no

t a re

quire

d pa

rt of

the

basi

c fin

anci

al s

tate

men

ts. T

he

com

bini

ng a

nd i

ndiv

idua

l fu

nd f

inan

cial

sta

tem

ents

and

sch

edul

es a

re t

he r

espo

nsib

ility

of

man

agem

ent a

nd w

ere

deriv

ed f

rom

and

rel

ate

dire

ctly

to th

e un

derly

ing

acco

untin

g an

d ot

her

reco

rds

used

to p

repa

re th

e ba

sic

finan

cial

sta

tem

ents

. The

info

rmat

ion

has

been

sub

ject

ed to

the

audi

ting

proc

edur

es a

pplie

d in

the

audi

t of

the

basi

c fin

anci

al s

tate

men

ts a

nd c

erta

in a

dditi

onal

pr

oced

ures

, in

clud

ing

com

parin

g an

d re

conc

iling

suc

h in

form

atio

n di

rect

ly t

o th

e un

derly

ing

acco

untin

g an

d ot

her r

ecor

ds u

sed

to p

repa

re th

e ba

sic f

inan

cial

stat

emen

ts o

r to

the b

asic

fina

ncia

l

- 3 -

stat

emen

ts t

hem

selv

es,

and

othe

r ad

ditio

nal

proc

edur

es i

n ac

cord

ance

with

aud

iting

sta

ndar

ds

gene

rally

acc

epte

d in

the

Uni

ted

Stat

es o

f Am

eric

a. In

our

opi

nion

, the

info

rmat

ion

is fa

irly

stat

ed

in a

ll m

ater

ial r

espe

cts

in re

latio

n to

the

basi

c fin

anci

al s

tate

men

ts a

s a

who

le. T

he in

trodu

ctor

y an

d st

atis

tical

sec

tions

hav

e no

t bee

n su

bjec

ted

to th

e au

ditin

g pr

oced

ures

app

lied

in th

e au

dit o

f th

e ba

sic

finan

cial

sta

tem

ents

and

, acc

ordi

ngly

, w

e do

not

exp

ress

an

opin

ion

or p

rovi

de a

ny

assu

ranc

e on

them

. W

e al

so h

ave

prev

ious

ly a

udite

d, in

acc

orda

nce

with

aud

iting

stan

dard

s gen

eral

ly a

ccep

ted

in th

e U

nite

d St

ates

of A

mer

ica,

the

City

’s b

asic

fina

ncia

l sta

tem

ents

for t

he y

ear e

nded

Dec

embe

r 31,

20

17, w

hich

are

not

pre

sent

ed w

ith th

e ac

com

pany

ing

finan

cial

sta

tem

ents

. In

our

repo

rt da

ted

May

31,

201

8, w

e ex

pres

sed

unm

odifi

ed o

pini

ons

on th

e re

spec

tive

finan

cial

sta

tem

ents

of

the

gove

rnm

enta

l act

iviti

es, t

he b

usin

ess-

type

act

iviti

es, e

ach

maj

or fu

nd a

nd th

e ag

greg

ate

rem

aini

ng

fund

info

rmat

ion.

Tha

t aud

it w

as c

ondu

cted

for t

he p

urpo

se o

f for

min

g op

inio

ns o

n th

e fin

anci

al

stat

emen

ts th

at c

olle

ctiv

ely

com

pris

e th

e C

ity’s

bas

ic fi

nanc

ial s

tate

men

ts a

s a

who

le. T

he 2

017

com

para

tive

info

rmat

ion

incl

uded

on

certa

in c

ombi

ning

and

ind

ivid

ual

fund

sta

tem

ents

and

sc

hedu

les a

re p

rese

nted

for p

urpo

ses o

f add

ition

al a

naly

sis a

nd a

re n

ot a

requ

ired

part

of th

e ba

sic

finan

cial

stat

emen

ts. S

uch

info

rmat

ion

is th

e re

spon

sibi

lity

of m

anag

emen

t and

was

der

ived

from

an

d re

late

s dire

ctly

to th

e un

derly

ing

acco

untin

g an

d ot

her r

ecor

ds u

sed

to p

repa

re th

e 20

17 b

asic

fin

anci

al st

atem

ents

. The

info

rmat

ion

has b

een

subj

ecte

d to

the

audi

ting

proc

edur

es a

pplie

d in

the

audi

t of t

hose

bas

ic fi

nanc

ial s

tate

men

ts a

nd c

erta

in a

dditi

onal

pro

cedu

res,

incl

udin

g co

mpa

ring

and

reco

ncili

ng s

uch

info

rmat

ion

dire

ctly

to th

e un

derly

ing

acco

untin

g an

d ot

her r

ecor

ds u

sed

to

prep

are

the

basi

c fin

anci

al s

tate

men

ts o

r to

the

basi

c fin

anci

al s

tate

men

ts th

emse

lves

, and

oth

er

addi

tiona

l pr

oced

ures

in

acco

rdan

ce w

ith a

uditi

ng s

tand

ards

gen

eral

ly a

ccep

ted

in t

he U

nite

d St

ates

of

Am

eric

a. I

n ou

r op

inio

n, t

he 2

017

com

para

tive

info

rmat

ion

incl

uded

on

certa

in

com

bini

ng a

nd in

divi

dual

fund

sta

tem

ents

and

sch

edul

es a

re fa

irly

stat

ed in

all

mat

eria

l res

pect

s in

rela

tion

to th

e ba

sic

finan

cial

stat

emen

ts fr

om w

hich

they

hav

e be

en d

eriv

ed.

Oth

er R

epor

ting

Req

uire

d by

Gov

ernm

ent A

uditi

ng S

tand

ards

In

acc

orda

nce

with

Gov

ernm

ent A

uditi

ng S

tand

ards

, we

have

als

o is

sued

our

repo

rt da

ted

June

4,

2019

on

our c

onsi

dera

tion

of th

e C

ity’s

inte

rnal

con

trol o

ver f

inan

cial

repo

rting

and

on

our t

ests

of

its c

ompl

ianc

e w

ith c

erta

in p

rovi

sion

s of l

aws,

regu

latio

ns, c

ontra

cts a

nd g

rant

agr

eem

ents

and

ot

her m

atte

rs. T

he p

urpo

se o

f tha

t rep

ort i

s to

desc

ribe

the

scop

e of

our

test

ing

of in

tern

al c

ontro

l ov

er fi

nanc

ial r

epor

ting

and

com

plia

nce a

nd th

e res

ults

of t

hat t

estin

g an

d no

t to

prov

ide a

n op

inio

n on

inte

rnal

con

trol o

ver f

inan

cial

repo

rting

or o

n co

mpl

ianc

e. T

hat r

epor

t is

an in

tegr

al p

art o

f an

audi

t per

form

ed in

acc

orda

nce

with

Gov

ernm

ent A

uditi

ng S

tand

ards

in c

onsi

derin

g C

ity’s

inte

rnal

co

ntro

l ove

r fin

anci

al re

porti

ng a

nd c

ompl

ianc

e.

Nap

ervi

lle, I

llino

is

June

4, 2

019

GEN

ERA

L PU

RPO

SE E

XTE

RN

AL

FI

NA

NC

IAL

STA

TEM

ENTS

For

Th

e F

isca

l Y

ea

r E

nd

ed

De

cem

be

r 3

1, 2

01

8

Com

preh

ensi

ve A

nnua

l Fin

anci

al R

epor

t

(See

inde

pend

ent a

udito

r’s r

epor

t) - M

D&

A 1

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

MA

NA

GE

ME

NT

’S D

ISC

USS

ION

AN

D A

NA

LY

SIS

Dec

embe

r 31

, 201

8

The

City

of

Elgi

n (th

e “C

ity”)

dis

cuss

ion

and

anal

ysis

is

desi

gned

to

(1)

assi

st t

he r

eade

r in

fo

cusi

ng o

n si

gnifi

cant

fina

ncia

l iss

ues,

(2) p

rovi

de a

n ov

ervi

ew o

f the

City

’s fi

nanc

ial a

ctiv

ity,

(3) i

dent

ify c

hang

es in

the

City

’s fi

nanc

ial p

ositi

on (i

ts a

bilit

y to

add

ress

the

next

and

subs

eque

nt

year

cha

lleng

es),

(4)

iden

tify

any

mat

eria

l de

viat

ions

fro

m t

he f

inan

cial

pla

n (th

e ap

prov

ed

budg

et),

and

(5) i

dent

ify in

divi

dual

fund

issu

es o

r con

cern

s.

Sinc

e th

e M

anag

emen

t’s D

iscu

ssio

n an

d A

naly

sis

(MD

&A

) is

des

igne

d to

foc

us o

n th

e cu

rren

t ye

ar’s

act

iviti

es, r

esul

ting

chan

ges

and

curr

ently

kno

wn

fact

s, pl

ease

read

it in

con

junc

tion

with

th

e Tr

ansm

ittal

Let

ter

(beg

inni

ng o

n pa

ge iv

) an

d th

e C

ity’s

fin

anci

al s

tate

men

ts (

begi

nnin

g on

pa

ge 4

).

USI

NG

TH

E F

INA

NC

IAL

SE

CT

ION

OF

TH

IS C

OM

PRE

HE

NSI

VE

AN

NU

AL

RE

POR

T

The

focu

s of t

he fi

nanc

ial s

tate

men

ts is

on

both

the

City

as a

who

le (g

over

nmen

t-wid

e) a

nd o

n th

e m

ajor

indi

vidu

al fu

nds.

Bot

h pe

rspe

ctiv

es (g

over

nmen

t-wid

e an

d m

ajor

fund

) allo

w th

e us

er to

ad

dres

s re

leva

nt q

uest

ions

, br

oade

n a

basi

s fo

r co

mpa

rison

(ye

ar t

o ye

ar o

r go

vern

men

t to

go

vern

men

t) an

d en

hanc

e th

e C

ity’s

acc

ount

abili

ty.

Gov

ernm

ent-

Wid

e Fi

nanc

ial S

tate

men

ts

The g

over

nmen

t-wid

e fin

anci

al st

atem

ents

(see

pag

es 4

-7) a

re d

esig

ned

to b

e cor

pora

te-li

ke in

that

al

l Gov

ernm

enta

l and

Bus

ines

s-Ty

pe A

ctiv

ities

are

con

solid

ated

into

col

umns

whi

ch a

dd to

a to

tal

for t

he P

rimar

y G

over

nmen

t. T

he fo

cus

of th

e St

atem

ent o

f Net

Pos

ition

(the

“U

nres

trict

ed N

et

Posi

tion”

) is

desi

gned

to b

e si

mila

r to

botto

m li

ne re

sults

for t

he C

ity a

nd it

s G

over

nmen

tal a

nd

Bus

ines

s-Ty

pe A

ctiv

ities

. Thi

s sta

tem

ent c

ombi

nes a

nd co

nsol

idat

es G

over

nmen

tal f

unds

’ cur

rent

fin

anci

al re

sour

ces (

shor

t-ter

m sp

enda

ble

reso

urce

s) w

ith c

apita

l ass

ets a

nd lo

ng te

rm o

blig

atio

ns

usin

g th

e ac

crua

l bas

is o

f acc

ount

ing

and

econ

omic

reso

urce

s mea

sure

men

t foc

us.

The

Stat

emen

t of A

ctiv

ities

(see

pag

es 6

-7) i

s fo

cuse

d on

bot

h th

e gr

oss

and

net c

ost o

f var

ious

ac

tiviti

es (i

nclu

ding

gov

ernm

enta

l and

bus

ines

s-ty

pe),

whi

ch a

re s

uppo

rted

by th

e go

vern

men

t’s

gene

ral t

axes

and

oth

er re

sour

ces.

Thi

s is i

nten

ded

to su

mm

ariz

e an

d si

mpl

ify th

e us

er’s

ana

lysi

s of

the

cost

of v

ario

us g

over

nmen

t ser

vice

s and

/or s

ubsi

dy to

var

ious

Bus

ines

s-Ty

pe A

ctiv

ities

.

The

Gov

ernm

enta

l A

ctiv

ities

ref

lect

the

City

’s b

asic

ser

vice

s, in

clud

ing

polic

e, f

ire,

code

en

forc

emen

t and

pub

lic w

orks

. Pr

oper

ty ta

xes,

shar

ed s

tate

sal

es, l

ocal

util

ity a

nd s

hare

d st

ate

inco

me

taxe

s fin

ance

the

maj

ority

of t

hese

serv

ices

. Th

e B

usin

ess-

Type

Act

iviti

es re

flect

priv

ate

sect

or ty

pe o

pera

tions

(Wat

er, S

ewer

, and

Gol

f), w

here

the

fee

for s

ervi

ce ty

pica

lly c

over

s al

l or

mos

t of t

he c

ost o

f ope

ratio

n, in

clud

ing

depr

ecia

tion.

CIT

Y O

F EL

GIN

, ILL

INO

IS

MA

NA

GEM

ENT’

S D

ISC

USS

ION

AN

D A

NA

LYSI

S (C

ontin

ued)

(See

inde

pend

ent a

udito

r’s r

epor

t) - M

D&

A 2

-

Fund

Fin

anci

al S

tate

men

ts Tr

aditi

onal

use

rs o

f go

vern

men

tal f

inan

cial

sta

tem

ents

will

fin

d th

e Fu

nd F

inan

cial

Sta

tem

ents

pr

esen

tatio

n m

ore

fam

iliar

. Th

e fo

cus i

s on

Maj

or F

unds

, rat

her t

han

(the

prev

ious

mod

el’s

) fun

d ty

pes.

The

Gov

ernm

enta

l Fun

d (s

ee p

ages

8-1

2) st

atem

ents

are

pre

sent

ed o

n a

sour

ces a

nd u

ses o

f liq

uid

reso

urce

s bas

is.

This

is th

e m

anne

r in

whi

ch th

e fin

anci

al p

lan

(the

budg

et) i

s typ

ical

ly d

evel

oped

. Th

e flo

w a

nd a

vaila

bilit

y of

liqu

id re

sour

ces

is a

cle

ar a

nd a

ppro

pria

te fo

cus

of a

ny a

naly

sis

of a

go

vern

men

t. F

unds

are

est

ablis

hed

for v

ario

us p

urpo

ses a

nd th

e Fu

nd F

inan

cial

Sta

tem

ent a

llow

s th

e de

mon

stra

tion

of so

urce

s and

use

s and

/or b

udge

ting

com

plia

nce

asso

ciat

ed th

erew

ith.

Whi

le th

e To

tal c

olum

n on

the

Prop

rieta

ry F

und

Fina

ncia

l Sta

tem

ents

(se

e pa

ges

13-1

7) is

the

sam

e as

th

e B

usin

ess-

Type

co

lum

n on

th

e G

over

nmen

t-Wid

e Fi

nanc

ial

Stat

emen

ts,

the

Gov

ernm

enta

l Fun

ds T

otal

col

umn

requ

ires a

reco

ncili

atio

n be

caus

e of

the

diff

eren

t mea

sure

men

t fo

cus (

curr

ent f

inan

cial

reso

urce

s ver

sus t

otal

eco

nom

ic re

sour

ces)

whi

ch is

refle

cted

on

the

page

fo

llow

ing

each

stat

emen

t (se

e pag

es 1

0 an

d 12

). T

he fl

ow o

f cur

rent

fina

ncia

l res

ourc

es w

ill re

flect

bo

nd p

roce

eds,

sale

of c

apita

l ass

ets

and

inte

rfun

d tra

nsfe

rs a

s ot

her f

inan

cial

sou

rces

as

wel

l as

capi

tal a

sset

pur

chas

es,b

ond

prin

cipa

l pay

men

ts an

d pe

nsio

n/O

PEB

cont

ribut

ions

as ex

pend

iture

s.

The

reco

ncili

atio

n w

ill e

limin

ate

thes

e tra

nsac

tions

and

inco

rpor

ate

the

capi

tal a

sset

s, lo

ng-te

rm

oblig

atio

n (b

onds

and

oth

ers)

and

net

pen

sion

liab

ility

/tota

l OPE

B li

abili

ty in

to th

e G

over

nmen

tal

Act

iviti

es c

olum

n (in

the

Gov

ernm

ent-W

ide

Stat

emen

ts).

The

Fund

Fin

anci

al S

tate

men

ts a

lso

allo

w th

e go

vern

men

t to

addr

ess

its F

iduc

iary

Fun

ds (P

olic

e an

d Fi

refig

hter

s’ P

ensi

ons

and

Ret

iree

Hea

lth In

sura

nce)

. W

hile

thes

e Fu

nds

(see

pag

es 1

8-19

) re

pres

ent t

rust

resp

onsi

bilit

ies o

f the

gov

ernm

ent,

thes

e as

sets

are

rest

ricte

d in

pur

pose

and

do

not

repr

esen

t dis

cret

iona

ry a

sset

s of t

he g

over

nmen

t. T

here

fore

, the

se a

sset

s are

not

pre

sent

ed a

s par

t of

the

Gov

ernm

ent-W

ide

Fina

ncia

l Sta

tem

ents

.

Infr

astru

ctur

e As

sets

His

toric

ally

, inf

rast

ruct

ure

asse

ts (

road

s, br

idge

s, st

orm

sew

ers,

etc.

) re

pres

ent a

gov

ernm

ent’s

la

rges

t gr

oup

of a

sset

s. Th

ese

asse

ts a

re r

equi

red

to b

e va

lued

and

rep

orte

d w

ithin

the

G

over

nmen

tal c

olum

n of

the

Gov

ernm

ent-W

ide

Stat

emen

ts.

Add

ition

ally

, the

gov

ernm

ent m

ust

elec

t to

eith

er (1

) dep

reci

ate

thes

e as

sets

ove

r the

ir es

timat

ed u

sefu

l life

or (

2) d

evel

op a

syst

em o

f as

sets

man

agem

ent d

esig

ned

to m

aint

ain

the s

ervi

ce d

eliv

ery

pote

ntia

l to

near

per

petu

ity. T

he C

ity

has

chos

en t

o de

prec

iate

the

ass

ets

over

the

ir us

eful

life

. I

f a

road

pro

ject

is

cons

ider

ed

mai

nten

ance

– a

rec

urrin

g co

st th

at d

oes

not e

xten

d th

e ro

ad’s

orig

inal

use

ful l

ife o

r ex

pand

its

capa

city

– th

e co

st o

f th

e pr

ojec

t will

be

expe

nsed

. A

n “o

verla

y” o

f a

road

will

be

cons

ider

ed

mai

nten

ance

whe

reas

a “

rebu

ild”

of a

roa

d w

ill b

e ca

pita

lized

. Th

e C

ity h

ad r

etro

activ

ely

capi

taliz

ed it

s inf

rast

ruct

ure

asse

ts in

the

year

end

ed D

ecem

ber 3

1, 2

003.

CIT

Y O

F EL

GIN

, ILL

INO

IS

MA

NA

GE

ME

NT

’S D

ISC

USS

ION

AN

D A

NA

LY

SIS

(Con

tinue

d)

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

_

(See

inde

pend

ent a

udito

r’s r

epor

t) - M

D&

A 3

-

GO

VE

RN

ME

NT

-WID

E S

TA

TE

ME

NT

Stat

emen

t of N

et P

ositi

on

The

follo

win

g ta

ble

refle

cts t

he c

onde

nsed

Sta

tem

ent o

f Net

Pos

ition

:

Tab

le 1

St

atem

ent o

f Net

Pos

ition

A

s of D

ecem

ber

31, 2

018

(In

mill

ions

)

Tot

alG

over

nmen

tal

Bus

ines

s-ty

pe

Prim

ary

Act

iviti

esA

ctiv

ities

Gov

ernm

ent

20

18

2017

2018

2017

2018

2017

Cur

rent

and

Oth

er A

sset

s $1

98.4

$1

79.3

$4

3.5

$4

2.0

$2

41.9

$2

21.3

C

apita

l Ass

ets

524.

5 54

4.4

297.

8 30

3.0

822.

3 84

7.4

Tot

al A

sset

s $7

22.9

$7

23.7

$3

41.3

$3

45.0

$1

,064

.2

$1,0

68.7

Def

erre

d O

utflo

ws o

f Res

ourc

es

38.4

25

.1

3.0

5.2

41.4

30

.3

T

otal

Ass

ets a

nd D

efer

red

Out

flow

s of R

esou

rces

$7

61.3

$748

.8$3

44.3

$350

.2$1

,105

.6$1

,099

.0

Long

term

Lia

bilit

ies

$ 26

5.4

$ 23

7.0

$52.

3

$62.

2

$317

.7

$299

.2

Oth

er L

iabi

litie

s 29

.1

29.1

1.

7 2.

0 30

.8

31.1

T

otal

Lia

bilit

ies

$294

.5

$266

.1

$54.

0 $6

4.2

$348

.5

$330

.3

D

efer

red

Inflo

ws o

f Res

ourc

es

87.9

88

.0

3.4

0.4

91.3

0 88

.4

Tot

al L

iabi

litie

s and

Def

erre

d In

flow

s of R

esou

rces

$3

82.4

$354

.1$5

7.4

$64.

6$4

39.8

$418

.7

Net

Pos

ition

:

N

et In

vest

men

t in

Cap

ital A

sset

$5

03.5

$5

20.4

$2

51.5

$2

50.6

$7

55.0

$7

71.0

R

estri

cted

20

.0

14.3

0

0 20

.0

14.3

U

nres

trict

ed

(144

.6)

(140

.0)

35.4

35

.0

(109

.2)

(105

.0)

Tot

al N

et P

ositi

on

$378

.9$3

94.7

$286

.9$2

85.6

$665

.8$6

80.3

For m

ore

deta

iled

info

rmat

ion

see

the

Stat

emen

t of N

et P

ositi

on (p

age

4).

The

City

’s c

ombi

ned

net p

ositi

on (w

hich

is th

e C

ity’s

bot

tom

line

) dec

reas

ed to

$66

5,70

2,45

4 fr

om $

680,

287,

415.

Gov

ernm

enta

l Act

iviti

es re

duce

d co

mbi

ned

net p

ositi

on b

y $1

5,81

7,32

3 w

hile

Bus

ines

s-Ty

pe A

ctiv

ities

incr

ease

d co

mbi

ned

net p

ositi

on b

y $1

,232

,362

. The

net

pos

ition

of

the

City

’s G

over

nmen

tal a

nd B

usin

ess-

Type

Act

iviti

es w

as im

pact

ed b

y a

chan

ge in

CIT

Y O

F EL

GIN

, ILL

INO

IS

MA

NA

GE

ME

NT

’S D

ISC

USS

ION

AN

D A

NA

LY

SIS

(Con

tinue

d)

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

_

(See

inde

pend

ent a

udito

r’s r

epor

t) - M

D&

A 4

-

acco

untin

g pr

inci

ple.

For

the

fisca

l yea

r end

ed D

ecem

ber 3

1, 2

018

the

City

impl

emen

ted

GA

SB

Stat

emen

t No.

75

that

requ

ired

the

City

to re

troac

tivel

y re

cord

the

tota

l pos

tem

ploy

men

t ben

efit

lia

bilit

y an

d w

rite-

off t

he n

et O

PEB

obl

igat

ion.

Gov

ernm

enta

l and

Bus

ines

s-Ty

pe A

ctiv

ities

de

crea

sed

by $

9,20

0,61

3 an

d $1

,211

,020

resp

ectiv

ely,

due

to th

e ch

ange

in a

ccou

ntin

g pr

inci

ple.

If

not

for t

his r

esta

tem

ent,

Gov

ernm

enta

l Act

iviti

es n

et p

ositi

on w

ould

hav

e de

crea

sed

$6,6

16,7

10 a

nd B

usin

ess-

Type

Act

iviti

es n

et p

ositi

on w

ould

hav

e in

crea

sed

$2,4

43,3

82.

The

Gov

ernm

enta

l Act

iviti

es n

et p

ositi

on a

t yea

r-en

d w

as $

378,

882,

349.

Cas

h an

d in

vest

men

ts

incr

ease

d $1

5,45

7,73

4 w

ithin

Gov

ernm

enta

l Act

iviti

es a

s a re

sult

of in

crea

ses w

ithin

the

Gen

eral

Fu

nd, N

onm

ajor

Gov

ernm

enta

l Fun

ds a

nd In

tern

al S

ervi

ce F

unds

. The

incr

ease

with

in th

e G

ener

al F

und

was

due

to re

venu

e ex

ceed

ing

expe

nditu

res a

nd c

ontri

bute

d $1

0,95

8,46

1 of

the

tota

l inc

reas

e in

cas

h an

d in

vest

men

ts.

The

Non

maj

or G

over

nmen

tal F

unds

incr

ease

was

due

to

incr

ease

s in

both

the

Non

maj

or C

apita

l Pro

ject

s Fun

ds a

nd th

e N

onm

ajor

Spe

cial

Rev

enue

Fu

nds.

Incr

ease

d ca

sh a

nd in

vest

men

ts w

ithin

the

Non

maj

or C

apita

l Pro

ject

s Fun

ds w

as d

ue to

an

incr

ease

with

in th

e C

apita

l Im

prov

emen

ts F

und

as a

resu

lt of

del

ayed

pro

ject

s tha

t was

par

tly

offs

et b

y th

e sp

endi

ng o

f prio

r yea

r bon

d pr

ocee

ds fo

r cap

ital o

utla

y w

ithin

the

2016

Cor

pora

te

Bon

d Fu

nd. T

he in

crea

se w

ithin

the

Non

maj

or S

peci

al R

even

ue F

unds

was

due

to in

crea

ses

with

in th

e Em

erge

ncy

Tele

phon

e Sy

stem

Fun

d an

d M

otor

Fue

l Tax

Fun

d ex

ceed

ing

decr

ease

s w

ithin

the

Rec

reat

ion

Cen

ter F

und

and

Cen

tral A

rea

Tax

Allo

catio

n Fu

nd. T

he In

tern

al S

ervi

ce

Fund

s cas

h in

crea

sed

due

to p

ositi

ve n

et c

ash

from

ope

ratin

g ac

tiviti

es a

nd tr

ansf

ers i

n. P

rope

rty

tax

rece

ivab

le d

ecre

ased

due

to a

dec

reas

ed le

vy w

ithin

the

Non

maj

or S

peci

al R

even

ue F

unds

for

the

Illin

ois M

unic

ipal

Ret

irem

ent F

und

(IM

RF)

. The

City

’s c

ontri

butio

n ra

te d

ecre

ased

from

11

.18

perc

ent i

n 20

18 to

8.2

2 pe

rcen

t in

2019

, res

ultin

g in

a d

ecre

ase

in th

e pr

oper

ty ta

x le

vy.

Oth

er re

ceiv

able

s inc

reas

ed $

1,34

6,86

6 du

e to

incr

ease

d re

ceiv

able

s with

in th

e G

ener

al F

und

for

ambu

lanc

e fe

es a

nd sp

ecia

l dut

y po

lice

serv

ices

. Sa

les t

ax re

venu

e, in

201

8, re

ache

d a

reco

rd

high

, as s

uch,

the

rece

ivab

le fo

r sal

es ta

x, a

t yea

r end

, inc

reas

ed d

ue fr

om o

ther

gov

ernm

ents

. N

et p

ensi

on a

sset

s inc

reas

ed d

ue to

an

impr

ovem

ent i

n th

e IM

RF

fund

ing

leve

l whi

ch re

sulte

d in

a

year

end

201

8 ne

t pen

sion

ass

et a

s com

pare

d to

a n

et p

ensi

on li

abili

ty a

s of D

ecem

ber 3

1,

2017

. Cap

ital a

sset

s dec

reas

ed 3

.7%

as a

resu

lt of

dep

reci

atio

n ex

pens

e ex

ceed

ing

capi

tal a

sset

s ac

quire

d an

d de

velo

per c

ontri

butio

ns o

f inf

rast

ruct

ure

acce

pted

. D

efer

red

outfl

ow o

f res

ourc

es

incr

ease

d du

e to

incr

ease

s in

pens

ion

item

s rel

ated

to th

e Po

lice

and

Fire

fight

ers’

Pen

sion

s and

O

PEB

item

s rec

orde

d du

e to

a c

hang

e in

acc

ount

ing

prin

cipl

e ex

ceed

ing

decr

ease

s in

pens

ion

item

s rel

ated

to IM

RF.

Acc

ount

s pay

able

dec

reas

ed d

ue to

dec

reas

es w

ithin

the

Non

maj

or

Spec

ial R

even

ue F

unds

exc

eedi

ng in

crea

ses w

ithin

the

Gen

eral

Fun

d. D

ecre

ased

acc

ount

s pa

yabl

e w

ithin

the

Cen

tral A

rea

Tax

Allo

catio

n Fu

nd fo

r eco

nom

ic d

evel

opm

ent r

esul

ted

in th

e de

crea

se w

ithin

the

Non

maj

or S

peci

al R

even

ue F

unds

. Cla

ims p

ayab

le in

crea

sed

due

to

incr

ease

s with

in th

e In

tern

al S

ervi

ce F

unds

. Lon

g te

rm li

abili

ties i

ncre

ased

due

to in

crea

ses i

n N

et P

ensi

on L

iabi

litie

s and

the

reco

rdin

g of

the

Net

OPE

B L

iabi

lity

exce

edin

g re

duct

ions

in

gene

ral o

blig

atio

n de

bt.

Net

Pen

sion

liab

ilitie

s inc

reas

ed d

ue to

incr

ease

s in

the

Polic

e an

d Fi

refig

hter

s’ P

ensi

ons e

xcee

ding

a d

ecre

ase

due

to e

limin

atio

n of

the

IMR

F ne

t pen

sion

liab

ility

fo

r 201

8. T

he C

ity d

id n

ot is

sue

any

new

gen

eral

obl

igat

ion

debt

in 2

018,

this

com

bine

d w

ith

2018

prin

cipa

l pay

men

ts, r

esul

ted

in a

dec

reas

e in

gen

eral

obl

igat

ion

debt

. Def

erre

d in

flow

s of

reso

urce

s rem

aine

d fla

t due

to d

ecre

ases

for p

ensi

on it

ems r

elat

ing

to th

e Po

lice

and

Fire

fight

ers’

CIT

Y O

F EL

GIN

, ILL

INO

IS

MA

NA

GE

ME

NT

’S D

ISC

USS

ION

AN

D A

NA

LY

SIS

(Con

tinue

d)

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

_

(See

inde

pend

ent a

udito

r’s r

epor

t) - M

D&

A 5

-

Pens

ions

bei

ng o

ffse

t by

incr

ease

s in

pens

ion

item

s rel

atin

g to

IMR

F an

d to

OPE

B it

ems

reco

rded

due

to a

cha

nge

in a

ccou

ntin

g pr

inci

ple.

The

unr

estri

cted

net

pos

ition

of G

over

nmen

tal

Act

iviti

es d

ecre

ased

$4,

619,

731

for t

he fi

scal

yea

r end

ed D

ecem

ber 3

1, 2

018.

The

City

’s B

usin

ess-

Type

Act

iviti

es n

et p

ositi

on a

t yea

r-en

d w

as $

286,

820,

105

whi

ch

repr

esen

ts a

n im

prov

emen

t of $

1,23

2,36

2 fr

om th

e pr

ior y

ear b

alan

ce o

f $28

5,58

7,74

3. T

his

impr

ovem

ent w

as im

pact

ed b

y a

chan

ge in

acc

ount

ing

prin

cipl

e th

at d

ecre

ased

prio

r yea

r fun

d ba

lanc

e by

$1,

211,

020.

Tot

al a

sset

s and

def

erre

d ou

tflow

s of B

usin

ess-

Type

Act

iviti

es d

ecre

ased

by

$6,

047,

318

due

to d

ecre

ased

cap

ital a

sset

s and

def

erre

d ou

tflow

s of r

esou

rces

. Cap

ital a

sset

s de

crea

sed

due

to d

epre

ciat

ion

expe

nse

exce

edin

g ca

pita

l ass

ets a

cqui

red

and

deve

lope

r co

ntrib

utio

ns o

f inf

rast

ruct

ure

acce

pted

. Def

erre

d ou

tflow

of r

esou

rces

dec

reas

ed d

ue to

de

crea

ses i

n pe

nsio

n ite

ms r

elat

ed to

IMR

F. I

ncre

ased

cas

h an

d ac

coun

ts re

ceiv

able

par

tially

of

fset

this

dec

reas

e. T

otal

liab

ilitie

s and

def

erre

d in

flow

s of r

esou

rces

dec

reas

ed $

7,27

9,68

0.Lo

ng-te

rm li

abili

ties d

ecre

ased

due

to n

o ne

w g

ener

al o

blig

atio

n de

bt is

suan

ces w

ithin

the

year

, pr

inci

pal r

epay

men

ts m

ade

durin

g th

e ye

ar a

nd th

e el

imin

atio

n of

the

IMR

F ne

t pen

sion

liab

ility

.Th

ese

decr

ease

s to

long

-term

liab

ilitie

s wer

e pa

rtial

ly o

ffse

t by

the

reco

rdin

g of

the

net O

PEB

lia

bilit

y du

e to

a c

hang

e in

acc

ount

ing

prin

cipl

e. T

he u

nres

trict

ed n

et p

ositi

on w

ithin

the

Bus

ines

s-Ty

pe A

ctiv

ities

of $

35,3

53,3

21 c

an b

e us

ed to

fund

ong

oing

ope

ratio

ns.

Nor

mal

Impa

cts

Ther

e ar

e se

ven

basi

c (n

orm

al) t

rans

actio

ns th

at w

ill a

ffec

t the

com

para

bilit

y of

the

Stat

emen

t of

Net

Pos

ition

sum

mar

y pr

esen

tatio

n.

Net

Res

ults

of A

ctiv

ities

– w

hich

will

impa

ct (i

ncre

ase/

decr

ease

) cur

rent

ass

ets a

nd u

nres

trict

ed

net p

ositi

on.

Bor

row

ing

for

Cap

ital –

whi

ch w

ill in

crea

se c

urre

nt a

sset

s and

long

-term

deb

t.

Spen

ding

Bor

row

ed P

roce

eds

on N

ew C

apita

l – w

hich

will

redu

ce c

urre

nt a

sset

s an

d in

crea

se

capi

tal a

sset

s. T

here

is a

sec

ond

impa

ct, a

n in

crea

se in

inve

sted

cap

ital a

sset

s an

d an

incr

ease

in

rela

ted

net d

ebt w

hich

will

not

cha

nge

the

net i

nves

tmen

t in

capi

tal a

sset

s.

Spen

ding

of

Non

-bor

row

ed C

urre

nt A

sset

s on

New

Cap

ital –

whi

ch w

ill (

a) r

educ

e cu

rren

t as

sets

and

incr

ease

cap

ital a

sset

s an

d (b

) w

ill r

educ

e un

rest

ricte

d ne

t pos

ition

and

incr

ease

net

in

vest

men

t in

capi

tal a

sset

s.

Prin

cipa

l Pay

men

t on

Deb

t – w

hich

will

(a) r

educ

e cu

rren

t ass

ets a

nd re

duce

long

-term

deb

t and

(b

) red

uce

unre

stric

ted

net p

ositi

onan

d in

crea

se n

et in

vest

men

t in

capi

tal a

sset

s.

Red

uctio

n of

Cap

ital A

sset

s th

roug

h D

epre

ciat

ion

– w

hich

will

redu

ce c

apita

l ass

ets

and

net

inve

stm

ent i

n ca

pita

l ass

ets.

CIT

Y O

F EL

GIN

, ILL

INO

IS

MA

NA

GE

ME

NT

’S D

ISC

USS

ION

AN

D A

NA

LY

SIS

(Con

tinue

d)

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

_

(See

inde

pend

ent a

udito

r’s r

epor

t) - M

D&

A 6

-

Rep

ortin

g Pe

nsio

n O

blig

atio

ns –

whi

ch w

ill i

mpa

ct (

incr

ease

/dec

reas

e) d

efer

red

outfl

ows

of

reso

urce

s, lo

ng te

rm li

abili

ties,

defe

rred

inflo

ws o

f res

ourc

es a

nd u

nres

trict

ed n

et p

ositi

on.

Cur

rent

Yea

r Im

pact

s

On

the

who

le th

e C

ity’s

fina

ncia

l pos

ition

dec

lined

in 2

018

with

tota

l exp

ense

s exc

eedi

ng to

tal

reve

nue

by $

4,17

3,32

8. T

otal

reve

nue

incr

ease

d an

d to

tal e

xpen

ses d

ecre

ased

from

the

prio

r ye

ar. G

over

nmen

tal A

ctiv

ity e

xpen

ses d

ecre

ased

5.1

% d

ue to

dec

reas

ed sp

endi

ng fo

r Hig

hway

an

d St

reet

s and

Eco

nom

ic D

evel

opm

ent e

xcee

ding

incr

ease

d sp

endi

ng fo

r Pub

lic S

afet

y.H

ighw

ay a

nd S

treet

s exp

ense

dec

reas

ed a

s a re

sult

of d

ecre

ased

spen

ding

on

capi

tal o

utla

y fo

r st

reet

resu

rfac

ing

and

reha

bilit

atio

n du

e to

del

ayed

pro

ject

s. Th

e C

ity e

nter

ed in

to a

dev

elop

men

t ag

reem

ent w

ith a

dev

elop

er to

rede

velo

p th

e hi

stor

ic T

ower

Bui

ldin

g w

hich

was

com

plet

ed in

20

17 a

nd re

sulte

d in

incr

ease

d Ec

onom

ic D

evel

opm

ent e

xpen

se d

urin

g 20

17 w

ithin

the

Cen

tral

Are

a Ta

x A

lloca

tion

Fund

. Pub

lic S

afet

y ex

pens

es in

crea

sed

due

to in

crea

sed

pens

ion

expe

nse

for t

he P

olic

e an

d Fi

refig

hter

s’ P

ensi

ons a

nd in

crea

sed

spen

ding

on

capi

tal o

utla

y w

hich

did

not

m

eet c

apita

lizat

ion

thre

shho

lds.

Bus

ines

s-Ty

pe A

ctiv

ities

exp

ense

s dec

reas

ed 3

.5%

, com

pare

d to

20

17, d

ue in

par

t to

a de

crea

se in

IMR

F ex

pens

e. G

over

nmen

tal A

ctiv

ity re

venu

e in

crea

sed

7.7%

an

d B

usin

ess-

Type

reve

nue

decr

ease

d by

6.1

%.

Cha

rges

for s

ervi

ces i

ncre

ased

in b

oth

the

Gov

ernm

enta

l Act

iviti

es a

nd th

e B

usin

ess-

Type

Act

iviti

es.

Gov

ernm

enta

l Act

iviti

es in

crea

sed

due

to in

crea

ses w

ithin

Gen

eral

Gov

ernm

ent,

Publ

ic S

afet

y an

d Sa

nita

tion.

Bus

ines

s-Ty

pe

activ

ities

reve

nue

incr

ease

d du

e to

incr

ease

d re

venu

e w

ithin

the

Wat

er a

nd S

ewer

Fun

ds.

The

incr

ease

d re

venu

e w

ithin

the

Wat

er a

nd S

ewer

Fun

ds w

as d

ue to

incr

ease

d sa

les o

f wat

er to

a

neig

hbor

ing

com

mun

ity a

nd ra

te in

crea

se im

plem

ente

d in

201

8. R

even

ue fr

om c

apita

l gra

nts a

nd

cont

ribut

ions

incr

ease

d w

ithin

Gov

ernm

enta

l Act

iviti

es a

nd d

ecre

ased

with

in B

usin

ess-

Type

A

ctiv

ities

rela

ted

to d

evel

oper

con

tribu

tions

. The

val

ue o

f dev

elop

er c

ontri

butio

ns re

late

d to

the

acce

ptan

ce o

f pub

lic im

prov

emen

ts in

clud

ing

wat

er m

ains

, san

itary

sew

ers a

nd ro

adw

ays

reco

rded

by

the

City

incr

ease

d 47

% w

hen

com

pare

d to

the

valu

e of

impr

ovem

ents

acc

epte

d ci

ty

wid

e in

201

7. T

he v

alue

of d

evel

oper

con

tribu

tion

acce

pted

incr

ease

d 24

% w

ithin

Gov

ernm

enta

l A

ctiv

ities

and

dec

reas

ed 8

6% w

ithin

Bus

ines

s-Ty

pe a

ctiv

ities

. Gov

ernm

enta

l Act

iviti

es g

ener

al

reve

nue

incr

ease

d $6

,821

,499

, whe

n co

mpa

red

to 2

017.

Pro

perty

tax

cont

inue

s to

be th

e C

ity’s

la

rges

t sou

rce

of re

venu

e. P

rope

rty ta

x re

venu

e in

crea

sed

2.2%

due

to a

n in

crea

sed

levy

with

in

the

Gen

eral

Fun

d fo

r Pol

ice

and

Fire

pen

sion

s and

an

incr

ease

d le

vy w

ithin

the

Deb

t Ser

vice

Fu

nd. D

urin

g 20

17 th

e D

ebt S

ervi

ce le

vy w

as re

duce

d du

e to

a p

lann

ed d

raw

dow

n of

fund

ba

lanc

e w

ithin

the

Deb

t Ser

vice

Fun

d. S

ales

tax

reve

nue

incr

ease

d by

$3,

357,

676

due

in p

art t

o an

incr

ease

in th

e ho

me

rule

sale

s tax

rate

. Oth

er ta

xes i

ncre

ased

due

to a

new

loca

l mot

or fu

el

tax

impo

sed

in 2

018.

Inv

estm

ent i

ncom

e in

crea

sed

71.8

%.

Gam

ing

reve

nue

decr

ease

d 4.

4%.

The

begi

nnin

g ne

t pos

ition

was

rest

ated

for b

oth

Gov

ernm

enta

l Act

iviti

es a

nd B

usin

ess-

Type

ac

tiviti

es d

ue to

a c

hang

e in

acc

ount

ing

prin

cipl

e.

CIT

Y O

F EL

GIN

, ILL

INO

IS

MA

NA

GE

ME

NT

’S D

ISC

USS

ION

AN

D A

NA

LY

SIS

(Con

tinue

d)

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

_

(See

inde

pend

ent a

udito

r’s r

epor

t) - M

D&

A 7

-

Tab

le 2

C

hang

es in

Net

Pos

ition

Fo

r th

e Fi

scal

Yea

r E

nded

Dec

embe

r 31

, 201

8 (I

n m

illio

ns)

Gov

ernm

enta

l B

usin

ess-

type

T

otal

Pri

mar

y A

ctiv

ities

Act

iviti

esG

over

nmen

t

2018

20

1720

1820

1720

1820

17R

EV

EN

UE

S Pr

ogra

m R

even

ues:

Cha

rges

for S

ervi

ces

$ 2

6.1

$ 2

2.5

35.4

33

.7

$61.

5 $5

6.2

O

pera

ting

gran

ts a

nd c

ontri

butio

ns

4.9

5.1

0.0

0.0

4.9

5.1

C

apita

l gra

nts a

nd c

ontri

butio

ns

2.7

1.6

0.4

2.5

3.1

4.1

Gen

eral

Rev

enue

s:

P

rope

rty T

axes

53

.3

52.1

0.

0 0.

0 53

.3

52.1

Oth

er T

axes

55

.4

50.8

0.

0 0.

0 55

.4

50.8

Oth

er

15.5

14

.3

0.7

0

.3

16.2

14

.6

Tot

al R

even

ues

$157

.9$1

46.4

$ 3

6.5

$ 3

6.5

$194

.4$1

82.9

E

XPE

NSE

SG

ener

al G

over

nmen

t $1

2.9

$13.

0 $

0.0

$

0.0

$1

2.9

$13.

0 Pu

blic

Saf

ety

91.4

85

.8

0.0

0.0

91.4

85

.8

Cul

ture

& R

ecre

atio

n

12.3

13

.2

0.0

0.0

12.3

13

.2

Inte

rest

0.

5 0.

6 0.

0 0.

0 0.

5 0.

6 W

ater

0.

0 0.

0 23

.0

23.7

23

.0

23.7

Se

wer

0.

0 0.

0 6.

1 6.

2 6.

1 6.

2 G

olf

0.0

0.0

3.8

4.0

3.8

4.0

Hig

hway

s & S

treet

s 37

.9

45.5

0.

0 0.

0 37

.9

45.5

H

ealth

& W

elfa

re

1.2

1.3

0.0

0.0

1.2

1.3

Econ

omic

Dev

elop

men

t 2.

7 8.

4 0.

0 0.

0 2.

7 8.

4 Sa

nita

tion

6.8

6.8

0.0

0.0

6.8

6.8

Tot

al E

xpen

ses

$165

.7$1

74.6

$ 3

2.9

$ 3

3.9

$198

.6$2

08.5

Exc

ess (

defic

ienc

y) b

efor

e tr

ansf

ers

(7.8

)(2

8.2)

3.

6 2.

6 (

4.2)

(

25.6

) T

rans

fers

1.

2 1.

3 (1

.2)

(1.3

) 0.

0 0.

0

Cha

nge

in N

et P

ositi

on

$ (6

.6)

$ (2

6.9)

$

2.4

$

1.3

$

(4.2

) $

(25.

6)

Cha

nge

in A

ccou

ntin

g Pr

inci

ple

(9.2

)(5

.2)

(1.2

)(0

.6)

(10.

4)(5

.8)

End

ing

Net

Pos

ition

$

378

.9

$ 3

94.7

$2

86.8

$285

.6$

665.

7 $

680.

3

CIT

Y O

F EL

GIN

, ILL

INO

IS

MA

NA

GE

ME

NT

’S D

ISC

USS

ION

AN

D A

NA

LY

SIS

(Con

tinue

d)

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

_

(See

inde

pend

ent a

udito

r’s r

epor

t) - M

D&

A 8

-

Gene

ral

Governmen

t6% Pu

blicSafety

41%

Highwaysa

ndStreets

22%

Health

and

Welfare

1%

Cultu

reand

recreatio

n6%

Econ

omic

Developm

ent

4%

Sanitatio

n3%

Interest

0%Water

12%

Sewer

3%Go

lfCo

urse

2%

EXPE

NSES

Chargesfor

Services

32%

Grants

4%

Prop

ertyTaxes

27%

Gaming

5%

SalesT

ax17

%

Utility

Tax

5%Other

Taxes

2%

Misc

ellane

ous

Revenu

e2%

IncomeTax

5%

Interest

Income

1%

REVE

NUES

CIT

Y O

F EL

GIN

, ILL

INO

IS

MA

NA

GE

ME

NT

’S D

ISC

USS

ION

AN

D A

NA

LY

SIS

(Con

tinue

d)

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

_

(See

inde

pend

ent a

udito

r’s r

epor

t) - M

D&

A 9

-

Nor

mal

Impa

cts

Ther

e ar

e ei

ght b

asic

impa

cts o

n re

venu

es a

nd e

xpen

ses a

s ref

lect

ed b

elow

.

Rev

enue

s:

Eco

nom

ic C

ondi

tion

– w

hich

can

ref

lect

a d

eclin

ing,

sta

ble

or g

row

ing

econ

omic

en

viro

nmen

t and

has

a s

ubst

antia

l im

pact

on

stat

e in

com

e, s

ales

and

util

ity ta

x re

venu

e

as w

ell

as p

ublic

spe

ndin

g ha

bits

for

bui

ldin

g pe

rmits

, ele

ctiv

e us

er f

ees

and

volu

mes

of

con

sum

ptio

n.

Incr

ease

/Dec

reas

e in

City

app

rove

d ra

tes –

whi

le c

erta

in ta

x ra

tes a

re se

t by

stat

ute,

the

City

Cou

ncil

has

sign

ifica

nt a

utho

rity

to im

pose

and

per

iodi

cally

incr

ease

/dec

reas

e ra

tes

(pro

perty

taxe

s, w

ater

/sew

er, i

mpa

ct fe

es, b

uild

ing

fees

, util

ity ta

x ra

tes,

etc.

).

Cha

ngin

g Pa

tter

ns in

Int

ergo

vern

men

tal a

nd G

rant

Rev

enue

(bo

th r

ecur

ring

and

N

on-r

ecur

ring

) – c

erta

in re

curr

ing

reve

nues

(sta

te sh

ared

reve

nues

, etc

.) m

ay e

xper

ienc

e

sign

ifica

nt c

hang

es p

erio

dica

lly w

hile

non

-rec

urrin

g (o

r on

e tim

e) g

rant

s ar

e le

ss

pr

edic

tabl

e an

d of

ten

dist

ortin

g in

thei

r im

pact

on

year

to y

ear c

ompa

rison

s.

Mar

ket

Impa

cts

on I

nves

tmen

t In

com

e –

mar

ket

cond

ition

s m

ay c

ause

inv

estm

ent

inco

me

to fl

uctu

ate

mor

e w

hen

inve

stm

ent o

ptio

ns a

re lo

nger

– te

rm m

atur

ities

ver

sus

an

alte

rnat

e sh

orte

r-te

rm p

ortfo

lio.

Exp

ense

s: Intr

oduc

tion

of N

ew P

rogr

ams

– w

ithin

the

func

tiona

l exp

ense

cat

egor

ies

(Mun

icip

al

Serv

ices

, La

w

Enfo

rcem

ent

Serv

ices

, Fi

re

and

Insp

ectio

nal

Serv

ices

, G

ener

al

G

over

nmen

t, et

c.)

indi

vidu

al p

rogr

ams

may

be

adde

d or

del

eted

to

mee

t ch

angi

ng

Com

mun

ity n

eeds

.

Incr

ease

in

Aut

hori

zed

Pers

onne

l –

chan

ges

in s

ervi

ce d

eman

d m

ay c

ause

the

City

C

ounc

il to

inc

reas

e/de

crea

se a

utho

rized

sta

ffin

g.

Staf

fing

cost

s (s

alar

y an

d re

late

d

bene

fits)

repr

esen

t 69.

5% o

f the

City

’s G

ener

al F

und

oper

atin

g co

st.

Sala

ry In

crea

ses (

annu

al a

djus

tmen

ts a

nd m

erit)

– th

e abi

lity

to at

tract

and

reta

in h

uman

an

d in

telle

ctua

l res

ourc

es re

quire

s the

City

to st

rive

to a

ppro

ach

a co

mpe

titiv

e sa

lary

rang

e po

sitio

n in

the

mar

ketp

lace

.

Infla

tion

– w

hile

ove

rall

infla

tion

appe

ars

to b

e re

ason

ably

mod

est,

the

City

is a

maj

or

cons

umer

of c

erta

in c

omm

oditi

es su

ch a

s che

mic

als,

fuel

s and

par

ts.

Som

e fu

nctio

ns m

ay

expe

rienc

e un

usua

l com

mod

ity sp

ecifi

c in

crea

ses.

CIT

Y O

F EL

GIN

, ILL

INO

IS

MA

NA

GE

ME

NT

’S D

ISC

USS

ION

AN

D A

NA

LY

SIS

(Con

tinue

d)

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

_

(See

inde

pend

ent a

udito

r’s r

epor

t) - M

D&

A 1

0 -

Cur

rent

Yea

r Im

pact

s

Gov

ernm

ent A

ctiv

ities

Rev

enue

s:

For t

he fi

scal

yea

r end

ed D

ecem

ber 3

1, 2

018

reve

nues

from

the

Gov

ernm

enta

l Act

iviti

es

incl

udin

g tra

nsfe

rs a

nd c

ontri

butio

ns to

tale

d $1

59,1

39,8

92, a

n in

crea

se o

f 7.7

4% o

ver t

he

prev

ious

yea

r. Pr

oper

ty ta

x re

venu

e in

crea

sed

$1,1

45,9

95 a

s a re

sult

of in

crea

sed

rece

ipts

w

ithin

the

Gen

eral

and

Deb

t Ser

vice

Fun

d. T

he G

ener

al F

und

prop

erty

tax

reve

nue

incr

ease

d sl

ight

ly d

ue to

incr

ease

d le

vies

for P

olic

e an

d Fi

refig

hter

s’ P

ensi

ons.

The

incr

ease

with

in th

e D

ebt S

ervi

ce F

und

was

due

to a

pla

nned

dra

wdo

wn

of fu

nd b

alan

ce d

urin

g 20

17 re

sulti

ng in

a

redu

ced

tax

levy

. Hot

el/m

otel

tax

incr

ease

d 94

% to

$95

9,25

4 du

e to

an

incr

ease

in th

e ho

tel/m

otel

tax

rate

. Sal

es ta

x re

ceip

ts o

f $32

,591

,567

exc

eede

d 20

17 re

sults

by

$3,3

57,6

76

due

in p

art t

o a

0.25

per

cent

incr

ease

in th

e ho

me

rule

sale

s rat

e as

of J

uly

1, 2

018.

The

City

in

trodu

ced

mun

icip

al e

lect

ricity

, nat

ural

gas

and

alc

ohol

ic b

ever

age

taxe

s in

July

of 2

012.

Th

e ut

ility

taxe

s and

alc

ohol

ic b

ever

age

tax

cont

ribut

ed $

6,56

8,37

9 an

d $1

,451

,207

re

spec

tivel

y, to

201

8 re

venu

es. A

n ad

ditio

nal u

tility

tax

for t

elec

omm

unic

atio

ns c

ontri

bute

d $2

,520

,429

. Oth

er ta

xes i

ncre

ased

due

to th

e im

plem

enta

tion,

as o

f Jul

y 1,

201

8, o

f a n

ew

loca

l mot

or fu

el ta

x in

the

amou

nt o

f fou

r cen

ts p

er g

allo

n. T

his n

ew re

venu

e so

urce

co

ntrib

uted

$98

7,23

1 to

201

8 re

venu

es. G

amin

g re

venu

es o

f $9,

571,

074

decr

ease

d $4

36,3

45

from

201

7. R

iver

boat

gam

ing

reve

nue

has b

een

decl

inin

g fo

r yea

rs d

ue to

the

Stat

e of

Illin

ois

impl

emen

ting

a sm

okin

g ba

n, th

e ap

prov

al o

f vid

eo g

amin

g in

Illin

ois a

nd th

e co

ntin

ued

succ

ess o

f the

Riv

ers C

asin

o lo

cate

d in

Des

Pla

ines

. Inc

ome

taxe

s rev

enue

, tot

alin

g $1

0,36

0,74

0, in

crea

sed

$423

,762

from

the

prev

ious

yea

r. Th

e C

ity re

ceiv

es in

com

e ta

x re

venu

e fr

om th

e St

ate

of Il

linoi

s bas

ed o

n th

e C

ity’s

pop

ulat

ion

and

colle

cted

stat

e re

venu

es.

The

stat

e’s 2

018

budg

et re

duce

d di

strib

utio

ns to

loca

l gov

ernm

ents

from

the

stat

e’s i

ncom

e ta

x sh

arin

g fu

nd k

now

n as

the

Loca

l Gov

ernm

ent D

istri

butiv

e Fu

nd (L

GD

F) b

y 10

%.

How

ever

, the

Sta

te’s

fisc

al y

ear 2

019

budg

et p

artia

lly re

stor

ed th

e re

duct

ion

in d

istri

butio

ns

to lo

cal g

over

nmen

ts a

nd re

duce

s LG

DF

paym

ents

by

5%, a

ccou

ntin

g fo

r the

incr

ease

in

inco

me

tax

reve

nue

in 2

018.

Inte

rest

inco

me

incr

ease

d gr

eatly

by

$716

,660

to $

1,71

4,21

7.

The

com

bina

tion

of th

ese

maj

or ta

x so

urce

s con

tribu

ted

78.8

% o

f the

Gov

ernm

enta

l Act

ivity

re

venu

es. P

rogr

am re

venu

es re

late

d to

cha

rges

for s

ervi

ces i

ncre

ased

by

16.3

% to

$2

6,13

0,92

8. I

ncre

ased

reve

nue

from

am

bula

nce

fees

, tel

epho

ne su

rcha

rge

taxe

s and

sa

nita

tion

char

ges c

ontri

bute

d to

the

incr

ease

. A

mbu

lanc

e fe

es in

crea

sed

due

to a

n in

crea

se

in fe

es c

harg

ed to

non

-res

iden

ts.

The

Stat

e of

Illin

ois i

ncre

ased

the

tele

phon

e su

rcha

rge

tax

from

$0.

87 to

$1.

50 re

sulti

ng in

incr

ease

d te

leph

one

surc

harg

e ta

x re

venu

e. C

apita

l gra

nts

and

cont

ribut

ions

tota

led

$2,6

69,5

03 re

pres

entin

g a

70.2

% in

crea

se o

ver t

he p

revi

ous y

ear.

Incr

ease

d de

velo

per c

ontri

butio

ns o

f inf

rast

ruct

ure

and

stre

ets a

ccep

ted

and

capi

tal

cont

ribut

ions

con

tribu

ted

to th

is in

crea

se.

Exp

ense

s:

Tota

l exp

ense

s for

Gov

ernm

enta

l Act

iviti

es to

tale

d $1

65,7

56,6

02, a

5.1

% d

ecre

ase

from

the

prio

r yea

r. E

xpen

ses i

n al

l fun

ctio

ns d

ecre

ased

, whe

n co

mpa

red

to 2

017,

exc

ludi

ng P

ublic

Sa

fety

and

San

itatio

n. G

ener

al G

over

nmen

t exp

ense

s dec

reas

ed le

ss th

an 1

%.

Hig

hway

and

CIT

Y O

F EL

GIN

, ILL

INO

IS

MA

NA

GE

ME

NT

’S D

ISC

USS

ION

AN

D A

NA

LY

SIS

(Con

tinue

d)

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

_

(See

inde

pend

ent a

udito

r’s r

epor

t) - M

D&

A 1

1 -

stre

ets e

xpen

se d

ecre

ased

$7,

635,

676

or 1

6.8%

due

to d

ecre

ased

spen

ding

on

capi

tal o

utla

y th

at d

id n

ot m

eet t

he c

apita

lizat

ion

thre

shol

d. I

n ad

ditio

n, th

e C

ity d

id n

ot is

sue

any

new

ge

nera

l obl

igat

ion

bond

s in

2018

. Hea

lth a

nd W

elfa

re e

xpen

se d

ecre

ased

10.

1% d

ue to

de

crea

sed

spen

ding

with

in th

e C

omm

unity

Dev

elop

men

t Blo

ck G

rant

. Cul

ture

and

R

ecre

atio

n ex

pens

e de

crea

sed

due

to d

ecre

ased

spen

ding

on

capi

tal o

utla

y th

at d

id n

ot m

eet

capi

taliz

atio

n th

resh

olds

. Eco

nom

ic D

evel

opm

ent e

xpen

ses d

ecre

ased

$5,

622,

669

or 6

7.4%

. D

urin

g 20

17 d

evel

opm

ent a

ssis

tanc

e pr

ovid

ed w

ithin

the

Cen

tral A

rea

Tax

Allo

catio

n Fu

nd

resu

lted

in a

larg

e in

crea

se to

the

2017

Eco

nom

ic D

evel

opm

ent e

xpen

se. I

nter

est e

xpen

se o

n ge

nera

l obl

igat

ion

bond

s dec

reas

ed fr

om 2

017.

San

itatio

n ex

pens

e in

crea

sed

due

to in

crea

sed

expe

nses

with

in c

ontra

ctua

l ser

vice

s. Pu

blic

Saf

ety

expe

nses

incr

ease

d $5

,585

,724

and

in

tota

l acc

ount

for 5

5.1%

of t

he G

over

nmen

tal A

ctiv

ities

exp

ense

for 2

018.

Pub

lic S

afet

y ex

pens

e in

crea

sed

due

to in

crea

sed

expe

nses

for l

ong-

term

liab

ilitie

s with

in th

e Po

lice

and

Fire

fight

ers’

Pen

sion

Fun

ds a

nd in

crea

sed

pers

onal

serv

ices

for t

he P

olic

e de

partm

ent.

Bus

ines

s-T

ype

Act

iviti

es

Rev

enue

s:

Bus

ines

s-Ty

pe A

ctiv

ity re

venu

e (in

clud

ing

trans

fers

) rem

aine

d fla

t, w

hen

com

pare

d to

201

7,

and

tota

led

$35,

249,

106.

Incr

ease

d ch

arge

s for

serv

ices

and

gen

eral

reve

nue

wer

e of

fset

by

decr

ease

d ca

pita

l gra

nts a

nd c

ontri

butio

ns re

venu

e. C

harg

es fo

r ser

vice

s inc

reas

ed d

ue to

in

crea

sed

reve

nue

with

in th

e W

ater

and

Sew

er F

unds

that

was

slig

htly

off

set b

y de

crea

sed

reve

nue

with

in th

e G

olf F

und.

Cha

rges

for s

ervi

ces w

ithin

the

Wat

er F

und

incr

ease

d du

e to

in

crea

sed

sale

s of w

ater

to a

nei

ghbo

ring

com

mun

ity a

nd in

crea

sed

wat

er ra

tes.

The

Sew

er

Fund

cha

rges

for s

ervi

ces i

ncre

ased

due

to in

crea

sed

sew

er im

pact

fees

col

lect

ed a

nd

incr

ease

d se

wer

rate

s. Th

e G

olf F

und

char

ges f

or se

rvic

es d

eclin

ed d

ue to

dec

reas

ed g

reen

fe

es a

nd g

olf c

art a

nd c

lub

rent

als t

hat w

ere

the

resu

lt of

poo

r wea

ther

con

ditio

ns, i

nclu

ding

an

incr

ease

d nu

mbe

r of r

ain

out e

vent

s dur

ing

2018

. Con

tribu

tions

rela

ted

to w

ater

and

sew

er

infr

astru

ctur

e w

ere

$361

,150

in 2

018

com

pare

d to

$2,

571,

525

in th

e pr

ior y

ear.

The

decl

ine

in c

ontri

butio

ns is

due

to re

duce

d de

velo

per c

ontri

butio

ns o

f wat

er a

nd se

wer

mai

n in

fras

truct

ure

from

new

ly a

ccep

ted

deve

lopm

ents

. Gen

eral

reve

nues

and

tran

sfer

s inc

reas

ed

due

to in

crea

sed

inve

stm

ent i

ncom

e an

d a

3.2%

dec

reas

e in

tran

sfer

s out

.

Exp

ense

s:

For t

he fi

scal

yea

r end

ed D

ecem

ber 3

1, 2

018,

exp

ense

s for

Bus

ines

s-Ty

pe A

ctiv

ities

tota

led

$32,

805,

724

whi

ch is

a d

ecre

ase

of $

1,19

0,19

0 or

3.5

% w

hen

com

pare

d to

the

prio

r yea

r. W

ater

exp

ense

s dec

reas

ed 3

.5%

due

to d

ecre

ased

con

tract

ual s

ervi

ces f

or e

ngin

eerin

g pr

ojec

ts fu

nded

by

the

2016

gen

eral

obl

igat

ion

bond

issu

ance

and

dec

reas

ed in

tere

st e

xpen

se

on d

ebt s

ervi

ce o

ffse

t by

incr

ease

d sp

endi

ng o

n ca

pita

l out

lay

not c

apita

lized

. Sew

er re

late

d ex

pens

es d

ecre

ased

2.7

% d

ue to

dec

reas

ed p

erso

nal s

ervi

ces,

low

er in

tere

st e

xpen

se o

n de

bt

serv

ice

and

decr

ease

d sp

endi

ng o

n ca

pita

l out

lay

not c

apita

lized

. Gol

f exp

endi

ture

s dec

reas

ed

4.6%

, fro

m 2

017,

due

to d

ecre

ased

exp

ense

s for

con

tract

ual s

ervi

ces a

nd c

apita

l out

lay

not

capi

taliz

ed.

CIT

Y O

F EL

GIN

, ILL

INO

IS

MA

NA

GE

ME

NT

’S D

ISC

USS

ION

AN

D A

NA

LY

SIS

(Con

tinue

d)

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

_

(See

inde

pend

ent a

udito

r’s r

epor

t) - M

D&

A 1

2 -

FIN

AN

CIA

L A

NA

LY

SIS

OF

TH

E C

ITY

’S F

UN

DS

Gov

ernm

enta

l Fun

ds

At D

ecem

ber 3

1, 2

018

the

Gov

ernm

enta

l Fun

ds (a

s pr

esen

ted

on th

e ba

lanc

e sh

eet o

n pa

ge 8

-9)

repo

rted

a co

mbi

ned

fund

bal

ance

of

$98,

600,

466.

Th

e un

assi

gned

fun

d ba

lanc

e am

ount

of

$68,

773,

923

indi

cate

s av

aila

bilit

y fo

r co

ntin

uing

city

ser

vice

s or

new

initi

ativ

es.

The

assi

gned

fu

nd b

alan

ce o

f $9,

823,

454

repr

esen

ts a

mou

nts

cons

train

ed b

y th

e C

ity’s

inte

nt to

use

them

for a

sp

ecifi

c pu

rpos

e. T

he n

on-s

pend

able

por

tion

of f

und

bala

nce

tota

ls $

28,9

88 a

nd is

cla

ssifi

ed a

s su

ch b

ecau

se it

repr

esen

ts p

repa

id it

ems.

The

rem

aini

ng fu

nd b

alan

ce o

f $19

,974

,101

is re

stric

ted

prim

arily

for c

apita

l out

lay,

pub

lic sa

fety

, mai

nten

ance

of r

oadw

ays a

nd e

cono

mic

dev

elop

men

t.

Maj

or G

over

nmen

tal F

unds

The

Gen

eral

Fun

d is

the

City

’s p

rimar

y op

erat

ing

fund

and

the

larg

est s

ourc

e of

day

-to-d

ay

serv

ice

deliv

ery.

In 2

018,

the

fund

bal

ance

of t

he G

ener

al F

und

incr

ease

d $1

0,55

6,65

1.R

even

ues i

ncre

ased

$8,

750,

702

due

to in

crea

sed

hote

l/mot

el ta

xes,

sale

s tax

es, u

tility

taxe

s, lic

ense

, fee

s and

per

mits

reve

nue,

cha

rges

for s

ervi

ces,

inve

stm

ent i

ncom

e an

d a

new

loca

l mot

or

fuel

tax.

Hot

el/m

otel

and

sale

s tax

reve

nue

incr

ease

d as

a re

sult

if im

prov

emen

ts in

the

econ

omy

and

due

to ra

te in

crea

ses a

dopt

ed in

201

8. U

tility

taxe

s inc

reas

ed d

ue to

incr

ease

s in

both

the

natu

ral g

as ta

x an

d th

e el

ectri

city

tax.

Lic

ense

s, fe

es a

nd p

erm

its in

crea

sed

due

to a

n in

crea

se in

th

e nu

mbe

r of p

erm

its is

sued

. C

harg

es fo

r ser

vice

s inc

reas

ed d

ue to

incr

ease

d am

bula

nce

fees

re

venu

e an

d in

crea

sed

fees

rece

ived

from

dev

elop

ers.

A d

ecre

ase

in in

terg

over

nmen

tal r

even

ue

due

to d

eclin

ing

gam

ing

reve

nue

parti

ally

off

set t

hese

incr

ease

s.

Expe

nditu

res d

ecre

ased

$5,

682,

252

whe

n co

mpa

red

to 2

017.

Cap

ital o

utla

y ex

pend

iture

s de

crea

sed

$7,5

84,0

36 d

ue to

dec

reas

ed sp

endi

ng o

n ca

pita

l out

lay

for r

esur

faci

ng a

nd

reha

bilit

atio

n of

stre

ets a

nd d

ecre

ased

spen

ding

for m

ajor

repa

irs.

Dur

ing

2017

the

City

had

a

larg

e ca

pita

l out

lay

for m

ajor

repa

irs to

the

aqua

tic a

rea

at th

e Ed

war

d Sh

ock

Cen

tre o

f Elg

in.

This

dec

reas

e w

as p

artly

off

set b

y in

crea

sed

spen

ding

with

in G

ener

al G

over

nmen

t and

Pub

lic

Safe

ty fo

r per

sona

l ser

vice

s. W

ithin

Pub

lic S

afet

y in

crea

ses w

ithin

the

Polic

e D

epar

tmen

t for

pe

rson

al se

rvic

es w

ere

parti

ally

off

set b

y de

crea

ses w

ithin

the

Fire

Dep

artm

ent d

ue to

redu

ced

over

time.

The

Deb

t Ser

vice

Fun

d pa

ys th

e pr

inci

pal a

nd in

tere

st o

n th

e C

ity’s

gen

eral

obl

igat

ion

debt

. Th

e fu

nd b

alan

ce a

t Dec

embe

r 31,

201

8 w

as $

1,47

9,42

1 w

hich

equ

ates

to a

$48

8 in

crea

se fr

om th

e pr

evio

us y

ear.

Pro

perty

tax

reve

nue

incr

ease

d $5

92,6

20. D

urin

g th

e 20

17 b

udge

t pro

cess

, the

C

ity o

pted

to u

se a

vaila

ble

fund

bal

ance

to se

rvic

e de

bt a

nd re

duce

d th

e D

ebt S

ervi

ce F

und

prop

erty

tax

levy

. Dur

ing

the

2018

bud

get p

roce

ss th

e C

ity c

hoos

e to

dis

cont

inue

usi

ng fu

nd

bala

nce

and

levy

the

full

amou

nt re

quire

d to

serv

ice

the

debt

. Ex

pend

iture

s dec

reas

ed d

ue to

de

crea

sed

prin

cipa

l and

inte

rest

pay

men

ts o

n ge

nera

l obl

igat

ion

bond

s.

CIT

Y O

F EL

GIN

, ILL

INO

IS

MA

NA

GE

ME

NT

’S D

ISC

USS

ION

AN

D A

NA

LY

SIS

(Con

tinue

d)

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

_

(See

inde

pend

ent a

udito

r’s r

epor

t) - M

D&

A 1

3 -

Non

maj

or G

over

nmen

tal F

unds

The

Non

maj

or G

over

nmen

tal F

unds

end

ing

fund

bal

ance

of $

23,8

18,0

91, i

ncre

ased

by

$4,8

61,0

71, w

hen

com

pare

d to

201

7. T

he N

onm

ajor

Spe

cial

Rev

enue

Fun

ds b

alan

ce in

crea

sed

$4,0

08,9

64 a

nd th

e N

onm

ajor

Cap

ital P

roje

cts F

unds

bal

ance

incr

ease

d $8

52,1

07.

Rev

enue

ex

ceed

ing

expe

nditu

res w

ithin

the

Cen

tral A

rea

Tax

Allo

catio

n Fu

nd, M

otor

Fue

l Tax

Fun

d an

d th

e Em

erge

ncy

Tele

phon

e Sy

stem

Fun

d co

ntrib

uted

to th

e in

crea

se w

ithin

the

Non

maj

or S

peci

al

Rev

enue

Fun

ds th

at w

as p

artia

lly o

ffse

t by

expe

nditu

res e

xcee

ding

reve

nue

and

trans

fers

in

with

in th

e R

ecre

atio

n Fu

nd.

The

incr

ease

in fu

nd b

alan

ce w

ithin

the

Non

maj

or C

apita

l Pro

ject

s Fu

nds r

esul

ted

from

the

posi

tive

net c

hang

e in

fund

bal

ance

with

in th

e C

apita

l Im

prov

emen

ts

Fund

exc

eedi

ng th

e ne

gativ

e ne

t cha

nge

in fu

nd b

alan

ces w

ithin

the

Park

Dev

elop

men

t Fun

d an

d th

e 20

16 C

orpo

rate

Bon

d Fu

nd. T

he p

ositi

ve n

et c

hang

e in

fund

bal

ance

with

in th

e C

apita

l Im

prov

emen

ts F

und

was

due

to d

elay

ed p

roje

cts r

esul

ting

in re

venu

e ex

ceed

ing

expe

nditu

res.

The

2016

Cor

pora

te B

ond

Fund

exp

ende

d pr

ior y

ear b

ond

proc

eeds

on

capi

tal o

utla

y re

sulti

ng in

th

e de

crea

se to

fund

bal

ance

. W

ithin

Par

k D

evel

opm

ent,

park

impa

ct fe

es w

ere

less

than

cap

ital

outla

y re

sulti

ng in

a d

ecre

ase

in fu

nd b

alan

ce.

Maj

or E

nter

pris

e Fu

nds

The

Wat

er F

und

prov

ides

for t

he tr

eatm

ent a

nd d

istri

butio

n of

hig

h-qu

ality

wat

er to

the

wat

er

cust

omer

s of E

lgin

and

two

surr

ound

ing

com

mun

ities

. A

ll ac

tivity

nec

essa

ry to

pro

vide

such

se

rvic

es is

acc

ount

ed fo

r in

the

Fund

incl

udin

g, b

ut n

ot li

mite

d to

ope

ratio

ns, m

aint

enan

ce, d

ebt

serv

ice,

bill

ing

and

colle

ctio

ns.

The

net p

ositi

on a

t Dec

embe

r 31,

201

8 w

as $

165,

125,

536

whi

ch

is a

n in

crea

se o

f $2,

828,

635,

exc

ludi

ng a

prio

r per

iod

adju

stm

ent f

or a

cha

nge

in a

ccou

ntin

g pr

inci

ple.

Inc

reas

ed re

venu

e fr

om th

e sa

le o

f wat

er re

sulte

d in

ope

ratin

g re

venu

e in

crea

sing

fr

om 2

017.

Ope

ratin

g ex

pend

iture

s dec

reas

ed fr

om 2

017

due

to d

ecre

ases

with

in p

erso

nal

serv

ices

and

con

tract

ual s

ervi

ces.

Ope

ratin

g re

venu

e ex

ceed

ed o

pera

ting

expe

nses

and

de

prec

iatio

n re

sulti

ng in

an

oper

atin

g in

com

e of

$4,

608,

652.

In

addi

tion,

the

Wat

er F

und

rece

ived

$22

3,65

0 in

wat

er sy

stem

con

tribu

tions

from

dev

elop

ers.

The

Sew

er F

und

prov

ides

for t

he m

aint

enan

ce o

f the

exi

stin

g se

wer

line

s and

fina

nces

the

expa

nsio

n of

the

colle

ctio

n sy

stem

. W

hile

the

City

is re

spon

sibl

e fo

r the

mai

nten

ance

and

ad

ditio

ns to

the

sew

er li

nes,

the

was

tew

ater

trea

tmen

t ser

vice

s are

pro

vide

d by

the

Fox

Riv

er

Wat

er R

ecla

mat

ion

Dis

trict

(FR

WR

D),

a se

para

te g

over

nmen

tal e

ntity

. The

net

pos

ition

at

Dec

embe

r 31,

201

8 w

as $

99,9

30,8

15 w

hich

is a

n in

crea

se o

f $54

5,06

6, e

xclu

ding

a p

rior p

erio

d ad

just

men

t for

a c

hang

e in

acc

ount

ing

prin

cipl

e. O

pera

ting

reve

nue

incr

ease

d du

e to

incr

ease

d re

venu

e fr

om se

wer

bill

ings

and

incr

ease

d se

wer

impa

ct fe

es.

Ope

ratin

g ex

pens

es d

ecre

ased

sl

ight

ly re

sulti

ng in

an

oper

atin

g in

com

e of

$75

1,15

2. In

add

ition

, the

Sew

er F

und

rece

ived

$1

37,5

00 in

sew

er sy

stem

con

tribu

tions

from

dev

elop

ers.

CIT

Y O

F EL

GIN

, ILL

INO

IS

MA

NA

GE

ME

NT

’S D

ISC

USS

ION

AN

D A

NA

LY

SIS

(Con

tinue

d)

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

_

(See

inde

pend

ent a

udito

r’s r

epor

t) - M

D&

A 1

4 -

Non

maj

or E

nter

pris

e Fu

nds

The

Gol

f Cou

rse

Fund

is u

sed

to a

ccou

nt fo

r the

reve

nue

and

expe

nses

of t

he th

ree

golf

cour

ses

owne

d an

d op

erat

ed b

y th

e C

ity.

Fina

ncin

g of

ope

ratio

ns is

pro

vide

d by

gol

f fee

s and

co

mm

odity

sale

s. T

he n

et p

ositi

on a

t Dec

embe

r 31,

201

8 w

as $

21,7

63,7

54, w

hich

is a

dec

reas

e of

$93

0,31

9, e

xclu

ding

a p

rior p

erio

d ad

just

men

t for

a c

hang

e in

acc

ount

ing

prin

cipl

e.

Ope

ratin

g re

venu

es d

ecre

ased

8.7

% fr

om th

e pr

ior y

ear d

ue to

dec

reas

ed g

reen

s fee

s and

gol

f ca

rt an

d cl

ub re

ntal

s. O

pera

ting

expe

nses

dec

reas

ed d

ue to

dec

reas

ed e

xpen

ses f

or p

ensi

ons a

nd

cont

ract

ual s

ervi

ces f

or te

mpo

rary

labo

r. T

he G

olf F

und

had

an o

pera

ting

loss

bef

ore

depr

ecia

tion

of $

145,

474

for 2

018.

Dep

reci

atio

n ex

pens

e w

as th

e pr

imar

y fa

ctor

con

tribu

ting

to

the

decr

ease

in n

et p

ositi

on.

Gen

eral

Fun

d B

udge

tary

Hig

hlig

hts

Ove

r the

cou

rse

of th

e ye

ar th

e C

ity a

men

ded

the

budg

et o

nce,

whi

ch o

ccur

red

at th

e en

d of

the

fisca

l yea

r. B

elow

is a

tabl

e w

hich

refle

cts t

he o

rigin

al a

nd re

vise

d bu

dget

and

the

actu

al 2

018

reve

nues

and

exp

endi

ture

s for

the

Gen

eral

Fun

d.

FY20

18O

rigi

nal

Am

ende

dG

ener

al F

und

Bud

get

Bud

get

Act

ual

Rev

enue

s

Taxe

s $8

0,62

1,00

0 $8

0,62

1,00

0 $8

3,63

8,00

4 Li

cens

es &

Per

mits

1,

796,

460

1,79

6,46

0 2,

348,

217

Inte

rgov

ernm

enta

l 22

,452

,400

22

,583

,580

21

,872

,308

C

harg

es fo

r Ser

vice

s 10

,236

,750

10

,404

,064

12

,543

,009

Oth

er

5,06

8,10

0 5,

153,

264

6,63

1,79

7 T

otal

$120

,174

,710

$120

,558

,368

$127

,033

,335

E

xpen

ditu

res

$130

,806

,180

$1

34,7

60,3

09

$116

,901

,654

O

ther

Fin

anci

ng S

ourc

es

Tra

nsfe

rs In

5,

509,

360

5,50

9,36

0 5,

400,

660

T

rans

fers

Out

(4

,975

,690

) (4

,975

,690

) (4

,975

,690

)

Sal

e of

Pro

perty

-

-

-

Tot

al$1

30,2

72,5

10$1

34,2

26,6

39$1

16,4

76,6

84

C

hang

e in

Fun

d B

alan

ce$

(10,

097,

800)

$

(13,

668,

271)

$

10,

556,

651

CIT

Y O

F EL

GIN

, ILL

INO

IS

MA

NA

GE

ME

NT

’S D

ISC

USS

ION

AN

D A

NA

LY

SIS

(Con

tinue

d)

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

_

(See

inde

pend

ent a

udito

r’s r

epor

t) - M

D&

A 1

5 -

Act

ual G

ener

al F

und

reve

nues

, whi

ch in

clud

e th

e se

para

tely

bud

gete

d R

iver

boat

and

Gra

nd

Vic

toria

Lea

se F

unds

, exc

eede

d th

e am

ende

d bu

dget

. Ta

xes,

licen

ses a

nd p

erm

its, c

harg

es fo

r se

rvic

es a

nd o

ther

reve

nues

cau

sed

this

pos

itive

var

ianc

e. T

he ta

x re

venu

es p

ositi

ve v

aria

nce,

to

budg

et, w

as d

ue to

gre

ater

than

ant

icip

ated

sale

s tax

that

was

par

tially

off

set b

y a

nega

tive

varia

nce

with

in p

rope

rty ta

x re

venu

es.

Prop

erty

tax

shor

tfalls

are

exp

ecte

d to

be

colle

cted

in

subs

eque

nt y

ears

. Lic

ense

s and

per

mits

exc

eede

d bu

dget

due

to in

crea

ses f

rom

bui

ldin

g pe

rmits

is

sued

. Cha

rges

for s

ervi

ces e

xcee

ded

budg

et w

ithin

am

bula

nce

fees

and

fees

for e

ngin

eerin

g se

rvic

es.

Inve

stm

ent i

ncom

e ex

ceed

ing

budg

et c

ause

d th

e po

sitiv

e va

rianc

e in

oth

er re

venu

e. A

ne

gativ

e va

rianc

e w

ithin

inte

rgov

ernm

enta

l rev

enue

s par

tly o

ffse

t the

pos

itive

var

ianc

es a

nd w

as

due

to le

ss th

an a

ntic

ipat

ed g

amin

g ta

xes a

nd g

rant

reve

nue

that

was

par

tly o

ffse

t by

grea

ter t

han

antic

ipat

ed in

com

e ta

x re

venu

e.

Act

ual G

ener

al F

und

expe

nditu

res w

ere

sign

ifica

ntly

less

than

bud

get i

n to

tal.

The

maj

ority

of

the

posi

tive

varia

nce

is d

ue to

less

than

pla

nned

cap

ital o

utla

y an

d ot

her e

xpen

ditu

res.

Act

ual

Gen

eral

Fun

d ex

pend

iture

s wer

e le

ss th

an b

udge

t in

all f

unct

ions

. C

apita

l out

lay

expe

nditu

res

wer

e lo

wer

than

pla

nned

due

to p

roje

cts b

eing

del

ayed

or c

ompl

eted

und

er b

udge

t. W

hile

the

dela

yed

proj

ects

will

be

finis

hed

in th

e ne

xt fi

scal

yea

r any

pro

ject

savi

ngs w

ill b

e re

prog

ram

med

to

futu

re p

roje

cts.

Oth

er e

xpen

ditu

res w

ere

unde

r bud

get d

ue to

del

ayed

eco

nom

ic d

evel

opm

ent

paym

ents

and

del

ayed

pro

ject

s ant

icip

ated

to b

e co

mpl

eted

in su

bseq

uent

yea

rs.

Cap

ital A

sset

s

At t

he e

nd o

f Fis

cal Y

ear 2

018,

the

City

’s G

over

nmen

tal A

ctiv

ities

had

inve

sted

$52

4,44

7,21

8 (s

ee N

otes

to F

inan

cial

Sta

tem

ent N

o. 4

) in

a va

riety

of c

apita

l ass

ets,

as re

flect

ed in

the

follo

win

g sc

hedu

le.

Tab

le 3

G

over

nmen

tal A

ctiv

ities

C

hang

e in

Cap

ital A

sset

s N

etB

alan

ceA

dditi

ons/

Bal

ance

Dec

embe

r 31

, 201

7 D

elet

ions

Dec

embe

r 31

, 201

8

Non

-Dep

reci

able

Ass

ets

L

and

& L

and

Rig

ht o

f Way

& E

asem

ents

$9

3,88

0,61

6 $9

19,2

10

$94,

799,

826

Oth

er C

apita

l Ass

ets

B

uild

ings

19

8,96

0,05

6 1,

199,

740

200,

159,

796

M

achi

ner y

& E

quip

men

t 34

,840

,340

37

7,77

3 35

,218

,113

Fur

nitu

re a

nd E

quip

men

t 90

,408

- 90

,408

Inf

rast

ruct

ure

687,

431,

951

1,08

6,33

4 68

8,51

8,28

5

Int

erna

l Ser

vice

Fun

d C

apita

l

Ass

ets

19,6

60,8

42

714,

797

20,3

75,6

39

A

ccum

ulat

ed D

epre

ciat

ion

on

oth

er C

apita

l Ass

ets

(490

,455

,512

) (2

4,25

9,33

7)

(514

,714

,849

)

Tot

als

$544

,408

,701

$(19

,961

,483

)$5

24,4

47,2

18

CIT

Y O

F EL

GIN

, ILL

INO

IS

MA

NA

GE

ME

NT

’S D

ISC

USS

ION

AN

D A

NA

LY

SIS

(Con

tinue

d)

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

_

(See

inde

pend

ent a

udito

r’s r

epor

t) - M

D&

A 1

6 -

Deb

t Out

stan

ding

As

a ho

me

rule

mun

icip

ality

, the

City

has

no

lega

l deb

t lim

it.

The

City

’s o

utst

andi

ng G

ener

al

Obl

igat

ion

(G.O

.) B

ond

debt

at D

ecem

ber 3

1, 2

018

was

$67

,405

,000

of w

hich

$47

,570

,000

was

pa

yabl

e by

Bus

ines

s-Ty

pe A

ctiv

ities

(Wat

er a

nd S

ewer

).

The

City

’s o

utst

andi

ng g

ener

al o

blig

atio

n ra

tings

are

“A

A+”

from

Sta

ndar

d &

Poo

r’s a

nd “

AA

A”

from

Fitc

h R

atin

gsTh

e crit

eria

cite

d by

Fitc

h R

atin

gs in

clud

e stro

ng b

udge

t man

agem

ent,

a stro

ng

reve

nue

and

expe

nditu

re f

ram

ewor

k, d

iver

sific

atio

n of

rev

enue

stre

ams,

flexi

bilit

y ov

er m

ain

expe

nditu

re it

ems,

a m

oder

ate

debt

bur

den,

am

ple

rese

rves

and

gap

clo

sing

abi

lity

thro

ugho

ut a

n ec

onom

ic c

ycle

. Sta

ndar

d &

Poo

r’s

cite

d ve

ry s

trong

man

agem

ent w

ith g

ood

finan

cial

pol

icie

s, ve

ry st

rong

bud

get f

lexi

bilit

y an

d liq

uidi

ty a

nd a

stro

ng d

ebt a

nd c

ontin

gent

liab

ility

pos

ition

. Se

e N

otes

to F

inan

cial

Sta

tem

ent N

o. 6

for a

dditi

onal

info

rmat

ion.

Eco

nom

ic F

acto

rs

The

City

has

a h

ighl

y di

vers

ified

, wel

l-bal

ance

d ec

onom

y an

d is

not

dom

inat

ed b

y an

y si

ngle

co

mm

erci

al o

r ind

ustri

al se

ctor

. El

gin

offe

rs a

var

iety

of h

ousi

ng ty

pes a

t cos

ts c

ompe

titiv

e w

ith

neig

hbor

ing

subu

rban

are

as.

New

sing

le fa

mily

hom

es in

Elg

in ra

nge

from

$15

0,00

0 to

mor

e th

an

$405

,000

.

The

City

cur

rent

ly a

ntic

ipat

es th

at 4

,500

new

hou

sing

uni

ts w

ill b

e ad

ded

to E

lgin

’s h

ousi

ng st

ock

once

the

maj

or d

evel

opm

ents

on

the

wes

t sid

e of

Elg

in a

re c

ompl

ete.

The

City

’s u

nem

ploy

men

t rat

e de

crea

sed

0.1%

, fro

m 5

.5%

in 2

017

to 5

.4%

in 2

018.

The

Gra

nd V

icto

ria R

iver

boat

Cas

ino

has b

een

oper

atin

g in

Elg

in si

nce

Oct

ober

199

4. T

he lo

cal

shar

e of

gam

ing

proc

eeds

are

5%

of t

he c

asin

o op

erat

ion’

s net

gam

ing

rece

ipts

and

a $

1 ad

mis

sion

ta

x. T

he 2

018

loca

l sha

re o

f gam

ing

reve

nues

dec

reas

ed to

$9.

6 m

illio

n, fr

om $

10.0

mill

ion

in th

e pr

ior

year

. Th

e lo

cal

shar

e of

the

riv

erbo

at p

roce

eds

are

budg

eted

in

conj

unct

ion

with

the

de

velo

pmen

t of

the

thre

e ye

ar f

inan

cial

pla

n. T

he f

inan

cial

pla

n in

vest

s riv

erbo

at p

roce

eds

into

pr

ojec

ts a

nd p

rogr

ams

that

alig

n w

ith t

he C

ity’s

cor

e va

lues

of

colla

bora

tion,

div

ersi

ty a

nd

incl

usio

n, i

nnov

atio

n an

d st

ewar

dshi

p, a

s de

fined

in

the

2018

-202

2 St

rate

gic

Prin

cipl

es &

Pr

iorit

ies,

adop

ted

by th

e C

ity C

ounc

il.

To h

elp

offs

et d

eclin

ing

reve

nue

with

in th

e R

iver

boat

Fu

nd, h

ome

rule

sal

es t

ax w

as i

ncre

ased

0.2

5% i

n Ju

ly 2

018.

Th

is r

even

ue s

tream

pro

duce

d $4

,778

,990

in

2018

and

was

dire

cted

to

a N

onm

ajor

Cap

ital

Proj

ect

Fund

to

finan

ce f

utur

e in

fras

truct

ure

impr

ovem

ents

.

The

2019

Ope

ratin

g B

udge

t fo

r th

e G

ener

al F

und

plan

s fo

r re

venu

es t

otal

ing

$120

.4 m

illio

n.

Bud

gete

d ex

pend

iture

s, to

talin

g $1

21.4

mill

ion,

exc

eed

reve

nues

by

$1.0

mill

ion.

Thi

s pl

anne

d dr

aw o

n fu

nd b

alan

ce m

aint

ains

a fl

at g

ener

al fu

nd ta

x le

vy a

nd p

rovi

des f

or a

pro

ject

ed y

ear e

nd

fund

bal

ance

that

exc

eeds

the

City

’s fu

nd b

alan

ce p

olic

y.

The

City

’s W

ater

and

Sew

er F

unds

con

tinue

to p

rovi

de fo

r bot

h th

e on

goin

g op

erat

iona

l sup

port

and

the

cost

of s

uppo

rting

futu

re c

apita

l im

prov

emen

t pro

ject

s. T

he w

ater

rate

s w

ere

incr

ease

d

CIT

Y O

F EL

GIN

, ILL

INO

IS

MA

NA

GE

ME

NT

’S D

ISC

USS

ION

AN

D A

NA

LY

SIS

(Con

tinue

d)

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

____

_

(See

inde

pend

ent a

udito

r’s r

epor

t) - M

D&

A 1

7 -

7% a

nd se

wer

rate

s wer

e in

crea

sed

8% fo

r 201

8. T

he in

crea

sed

wat

er a

nd se

wer

rate

s will

ens

ure

wat

er a

nd se

wer

ope

ratio

ns m

aint

ain

expe

cted

serv

ice

leve

ls a

nd in

fras

truct

ure

repa

irs c

ontin

ue in

a

timel

y m

anne

r.

CO

NT

AC

TIN

G T

HE

CIT

Y’S

FIN

AN

CIA

L M

AN

AG

EM

EN

T

This

fina

ncia

l rep

ort i

s des

igne

d to

pro

vide

our

citi

zens

, cus

tom

ers,

inve

stor

s and

cre

dito

rs w

ith a

ge

nera

l ove

rvie

w o

f the

City

’s fi

nanc

es an

d to

dem

onst

rate

the C

ity’s

acco

unta

bilit

y fo

r the

mon

ey

it re

ceiv

es. Q

uest

ions

conc

erni

ng th

is re

port

or re

ques

ts fo

r add

ition

al fi

nanc

ial i

nfor

mat

ion

shou

ld

be d

irect

ed to

Deb

ra N

awro

cki,

Chi

ef F

inan

cial

Off

icer

, City

of E

lgin

, 150

Dex

ter C

ourt,

Elg

in,

Illin

ois 6

0120

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ernm

enta

l B

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ess-

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ctiv

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al

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Cas

h an

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vest

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ts12

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37

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4,43

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8$

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es (n

et o

f allo

wan

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whe

re a

pplic

able

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Prop

erty

taxe

s51

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-

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nts

518,

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8

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rued

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rest

598,

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264,

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862,

670

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609,

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5,61

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509,

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1,35

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10,9

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Inte

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9

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of a

ccum

ulat

ed d

epre

ciat

ion)

429,

647,

392

294,

820,

656

724,

468,

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Tota

l ass

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722,

879,

093

341,

226,

986

1,06

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6,07

9

DE

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38,3

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294,

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Tot

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gov

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2,51

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(7,1

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35)

(1,3

98,1

53)

(1,7

93,7

93)

(10,

294,

081)

(9

84,4

48)

Net

cas

h fr

om o

pera

ting

activ

ities

8,65

7,23

7

3,84

4,24

0

(94,

438)

12,4

07,0

39

1,

132,

054

C

ASH

FL

OW

S FR

OM

NO

NC

API

TA

L F

INA

NC

ING

AC

TIV

ITIE

STr

ansf

ers i

n51

,251

-

-

51,2

51

2,

250,

000

Tr

ansf

ers (

out)

(1,2

85,4

00)

-

-

(1,2

85,4

00)

-

D

ue fr

om o

ther

fund

s(3

04,4

87)

(1

6,15

7)

1,

152

(3

19,4

92)

(6

,139

)

D

ue to

oth

er fu

nds

17,1

37

(1

34)

10

1

17

,104

6,13

9

Adv

ance

s to

othe

r fun

ds38

1,86

4

-

(19,

973)

361,

891

-

N

et c

ash

from

non

capi

tal

fin

anci

ng a

ctiv

ities

(1,1

39,6

35)

(

16,2

91)

(

18,7

20)

(1,1

74,6

46)

2,2

50,0

00

CA

SH F

LO

WS

FRO

M C

API

TA

L A

ND

R

EL

AT

ED

FIN

AN

CIN

G A

CT

IVIT

IES

Cap

ital a

sset

s pur

chas

ed(1

,189

,479

)

(1

,395

,268

)

-

(2,5

84,7

47)

-

B

ond

prin

cipa

l pay

men

ts(4

,150

,000

)

(2

,595

,000

)

-

(6,7

45,0

00)

-

B

ond

inte

rest

pay

men

ts(1

,315

,545

)

(5

95,2

69)

-

(1,9

10,8

14)

-

N

et c

ash

from

cap

ital a

nd

rel

ated

fina

ncin

g ac

tiviti

es(6

,655

,024

)

(4

,585

,537

)

-

(11,

240,

561)

-

CA

SH F

LO

WS

FRO

M IN

VE

STIN

G A

CT

IVIT

IES

Inte

rest

rece

ived

348,

096

199,

983

-

54

8,07

9

18

6,75

9

N

et c

ash

from

inve

stin

g ac

tiviti

es34

8,09

6

19

9,98

3

-

548,

079

186,

759

NET

INC

REA

SE (D

ECR

EASE

) IN

CA

SH A

ND

CA

SH E

QU

IVA

LEN

TS1,

210,

674

(5

57,6

05)

(1

13,1

58)

53

9,91

1

3,

568,

813

CA

SH A

ND

CA

SH E

QU

IVA

LEN

TS, J

AN

UA

RY

124

,421

,860

12,0

58,7

37

41

0,79

7

36

,891

,394

19,2

78,4

65

C

ASH

AN

D C

ASH

EQ

UIV

AL

EN

TS,

DE

CE

MB

ER

31

25,6

32,5

34$

11

,501

,132

$

297,

639

$

37,4

31,3

05$

22

,847

,278

$

Bus

ines

s-T

ype

Act

iviti

es

(Thi

s sta

tem

ent i

s con

tinue

d on

the

follo

win

g pa

ge.)

- 16

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

STA

TEM

ENT

OF

CA

SH F

LOW

S (C

ontin

ued)

PRO

PRIE

TAR

Y F

UN

DS

For t

he Y

ear E

nded

Dec

embe

r 31,

201

8

Gov

ernm

enta

lA

ctiv

ities

Non

maj

orE

nter

pris

eIn

tern

alW

ater

Sew

erFu

ndT

otal

Serv

ice

Fund

s

RE

CO

NC

ILIA

TIO

N O

F O

PER

AT

ING

INC

OM

E (

LO

SS) T

O N

ET

CA

SH F

LO

WS

FRO

M O

PER

AT

ING

AC

TIV

ITIE

SO

pera

ting

inco

me

(loss

)4,

608,

652

$

75

1,15

2$

(9

30,3

19)

$

4,

429,

485

$

(1

,447

,754

)$

A

djus

tmen

ts to

reco

ncile

ope

ratin

g in

com

e (lo

ss)

to

net c

ash

from

ope

ratin

g ac

tiviti

esD

epre

ciat

ion

4,44

6,51

3

2,94

8,43

2

784,

845

8,17

9,79

0

1,39

5,48

3

(Incr

ease

) dec

reas

e in

Rec

eiva

bles

(378

,381

)

(54,

785)

26,8

29

(4

06,3

37)

25

,323

Prep

aid

expe

nses

-

-

-

-

10,5

32

In

vent

orie

s(4

,326

)

-

(10,

409)

(14,

735)

3,79

6

Net

pen

sion

ass

et(3

05,3

18)

(7

7,63

5)

(4

5,23

8)

(4

28,1

91)

-

Def

erre

d ou

tflow

s1,

369,

697

33

7,46

0

21

1,81

6

1,

918,

973

-

Incr

ease

(dec

reas

e) in

Acc

ount

s pay

able

(226

,714

)

57,0

84

(2

9,80

8)

(1

99,4

38)

86

,247

Ret

aina

ge p

ayab

le(1

46,7

74)

54

,251

-

(9

2,52

3)

A

ccru

ed sa

larie

s21

,861

8,30

8

3,02

8

33,1

97

(1

,221

)

C

ompe

nsat

ed a

bsen

ces p

ayab

le18

,264

(5,1

59)

3,46

9

16,5

74

1,

410

O

PEB

liab

ility

26,1

46

3,

902

6,

580

36

,628

-

D

epos

its p

ayab

le(2

,814

)

-

-

(2

,814

)

-

Une

arne

d re

venu

e-

-

12

,736

12,7

36

-

Net

pen

sion

liab

ility

(2,8

62,1

27)

(710

,994

)

(440

,655

)

(4,0

13,7

76)

-

D

efer

red

inflo

ws

2,09

2,55

8

532,

224

312,

688

2,93

7,47

0

-

C

laim

s pay

able

-

-

-

-

1,05

8,23

8

NE

T C

ASH

FR

OM

OPE

RA

TIN

G A

CT

IVIT

IES

8,65

7,23

7$

3,84

4,24

0$

(94,

438)

$

12,4

07,0

39$

1,

132,

054

$

CA

SH A

ND

INV

EST

ME

NT

SC

ash

and

cash

equ

ival

ents

25,6

32,5

34$

11

,501

,132

$

297,

639

$

37,4

31,3

05$

22

,847

,278

$

TO

TA

L C

ASH

AN

D IN

VE

STM

EN

TS

25,6

32,5

34$

11

,501

,132

$

297,

639

$

37,4

31,3

05$

22

,847

,278

$

NO

NC

ASH

TR

AN

SAC

TIO

NS

Con

tribu

tions

of c

apita

l ass

ets b

y de

velo

pers

223,

650

$

137,

500

$

-$

36

1,15

0$

-

$

Con

tribu

tions

of c

apita

l ass

ets b

y ot

her f

unds

-

-

-

-

914,

075

TO

TA

L N

ON

CA

SH T

RA

NSA

CT

ION

S $

223

,650

$

137

,500

-

$

361,

150

$

$

9

14,0

75

Bus

ines

s-T

ype

Act

iviti

es

See

acco

mpa

nyin

g no

tes t

o fin

anci

al st

atem

ents

.- 1

7 -

Pens

ion

and

Oth

er E

mpl

oyee

Ben

efit

Tru

stA

genc

yFu

nds

Fund

s

ASS

ET

SC

ash

and

shor

t-ter

m in

vest

men

ts69

3,29

7$

450,

005

$

R

ecei

vabl

esPr

oper

ty ta

xes

-

56,3

10

Acc

ount

s13

,331

-

Sp

ecia

l ass

essm

ents

-

74,1

07

Acc

rued

inte

rest

43

0,21

5

12,0

27

Inve

stm

ents

U.S

. Tre

asur

y ob

ligat

ions

13,7

82,9

83

-

U.S

. age

ncy

oblig

atio

ns20

,584

,136

-

St

ate

and

loca

l obl

igat

ions

412,

000

-

C

orpo

rate

bon

ds26

,794

,241

-

C

orpo

rate

equ

ity se

curit

ies

14,1

52,4

47

-

Equi

ty m

utua

l fun

ds91

,406

,548

-

B

ond

mut

ual f

unds

5,02

8,27

6

-

B

alan

ced

mut

ual f

unds

7,01

8,39

8

-

M

oney

mar

ket m

utua

l fun

ds5,

792,

000

-

Cer

tific

ates

of d

epos

it4,

621,

149

-

Pool

ed re

al e

stat

e18

,509

,284

-

Pr

epai

ds33

,602

-

Tota

l ass

ets

209,

271,

907

592,

449

$

LIA

BIL

ITIE

SA

ccou

nts p

ayab

le83

,028

-

$

D

epos

its p

ayab

le10

2,32

9

-

Due

to b

ondh

olde

rs-

59

2,44

9

Tota

l lia

bilit

ies

185,

357

59

2,44

9$

NE

T P

OSI

TIO

N R

EST

RIC

TE

D F

OR

BE

NE

FIT

S 20

9,08

6,55

0$

CIT

Y O

F E

LG

IN, I

LL

INO

IS

STA

TEM

ENT

OF

FID

UC

IAR

Y N

ET P

OSI

TIO

N

Dec

embe

r 31,

201

8

See

acco

mpa

nyin

g no

tes t

o fin

anci

al st

atem

ents

.- 1

8 -

2018

2017

AD

DIT

ION

SC

ontri

butio

ns

Empl

oyer

16,4

24,6

02$

16

,525

,267

$

Em

ploy

ee3,

203,

309

3,

246,

926

To

tal c

ontri

butio

ns19

,627

,911

19,7

72,1

93

In

vest

men

t inc

ome

Net

app

reci

atio

n (d

epre

ciat

ion)

in fa

ir v

alue

of i

nves

tmen

ts(1

3,73

8,44

2)

25

,601

,846

Inte

rest

4,43

3,62

0

3,81

8,22

8

Tota

l inv

estm

ent i

ncom

e(9

,304

,822

)

29

,420

,074

Less

inve

stm

ent e

xpen

se(4

02,0

77)

(4

10,7

62)

Net

inve

stm

ent i

ncom

e (9

,706

,899

)

29

,009

,312

Tota

l add

ition

s

9

,921

,012

48

,781

,505

DE

DU

CT

ION

SB

enef

its a

nd re

fund

s16

,739

,576

15,1

51,9

17

A

dmin

istra

tion

203,

866

187,

079

Tota

l ded

uctio

ns16

,943

,442

15,3

38,9

96

N

ET IN

CR

EASE

(DEC

REA

SE)

(7,0

22,4

30)

33,4

42,5

09

NE

T P

OSI

TIO

N R

EST

RIC

TE

D

F

OR

BE

NE

FIT

S

Janu

ary

121

6,10

8,98

0

182,

666,

471

Dec

embe

r 31

$ 2

09,0

86,5

50

$ 2

16,1

08,9

80

For t

he Y

ear E

nded

Dec

embe

r 31,

201

8(W

ith C

ompa

rativ

e A

ctua

l)

CIT

Y O

F E

LG

IN, I

LL

INO

IS

STA

TEM

ENT

OF

CH

AN

GES

IN F

IDU

CIA

RY

NET

PO

SITI

ON

See

acco

mpa

nyin

g no

tes t

o fin

anci

al st

atem

ents

.- 1

9 -

- 20

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

N

OTE

S TO

TH

E FI

NA

NC

IAL

STA

TEM

ENTS

Dec

embe

r 31,

201

8 1.

SU

MM

AR

Y O

F SI

GN

IFIC

AN

T A

CC

OU

NT

ING

PO

LIC

IES

Th

e fin

anci

al s

tate

men

ts o

f th

e C

ity o

f El

gin,

Illi

nois

(th

e C

ity)

have

bee

n pr

epar

ed i

n co

nfor

mity

with

acc

ount

ing

prin

cipl

es g

ener

ally

acc

epte

d in

the

Uni

ted

Stat

es o

f Am

eric

a,

as a

pplie

d to

gov

ernm

ent

units

(he

rein

afte

r re

ferr

ed t

o as

gen

eral

ly a

ccep

ted

acco

untin

g pr

inci

ples

(G

AA

P)).

The

Gov

ernm

enta

l A

ccou

ntin

g St

anda

rds

Boa

rd (

GA

SB)

is t

he

acce

pted

sta

ndar

d-se

tting

bod

y fo

r es

tabl

ishi

ng g

over

nmen

tal

acco

untin

g an

d fin

anci

al

repo

rting

prin

cipl

es. T

he m

ore

sign

ifica

nt o

f th

e C

ity’s

acc

ount

ing

polic

ies

are

desc

ribed

be

low

.

a.

Rep

ortin

g En

tity

The

City

is a

mun

icip

al c

orpo

ratio

n op

erat

ing

unde

r a M

ayor

-Cou

ncil-

City

Man

ager

fo

rm o

f gov

ernm

ent.

As r

equi

red

by G

AA

P, th

ese f

inan

cial

stat

emen

ts p

rese

nt th

e City

(th

e pr

imar

y go

vern

men

t) an

d its

com

pone

nt u

nits

.

Th

e C

ity’s

fina

ncia

l sta

tem

ents

incl

ude

two

pens

ion

trust

fund

s:

Po

lice

Pens

ion

Empl

oyee

s Ret

irem

ent S

yste

m

Th

e C

ity’s

pol

ice

empl

oyee

s pa

rtici

pate

in

the

Polic

e Pe

nsio

n Em

ploy

ees

Ret

irem

ent

Syst

em (

PPER

S).

PPER

S fu

nctio

ns f

or t

he b

enef

it of

th

ese

empl

oyee

s an

d is

gov

erne

d by

a f

ive-

mem

ber

pens

ion

boar

d. T

wo

mem

bers

ap

poin

ted

by th

e C

ity’s

May

or, o

ne e

lect

ed p

ensi

on b

enef

icia

ry a

nd tw

o el

ecte

d po

lice e

mpl

oyee

s con

stitu

te th

e pen

sion

boa

rd. T

he C

ity an

d PP

ERS

parti

cipa

nts

are o

blig

ated

to fu

nd a

ll PP

ERS

cost

s bas

ed u

pon

actu

aria

l val

uatio

ns. T

he S

tate

of

Illin

ois

is a

utho

rized

to e

stab

lish

bene

fit le

vels

and

the

City

is a

utho

rized

to

appr

ove

the

actu

aria

l as

sum

ptio

ns u

sed

in t

he d

eter

min

atio

n of

con

tribu

tion

leve

ls. A

lthou

gh it

pos

sess

es m

any

of th

e ch

arac

teris

tics

of a

lega

lly s

epar

ate

gove

rnm

ent,

PPER

S is

rep

orte

d as

if

it w

as p

art

of t

he p

rimar

y go

vern

men

t be

caus

e its

sol

e pu

rpos

e is

to fi

nanc

e an

d ad

min

iste

r the

pen

sion

s of

the

City

’s

polic

e em

ploy

ees a

nd b

ecau

se o

f the

fidu

ciar

y na

ture

of s

uch

activ

ities

. PPE

RS

is re

porte

d as

a p

ensi

on tr

ust f

und.

Fire

fight

ers’

Pen

sion

Em

ploy

ees R

etire

men

t Sys

tem

The

City

’s f

irefig

hter

s pa

rtici

pate

in

the

Fire

fight

ers’

Pen

sion

Em

ploy

ees

Ret

irem

ent

Syst

em (

FPER

S).

FPER

S fu

nctio

ns f

or t

he b

enef

it of

the

se

empl

oyee

s an

d is

gov

erne

d by

a f

ive-

mem

ber

pens

ion

boar

d. T

wo

mem

bers

ap

poin

ted

by th

e C

ity’s

May

or, o

ne e

lect

ed p

ensi

on b

enef

icia

ry a

nd tw

o el

ecte

d fir

efig

hter

s’ e

mpl

oyee

s co

nstit

ute

the

pens

ion

boar

d. T

he C

ity a

nd F

PER

S

- 20

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 21

-

1.

SUM

MA

RY

OF

SIG

NIF

ICA

NT

AC

CO

UN

TIN

G P

OL

ICIE

S (C

ontin

ued)

a.

Rep

ortin

g En

tity

(Con

tinue

d)

Fi

refig

hter

s’ P

ensi

on E

mpl

oyee

s Ret

irem

ent S

yste

m (C

ontin

ued)

parti

cipa

nts

are

oblig

ated

to

fund

all

FPER

S co

sts

base

d up

on a

ctua

rial

valu

atio

ns. T

he S

tate

of I

llino

is is

aut

horiz

ed to

est

ablis

h be

nefit

leve

ls a

nd th

e C

ity is

auth

oriz

ed to

appr

ove t

he ac

tuar

ial a

ssum

ptio

ns u

sed

in th

e det

erm

inat

ion

of c

ontri

butio

n le

vels

. Alth

ough

it p

osse

sses

man

y of

the

char

acte

ristic

s of

a

lega

lly se

para

te g

over

nmen

t, FP

ERS

is re

porte

d as

if it

wer

e pa

rt of

the

prim

ary

gove

rnm

ent b

ecau

se it

s so

le p

urpo

se is

to fi

nanc

e an

d ad

min

iste

r the

pen

sion

s of

the

City

’s fi

refig

hter

s an

d be

caus

e of

the

fiduc

iary

nat

ure

of s

uch

activ

ities

. FP

ERS

is re

porte

d as

a p

ensi

on tr

ust f

und.

b.

Fund

Acc

ount

ing

The

City

use

s fun

ds to

repo

rt on

its f

inan

cial

pos

ition

, cha

nges

in it

s fin

anci

al p

ositi

on

and

cash

flow

s. Fu

nd a

ccou

ntin

g is

des

igne

d to

dem

onst

rate

lega

l com

plia

nce

and

to

aid

finan

cial

man

agem

ent b

y se

greg

atin

g tra

nsac

tions

rel

ated

to c

erta

in g

over

nmen

t fu

nctio

ns o

r act

iviti

es.

A f

und

is a

sep

arat

e ac

coun

ting

entit

y w

ith a

sel

f-ba

lanc

ing

set

of a

ccou

nts.

The

m

inim

um n

umbe

rs o

f fu

nds

are

mai

ntai

ned

cons

iste

nt w

ith l

egal

and

man

ager

ial

requ

irem

ents

. Fu

nds

are

clas

sifie

d in

to t

he f

ollo

win

g ca

tego

ries:

gov

ernm

enta

l, pr

oprie

tary

and

fidu

ciar

y.

Gov

ernm

enta

l fun

ds a

re u

sed

to a

ccou

nt f

or a

ll or

mos

t of

a go

vern

men

t’s g

ener

al

activ

ities

, inc

ludi

ng th

e col

lect

ion

and

disb

urse

men

t of r

estri

cted

or c

omm

itted

mon

ies

(spe

cial

reve

nue

fund

s), t

he fu

nds c

omm

itted

, res

trict

ed o

r ass

igne

d fo

r the

acq

uisi

tion

or c

onst

ruct

ion

of c

apita

l as

sets

(ca

pita

l pr

ojec

ts f

unds

) an

d th

e fu

nds

rest

ricte

d,

com

mitt

ed o

r ass

igne

d fo

r the

ser

vici

ng o

f lo

ng-te

rm d

ebt (

debt

ser

vice

fun

ds).

The

Gen

eral

Fun

d is

use

d to

acc

ount

for a

ll ac

tiviti

es o

f the

City

not

acc

ount

ed fo

r in

som

e ot

her f

und.

Pr

oprie

tary

fund

s are

use

d to

acco

unt f

or ac

tiviti

es si

mila

r to

thos

e fou

nd in

the p

rivat

e se

ctor

, whe

re th

e det

erm

inat

ion

of n

et in

com

e is n

eces

sary

or u

sefu

l for

soun

d fin

anci

al

adm

inis

tratio

n. G

oods

or s

ervi

ces f

rom

such

activ

ities

can

be p

rovi

ded

eith

er to

out

side

pa

rties

(en

terp

rise

fund

s) o

r to

oth

er d

epar

tmen

ts o

r ag

enci

es p

rimar

ily w

ithin

the

go

vern

men

t (in

tern

al se

rvic

e fu

nds)

.

Fi

duci

ary

fund

s ar

e us

ed t

o ac

coun

t fo

r as

sets

hel

d on

beh

alf

of o

utsi

de p

artie

s, in

clud

ing

othe

r gov

ernm

ents

, or o

n be

half

of o

ther

fund

s with

in th

e go

vern

men

t. Th

e C

ity u

tiliz

es p

ensi

on a

nd o

ther

em

ploy

ee b

enef

it tru

st fu

nds

and

agen

cy fu

nds

whi

ch

are

gene

rally

use

d to

acc

ount

for a

sset

s th

at th

e C

ity h

olds

in a

fidu

ciar

y ca

paci

ty o

r on

beh

alf o

f oth

ers a

s the

ir ag

ent.

- 21

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 22

-

1.

SUM

MA

RY

OF

SIG

NIF

ICA

NT

AC

CO

UN

TIN

G P

OL

ICIE

S (C

ontin

ued)

c.

Gov

ernm

ent-W

ide

and

Fund

Fin

anci

al S

tate

men

ts

Th

e go

vern

men

t-wid

e fin

anci

al s

tate

men

ts (i.

e., t

he s

tate

men

t of

net

posit

ion

and

the

state

men

t of a

ctiv

ities

) rep

ort i

nfor

mat

ion

on a

ll of

the

activ

ities

of t

he C

ity. T

he e

ffect

of

mat

eria

l int

erfu

nd ac

tivity

, oth

er th

an in

terfu

nd sa

les a

nd se

rvic

es, h

as b

een

elim

inat

ed

from

thes

e sta

tem

ents.

Gov

ernm

enta

l act

iviti

es, w

hich

nor

mal

ly a

re su

ppor

ted

by ta

xes

and

inte

rgov

ernm

enta

l rev

enue

s, ar

e re

porte

d se

para

tely

fro

m b

usin

ess-

type

act

iviti

es,

whi

ch re

ly to

a si

gnifi

cant

ext

ent o

n fe

es a

nd c

harg

es fo

r sup

port.

Th

e sta

tem

ent o

f ac

tiviti

es d

emon

strat

es th

e de

gree

to w

hich

the

dire

ct e

xpen

ses

of a

gi

ven

func

tion,

segm

ent o

r pro

gram

are

offs

et b

y pr

ogra

m re

venu

es. D

irect

expe

nses

are

th

ose

that

are

cle

arly

iden

tifia

ble

with

a sp

ecifi

c fu

nctio

n or

segm

ent.

Prog

ram

reve

nues

in

clud

e (1)

char

ges t

o cu

stom

ers o

r app

lican

ts w

ho p

urch

ase,

use

or d

irect

ly b

enef

it fro

m

good

s, se

rvic

es o

r priv

ilege

s pro

vide

d by

a g

iven

func

tion

or se

gmen

t and

(2) g

rant

s and

sta

ndar

d re

venu

es th

at ar

e res

trict

ed to

mee

ting

the o

pera

tiona

l or c

apita

l req

uire

men

ts of

a

parti

cula

r fu

nctio

n or

seg

men

t. Ta

xes

and

othe

r ite

ms

not p

rope

rly in

clud

ed a

mon

g pr

ogra

m re

venu

es a

re re

porte

d in

stead

as g

ener

al re

venu

es.

Sepa

rate

fina

ncia

l sta

tem

ents

are p

rovi

ded

for g

over

nmen

tal f

unds

, pro

prie

tary

fund

s and

fid

ucia

ry fu

nds,

even

thou

gh th

e la

tter a

re e

xclu

ded

from

the

gove

rnm

ent-w

ide

finan

cial

sta

tem

ents.

Maj

or in

divi

dual

gov

ernm

enta

l fun

ds a

nd m

ajor

indi

vidu

al e

nter

prise

fund

s ar

e re

porte

d as

sepa

rate

col

umns

in th

e fu

nd fi

nanc

ial s

tate

men

ts.

The

City

repo

rts th

e fo

llow

ing

maj

or g

over

nmen

tal f

unds

:

The G

ener

al F

und

is th

e City

’s p

rimar

y op

erat

ing

fund

. It a

ccou

nts f

or al

l fin

anci

al

reso

urce

s of t

he g

ener

al g

over

nmen

t, ex

cept

thos

e ac

coun

ted

for i

n an

othe

r fun

d.

Th

e D

ebt S

ervi

ce F

und

is us

ed to

acc

umul

ate

mon

ies f

or th

e pa

ymen

t of p

rinci

pal

and

inte

rest

on a

ll ge

nera

l obl

igat

ion

bond

s no

t rep

aid

by P

ropr

ieta

ry F

unds

. The

C

ity h

as e

lect

ed to

pre

sent

this

fund

as m

ajor

.

Th

e Ci

ty re

ports

the

follo

win

g m

ajor

ent

erpr

ise fu

nds:

Th

e Wat

er F

und

acco

unts

for t

he p

rovi

sion

of w

ater

serv

ice

to th

e re

side

nts o

f the

C

ity. A

ll ac

tivity

nec

essa

ry to

pro

vide

such

serv

ices

is a

ccou

nted

for i

n th

is fu

nd

incl

udin

g, b

ut n

ot li

mite

d to

, adm

inis

tratio

n, o

pera

tion,

mai

nten

ance

, fin

anci

ng

and

rela

ted

debt

serv

ice

and

billi

ng a

nd c

olle

ctio

ns.

Th

e Se

wer

Fun

d is

use

d to

acc

ount

for

the

fund

s ne

cess

ary

to p

rovi

de s

ewer

tra

nsm

issi

on se

rvic

es to

the

resi

dent

s of t

he C

ity. F

inan

cing

is p

rovi

ded

thro

ugh

a se

wer

mai

nten

ance

cha

rge

on th

e w

ater

bill

.

- 22

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 23

-

1.

SUM

MA

RY

OF

SIG

NIF

ICA

NT

AC

CO

UN

TIN

G P

OLI

CIE

S (C

ontin

ued)

c.

Gov

ernm

ent-W

ide

and

Fund

Fin

anci

al S

tate

men

ts (C

ontin

ued)

A

dditi

onal

ly, t

he C

ity re

ports

the

follo

win

g in

tern

al se

rvic

e fu

nds:

In

tern

al s

ervi

ce f

unds

acc

ount

for

the

City

’s e

quip

men

t re

plac

emen

t pr

ogra

m;

self-

insu

red

prop

erty

, cas

ualty

and

wor

kers

’ co

mpe

nsat

ion

insu

ranc

e pr

ogra

ms

(risk

man

agem

ent)

and

the

empl

oyee

hea

lth b

enef

its (m

edic

al in

sura

nce)

pro

vide

d to

oth

er d

epar

tmen

ts or

age

ncie

s of t

he C

ity o

n a

cost

reim

burs

emen

t bas

is.

The

City

repo

rts th

e fo

llow

ing

fiduc

iary

fund

s:

Th

e Ci

ty re

ports

pen

sion

trust

fund

s as

fidu

ciar

y fu

nds

to a

ccou

nt fo

r the

Pol

ice

Pens

ion

Fund

and

Fire

fight

ers’

Pen

sion

Fund

. In

addi

tion,

the C

ity re

ports

ano

ther

po

stem

ploy

men

t ben

efit

(OPE

B) fu

nd to

acc

ount

for t

he R

etire

e H

ealth

Insu

ranc

e Fu

nd. F

urth

erm

ore,

the C

ity re

ports

the f

ollo

win

g ag

ency

fund

as a

fidu

ciar

y fu

nd:

Spec

ial A

sses

smen

ts Fu

nd, w

hich

acc

ount

s fo

r col

lect

ion

of s

peci

al a

sses

smen

ts

from

ben

efite

d pr

oper

ty o

wne

rs a

nd th

e Spe

cial

Ser

vice

Are

a #19

, whi

ch a

ccou

nts

for t

he re

paym

ent o

f no

com

mitm

ent d

ebt.

d.

M

easu

rem

ent F

ocus

, Bas

is of

Acc

ount

ing

and

Fina

ncia

l Sta

tem

ent P

rese

ntat

ion

The

gove

rnm

ent-w

ide

finan

cial

sta

tem

ents

are

repo

rted

usin

g th

e ec

onom

ic r

esou

rces

m

easu

rem

ent f

ocus

and

the

accr

ual b

asis

of a

ccou

ntin

g, a

s are

the

prop

rieta

ry fu

nd a

nd

fiduc

iary

fund

(pen

sion

fund

s) fi

nanc

ial s

tate

men

ts. A

genc

y fu

nds u

se th

e ac

crua

l bas

is of

acc

ount

ing

but h

ave

no m

easu

rem

ent f

ocus

. Rev

enue

s an

d ad

ditio

ns a

re r

ecor

ded

whe

n ea

rned

and

exp

ense

s an

d de

duct

ions

are

rec

orde

d w

hen

a lia

bilit

y is

incu

rred.

Pr

oper

ty ta

xes

are

reco

gniz

ed a

s re

venu

es in

the

year

for

whi

ch th

ey a

re le

vied

(i.e

., in

tend

ed to

fina

nce)

. Gra

nts

and

simila

r ite

ms

are

reco

gniz

ed a

s re

venu

e as

soo

n as

all

elig

ibili

ty

requ

irem

ents

impo

sed

by

the

prov

ider

ha

ve

been

m

et.

Ope

ratin

g re

venu

es/e

xpen

ses i

nclu

de a

ll re

venu

es/e

xpen

ses d

irect

ly re

late

d to

pro

vidi

ng e

nter

prise

fu

nd se

rvic

es. I

ncid

enta

l rev

enue

s/exp

ense

s are

repo

rted

as n

on-o

pera

ting.

G

over

nmen

tal f

und

finan

cial

stat

emen

ts ar

e rep

orte

d us

ing

the c

urre

nt fi

nanc

ial r

esou

rces

m

easu

rem

ent

focu

s an

d th

e m

odifi

ed a

ccru

al b

asis

of a

ccou

ntin

g. R

even

ues

are

reco

gniz

ed a

s soo

n as

they

are

bot

h m

easu

rabl

e an

d av

aila

ble.

Rev

enue

s are

con

sider

ed

to b

e av

aila

ble

whe

n th

ey a

re c

olle

ctib

le w

ithin

the

cur

rent

per

iod

or s

oon

enou

gh

ther

eafte

r to

pay

lia

bilit

ies

of t

he c

urre

nt p

erio

d. T

he C

ity c

onsid

ers

reve

nues

to

be

avai

labl

e if t

hey a

re co

llect

ed w

ithin

60

days

of t

he en

d of

the c

urre

nt fi

scal

per

iod,

exce

pt

for

prop

erty

tax

es,

whi

ch a

re r

ecog

nize

d on

a c

ash

basis

, an

d sa

les

taxe

s an

d te

leco

mm

unic

atio

ns ta

x, w

hich

use

a 90

-day

per

iod.

Exp

endi

ture

s gen

eral

ly a

re re

cord

ed

whe

n a

fund

liab

ility

is in

curre

d. H

owev

er, d

ebt s

ervi

ce e

xpen

ditu

res a

re re

cord

ed o

nly

whe

n pa

ymen

t is d

ue b

y th

e en

d of

the

year

or t

he fi

rst o

f the

follo

win

g ye

ar.

- 23

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 24

-

1.

SUM

MA

RY

OF

SIG

NIF

ICA

NT

AC

CO

UN

TIN

G P

OLI

CIE

S (C

ontin

ued)

d.

Mea

sure

men

t Foc

us, B

asis

of A

ccou

ntin

g an

d Fi

nanc

ial S

tate

men

t Pre

sent

atio

n

(Co

ntin

ued)

Sa

les a

nd te

leco

mm

unic

atio

n ta

xes o

wed

to th

e sta

te at

yea

r end

, fra

nchi

se ta

xes,

licen

ses,

char

ges

for

serv

ices

, foo

d an

d be

vera

ge ta

xes

and

inte

rest

asso

ciat

ed w

ith th

e cu

rrent

fis

cal p

erio

d ar

e all

cons

ider

ed to

be s

usce

ptib

le to

accr

ual a

nd ar

e rec

ogni

zed

as re

venu

es

of th

e cu

rrent

fisc

al p

erio

d. F

ines

and

per

mit

reve

nue

are

cons

ider

ed to

be

mea

sura

ble

and

avai

labl

e on

ly w

hen

cash

is re

ceiv

ed b

y th

e C

ity.

The

City

rep

orts

unav

aila

ble/

defe

rred

reve

nue

and

unea

rned

rev

enue

on

its f

inan

cial

sta

tem

ents.

Una

vaila

ble/

defe

rred

reve

nues

aris

e w

hen

a po

tent

ial r

even

ue d

oes n

ot m

eet

both

the m

easu

rabl

e and

avai

labl

e or

earn

ed cr

iteria

for r

ecog

nitio

n in

the c

urre

nt p

erio

d.

Une

arne

d re

venu

es a

rise

whe

n re

sour

ces

are

rece

ived

by

the

City

bef

ore

it ha

s a

lega

l cl

aim

to th

em, a

s w

hen

gran

t mon

ies

are

rece

ived

prio

r to

the

incu

rrenc

e of

qua

lifyi

ng

expe

nditu

res.

In su

bseq

uent

per

iods

, whe

n bo

th re

venu

e re

cogn

ition

crit

eria

are

met

, or

whe

n th

e Ci

ty

has

a le

gal

clai

m

to

the

reso

urce

s, th

e de

ferre

d in

flow

fo

r un

avai

labl

e/de

ferre

d re

venu

e or

the

liabi

lity

for u

near

ned

reve

nue

is re

mov

ed fr

om th

e fin

anci

al st

atem

ents

and

reve

nue

is re

cogn

ized

.

In

app

lyin

g th

e su

scep

tible

to

accr

ual

conc

ept

to i

nter

gove

rnm

enta

l re

venu

es (

i.e.,

fede

ral

and

stat

e gr

ants

), th

e le

gal

and

cont

ract

ual

requ

irem

ents

of

the

num

erou

s in

divi

dual

pro

gram

s ar

e us

ed a

s gu

idan

ce. T

here

are

, how

ever

, ess

entia

lly tw

o ty

pes

of th

ese

reve

nues

. In

one,

mon

ies m

ust b

e ex

pend

ed o

n th

e sp

ecifi

c pu

rpos

e or

pro

ject

be

fore

any

am

ount

s will

be

paid

to th

e C

ity; t

here

fore

, rev

enue

s are

reco

gniz

ed b

ased

up

on

the

expe

nditu

res/

expe

nses

in

curr

ed.

In

the

othe

r, m

onie

s ar

e vi

rtual

ly

unre

stric

ted

as to

pur

pose

of e

xpen

ditu

res/

expe

nses

and

are

gen

eral

ly re

voca

ble

only

fo

r fa

ilure

to

com

ply

with

pre

scrib

ed e

ligib

ility

req

uire

men

ts.

Thes

e re

sour

ces

are

refle

cted

as

reve

nues

at

the

time

of r

ecei

pt o

r ea

rlier

if

they

mee

t th

e el

igib

ility

cr

iterio

n.

e.

C

ash

and

Inve

stm

ents

C

ash

and

Cas

h Eq

uiva

lent

s

Fo

r pur

pose

s of t

he st

atem

ent o

f cas

h flo

ws,

the

City

’s p

ropr

ieta

ry fu

nds

cons

ider

all

high

ly l

iqui

d in

vest

men

ts w

ith a

n or

igin

al m

atur

ity o

f th

ree

mon

ths

or l

ess

whe

n pu

rcha

sed

to b

e ca

sh e

quiv

alen

ts.

Inve

stm

ents

In

vest

men

ts w

ith a

mat

urity

of l

ess t

han

one

year

whe

n pu

rcha

sed

and

non-

nego

tiabl

e ce

rtific

ates

of d

epos

it ar

e st

ated

at c

ost o

r am

ortiz

ed c

ost.

Mon

ey m

arke

t mut

ual f

unds

ar

e st

ated

at

amor

tized

cos

t, w

hich

app

roxi

mat

es f

air

valu

e. I

nves

tmen

ts w

ith a

m

atur

ity g

reat

er th

an o

ne y

ear w

hen

purc

hase

d ar

e st

ated

at f

air v

alue

. Fai

r val

ue is

th

e pr

ice

that

wou

ld b

e re

ceiv

ed to

sel

l an

asse

t or

paid

to tr

ansf

er a

liab

ility

in a

n or

derly

tran

sact

ion

betw

een

mar

ket p

artic

ipan

ts a

t the

mea

sure

men

t dat

e.

- 24

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 25

-

1.

SUM

MA

RY

OF

SIG

NIF

ICA

NT

AC

CO

UN

TIN

G P

OLI

CIE

S (C

ontin

ued)

e.

Cas

h an

d In

vest

men

ts (C

ontin

ued)

In

vest

men

ts (C

ontin

ued)

The I

llino

is P

ublic

Tre

asur

ers’

Inve

stm

ent P

ool,

know

n as

The

Illin

ois F

unds

, ope

rate

s as

a q

ualif

ied

exte

rnal

inve

stm

ent p

ool i

n ac

cord

ance

with

the

crite

ria e

stab

lishe

d in

G

ASB

Sta

tem

ent N

o. 7

9, C

erta

in E

xter

nal I

nves

tmen

t Poo

ls a

nd P

ool P

artic

ipan

ts,

and

thus

, re

ports

all

inve

stm

ents

at

amor

tized

cos

t ra

ther

tha

n fa

ir va

lue.

The

in

vest

men

t in

The

Illin

ois F

unds

by

parti

cipa

nts i

s als

o re

porte

d at

am

ortiz

ed co

st. T

he

Illin

ois F

unds

doe

s not

hav

e an

y lim

itatio

ns o

r res

trict

ions

on

parti

cipa

nt w

ithdr

awal

s. Th

e Ill

inoi

s Tre

asur

er’s

Off

ice

issu

es a

sepa

rate

fina

ncia

l rep

ort f

or T

he Il

linoi

s Fun

ds

whi

ch m

ay b

e ob

tain

ed b

y co

ntac

ting

the

Adm

inis

trativ

e O

ffic

e at

Illin

ois

Bus

ines

s C

ente

r, 40

0 W

est M

onro

e St

reet

, Sui

te 4

01, S

prin

gfie

ld, I

llino

is 6

2704

.

f. Pr

oper

ty T

axes

Pr

oper

ty t

axes

are

rec

ogni

zed

as r

ecei

vabl

e in

the

yea

r th

at t

hey

atta

ch a

s an

en

forc

eabl

e lie

n an

d ar

e le

vied

. Fu

nds

utili

zing

the

mod

ified

acc

rual

bas

is o

f ac

coun

ting

treat

pro

perty

taxe

s rec

eiva

ble

as u

nava

ilabl

e re

venu

e un

til th

e m

easu

rabl

e an

d av

aila

ble

crite

ria h

ave

been

met

(the

yea

r int

ende

d to

fina

nce

and

colle

cted

bef

ore

year

end

). O

n th

e ac

crua

l bas

is, p

rope

rty ta

xes

are

reco

gniz

ed a

s re

venu

e in

the

year

in

tend

ed to

fina

nce,

rega

rdle

ss o

f whe

n co

llect

ed. P

rope

rty ta

xes r

ecei

vabl

e m

ore

than

on

e ye

ar o

ld h

ave

been

fully

off

set b

y an

allo

wan

ce a

ccou

nt.

g.

In

terf

und

Rec

eiva

ble/

Paya

bles

A

ctiv

ity b

etw

een

fund

s th

at a

re r

epre

sent

ativ

e of

len

ding

/bor

row

ing

arra

ngem

ents

outst

andi

ng at

the e

nd o

f the

fisc

al y

ear a

re re

ferre

d to

as ei

ther

“due

to/fr

om o

ther

fund

s”

(i.e.

, the

cur

rent

por

tion

of in

terfu

nd lo

ans)

or “

adva

nces

to/fr

om o

ther

fund

s” (i

.e.,

the

nonc

urre

nt p

ortio

n of

inte

rfund

loan

s). A

ll ot

her o

utsta

ndin

g ba

lanc

es b

etw

een

fund

s are

re

porte

d as

“du

e to

/from

oth

er fu

nds.”

A

dvan

ces b

etw

een

fund

s, as

repo

rted

in th

e fun

d fin

anci

al st

atem

ents,

are o

ffset

by

a fun

d ba

lanc

e no

nspe

ndab

le

acco

unt

in

appl

icab

le

gove

rnm

enta

l fu

nds

fund

fin

anci

al

state

men

ts to

indi

cate

that

they

are n

ot av

aila

ble f

or ap

prop

riatio

n an

d ar

e not

expe

ndab

le

avai

labl

e fin

anci

al re

sour

ces.

h.

In

vent

orie

s

In

vent

orie

s ar

e va

lued

at c

ost,

whi

ch a

ppro

xim

ates

mar

ket,

usin

g th

e fir

st-in

/firs

t-out

(F

IFO

) m

etho

d. T

he c

osts

of

gove

rnm

enta

l fu

nd i

nven

torie

s ar

e re

cord

ed a

s ex

pend

iture

s whe

n pu

rcha

sed

rath

er th

an w

hen

cons

umed

.

- 25

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 26

-

1.

SUM

MA

RY

OF

SIG

NIF

ICA

NT

AC

CO

UN

TIN

G P

OLI

CIE

S (C

ontin

ued)

i. Pr

epai

d Ite

ms/

Expe

nses

Pa

ymen

ts m

ade t

o ve

ndor

s for

serv

ices

that

will

ben

efit

perio

ds b

eyon

d th

e da

te o

f thi

s re

port

are

reco

rded

as

prep

aid

item

s/ex

pens

es.

Prep

aid

item

s ar

e re

cogn

ized

as

expe

nditu

res o

n th

e co

nsum

ptio

n m

etho

d in

gov

ernm

enta

l fun

ds.

j.

Cap

ital A

sset

s

C

apita

l ass

ets,

whi

ch in

clud

e pr

oper

ty, p

lant

, equ

ipm

ent a

nd in

frastr

uctu

re a

sset

s (e

.g.,

road

s, br

idge

s, sto

rm se

wer

s and

sim

ilar i

tem

s sin

ce th

e City

’s in

cept

ion)

, are

repo

rted

in

the

appl

icab

le g

over

nmen

tal o

r bus

ines

s-ty

pe a

ctiv

ities

col

umns

in th

e gov

ernm

ent-w

ide

finan

cial

sta

tem

ents.

Cap

ital

asse

ts ar

e de

fined

by

the

City

as

asse

ts w

ith a

n in

itial

, in

divi

dual

cos

t in

exce

ss o

f the

follo

win

g an

d an

esti

mat

ed u

sefu

l life

in e

xces

s of

one

ye

ar.

Ass

et C

lass

Ca

pita

lizat

ion

Thre

shol

d

B

uild

ing

impr

ovem

ents,

land

impr

ovem

ents

$ 50

,000

V

ehic

les,

mac

hine

ry, f

urni

ture

and

equ

ipm

ent

50

,000

W

orks

of a

rt, h

istor

ical

arti

fact

s

50,0

00

Infra

struc

ture

100,

000

Inta

ngib

le a

sset

s

100,

000

Such

ass

ets

are

reco

rded

at h

istor

ical

cos

t or

estim

ated

hist

oric

al c

ost i

f pu

rcha

sed

or

cons

truct

ed.

Don

ated

cap

ital

asse

ts ar

e re

cord

ed a

t ac

quisi

tion

valu

e at

the

dat

e of

do

natio

n.

The

costs

of n

orm

al m

aint

enan

ce a

nd re

pairs

, inc

ludi

ng st

reet

ove

rlays

that

do

not a

dd to

th

e va

lue

of th

e as

set o

r mat

eria

lly e

xten

d as

set l

ives

are

not

cap

italiz

ed.

Maj

or o

utla

ys f

or c

apita

l as

sets

and

impr

ovem

ents

are

capi

taliz

ed a

s pr

ojec

ts ar

e co

nstru

cted

. Pro

perty

, pla

nt, e

quip

men

t and

infra

struc

ture

ass

ets

are

depr

ecia

ted

usin

g th

e str

aigh

t-lin

e m

etho

d ov

er th

e fo

llow

ing

estim

ated

use

ful l

ives

:

Y

ears

B

uild

ing

impr

ovem

ents

15

-30

Bui

ldin

gs a

nd st

ruct

ures

30

-50

Dis

tribu

tion

syst

em

30-7

5 M

achi

nery

and

equ

ipm

ent

5-20

M

obile

equ

ipm

ent

3-20

Fu

rnitu

re a

nd fi

xtur

es

3-20

O

ffice

equ

ipm

ent

3-10

In

frast

ruct

ure

30-7

5

- 26

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 27

-

1.

SUM

MA

RY

OF

SIG

NIF

ICA

NT

AC

CO

UN

TIN

G P

OL

ICIE

S (C

ontin

ued)

k.

Com

pens

ated

Abs

ence

s

V

este

d or

acc

umul

ated

vac

atio

n le

ave

that

is d

ue to

em

ploy

ees

who

hav

e re

tired

or

term

inat

ed b

y th

e en

d of

the

year

is re

porte

d as

an

expe

nditu

re a

nd a

fund

liab

ility

of

the

gove

rnm

enta

l fu

nd t

hat

will

pay

it.

Ves

ted

or a

ccum

ulat

ed v

acat

ion

leav

e of

pr

oprie

tary

fund

s an

d go

vern

men

tal a

ctiv

ities

is re

cord

ed a

s an

exp

ense

and

liab

ility

of

thos

e fu

nds a

s the

ben

efits

acc

rue

to e

mpl

oyee

s.

Sick

pay

ben

efits

acc

umul

ated

abo

ve a

min

imum

num

ber o

f hou

rs m

ay b

e co

nver

ted

to v

acat

ion

hour

s bas

ed o

n pr

eset

con

vers

ion

ratio

s. S

uch

conv

ersi

ons a

re li

mite

d to

a

max

imum

num

ber o

f hou

rs e

ach

year

and

are

exp

ecte

d to

be

liqui

date

d w

ithin

the

next

ye

ar. T

he r

emai

ning

sic

k pa

y be

nefit

s m

ay b

e co

nver

ted

for c

ash

paym

ent b

ased

on

pres

et c

onve

rsio

n ra

tios u

pon

retir

emen

t in

good

stan

ding

.

N

o lia

bilit

y is

rec

ogni

zed

for

nonv

este

d ac

cum

ulat

ed r

ight

s to

rec

eive

sic

k pa

y be

nefit

s. A

liab

ility

is re

cogn

ized

for t

hat p

ortio

n of

acc

umul

atin

g si

ck le

ave

bene

fits

that

it

is e

stim

ated

to

be c

onve

rted

and

take

n as

vac

atio

n pr

ior

to r

etire

men

t or

co

nver

ted

to a

cas

h pa

ymen

t upo

n re

tirem

ent.

l.

Long

-Ter

m O

blig

atio

ns

In t

he g

over

nmen

t-wid

e fin

anci

al s

tate

men

ts, p

ropr

ieta

ry f

unds

in

the

fund

fin

anci

al

state

men

ts, lo

ng-te

rm d

ebt a

nd o

ther

long

-term

obl

igat

ions

are

repo

rted

as li

abili

ties

in

the

appl

icab

le g

over

nmen

tal

activ

ities

, bu

sines

s-ty

pe a

ctiv

ities

or

prop

rieta

ry f

und

finan

cial

sta

tem

ents.

Bon

d pr

emiu

ms

and

disc

ount

s, as

wel

l as

gai

ns/lo

sses

on

refu

ndin

gs, a

re d

efer

red

and

amor

tized

ove

r th

e lif

e of

the

bond

s. Bo

nds

paya

ble

are

repo

rted

net

of t

he a

pplic

able

bon

d pr

emiu

m o

r di

scou

nt.

Bond

iss

uanc

e co

sts a

re

reco

gniz

ed a

s exp

ense

s dur

ing

the

curre

nt p

erio

d.

In t

he f

und

finan

cial

sta

tem

ents,

gov

ernm

enta

l fu

nds

reco

gniz

e bo

nd p

rem

ium

s an

d di

scou

nts,

as w

ell a

s bon

d iss

uanc

e co

sts, d

urin

g th

e cu

rrent

per

iod.

The

face

am

ount

of

debt

issu

ed is

repo

rted

as o

ther

fina

ncin

g so

urce

s. Pr

emiu

ms r

ecei

ved

on d

ebt i

ssua

nces

ar

e re

porte

d as

oth

er fi

nanc

ing

sour

ces w

hile

disc

ount

s on

debt

issu

ance

s are

repo

rted

as

othe

r fin

anci

ng u

ses.

Issu

ance

cos

ts, w

heth

er o

r no

t w

ithhe

ld f

rom

the

act

ual

debt

pr

ocee

ds re

ceiv

ed, a

re re

porte

d as

exp

endi

ture

s.

m.

Fund

Bal

ance

s/N

et P

ositi

on

In

the

fun

d fin

anci

al s

tate

men

ts,

gove

rnm

enta

l fu

nds

repo

rt no

nspe

ndab

le f

und

bala

nce

for a

mou

nts

that

are

eith

er n

ot in

spe

ndab

le fo

rm o

r leg

ally

or c

ontra

ctua

lly

requ

ired

to b

e mai

ntai

ned

inta

ct. R

estri

ctio

ns o

f fun

d ba

lanc

e are

repo

rted

for a

mou

nts

cons

train

ed b

y le

gal r

estri

ctio

ns fr

om o

utsi

de p

artie

s for

use

for a

spec

ific

purp

ose,

or

exte

rnal

ly im

pose

d by

out

side

ent

ities

or

from

ena

blin

g le

gisl

atio

n ad

opte

d by

the

- 27

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 28

-

1.

SUM

MA

RY

OF

SIG

NIF

ICA

NT

AC

CO

UN

TIN

G P

OL

ICIE

S (C

ontin

ued)

m

. Fu

nd B

alan

ces/

Net

Pos

ition

(Con

tinue

d)

City

. Com

mitt

ed fu

nd b

alan

ce is

con

stra

ined

by

form

al a

ctio

ns o

f the

City

Cou

ncil,

w

hich

is

cons

ider

ed t

he C

ity’s

hig

hest

lev

el o

f de

cisi

on-m

akin

g au

thor

ity.

Form

al

actio

ns in

clud

e res

olut

ions

and

ordi

nanc

es (b

oth

equa

lly b

indi

ng) a

ppro

ved

by th

e City

C

ounc

il. A

ssig

ned

fund

bal

ance

repr

esen

ts a

mou

nts

cons

train

ed b

y th

e C

ity’s

inte

nt

to u

se th

em f

or a

spe

cific

pur

pose

. The

aut

horit

y to

ass

ign

fund

bal

ance

has

bee

n de

lega

ted

to th

e C

ity’s

Chi

ef F

inan

cial

Off

icer

thro

ugh

an a

ppro

ved

reso

lutio

n of

the

City

. Any

resi

dual

fund

bal

ance

of t

he G

ener

al F

und

and

any

defic

it fu

nd b

alan

ce o

f an

y ot

her g

over

nmen

tal f

und

is re

porte

d as

una

ssig

ned.

Th

e C

ity’s

flow

of f

unds

ass

umpt

ion

pres

crib

es th

at th

e fu

nds

with

the

high

est l

evel

of

con

stra

int a

re e

xpen

ded

first

. If

rest

ricte

d or

unr

estri

cted

fun

ds a

re a

vaila

ble

for

spen

ding

, th

e re

stric

ted

fund

s ar

e sp

ent

first

. A

dditi

onal

ly,

if di

ffer

ent

leve

ls o

f un

rest

ricte

d fu

nds a

re a

vaila

ble

for s

pend

ing

the

City

con

side

rs c

omm

itted

fund

s to

be

expe

nded

firs

t fol

low

ed b

y as

sign

ed a

nd th

en u

nass

igne

d fu

nds.

In

the

gov

ernm

ent-w

ide

finan

cial

sta

tem

ents

, re

stric

ted

net

posi

tion

is l

egal

ly

rest

ricte

d by

out

side

par

ties

for a

spe

cific

pur

pose

. Net

inve

stm

ent i

n ca

pita

l ass

ets,

re

pres

ents

the

City

’s in

vestm

ent i

n th

e bo

ok v

alue

of c

apita

l ass

ets,

less

any

out

stand

ing

debt

that

was

issu

ed to

con

struc

t or a

cqui

re th

e ca

pita

l ass

et. R

estri

cted

net

pos

ition

and

re

stric

ted

fund

bal

ance

resu

lting

from

ena

blin

g le

gisla

tion

adop

ted

by th

e Ci

ty c

onsis

ts of

$5,

096,

378

restr

icte

d by

the

orig

inal

ord

inan

ces t

o be

use

d fo

r cap

ital o

utla

y.

n.

In

terf

und

Tran

sact

ions

In

terf

und

serv

ice t

rans

actio

ns ar

e acc

ount

ed fo

r as r

even

ues,

expe

nditu

res o

r exp

ense

s.

Tran

sact

ions

tha

t co

nstit

ute

reim

burs

emen

ts t

o a

fund

for

exp

endi

ture

s/ex

pens

es

initi

ally

mad

e fr

om it

that

are

pro

perly

app

licab

le to

ano

ther

fun

d, a

re r

ecor

ded

as

expe

nditu

res/

expe

nses

in

th

e re

imbu

rsin

g fu

nd

and

as

redu

ctio

ns

of

expe

nditu

res/

expe

nses

in th

e fu

nd th

at is

reim

burs

ed.

All

othe

r in

terf

und

trans

actio

ns,

exce

pt

inte

rfun

d se

rvic

e tra

nsac

tions

an

d re

imbu

rsem

ents

, are

repo

rted

as tr

ansf

ers.

o.

Def

erre

d O

utflo

ws/

Inflo

ws o

f Res

ourc

es

In a

dditi

on t

o as

sets

, th

e st

atem

ent

of f

inan

cial

pos

ition

will

som

etim

es r

epor

t a

sepa

rate

sec

tion

for d

efer

red

outfl

ows

of re

sour

ces.

This

sep

arat

e fin

anci

al s

tate

men

t el

emen

t, de

ferr

ed o

utflo

ws

of re

sour

ces,

repr

esen

ts a

con

sum

ptio

n of

net

ass

ets

that

ap

plie

s to

a fu

ture

per

iod(

s) a

nd s

o w

ill n

ot b

e re

cogn

ized

as

an o

utflo

w o

f res

ourc

es

(exp

ense

/exp

endi

ture

) un

til th

en. I

n ad

ditio

n to

liab

ilitie

s, th

e st

atem

ent o

f fin

anci

al

posi

tion

will

som

etim

es r

epor

t a s

epar

ate

sect

ion

for

defe

rred

inflo

ws

of r

esou

rces

. Th

is se

para

te fi

nanc

ial s

tate

men

t ele

men

t, de

ferr

ed in

flow

s of r

esou

rces

, rep

rese

nts a

n ac

quis

ition

of n

et a

sset

s tha

t app

lies t

o a

futu

re p

erio

d(s)

and

so w

ill n

ot b

e re

cogn

ized

as

an

inflo

w o

f res

ourc

es (r

even

ue) u

ntil

that

tim

e.

- 28

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 29

-

1.

SUM

MA

RY

OF

SIG

NIF

ICA

NT

AC

CO

UN

TIN

G P

OL

ICIE

S (C

ontin

ued)

p.

Use

of E

stim

ates

Th

e pr

epar

atio

n of

fin

anci

al

stat

emen

ts

in

conf

orm

ity

with

G

AA

P re

quire

s m

anag

emen

t to

mak

e es

timat

es a

nd a

ssum

ptio

ns th

at a

ffec

t the

repo

rted

amou

nts

of

asse

ts,

defe

rred

out

flow

s, lia

bilit

ies,

defe

rred

inf

low

s an

d di

sclo

sure

of

cont

inge

nt

asse

ts a

nd li

abili

ties

at th

e da

te o

f the

fina

ncia

l sta

tem

ents

and

the

repo

rted

amou

nts

of r

even

ues

and

expe

nditu

res/

expe

nses

dur

ing

the

repo

rting

per

iod.

Act

ual

resu

lts

coul

d di

ffer

from

thos

e es

timat

es.

2.

DE

POSI

TS

AN

D IN

VE

STM

EN

TS

Th

e C

ity m

aint

ains

a c

ash

and

inve

stm

ent p

ool t

hat i

s av

aila

ble-

for-

use

by a

ll fu

nds

exce

pt

the

pens

ion

trust

fun

ds.

Each

fun

d’s

porti

on o

f th

is p

ool

is d

ispl

ayed

on

the

finan

cial

st

atem

ents

as “c

ash

and

inve

stm

ents

.” In

addi

tion,

inve

stm

ents

are s

epar

atel

y he

ld b

y se

vera

l of

the

City

’s f

unds

. Th

e de

posi

ts a

nd i

nves

tmen

ts o

f th

e pe

nsio

n tru

st f

unds

and

the

in

vest

men

ts o

f th

e R

etire

e H

ealth

Ins

uran

ce F

und

are

held

sep

arat

ely

from

thos

e of

oth

er

fund

s. Th

e in

vest

men

ts a

re g

over

ned

by fo

ur se

para

te in

vest

men

t pol

icie

s; o

ne p

olic

y fo

r the

C

ity a

dopt

ed b

y th

e C

ity C

ounc

il, o

ne p

olic

y ea

ch f

or t

he P

olic

e Pe

nsio

n Fu

nd a

nd t

he

Fire

fight

ers’

Pen

sion

Fun

d ap

prov

ed b

y th

eir r

espe

ctiv

e boa

rds a

nd o

ne p

olic

y fo

r the

Ret

iree

Hea

lth In

sura

nce

Fund

app

rove

d by

thei

r boa

rd.

Th

e C

ity’s

inv

estm

ent

polic

y (O

rdin

ance

No.

S37

-04)

aut

horiz

es t

he C

ity t

o m

ake

depo

sits

/inve

st in

in a

ny ty

pe o

f sec

urity

allo

wed

by

law

as

set o

ut in

the

Illin

ois

Com

pile

d St

atut

es, C

hapt

er 3

0 IL

CS

235/

2 in

clud

ing

insu

red

com

mer

cial

ban

ks, s

avin

gs a

nd l

oan

inst

itutio

ns, o

blig

atio

ns o

f the

U.S

. Tre

asur

y an

d U

.S. a

genc

ies,

insu

red

cred

it un

ion

shar

es,

mon

ey m

arke

t mut

ual f

unds

with

por

tfolio

s of s

ecur

ities

issu

ed o

r gua

rant

eed

by th

e U

nite

d St

ates

Gov

ernm

ent

or a

gree

men

ts t

o re

purc

hase

the

se s

ame

oblig

atio

ns,

repu

rcha

se

agre

emen

ts, s

hort-

term

com

mer

cial

pap

er ra

ted

with

in th

e th

ree

high

est c

lass

ifica

tions

by

at

leas

t tw

o st

anda

rd ra

ting

serv

ices

and

The

Illin

ois F

unds

.

The P

olic

e Pen

sion

Fun

d an

d th

e Fire

fight

ers’

Pen

sion

Fun

d ca

n in

vest

in th

e sam

e sec

uriti

es

as t

he C

ity,

plus

the

fol

low

ing:

cer

tain

non

-U.S

. ob

ligat

ions

(co

rpor

ate

debt

sec

uriti

es

man

aged

thro

ugh

an in

vest

men

t adv

isor

, rat

ed A

or h

ighe

r by

one

of th

e tw

o la

rges

t rat

ing

serv

ices

at

the

time

of p

urch

ase

and

liqui

date

d w

ithin

90

days

if

dow

ngra

ded

belo

w a

n A

ratin

g),

Illin

ois

mun

icip

al c

orpo

ratio

ns t

ax a

ntic

ipat

ion

war

rant

s, ve

tera

n’s

loan

s, ob

ligat

ions

of

the

Stat

e of

Illi

nois

and

its

polit

ical

div

isio

ns, I

llino

is i

nsur

ance

com

pany

ge

nera

l an

d se

para

te a

ccou

nts,

mut

ual f

unds

, equ

ity s

ecur

ities

and

rea

l est

ate

inve

stm

ent

trust

s. Th

e R

etire

e H

ealth

Insu

ranc

e Fu

nd c

an in

vest

in th

e sa

me

secu

ritie

s as t

he C

ity, p

lus

mut

ual f

unds

and

equ

ity se

curit

ies.

It is

the

polic

y of

the

City

to in

vest

its

fund

s in

a m

anne

r w

hich

will

pro

vide

the

high

est

inve

stm

ent r

etur

n w

ith th

e m

axim

um se

curit

y w

hile

mee

ting

the

daily

cas

h flo

w d

eman

ds o

f th

e C

ity a

nd c

onfo

rmin

g to

all

stat

e an

d lo

cal s

tatu

tes

gove

rnin

g th

e in

vest

men

t of

publ

ic

fund

s, us

ing

the

“pru

dent

per

son”

stan

dard

for m

anag

ing

the

over

all p

ortfo

lio. T

he p

rimar

y ob

ject

ive

of t

he p

olic

y is

saf

ety

(pre

serv

atio

n of

cap

ital

and

prot

ectio

n of

inv

estm

ent

prin

cipa

l), li

quid

ity a

nd y

ield

.

- 29

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 30

-

2.

DE

POSI

TS

AN

D IN

VE

STM

EN

TS

(Con

tinue

d)

a.

C

ity D

epos

its w

ith F

inan

cial

Inst

itutio

ns

Cus

todi

al c

redi

t ris

k fo

r dep

osits

with

fina

ncia

l ins

titut

ions

is th

e ris

k th

at in

the

even

t of

a ba

nk’s

failu

re, t

he C

ity’s

dep

osits

may

not

be r

etur

ned

to it

. The

City

’s in

vest

men

t po

licy

requ

ires p

ledg

ing

of c

olla

tera

l with

a fa

ir va

lue

of 1

05%

of a

ll ba

nk b

alan

ces i

n ex

cess

of

fede

ral

depo

sito

ry i

nsur

ance

. C

olla

tera

l is

to

be h

eld

by t

he C

ity o

r in

sa

feke

epin

g or

evi

denc

ed b

y a

safe

keep

ing

agre

emen

t.

b.

C

ity In

vest

men

ts

The

follo

win

g ta

ble

pres

ents

the

inv

estm

ents

and

mat

uriti

es o

f th

e C

ity’s

deb

t se

curit

ies a

s of D

ecem

ber 3

1, 2

018:

Inve

stm

ent M

atur

ities

(in

Yea

rs)

Inve

stm

ent T

ype

Fair

Val

ue

Less

than

1

1-5

6-10

G

reat

er th

an 1

0

U

.S. T

reas

ury

and

agen

cy

oblig

atio

ns

$ 18

,403

,263

$

15,2

04,6

00

$ 3,

198,

663

$ -

$ -

Neg

otia

ble

certi

ficat

es o

f d

epos

it

2,69

1,67

5

1,47

7,88

3

1,21

3,79

2

-

-

TO

TAL

$ 21

,094

,938

$

16,6

82,4

83

$ 4,

412,

455

$ -

$ -

The

City

cat

egor

izes

its

fai

r va

lue

mea

sure

men

ts w

ithin

the

fai

r va

lue

hier

arch

y es

tabl

ishe

d by

GA

AP.

The

hie

rarc

hy is

bas

ed o

n th

e va

luat

ion

inpu

ts u

sed

to m

easu

re

the

fair

valu

e of

the

ass

et.

Leve

l 1

inpu

ts a

re q

uote

d pr

ices

in

activ

e m

arke

ts f

or

iden

tical

ass

ets;

Lev

el 2

inpu

ts a

re s

igni

fican

t oth

er o

bser

vabl

e in

puts

; and

Lev

el 3

in

puts

are

sig

nific

ant u

nobs

erva

ble

inpu

ts. T

he C

ity h

as th

e fo

llow

ing

recu

rrin

g fa

ir va

lue

mea

sure

men

ts a

s of

Dec

embe

r 31

, 201

8: th

e U

.S. a

genc

y ob

ligat

ions

and

the

nego

tiabl

e ce

rtific

ates

of

depo

sit

are

valu

ed u

sing

quo

ted

mat

rix p

ricin

g m

odel

s (L

evel

2 in

puts

).

Inte

rest

rate

risk

is th

e ris

k th

at c

hang

es in

inte

rest

rate

s w

ill a

dver

sely

aff

ect t

he fa

ir va

lue

of a

n in

vest

men

t. In

acc

orda

nce

with

its

inve

stm

ent p

olic

y, th

e C

ity li

mits

its

expo

sure

to

inte

rest

rat

e ris

k by

stru

ctur

ing

the

portf

olio

to

prov

ide

liqui

dity

for

op

erat

ing

fund

s an

d m

axim

izin

g yi

elds

for

fun

ds n

ot n

eede

d w

ithin

a t

hree

-yea

r pe

riod.

The

inve

stm

ent p

olic

y lim

its th

e m

axim

um m

atur

ity le

ngth

of i

nves

tmen

ts in

th

e G

ener

al F

und

and

the

spec

ial r

even

ue fu

nds t

o th

ree

year

s fr

om d

ate

of p

urch

ase.

In

vest

men

ts in

oth

er fu

nds m

ay b

e pu

rcha

sed

with

mat

uriti

es to

mat

ch fu

ture

pro

ject

s or

lia

bilit

y re

quire

men

ts.

In a

dditi

on,

the

polic

y re

quire

s th

e C

ity t

o st

ruct

ure

the

inve

stm

ent p

ortfo

lio s

o th

at s

ecur

ities

mat

ure

to m

eet c

ash

requ

irem

ents

for o

ngoi

ng

oper

atio

ns, t

here

by a

void

ing

the

need

to s

ell s

ecur

ities

on

the

open

mar

ket p

rior

to

mat

urity

.

- 30

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 31

-

2.

DE

POSI

TS

AN

D IN

VE

STM

EN

TS

(Con

tinue

d)

b.

C

ity In

vest

men

ts (C

ontin

ued)

Th

e C

ity li

mits

its e

xpos

ure

to c

redi

t ris

k, th

e ris

k th

at th

e is

suer

of a

deb

t sec

urity

will

no

t pay

its p

ar v

alue

upo

n m

atur

ity, b

y pr

imar

ily in

vest

ing

in U

.S. a

genc

y ob

ligat

ions

an

d sh

ort-t

erm

mon

ey m

arke

t fun

ds r

ated

AA

to A

AA

and

lim

iting

inve

stm

ents

in

com

mer

cial

pap

er to

the h

ighe

st th

ree r

atin

g ca

tego

ries.

The

U.S

. Tre

asur

y an

d ag

ency

ob

ligat

ions

are

rate

d A

A+

by S

tand

ard

and

Poor

’s.

Cus

todi

al c

redi

t ris

k fo

r inv

estm

ents

is th

e ris

k th

at, i

n th

e ev

ent o

f the

failu

re o

f th

e co

unte

rpar

ty to

the

inve

stm

ent,

the

City

will

not

be

able

to r

ecov

er th

e va

lue

of it

s in

vest

men

ts th

at a

re in

pos

sess

ion

of a

n ou

tsid

e pa

rty. T

o lim

it its

exp

osur

e, th

e C

ity’s

in

vest

men

t pol

icy

requ

ires a

ll se

curit

y tra

nsac

tions

that

are

exp

osed

to c

usto

dial

cre

dit

risk

to b

e pr

oces

sed

on a

del

iver

y ve

rsus

pay

men

t (D

VP)

bas

is w

ith th

e un

derly

ing

inve

stm

ents

hel

d by

a th

ird p

arty

act

ing

as th

e C

ity’s

age

nt s

epar

ate

from

whe

re th

e in

vest

men

t was

pur

chas

ed o

r by

the

trust

dep

artm

ent o

f the

ban

k w

here

pur

chas

ed, i

n th

e C

ity’s

nam

e. T

he Il

linoi

s Fun

ds a

nd th

e m

oney

mar

ket m

utua

l fun

d ar

e no

t sub

ject

to

cus

todi

al c

redi

t ris

k.

Con

cent

ratio

n of

cre

dit

risk

- Th

e C

ity’s

inv

estm

ent

polic

y lim

its i

nves

tmen

ts t

he

amou

nt o

f the

por

tfolio

that

can

be

inve

sted

in a

ny o

ne in

vest

men

t veh

icle

as f

ollo

ws:

Div

ersi

ficat

ion

by In

stru

men

t Pe

rcen

t of P

ortfo

lio

U.S

. Tre

asur

y ob

ligat

ions

(bill

s, no

tes a

nd b

onds

)

100%

U

.S. G

over

nmen

t age

ncy

secu

ritie

s and

inst

rum

enta

litie

s of

g

over

nmen

t spo

nsor

ed c

orpo

ratio

ns

50

%

Ban

kers

acc

epta

nces

(BA

s)

25

%

Rep

urch

ase

agre

emen

ts (R

EPO

s) (m

onie

s in

the

publ

ic fu

nds

or o

ther

mon

ey m

arke

t fun

ds a

re n

ot to

be

incl

uded

in th

is

l

imita

tion)

35%

C

ertif

icat

es o

f dep

osit

(CD

s) c

omm

erci

al b

anks

/

sav

ings

and

loan

s

100%

C

ertif

icat

es o

f dep

osit

(CD

s) c

redi

t uni

ons

25

%

Illin

ois P

ublic

Fun

ds (o

r sim

ilar t

ypes

of i

nves

tmen

ts/

m

oney

mar

ket p

ools

)

75%

C

omm

erci

al p

aper

(CP)

33%

D

iver

sific

atio

n by

Fin

anci

al In

stitu

tion

Ban

ker’

s acc

epta

nces

No

mor

e th

an 2

5% o

f the

tota

l por

tfolio

with

any

one

inst

itutio

n.

Rep

urch

ase

agre

emen

ts

N

o m

ore

than

25%

of t

he to

tal p

ortfo

lio w

ith a

ny o

ne in

stitu

tion.

- 3

1 -

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 32

-

2.

DE

POSI

TS

AN

D IN

VE

STM

EN

TS

(Con

tinue

d)

b.

C

ity In

vest

men

ts (C

ontin

ued)

D

iver

sific

atio

n by

Fin

anci

al In

stitu

tion

(Con

tinue

d)

Cer

tific

ates

of d

epos

it co

mm

erci

al b

anks

, sav

ings

and

loan

ass

ocia

tions

, cre

dit u

nion

s

No

mor

e th

an 2

5% o

f the

tota

l por

tfolio

with

any

one

inst

itutio

n.

Loca

l G

over

nmen

t In

vest

men

t Po

ol

- Ill

inoi

s Pu

blic

Fu

nds

or

sim

ilar

type

i

nves

tmen

t/mon

ey m

arke

t poo

ls

N

o m

ore

than

$30

,000

,000

.

Th

e City

’s in

vest

men

t pol

icy

does

not

spec

ifica

lly p

rohi

bit t

he u

se o

f or t

he in

vest

men

t in

der

ivat

ives

. 3.

R

EC

EIV

AB

LE

S - T

AX

ES

Pr

oper

ty ta

xes f

or 2

018

atta

ch a

s an

enfo

rcea

ble

lien

on J

anua

ry 1

, 201

8 on

pro

perty

val

ues

asse

ssed

as o

f the

sam

e da

te. T

axes

are

levi

ed b

y D

ecem

ber o

f the

fisc

al y

ear (

by p

assa

ge o

f a

Tax

Levy

Ord

inan

ce).

Tax

bills

are

pre

pare

d by

the

Cou

nty

and

issu

ed o

n or

abo

ut M

ay

2019

, and

are

pay

able

in tw

o in

stal

lmen

ts, o

n or

abo

ut Ju

ne 1

, 201

9 an

d Se

ptem

ber 1

, 201

9.

The C

ount

y co

llect

s suc

h ta

xes a

nd re

mits

them

per

iodi

cally

. The

allo

wan

ce fo

r unc

olle

ctib

le

taxe

s has

bee

n st

ated

at 1

% o

f the

tax

levy

, to

refle

ct a

ctua

l col

lect

ion

expe

rienc

e. S

ince

the

levy

is in

tend

ed to

fund

the

2019

fisc

al y

ear,

the

levy

has

bee

n re

cord

ed a

s a re

ceiv

able

and

un

avai

labl

e/de

ferr

ed re

venu

e as

of D

ecem

ber 3

1, 2

018.

4.

C

API

TA

L A

SSE

TS

Ca

pita

l ass

et a

ctiv

ity fo

r the

yea

r end

ed D

ecem

ber 3

1, 2

018

was

as f

ollo

ws:

Beg

inni

ng

Bal

ance

s

In

crea

ses

D

ecre

ases

En

ding

B

alan

ces

G

OV

ERN

MEN

TAL

ACT

IVIT

IES

Ca

pita

l ass

ets n

ot b

eing

dep

reci

ated

Lan

d $

50,1

82,2

54

$ 12

5,00

0 $

293,

000

$ 50

,014

,254

Lan

d rig

ht o

f way

40,9

97,3

89

1,

039,

900

-

42

,037

,289

Eas

emen

ts

2,70

0,97

3

47,3

10

-

2,

748,

283

Tota

l cap

ital a

sset

s not

bei

ng d

epre

ciat

ed

93

,880

,616

1,21

2,21

0

293,

000

94

,799

,826

- 32

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 33

-

4.

CA

PIT

AL

ASS

ET

S (C

ontin

ued)

B

egin

ning

B

alan

ces

In

crea

ses

D

ecre

ases

En

ding

B

alan

ces

G

OV

ERN

MEN

TAL

ACT

IVIT

IES

(

Cont

inue

d)

Ca

pita

l ass

ets b

eing

dep

reci

ated

Bui

ldin

gs a

nd st

ruct

ures

$

198,

960,

056

$ 1,

262,

816

$ 63

,076

$

200,

159,

796

O

ffice

equ

ipm

ent

5,

147,

791

-

-

5,

147,

791

M

achi

nery

and

equ

ipm

ent

29

,692

,549

676,

583

29

8,81

0

30,0

70,3

22

F

urni

ture

and

fixt

ures

90,4

08

-

-

90

,408

Inf

rastr

uctu

re

68

7,43

1,95

1

1,08

6,33

4

-

688,

518,

285

I

nter

nal S

ervi

ce F

und

mac

hine

ry a

nd

equ

ipm

ent

19

,660

,842

914,

075

19

9,27

8

20,3

75,6

39

Tot

al c

apita

l ass

ets b

eing

dep

reci

ated

940,

983,

597

3,

939,

808

56

1,16

4

944,

362,

241

Less

acc

umul

ated

dep

reci

atio

n fo

r

Bui

ldin

gs a

nd st

ruct

ures

98,1

82,8

59

5,

553,

781

26

,019

103,

710,

621

O

ffice

equ

ipm

ent

3,

457,

322

39

9,36

1

-

3,85

6,68

3

Mac

hine

ry a

nd e

quip

men

t

15,4

38,6

52

1,

204,

682

12

5,33

2

16,5

18,0

02

F

urni

ture

and

fixt

ures

82,0

83

4,

996

-

87

,079

Inf

rastr

uctu

re

36

0,33

9,89

8

16,0

45,6

88

-

37

6,38

5,58

6

Int

erna

l Ser

vice

Fun

d m

achi

nery

and

e

quip

men

t

12,9

54,6

98

1,

395,

483

19

3,30

3

14,1

56,8

78

Tot

al a

ccum

ulat

ed d

epre

ciat

ion

49

0,45

5,51

2

24,6

03,9

91

34

4,65

4

514,

714,

849

To

tal c

apita

l ass

ets b

eing

dep

reci

ated

, net

450,

528,

085

(2

0,66

4,18

3)

21

6,51

0

429,

647,

392

G

OV

ERN

MEN

TAL

ACT

IVIT

IES

C

API

TAL

ASS

ETS,

NET

$

544,

408,

701

$ (1

9,45

1,97

3)

$ 50

9,51

0 $

524,

447,

218

B

USI

NES

S-TY

PE A

CTIV

ITIE

S

Capi

tal a

sset

s not

bei

ng d

epre

ciat

ed

L

and

$

2,64

2,28

9 $

- $

- $

2,64

2,28

9

Eas

emen

ts

28

9,35

0

-

-

289,

350

Tota

l cap

ital a

sset

s not

bei

ng d

epre

ciat

ed

2,

931,

639

-

-

2,

931,

639

Capi

tal a

sset

s bei

ng d

epre

ciat

ed

L

and

impr

ovem

ents

32,3

26,1

36

-

-

32

,326

,136

Bui

ldin

gs a

nd st

ruct

ures

79,7

59,4

86

6,

090

17

,943

79,7

47,6

33

D

istrib

utio

n sy

stem

303,

876,

196

2,

032,

016

-

30

5,90

8,21

2

Mac

hine

ry a

nd e

quip

men

t

6,77

0,83

8

369,

139

24

0

7,13

9,73

7

Mob

ile e

quip

men

t

69,8

50

55

6,05

8

-

625,

908

Tota

l cap

ital a

sset

s bei

ng d

epre

ciat

ed

42

2,80

2,50

6

2,96

3,30

3

18,1

83

42

5,74

7,62

6

- 33

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 34

-

4.

CA

PIT

AL

ASS

ET

S (C

ontin

ued)

B

egin

ning

B

alan

ces

In

crea

ses

D

ecre

ases

En

ding

B

alan

ces

B

USI

NES

S-TY

PE A

CTIV

ITIE

S (C

ontin

ued)

Less

acc

umul

ated

dep

reci

atio

n fo

r

Lan

d im

prov

emen

ts

$ 11

,984

,809

$

764,

608

$ -

$ 12

,749

,417

Bui

ldin

gs a

nd st

ruct

ures

38,4

82,7

76

2,

041,

397

76

9

40,5

23,4

04

D

istrib

utio

n sy

stem

67,5

90,8

63

5,

105,

845

-

72

,696

,708

Mac

hine

ry a

nd e

quip

men

t

4,61

9,65

9

237,

064

8

4,

856,

715

M

obile

equ

ipm

ent

69

,850

30,8

76

-

10

0,72

6

To

tal a

ccum

ulat

ed d

epre

ciat

ion

12

2,74

7,95

7

8,17

9,79

0

777

13

0,92

6,97

0

Tota

l cap

ital a

sset

s bei

ng d

epre

ciat

ed, n

et

30

0,05

4,54

9

(5,2

16,4

87)

17

,406

294,

820,

656

B

USI

NES

S-TY

PE A

CTIV

ITIE

S

CA

PITA

L A

SSET

S, N

ET

$ 30

2,98

6,18

8 $

(5,2

16,4

87)

$ 17

,406

$

297,

752,

295

D

epre

ciat

ion

expe

nse

was

cha

rged

to

func

tions

/pro

gram

s of

the

prim

ary

gove

rnm

ent

as

follo

ws:

G

OV

ERN

MEN

TAL

ACT

IVIT

IES

Gen

eral

gov

ernm

ent

$ 1,

182,

350

Pu

blic

safe

ty

2,

489,

431

H

ighw

ays a

nd st

reet

s, in

clud

ing

depr

ecia

tion

o

f gen

eral

infra

struc

ture

ass

ets

16

,908

,608

Cultu

re a

nd re

crea

tion

2,

576,

374

H

ealth

and

wel

fare

51,7

45

In

tern

al S

ervi

ce F

und

1,

395,

483

TOTA

L D

EPRE

CIA

TIO

N E

XPE

NSE

- G

OV

ERN

MEN

TAL

ACT

IVIT

IES

$ 24

,603

,991

5.

R

ISK

MA

NA

GE

ME

NT

The

City

is

expo

sed

to v

ario

us r

isks

of

loss

rel

ated

to

torts

; th

eft

of,

dam

age

to a

nd

dest

ruct

ion

of a

sset

s; e

rror

s an

d om

issi

ons;

inju

ries

to e

mpl

oyee

s; il

lnes

ses

of e

mpl

oyee

s;

and

natu

ral d

isas

ters

. The

City

has

pur

chas

ed in

sura

nce

from

priv

ate

insu

ranc

e co

mpa

nies

fo

r illn

esse

s of e

mpl

oyee

s, em

ploy

ee b

onds

, boi

ler a

nd m

achi

nery

, cyb

er li

abili

ty, p

ollu

tion

and

prop

erty

ris

ks.

The

polic

ies

call

for

vario

us l

evel

s of

ded

uctib

les

or s

elf-

insu

red

rete

ntio

ns.

Th

e C

ity is

sel

f-in

sure

d fo

r all

othe

r ris

ks a

nd h

as e

stab

lishe

d a

risk

finan

cing

fun

d (R

isk

Man

agem

ent F

und)

for a

ll ris

ks, e

xcep

t em

ploy

ee h

ealth

whi

ch is

acco

unte

d fo

r in

a sep

arat

e fu

nd (

Med

ical

Ins

uran

ce F

und)

. The

se a

re a

ccou

nted

for

as

Inte

rnal

Ser

vice

Fun

ds w

here

as

sets

are

set

asi

de fo

r cla

im s

ettle

men

ts. U

nder

this

pro

gram

, the

fun

ds p

rovi

de c

over

age

up to

a m

axim

um o

f $25

0,00

0 fo

r eac

h ge

nera

l lia

bilit

y cl

aim

, $65

0,00

0 fo

r eac

h w

orke

rs’

- 34

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 35

-

5.

RIS

K M

AN

AG

EM

EN

T (C

ontin

ued)

com

pens

atio

n cl

aim

and

$25

,000

for

eac

h pr

oper

ty d

amag

e cl

aim

. Th

e C

ity p

urch

ases

co

mm

erci

al in

sura

nce

for c

laim

s in

exc

ess

of th

e co

vera

ges

prov

ided

by

the

fund

s up

to a

m

axim

um o

f $1

5,00

0,00

0. S

ettle

d cl

aim

s ha

ve n

ot e

xcee

ded

the

fund

s co

vera

ge a

nd th

e co

mm

erci

al c

over

age

has n

ot b

een

exce

eded

in a

ny o

f the

pas

t thr

ee fi

scal

yea

rs.

A

ll fu

nds

of t

he C

ity p

artic

ipat

e an

d m

ake

paym

ents

to

the

fund

s ba

sed

upon

act

uaria

l es

timat

es o

f the

am

ount

s ar

e ne

eded

to p

ay p

rior a

nd c

urre

nt y

ear c

laim

s. L

iabi

litie

s of

the

fund

s are

repo

rted

whe

n it

is p

roba

ble

that

a lo

ss h

as o

ccur

red

and

the

amou

nt o

f the

loss

can

be

rea

sona

bly

estim

ated

. Lia

bilit

ies

incl

ude

an a

mou

nt f

or c

laim

s th

at h

ave

been

incu

rred

bu

t not

repo

rted

(IB

NR

). C

laim

liab

ilitie

s are

cal

cula

ted

cons

ider

ing

the

effe

cts o

f inf

latio

n,

rece

nt c

laim

set

tlem

ent

trend

s in

clud

ing

freq

uenc

y an

d am

ount

of

payo

uts,

and

othe

r ec

onom

ic a

nd s

ocie

tal f

acto

rs. C

hang

es in

the

bala

nces

of c

laim

s lia

bilit

ies

durin

g th

e pa

st

two

fisca

l yea

rs a

re a

s fol

low

s:

2018

20

17

C

LAIM

S PA

YA

BLE

, JA

NU

AR

Y 1

$

4,83

7,18

6 $

4,80

9,67

3

Add

cla

ims i

ncur

red

5,

110,

518

3,

720,

218

Le

ss c

laim

s pai

d

4,05

2,28

0

3,69

2,70

5

CLA

IMS

PAY

AB

LE, D

ECEM

BER

31

$ 5,

895,

424

$ 4,

837,

186

6.

LO

NG

-TE

RM

DE

BT

a.

Gen

eral

Obl

igat

ion

Bon

ds a

nd N

otes

Th

e City

issu

es g

ener

al o

blig

atio

n bo

nds a

nd n

otes

to p

rovi

de fu

nds f

or th

e acq

uisi

tion

and

cons

truct

ion

of m

ajor

cap

ital f

acili

ties.

G

ener

al o

blig

atio

n bo

nds a

nd n

otes

are

dire

ct o

blig

atio

ns a

nd p

ledg

e th

e fu

ll fa

ith a

nd

cred

it of

the

City

. Gen

eral

obl

igat

ion

bond

s an

d no

tes

curr

ently

out

stan

ding

are

as

follo

ws:

Is

sue

Fund

Deb

t R

etire

d by

B

alan

ces

Janu

ary

1

Issu

ance

s R

etire

men

ts/

Ref

undi

ngs

Bal

ance

s D

ecem

ber 3

1 C

urre

nt

Porti

on

$1

4,82

5,00

0 20

08A

Ser

ies

Gen

eral

Obl

igat

ion

Bond

s da

ted

May

15,

200

8, d

ue

in a

nnua

l ins

tallm

ents

of

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,000

to $

2,65

0,00

0 th

roug

h 20

27 w

ith in

tere

st

rang

ing

from

3.5

0% to

5.

00%

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W

ater

$

940,

000

$

-

$

460,

000

$

480,

000

$

480,

000

- 35

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 36

-

6.

LO

NG

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RM

DE

BT

(Con

tinue

d)

a.

G

ener

al O

blig

atio

n B

onds

and

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es (C

ontin

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Is

sue

Fund

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t R

etire

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alan

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Janu

ary

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Issu

ance

s R

etire

men

ts/

Ref

undi

ngs

Bal

ance

s D

ecem

ber 3

1 C

urre

nt

Porti

on

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,105

,000

201

0A S

erie

s G

ener

al O

blig

atio

n Bo

nds

date

d A

pril

14, 2

010,

due

in

ann

ual i

nsta

llmen

ts o

f $1

0,00

0 to

$1,

335,

000

thro

ugh

2026

with

inte

rest

ra

ngin

g fro

m 2

.00%

to

4.10

%.

Se

wer

$ 69

5,00

0

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,000

$ 63

0,00

0

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,000

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55,0

00 2

010B

Ser

ies

Gen

eral

Obl

igat

ion

Ref

undi

ng B

onds

dat

ed

Apr

il 14

, 201

0, d

ue in

an

nual

inst

allm

ents

of

$295

,000

to $

750,

000

thro

ugh

2018

with

inte

rest

ra

ngin

g fro

m 2

% to

4%

.

W

ater

Sew

er

22

5,00

0

525,

000

-

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22

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0

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000

-

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-

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201

0C S

erie

s G

ener

al O

blig

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ding

Bon

ds d

ated

O

ctob

er 1

3, 2

010,

due

in

annu

al in

stal

lmen

ts o

f $1

30,0

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$96

0,00

0 w

ith in

tere

st ra

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g fro

m

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D

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Serv

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W

ater

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12

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011

Serie

s G

ener

al O

blig

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nds

date

d Ju

ne 1

5, 2

011,

due

in

ann

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nsta

llmen

ts o

f $1

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0 w

ith in

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st ra

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m

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W

ater

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er

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40

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0

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12 S

erie

s G

ener

al O

blig

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efun

ding

Bon

ds d

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M

arch

15,

201

2, d

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an

nual

inst

allm

ents

of

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to $

2,11

5,00

0 w

ith in

tere

st ra

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D

ebt

Serv

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ater

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0,00

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000

31

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50

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50

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000

32

0,00

0

$8,6

00,0

00 2

012A

Ser

ies

Gen

eral

Obl

igat

ion

Bond

s D

ated

June

4, 2

012,

due

in

annu

al in

stal

lmen

ts o

f $4

90,0

00 to

$74

5,00

0 w

ith in

tere

st ra

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m

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D

ebt

Serv

ice

W

ater

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080,

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3,

785,

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-

39

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525,

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40

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- 36

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 37

-

6.

LO

NG

-TE

RM

DE

BT

(Con

tinue

d)

a.

G

ener

al O

blig

atio

n B

onds

and

Not

es (C

ontin

ued)

Is

sue

Fund

Deb

t R

etire

d by

B

alan

ces

Janu

ary

1

Issu

ance

s R

etire

men

ts/

Ref

undi

ngs

Bal

ance

s D

ecem

ber 3

1 C

urre

nt

Porti

on

$4

,785

,000

201

2B S

erie

s G

ener

al O

blig

atio

n R

efun

ding

Bon

ds d

ated

Ju

ne 2

7, 2

012,

due

in

annu

al in

stal

lmen

ts o

f $2

40,0

00 to

$68

0,00

0 w

ith in

tere

st ra

ngin

g fro

m

2% to

4%

.

Se

wer

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135,

000

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0

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000

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5,00

0

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000

2013

A S

erie

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ener

al O

blig

atio

n R

efun

ding

Bon

ds d

ated

A

pril

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013,

due

in

annu

al in

stal

lmen

ts o

f $2

95,0

00 to

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430,

000

with

inte

rest

rang

ing

from

1%

to 5

%.

W

ater

Sew

er

2,

695,

000

4,

965,

000

-

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25

0,00

0

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2,

445,

000

4,

585,

000

31

0,00

0

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000

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2,45

0,00

0 20

13B

Ser

ies

Gen

eral

Obl

igat

ion

Bond

s da

ted

Apr

il 1,

201

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ue in

an

nual

inst

allm

ents

of

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000

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inte

rest

rang

ing

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to 4

%.

D

ebt

Serv

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W

ater

Sew

er

4,

640,

000

85

5,00

0

305,

000

-

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1,

160,

000

27

0,00

0

100,

000

3,

480,

000

58

5,00

0

205,

000

1,

175,

000

28

5,00

0

100,

000

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,000

201

3C S

erie

s G

ener

al O

blig

atio

n Bo

nds

date

d A

pril

1, 2

013,

due

in

annu

al in

stal

lmen

ts o

f $4

20,0

00 to

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590,

000

with

inte

rest

rang

ing

from

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10%

to 3

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.

D

ebt

Serv

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W

ater

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000

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0

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erie

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ener

al O

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atio

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ds d

ated

A

pril

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015,

due

in

annu

al in

stal

lmen

ts o

f $1

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inte

rest

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W

ater

Sew

er

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1,

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23

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24

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pril

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015,

due

in

annu

al in

stal

lmen

ts o

f $5

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0 to

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5,00

0 w

ith

inte

rest

rang

ing

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70%

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Wat

er

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24

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16

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16

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0

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- 37

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 38

-

6.

LO

NG

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RM

DE

BT

(Con

tinue

d)

a.

G

ener

al O

blig

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n B

onds

and

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es (C

ontin

ued)

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sue

Fund

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t R

etire

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B

alan

ces

Janu

ary

1

Issu

ance

s R

etire

men

ts/

Ref

undi

ngs

Bal

ance

s D

ecem

ber 3

1 C

urre

nt

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on

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4,99

5,00

0 20

16 S

erie

s G

ener

al O

blig

atio

n Bo

nds

date

d Fe

brua

ry 1

0, 2

016,

du

e in

ann

ual i

nsta

llmen

ts

of $

1,33

5,00

0 to

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,995

,000

with

inte

rest

at

3%.

D

ebt

Serv

ice

W

ater

$ 13

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8,80

5,00

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000

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TO

TAL

GEN

ERA

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GA

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ON

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b.

Deb

t Ser

vice

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uire

men

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Mat

urity

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nnua

l deb

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requ

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atur

ity a

re a

s fol

low

s:

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scal

Yea

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Gen

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Bond

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over

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tal A

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Ent

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Fund

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ecem

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cipa

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pal

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tal

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26

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3,18

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5,00

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2,

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2,85

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00

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5,00

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00

82

2,40

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30

1,

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000

35

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5,70

0

805,

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24

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150

TO

TAL

$ 19

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,000

$

3,19

7,29

5 $

23,0

32,2

95

$ 47

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,000

$

8,04

6,97

2 $

55,6

16,9

72

- 38

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 39

-

6.

LO

NG

-TE

RM

DE

BT

(Con

tinue

d)

c.

C

hang

es in

Lon

g-Te

rm L

iabi

litie

s

D

urin

g th

e fis

cal y

ear t

he fo

llow

ing

chan

ges o

ccur

red

in lo

ng-te

rm li

abili

ties r

epor

ted

in th

e go

vern

men

tal a

ctiv

ities

:

Bal

ance

s Ja

nuar

y 1,

R

esta

ted

Is

suan

ces

R

etire

men

ts

Bal

ance

s D

ecem

ber 3

1 C

urre

nt

Porti

on

Com

pens

ated

abs

ence

s*

$ 3,

970,

477

$ 3,

197,

165

$ 2,

696,

613

$ 4,

471,

029

$ 2,

799,

829

Gen

eral

obl

igat

ion

bond

s

22,8

80,0

00

-

3,

045,

000

19

,835

,000

3,12

5,00

0 N

et O

PEB

Lia

bilit

y*

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255,

563

19

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- N

et p

ensi

on li

abili

ty -

IMR

F*

15

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15,2

34,4

00

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pen

sion

liab

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e Pe

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n*

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6,69

4

16,2

32,5

85

-

12

3,59

9,27

9

- N

et p

ensi

on li

abili

ty -

Fire

fight

ers’

Pen

sion*

75,6

88,5

48

21

,173

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96,8

61,9

49

-

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mor

tized

bon

d pr

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m

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145

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24

6,90

1

1,13

4,24

4

-

TO

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GO

VER

NM

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L

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7 $

40,6

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51

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$

265,

350,

161

$ 5,

924,

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* Pr

imar

ily re

tired

by

the

Gen

eral

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d.

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ing

the

fisca

l yea

r, th

e fo

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chan

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ties r

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in th

e bu

sine

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pe a

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:

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ance

s Ja

nuar

y 1,

R

esta

ted

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s D

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nt

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on

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pens

ated

abs

ence

s $

351,

266

$ 36

7,84

0 $

351,

266

$ 36

7,84

0 $

264,

673

Gen

eral

obl

igat

ion

bond

s

54,3

15,0

00

-

6,

745,

000

47

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5,00

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bilit

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4

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BU

SIN

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TYPE

AC

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S $

63,4

75,0

05

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4,46

7 $

11,5

83,7

96

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6,28

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3

- 39

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

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STA

TEM

ENTS

(Con

tinue

d)

- 40

-

6.

LO

NG

-TE

RM

DE

BT

(Con

tinue

d)

d.

Le

gal D

ebt M

argi

n

Th

e C

ity is

a h

ome

rule

mun

icip

ality

.

A

rticl

e V

II, S

ectio

n 6(

k) o

f the

197

0 Ill

inoi

s Con

stitu

tion

gove

rns c

ompu

tatio

n of

the

lega

l deb

t mar

gin.

“The

Gen

eral

Ass

embl

y m

ay li

mit

by la

w th

e am

ount

and

requ

ire r

efer

endu

m

appr

oval

of

debt

to b

e in

curr

ed b

y ho

me

rule

mun

icip

aliti

es, p

ayab

le f

rom

ad

valo

rem

pro

perty

tax

rece

ipts

, onl

y in

exc

ess o

f the

follo

win

g pe

rcen

tage

s of t

he

asse

ssed

val

ue o

f its

taxa

ble

prop

erty

... (2

) if i

ts p

opul

atio

n is

mor

e th

an 2

5,00

0 an

d le

ss t

han

500,

000

an a

ggre

gate

of

one

perc

ent:

...in

debt

edne

ss w

hich

is

outs

tand

ing

on th

e ef

fect

ive

date

(Jul

y 1,

197

1) o

f thi

s co

nstit

utio

n or

whi

ch is

th

erea

fter

appr

oved

by

refe

rend

um...

sha

ll no

t be

inc

lude

d in

the

for

egoi

ng

perc

enta

ge a

mou

nts.”

To

dat

e th

e G

ener

al A

ssem

bly

has s

et n

o lim

its fo

r hom

e ru

le m

unic

ipal

ities

.

e.

Spec

ial S

ervi

ce A

rea

Bon

ds

Spec

ial S

ervi

ce A

rea

Bon

ds o

utst

andi

ng a

s of t

he d

ate

of th

is re

port

tota

led

$412

,000

. Th

ese

bond

s ar

e no

t an

obl

igat

ion

of t

he C

ity a

nd a

re t

o be

pai

d so

lely

fro

m t

he

colle

ctio

ns o

f the

spe

cial

ass

essm

ents

on

the

real

pro

perty

with

in th

e sp

ecia

l ser

vice

ar

ea. T

he C

ity is

in n

o w

ay li

able

for

rep

aym

ent b

ut is

onl

y ac

ting

as a

gent

for

the

prop

erty

ow

ners

in le

vyin

g an

d co

llect

ing

the

tax

and

forw

ardi

ng th

e co

llect

ions

to th

e bo

ndho

lder

s.

f. C

ondu

it D

ebt

The

City

has

iss

ued

indu

stria

l re

venu

e bo

nds

to p

rovi

de f

inan

cing

for

var

ious

ec

onom

ic d

evel

opm

ent p

roje

cts.

The

bon

ds ar

e sec

ured

sole

ly b

y th

e pro

perty

fina

nced

an

d ar

e pa

yabl

e so

lely

from

the

paym

ents

rece

ived

on

the

unde

rlyin

g m

ortg

age

loan

s on

the

prop

erty

. The

City

is n

ot o

blig

ated

in a

ny m

anne

r fo

r th

e re

paym

ent o

f th

e bo

nds.

Acc

ordi

ngly

, th

e bo

nds

outs

tand

ing

are

not

repo

rted

as a

lia

bilit

y in

the

se

finan

cial

sta

tem

ents

. A

s of

Dec

embe

r 31

, 20

18,

ther

e w

ere

seve

n se

ries

of b

onds

ou

tsta

ndin

g. T

he a

ggre

gate

prin

cipa

l am

ount

pay

able

for t

he se

ries o

f bon

ds c

ould

not

be

de

term

ined

; ho

wev

er,

thei

r or

igin

al

issu

e am

ount

s of

th

e bo

nds

tota

led

$25,

183,

000.

- 40

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 41

-

7.

INT

ER

FUN

D A

SSE

TS/

LIA

BIL

ITIE

S

Due

from

/to o

ther

fund

s are

as f

ollo

ws:

D

ue F

rom

D

ue T

o

Gen

eral

Non

maj

or G

over

nmen

tal

$ 33

3,42

5 $

1,12

8,42

9

Wat

er

23

7

-

Sew

er

49

-

Non

maj

or E

nter

pris

e

101

-

In

tern

al S

ervi

ce

7

-

Tota

l Gen

eral

333,

819

1,

128,

429

W

ater

Gen

eral

-

237

Non

maj

or G

over

nmen

tal

30

4,67

0

-

Sew

er

94

6

17,0

95

Tota

l Wat

er

30

5,61

6

17,3

32

Se

wer

Gen

eral

-

49

W

ater

17,0

95

94

6

To

tal S

ewer

17,0

95

99

5

Non

maj

or G

over

nmen

tal

G

ener

al

1,

128,

429

33

3,42

5

Wat

er

-

30

4,67

0

To

tal N

onm

ajor

Gov

ernm

enta

l

1,12

8,42

9

638,

095

N

onm

ajor

Ent

erpr

ise

Gen

eral

-

101

Tota

l Non

maj

or E

nter

pris

e

-

101

In

tern

al S

ervi

ce

In

tern

al S

ervi

ce

60

,893

60,8

93

G

ener

al

-

7

Tota

l Int

erna

l Ser

vice

60,8

93

60

,900

TOTA

L $

1,84

5,85

2 $

1,84

5,85

2

- 41

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 42

-

7.

INT

ER

FUN

D A

SSE

TS/

LIA

BIL

ITIE

S (C

ontin

ued)

Adv

ance

s fro

m/to

oth

er fu

nds a

re a

s fol

low

s:

R

ecei

vabl

e Fu

nd

Paya

ble

Fund

A

mou

nt

W

ater

N

onm

ajor

Ent

erpr

ise

$ 68

,036

TOTA

L

$ 68

,036

The

purp

ose

of si

gnifi

cant

due

from

/to o

ther

fund

s and

adv

ance

s fr

om/to

oth

er fu

nds a

re a

s fo

llow

s:

• $1

,128

,429

to

Non

maj

or G

over

nmen

tal

Fund

s fr

om G

ener

al F

und

is f

or n

et

expe

nditu

res f

or M

otor

Fue

l Tax

exp

ense

s.

• $2

99,9

50 to

Gen

eral

Fun

d fr

om N

onm

ajor

Gov

ernm

enta

l Fun

ds is

for n

et ex

pend

iture

s no

t qua

lifyi

ng a

s Mot

or F

uel T

ax e

xpen

ses.

•

$304

,670

to W

ater

Fun

d fr

om N

onm

ajor

Gov

ernm

enta

l Fun

ds is

for e

xpen

ses t

o cl

ose

the

2016

Bon

d Fu

nd.

•

$68,

036

to W

ater

Fun

d fr

om N

onm

ajor

Ent

erpr

ise

Fund

s is

a lo

an fo

r the

reno

vatio

n of

the

Gru

mpy

Goa

t Res

taur

ant a

t the

Hig

hlan

ds G

olf C

ours

e.

8.

INT

ER

FUN

D T

RA

NSF

ER

S

Inte

rfun

d tra

nsfe

rs b

etw

een

fund

s for

the

year

end

ed D

ecem

ber 3

1, 2

018

wer

e as

follo

ws:

Tr

ansf

ers

In

Tran

sfer

s O

ut

G

ener

al

W

ater

$

1,28

5,40

0 $

-

Sew

er

-

-

N

onm

ajor

Gov

ernm

enta

l

4,11

5,26

0

3,47

5,69

0

Inte

rnal

Ser

vice

-

1,50

0,00

0

To

tal G

ener

al

5,

400,

660

4,

975,

690

W

ater

Gen

eral

51,2

51

1,

285,

400

Tota

l Wat

er

51

,251

1,28

5,40

0

- 42

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 43

-

8.

INT

ER

FUN

D T

RA

NSF

ER

S (C

ontin

ued)

Tr

ansf

ers

In

Tran

sfer

s O

ut

N

onm

ajor

Gov

ernm

enta

l

Gen

eral

$

2,72

5,69

0 $

4,11

5,26

0

Non

maj

or G

over

nmen

tal

69

3,40

1

693,

401

W

ater

-

51,2

51

Tota

l Non

maj

or G

over

nmen

tal

3,

419,

091

4,

859,

912

In

tern

al S

ervi

ce

G

ener

al

2,

250,

000

-

Tota

l Int

erna

l Ser

vice

2,25

0,00

0

-

TOTA

L $

11,1

21,0

02

$ 11

,121

,002

The

purp

ose

of si

gnifi

cant

tran

sfer

s is a

s fol

low

s:

•

$4,1

15,2

60 tr

ansf

erre

d fr

om th

e N

onm

ajor

Gov

ernm

enta

l Fun

ds to

the

Gen

eral

Fun

d fo

r pen

sion

cos

ts p

aid

for b

y th

e G

ener

al F

und.

•

$4,2

25,6

90 t

rans

ferr

ed f

rom

the

Gen

eral

Fun

d to

oth

er f

unds

. $1

,500

,000

was

tra

nsfe

rred

from

the

Gen

eral

Fun

d to

the

Equi

pmen

t Rep

lace

men

t Fun

d fo

r ope

ratio

ns

and

vehi

cle

and

equi

pmen

t pu

rcha

ses.

$2,

725,

690

was

tra

nsfe

rred

to

Non

maj

or

Gov

ernm

enta

l Fu

nds.

This

con

sist

s of

$11

0,14

0 to

fun

d ce

met

ery

oper

atio

ns a

nd

$2,6

15,5

50 to

fund

ope

ratio

ns o

f the

Rec

reat

ion

Fund

. 9.

C

ON

TIN

GE

NT

LIA

BIL

ITIE

S

a.

Litig

atio

n

Th

e C

ity is

a d

efen

dant

in v

ario

us la

wsu

its. A

lthou

gh th

e ou

tcom

e of

thes

e la

wsu

its is

no

t pre

sent

ly d

eter

min

able

, in

the o

pini

on o

f the

City

’s at

torn

ey, t

he re

solu

tion

of th

ese

mat

ters

will

not

hav

e a

mat

eria

l adv

erse

eff

ect o

n th

e fin

anci

al c

ondi

tion

of th

e C

ity.

b.

G

rant

s

A

mou

nts

rece

ived

or

rece

ivab

le f

rom

gra

ntor

age

ncie

s ar

e su

bjec

t to

aud

it an

d ad

just

men

t by

gran

tor a

genc

ies,

prin

cipa

lly th

e fe

dera

l gov

ernm

ent.

Any

dis

allo

wed

cl

aim

s, in

clud

ing

amou

nts

alre

ady

colle

cted

, m

ay c

onst

itute

a l

iabi

lity

of

the

appl

icab

le fu

nds.

The

amou

nt, i

f any

, of e

xpen

ditu

res

that

may

be

disa

llow

ed b

y th

e gr

anto

r can

not b

e de

term

ined

at t

his t

ime;

alth

ough

, the

City

exp

ects

such

am

ount

s, if

any,

to b

e im

mat

eria

l.

- 4

3 -

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 44

-

10.

CO

MM

ITM

EN

TS

Th

e C

ity h

as e

nter

ed in

to c

ontra

cts

for t

he c

onst

ruct

ion

or re

nova

tion

of v

ario

us fa

cilit

ies a

s fo

llow

s:

Pr

ojec

t Ex

pend

ed

Pr

ojec

t A

utho

rizat

ion

To D

ate

Com

mitm

ent

Alft

Lan

e W

ater

Tow

er R

epai

r $

136,

075

$ 19

,700

$

116,

375

Bik

eway

Rou

te 4

230,

500

22

4,13

4

6,36

6 B

luff

City

Com

bine

d Se

wer

Sep

arat

ion

72

9,55

6

53,8

58

67

5,69

8 B

owes

Rd/

Trun

k 20

1,19

0,00

0

1,03

0,76

8

159,

232

Cen

tral B

usin

ess D

istri

ct H

ighl

and

and

1,

350,

114

1,

150,

114

20

0,00

0 C

hica

go

C

hica

go S

treet

STP

873,

448

86

8,79

5

4,65

3 C

olle

ctor

Stre

et R

esur

faci

ng

2,

513,

956

2,

045,

896

46

8,06

0 En

viro

nmen

tal R

emed

iatio

n –

McB

ride

1,

044,

305

78

5,92

6

258,

379

McL

ean/

Tim

ber R

ailro

ad C

ross

ing

10

0,01

7

16,8

85

83

,132

Po

lice

Secu

rity

Syste

m

1,

136,

457

1,

062,

696

73

,761

R

ecre

atio

n C

ente

r Rem

odel

110,

787

-

11

0,78

7 R

esid

entia

l Stre

et R

esur

faci

ng E

ast

2,

291,

915

1,

823,

204

46

8,71

1 R

iver

side

Wat

er T

reat

men

t Pla

nt R

iver

194,

690

12

,683

182,

007

Inta

ke Im

prov

emen

t

Sew

er Im

prov

emen

ts

13

6,00

0

-

136,

000

US

20/M

cLea

n

262,

263

11

2,71

8

149,

545

Wat

er T

ower

s - F

iber

Opt

ic C

able

316,

684

15

8,34

2

158,

342

Win

g Pa

rk D

rain

age

73

,840

68,1

15

5,

725

TOTA

L $

12,6

90,6

07

$ 9,

433,

834

$ 3,

256,

773

11.

OT

HE

R P

OST

EM

PLO

YM

EN

T B

EN

EFI

TS

a.

Plan

Adm

inis

tratio

n

In

ad

ditio

n to

pr

ovid

ing

the

pens

ion

bene

fits

desc

ribed

, th

e C

ity

prov

ides

po

stem

ploy

men

t he

alth

be

nefit

s (O

PEB

) fo

r re

tired

em

ploy

ees

thro

ugh

a si

ngle

-em

ploy

er

defin

ed

bene

fit

plan

. Th

e be

nefit

s, be

nefit

le

vels

, em

ploy

ee

cont

ribut

ions

and

em

ploy

er c

ontri

butio

ns a

re g

over

ned

by t

he C

ity a

nd c

an b

e am

ende

d by

the

City

thro

ugh

its p

erso

nnel

man

ual a

nd u

nion

con

tract

s. Th

e pl

an d

oes

not i

ssue

a se

para

te re

port.

M

anag

emen

t of

the

plan

is v

este

d w

ith th

e pl

an’s

Boa

rd o

f Tr

uste

es. T

he B

oard

of

Trus

tees

con

sist

s of

five

mem

bers

: thr

ee e

x of

ficio

mem

bers

and

two

elec

ted

retir

ee

plan

par

ticip

ants

. Th

e pl

an i

s ac

coun

ted

for

on t

he e

cono

mic

res

ourc

es m

easu

rem

ent

focu

s an

d th

e ac

crua

l ba

sis

of a

ccou

ntin

g. E

mpl

oyer

and

em

ploy

ee c

ontri

butio

ns a

re r

ecog

nize

d w

hen

earn

ed in

the

year

that

the

cont

ribut

ions

are

requ

ired,

ben

efits

and

refu

nds

are

reco

gniz

ed a

s an

expe

nse

and

liabi

lity

whe

n du

e an

d pa

yabl

e.

- 44

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 45

-

11.

OT

HE

R P

OST

EM

PLO

YM

EN

T B

EN

EFI

TS

(Con

tinue

d)

b.

B

enef

its P

rovi

ded

The

City

pro

vide

s po

stem

ploy

men

t hea

lth c

are

bene

fits

to it

s re

tiree

s. To

be

elig

ible

fo

r be

nefit

s, an

em

ploy

ee m

ust

qual

ify f

or r

etire

men

t un

der

one

of t

he C

ity’s

re

tirem

ent

plan

s. Fo

r ce

rtain

dis

able

d em

ploy

ees

who

qua

lify

for

heal

th i

nsur

ance

be

nefit

s und

er th

e Pu

blic

Saf

ety

Empl

oyee

Ben

efits

Act

(PSE

BA

), th

e C

ity is

requ

ired

to p

ay 1

00%

of

the

cost

of

basi

c he

alth

ins

uran

ce f

or t

he e

mpl

oyee

and

the

ir de

pend

ents

for t

heir

lifet

ime.

A

ll he

alth

car

e be

nefit

s ar

e pr

ovid

ed t

hrou

gh t

he C

ity’s

ins

ured

hea

lth p

lan.

The

be

nefit

leve

ls a

re th

e sa

me

as th

ose

affo

rded

to a

ctiv

e em

ploy

ees.

Ben

efits

incl

ude

gene

ral i

npat

ient

and

outp

atie

nt m

edic

al se

rvic

es; m

enta

l, ne

rvou

s and

subs

tanc

e abu

se

care

; vis

ion

care

; den

tal c

are;

and

pre

scrip

tions

. Upo

n a

retir

ee re

achi

ng a

ge 6

5 ye

ars

of a

ge, M

edic

are b

ecom

es th

e pr

imar

y in

sure

r and

the

City

’s p

lan

beco

mes

seco

ndar

y.

c.

M

embe

rshi

p

A

t Dec

embe

r 31,

201

8, m

embe

rshi

p co

nsis

ted

of:

In

activ

e fu

nd m

embe

rs a

nd b

enef

icia

ries

cur

rent

ly re

ceiv

ing

bene

fit p

aym

ents

65

Inac

tive

fund

mem

bers

ent

itled

to b

ut n

ot y

et

rec

eivi

ng b

enef

it pa

ymen

ts

-

Act

ive

fund

mem

bers

597

TOTA

L

662

Parti

cipa

ting

empl

oyer

s

1

d.

Con

tribu

tions

The

City

neg

otia

tes

the

cont

ribut

ion

perc

enta

ges

betw

een

the

City

and

em

ploy

ees

thro

ugh

the

unio

n co

ntra

cts

and

pers

onne

l pol

icy.

All

retir

ees

hire

d be

fore

Mar

ch 1

, 20

10 c

ontri

bute

0%

of t

he p

rem

ium

from

age

s 60

to 6

2 an

d 50

% o

f pre

miu

ms f

or a

ge

63 t

o 65

to

the

plan

and

the

City

con

tribu

tes

the

rem

aind

er t

o co

ver

the

cost

of

prov

idin

g th

e be

nefit

s to

the

retir

ees v

ia th

e in

sure

d pl

an. R

etire

es h

ired

afte

r Mar

ch 1

, 20

10 c

ontri

bute

100

% o

f pre

miu

ms.

For t

he fi

scal

yea

r end

ed D

ecem

ber 3

1, 2

018,

the

City

’s c

ontri

butio

n ra

te w

as 2

.80%

of c

over

ed p

ayro

ll.

- 45

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 46

-

11.

OT

HE

R P

OST

EM

PLO

YM

EN

T B

EN

EFI

TS

(Con

tinue

d)

e.

D

epos

its a

nd In

vest

men

ts

Inve

stm

ent P

olic

y

Th

e fu

nd’s

Boa

rd o

f Tru

stee

s ado

pted

an

inve

stm

ent p

olic

y w

hich

can

be

amen

ded

by

a m

ajor

ity v

ote

of th

e B

oard

of T

rust

ees.

Dur

ing

the

year

end

ed D

ecem

ber 3

1, 2

018,

no

cha

nges

to th

e in

vest

men

t pol

icy

wer

e ap

prov

ed b

y th

e B

oard

of T

rust

ees,

whi

ch

incl

uded

cha

nges

to th

e ta

rget

ass

et a

lloca

tion

and

perm

issi

ble

rang

es, a

s not

ed in

the

tabl

e be

low

, as w

ell a

s per

form

ance

ben

chm

arks

for i

nves

tmen

ts. S

ee N

ote

2 fo

r a li

st

of a

llow

able

inve

stm

ents

.

Th

e in

vest

men

t pol

icy

calls

for t

he fo

llow

ing

allo

catio

n of

the

Fund

’s a

sset

s:

Ass

et C

lass

Ta

rget

Long

-Ter

m

Expe

cted

Rea

l R

ate

of R

etur

n

Fixe

d In

com

e 45

%

2.10

%

D

omes

tic E

quiti

es

25%

5.

60%

Inte

rnat

iona

l Equ

ities

17

.50%

5.

80%

Glo

bal

10%

3.

90%

Cas

h an

d C

ash

Equi

vale

nts

2.50

%

0.40

%

The

long

-term

exp

ecte

d re

al r

ates

of

retu

rn s

how

n fo

r th

e as

set

clas

ses

abov

e ar

e lo

ng-te

rm e

xpec

ted

retu

rns a

fter a

djus

tmen

t to

elim

inat

e in

flatio

n.

Cus

todi

al C

redi

t Ris

k fo

r Dep

osits

C

usto

dial

cre

dit r

isk

for d

epos

its w

ith fi

nanc

ial i

nstit

utio

ns is

the

risk

that

in th

e ev

ent

of a

ban

k’s

failu

re, t

he f

und’

s de

posi

ts m

ay n

ot b

e re

turn

ed to

them

. The

fun

d do

es

not s

peci

fical

ly a

ddre

ss c

usto

dial

cre

dit r

isk

for d

epos

its.

- 46

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 47

-

11.

OT

HE

R P

OST

EM

PLO

YM

EN

T B

EN

EFI

TS

(Con

tinue

d)

e.

D

epos

its a

nd In

vest

men

ts (C

ontin

ued)

In

tere

st R

ate

Risk

Th

e fo

llow

ing

tabl

e pr

esen

ts t

he i

nves

tmen

ts a

nd m

atur

ities

of

the

fund

’s d

ebt

secu

ritie

s as o

f Dec

embe

r 31,

201

8:

In

vest

men

t Mat

uriti

es (i

n Y

ears

) In

vest

men

t Typ

e Fa

ir V

alue

Le

ss th

an 1

1-

5 6-

10

Gre

ater

than

10

Stat

e an

d lo

cal o

blig

atio

ns

$ 41

2,00

0 $

27,0

00

$ 12

5,00

0 $

209,

000

$ 51

,000

B

ond

mut

ual f

unds

5,02

8,27

6

-

5,02

8,27

6

-

-

TO

TAL

$ 5,

440,

276

$ 27

,000

$

5,15

3,27

6 $

209,

000

$ 51

,000

In

tere

st ra

te ri

sk is

the

risk

that

cha

nges

in in

tere

st ra

tes

will

adv

erse

ly a

ffec

t the

fair

valu

e of

an

inve

stm

ent.

In a

ccor

danc

e w

ith it

s in

vest

men

t pol

icy,

the

fund

lim

its it

s ex

posu

re to

inte

rest

rat

e ris

k by

stru

ctur

ing

the

portf

olio

to p

rovi

de li

quid

ity fo

r the

m

onth

ly b

enef

it pa

ymen

ts fo

r the

Ret

iree

Hea

lth In

sura

nce

Trus

t for

thre

e ye

ars w

hile

m

aint

aini

ng a

n av

erag

e du

ratio

n of

3.5

yea

rs o

r les

s.

Cre

dit R

isk

The

fund

inve

stm

ent p

olic

y do

es n

ot c

onta

in g

uida

nce

on c

redi

t ris

k. H

owev

er, t

he

fund

lim

its it

s exp

osur

e to

cre

dit r

isk,

the

risk

that

the

issu

er o

f a d

ebt s

ecur

ity w

ill n

ot

pay

its p

ar v

alue

upo

n m

atur

ity, b

y pr

imar

ily in

vest

ing

in o

blig

atio

ns g

uara

ntee

d by

th

e U

nite

d St

ates

Gov

ernm

ent o

r se

curit

ies

issu

ed b

y ag

enci

es o

f th

e U

nite

d St

ates

G

over

nmen

t th

at a

re e

xplic

itly

or i

mpl

icitl

y gu

aran

teed

by

the

Uni

ted

Stat

es

Gov

ernm

ent.

The

bond

mut

ual f

unds

are

rat

ed A

AA

, the

sta

te a

nd lo

cal o

blig

atio

ns

are

rate

d A

AA

to C

CC

.

C

usto

dial

Cre

dit R

isk

for I

nves

tmen

ts

Cus

todi

al c

redi

t ris

k fo

r inv

estm

ents

is th

e ris

k th

at, i

n th

e ev

ent o

f the

failu

re o

f the

co

unte

rpar

ty to

the

inve

stm

ent,

the

fund

will

not

be

able

to r

ecov

er th

e va

lue

of it

s in

vest

men

ts th

at a

re in

pos

sess

ion

of a

n ou

tsid

e pa

rty. T

o lim

it its

exp

osur

e, th

e fu

nd’s

in

vest

men

t pol

icy

requ

ires a

ll se

curit

y tra

nsac

tions

that

are

exp

osed

to c

usto

dial

cre

dit

risk

to b

e pr

oces

sed

on a

del

iver

y ve

rsus

pay

men

t (D

VP)

bas

is w

ith th

e un

derly

ing

inve

stm

ents

hel

d by

a th

ird p

arty

act

ing

as th

e fu

nd’s

age

nt s

epar

ate

from

whe

re th

e in

vest

men

t was

pur

chas

ed in

the

fund

’s n

ame.

The

mon

ey m

arke

t mut

ual f

unds

are

no

t sub

ject

to c

usto

dial

cre

dit r

isk.

- 47

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 48

-

11.

OT

HE

R P

OST

EM

PLO

YM

EN

T B

EN

EFI

TS

(Con

tinue

d)

e.

D

epos

its a

nd In

vest

men

ts (C

ontin

ued)

C

once

ntra

tion

of C

redi

t Ris

k

Th

e fu

nd’s

inve

stm

ent p

olic

y lim

its th

e am

ount

of t

he p

ortfo

lio th

at c

an b

e in

vest

ed in

an

y on

e in

vest

men

t veh

icle

as f

ollo

ws:

D

iver

sific

atio

n by

Inst

rum

ent

Targ

eted

Per

cent

of

Por

tfolio

Fi

xed

inco

me

45

.00%

D

omes

tic e

quity

25.0

0%

Inte

rnat

iona

l equ

ity

17

.50%

G

loba

l

10.0

0%

Cas

h/ot

her

2.

50%

Th

e fun

d’s i

nves

tmen

t pol

icy

does

not

spec

ifica

lly p

rohi

bit t

he u

se o

f or t

he in

vest

men

t in

der

ivat

ives

.

Th

e fun

d di

d no

t hol

d an

y in

vest

men

ts in

any

one o

rgan

izat

ion

(exc

ludi

ng th

ose i

ssue

d or

exp

licitl

y gu

aran

teed

by

the

U.S

. Gov

ernm

ent)

that

repr

esen

ted

5% o

r mor

e of

the

fund

’s fi

duci

ary

net p

ositi

on.

Fair

Val

ue M

easu

rem

ent

The

City

has

the

follo

win

g re

curr

ing

fair

valu

e m

easu

rem

ents

as

of D

ecem

ber

31,

2018

: the

equ

ity m

utua

l fun

ds a

re v

alue

d us

ing

quot

ed p

rices

in a

ctiv

e m

arke

ts f

or

iden

tical

ass

ets

(Lev

el 1

inpu

ts).

The

stat

e an

d lo

cal o

blig

atio

ns a

re m

anua

lly p

riced

th

roug

h m

ultip

le s

ourc

es (

Leve

l 3 in

puts

). Th

e bo

nd m

utua

l fun

ds a

re v

alue

d us

ing

quot

ed p

rices

in a

ctiv

e m

arke

ts fo

r ide

ntic

al a

sset

s (Le

vel 1

inpu

ts).

Rate

of R

etur

n

Fo

r the

yea

r end

ed D

ecem

ber 3

1, 2

018,

the

annu

al m

oney

-wei

ghte

d ra

te o

f ret

urn

on

the

fund

’s i

nves

tmen

ts,

net

of t

he f

und’

s in

vest

men

t ex

pens

e, w

as (

4.17

)%.

The

mon

ey-w

eigh

ted

rate

of r

etur

n ex

pres

ses

inve

stm

ent p

erfo

rman

ce, n

et o

f inv

estm

ent

expe

nse,

adj

uste

d fo

r the

cha

ngin

g am

ount

s act

ually

inve

sted

.

- 48

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 49

-

11.

OT

HE

R P

OST

EM

PLO

YM

EN

T B

EN

EFI

TS

(Con

tinue

d)

f.

Act

uaria

l Ass

umpt

ions

Th

e to

tal O

PEB

liab

ility

abo

ve, a

fter c

onsi

derin

g th

e sh

arin

g of

ben

efit-

rela

ted

cost

s w

ith in

activ

e fu

nd m

embe

rs, w

as d

eter

min

ed b

y an

act

uaria

l val

uatio

n pe

rfor

med

as

of D

ecem

ber 3

1, 2

018

usin

g th

e fo

llow

ing

actu

aria

l met

hods

and

ass

umpt

ions

.

A

ctua

rial v

alua

tion

date

D

ecem

ber 3

1, 2

018

Mea

sure

men

t dat

e D

ecem

ber 3

1, 2

018

Act

uaria

l cos

t met

hod

En

try-a

ge n

orm

al

Ass

umpt

ions

In

flatio

n 2.

50%

Inve

stm

ent r

ate

of re

turn

6.

00%

(N

et o

f fun

d in

vest

men

t exp

ense

, inc

ludi

ng in

flatio

n)

Hea

lthca

re c

ost t

rend

rate

s 4.

00%

to 8

.00%

A

sset

val

uatio

n m

etho

d

Mar

ket

For

publ

ic e

mpl

oyee

s, m

orta

lity

rate

s w

ere

base

d on

the

RP-

2000

mor

talit

y ta

bles

. R

ates

wer

e pro

ject

ed to

the v

alua

tion

date

usi

ng m

orta

lity

impr

ovem

ent s

cale

AA

. Fo

r Ill

inoi

s Mun

icip

al R

etire

men

t Fun

d em

ploy

ees,

mor

talit

y ra

tes w

ere

base

d on

the

RP-

2014

mor

talit

y ta

bles

as d

escr

ibed

bel

ow:

H

ealth

y Li

ves:

Fo

r fem

ale

lives

, 99%

of t

he R

P-20

14 B

lue

Col

lar t

able

was

use

d. F

or m

ale

lives

, a

100%

of t

he B

lue-

Col

lar R

P-20

14 ta

ble w

as u

sed.

All

tabl

es in

clud

e ful

ly g

ener

atio

nal

adju

stm

ents

for m

orta

lity

impr

ovem

ents

usi

ng im

prov

emen

t sca

le M

P-20

17.

Dis

able

d Li

ves:

Fo

r all

disa

bled

live

s, th

e R

P-20

14 D

isab

led

Ret

iree

Mor

talit

y Ta

ble

was

use

d. A

ll ta

bles

inc

lude

ful

ly g

ener

atio

nal

adju

stm

ents

for

mor

talit

y im

prov

emen

ts u

sing

im

prov

emen

t sca

le M

P-20

17.

Th

e lo

ng-te

rm r

ate

of r

etur

n on

the

fun

d’s

inve

stm

ents

was

det

erm

ined

usi

ng a

bu

ildin

g bl

ock

met

hod

in w

hich

bes

t est

imat

e ra

nges

of e

xpec

ted

futu

re re

al ra

tes

of

retu

rn (e

xpec

ted

retu

rns,

net o

f inv

estm

ent e

xpen

se a

nd in

flatio

n) a

re d

evel

oped

for

each

maj

or a

sset

cla

ss. T

hese

rang

es a

re c

ombi

ned

to p

rodu

ce th

e lo

ng-te

rm e

xpec

ted

rate

of r

etur

n by

wei

ghtin

g th

e ex

pect

ed fu

ture

real

rate

s of

retu

rn b

y th

e ta

rget

ass

et

allo

catio

n pe

rcen

tage

and

by

addi

ng e

xpec

ted

infla

tion.

Bes

t es

timat

es o

f th

e ar

ithm

etic

rea

l rat

es o

f re

turn

for

eac

h m

ajor

ass

et c

lass

incl

uded

in th

e ta

rget

ass

et

allo

catio

n as

of D

ecem

ber 3

1, 2

018

are

indi

cate

d ab

ove.

- 4

9 -

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 50

-

11.

OT

HE

R P

OST

EM

PLO

YM

EN

T B

EN

EFI

TS

(Con

tinue

d)

g.

D

isco

unt R

ate

The

disc

ount

rate

use

d to

mea

sure

the

tota

l OPE

B li

abili

ty w

as 5

.00%

. The

pro

ject

ion

of c

ash

flow

s us

ed to

det

erm

ine

the

disc

ount

rate

ass

umed

that

cur

rent

Pla

n M

embe

r an

d Sp

onso

r con

tribu

tions

will

be

mad

e at

the

curr

ent c

ontri

butio

n ra

te.

The

expe

cted

ra

te o

f ret

urn

on tr

ust i

nves

tmen

ts is

6.0

0%.

This

rate

was

use

d to

dis

coun

t pro

ject

ed

bene

fit p

aym

ents

for

24

year

s at

whi

ch p

oint

the

trust

will

bec

ome

inso

lven

t. T

he

rem

aini

ng p

roje

cted

ben

efit

paym

ents

wer

e di

scou

nted

at a

mun

icip

al b

ond

rate

. Th

e hi

gh-q

ualit

y m

unic

ipal

bon

d ra

te, 4

.10%

, was

bas

ed o

n th

e w

eek

clos

est b

ut n

ot la

ter

than

the

mea

sure

men

t dat

e of

the

Bon

d B

uyer

20-

Bon

d In

dex

as p

ublis

hed

by th

e Fe

dera

l Res

erve

. Th

e 20

-Bon

d In

dex

cons

ists

of

20 g

ener

al o

blig

atio

ns b

onds

that

m

atur

e in

20

year

s. T

he a

vera

ge r

atin

g of

the

20

bond

s is

rou

ghly

equ

ival

ent

to

Moo

dy’s

Inv

esto

rs S

ervi

ces’

Aa2

rat

ing

and

Stan

dard

& P

oor’

s C

orp.

’s A

A.

The

sing

le e

quiv

alen

t rat

e w

as 5

.00%

.

h.

Cha

nges

in th

e N

et O

PEB

Lia

bilit

y

(a)

Tota

l OPE

B

(b)

Plan

Fid

ucia

ry

(a) -

(b)

Net

OPE

B

Li

abili

ty

Net

Pos

ition

Li

abili

ty

BA

LAN

CES

AT

J

AN

UA

RY

1, 2

018

$ 32

,021

,617

$

10,9

79,2

02

$ 21

,042

,415

C

hang

es fo

r the

per

iod

Serv

ice

cost

1,44

9,13

2

-

1,44

9,13

2

Inte

rest

1,51

2,14

4

-

1,51

2,14

4

Diff

eren

ce b

etw

een

expe

cted

a

nd a

ctua

l exp

erie

nce

(1,0

86,0

74)

-

(1

,086

,074

)

Cha

nges

in a

ssum

ptio

ns

(5

61,0

76)

-

(5

61,0

76)

Em

ploy

er tr

ust c

ontri

butio

ns

-

1,

627,

171

(1

,627

,171

)

Pay-

as-y

ou-g

o co

ntrib

utio

ns

-

43

4,21

0

(434

,210

)

Net

Inve

stm

ent i

ncom

e

-

(528

,319

)

528,

319

B

enef

it pa

ymen

ts a

nd re

fund

s

(1,0

64,8

05)

(1

,064

,805

)

-

Adm

inis

trativ

e ex

pens

e

-

-

-

N

et C

hang

es

24

9,32

1

468,

257

(2

18,9

36)

BA

LAN

CES

AT

D

ECEM

BER

31,

201

8 $

32,2

70,9

38

$ 11

,447

,459

$

20,8

23,4

79

In 2

018,

cha

nges

in a

ssum

ptio

ns r

elat

ed to

the

disc

ount

rat

e w

ere

mad

e (4

.59%

to

5.00

%).

- 50

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 51

-

11.

OT

HE

R P

OST

EM

PLO

YM

EN

T B

EN

EFI

TS

(Con

tinue

d)

i.

Rat

e Se

nsiti

vity

Th

e fo

llow

ing

is a

sen

sitiv

e an

alys

is o

f th

e ne

t O

PEB

lia

bilit

y to

cha

nges

in

the

disc

ount

rate

and

the h

ealth

care

cost

tren

d ra

te. T

he ta

ble b

elow

pre

sent

s the

net

OPE

B

liabi

lity

of th

e C

ity c

alcu

late

d us

ing

the

disc

ount

rate

of 5

% a

s wel

l as w

hat t

he C

ity’s

ne

t O

PEB

lia

bilit

y w

ould

be

if it

wer

e ca

lcul

ated

usi

ng a

dis

coun

t ra

te t

hat

is

1 pe

rcen

tage

poi

nt lo

wer

(4%

) or 1

per

cent

age

poin

t hig

her (

6%) t

han

the

curr

ent r

ate:

1% D

ecre

ase

Cur

rent

D

isco

unt R

ate

1%

Incr

ease

(4%

) (5

%)

(6%

)

N

et O

PEB

liab

ility

$

24,4

09,9

11

$ 20

,823

,479

$

17,6

96,8

48

The

tabl

e be

low

pre

sent

s th

e ne

t O

PEB

lia

bilit

y of

the

City

cal

cula

ted

usin

g th

e he

alth

care

rate

of 4

% to

8%

as w

ell a

s wha

t the

City

’s n

et O

PEB

liab

ility

wou

ld b

e if

it w

ere

calc

ulat

ed u

sing

a h

ealth

care

rate

that

is 1

per

cent

age

poin

t low

er (3

% to

7%

) or

1 p

erce

ntag

e po

int h

ighe

r (5%

to 9

%) t

han

the

curr

ent r

ate:

1% D

ecre

ase

Cur

rent

H

ealth

care

Rat

e

1% In

crea

se

(3

% to

7%

) (4

% to

8%

) (5

% to

9%

)

N

et O

PEB

liab

ility

$

16,8

61,9

87

$ 20

,823

,479

$

25,5

78,3

03

j.

OPE

B E

xpen

se a

nd D

efer

red

Out

flow

s of

Res

ourc

es a

nd D

efer

red

Inflo

ws

of

Res

ourc

es R

elat

ed to

OPE

B

For

the

year

end

ed D

ecem

ber

31,

2018

, th

e C

ity r

ecog

nize

d O

PEB

exp

ense

of

$2,3

37,4

21. A

t Dec

embe

r 31,

201

8, th

e C

ity re

porte

d de

ferr

ed o

utflo

ws

of re

sour

ces

and

defe

rred

inflo

ws o

f res

ourc

es re

late

d to

OPE

B fr

om th

e fo

llow

ing

sour

ces:

D

efer

red

Out

flow

s of

Def

erre

d In

flow

s of

R

esou

rces

R

esou

rces

Diff

eren

ce b

etw

een

expe

cted

and

act

ual e

xper

ienc

e $

- $

950,

315

Cha

nges

in a

ssum

ptio

n

-

490,

941

Net

diff

eren

ce b

etw

een

proj

ecte

d an

d ac

tual

e

arni

ngs o

n pe

nsio

n pl

an in

vest

men

ts

94

6,70

6

-

TOTA

L $

946,

706

$ 1,

441,

256

- 51

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 52

-

11.

OT

HE

R P

OST

EM

PLO

YM

EN

T B

EN

EFI

TS

(Con

tinue

d)

j.

OPE

B E

xpen

se a

nd D

efer

red

Out

flow

s of

Res

ourc

es a

nd D

efer

red

Inflo

ws

of

Res

ourc

es R

elat

ed to

OPE

B (C

ontin

ued)

A

mou

nts r

epor

ted

as d

efer

red

outfl

ows o

f res

ourc

es a

nd d

efer

red

inflo

ws o

f res

ourc

es

rela

ted

to O

PEB

will

be

reco

gniz

ed a

s OPE

B e

xpen

se a

s fol

low

s:

Y

ear E

ndin

g

D

ecem

ber 3

1,

20

19

$

30,7

82

2020

30

,782

20

21

30,7

82

2022

30

,783

20

23

(205

,894

) Th

erea

fter

(411

,785

)

TOTA

L

$ 49

4,55

0 12

. E

MPL

OY

EE

RE

TIR

EM

EN

T S

YST

EM

S

The

City

con

tribu

tes

to f

our

defin

ed b

enef

it pe

nsio

n pl

ans

(col

lect

ivel

y re

ferr

ed to

as

the

Pens

ion

Plan

s), t

he Il

linoi

s Mun

icip

al R

etire

men

t Fun

d (I

MR

F), a

n ag

ent m

ultip

le-e

mpl

oyer

pu

blic

empl

oyee

retir

emen

t sys

tem

; the

She

riff’

s Law

Enf

orce

men

t Per

sonn

el F

und

(SLE

P),

whi

ch is

adm

inis

tere

d by

IM

RF

and

is a

lso

an a

gent

mul

tiple

-em

ploy

er p

ublic

em

ploy

ee

retir

emen

t sys

tem

; the

Pol

ice

Pens

ion

Plan

, whi

ch is

a s

ingl

e-em

ploy

er p

ensi

on p

lan;

and

th

e Fi

refig

hter

s’ P

ensi

on P

lan,

whi

ch is

als

o a

sing

le-e

mpl

oyer

pen

sion

pla

n. T

he b

enef

its,

bene

fit l

evel

s, em

ploy

ee c

ontri

butio

ns a

nd e

mpl

oyer

con

tribu

tions

for

all

four

pla

ns a

re

gove

rned

by

Illin

ois

Com

pile

d St

atut

es (

ILC

S) a

nd c

an o

nly

be a

men

ded

by th

e Ill

inoi

s G

ener

al A

ssem

bly.

Non

e of

the

pens

ion

plan

s is

sue

sepa

rate

repo

rts o

n th

e pe

nsio

n pl

ans.

How

ever

, IM

RF

issu

es a

pub

licly

ava

ilabl

e re

port

that

incl

udes

fin

anci

al s

tate

men

ts a

nd

supp

lem

enta

ry in

form

atio

n fo

r the

pla

n as

a w

hole

, but

not

for i

ndiv

idua

l em

ploy

ers.

Tho

se

repo

rts c

an b

e ob

tain

ed fr

om IM

RF,

221

1 Y

ork

Roa

d, S

uite

500

, Oak

Bro

ok, I

llino

is 6

0523

or

at i

mrf

.org

.

The

aggr

egat

e am

ount

of p

ensi

on e

xpen

se re

cogn

ized

for a

ll pl

ans w

as $

25,4

33,0

74 fo

r the

ye

ar e

nded

Dec

embe

r 31,

201

8.

- 52

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 53

-

12.

EM

PLO

YE

E R

ET

IRE

ME

NT

SY

STE

MS

(Con

tinue

d)

a.

Pl

an D

escr

iptio

ns

Illin

ois M

unic

ipal

Ret

irem

ent F

und

Plan

Adm

inis

trat

ion

and

Bene

fits P

rovi

ded

A

ll em

ploy

ees

(oth

er t

han

thos

e co

vere

d by

the

Pol

ice

Pens

ion

Plan

, Fire

fight

ers’

Pe

nsio

n Pl

an, o

r IM

RF-

SLEP

) hire

d in

pos

ition

s th

at m

eet o

r exc

eed

the

pres

crib

ed

annu

al h

ourly

sta

ndar

d m

ust b

e en

rolle

d in

IM

RF

as p

artic

ipat

ing

mem

bers

. IM

RF

prov

ides

two

tiers

of p

ensi

on b

enef

its. E

mpl

oyee

s hi

red

prio

r to

Janu

ary

1, 2

011,

are

el

igib

le f

or T

ier

1 be

nefit

s. Fo

r Ti

er 1

em

ploy

ees,

pens

ion

bene

fits

vest

afte

r ei

ght

year

s of s

ervi

ce. P

artic

ipat

ing

mem

bers

who

retir

e at a

ge 5

5 (r

educ

ed b

enef

its) o

r afte

r ag

e 60

(fu

ll be

nefit

s) w

ith e

ight

yea

rs o

f cr

edite

d se

rvic

e ar

e en

title

d to

an

annu

al

retir

emen

t ben

efit,

pay

able

mon

thly

for l

ife, i

n an

amou

nt eq

ual t

o 1

2/3%

of t

heir

final

ra

te o

f ear

ning

s, fo

r eac

h ye

ar o

f cre

dite

d se

rvic

e up

to 1

5 ye

ars,

and

2% fo

r eac

h ye

ar

ther

eafte

r.

Em

ploy

ees h

ired

on o

r afte

r Jan

uary

1, 2

011,

are e

ligib

le fo

r Tie

r 2 b

enef

its. F

or T

ier 2

em

ploy

ees,

pens

ion

bene

fits v

est a

fter t

en y

ears

of s

ervi

ce. P

artic

ipat

ing

mem

bers

who

re

tire

at a

ge 6

2 (r

educ

ed b

enef

its)

or a

fter

age

67 (

full

bene

fits)

with

ten

yea

rs o

f cr

edite

d se

rvic

e ar

e en

title

d to

an

annu

al re

tirem

ent b

enef

it, p

ayab

le m

onth

ly fo

r lif

e,

in a

n am

ount

equ

al to

1 2

/3%

of t

heir

final

rate

of e

arni

ngs,

for e

ach

year

of c

redi

ted

serv

ice

up to

15

year

s, an

d 2%

for e

ach

year

ther

eafte

r.

C

ontr

ibut

ions

Th

ese

bene

fit p

rovi

sion

s an

d al

l oth

er r

equi

rem

ents

are

est

ablis

hed

by s

tate

sta

tute

. Pa

rtici

patin

g m

embe

rs ar

e req

uire

d to

cont

ribut

e 4.5

0% o

f the

ir an

nual

sala

ry to

IMR

F.

The

City

is re

quire

d to

con

tribu

te th

e re

mai

ning

am

ount

s ne

cess

ary

to fu

nd IM

RF

as

spec

ified

by

stat

ute.

The

em

ploy

er co

ntrib

utio

n fo

r the

fisc

al y

ear e

nded

Dec

embe

r 31,

20

18 w

as 1

1.18

% o

f cov

ered

pay

roll.

Pl

an M

embe

rshi

p

At

Dec

embe

r 31

, 20

17 (

mos

t re

cent

inf

orm

atio

n av

aila

ble)

, IM

RF

mem

bers

hip

cons

iste

d of

:

Inac

tive

empl

oyee

s or t

heir

bene

ficia

ries

c

urre

ntly

rece

ivin

g be

nefit

s

541

Inac

tive

empl

oyee

s ent

itled

to b

ut n

ot y

et re

ceiv

ing

bene

fits

23

4 A

ctiv

e em

ploy

ees

38

3

TO

TAL

1,

158

- 5

3 -

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 54

-

12.

EM

PLO

YE

E R

ET

IRE

ME

NT

SY

STE

MS

(Con

tinue

d)

a.

Pl

an D

escr

iptio

ns (C

ontin

ued)

Ill

inoi

s Mun

icip

al R

etire

men

t Fun

d (C

ontin

ued)

Ac

tuar

ial A

ssum

ptio

ns

The

City

’s n

et p

ensi

on li

abili

ty w

as m

easu

red

as o

f Dec

embe

r 31,

201

7 an

d th

e to

tal

pens

ion

liabi

lity

used

to

calc

ulat

e th

e ne

t pe

nsio

n lia

bilit

y w

as d

eter

min

ed b

y an

ac

tuar

ial

valu

atio

n pe

rfor

med

as

of t

he s

ame

date

usi

ng t

he f

ollo

win

g ac

tuar

ial

met

hods

and

ass

umpt

ions

.

Act

uaria

l val

uatio

n da

te

Dec

embe

r 31,

201

7

A

ctua

rial c

ost m

etho

d

Entry

-age

nor

mal

A

ssum

ptio

ns

Infla

tion

2.50

%

Sa

lary

incr

ease

s 3.

39%

to 1

4.25

%

In

tere

st ra

te

7.50

%

C

ost o

f liv

ing

adju

stm

ents

3.

00%

A

sset

val

uatio

n m

etho

d

Mar

ket v

alue

For

nond

isab

led

retir

ees,

an I

MR

F sp

ecifi

c m

orta

lity

tabl

e w

as u

sed

with

ful

ly

gene

ratio

nal p

roje

ctio

n sc

ale

MP-

2017

(ba

se y

ear

2015

). T

he I

MR

F sp

ecifi

c ra

tes

wer

e de

velo

ped

from

the

RP-

2014

Blu

e C

olla

r Hea

lth A

nnui

tant

Mor

talit

y Ta

ble

with

ad

just

men

ts t

o m

atch

cur

rent

IM

RF

expe

rienc

e.

For

disa

bled

ret

irees

, an

IM

RF

spec

ific

mor

talit

y ta

ble

was

use

d w

ith f

ully

gen

erat

iona

l pro

ject

ion

scal

e M

P-20

17

(bas

e yea

r 201

5). T

he IM

RF

spec

ific r

ates

wer

e dev

elop

ed fr

om th

e RP-

2014

Dis

able

d R

etire

es M

orta

lity

Tabl

e ap

plyi

ng t

he s

ame

adju

stm

ent

that

wer

e ap

plie

d fo

r no

ndis

able

d liv

es.

For

activ

e m

embe

rs, a

n IM

RF

spec

ific

mor

talit

y ta

ble

was

use

d w

ith f

ully

gen

erat

iona

l pr

ojec

tion

scal

e M

P-20

17 (

base

yea

r 20

15).

The

IM

RF

spec

ific

rate

s w

ere

deve

lope

d fr

om t

he R

P-20

14 E

mpl

oyee

Mor

talit

y Ta

ble

with

ad

just

men

ts to

mat

ch c

urre

nt IM

RF

expe

rienc

e.

- 54

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 55

-

12.

EM

PLO

YE

E R

ET

IRE

ME

NT

SY

STE

MS

(Con

tinue

d)

a.

Pl

an D

escr

iptio

ns (C

ontin

ued)

Ill

inoi

s Mun

icip

al R

etire

men

t Fun

d (C

ontin

ued)

D

isco

unt R

ate

The d

isco

unt r

ate u

sed

to m

easu

re th

e to

tal p

ensi

on li

abili

ty w

as 7

.50%

. The

pro

ject

ion

of c

ash

flow

s use

d to

det

erm

ine

the

disc

ount

rate

ass

umed

that

mem

ber c

ontri

butio

ns

will

be

mad

e at

the

curr

ent c

ontri

butio

n ra

te a

nd th

at th

e C

ity c

ontri

butio

ns w

ill b

e m

ade a

t rat

es eq

ual t

o th

e diff

eren

ce b

etw

een

actu

aria

lly d

eter

min

ed co

ntrib

utio

n ra

tes

and

the

mem

ber r

ate.

Bas

ed o

n th

ose

assu

mpt

ions

, the

IMR

F’s

fiduc

iary

net

pos

ition

w

as p

roje

cted

to b

e av

aila

ble

to m

ake

all p

roje

cted

futu

re b

enef

it pa

ymen

ts o

f cur

rent

pl

an m

embe

rs.

Ther

efor

e, t

he l

ong-

term

exp

ecte

d ra

te o

f re

turn

on

pens

ion

plan

in

vest

men

ts o

f 7.5

0% w

as u

sed

to d

eter

min

e th

e to

tal p

ensi

on li

abili

ty.

Cha

nges

in th

e N

et P

ensi

on L

iabi

lity

(a)

Tota

l Pe

nsio

n

(b)

Plan

Fi

duci

ary

(a) -

(b)

Net

Pe

nsio

n

Liab

ility

N

et P

ositi

on

Liab

ility

(Ass

et)

BA

LAN

CES

AT

J

AN

UA

RY

1, 2

017

$ 18

9,41

4,21

5 $

170,

166,

039

$ 19

,248

,176

C

hang

es fo

r the

per

iod

Serv

ice

cost

3,04

1,41

3

-

3,04

1,41

3

Inte

rest

13,9

39,0

38

-

13

,939

,038

Diff

eren

ce b

etw

een

expe

cted

a

nd a

ctua

l exp

erie

nce

181,

350

-

18

1,35

0

Cha

nges

in a

ssum

ptio

ns

(6

,050

,712

)

-

(6,0

50,7

12)

Em

ploy

er c

ontri

butio

ns

-

3,

276,

069

(3

,276

,069

)

Empl

oyee

con

tribu

tions

-

1,29

8,56

3

(1,2

98,5

63)

N

et in

vest

men

t inc

ome

-

30

,926

,361

(30,

926,

361)

Ben

efit

paym

ents

and

refu

nds

(1

0,16

2,17

2)

(1

0,16

2,17

2)

-

A

dmin

istra

tive

expe

nse

-

-

-

O

ther

(net

tran

sfer

)

-

(3,1

56,0

36)

3,

156,

036

Net

cha

nges

948,

917

22

,182

,785

(21,

233,

868)

B

ALA

NC

ES A

T

DEC

EMB

ER 3

1, 2

017

$ 19

0,36

3,13

2 $

192,

348,

824

$ (1

,985

,692

)

Ther

e w

ere

chan

ges i

n as

sum

ptio

ns re

late

d to

infla

tion

and

sala

ry in

crea

ses i

n 20

17.

- 55

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 56

-

12.

EM

PLO

YE

E R

ET

IRE

ME

NT

SY

STE

MS

(Con

tinue

d)

a.

Pl

an D

escr

iptio

ns (C

ontin

ued)

Ill

inoi

s Mun

icip

al R

etire

men

t Fun

d (C

ontin

ued)

Pens

ion

Expe

nse

and

Def

erre

d O

utflo

ws

of R

esou

rces

and

Def

erre

d In

flow

s of

R

esou

rces

Fo

r th

e ye

ar e

nded

Dec

embe

r 31

, 20

18,

the

City

rec

ogni

zed

pens

ion

expe

nse

of

$4,7

14,0

14. A

t Dec

embe

r 31,

201

8, th

e C

ity re

porte

d de

ferr

ed o

utflo

ws

of re

sour

ces

and

defe

rred

inflo

ws o

f res

ourc

es re

late

d to

IMR

F fr

om th

e fo

llow

ing

sour

ces:

Def

erre

d O

utflo

ws o

f D

efer

red

Inflo

ws o

f

Res

ourc

es

Res

ourc

es

D

iffer

ence

bet

wee

n ex

pect

ed a

nd a

ctua

l exp

erie

nce

$ 41

9,90

3 $

987,

253

Cha

nges

in a

ssum

ptio

n

27,9

29

4,

508,

076

Net

diff

eren

ce b

etw

een

proj

ecte

d an

d ac

tual

e

arni

ngs o

n pe

nsio

n pl

an in

vest

men

ts

-

9,

271,

819

Empl

oyer

con

tribu

tions

subs

eque

nt to

the

m

easu

rem

ent d

ate

3,

309,

929

-

TO

TAL

$ 3,

757,

761

$ 14

,767

,148

$3,3

09,9

29 r

epor

ted

as d

efer

red

outfl

ows

of r

esou

rces

rel

ated

to p

ensi

ons

resu

lting

fr

om c

ity c

ontri

butio

ns s

ubse

quen

t to

the

mea

sure

men

t dat

e w

ill b

e re

cogn

ized

as

a re

duct

ion

of n

et p

ensi

on li

abili

ty in

the

rep

ortin

g ye

ar e

ndin

g D

ecem

ber

31, 2

019.

O

ther

am

ount

s re

porte

d as

def

erre

d ou

tflow

s of

res

ourc

es a

nd d

efer

red

inflo

ws

of

reso

urce

s rel

ated

to IM

RF

will

be

reco

gniz

ed in

pen

sion

exp

ense

as f

ollo

ws:

Y

ear E

ndin

g

D

ecem

ber 3

1,

20

19

$

(2,9

65,9

28)

2020

(3

,293

,122

) 20

21

(4,3

61,9

06)

2022

(3

,698

,360

) 20

23

- Th

erea

fter

-

TOTA

L

$ (1

4,31

9,31

6)

- 56

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 57

-

12.

EM

PLO

YE

E R

ET

IRE

ME

NT

SY

STE

MS

(Con

tinue

d)

a.

Pl

an D

escr

iptio

ns (C

ontin

ued)

Ill

inoi

s Mun

icip

al R

etire

men

t Fun

d (C

ontin

ued)

D

isco

unt R

ate

Sens

itivi

ty

The

follo

win

g is

a se

nsiti

vity

ana

lysi

s of t

he n

et p

ensi

on li

abili

ty (a

sset

) to

chan

ges i

n th

e di

scou

nt ra

te. T

he ta

ble

belo

w p

rese

nts t

he n

et p

ensi

on li

abili

ty (a

sset

) of t

he C

ity

calc

ulat

ed u

sing

the

disc

ount

rat

e of

7.5

0% a

s w

ell a

s w

hat t

he C

ity’s

net

pen

sion

lia

bilit

y (a

sset

) wou

ld b

e if

it w

ere

calc

ulat

ed u

sing

a d

isco

unt r

ate

that

is 1

per

cent

age

poin

t low

er (6

.50%

) or 1

per

cent

age

poin

t hig

her (

8.50

%) t

han

the

curr

ent r

ate:

1% D

ecre

ase

Cur

rent

D

isco

unt R

ate

1%

Incr

ease

(6.5

0%)

(7.5

0%)

(8.5

0%)

Net

pen

sion

liab

ility

(ass

et)

$ 21

,407

,506

$

(1,9

85,6

92)

$ (2

1,33

2,76

2)

Sher

iff’s

Law

Enf

orce

men

t Per

sonn

el

Be

nefit

s Pro

vide

d

SLEP

mem

bers

hav

ing

accu

mul

ated

at l

east

20

year

s of S

LEP

serv

ice

and

term

inat

ing

IMR

F pa

rtici

patio

n or

afte

r Jan

uary

1, 1

988,

may

ele

ct to

retir

e at

or a

fter a

ge 5

0 w

ith

no e

arly

retir

emen

t dis

coun

t pen

alty

. SLE

P m

embe

rs m

eetin

g th

ese

two

qual

ifica

tions

ar

e en

title

d to

an

annu

al r

etire

men

t ben

efit

paya

ble

mon

thly

for

life

, in

an a

mou

nt

equa

l to

2 1/

2% o

f the

ir fin

al ra

te o

f ear

ning

s fo

r eac

h ye

ar o

f cre

dite

d se

rvic

e up

to

20 y

ears

, 2%

of t

heir

final

ear

ning

s ra

te fo

r the

nex

t ten

yea

rs o

f cre

dite

d se

rvic

e an

d 1%

for

eac

h ye

ar th

erea

fter.

For

SLEP

mem

bers

ret

iring

with

less

than

20

year

s of

SL

EP s

ervi

ce, t

he re

gula

r IM

RF

pens

ion

form

ula

appl

ies.

SLE

P al

so p

rovi

des

deat

h an

d di

sabi

lity

bene

fits.

The

se b

enef

it pr

ovis

ions

and

all

othe

r re

quire

men

ts a

re

esta

blis

hed

by IL

CS.

Con

trib

utio

ns

Parti

cipa

ting

mem

bers

are r

equi

red

to c

ontri

bute

7.5

0% o

f the

ir an

nual

sala

ry to

SLE

P.

The

City

is re

quire

d to

con

tribu

te th

e re

mai

ning

am

ount

s ne

cess

ary

to fu

nd S

LEP

as

spec

ified

by

stat

ute.

The

em

ploy

er c

ontri

butio

n fo

r the

yea

r end

ed D

ecem

ber 3

1, 2

018

was

0.0

0% o

f cov

ered

pay

roll.

- 57

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 58

-

12.

EM

PLO

YE

E R

ET

IRE

ME

NT

SY

STE

MS

(Con

tinue

d)

a.

Pl

an D

escr

iptio

ns (C

ontin

ued)

Sh

eriff

’s L

aw E

nfor

cem

ent P

erso

nnel

(Con

tinue

d)

Plan

Mem

bers

hip

A

t D

ecem

ber

31,

2017

(m

ost

rece

nt i

nfor

mat

ion

avai

labl

e),

SLEP

mem

bers

hip

cons

iste

d of

:

Inac

tive

empl

oyee

s or t

heir

bene

ficia

ries

c

urre

ntly

rece

ivin

g be

nefit

s

4 In

activ

e em

ploy

ees e

ntitl

ed to

but

not

yet

rece

ivin

g be

nefit

s

- A

ctiv

e em

ploy

ees

-

TOTA

L

4

Ac

tuar

ial A

ssum

ptio

ns

The

City

’s n

et p

ensi

on li

abili

ty w

as m

easu

red

as o

f Dec

embe

r 31,

201

7 an

d th

e to

tal

pens

ion

liabi

lity

used

to

calc

ulat

e th

e ne

t pe

nsio

n lia

bilit

y w

as d

eter

min

ed b

y an

ac

tuar

ial

valu

atio

n pe

rfor

med

as

of t

he s

ame

date

usi

ng t

he f

ollo

win

g ac

tuar

ial

met

hods

and

ass

umpt

ions

.

Act

uaria

l val

uatio

n da

te

Dec

embe

r 31,

201

7

A

ctua

rial c

ost m

etho

d

Entry

-age

nor

mal

A

ssum

ptio

ns

Infla

tion

2.50

%

Sa

lary

incr

ease

s 3.

39%

to 1

4.25

%

In

tere

st ra

te

7.50

%

C

ost o

f liv

ing

adju

stm

ents

3.

00%

A

sset

val

uatio

n m

etho

d

Mar

ket v

alue

For

nond

isab

led

retir

ees,

an I

MR

F sp

ecifi

c m

orta

lity

tabl

e w

as u

sed

with

ful

ly

gene

ratio

nal p

roje

ctio

n sc

ale

MP-

2017

(ba

se y

ear

2015

). IM

RF

spec

ific

rate

s w

ere

deve

lope

d fr

om t

he R

P-20

14 B

lue

Col

lar

Hea

lth A

nnui

tant

Mor

talit

y Ta

ble

with

ad

just

men

ts t

o m

atch

cur

rent

IM

RF

expe

rienc

e. F

or d

isab

led

retir

ees,

an I

MR

F sp

ecifi

c m

orta

lity

tabl

e w

as u

sed

with

ful

ly g

ener

atio

nal p

roje

ctio

n sc

ale

MP-

2017

(b

ase

year

201

5). I

MR

F sp

ecifi

c ra

tes

wer

e de

velo

ped

from

the

RP-

2014

Dis

able

d R

etire

es M

orta

lity

Tabl

e ap

plyi

ng t

he s

ame

adju

stm

ent

that

wer

e ap

plie

d fo

r no

ndis

able

d liv

es. F

or a

ctiv

e m

embe

rs, a

n IM

RF

spec

ific

mor

talit

y ta

ble

was

use

d w

ith f

ully

gen

erat

iona

l pr

ojec

tion

scal

e M

P-20

17 (

base

yea

r 20

15).

IMR

F sp

ecifi

c ra

tes

wer

e de

velo

ped

from

the

RP-

2014

Em

ploy

ee M

orta

lity

Tabl

e w

ith a

djus

tmen

ts

to m

atch

cur

rent

IMR

F ex

perie

nce.

- 5

8 -

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 59

-

12.

EM

PLO

YE

E R

ET

IRE

ME

NT

SY

STE

MS

(Con

tinue

d)

a.

Pl

an D

escr

iptio

ns (C

ontin

ued)

Sh

eriff

’s L

aw E

nfor

cem

ent P

erso

nnel

(Con

tinue

d)

D

isco

unt R

ate

The d

isco

unt r

ate u

sed

to m

easu

re th

e tot

al p

ensi

on li

abili

ty w

as 7

.50%

. The

pro

ject

ion

of c

ash

flow

s use

d to

det

erm

ine

the

disc

ount

rate

ass

umed

that

mem

ber c

ontri

butio

ns

will

be

mad

e at

the

curr

ent c

ontri

butio

n ra

te a

nd th

at th

e C

ity’s

con

tribu

tions

will

be

mad

e at r

ates

equa

l to

the d

iffer

ence

bet

wee

n ac

tuar

ially

det

erm

ined

cont

ribut

ion

rate

s an

d th

e m

embe

r rat

e. B

ased

on

thos

e as

sum

ptio

ns, S

LEP’

s fid

ucia

ry n

et p

ositi

on w

as

proj

ecte

d to

be

avai

labl

e to

mak

e al

l pro

ject

ed fu

ture

ben

efit

paym

ents

of c

urre

nt p

lan

mem

bers

. Th

eref

ore,

th

e lo

ng-te

rm

expe

cted

ra

te

of

retu

rn

on

pens

ion

plan

in

vest

men

ts w

as a

pplie

d to

all

perio

ds o

f pro

ject

ed b

enef

it pa

ymen

ts to

det

erm

ine

the

tota

l pen

sion

liab

ility

.

Cha

nges

in th

e N

et P

ensi

on L

iabi

lity

(Ass

et)

(a)

Tota

l (b

) Pl

an

(a) -

(b)

Net

Pen

sion

Pens

ion

Liab

ility

Fi

duci

ary

Net

Pos

ition

Li

abili

ty

(Ass

et)

BA

LAN

CES

AT

J

AN

UA

RY

1, 2

017

$ 1,

543,

657

$ 1,

778,

445

$ (2

34,7

88)

Cha

nges

for t

he p

erio

d

In

tere

st

11

0,38

8

-

110,

388

D

iffer

ence

bet

wee

n ex

pect

ed

and

act

ual e

xper

ienc

e

24

,287

-

24,2

87

Cha

nges

of a

ssum

ptio

ns

(5

3,70

5)

-

(5

3,70

5)

N

et in

vest

men

t inc

ome

-

35

8,01

9

(358

,019

)

Ben

efit

paym

ents

and

refu

nds

(1

43,6

41)

(1

43,6

41)

-

A

dmin

istra

tive

expe

nse

-

-

-

O

ther

(net

tran

sfer

)

-

(38,

615)

38,6

15

Net

cha

nges

(62,

671)

175,

763

(2

38,4

34)

BA

LAN

CES

AT

D

ECEM

BER

31,

201

7 $

1,48

0,98

6 $

1,95

4,20

8 $

(473

,222

)

Th

ere

wer

e ch

ange

s in

assu

mpt

ions

rela

ted

to in

flatio

n an

d sa

lary

incr

ease

s in

2017

.

- 59

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 60

-

12.

EM

PLO

YE

E R

ET

IRE

ME

NT

SY

STE

MS

(Con

tinue

d)

a.

Pl

an D

escr

iptio

ns (C

ontin

ued)

Sh

eriff

’s L

aw E

nfor

cem

ent P

erso

nnel

(Con

tinue

d)

Pe

nsio

n Ex

pens

e an

d D

efer

red

Out

flow

s of

Res

ourc

es a

nd D

efer

red

Inflo

ws

of

Res

ourc

es

For

the

year

end

ed D

ecem

ber

31,

2018

, th

e C

ity r

ecog

nize

d pe

nsio

n ex

pens

e of

$2

1,51

9. A

t Dec

embe

r 31,

201

8, th

e C

ity re

porte

d de

ferr

ed o

utflo

ws o

f res

ourc

es a

nd

defe

rred

inflo

ws o

f res

ourc

es re

late

d to

SLE

P fr

om th

e fo

llow

ing

sour

ces:

Def

erre

d O

utflo

ws o

f D

efer

red

Inflo

ws o

f

Res

ourc

es

Res

ourc

es

D

iffer

ence

bet

wee

n ex

pect

ed a

nd a

ctua

l exp

erie

nce

$ -

$ -

Cha

nges

in a

ssum

ptio

n

-

- N

et d

iffer

ence

bet

wee

n pr

ojec

ted

and

actu

al e

arni

ngs

on

pens

ion

plan

inve

stm

ents

-

125,

462

TO

TAL

$ -

$ 12

5,46

2 A

mou

nts r

epor

ted

as d

efer

red

outfl

ows o

f res

ourc

es a

nd d

efer

red

inflo

ws o

f res

ourc

es

rela

ted

to S

LEP

will

be

reco

gniz

ed in

pen

sion

exp

ense

as f

ollo

ws:

Y

ear E

ndin

g

D

ecem

ber 3

1,

20

19

$

(14,

556)

20

20

(19,

662)

20

21

(44,

950)

20

22

(46,

294)

20

23

- Th

erea

fter

-

TOTA

L

$ (1

25,4

62)

- 60

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 61

-

12.

EM

PLO

YE

E R

ET

IRE

ME

NT

SY

STE

MS

(Con

tinue

d)

a.

Pl

an D

escr

iptio

ns (C

ontin

ued)

Sh

eriff

’s L

aw E

nfor

cem

ent P

erso

nnel

(Con

tinue

d)

D

isco

unt R

ate

Sens

itivi

ty

The

follo

win

g is

a se

nsiti

vity

ana

lysi

s of t

he n

et p

ensi

on li

abili

ty (a

sset

) to

chan

ges i

n th

e di

scou

nt ra

te. T

he ta

ble

belo

w p

rese

nts t

he n

et p

ensi

on li

abili

ty (a

sset

) of t

he C

ity

calc

ulat

ed u

sing

the

disc

ount

rat

e of

7.5

0% a

s w

ell a

s w

hat t

he C

ity’s

net

pen

sion

lia

bilit

y (a

sset

) wou

ld b

e if

it w

ere

calc

ulat

ed u

sing

a d

isco

unt r

ate

that

is 1

per

cent

age

poin

t low

er (6

.50%

) or 1

per

cent

age

poin

t hig

her (

8.50

%) t

han

the

curr

ent r

ate:

1% D

ecre

ase

Cur

rent

D

isco

unt R

ate

1%

Incr

ease

(6.5

0%)

(7.5

0%)

(8.5

0%)

Net

pen

sion

liab

ility

(ass

et)

$ (3

57,4

41)

$ (4

73,2

22)

$ (5

74,9

58)

Polic

e Pe

nsio

n Pl

an

Plan

Adm

inis

trat

ion

Polic

e sw

orn

pers

onne

l are

cov

ered

by

the

Polic

e Pe

nsio

n Pl

an. A

lthou

gh th

is is

a

sing

le-e

mpl

oyer

pen

sion

pla

n, t

he d

efin

ed b

enef

its a

nd e

mpl

oyee

and

em

ploy

er

cont

ribut

ion

leve

ls a

re g

over

ned

by I

llino

is C

ompi

led

Stat

utes

(40

ILC

S 5/

3-1)

and

m

ay b

e am

ende

d on

ly b

y th

e Ill

inoi

s le

gisl

atur

e. T

he C

ity a

ccou

nts

for

the

Polic

e Pe

nsio

n Pl

an a

s a p

ensi

on tr

ust f

und.

Th

e pl

an is

gov

erne

d by

a fi

ve-m

embe

r Boa

rd o

f Tru

stee

s. Tw

o m

embe

rs o

f the

Boa

rd

of T

rust

ees

are

appo

inte

d by

the

City

’s M

ayor

, one

mem

ber

is e

lect

ed b

y pe

nsio

n be

nefic

iarie

s and

two

mem

bers

are

ele

cted

by

activ

e po

lice

empl

oyee

s.

The

plan

is

acco

unte

d fo

r on

the

eco

nom

ic r

esou

rces

mea

sure

men

t fo

cus

and

the

accr

ual

basi

s of

acc

ount

ing.

Em

ploy

er a

nd e

mpl

oyee

con

tribu

tions

are

rec

ogni

zed

whe

n ea

rned

in th

e ye

ar th

at th

e co

ntrib

utio

ns a

re re

quire

d, b

enef

its a

nd re

fund

s ar

e re

cogn

ized

as a

n ex

pens

e an

d lia

bilit

y w

hen

due

and

paya

ble.

Pl

an M

embe

rshi

p

A

t Dec

embe

r 31,

201

8, th

e Po

lice

Pens

ion

Plan

mem

bers

hip

cons

iste

d of

:

Inac

tive

plan

mem

bers

cur

rent

ly re

ceiv

ing

bene

fits

13

8 In

activ

e pl

an m

embe

rs e

ntitl

ed to

but

not

yet

rec

eivi

ng b

enef

its

12

A

ctiv

e pl

an m

embe

rs

18

2

TO

TAL

33

2

- 6

1 -

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 62

-

12.

EM

PLO

YE

E R

ET

IRE

ME

NT

SY

STE

MS

(Con

tinue

d)

a.

Pl

an D

escr

iptio

ns (C

ontin

ued)

Po

lice

Pens

ion

Plan

(Con

tinue

d)

Bene

fits P

rovi

ded

Th

e Po

lice

Pens

ion

Plan

pro

vide

s re

tirem

ent b

enef

its th

roug

h tw

o tie

rs o

f ben

efits

as

wel

l as d

eath

and

dis

abili

ty b

enef

its. T

ier 1

em

ploy

ees (

thos

e hi

red

prio

r to

Janu

ary

1,

2011

) atta

inin

g th

e ag

e of

50

or o

lder

with

20

or m

ore

year

s of

cre

dita

ble

serv

ice

are

entit

led

to re

ceiv

e an

ann

ual r

etire

men

t ben

efit

equa

l to

one-

half

of th

e sa

lary

atta

ched

to

the

ran

k he

ld o

n th

e la

st d

ay o

f se

rvic

e, o

r fo

r on

e ye

ar p

rior

to t

he l

ast

day,

w

hich

ever

is g

reat

er. T

he a

nnua

l ben

efit

shal

l be

incr

ease

d by

2.5

0% o

f suc

h sa

lary

fo

r eac

h ad

ditio

nal y

ear o

f ser

vice

ove

r 20

year

s up

to 3

0 ye

ars t

o a

max

imum

of 7

5%

of s

uch

sala

ry. E

mpl

oyee

s w

ith a

t lea

st e

ight

yea

rs b

ut le

ss th

an 2

0 ye

ars

of c

redi

ted

serv

ice m

ay re

tire a

t or a

fter a

ge 6

0 an

d re

ceiv

e a re

duce

d be

nefit

. The

mon

thly

ben

efit

of a

pol

ice

offic

er w

ho re

tired

with

20

or m

ore

year

s of s

ervi

ce a

fter J

anua

ry 1

, 197

7 sh

all b

e in

crea

sed

annu

ally

, fol

low

ing

the

first

ann

iver

sary

dat

e of

retir

emen

t and

be

paid

upo

n re

achi

ng th

e ag

e of

at l

east

55

year

s, by

3%

of t

he o

rigin

al p

ensi

on a

nd 3

%

com

poun

ded

annu

ally

ther

eafte

r.

Tier

2 e

mpl

oyee

s (th

ose

hire

d on

or a

fter J

anua

ry 1

, 201

1) a

ttain

ing

the

age

of 5

5 or

ol

der

with

ten

or m

ore

year

s of

cre

dita

ble

serv

ice

are

entit

led

to r

ecei

ve a

n an

nual

re

tirem

ent b

enef

it eq

ual t

o th

e av

erag

e m

onth

ly s

alar

y ob

tain

ed b

y di

vidi

ng th

e to

tal

sala

ry o

f the

pol

ice

offic

er d

urin

g th

e 96

con

secu

tive

mon

ths o

f ser

vice

with

in th

e la

st 12

0 m

onth

s of

ser

vice

in

whi

ch th

e to

tal s

alar

y w

as th

e hi

ghes

t by

the

num

ber

of

mon

ths o

f ser

vice

in th

at p

erio

d. P

olic

e of

ficer

s’ sa

lary

for p

ensi

on p

urpo

ses i

s cap

ped

at $

113,

645,

plu

s the

less

er o

f ½ o

f the

ann

ual c

hang

e in

the

Con

sum

er P

rice

Inde

x or

3%

com

poun

ded.

The

ann

ual b

enef

it sh

all b

e in

crea

sed

by 2

.50%

of s

uch

sala

ry fo

r ea

ch a

dditi

onal

yea

r of s

ervi

ce o

ver 2

0 ye

ars u

p to

30

year

s to

a m

axim

um o

f 75%

of

such

sala

ry. E

mpl

oyee

s with

at l

east

ten

year

s may

retir

e at

or a

fter a

ge 5

0 an

d re

ceiv

e a

redu

ced

bene

fit (i

.e.,

½%

for e

ach

mon

th u

nder

55)

. The

mon

thly

ben

efit

of a

Tie

r 2

polic

e of

ficer

sha

ll be

incr

ease

d an

nual

ly a

t age

60

on th

e Ja

nuar

y 1st

afte

r the

pol

ice

offic

er re

tires

, or t

he fi

rst a

nniv

ersa

ry o

f the

pen

sion

sta

rting

dat

e, w

hich

ever

is la

ter.

Non

com

poun

ding

incr

ease

s oc

cur

annu

ally

, eac

h Ja

nuar

y th

erea

fter.

The

incr

ease

is

the

less

er o

f 3%

or ½

of t

he c

hang

e in

the

Con

sum

er P

rice

Inde

x fo

r the

pro

ceed

ing

cale

ndar

yea

r.

C

ontr

ibut

ions

Em

ploy

ees a

re re

quire

d by

ILC

S to

con

tribu

te 9

.91%

of t

heir

base

sala

ry to

the

Polic

e Pe

nsio

n Pl

an. I

f an

empl

oyee

leav

es c

over

ed e

mpl

oym

ent w

ith le

ss th

an 2

0 ye

ars

of

serv

ice,

acc

umul

ated

em

ploy

ee c

ontri

butio

ns m

ay b

e re

fund

ed w

ithou

t acc

umul

ated

in

tere

st. T

he C

ity is

requ

ired

to c

ontri

bute

the

rem

aini

ng a

mou

nts n

eces

sary

to fi

nanc

e th

e Po

lice

Pens

ion

Plan

as

actu

aria

lly d

eter

min

ed b

y an

enr

olle

d ac

tuar

y, in

clud

ing

- 6

2 -

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 63

-

12.

EM

PLO

YE

E R

ET

IRE

ME

NT

SY

STE

MS

(Con

tinue

d)

a.

Pl

an D

escr

iptio

ns (C

ontin

ued)

Polic

e Pe

nsio

n Pl

an (C

ontin

ued)

C

ontr

ibut

ions

(Con

tinue

d)

amou

nts f

or a

dmin

istra

tive

cost

s. B

enef

its a

nd re

fund

s are

reco

rded

as a

liab

ility

whe

n du

e an

d pa

yabl

e. E

ffec

tive

Janu

ary

1, 2

011,

the

City

has

unt

il th

e ye

ar 2

040

to f

und

90%

of t

he p

ast s

ervi

ce c

ost f

or th

e Pol

ice P

ensi

on P

lan.

How

ever

, the

City

has

elec

ted

to fu

nd 1

00%

of t

he p

ast s

ervi

ce c

ost b

y 20

40. T

he C

ity’s

con

tribu

tion

was

45.

50%

of

cove

red

payr

oll f

or th

e ye

ar e

nded

Dec

embe

r 31,

201

8.

Inve

stm

ent P

olic

y

IL

CS

limit

the

Polic

e Pe

nsio

n Fu

nd’s

(th

e Fu

nd)

inve

stm

ents

to th

ose

allo

wab

le b

y IL

CS

and

requ

ire th

e Fu

nd’s

Boa

rd o

f Tru

stee

s to

ado

pt a

n in

vest

men

t pol

icy

whi

ch

can

be a

men

ded

by a

maj

ority

vot

e of

the

Boa

rd o

f Tru

stee

s. D

urin

g th

e ye

ar e

nded

D

ecem

ber 3

1, 2

018,

cha

nges

to th

e in

vest

men

t pol

icy

wer

e ap

prov

ed b

y th

e B

oard

of

Trus

tees

on

July

18,

201

8. S

ee N

ote

2 fo

r a li

st o

f allo

wab

le in

vest

men

ts.

Th

e Fu

nd’s

inve

stm

ent p

olic

y es

tabl

ishe

s th

e fo

llow

ing

targ

et a

lloca

tion

acro

ss a

sset

cl

asse

s:

Ass

et C

lass

Ta

rget

Long

-Ter

m

Expe

cted

Rea

l R

ate

of R

etur

n

Fixe

d in

com

e*

35.0

0%

2.10

%

U

.S. e

quity

**

32.5

0%

5.60

%

In

tern

atio

nal e

quity

17

.50%

5.

80%

Rea

l est

ate

10

.00%

5.

20%

Glo

bal t

actic

al

5.00

%

3.90

%

*N

o si

ngle

sec

urity

>10

% o

f to

tal b

ond

portf

olio

, ave

rage

dur

atio

n +/

- 20

% o

f th

e ap

prop

riate

inde

x, u

p to

10%

in c

ash

or c

ash

equi

vale

nts.

**N

o si

ngle

sto

ck >

5% o

f the

tota

l cas

h an

d in

vest

men

ts o

f the

Fun

d an

d no

sin

gle

stoc

k >5

% o

f tot

al st

ock

outs

tand

ing

for t

he c

orpo

ratio

n.

- 63

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 64

-

12.

EM

PLO

YE

E R

ET

IRE

ME

NT

SY

STE

MS

(Con

tinue

d)

a.

Pl

an D

escr

iptio

ns (C

ontin

ued)

Polic

e Pe

nsio

n Pl

an (C

ontin

ued)

In

vest

men

t Pol

icy

(Con

tinue

d)

The

Fund

’s i

nves

tmen

t po

licy

does

not

spe

cific

ally

pro

hibi

t th

e us

e of

or

the

inve

stm

ent i

n de

rivat

ives

, but

doe

s pro

hibi

t the

pur

chas

e of

secu

ritie

s on

mar

gin.

Th

e lo

ng-te

rm e

xpec

ted

real

rat

e of

ret

urn

are

base

d on

the

inv

estm

ent

man

ager

’s

prop

rieta

ry a

sset

allo

catio

n so

ftwar

e, w

hich

util

izes

Mon

te-C

arlo

sim

ulat

ions

to

deve

lop

expe

cted

ass

et c

lass

retu

rns a

nd v

olat

ility

val

ues.

The

prim

ary

inpu

ts in

to th

e m

odel

are

stra

ight

forw

ard

econ

omic

dat

a su

ch a

s yi

elds

, inf

latio

n, B

BB

spr

eads

and

lo

ng-d

ated

ass

et c

lass

retu

rn se

ries d

ata.

In

vest

men

t Val

uatio

ns

All

inve

stm

ents

in th

e pla

n ar

e sta

ted

at fa

ir va

lue a

nd ar

e rec

orde

d as

of t

he tr

ade d

ate.

Fa

ir va

lue

is th

e pr

ice

that

wou

ld b

e re

ceiv

ed to

sel

l an

asse

t or

paid

to tr

ansf

er a

lia

bilit

y in

an o

rder

ly tr

ansa

ctio

n be

twee

n m

arke

t par

ticip

ants

at th

e mea

sure

men

t dat

e.

Inve

stm

ent R

ate

of R

etur

n

For t

he y

ear e

nded

Dec

embe

r 31,

201

8, th

e an

nual

mon

ey-w

eigh

ted

rate

of r

etur

n on

pe

nsio

n pl

an in

vest

men

ts, n

et o

f pen

sion

pla

n in

vest

men

t exp

ense

, was

(4.2

5)%

. The

m

oney

-wei

ghte

d ra

te o

f ret

urn

expr

esse

s in

vest

men

t per

form

ance

, net

of i

nves

tmen

t ex

pens

e, a

djus

ted

for t

he c

hang

ing

amou

nts a

ctua

lly in

vest

ed.

Dep

osits

with

Fin

anci

al In

stitu

tions

Cus

todi

al c

redi

t ris

k fo

r dep

osits

with

fina

ncia

l ins

titut

ions

is th

e ris

k th

at in

the

even

t of

a b

ank’

s fa

ilure

, the

Fun

d’s

depo

sits

may

not

be

retu

rned

to

them

. The

Fun

d’s

inve

stm

ent p

olic

ies d

o no

t req

uire

ple

dgin

g of

colla

tera

l for

all b

ank

bala

nces

in ex

cess

of

fed

eral

dep

osito

ry in

sura

nce,

sin

ce f

low

-thro

ugh

FDIC

insu

ranc

e is

ava

ilabl

e fo

r th

e Fu

nd’s

dep

osits

with

fina

ncia

l ins

titut

ions

.

- 64

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 65

-

12.

EM

PLO

YE

E R

ET

IRE

ME

NT

SY

STE

MS

(Con

tinue

d)

a.

Pl

an D

escr

iptio

ns (C

ontin

ued)

Polic

e Pe

nsio

n Pl

an (C

ontin

ued)

In

tere

st R

ate

Risk

Th

e fo

llow

ing

tabl

e pr

esen

ts t

he i

nves

tmen

ts a

nd m

atur

ities

of

the

Fund

’s d

ebt

secu

ritie

s as o

f Dec

embe

r 31,

201

8:

In

vest

men

t Mat

uriti

es (i

n Y

ears

) In

vest

men

t Typ

e Fa

ir V

alue

Le

ss th

an 1

1-

5 6-

10

Gre

ater

than

10

U.S

. Tre

asur

y ob

ligat

ions

$

6,33

4,13

4 $

- $

4,82

4,55

2 $

1,50

9,58

2 $

- U

.S. a

genc

y ob

ligat

ions

13,0

20,3

28

85

2,48

1

5,81

8,84

7

3,88

1,89

7

2,46

7,10

3 C

ertif

icat

es o

f dep

osit

2,

462,

161

-

2,

462,

161

-

-

Cor

pora

te b

onds

15,1

04,5

05

43

6,90

0

10,0

57,2

19

4,

610,

386

-

TOTA

L $

36,9

21,1

28

$ 1,

289,

381

$ 23

,162

,779

$

10,0

01,8

65

$ 2,

467,

103

The

Fund

cat

egor

izes

its

fai

r va

lue

mea

sure

men

ts w

ithin

the

fai

r va

lue

hier

arch

y es

tabl

ishe

d by

GA

AP.

The

hie

rarc

hy is

bas

ed o

n th

e va

luat

ion

inpu

ts u

sed

to m

easu

re

the

fair

valu

e of

the

ass

et.

Leve

l 1

inpu

ts a

re q

uote

d pr

ices

in

activ

e m

arke

ts f

or

iden

tical

ass

ets;

Lev

el 2

inpu

ts a

re s

igni

fican

t oth

er o

bser

vabl

e in

puts

; and

Lev

el 3

in

puts

are

sig

nific

ant u

nobs

erva

ble

inpu

ts. T

he F

und

has

the

follo

win

g re

curr

ing

fair

valu

e m

easu

rem

ents

as o

f Dec

embe

r 31,

201

8: th

e U

.S. T

reas

ury

oblig

atio

ns, e

quiti

es

and

mut

ual f

unds

are

val

ued

usin

g qu

oted

pric

es in

act

ive

mar

kets

for i

dent

ical

ass

ets

(Lev

el 1

inpu

ts).

The

U.S

. age

ncy

oblig

atio

ns, c

ertif

icat

es o

f dep

osit

and

the

corp

orat

e bo

nds a

re v

alue

d us

ing

quot

ed m

atrix

pric

ing

mod

els (

Leve

l 2 in

puts

). Th

e po

oled

real

es

tate

inv

estm

ent

is v

alue

d us

ing

appr

aisa

ls,

inte

rnal

ly p

repa

red

valu

atio

ns a

nd

disc

ount

ed c

ash

flow

ana

lysi

s (Le

vel 3

inpu

ts).

Inte

rest

rate

risk

is th

e ris

k th

at c

hang

es in

inte

rest

rate

s w

ill a

dver

sely

aff

ect t

he fa

ir va

lue

of a

n in

vest

men

t. In

acc

orda

nce

with

its

inve

stm

ent p

olic

y, th

e Fu

nd li

mits

its

expo

sure

to

inte

rest

rat

e ris

k by

stru

ctur

ing

the

portf

olio

to

prov

ide

liqui

dity

for

op

erat

ing

fund

s and

max

imiz

ing

yiel

ds fo

r fun

ds n

ot n

eede

d w

ithin

a o

ne-y

ear p

erio

d.

The

inve

stm

ent p

olic

y do

es n

ot li

mit

the

max

imum

mat

urity

leng

th o

f inv

estm

ents

in

the

Fund

.

C

redi

t Ris

k

The

Fund

’s in

vest

men

t pol

icy

does

not

con

tain

gui

danc

e on

cre

dit r

isk.

How

ever

, the

Fu

nd li

mits

its e

xpos

ure

to c

redi

t ris

k, th

e ris

k th

at th

e is

suer

of a

deb

t sec

urity

will

not

pa

y its

par

val

ue u

pon

mat

urity

, by

prim

arily

inve

stin

g in

obl

igat

ions

gua

rant

eed

by

the

Uni

ted

Stat

es G

over

nmen

t or

secu

ritie

s is

sued

by

agen

cies

of

the

Uni

ted

Stat

es

Gov

ernm

ent

that

are

exp

licitl

y or

im

plic

itly

guar

ante

ed b

y th

e U

nite

d St

ates

G

over

nmen

t. Th

e U

.S. a

genc

y ob

ligat

ions

are

rat

ed A

AA

to B

BB

- an

d th

e m

oney

m

arke

t fun

ds a

re n

ot ra

ted.

The

cor

pora

te b

onds

are

rate

d A

aa to

Baa

3.

- 65

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 66

-

12.

EM

PLO

YE

E R

ET

IRE

ME

NT

SY

STE

MS

(Con

tinue

d)

a.

Pl

an D

escr

iptio

ns (C

ontin

ued)

Polic

e Pe

nsio

n Pl

an (C

ontin

ued)

C

usto

dial

Cre

dit R

isk

C

usto

dial

cre

dit r

isk

for i

nves

tmen

ts is

the

risk

that

, in

the

even

t of t

he fa

ilure

of t

he

coun

terp

arty

to th

e in

vest

men

t, th

e Fu

nd w

ill n

ot b

e ab

le to

rec

over

the

valu

e of

its

inve

stm

ents

that

are i

n po

sses

sion

of a

n ou

tsid

e par

ty. T

o lim

it its

expo

sure

, the

Fun

d’s

inve

stm

ent p

olic

y re

quire

s all

secu

rity

trans

actio

ns th

at a

re e

xpos

ed to

cus

todi

al c

redi

t ris

k to

be

proc

esse

d on

a d

eliv

ery

vers

us p

aym

ent (

DV

P) b

asis

with

the

unde

rlyin

g in

vest

men

ts h

eld

by a

third

par

ty a

ctin

g as

the

Fund

’s a

gent

sep

arat

e fr

om w

here

the

inve

stm

ent

was

pur

chas

ed i

n th

e Fu

nd’s

nam

e. T

he I

llino

is F

unds

and

the

mon

ey

mar

ket m

utua

l fun

ds a

nd e

quity

and

bal

ance

d m

utua

l fun

ds ar

e not

subj

ect t

o cu

stod

ial

cred

it ris

k.

Con

cent

ratio

n of

Cre

dit R

isk

Ther

e are

no

sign

ifica

nt in

vest

men

ts (o

ther

than

Uni

ted

Stat

es G

over

nmen

t gua

rant

eed

oblig

atio

ns)

in a

ny o

ne o

rgan

izat

ion

that

rep

rese

nts

5% o

r m

ore

of t

he F

und’

s in

vest

men

ts.

Cha

nges

in th

e N

et P

ensi

on L

iabi

lity

(a)

Tota

l Pen

sion

(b

) Pl

an F

iduc

iary

(a

) - (b

) N

et P

ensi

on

Li

abili

ty

Net

Pos

ition

Li

abili

ty

BA

LAN

CES

AT

J

AN

UA

RY

1, 2

018

$ 22

5,45

0,97

1 $

118,

084,

277

$ 10

7,36

6,69

4

C

hang

es fo

r the

per

iod

Serv

ice

cost

3,74

0,76

4

-

3,74

0,76

4

Inte

rest

15,4

67,6

07

-

15

,467

,607

Diff

eren

ce b

etw

een

expe

cted

a

nd a

ctua

l exp

erie

nce

(6,3

30,1

60)

-

(6

,330

,160

)

Cha

nges

in a

ssum

ptio

ns

8,

840,

448

-

8,

840,

448

Em

ploy

er c

ontri

butio

ns

-

8,

604,

338

(8

,604

,338

)

Empl

oyee

con

tribu

tions

-

1,93

6,66

7

(1,9

36,6

67)

N

et in

vest

men

t inc

ome

-

(4

,931

,756

)

4,93

1,75

6

Ben

efit

paym

ents

and

refu

nds

(8

,970

,327

)

(8,9

70,3

27)

-

A

dmin

istra

tive

expe

nse

-

(1

23,1

75)

12

3,17

5

N

et c

hang

es

12

,748

,332

(3,4

84,2

53)

16

,232

,585

B

ALA

NC

ES A

T

DEC

EMB

ER 3

1, 2

018

$ 23

8,19

9,30

3 $

114,

600,

024

$ 12

3,59

9,27

9

- 66

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 67

-

12.

EM

PLO

YE

E R

ET

IRE

ME

NT

SY

STE

MS

(Con

tinue

d)

a.

Pl

an D

escr

iptio

ns (C

ontin

ued)

Polic

e Pe

nsio

n Pl

an (C

ontin

ued)

C

hang

es in

the

Net

Pen

sion

Lia

bilit

y (C

ontin

ued)

Th

ere

was

a c

hang

e w

ith re

spec

t to

actu

aria

l ass

umpt

ions

from

the

prio

r yea

r to

refle

ct

revi

sed

expe

ctat

ions

with

res

pect

to

mor

talit

y ra

tes,

mor

talit

y im

prov

emen

t ra

tes,

retir

emen

t rat

es, d

isab

ility

rate

s and

term

inat

ion

rate

s.

Se

e th

e sc

hedu

le o

f cha

nges

in th

e em

ploy

er’s

net

pen

sion

liab

ility

and

rela

ted

ratio

s in

the

requ

ired

supp

lem

enta

ry in

form

atio

n fo

r ad

ditio

nal i

nfor

mat

ion

rela

ted

to th

e fu

nded

stat

us o

f the

Fun

d.

Actu

aria

l Ass

umpt

ions

Th

e to

tal p

ensi

on li

abili

ty a

bove

was

det

erm

ined

by

an a

ctua

rial v

alua

tion

perf

orm

ed

as o

f Dec

embe

r 31,

201

8 us

ing

the

follo

win

g ac

tuar

ial m

etho

ds a

nd a

ssum

ptio

ns.

A

ctua

rial v

alua

tion

date

D

ecem

ber 3

1, 2

018

Mea

sure

men

t dat

e D

ecem

ber 3

1, 2

018

Act

uaria

l cos

t met

hod

En

try-a

ge n

orm

al

Ass

umpt

ions

In

flatio

n 2.

50%

Sala

ry in

crea

ses

4.00

% to

12.

48%

Inte

rest

rate

7.

00%

Cos

t of l

ivin

g ad

just

men

ts

Tier

1 a

t 3.0

0%

Tier

2 a

t 2.0

0%

Ass

et v

alua

tion

met

hod

M

arke

t

Mor

talit

y ra

tes w

ere b

ased

on

the R

P-20

14 M

orta

lity

Tabl

e (B

CH

A) p

roje

cted

to 2

017

usin

g im

prov

emen

t sca

le M

P-20

16.

The

othe

r non

-eco

nom

ic a

ctua

rial a

ssum

ptio

ns

used

in th

e D

ecem

ber

31, 2

018

valu

atio

n w

ere

base

d on

the

resu

lts o

f an

act

uaria

l ex

perie

nce

stud

y co

nduc

ted

by th

e Ill

inoi

s Dep

artm

ent o

f Ins

uran

ce (G

RS)

in 2

012.

D

isco

unt R

ate

The

disc

ount

rate

use

d to

mea

sure

the

tota

l pen

sion

liab

ility

was

7%

. The

pro

ject

ion

of c

ash

flow

s use

d to

det

erm

ine

the

disc

ount

rate

ass

umed

that

mem

ber c

ontri

butio

ns

will

be

mad

e at

the

curr

ent c

ontri

butio

n ra

te a

nd th

at th

e C

ity’s

con

tribu

tions

will

be

mad

e at

rate

s equ

al to

the

diff

eren

ce b

etw

een

actu

aria

lly d

eter

min

ed c

ontri

butio

n ra

tes

- 6

7 -

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 68

-

12.

EM

PLO

YE

E R

ET

IRE

ME

NT

SY

STE

MS

(Con

tinue

d)

a.

Pl

an D

escr

iptio

ns (C

ontin

ued)

Polic

e Pe

nsio

n Pl

an (C

ontin

ued)

D

isco

unt R

ate

(Con

tinue

d)

and

the

mem

ber r

ate.

Bas

ed o

n th

ose

assu

mpt

ions

, the

Fun

d’s

fiduc

iary

net

pos

ition

w

as p

roje

cted

to b

e av

aila

ble

to m

ake

all p

roje

cted

futu

re b

enef

it pa

ymen

ts o

f cur

rent

pl

an m

embe

rs.

Ther

efor

e, t

he l

ong-

term

exp

ecte

d ra

te o

f re

turn

on

pens

ion

plan

in

vest

men

ts w

as a

pplie

d to

all

perio

ds o

f pro

ject

ed b

enef

it pa

ymen

ts to

det

erm

ine

the

tota

l pen

sion

liab

ility

.

D

isco

unt R

ate

Sens

itivi

ty

The

follo

win

g is

a s

ensi

tivity

ana

lysi

s of

the

net p

ensi

on li

abili

ty to

cha

nges

in th

e di

scou

nt ra

te. T

he ta

ble

belo

w p

rese

nts t

he n

et p

ensi

on li

abili

ty o

f the

City

cal

cula

ted

usin

g th

e di

scou

nt ra

te o

f 7%

as w

ell a

s wha

t the

City

’s n

et p

ensi

on li

abili

ty w

ould

be

if it

wer

e ca

lcul

ated

usi

ng a

dis

coun

t rat

e th

at is

1 p

erce

ntag

e po

int l

ower

(6%

) or 1

pe

rcen

tage

poi

nt h

ighe

r (8%

) tha

n th

e cu

rren

t rat

e:

1%

Dec

reas

e C

urre

nt

Dis

coun

t Rat

e

1% In

crea

se

(6

%)

(7%

) (8

%)

Net

pen

sion

liab

ility

$

160,

213,

258

$ 12

3,59

9,27

9 $

94,0

20,9

82

Pens

ion

Expe

nse

and

Def

erre

d O

utflo

ws

of R

esou

rces

and

Def

erre

d In

flow

s of

R

esou

rces

Fo

r the

yea

r end

ed D

ecem

ber 3

1, 2

018,

the

City

reco

gniz

ed p

olic

e pe

nsio

n ex

pens

e of

$1

0,60

4,33

8. A

t Dec

embe

r 31,

201

8, th

e C

ity re

porte

d de

ferr

ed o

utflo

ws o

f res

ourc

es

and

defe

rred

inflo

ws

of r

esou

rces

rel

ated

to th

e po

lice

pens

ion

from

the

follo

win

g so

urce

s:

D

efer

red

Out

flow

s of

Def

erre

d In

flow

s of

R

esou

rces

R

esou

rces

Diff

eren

ce b

etw

een

expe

cted

and

act

ual e

xper

ienc

e $

428,

020

$ 8,

011,

116

Cha

nges

in a

ssum

ptio

n

10,5

75,6

68

8,

673,

589

Net

diff

eren

ce b

etw

een

proj

ecte

d an

d ac

tual

ear

ning

s

o

n pe

nsio

n pl

an in

vest

men

ts

5,

755,

595

-

TO

TAL

$ 16

,759

,283

$

16,6

84,7

05

- 68

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 69

-

12.

EM

PLO

YE

E R

ET

IRE

ME

NT

SY

STE

MS

(Con

tinue

d)

a.

Pl

an D

escr

iptio

ns (C

ontin

ued)

Polic

e Pe

nsio

n Pl

an (C

ontin

ued)

Pe

nsio

n Ex

pens

e an

d D

efer

red

Out

flow

s of

Res

ourc

es a

nd D

efer

red

Inflo

ws

of

Res

ourc

es (C

ontin

ued)

A

mou

nts r

epor

ted

as d

efer

red

outfl

ows o

f res

ourc

es a

nd d

efer

red

inflo

ws o

f res

ourc

es

rela

ted

to th

e po

lice

pens

ion

will

be

reco

gniz

ed in

pen

sion

exp

ense

as f

ollo

ws:

Yea

r End

ing

Dec

embe

r 31,

2019

$ 1,

725,

548

2020

(2

,304

,116

) 20

21

(1,4

77,3

46)

2022

1,

418,

405

2023

35

9,64

0 Th

erea

fter

352,

447

TO

TAL

$

74,5

78

Fire

fight

ers’

Pen

sion

Pla

n

Pl

an A

dmin

istr

atio

n

Fi

re sw

orn

pers

onne

l are

cov

ered

by

the

Fire

fight

ers’

Pen

sion

Pla

n. A

lthou

gh th

is is

a

sing

le-e

mpl

oyer

pen

sion

pla

n, t

he d

efin

ed b

enef

its a

nd e

mpl

oyee

and

em

ploy

er

cont

ribut

ion

leve

ls a

re g

over

ned

by I

llino

is C

ompi

led

Stat

utes

(40

ILC

S 5/

4-1)

and

m

ay b

e am

ende

d on

ly b

y th

e Illi

nois

legi

slat

ure.

The

City

acco

unts

for t

he F

irefig

hter

s’

Pens

ion

Plan

as a

pen

sion

trus

t fun

d.

The

plan

is g

over

ned

by a

five

-mem

ber B

oard

of T

rust

ees.

Two

mem

bers

of t

he B

oard

of

Tru

stee

s ar

e ap

poin

ted

by th

e C

ity’s

May

or, o

ne m

embe

r is

ele

cted

by

pens

ion

bene

ficia

ries a

nd tw

o m

embe

rs a

re e

lect

ed b

y ac

tive

firef

ight

er e

mpl

oyee

s.

The

plan

is

acco

unte

d fo

r on

the

eco

nom

ic r

esou

rces

mea

sure

men

t fo

cus

and

the

accr

ual

basi

s of

acc

ount

ing.

Em

ploy

er a

nd e

mpl

oyee

con

tribu

tions

are

rec

ogni

zed

whe

n ea

rned

in th

e ye

ar th

at th

e co

ntrib

utio

ns a

re re

quire

d, b

enef

its a

nd re

fund

s ar

e re

cogn

ized

as a

n ex

pens

e an

d lia

bilit

y w

hen

due

and

paya

ble.

- 69

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 70

-

12.

EM

PLO

YE

E R

ET

IRE

ME

NT

SY

STE

MS

(Con

tinue

d)

a.

Pl

an D

escr

iptio

ns (C

ontin

ued)

Fi

refig

hter

s’ P

ensi

on P

lan

(Con

tinue

d)

Plan

Mem

bers

hip

A

t Dec

embe

r 31,

201

8, th

e Fi

refig

hter

s’ P

ensi

on P

lan

mem

bers

hip

cons

iste

d of

:

Inac

tive

plan

mem

bers

cur

rent

ly re

ceiv

ing

bene

fits

11

2 In

activ

e pl

an m

embe

rs e

ntitl

e to

but

not

yet

rec

eivi

ng b

enef

its

2

Act

ive

plan

mem

bers

130

TOTA

L

244

Bene

fits P

rovi

ded

The

Fire

fight

ers’

Pen

sion

Pla

n pr

ovid

es r

etire

men

t be

nefit

s th

roug

h tw

o tie

rs o

f be

nefit

s as w

ell a

s dea

th a

nd d

isab

ility

ben

efits

. Tie

r 1 e

mpl

oyee

s (th

ose

hire

d pr

ior t

o Ja

nuar

y 1,

201

1) a

ttain

ing

the

age

of 5

0 or

old

er w

ith 2

0 or

mor

e ye

ars

of c

redi

tabl

e se

rvic

e ar

e en

title

d to

rec

eive

an

annu

al r

etire

men

t ben

efit

equa

l to

one-

half

of th

e sa

lary

atta

ched

to th

e ra

nk h

eld

at th

e da

te o

f ret

irem

ent.

The

annu

al b

enef

it sh

all b

e in

crea

sed

by 2

.50%

of s

uch

sala

ry fo

r eac

h ad

ditio

nal y

ear o

f ser

vice

ove

r 20

year

s up

to 3

0 ye

ars

to a

max

imum

of 7

5% o

f suc

h sa

lary

. Em

ploy

ees

with

at l

east

ten

year

s bu

t les

s th

an 2

0 ye

ars

of c

redi

ted

serv

ice

may

retir

e at

or

afte

r age

60

and

rece

ive

a re

duce

d be

nefit

. The

mon

thly

ben

efit

of a

cov

ered

em

ploy

ee w

ho re

tired

with

20

or

mor

e ye

ars o

f ser

vice

afte

r Jan

uary

1, 1

977

shal

l be

incr

ease

d an

nual

ly, f

ollo

win

g th

e fir

st a

nniv

ersa

ry d

ate

of r

etire

men

t and

be

paid

upo

n re

achi

ng th

e ag

e of

at l

east

55

year

s, by

3%

of t

he o

rigin

al p

ensi

on a

nd 3

% c

ompo

unde

d an

nual

ly th

erea

fter.

Ti

er 2

em

ploy

ees

(thos

e hi

red

on o

r afte

r Jan

uary

1, 2

011)

atta

inin

g th

e ag

e of

55

or

olde

r w

ith te

n or

mor

e ye

ars

of c

redi

tabl

e se

rvic

e ar

e en

title

d to

rec

eive

an

annu

al

retir

emen

t ben

efit

equa

l to

the

aver

age

mon

thly

sal

ary

obta

ined

by

divi

ding

the

tota

l sa

lary

of

the

firef

ight

er d

urin

g th

e 96

con

secu

tive

mon

ths

of s

ervi

ce w

ithin

the

last

120

mon

ths

of s

ervi

ce i

n w

hich

the

tota

l sal

ary

was

the

high

est

by th

e nu

mbe

r of

m

onth

s of s

ervi

ce in

that

per

iod.

Fire

fight

ers’

sala

ry fo

r pen

sion

pur

pose

s is c

appe

d at

$1

13,6

45, p

lus

the

less

er o

f ½ o

f the

ann

ual c

hang

e in

the

Con

sum

er P

rice

Inde

x or

3%

com

poun

ded.

The

ann

ual b

enef

it sh

all b

e in

crea

sed

by 2

.50%

of s

uch

sala

ry fo

r ea

ch a

dditi

onal

yea

r of s

ervi

ce o

ver 2

0 ye

ars u

p to

30

year

s to

a m

axim

um o

f 75%

of

such

sala

ry. E

mpl

oyee

s with

at l

east

ten

year

s may

retir

e at

or a

fter a

ge 5

0 an

d re

ceiv

e a

redu

ced

bene

fit (i

.e.,

½%

for e

ach

mon

th u

nder

55)

. The

mon

thly

ben

efit

of a

Tie

r 2

firef

ight

er sh

all b

e in

crea

sed

annu

ally

at a

ge 6

0 on

the

Janu

ary

1st a

fter t

he fi

refig

hter

re

tires

, or

the

firs

t an

nive

rsar

y of

the

pen

sion

sta

rting

dat

e, w

hich

ever

is

late

r. N

onco

mpo

undi

ng in

crea

ses

occu

r ann

ually

, eac

h Ja

nuar

y th

erea

fter.

The

incr

ease

is

the

less

er o

f 3%

or ½

of t

he c

hang

e in

the

Con

sum

er P

rice

Inde

x fo

r the

pro

ceed

ing

cale

ndar

yea

r.

- 70

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 71

-

12.

EM

PLO

YE

E R

ET

IRE

ME

NT

SY

STE

MS

(Con

tinue

d)

a.

Pl

an D

escr

iptio

ns (C

ontin

ued)

Fi

refig

hter

s’ P

ensi

on P

lan

(Con

tinue

d)

Con

trib

utio

ns

Cov

ered

em

ploy

ees

are

requ

ired

to c

ontri

bute

9.4

55%

of

thei

r ba

se s

alar

y to

the

Fi

refig

hter

s’ P

ensi

on P

lan.

If a

n em

ploy

ee le

aves

cov

ered

em

ploy

men

t with

less

than

20

yea

rs o

f se

rvic

e, a

ccum

ulat

ed e

mpl

oyee

con

tribu

tions

may

be

refu

nded

with

out

accu

mul

ated

inte

rest

. The

City

is re

quire

d to

fina

nce

the

Fire

fight

ers’

Pen

sion

Pla

n as

ac

tuar

ially

det

erm

ined

by

an e

nrol

led

actu

ary

incl

udin

g am

ount

s fo

r ad

min

istra

tive

cost

s. B

enef

its a

nd re

fund

s are

reco

rded

as a

liab

ility

whe

n du

e an

d pa

yabl

e. E

ffec

tive

Janu

ary

1, 2

011,

the

City

has

unt

il th

e ye

ar 2

040

to fu

nd 9

0% o

f the

pas

t ser

vice

s cos

ts

for t

he F

irefig

hter

s’ P

ensi

on P

lan.

How

ever

, the

City

has

ele

cted

to fu

nd 1

00%

of t

he

past

serv

ice

cost

by

2040

. The

City

’s c

ontri

butio

n w

as 4

6.48

% o

f cov

ered

pay

roll

for

the

year

end

ed D

ecem

ber 3

1, 2

018.

In

vest

men

t Pol

icy

ILC

S lim

it th

e Fi

refig

hter

s’ P

ensi

on F

und’

s (th

e Fu

nd) i

nves

tmen

ts to

thos

e al

low

able

by

ILC

S an

d re

quire

the F

und’

s Boa

rd o

f Tru

stee

s to

adop

t an

inve

stm

ent p

olic

y w

hich

ca

n be

am

ende

d by

a m

ajor

ity v

ote

of th

e B

oard

of T

rust

ees.

Dur

ing

the

year

end

ed

Dec

embe

r 31,

201

7, c

hang

es to

the

inve

stm

ent p

olic

y w

ere

appr

oved

by

the

Boa

rd o

f Tr

uste

es. C

hang

es w

ere

mad

e to

allo

wab

le d

urat

ion

varia

nces

, cor

pora

te b

ond

and

sepa

rate

insu

ranc

e ac

coun

t gui

delin

es a

nd a

lloca

tion

perc

enta

ges.

See

Not

e 2

for a

list

of

allo

wab

le in

vest

men

ts.

Th

e Fu

nd’s

inv

estm

ent

polic

y do

es n

ot s

peci

fical

ly p

rohi

bit

the

use

of o

r th

e in

vest

men

t in

deriv

ativ

es.

Th

e Fu

nd’s

inve

stm

ent p

olic

y es

tabl

ishe

s th

e fo

llow

ing

targ

et a

lloca

tion

acro

ss a

sset

cl

asse

s:

Ass

et C

lass

Ta

rget

Long

-Ter

m

Expe

cted

Rea

l R

ate

of R

etur

n

Fixe

d in

com

e*

35%

2.

10%

U.S

. equ

ity**

40

%

5.60

%

In

tern

atio

nal e

quity

20

%

5.80

%

R

eal e

stat

e 5%

5.

20%

- 71

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 72

-

12.

EM

PLO

YE

E R

ET

IRE

ME

NT

SY

STE

MS

(Con

tinue

d)

a.

Pl

an D

escr

iptio

ns (C

ontin

ued)

Fi

refig

hter

s’ P

ensi

on P

lan

(Con

tinue

d)

Inve

stm

ent P

olic

y (C

ontin

ued)

*No

sing

le s

ecur

ity >

10%

of

tota

l bon

d po

rtfol

io, a

vera

ge d

urat

ion

+/-

20%

of

the

appr

opria

te in

dex,

up

to 1

0% in

cas

h or

cas

h eq

uiva

lent

s.

**N

o si

ngle

sto

ck >

5% o

f the

tota

l cas

h an

d in

vest

men

ts o

f the

Fun

d an

d no

sin

gle

stoc

k >5

% o

f tot

al st

ock

outs

tand

ing

for t

he c

orpo

ratio

n.

The

long

-term

exp

ecte

d re

al r

ate

of r

etur

n ar

e ba

sed

on t

he i

nves

tmen

t m

anag

er’s

pr

oprie

tary

ass

et a

lloca

tion

softw

are,

whi

ch u

tiliz

es M

onte

-Car

lo s

imul

atio

ns t

o de

velo

p ex

pect

ed a

sset

cla

ss re

turn

s and

vol

atili

ty v

alue

s. Th

e pr

imar

y in

puts

into

the

mod

el a

re s

traig

htfo

rwar

d ec

onom

ic d

ata

such

as

yiel

ds, i

nfla

tion,

BB

B s

prea

ds a

nd

long

-dat

ed a

sset

cla

ss re

turn

serie

s dat

a.

In

vest

men

t Val

uatio

ns

All

inve

stm

ents

in th

e pla

n ar

e sta

ted

at fa

ir va

lue a

nd ar

e rec

orde

d as

of t

he tr

ade d

ate.

Fa

ir va

lue

is th

e pr

ice

that

wou

ld b

e re

ceiv

ed to

sel

l an

asse

t or

paid

to tr

ansf

er a

lia

bilit

y in

an o

rder

ly tr

ansa

ctio

n be

twee

n m

arke

t par

ticip

ants

at th

e mea

sure

men

t dat

e.

Inve

stm

ent R

ate

of R

etur

n

For t

he y

ear e

nded

Dec

embe

r 31,

201

8, th

e an

nual

mon

ey-w

eigh

ted

rate

of r

etur

n on

pe

nsio

n pl

an in

vest

men

ts, n

et o

f pen

sion

pla

n in

vest

men

t exp

ense

, was

(4.8

3)%

. The

m

oney

-wei

ghte

d ra

te o

f ret

urn

expr

esse

s in

vest

men

t per

form

ance

, net

of i

nves

tmen

t ex

pens

e, a

djus

ted

for t

he c

hang

ing

amou

nts a

ctua

lly in

vest

ed.

Dep

osits

with

Fin

anci

al In

stitu

tions

Cus

todi

al c

redi

t ris

k fo

r dep

osits

with

fina

ncia

l ins

titut

ions

is th

e ris

k th

at in

the

even

t of

a b

ank’

s fa

ilure

, the

Fun

d’s

depo

sits

may

not

be

retu

rned

to

them

. Th

e Fu

nd’s

in

vest

men

t pol

icie

s do

not r

equi

re p

ledg

ing

of co

llate

ral f

or al

l ban

k ba

lanc

es in

exce

ss

of f

eder

al d

epos

itory

insu

ranc

e, s

ince

flo

w-th

roug

h FD

IC in

sura

nce

is a

vaila

ble

for

the

Fund

’s d

epos

its w

ith fi

nanc

ial i

nstit

utio

ns.

- 72

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 73

-

12.

EM

PLO

YE

E R

ET

IRE

ME

NT

SY

STE

MS

(Con

tinue

d)

a.

Pl

an D

escr

iptio

ns (C

ontin

ued)

Fi

refig

hter

s’ P

ensi

on P

lan

(Con

tinue

d)

Inte

rest

Rat

e Ri

sk

The

follo

win

g ta

ble

pres

ents

the

inv

estm

ents

and

mat

uriti

es o

f th

e Fu

nd’s

deb

t se

curit

ies a

s of D

ecem

ber 3

1, 2

018:

Inve

stm

ent M

atur

ities

(in

Yea

rs)

Inve

stm

ent T

ype

Fair

Val

ue

Less

than

1

1-5

6-10

G

reat

er th

an 1

0

U

.S. T

reas

ury

oblig

atio

ns

$ 7,

448,

849

$ -

$ 6,

614,

324

$ 83

4,52

5 $

- U

.S. a

genc

y ob

ligat

ions

7,56

3,80

8

-

3,22

1,50

2

2,23

9,23

1

2,10

3,07

5 C

ertif

icat

es o

f dep

osit

2,

158,

988

-

2,

158,

988

-

-

Cor

pora

te b

onds

11,6

89,7

36

67

2,23

4

7,79

5,99

1

3,22

1,51

1

-

TO

TAL

$ 28

,861

,381

$

672,

234

$ 19

,790

,805

$

6,29

5,26

7 $

2,10

3,07

5

Th

e Fu

nd c

ateg

oriz

es i

ts f

air

valu

e m

easu

rem

ents

with

in t

he f

air

valu

e hi

erar

chy

esta

blis

hed

by G

AA

P. T

he h

iera

rchy

is b

ased

on

the

valu

atio

n in

puts

use

d to

mea

sure

th

e fa

ir va

lue

of t

he a

sset

. Le

vel

1 in

puts

are

quo

ted

pric

es i

n ac

tive

mar

kets

for

id

entic

al a

sset

s; L

evel

2 in

puts

are

sig

nific

ant o

ther

obs

erva

ble

inpu

ts; a

nd L

evel

3

inpu

ts a

re s

igni

fican

t uno

bser

vabl

e in

puts

. The

Fun

d ha

s th

e fo

llow

ing

recu

rrin

g fa

ir va

lue

mea

sure

men

ts a

s of D

ecem

ber 3

1, 2

018:

the

U.S

. Tre

asur

y ob

ligat

ions

, equ

ities

an

d m

utua

l fun

ds a

re v

alue

d us

ing

quot

ed p

rices

in a

ctiv

e m

arke

ts fo

r ide

ntic

al a

sset

s (L

evel

1 i

nput

s).

The

U.S

. ag

ency

obl

igat

ions

, co

rpor

ate

bond

s an

d ne

gotia

ble

certi

ficat

es o

f dep

osit

are

valu

ed u

sing

quo

ted

mat

rix p

ricin

g m

odel

s (Le

vel 2

inpu

ts).

The

pool

ed r

eal

esta

te i

nves

tmen

t is

val

ued

usin

g ap

prai

sals

, in

tern

ally

pre

pare

d va

luat

ions

and

dis

coun

ted

cash

flow

ana

lysi

s (Le

vel 3

inpu

ts).

In

tere

st ra

te ri

sk is

the

risk

that

cha

nges

in in

tere

st ra

tes

will

adv

erse

ly a

ffec

t the

fair

valu

e of

an

inve

stm

ent.

In a

ccor

danc

e w

ith it

s in

vest

men

t pol

icy,

the

Fund

lim

its it

s ex

posu

re t

o in

tere

st r

ate

risk

by s

truct

urin

g th

e po

rtfol

io t

o pr

ovid

e liq

uidi

ty f

or

oper

atin

g fu

nds a

nd m

axim

izin

g yi

elds

for f

unds

not

nee

ded

with

in a

one

-yea

r per

iod.

Th

e in

vest

men

t pol

icy

does

not

lim

it th

e m

axim

um m

atur

ity le

ngth

of i

nves

tmen

ts in

th

e Fu

nd.

- 73

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 74

-

12.

EM

PLO

YE

E R

ET

IRE

ME

NT

SY

STE

MS

(Con

tinue

d)

a.

Pl

an D

escr

iptio

ns (C

ontin

ued)

Fi

refig

hter

s’ P

ensi

on P

lan

(Con

tinue

d)

Cre

dit R

isk

Th

e Fu

nd’s

inve

stm

ent p

olic

y do

es n

ot c

onta

in g

uida

nce

on c

redi

t ris

k. H

owev

er, t

he

Fund

lim

its it

s exp

osur

e to

cre

dit r

isk,

the

risk

that

the

issu

er o

f a d

ebt s

ecur

ity w

ill n

ot

pay

its p

ar v

alue

upo

n m

atur

ity, b

y pr

imar

ily in

vest

ing

in o

blig

atio

ns g

uara

ntee

d by

th

e U

nite

d St

ates

Gov

ernm

ent o

r se

curit

ies

issu

ed b

y ag

enci

es o

f th

e U

nite

d St

ates

G

over

nmen

t th

at a

re e

xplic

itly

or i

mpl

icitl

y gu

aran

teed

by

the

Uni

ted

Stat

es

Gov

ernm

ent

or b

ond

mut

ual

fund

s th

at a

re i

nves

ted

in t

hese

sec

uriti

es.

The

U.S

. ag

ency

obl

igat

ions

are

rat

ed A

AA

to

BB

B-

and

the

mon

ey m

arke

t fu

nds

and

nego

tiabl

e ce

rtific

ates

of d

epos

it ar

e no

t rat

ed. T

he c

orpo

rate

bon

ds a

re ra

ted

Baa

3 to

A

aa.

Cus

todi

al C

redi

t Ris

k

Cus

todi

al c

redi

t ris

k fo

r inv

estm

ents

is th

e ris

k th

at, i

n th

e ev

ent o

f the

failu

re o

f the

co

unte

rpar

ty to

the

inve

stm

ent,

the

Fund

will

not

be

able

to r

ecov

er th

e va

lue

of it

s in

vest

men

ts th

at ar

e in

poss

essi

on o

f an

outs

ide p

arty

. To

limit

its ex

posu

re, t

he F

und’

s in

vest

men

t pol

icy

requ

ires a

ll se

curit

y tra

nsac

tions

that

are

exp

osed

to c

usto

dial

cre

dit

risk

to b

e pr

oces

sed

on a

del

iver

y ve

rsus

pay

men

t (D

VP)

bas

is w

ith th

e un

derly

ing

inve

stm

ents

hel

d by

a th

ird p

arty

act

ing

as th

e Fu

nd’s

age

nt s

epar

ate

from

whe

re th

e in

vest

men

t was

pur

chas

ed in

the

Fund

’s n

ame.

The

mon

ey m

arke

t mut

ual f

unds

and

m

utua

l fun

ds a

re n

ot su

bjec

t to

cust

odia

l cre

dit r

isk.

C

once

ntra

tion

of C

redi

t Ris

k

Th

ere a

re n

o si

gnifi

cant

inve

stm

ents

(oth

er th

an U

nite

d St

ates

Gov

ernm

ent g

uara

ntee

d ob

ligat

ions

) in

any

one

org

aniz

atio

n th

at r

epre

sent

s 5%

or

mor

e of

the

Fun

d’s

inve

stm

ents

.

- 74

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 75

-

12.

EM

PLO

YE

E R

ET

IRE

ME

NT

SY

STE

MS

(Con

tinue

d)

a.

Pl

an D

escr

iptio

ns (C

ontin

ued)

Fi

refig

hter

s’ P

ensi

on P

lan

(Con

tinue

d)

Cha

nges

in th

e N

et P

ensi

on L

iabi

lity

(a)

Tota

l Pen

sion

(b

) Pl

an F

iduc

iary

(a

) - (b

) N

et P

ensi

on

Li

abili

ty

Net

Pos

ition

Li

abili

ty

BA

LAN

CES

AT

J

AN

UA

RY

1, 2

018

$ 16

2,73

4,04

9 $

87,0

45,5

01

$ 75

,688

,548

C

hang

es fo

r the

per

iod

Serv

ice

cost

3,02

0,28

6

-

3,02

0,28

6

Inte

rest

11,1

41,5

31

-

11

,141

,531

Diff

eren

ce b

etw

een

expe

cted

a

nd a

ctua

l exp

erie

nce

337,

398

-

33

7,39

8

Cha

nges

in a

ssum

ptio

ns

9,

806,

406

-

9,

806,

406

Em

ploy

er c

ontri

butio

ns

-

6,

193,

093

(6

,193

,093

)

Empl

oyee

con

tribu

tions

-

1,26

6,64

2

(1,2

66,6

42)

N

et in

vest

men

t inc

ome

-

(4

,246

,824

)

4,24

6,82

4

Ben

efit

paym

ents

and

refu

nds

(7

,138

,654

)

(7,1

38,6

54)

-

A

dmin

istra

tive

expe

nse

-

(8

0,69

1)

80

,691

N

et c

hang

es

17

,166

,967

(4,0

06,4

34)

21

,173

,401

B

ALA

NC

ES A

T

DEC

EMB

ER 3

1, 2

018

$ 17

9,90

1,01

6 $

83,0

39,0

67

$ 96

,861

,949

Th

ere

was

a c

hang

e w

ith re

spec

t to

actu

aria

l ass

umpt

ions

from

the

prio

r yea

r to

refle

ct

revi

sed

expe

ctat

ions

with

res

pect

to

mor

talit

y ra

tes,

mor

talit

y im

prov

emen

t ra

tes,

retir

emen

t rat

es, d

isab

ility

rate

s and

term

inat

ion

rate

s.

See

the

sche

dule

of c

hang

es in

the

empl

oyer

’s n

et p

ensi

on li

abili

ty a

nd re

late

d ra

tios

in th

e re

quire

d su

pple

men

tary

info

rmat

ion

for

addi

tiona

l inf

orm

atio

n re

late

d to

the

fund

ed st

atus

of t

he F

und.

Ac

tuar

ial A

ssum

ptio

ns

The

tota

l pen

sion

liab

ility

abo

ve w

as d

eter

min

ed b

y an

act

uaria

l val

uatio

n pe

rfor

med

as

of D

ecem

ber 3

1, 2

018

usin

g th

e fo

llow

ing

actu

aria

l met

hods

and

ass

umpt

ions

.

- 75

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 76

-

12.

EM

PLO

YE

E R

ET

IRE

ME

NT

SY

STE

MS

(Con

tinue

d)

a.

Pl

an D

escr

iptio

ns (C

ontin

ued)

Fi

refig

hter

s’ P

ensi

on P

lan

(Con

tinue

d)

Actu

aria

l Ass

umpt

ions

(Con

tinue

d)

A

ctua

rial v

alua

tion

date

D

ecem

ber 3

1, 2

018

Mea

sure

men

t dat

e D

ecem

ber 3

1, 2

018

Act

uaria

l cos

t met

hod

En

try-a

ge n

orm

al

Ass

umpt

ions

In

flatio

n 2.

50%

Sala

ry in

crea

ses

4.00

% to

8.7

7%

In

tere

st ra

te

7.00

%

C

ost o

f liv

ing

adju

stm

ents

Ti

er 1

at 3

.00%

Ti

er 2

at 2

.00%

A

sset

val

uatio

n m

etho

d

Mar

ket

Mor

talit

y ra

tes w

ere b

ased

on

the R

P-20

14 M

orta

lity

Tabl

e (B

CH

A) p

roje

cted

to 2

017

usin

g im

prov

emen

t sca

le M

P-20

16.

The

othe

r non

-eco

nom

ic a

ctua

rial a

ssum

ptio

ns

used

in th

e D

ecem

ber

31, 2

018

valu

atio

n w

ere

base

d on

the

resu

lts o

f an

act

uaria

l ex

perie

nce

stud

y co

nduc

ted

by th

e Ill

inoi

s Dep

artm

ent o

f Ins

uran

ce (G

RS)

in 2

012.

D

isco

unt R

ate

The

disc

ount

rate

use

d to

mea

sure

the

tota

l pen

sion

liab

ility

was

7%

. The

pro

ject

ion

of c

ash

flow

s use

d to

det

erm

ine

the

disc

ount

rate

ass

umed

that

mem

ber c

ontri

butio

ns

will

be

mad

e at

the

curr

ent c

ontri

butio

n ra

te a

nd th

at th

e C

ity c

ontri

butio

ns w

ill b

e m

ade

at ra

tes e

qual

to th

e di

ffer

ence

bet

wee

n ac

tuar

ially

det

erm

ined

con

tribu

tion

rate

s an

d th

e m

embe

r rat

e. B

ased

on

thos

e as

sum

ptio

ns, t

he F

und’

s fid

ucia

ry n

et p

ositi

on

was

pro

ject

ed to

be

avai

labl

e to

mak

e al

l pro

ject

ed fu

ture

ben

efit

paym

ents

of c

urre

nt

plan

mem

bers

. Th

eref

ore,

the

lon

g-te

rm e

xpec

ted

rate

of

retu

rn o

n pe

nsio

n pl

an

inve

stm

ents

was

app

lied

to a

ll pe

riods

of p

roje

cted

ben

efit

paym

ents

to d

eter

min

e th

e to

tal p

ensi

on li

abili

ty.

Dis

coun

t Rat

e Se

nsiti

vity

Th

e fo

llow

ing

is a

sen

sitiv

ity a

naly

sis

of th

e ne

t pen

sion

liab

ility

to c

hang

es in

the

disc

ount

rate

. The

tabl

e be

low

pre

sent

s the

net

pen

sion

liab

ility

of t

he C

ity c

alcu

late

d us

ing

the

disc

ount

rate

of 7

% a

s wel

l as w

hat t

he C

ity’s

net

pen

sion

liab

ility

wou

ld b

e if

it w

ere

calc

ulat

ed u

sing

a d

isco

unt r

ate

that

is 1

per

cent

age

poin

t low

er (

6%)

or

1 pe

rcen

tage

poi

nt h

ighe

r (8%

) tha

n th

e cu

rren

t rat

e:

- 76

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 77

-

12.

EM

PLO

YE

E R

ET

IRE

ME

NT

SY

STE

MS

(Con

tinue

d)

a.

Pl

an D

escr

iptio

ns (C

ontin

ued)

Fi

refig

hter

s’ P

ensi

on P

lan

(Con

tinue

d)

Dis

coun

t Rat

e Se

nsiti

vity

(Con

tinue

d)

1%

Dec

reas

e C

urre

nt

Dis

coun

t Rat

e

1% In

crea

se

(6

%)

(7%

) (8

%)

Net

pen

sion

liab

ility

$

123,

110,

075

$ 96

,861

,949

$

75,4

93,5

55

Pe

nsio

n Ex

pens

e an

d D

efer

red

Out

flow

s of

Res

ourc

es a

nd D

efer

red

Inflo

ws

of

Res

ourc

es

Fo

r th

e ye

ar e

nded

Dec

embe

r 31

, 20

18,

the

City

rec

ogni

zed

firef

ight

ers’

pen

sion

ex

pens

e of

$10

,093

,203

. At D

ecem

ber 3

1, 2

018,

the

City

repo

rted

defe

rred

out

flow

s of

reso

urce

s and

def

erre

d in

flow

s of r

esou

rces

rela

ted

to th

e fir

efig

hter

s’ p

ensi

on fr

om

the

follo

win

g so

urce

s:

D

efer

red

Out

flow

s of

Def

erre

d In

flow

s of

R

esou

rces

R

esou

rces

Diff

eren

ce b

etw

een

expe

cted

and

act

ual e

xper

ienc

e $

1,67

6,46

6 $

1,02

2,66

1 C

hang

es in

ass

umpt

ion

11

,599

,611

5,78

2,90

6 N

et d

iffer

ence

bet

wee

n pr

ojec

ted

and

actu

al e

arni

ngs

on

pens

ion

plan

inve

stm

ents

4,50

2,82

4

-

TOTA

L $

17,7

78,9

01

$ 6,

805,

567

A

mou

nts r

epor

ted

as d

efer

red

outfl

ows o

f res

ourc

es a

nd d

efer

red

inflo

ws o

f res

ourc

es

rela

ted

to th

e po

lice

pens

ion

will

be

reco

gniz

ed in

pen

sion

exp

ense

as f

ollo

ws:

Yea

r End

ing

Dec

embe

r 31,

2019

$ 3,

234,

047

2020

1,

504,

739

2021

75

8,20

7 20

22

2,56

9,46

1 20

23

1,22

8,01

4 Th

erea

fter

1,67

8,86

6

TOTA

L

$ 10

,973

,334

- 7

7 -

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 78

-

12.

EM

PLO

YE

E R

ET

IRE

ME

NT

SY

STE

MS

(Con

tinue

d)

b.

Fi

duci

ary

Fund

s Sum

mar

y Fi

nanc

ial I

nfor

mat

ion

The

follo

win

g is

sum

mar

y fin

anci

al in

form

atio

n fo

r the

Pol

ice

Pens

ion

Plan

and

the

Fire

fight

ers’

Pen

sion

Pla

n an

d th

e R

etire

e H

ealth

Insu

ranc

e Pl

an.

Stat

emen

t of N

et P

ositi

on

Pe

nsio

n Tr

ust

Oth

er

Empl

oyee

B

enef

its T

rust

Po

lice

Pens

ion

Fire

fight

ers’

Pe

nsio

n R

etire

e H

ealth

In

sura

nce

To

tal

A

SSET

S

Cas

h an

d sh

ort-t

erm

inve

stm

ents

$

212,

694

$ 28

9,64

9 $

190,

954

$ 69

3,29

7

Rec

eiva

bles

A

ccou

nts

-

-

13

,331

13,3

31

Acc

rued

inte

rest

242,

905

18

4,96

1

2,34

9

430,

215

In

vest

men

ts

U.S

. Tre

asur

y ob

ligat

ions

6,33

4,13

4

7,44

8,84

9

-

13,7

82,9

83

U.S

. age

ncy

oblig

atio

ns

13

,020

,328

7,56

3,80

8

-

20,5

84,1

36

Stat

e an

d lo

cal o

blig

atio

ns

-

-

41

2,00

0

412,

000

Cor

pora

te b

onds

15,1

04,5

05

11

,689

,736

-

26,7

94,2

41

Cor

pora

te e

quity

secu

ritie

s

6,53

0,56

3

7,62

1,88

4

-

14,1

52,4

47

Equi

ty m

utua

l fun

ds

47

,389

,823

39,4

24,0

03

4,

592,

722

91

,406

,548

B

ond

mut

ual f

unds

-

-

5,02

8,27

6

5,02

8,27

6 B

alan

ced

mut

ual f

unds

5,83

9,64

5

-

1,17

8,75

3

7,01

8,39

8

C

ertif

icat

es o

f dep

osit

2,46

2,16

1

2,15

8,98

8

-

4,62

1,14

9

M

oney

mar

ket m

utua

l fun

ds

3,

595,

285

2,

068,

229

12

8,48

6

5,79

2,00

0

Po

oled

real

est

ate

fund

13,8

87,0

79

4,

622,

205

-

18

,509

,284

Prep

aid

item

s

17,8

28

12

,857

2,91

7

33,6

02

Tota

l ass

ets

11

4,63

6,95

0

83,0

85,1

69

11

,549

,788

209,

271,

907

LI

AB

ILIT

IES

A

ccou

nts p

ayab

le

36

,926

46,1

02

-

83

,028

Dep

osits

-

-

102,

329

10

2,32

9

Due

to o

ther

fund

s

-

-

-

-

To

tal l

iabi

litie

s

36,9

26

46

,102

102,

329

18

5,35

7

NET

PO

SITI

ON

HEL

D IN

TR

UST

F

OR

PEN

SIO

N B

ENEF

ITS

$ 11

4,60

0,02

4 $

83,0

39,0

67

$ 11

,447

,459

$

209,

086,

550

- 78

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 79

-

12.

EM

PLO

YE

E R

ET

IRE

ME

NT

SY

STE

MS

(Con

tinue

d)

b.

Fi

duci

ary

Fund

s Sum

mar

y Fi

nanc

ial I

nfor

mat

ion

(Con

tinue

d)

Cha

nges

in P

lan

Net

Pos

ition

Pens

ion

Trus

t

Oth

er

Empl

oyee

B

enef

its T

rust

Po

lice

Pens

ion

Fire

fight

ers’

Pe

nsio

n R

etire

e H

ealth

In

sura

nce

To

tal

A

DD

ITIO

NS

C

ontri

butio

ns

Empl

oyer

$

8,60

4,33

8 $

6,19

3,09

3 $

1,62

7,17

1 $

16,4

24,6

02

Empl

oyee

/retir

ee

1,

936,

667

1,

266,

642

-

3,

203,

309

Tota

l con

tribu

tions

10,5

41,0

05

7,

459,

735

1,

627,

171

19

,627

,911

In

vest

men

t inc

ome

Net

(dep

reci

atio

n) in

fair

valu

e

o

f inv

estm

ents

(7,2

43,5

34)

(5

,674

,877

)

(820

,031

)

(13,

738,

442)

In

tere

st

2,

501,

263

1,

616,

531

31

5,82

6

4,43

3,62

0

To

tal i

nves

tmen

t inc

ome

(4

,742

,271

)

(4,0

58,3

46)

(5

04,2

05)

(9

,304

,822

)

Less

inve

stm

ent e

xpen

se

(1

89,4

85)

(1

88,4

78)

(2

4,11

4)

(4

02,0

77)

Net

inve

stm

ent i

ncom

e

(4,9

31,7

56)

(4

,246

,824

)

(528

,319

)

(9,7

06,8

99)

Tota

l add

ition

s

5,60

9,24

9

3,21

2,91

1

1,09

8,85

2

9,92

1,01

2

DED

UC

TIO

NS

B

enef

its a

nd re

fund

s

8,97

0,32

7

7,13

8,65

4

630,

595

16

,739

,576

Mis

cella

neou

s

C

ontra

ctua

l pro

fess

iona

l ser

vice

s

110,

319

72

,168

-

182,

487

Insu

ranc

e

12,8

56

8,

523

-

21

,379

To

tal d

educ

tions

9,09

3,50

2

7,21

9,34

5

630,

595

16

,943

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NET

INC

REA

SE (D

ECR

EASE

)

(3,4

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53)

(4

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)

468,

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(7

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NET

PO

SITI

ON

HEL

D IN

TR

UST

F

OR

PEN

SIO

N B

ENEF

ITS

Janu

ary

1

118,

084,

277

87

,045

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10,9

79,2

02

21

6,10

8,98

0

D

ecem

ber 3

1 $

114,

600,

024

$ 83

,039

,067

$

11,4

47,4

59

$ 20

9,08

6,55

0

- 79

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 80

-

13.

EC

ON

OM

IC D

EV

EL

OPM

EN

T A

SSIS

TA

NC

E

Th

e C

ity h

as e

nter

ed i

nto

vario

us a

gree

men

ts w

ith p

rivat

e or

gani

zatio

ns t

o en

cour

age

econ

omic

dev

elop

men

t in

the

City

. So

me

of t

hese

agr

eem

ents

pro

vide

for

job

cre

atio

n pa

ymen

ts a

nd r

ebat

ing

a po

rtion

of

sale

s ta

xes

to t

he p

rivat

e or

gani

zatio

n if

certa

in

benc

hmar

ks o

f dev

elop

men

t are

ach

ieve

d. D

urin

g th

e fis

cal y

ear e

nded

Dec

embe

r 31,

201

8,

appr

oxim

atel

y $1

,699

,501

in

sa

les

tax

reba

tes

wer

e pa

id

unde

r th

ese

agre

emen

ts.

App

roxi

mat

ely

$19,

938,

388

in s

ales

tax

reba

tes

may

be

paid

if c

erta

in c

riter

ia a

re m

et in

fu

ture

yea

rs.

14.

TA

X A

BA

TE

ME

NT

S

The C

ity re

bate

s hom

e rul

e sal

es ta

x an

d pr

oper

ty ta

xes t

o en

cour

age

econ

omic

dev

elop

men

t in

the

City

. The

term

s of t

hese

reba

te a

rran

gem

ents

are

spec

ified

with

in w

ritte

n ag

reem

ents

w

ith th

e bu

sine

ss c

once

rned

thro

ugh

the

City

’s e

cono

mic

dev

elop

men

t pro

gram

. Cer

tain

re

bate

s may

be

reca

ptur

ed if

the

busi

ness

fails

to m

eet o

r mai

ntai

n th

e cr

iteria

est

ablis

hed

in

the

writ

ten

agre

emen

ts. T

hese

agr

eem

ents

are

aut

horiz

ed th

roug

h re

solu

tions

app

rove

d by

th

e C

ity C

ounc

il. T

he C

ity r

ebat

ed $

25,6

70 i

n pr

oper

ty t

axes

dur

ing

the

year

end

ed

Dec

embe

r 31,

201

8. T

he C

ity re

bate

d $5

23,2

09 o

f hom

e ru

le sa

les t

ax d

urin

g th

e ye

ar e

nded

D

ecem

ber 3

1, 2

018.

15

. C

HA

NG

E IN

AC

CO

UN

TIN

G P

RIN

CIP

LE

For

the

fisca

l ye

ar e

nded

Dec

embe

r 31

, 20

18,

the

City

im

plem

ente

d G

ASB

Sta

tem

ent

No.

75.

With

the

im

plem

enta

tion,

the

City

is

requ

ired

to r

etro

activ

ely

reco

rd t

he t

otal

po

stem

ploy

men

t ben

efit

liabi

lity

and

writ

e-of

f the

net

OPE

B o

blig

atio

n.

Th

e be

ginn

ing

net

posi

tion

repo

rted

in t

he g

over

nmen

t-wid

e an

d bu

sine

ss-ty

pe f

inan

cial

st

atem

ents

has

bee

n re

stat

ed to

refle

ct th

e ne

w g

uida

nce

as fo

llow

s:

G

OV

ERN

MEN

TAL

AC

TIV

ITIE

S

BEG

INN

ING

NET

PO

SITI

ON

, AS

PREV

IOU

SLY

REP

OR

TED

$

394,

699,

672

W

rite-

off n

et O

PEB

obl

igat

ion

10

,503

,610

Tota

l OPE

B li

abili

ty

(1

9,70

4,22

3)

T

otal

rest

atem

ent

(9

,200

,613

)

B

EGIN

NIN

G N

ET P

OSI

TIO

N, A

S R

ESTA

TED

$

385,

499,

059

B

USI

NES

S TY

PE A

CTI

VIT

IES

B

EGIN

NIN

G N

ET P

OSI

TIO

N, A

S PR

EVIO

USL

Y R

EPO

RTE

D

$ 28

5,58

7,74

3

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e-of

f net

OPE

B o

blig

atio

n

127,

171

To

tal O

PEB

liab

ility

(1,3

38,1

91)

T

otal

rest

atem

ent

(1

,211

,020

)

B

EGIN

NIN

G N

ET P

OSI

TIO

N, A

S R

ESTA

TED

$

284,

376,

723

- 8

0 -

CIT

Y O

F E

LG

IN, I

LL

INO

IS

NO

TES

TO F

INA

NC

IAL

STA

TEM

ENTS

(Con

tinue

d)

- 81

-

16.

SUB

SEQ

UE

NT

EV

EN

T

O

n M

arch

20,

201

9, th

e C

ity p

asse

d an

ord

inan

ce p

rovi

ding

for t

he is

suan

ce o

f $9,

310,

000

Gen

eral

Obl

igat

ion

Cor

pora

te P

urpo

se B

onds

, Ser

ies

2019

. Th

e bo

nds

will

fina

nce

certa

in

capi

tal i

mpr

ovem

ents

.

- 81

-Fo

r T

he

Fis

cal

Ye

ar

En

de

d D

ece

mb

er

31

, 20

18

Com

preh

ensi

ve A

nnua

l Fin

anci

al R

epor

t

REQ

UIR

ED S

UPP

LEM

ENTA

RY

IN

FOR

MA

TIO

N

CIT

Y O

F E

LG

IN, I

LL

INO

IS

SCH

EDU

LE O

F R

EVEN

UES

, EX

PEN

DIT

UR

ESA

ND

CH

AN

GES

IN F

UN

D B

ALA

NC

E - B

UD

GET

AN

D A

CTU

AL

GEN

ERA

L FU

ND

For t

he Y

ear E

nded

Dec

embe

r 31,

201

8

Var

ianc

eO

rigi

nal

Fina

lO

ver

Bud

get

Bud

get

Act

ual

(Und

er)

RE

VE

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ES

Taxe

sPr

oper

ty

42,7

77,0

00$

42,7

77,0

00$

42

,192

,320

$

(584

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)$

Roa

d an

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idge

90

0,00

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90

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0

97

4,46

8

74

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969,

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959,

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les

24,7

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24,7

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27

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ity6,

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6,

568,

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8,37

9

Te

leco

mm

unic

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ns2,

750,

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2,

750,

000

2,

520,

429

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29,5

71)

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cal l

iquo

r1,

325,

000

1,

325,

000

1,

451,

207

12

6,20

7

Lo

cal m

otor

fuel

800,

000

800,

000

987,

231

187,

231

Oth

er

-

-

17

2,13

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17

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Li

cens

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nd p

erm

its1,

796,

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1,

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2,

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nmen

tal

22,4

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00

22,5

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50

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vest

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415,

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1,34

7,89

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932,

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cella

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3,

145,

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536,

538

39

0,77

4

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l rev

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8

127,

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8,37

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(354

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ic sa

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78,2

73,5

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78,8

47,9

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Hig

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ets

14,6

88,5

95

17,0

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recr

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00)

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evel

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541,

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541,

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7

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ER

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)

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sfer

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90)

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-

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nanc

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ces (

uses

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0)$

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24,9

22$

FUN

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inde

pend

ent a

udito

r's re

port.

)- 8

2 -

- 64

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

N

OTE

S TO

REQ

UIR

ED S

UPP

LEM

ENTA

RY

INFO

RM

ATI

ON

Dec

embe

r 31,

201

8 B

udge

ts a

re a

dopt

ed o

n a

basi

s co

nsis

tent

with

GA

AP.

Ann

ual a

ppro

pria

ted

budg

ets

are

adop

ted

(at t

he f

und

leve

l) fo

r the

Gen

eral

, Spe

cial

Rev

enue

(ex

cept

for

the

EEC

BG

Gra

nt F

und)

, Deb

t Se

rvic

e an

d C

apita

l Pro

ject

s Fu

nds o

n th

e m

odifi

ed a

ccru

al b

asis

and

Ent

erpr

ise,

Inte

rnal

Ser

vice

an

d Pe

nsio

n Tr

ust F

unds

on

the a

ccru

al b

asis

and

a cu

rren

t fin

anci

al re

sour

ces m

easu

rem

ent f

ocus

. Th

e an

nual

app

ropr

iate

d bu

dget

is le

gally

ena

cted

and

pro

vide

s fo

r a le

gal l

evel

of c

ontro

l at t

he

fund

leve

l. A

ll an

nual

app

ropr

iatio

ns la

pse

at fi

scal

yea

r end

.

Bud

gets

All

depa

rtmen

ts o

f the

City

subm

it re

ques

ts fo

r app

ropr

iatio

n to

the

City

Man

ager

so

that

a

budg

et m

ay b

e pr

epar

ed. T

he b

udge

t is p

repa

red

by fu

nd, f

unct

ion

and

activ

ity a

nd in

clud

es

info

rmat

ion

on th

e pas

t yea

r, cu

rren

t yea

r est

imat

es an

d re

ques

ted

appr

opria

tions

for t

he n

ext

year

.

The

prop

osed

bud

get i

s pr

esen

ted

to th

e C

ity C

ounc

il fo

r rev

iew

. The

City

Cou

ncil

hold

s pu

blic

hea

rings

and

may

add

to, s

ubtra

ct fr

om o

r cha

nge

appr

opria

tions

but

may

not

cha

nge

the

form

of t

he b

udge

t.

The

City

Man

ager

is a

utho

rized

to tr

ansf

er b

udge

ted

amou

nts

betw

een

depa

rtmen

ts w

ithin

an

y fu

nd;

how

ever

, an

y re

visi

ons

that

alte

r th

e to

tal

expe

nditu

res

of a

ny f

und

mus

t be

ap

prov

ed b

y th

e C

ity C

ounc

il.

Ex

pend

iture

s m

ay n

ot le

gally

exc

eed

budg

eted

app

ropr

iatio

ns a

t the

fund

leve

l. D

urin

g th

e ye

ar, t

here

wer

e su

pple

men

tary

app

ropr

iatio

ns m

ade.

Dur

ing

the

year

end

ed D

ecem

ber 3

1, 2

018,

exp

endi

ture

s ex

ceed

ed b

udge

t in

the

IMR

F by

$1

41.

- 83

-

FISC

AL

YE

AR

EN

DE

D D

EC

EM

BE

R 3

1,20

1520

1620

1720

18

Act

uaria

lly d

eter

min

ed c

ontri

butio

n3,

390,

871

$

3,

416,

641

$

3,

276,

069

$

3,

309,

929

$

Con

tribu

tions

in re

latio

n to

the

actu

aria

lly

det

erm

ined

con

tribu

tion

3,39

0,87

1

3,41

6,64

1

3,27

6,06

9

3,30

9,92

9

CO

NT

RIB

UT

ION

DE

FIC

IEN

CY

(Exc

ess)

-$

-$

-$

-$

Cov

ered

pay

roll

27,6

57,9

99$

27

,755

,007

$

28,5

37,1

86$

29

,605

,805

$

Con

tribu

tions

as a

per

cent

age

of

cov

ered

pay

roll

12.2

6%12

.31%

11.4

8%11

.18%

Not

es to

Req

uire

d Su

pple

men

tary

Info

rmat

ion

Ulti

mat

ely,

this

sche

dule

shou

ldpr

esen

tinf

orm

atio

nfo

rth

ela

stte

nye

ars.

How

ever

,unt

ilte

nye

ars

ofin

form

atio

nca

n be

com

pile

d, in

form

atio

n w

ill b

e pr

esen

ted

for a

s man

y ye

ars a

s is a

vaila

ble.

CIT

Y O

F E

LG

IN, I

LL

INO

IS

SCH

EDU

LE O

F EM

PLO

YER

CO

NTR

IBU

TIO

NS

ILLI

NO

IS M

UN

ICIP

AL

RET

IREM

ENT

FUN

D

Last

Fou

r Fis

cal Y

ears

The

info

rmat

ion

pres

ente

dw

asde

term

ined

aspa

rtof

the

actu

aria

lval

uatio

nsas

ofJa

nuar

y1

ofth

epr

iorf

isca

lyea

r.A

dditi

onal

info

rmat

ion

asof

the

late

stac

tuar

ial

valu

atio

npr

esen

ted

isas

follo

ws:

the

actu

aria

lco

stm

etho

dw

asag

greg

ate

entry

-age

nor

mal

; the

am

ortiz

atio

n m

etho

d w

as le

vel p

erce

nt o

f pay

, clo

sed

and

the

amor

tizat

ion

perio

d w

as

26ye

ars;

the

asse

tval

uatio

nm

etho

dw

asfiv

e-ye

arsm

ooth

edm

arke

t;an

dth

esi

gnifi

cant

actu

aria

lass

umpt

ions

wer

ean

inve

stm

ent

rate

ofre

turn

at7.

50%

annu

ally

,pr

ojec

ted

sala

ryin

crea

ses

assu

mpt

ion

of3.

75%

to14

.50%

com

poun

ded

annu

ally

and

pos

tretir

emen

t ben

efit

incr

ease

s of 3

.00%

com

poun

ded

annu

ally

.

(See

inde

pend

ent a

udito

r's re

port.

)- 8

4 -

FISC

AL

YE

AR

EN

DE

D D

EC

EM

BE

R 3

1,20

1520

1620

1720

18

Act

uaria

lly d

eter

min

ed c

ontri

butio

n-

$

-$

-

$

-$

Con

tribu

tions

in re

latio

n to

the

actu

aria

lly

det

erm

ined

con

tribu

tion

-

-

-

-

CO

NT

RIB

UT

ION

DE

FIC

IEN

CY

(Exc

ess)

-$

-

$

-$

-

$

Cov

ered

pay

roll

-$

-

$

-$

-

$

Con

tribu

tions

as a

per

cent

age

of

cov

ered

pay

roll

N/A

N/A

N/A

N/A

Not

es to

Req

uire

d Su

pple

men

tary

Info

rmat

ion

Ulti

mat

ely,

this

sche

dule

shou

ld p

rese

nt in

form

atio

n fo

r the

last

ten

year

s. H

owev

er, u

ntil

ten

year

s of i

nfor

mat

ion

can

be c

ompi

led,

info

rmat

ion

will

be

pres

ente

d fo

r as m

any

year

s as i

s ava

ilabl

e.

CIT

Y O

F E

LG

IN, I

LL

INO

IS

SCH

EDU

LE O

F EM

PLO

YER

CO

NTR

IBU

TIO

NS

ILLI

NO

IS M

UN

ICIP

AL

RET

IREM

ENT

FUN

D -

SLEP

Last

Fou

r Fis

cal Y

ears

The

info

rmat

ion

pres

ente

dw

asde

term

ined

aspa

rtof

the

actu

aria

lval

uatio

nsas

ofJa

nuar

y1

ofth

epr

iorf

isca

lyea

r.A

dditi

onal

info

rmat

ion

asof

the

late

stac

tuar

ial

valu

atio

npr

esen

ted

isas

follo

ws:

the

actu

aria

lco

stm

etho

dw

asag

greg

ate

entry

-age

norm

al;t

heam

ortiz

atio

nm

etho

dw

asle

velp

erce

ntof

pay,

clos

edan

dth

eam

ortiz

atio

npe

riod

was

26ye

ars;

the

asse

tval

uatio

nm

etho

dw

asfiv

e-ye

arsm

ooth

edm

arke

t;an

dth

esi

gnifi

cant

actu

aria

lass

umpt

ions

wer

ean

inve

stm

ent

rate

ofre

turn

at7.

50%

annu

ally

,pr

ojec

ted

sala

ryin

crea

ses

assu

mpt

ion

of3.

75%

to14

.50%

com

poun

ded

annu

ally

and

pos

tretir

emen

t ben

efit

incr

ease

s of 3

.00%

com

poun

ded

annu

ally

.

(See

inde

pend

ent a

udito

r's re

port.

)- 8

5 -

FISC

AL

YEA

R E

ND

ED D

ECEM

BER

31,

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Act

uaria

lly d

eter

min

ed c

ontri

butio

n2,

336,

721

$

3,23

5,79

3$

3,

421,

874

$

3,76

3,65

9$

3,

887,

805

$

5,65

9,86

9$

6,

553,

044

$

7,54

9,36

8$

8,

891,

497

$

8,70

8,53

6$

Con

tribu

tions

in re

latio

n to

the

actu

aria

lly

det

erm

ined

con

tribu

tion

2,32

5,27

6

3,

105,

911

3,47

2,93

4

4,

409,

957

5,85

6,17

5

10

,498

,071

8,93

7,88

5

7,

991,

936

8,81

2,14

0

8,

604,

338

CO

NTR

IBU

TIO

N D

EFIC

IEN

CY

(Exc

ess)

11,4

45$

12

9,88

2$

(51,

060)

$

(646

,298

)$

(1,9

68,3

70)

$

(4,8

38,2

02)

$

(2,3

84,8

41)

$

(442

,568

)$

79,3

57$

10

4,19

8$

Cov

ered

pay

roll

15,3

78,3

89$

15

,996

,317

$

15,8

47,1

96$

16

,100

,301

$

16,6

75,5

71$

16

,536

,069

$

17,6

62,0

58$

18

,159

,396

$

18,5

24,2

23$

18

,909

,118

$

Con

tribu

tions

as a

per

cent

age

of

cov

ered

pay

roll

15.1

2%19

.42%

21.9

2%27

.39%

35.1

2%63

.49%

50.6

1%44

.01%

47.5

7%45

.50%

Not

es to

Req

uire

d Su

pple

men

tary

Info

rmat

ion

CIT

Y O

F EL

GIN

, ILL

INO

IS

SCH

EDU

LE O

F EM

PLO

YER

CO

NTR

IBU

TIO

NS

POLI

CE

PEN

SIO

N F

UN

D

Last

Ten

Fis

cal Y

ears

The

info

rmat

ion

pres

ente

dw

asde

term

ined

aspa

rtof

the

actu

aria

lval

uatio

nsas

ofJa

nuar

y1

ofth

epr

ior

fisca

lyea

r.A

dditi

onal

info

rmat

ion

asof

the

late

stac

tuar

ialv

alua

tion

pres

ente

dis

asfo

llow

s:th

eac

tuar

ialc

ostm

etho

dw

asen

try-a

geno

rmal

;the

amor

tizat

ion

met

hod

was

leve

lper

cent

ofpa

y,cl

osed

and

the

amor

tizat

ion

perio

dw

as24

year

s;th

eas

setv

alua

tion

met

hod

was

atfiv

e-ye

arsm

ooth

edm

arke

tva

lue;

and

the

sign

ifica

ntac

tuar

iala

ssum

ptio

nsw

ere

anin

vest

men

trat

eof

retu

rnat

7.00

%an

nual

ly,p

roje

cted

sala

ryin

crea

ses

assu

mpt

ion

ofco

mpo

unde

dan

nual

lyan

dpo

stre

tirem

entb

enef

itin

crea

ses

of3.

00%

com

poun

ded

annu

ally

(Tie

r 1) a

nd le

sser

of 3

.00%

or 5

0.00

% o

f CPI

, sim

ple

(Tie

r 2).

(See

inde

pend

ent a

udito

r's re

port.

)- 8

6 -

FISC

AL

YEA

R E

ND

ED D

ECEM

BER

31,

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Act

uaria

lly d

eter

min

ed c

ontri

butio

n2,

188,

257

$

3,09

7,23

6$

3,

117,

165

$

3,25

9,24

0$

3,

350,

199

$

3,79

7,27

8$

4,

454,

657

$

5,36

6,45

7$

6,

167,

330

$

6,26

8,45

8$

Con

tribu

tions

in re

latio

n to

the

actu

aria

lly

det

erm

ined

con

tribu

tion

2,12

2,36

0

2,

989,

332

3,16

3,69

5

3,

912,

103

3,82

0,13

7

3,

690,

051

6,87

5,62

8

5,

824,

657

6,11

1,02

1

6,

193,

093

CO

NTR

IBU

TIO

N D

EFIC

IEN

CY

(Exc

ess)

65,8

97$

10

7,90

4$

(46,

530)

$

(652

,863

)$

(469

,938

)$

107,

227

$

(2

,420

,971

)$

(4

58,2

00)

$

56

,309

$

75,3

65$

Cov

ered

pay

roll

10,9

82,8

25$

11

,247

,355

$

11,6

96,7

65$

11

,519

,553

$

11,9

53,5

94$

12,1

66,3

88$

12

,158

,581

$

13,0

94,7

40$

13

,369

,957

$

13,3

23,4

76$

Con

tribu

tions

as a

per

cent

age

of

cov

ered

pay

roll

19.3

2%26

.58%

27.0

5%33

.96%

31.9

6%30

.33%

56.5

5%44

.48%

45.7

1%46

.48%

Not

es to

Req

uire

d Su

pple

men

tary

Info

rmat

ion

CIT

Y O

F EL

GIN

, ILL

INO

IS

SCH

EDU

LE O

F EM

PLO

YER

CO

NTR

IBU

TIO

NS

FIR

EFIG

HTE

RS'

PEN

SIO

N F

UN

D

Last

Ten

Fis

cal Y

ears

The

info

rmat

ion

pres

ente

dw

asde

term

ined

aspa

rtof

the

actu

aria

lval

uatio

nsas

ofJa

nuar

y1

ofth

epr

ior

fisca

lyea

r.A

dditi

onal

info

rmat

ion

asof

the

late

stac

tuar

ialv

alua

tion

pres

ente

dis

asfo

llow

s:th

eac

tuar

ialc

ostm

etho

dw

asen

try-a

geno

rmal

;the

amor

tizat

ion

met

hod

was

leve

lper

cent

ofpa

y,cl

osed

and

the

amor

tizat

ion

perio

dw

as24

year

s;th

eas

setv

alua

tion

met

hod

was

atfiv

e-ye

arsm

ooth

mar

ket

valu

e;an

dth

esi

gnifi

cant

actu

aria

lass

umpt

ions

wer

ean

inve

stm

entr

ate

ofre

turn

at7.

00%

annu

ally

,pro

ject

edsa

lary

incr

ease

sas

sum

ptio

nof

3.50

%co

mpo

unde

dan

nual

lyan

dpo

stre

tirem

entb

enef

itin

crea

ses

of 3

.00%

com

poun

ded

annu

ally

(Tie

r 1) a

nd le

sser

of 3

.00%

or 5

0.00

% o

f CPI

, sim

ple

(Tie

r 2).

(See

inde

pend

ent a

udito

r's re

port.

)- 8

7 -

FISC

AL

YE

AR

EN

DE

D D

EC

EM

BE

R 3

1,20

0920

1020

1120

1220

1320

1420

1520

1620

1720

18

Act

uaria

lly d

eter

min

ed c

ontri

butio

n2,

167,

527

$

1,45

5,48

3$

2,04

1,77

5$

1,

997,

532

$

2,23

9,44

4$

2,

159,

830

$

1,66

0,56

6$

1,

757,

083

$

2,02

2,61

8$

1,

933,

879

$

Con

tribu

tions

in re

latio

n to

the

actu

aria

lly

det

erm

ined

con

tribu

tion

1,35

9,00

6

1,

048,

572

1,

170,

262

1,17

0,58

6

68

5,51

9

2,13

5,22

5

1,

655,

000

1,62

0,55

9

1,

602,

106

1,62

7,17

1

CO

NT

RIB

UT

ION

DE

FIC

IEN

CY

(Exc

ess)

808,

521

$

40

6,91

1$

87

1,51

3$

826,

946

$

1,

553,

925

$

24,6

05$

5,

566

$

13

6,52

4$

420,

512

$

30

6,70

8$

Cov

ered

pay

roll

46,4

26,5

22$

52

,793

,767

$

54,1

57,2

46$

53

,584

,513

$

56,0

98,7

48$

50

,110

,442

$

55,6

57,4

63$

58

,278

,568

$

55,9

97,0

07$

58

,559

,321

$

Con

tribu

tions

as a

per

cent

age

of

cov

ered

pay

roll

2.93

%1.

99%

2.16

%2.

18%

1.22

%4.

26%

2.97

%2.

78%

2.86

%2.

78%

Not

es to

Req

uire

d Su

pple

men

tary

Info

rmat

ion

CIT

Y O

F E

LG

IN, I

LL

INO

IS

SCH

EDU

LE O

F EM

PLO

YER

CO

NTR

IBU

TIO

NS

RET

IREE

HEA

LTH

INSU

RA

NC

E FU

ND

Last

Ten

Fisc

al Y

ears

The

info

rmat

ion

pres

ente

dw

asde

term

ined

aspa

rtof

the

actu

aria

lval

uatio

nsas

ofJa

nuar

y1

ofth

epr

iorf

iscal

year

.Add

ition

alin

form

atio

nas

ofth

ela

test

actu

aria

lval

uatio

npr

esen

ted

isas

follo

ws:

the

actu

aria

lco

stm

etho

dw

asen

try-a

geno

rmal

;the

amor

tizat

ion

met

hod

was

leve

lper

cent

ofpa

y,op

enan

dth

eam

ortiz

atio

npe

riod

was

30ye

ars;

the

asse

tval

uatio

nm

etho

dw

asat

mar

ketv

alue

;and

the

signi

fican

tact

uaria

las

sum

ptio

ns w

ere

an in

vest

men

t rat

e of

retu

rn a

t 6.0

0% a

nnua

lly, a

nd p

roje

cted

sala

ry in

crea

ses a

ssum

ptio

n of

4.0

0%.

(See

inde

pend

ent a

udito

r's re

port.

)- 8

8 -

ME

ASU

RE

ME

NT

DA

TE

DE

CE

MB

ER

31,

2014

2015

2016

2017

TO

TA

L P

EN

SIO

N L

IAB

ILIT

Y

Serv

ice

cost

2,98

1,26

8$

2,86

4,70

3$

3,13

5,36

4$

3,04

1,41

3$

Inte

rest

12,0

02,5

74

12,9

65,1

21

13,6

11,1

90

13,9

39,0

38

Cha

nges

of b

enef

it te

rms

-

-

-

-

Diff

eren

ces b

etw

een

expe

cted

and

act

ual e

xper

ienc

e 1,

469,

367

2,

337,

041

(2

,341

,789

)

181,

350

Cha

nges

of a

ssum

ptio

ns

5,84

1,02

5

224,

657

(454

,926

)

(6

,050

,712

)

Ben

efit

paym

ents,

incl

udin

g re

fund

s of m

embe

r con

tribu

tions

(8,8

97,5

34)

(9

,444

,848

)

(9,8

71,4

46)

(1

0,16

2,17

2)

Net

cha

nge

in to

tal p

ensio

n lia

bilit

y13

,396

,700

8,

946,

674

4,

078,

393

94

8,91

7

Tota

l pen

sion

liabi

lity

- beg

inni

ng

162,

992,

448

176,

389,

148

185,

335,

822

189,

414,

215

TO

TA

L P

EN

SIO

N L

IAB

ILIT

Y -

EN

DIN

G17

6,38

9,14

8$

18

5,33

5,82

2$

18

9,41

4,21

5$

19

0,36

3,13

2$

PLA

N F

IDU

CIA

RY

NE

T P

OSI

TIO

N

Con

tribu

tions

- em

ploy

er3,

285,

554

$

3,

390,

871

$

3,

416,

642

$

3,

276,

069

$

C

ontri

butio

ns -

mem

ber

1,22

3,85

5

1,25

6,04

8

1,31

1,73

4

1,29

8,56

3

Net

inve

stmen

t inc

ome

9,60

8,41

6

816,

865

11,2

93,2

20

30,9

26,3

61

Ben

efit

paym

ents,

incl

udin

g re

fund

s of m

embe

r con

tribu

tions

(8,8

97,5

34)

(9

,444

,848

)

(9,8

71,4

46)

(1

0,16

2,17

2)

A

dmin

istra

tive

expe

nse

842,

651

1,62

1,50

7

603,

430

(3,1

56,0

36)

Net

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per

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tal p

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t pen

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ges i

n as

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late

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and

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201

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mat

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this

sche

dule

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ld p

rese

nt in

form

atio

n fo

r the

last

ten

year

s. H

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in

form

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D

Last

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inde

pend

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port.

)- 8

9 -

ME

ASU

RE

ME

NT

DA

TE

DE

CE

MB

ER

31,

2014

2015

2016

2017

TO

TA

L P

EN

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N L

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Serv

ice

cost

-$

-

$

-

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175,

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t pos

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1,84

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tal p

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Empl

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ges i

n as

sum

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ns re

late

d to

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and

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17.

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talit

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nca

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Last

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cal Y

ears

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inde

pend

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r's re

port.

)- 9

0 -

ME

ASU

RE

ME

NT

DA

TE

DE

CE

MB

ER

31,

2014

2015

TOTA

L PE

NSI

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LIA

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rvic

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st3,

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tere

st11

,499

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13

,311

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f ben

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pect

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nce

937,

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16,7

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ng re

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tal p

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ty26

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167,

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PO

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9,79

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t pos

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86,7

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107,

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fidu

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as a

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tal p

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16,5

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per

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over

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es to

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uire

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pple

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rmat

ion

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inte

rest

rate

assu

mpt

ion

was

chan

ged

from

7.25

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.In

addi

tion,

ther

ew

asa

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gew

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las

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om20

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tes,

turn

over

rate

san

dre

tirem

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rate

s.Th

ere

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ach

ange

in20

15,

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and

2017

with

resp

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toac

tuar

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assu

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ions

from

the

prio

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arto

refle

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dex

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spec

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mor

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bles

.In

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spec

tto

new

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nce

assu

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ions

repo

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in th

e G

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ased

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tota

l pen

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aine

d co

nsta

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t 7.0

0%.

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mat

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this

sche

dule

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ldpr

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tinf

orm

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nfo

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125,

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10

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2 -

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DA

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DE

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MB

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31,

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TO

TA

L P

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cost

2,96

5,26

3$

3,

233,

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8,20

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4

9,

424,

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12

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7,56

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2,19

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t pos

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63,4

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65,6

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71,8

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fidu

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addi

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FIN

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STA

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CT

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par

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the

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Elgi

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l fin

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etai

led

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rmat

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as a

con

text

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stan

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info

rmat

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in th

e fin

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tate

men

ts, n

ote

disc

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quire

d su

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men

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info

rmat

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says

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ove

rall

finan

cial

hea

lth.

Con

tent

s

Page

(s)

Fina

ncia

l Tre

nds

Th

ese

sche

dule

s co

ntai

n tre

nd in

form

atio

n to

hel

p th

e re

ader

und

erst

and

how

the

City

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nanc

ial p

erfo

rman

ce a

nd w

ell-b

eing

hav

e be

en c

hang

ed

over

tim

e.

155-

164

Rev

enue

Cap

acity

Thes

e sc

hedu

les

cont

ain

info

rmat

ion

to h

elp

the

read

er a

sses

s th

e C

ity’s

m

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igni

fican

t loc

al re

venu

e so

urce

, the

pro

perty

tax.

16

5-17

1

D

ebt C

apac

ity

Th

ese

sche

dule

s pr

esen

t in

form

atio

n to

hel

p th

e re

ader

ass

ess

the

affo

rdab

ility

of t

he C

ity’s

cur

rent

leve

ls o

f out

stan

ding

deb

t and

the

City

’s

abili

ty to

issu

e ad

ditio

nal d

ebt i

n th

e fu

ture

.

172-

177

Dem

ogra

phic

and

Eco

nom

ic In

form

atio

n

Thes

e sc

hedu

les

offe

r de

mog

raph

ic a

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mic

indi

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rs to

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ader

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and

the

envi

ronm

ent

with

in w

hich

the

City

’s f

inan

cial

ac

tiviti

es ta

ke p

lace

.

178-

179

Ope

ratin

g In

form

atio

n

Thes

e sc

hedu

les c

onta

in s

ervi

ce a

nd in

fras

truct

ure

data

to h

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read

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unde

rsta

nd h

ow th

e in

form

atio

n in

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City

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nanc

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ates

to th

e se

rvic

es th

e C

ity p

rovi

des a

nd th

e ac

tiviti

es it

per

form

s.

180-

182

Sour

ces:

Unl

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othe

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inf

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se s

ched

ules

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ann

ual f

inan

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or th

e re

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Fisc

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ear

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2010

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2012

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ME

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AL

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*The

City

impl

emen

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GA

SB S

tate

men

t No.

68

for t

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ear e

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201

5.

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Last

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2013

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Fisc

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- 159

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Fisc

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- 161

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2017

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- 163

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Fisc

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2009

2010

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Taxe

s

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ty54

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1.

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$

7,

886,

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$

33.3

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2010

1,79

3,51

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8

38

5,99

7,75

5

29

1,81

4,99

5

-

2,47

1,32

3,79

8

1.

9214

7,

413,

971,

394

33.3

33%

2011

1,65

3,12

6,71

7

36

8,67

6,69

1

27

8,41

2,65

8

-

2,30

0,21

6,06

6

1.

9588

6,

900,

648,

198

33.3

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2012

1,42

9,58

2,40

4

36

3,26

8,20

8

32

9,12

9,34

7

-

2,12

1,97

9,95

9

1.

9344

6,

365,

939,

877

33.3

33%

2013

1,32

4,19

5,89

6

33

1,23

9,00

9

31

2,49

3,89

2

-

1,96

7,92

8,79

7

2.

1668

5,

903,

786,

391

33.3

33%

2014

1,24

0,57

0,26

3

30

9,88

3,81

8

32

6,26

5,36

2

-

1,87

6,71

9,44

3

2.

3218

5,

630,

158,

329

33.3

33%

2015

1,31

0,47

0,00

8

32

9,70

9,97

8

36

9,91

3,39

3

-

2,01

0,09

3,37

9

2.

4110

6,

030,

280,

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33.3

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2016

1,47

7,63

0,55

7

34

9,35

1,89

0

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8,76

5,43

1

-

2,22

5,74

7,87

8

2.

2396

6,

677,

243,

634

33.3

33%

2017

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3,64

1,29

8

35

9,25

7,22

7

41

6,68

7,40

3

-

2,36

9,58

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8

2.

1494

7,

108,

757,

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33.3

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2018

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Dat

a So

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of th

e C

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y C

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- 166

-

Tax

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2011

2012

2013

2014

2015

2016

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2018

CIT

Y D

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4096

1.

3571

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Com

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Det

ails

of t

he C

ity's

outs

tand

ing

debt

can

be

foun

d in

the

note

s to

finan

cial

stat

emen

ts.

CIT

Y O

F E

LG

IN, I

LL

INO

IS

RA

TIO

S O

F O

UTS

TAN

DIN

G D

EBT

BY

TY

PE

Last

Ten

Fis

cal Y

ears

Gov

ernm

enta

l Act

iviti

es

- 173

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

RA

TIO

S O

F G

ENER

AL

BO

ND

ED D

EBT

OU

TSTA

ND

ING

Last

Ten

Fis

cal Y

ears

Perc

enta

ge o

fL

ess A

mou

nts

Est

imat

edG

ener

alA

vaila

ble

Act

ual T

axab

leFi

scal

Obl

igat

ion

In D

ebt

Val

ue o

fPe

rY

ear

Bon

dsSe

rvic

e Fu

ndT

otal

Prop

erty

*C

apita

2009

113,

032,

369

$

8,28

0,85

2$

104,

751,

517

$

1.33

%98

5.15

$

2010

107,

558,

744

7,71

6,87

6

99,8

41,8

68

1.

35%

922.

86

20

1110

4,02

2,87

2

-

104,

022,

872

1.51

%96

1.50

2012

99,6

11,7

42

-

99

,611

,742

1.56

%92

0.73

2013

109,

045,

540

-

10

9,04

5,54

0

1.

85%

991.

98

20

1493

,956

,955

-

93,9

56,9

55

1.

67%

853.

03

20

1579

,988

,696

-

79,9

88,6

96

1.

33%

719.

86

20

1693

,154

,287

-

93,1

54,2

87

1.

43%

830.

91

20

1782

,032

,916

-

82,0

32,9

16

1.

16%

731.

63

20

1871

,522

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-

71,5

22,2

61

0.

97%

635.

03

*See

the

sche

dule

ofA

sses

sed

Val

uean

dA

ctua

lVal

ueof

Taxa

ble

Prop

erty

onpa

ge16

6fo

rpr

oper

ty v

alue

dat

a.

Not

e: D

etai

ls o

f the

City

's ou

tsta

ndin

g de

bt c

an b

e fo

und

in th

e no

tes t

o fin

anci

al st

atem

ents

.

- 174

-

Perc

enta

geC

ity's

Gro

ssD

ebt A

pplic

able

Shar

eG

over

nmen

t Uni

tD

ebt

to th

e C

ityof

Deb

t

City

of E

lgin

20,9

69,2

44$

100.

00%

20,9

69,2

44$

Coo

k C

ount

y2,

950,

121,

750

0.27

%8,

042,

170

K

ane

Cou

nty

28,2

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00

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988,

720

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ook

Cou

nty

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st P

rese

rve

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trict

142,

360,

000

0.

27%

388,

080

Kan

e C

ount

y Fo

rest

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serv

e D

istri

ct14

4,41

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0

14.1

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etro

polit

an W

ater

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lam

atio

n D

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ct2,

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000

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6,61

0

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artle

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rk D

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47,9

24

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dee

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p Pa

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TOTA

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826,

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212,

870,

336

$

Dat

a So

urce

Off

ice

of th

e C

ount

y C

lerk

CIT

Y O

F E

LG

IN, I

LL

INO

IS

DIR

ECT

AN

D O

VER

LAPP

ING

GO

VER

NM

ENTA

L A

CTI

VIT

IES

DEB

T

Dec

embe

r 31,

201

8

Not

e:Th

epe

rcen

tage

ofov

erla

ppin

gde

btap

plic

able

ises

timat

edus

ing

taxa

ble

asse

ssed

prop

erty

valu

es.

App

licab

lepe

rcen

tage

sw

ere

estim

ated

byde

term

inin

gth

epo

rtion

ofth

eC

ity's

asse

ssed

valu

eth

atis

with

in th

e C

ity's

boun

darie

s and

div

idin

g it

by th

e di

stric

t's to

tal t

axab

le a

sses

sed

valu

e.

- 175

-

The

City

is a

hom

e ru

le m

unic

ipal

ity.

"The

Gen

eral

Ass

embl

ym

aylim

itby

law

the

amou

ntan

dre

quire

refe

rend

umap

prov

alof

debt

tobe

incu

rred

byho

me

rule

mun

icip

aliti

es,

paya

ble

from

adva

lore

mpr

oper

tyta

xre

ceip

ts, o

nly

inex

cess

ofth

efo

llow

ing

perc

enta

ges

ofth

eas

sess

edva

lue

ofits

taxa

ble

prop

erty

...in

debt

edne

ssw

hich

isou

tsta

ndin

gon

the

effe

ctiv

eda

te(J

uly

1,19

71)

ofth

isco

nstit

utio

nor

whi

chis

ther

eafte

rap

prov

edby

refe

rend

um...

shal

lnot

bein

clud

edin

the

fore

goin

g pe

rcen

tage

am

ount

s."

To d

ate,

the

Gen

eral

Ass

embl

y ha

s set

no

limits

for h

ome

rule

mun

icip

aliti

es.

Dec

embe

r 31,

201

8

CIT

Y O

F E

LG

IN, I

LL

INO

IS

LEG

AL

DEB

T M

AR

GIN

Arti

cle

VII,

Sect

ion

6(k)

ofth

e19

70Ill

inoi

sCon

stitu

tion

gove

rnsc

ompu

tatio

nof

the

lega

ldeb

tm

argi

n.

- 176

-

CIT

Y O

F E

LG

IN, I

LL

INO

IS

PLED

GED

-REV

ENU

E C

OV

ERA

GE

Last

Ten

Fis

cal Y

ears

Wat

erC

harg

es

Les

sN

etFi

scal

and

Ope

ratin

gA

vaila

ble

Deb

t Ser

vice

Yea

rO

ther

Exp

ense

sR

even

uePr

inci

pal

Inte

rest

Cov

erag

e

2009

22,1

17,2

44$

12,2

30,8

86$

9,

886,

358

$

3,76

0,00

0$

2,

349,

964

$

1.62

$

2010

22,6

14,1

71

12,6

08,1

04

10

,006

,067

3,

510,

000

2,09

9,54

2

1.

78

20

1123

,805

,259

12

,389

,844

11,4

15,4

15

4,30

5,00

0

2,

142,

182

1.77

2012

24,6

87,3

68

12,7

01,2

02

11

,986

,166

4,

655,

000

2,24

1,00

1

1.

74

20

1323

,778

,170

13

,757

,446

10,0

20,7

24

5,09

0,00

0

2,

185,

985

1.38

2014

23,7

25,7

77

13,4

36,7

39

10

,289

,038

5,

190,

000

1,91

7,88

8

1.

45

20

1523

,281

,454

16

,194

,636

7,08

6,81

8

4,

610,

000

1,53

7,95

8

1.

15

20

1623

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,782

17

,141

,404

6,73

0,37

8

6,

155,

000

1,71

5,30

7

0.

86

20

1725

,185

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17

,979

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7,20

5,93

5

4,

400,

000

1,36

7,93

1

1.

25

20

1826

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17

,261

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1,56

0

1.

77

WA

TER

REV

ENU

E B

ON

DS

Not

e:D

etai

lsof

the

City

'sou

tsta

ndin

gde

btca

nbe

foun

din

the

note

sto

finan

cial

stat

emen

ts.W

ater

char

ges

and

othe

r inc

lude

s inv

estm

ent e

arni

ngs.

Ope

ratin

g ex

pens

es d

o no

t inc

lude

inte

rest

or d

epre

ciat

ion.

- 177

-

CIT

Y O

F EL

GIN

, IL

LIN

OIS

PLED

GED

-REV

ENU

E C

OV

ERA

GE

Last

Ten

Fis

cal Y

ears

Sew

erC

harg

es

Less

Net

Fisc

alan

dO

pera

ting

Ava

ilabl

eD

ebt S

ervi

ceY

ear

Oth

erEx

pens

esR

even

uePr

inci

pal

Inte

rest

Cov

erag

e

2009

4,91

7,23

0$

1,79

1,27

1$

3,12

5,95

9$

1,66

5,00

0$

1,39

7,67

2$

1.02

$

2010

5,29

4,80

5

1,73

3,90

4

3,56

0,90

1

1,42

0,00

0

1,28

1,37

9

1.32

2011

5,43

6,87

3

1,80

3,79

9

3,63

3,07

4

1,91

0,00

0

1,32

9,45

6

1.12

2012

5,63

8,55

3

1,77

6,92

4

3,86

1,62

9

2,00

5,00

0

1,30

2,85

5

1.17

2013

5,55

1,39

8

1,83

4,30

3

3,71

7,09

5

3,11

0,00

0

798,

593

0.95

2014

5,98

2,28

8

1,84

1,40

9

4,14

0,87

9

2,51

5,00

0

772,

134

1.26

2015

5,47

8,84

4

2,50

6,03

4

2,97

2,81

0

2,51

0,00

0

855,

741

0.88

2016

5,66

3,72

7

2,93

4,11

7

2,72

9,61

0

2,49

0,00

0

718,

268

0.85

2017

5,64

0,40

2

2,67

5,53

6

2,96

4,86

6

2,61

0,00

0

631,

382

0.91

2018

6,45

6,08

9

2,54

7,33

6

3,90

8,75

3

2,59

5,00

0

552,

755

1.24

SEW

ER R

EVEN

UE

BO

ND

S

Not

e:D

etai

lsof

the

City

'sou

tsta

ndin

gde

btca

nbe

foun

din

the

note

sto

finan

cial

stat

emen

ts.S

ewer

char

ges

and

othe

r inc

lude

s inv

estm

ent e

arni

ngs.

Ope

ratin

g ex

pens

es d

o no

t inc

lude

inte

rest

or d

epre

ciat

ion.

- 178

-

Per

Cap

itaFi

scal

Pers

onal

Pers

onal

Une

mpl

oym

ent

Yea

rPo

pula

tion

Inco

me

Inco

me

Rat

e

2009

106,

330

2,92

9,00

5,67

7$

27

,546

$

13.0

0%20

10*

108,

188

2,92

9,00

5,67

7

27

,073

12.4

0%20

1110

8,18

8

2,

929,

005,

677

27,0

73

12

.00%

2012

108,

188

2,98

7,55

3,19

8

27

,614

10.5

0%20

1310

9,92

7

2,

594,

387,

127

23,6

01

10

.40%

2014

110,

145

2,59

3,14

3,73

5

23

,543

8.40

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1511

1,11

7

2,

614,

805,

244

23,5

32

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2016

112,

111

2,73

1,02

3,96

0

24

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2,12

3

2,

811,

596,

348

25,0

76

5.

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112,

628

2,95

9,52

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6

26

,277

5.40

%

*Dat

a fr

om 2

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ram

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

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APPENDIX B DESCRIBING BOOK-ENTRY-ONLY ISSUANCE

1. The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for

the Bonds (the “Securities”). The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC.

2. DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which

will receive a credit for the Securities on DTC’s records. The ownership interest of each actual purchaser of each Security (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued.

4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

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5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy).

8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the City or the Paying Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Paying Agent, or the City, 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 City or the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

9. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to any Tender/Remarketing Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant’s interest in the Securities, on DTC’s records, to any Tender/Remarketing Agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC’s records and followed by a book-entry credit of tendered Securities to any Tender/Remarketing Agent’s DTC account.

10. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to the City or the Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered.

11. The City may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC.

12. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof.

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APPENDIX C

PROPOSED FORM OF OPINION OF BOND COUNSEL

[LETTERHEAD OF CHAPMAN AND CUTLER LLP]

[TO BE DATED CLOSING DATE]

We hereby certify that we have examined certified copy of the proceedings (the “Proceedings”) of the City Council of the City of Elgin, Kane and Cook Counties, Illinois (the “City”), passed preliminary to the issue by the City of its fully registered General Obligation Corporate Purpose Bonds, Series 2020B (the “Bonds”), to the amount of $_________, dated the date hereof, due serially on December 15 of the years and in the amounts and bearing interest as follows:

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034

the Bonds due on or after December 15, 20__, being subject to redemption prior to maturity at the option of the City as a whole or in part in any order of their maturity as determined by the City (less than all of the Bonds of a single maturity to be selected by the Bond Registrar), on December 15, 20__, or on any date thereafter, at the redemption price of par plus accrued interest to the redemption date, as provided in the Proceedings, and we are of the opinion that the Proceedings show lawful authority for said issue under the laws of the State of Illinois now in force.

We further certify that we have examined the form of bond prescribed for said issue and find the same in due form of law, and in our opinion said issue, to the amount named, is valid and legally binding upon the City and is payable from any funds of the City legally available for such purpose, and all taxable property in the City is subject to the levy of taxes to pay the same without limitation as to rate or amount, except that the rights of the owners of the Bonds and the enforceability of the Bonds may be limited by bankruptcy, insolvency, moratorium,

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reorganization and other similar laws affecting creditors’ rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion.

It is our opinion that, subject to the City’s compliance with certain covenants, 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 alternative minimum tax for individuals under the Internal Revenue Code of 1986, as amended. Failure to comply with certain of such City covenants could cause interest on the Bonds to be includible in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. Ownership of the Bonds may result in other federal tax consequences to certain taxpayers, and we express no opinion regarding any such collateral consequences arising with respect to the Bonds.

We express no opinion herein as to the accuracy, adequacy or completeness of any information furnished to any person in connection with any offer or sale of the Bonds.

In rendering this opinion, we have relied upon certifications of the City with respect to certain material facts within the City’s knowledge. Our opinion represents our legal judgment based upon our review of the law and the facts that we deem relevant to render such opinion and is not a guarantee of a result. This opinion is given as of the date hereof and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur.

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APPENDIX D

PROPOSED FORM OF CONTINUING DISCLOSURE UNDERTAKING

FORM OF CONTINUING DISCLOSURE UNDERTAKING FOR THE PURPOSE OF PROVIDING

CONTINUING DISCLOSURE INFORMATION UNDER SECTION (b)(5) OF RULE 15c2-12

This Continuing Disclosure Undertaking (this “Agreement”) is executed and delivered by the City of Elgin, Kane and Cook Counties, Illinois (the “Issuer”), in connection with the issuance of $__________ General Obligation Corporate Purpose Bonds, Series 2020B (the “Bonds”). The Bonds are being issued pursuant to an ordinance adopted by the City Council of the Issuer on the 16th day of March, 2020 (the “Ordinance”).

In consideration of the issuance of the Bonds by the Issuer and the purchase of such Bonds by the beneficial owners thereof, the Issuer covenants and agrees as follows:

1. PURPOSE OF THIS AGREEMENT. This Agreement is executed and delivered by theIssuer as of the date set forth below, for the benefit of the beneficial owners of the Bonds and in order to assist the Participating Underwriters in complying with the requirements of the Rule (as defined below). The Issuer represents that it will be the only obligated person with respect to the Bonds at the time the Bonds are delivered to the Participating Underwriters and that no other person is expected to become so committed at any time after issuance of the Bonds.

2. DEFINITIONS. The terms set forth below shall have the following meanings in thisAgreement, unless the context clearly otherwise requires.

Annual Financial Information means information of the type contained under the following headings and subheadings of, and in the following appendices and exhibits to, the Official Statement:

1. The table under the heading “Retailers’ Occupation, Service Occupation and Use Tax”;2. All of the tables under the heading “PROPERTY ASSESSMENT AND TAX INFORMATION”;3. All of the tables under the heading “DEBT INFORMATION”; and4. All of the tables under the heading “FINANCIAL INFORMATION” (excluding Budget andEstimated Financial Information).

Annual Financial Information Disclosure means the dissemination of disclosure concerning Annual Financial Information and the dissemination of the Audited Financial Statements as set forth in Section 4.

Audited Financial Statements means the audited financial statements of the Issuer prepared pursuant to the standards and as described in Exhibit I.

Commission means the Securities and Exchange Commission.

D-1

Dissemination Agent means any agent designated as such in writing by the Issuer and which has filed with the Issuer a written acceptance of such designation, and such agent’s successors and assigns.

EMMA means the MSRB through its Electronic Municipal Market Access system for municipal securities disclosure or through any other electronic format or system prescribed by the MSRB for purposes of the Rule.

Exchange Act means the Securities Exchange Act of 1934, as amended.

Financial Obligation of the Issuer means a (a) debt obligation; (b) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (c) guarantee of a debt obligation or any such derivative instrument; provided that “financial obligation” shall not include municipal securities as to which a final official statement (as defined in the Rule) has been provided to the MSRB consistent with the Rule.

MSRB means the Municipal Securities Rulemaking Board.

Official Statement means the Final Official Statement, dated __________, 2020, and relating to the Bonds.

Participating Underwriter means each broker, dealer or municipal securities dealer acting as an underwriter in the primary offering of the Bonds.

Reportable Event means the occurrence of any of the Events with respect to the Bonds set forth in Exhibit II.

Reportable Events Disclosure means dissemination of a notice of a Reportable Event as set forth in Section 5.

Rule means Rule 15c2-12 adopted by the Commission under the Exchange Act, as the same may be amended from time to time.

State means the State of Illinois.

Undertaking means the obligations of the Issuer pursuant to Sections 4 and 5.

3. CUSIP NUMBERS. The CUSIP Numbers of the Bonds are set forth in Exhibit III.The Issuer will include the CUSIP Numbers in all disclosure materials described in Sections 4 and 5 of this Agreement.

4. ANNUAL FINANCIAL INFORMATION DISCLOSURE. Subject to Section 8 of thisAgreement, the Issuer hereby covenants that it will disseminate its Annual Financial Information and its Audited Financial Statements (in the form and by the dates set forth in Exhibit I) to EMMA in such manner and format and accompanied by identifying information as is prescribed

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by the MSRB or the Commission at the time of delivery of such information and by such time so that such entities receive the information by the dates specified. MSRB Rule G-32 requires all EMMA filings to be in word-searchable PDF format. This requirement extends to all documents required to be filed with EMMA, including financial statements and other externally prepared reports.

If any part of the Annual Financial Information can no longer be generated because the operations to which it is related have been materially changed or discontinued, the Issuer will disseminate a statement to such effect as part of its Annual Financial Information for the year in which such event first occurs.

If any amendment or waiver is made to this Agreement, the Annual Financial Information for the year in which such amendment or waiver is made (or in any notice or supplement provided to EMMA) shall contain a narrative description of the reasons for such amendment or waiver and its impact on the type of information being provided.

5. REPORTABLE EVENTS DISCLOSURE. Subject to Section 8 of this Agreement, theIssuer hereby covenants that it will disseminate in a timely manner (not in excess of ten business days after the occurrence of the Reportable Event) Reportable Events Disclosure to EMMA in such manner and format and accompanied by identifying information as is prescribed by the MSRB or the Commission at the time of delivery of such information. MSRB Rule G-32 requires all EMMA filings to be in word-searchable PDF format. This requirement extends to all documents required to be filed with EMMA, including financial statements and other externally prepared reports. Notwithstanding the foregoing, notice of optional or unscheduled redemption of any Bonds or defeasance of any Bonds need not be given under this Agreement any earlier than the notice (if any) of such redemption or defeasance is given to the Bondholders pursuant to the Ordinance.

6. CONSEQUENCES OF FAILURE OF THE ISSUER TO PROVIDE INFORMATION. The Issuershall give notice in a timely manner to EMMA of any failure to provide Annual Financial Information Disclosure when the same is due hereunder.

In the event of a failure of the Issuer to comply with any provision of this Agreement, the beneficial owner of any Bond may seek mandamus or specific performance by court order, to cause the Issuer to comply with its obligations under this Agreement. A default under this Agreement shall not be deemed a default under the Ordinance, and the sole remedy under this Agreement in the event of any failure of the Issuer to comply with this Agreement shall be an action to compel performance.

7. AMENDMENTS; WAIVER. Notwithstanding any other provision of this Agreement,the Issuer by ordinance authorizing such amendment or waiver, may amend this Agreement, and any provision of this Agreement may be waived, if:

(a) (i) The amendment or waiver is made in connection with a change in circumstances that arises from a change in legal requirements, including without

D-3

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 Issuer, or type of business conducted; or

(ii) This Agreement, as amended, or the provision, as waived, would have complied with the requirements of the Rule at the time of the primary offering, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and

(b) The amendment or waiver does not materially impair the interests of the beneficial owners of the Bonds, as determined by parties unaffiliated with the Issuer (such as Bond Counsel).

In the event that the Commission or the MSRB or other regulatory authority shall approve or require Annual Financial Information Disclosure or Reportable Events Disclosure to be made to a central post office, governmental agency or similar entity other than EMMA or in lieu of EMMA, the Issuer shall, if required, make such dissemination to such central post office, governmental agency or similar entity without the necessity of amending this Agreement.

8. TERMINATION OF UNDERTAKING. The Undertaking of the Issuer shall be terminatedhereunder if the Issuer shall no longer have any legal liability for any obligation on or relating to repayment of the Bonds under the Ordinance. The Issuer shall give notice to EMMA in a timely manner if this Section is applicable.

9. FUTURE CHANGES TO THE RULE. As set forth in Section 1 of this Agreement, theIssuer has executed and delivered this Agreement solely and only to assist the Participating Underwriters in complying with the requirements of the Rule. Therefore, notwithstanding anything in this Agreement to the contrary, in the event the Commission, the MSRB or other regulatory authority shall approve or require changes to the requirements of the Rule, the Issuer shall be permitted, but shall not be required, to unilaterally modify the covenants in this Agreement, without complying with the requirements of Section 7 of this Agreement, in order to comply with, or conform to, such changes. In the event of any such modification of this Agreement, the Issuer shall file a copy of this Agreement, as revised, on EMMA in a timely manner.

10. DISSEMINATION AGENT. The Issuer may, from time to time, appoint or engage aDissemination Agent to assist it in carrying out its obligations under this Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent.

11. ADDITIONAL INFORMATION. Nothing in this Agreement shall be deemed to preventthe Issuer from disseminating any other information, using the means of dissemination set forth in this Agreement or any other means of communication, or including any other information in any Annual Financial Information Disclosure or notice of occurrence of a Reportable Event, in addition to that which is required by this Agreement. If the Issuer chooses to include any information from any document or notice of occurrence of a Reportable Event in addition to that which is specifically required by this Agreement, the Issuer shall have no obligation under this

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Agreement to update such information or include it in any future disclosure or notice of occurrence of a Reportable Event.

121. BENEFICIARIES. This Agreement has been executed in order to assist the Participating Underwriters in complying with the Rule; however, this Agreement shall inure solely to the benefit of the Issuer, the Dissemination Agent, if any, and the beneficial owners of the Bonds, and shall create no rights in any other person or entity.

13. RECORDKEEPING. The Issuer shall maintain records of all Annual FinancialInformation Disclosure and Reportable Events Disclosure, including the content of such disclosure, the names of the entities with whom such disclosure was filed and the date of filing such disclosure.

14. ASSIGNMENT. The Issuer shall not transfer its obligations under the Ordinanceunless the transferee agrees to assume all obligations of the Issuer under this Agreement or to execute an Undertaking under the Rule.

15. GOVERNING LAW. This Agreement shall be governed by the laws of the State.

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CITY OF ELGIN, KANE AND COOK COUNTIES,ILLINOIS

By: ____________________________________ Its: Director of Finance

Date: ______________, 2020

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EXHIBIT I ANNUAL FINANCIAL INFORMATION AND TIMING AND AUDITED

FINANCIAL STATEMENTS

All or a portion of the Annual Financial Information and the Audited Financial Statements as set forth below may be included by reference to other documents which have been submitted to EMMA or filed with the Commission. If the information included by reference is contained in a Final Official Statement, the Final Official Statement must be available on EMMA; the Final Official Statement need not be available from the Commission. The Issuer shall clearly identify each such item of information included by reference.

Annual Financial Information exclusive of Audited Financial Statements will be submitted to EMMA by 210 days after the last day of the Issuer’s fiscal year (currently December 31), beginning with the fiscal year ending December 31, 2019. Audited Financial Statements as described below should be filed at the same time as the Annual Financial Information. If Audited Financial Statements are not available when the Annual Financial Information is filed, unaudited financial statements shall be included. In such event, Audited Financial Statement will be submitted to EMMA within 30 days after availability to the Issuer.

Audited Financial Statements will be prepared in accordance with the accounting principles described in the Official Statement.

If any change is made to the Annual Financial Information as permitted by Section 4 of the Agreement, the Issuer will disseminate a notice of such change as required by Section 4.

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EXHIBIT II EVENTS WITH RESPECT TO THE BONDS

FOR WHICH REPORTABLE EVENTS DISCLOSURE IS REQUIRED

1. Principal and interest payment delinquencies2. Non-payment related defaults, if material3. Unscheduled draws on debt service reserves reflecting financial difficulties4. Unscheduled draws on credit enhancements reflecting financial difficulties5. Substitution of credit or liquidity providers, or their failure to perform6. 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 othermaterial notices or determinations with respect to the tax status of the security, or othermaterial events affecting the tax status of the security

7. Modifications to the rights of security holders, if material8. Bond calls, if material, and tender offers9. Defeasances

10. Release, substitution or sale of property securing repayment of the securities, if material11. Rating changes12. Bankruptcy, insolvency, receivership or similar event of the Issuer∗

13. The consummation of a merger, consolidation, or acquisition involving the Issuer or thesale of all or substantially all of the assets of the Issuer, other than in the ordinary courseof business, the entry into a definitive agreement to undertake such an action or thetermination of a definitive agreement relating to any such actions, other than pursuant toits terms, if material

14. Appointment of a successor or additional trustee or the change of name of a trustee, ifmaterial

15. (a) Incurrence of a Financial Obligation, if material, or (b) an agreement to covenants,events of default, remedies, priority rights, or other similar terms of a FinancialObligation, any of which affect security holders, if material

16. Default, event of acceleration, termination event, modification of terms, or other similarevents under the terms of a Financial Obligation, any of which reflect financialdifficulties

∗ This event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the Issuer 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 Issuer, 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 Issuer.

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EXHIBIT III CUSIP NUMBERS

YEAR OFMATURITY

CUSIP NUMBERS (286299)

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034

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OFFICIAL BID FORM (Open Speer Auction)

City of Elgin March 18, 2020 150 Dexter Court Speer Financial, Inc. Elgin, Illinois 60120 Members of the City Council:

For the $9,645,000* General Obligation Corporate Purpose Bonds, Series 2020B (the “Bonds”), of the City of Elgin, Kane and Cook Counties, Illinois (the “City”), as described in the annexed Official Notice of Sale, which is expressly made a part of this bid, we will pay you $_______________________ (no less than $9,565,000) to the date of delivery for Bonds, expected to be on or about April 1, 2020, bearing interest as follows (each rate a multiple of 1/8 or 1/100 of 1%). The premium or discount, if any, is subject to adjustment allowing the same $___________ gross spread per $1,000 bond as bid herein.

MATURITIES* – DECEMBER 15

$555,000 .................. 2021 $650,000 .................. 2026 $735,000 .................. 2030

575,000 .................. 2022 675,000 .................. 2027 765,000 .................. 2031

595,000 .................. 2023 695,000 .................. 2028 790,000 .................. 2032

610,000 .................. 2024 715,000 .................. 2029 810,000 .................. 2033

635,000 .................. 2025 840,000 .................. 2034

Any consecutive maturities may be aggregated into term bonds at the option of the bidder, in which case the mandatory redemption provisions shall be on the same schedule as above.

The Bonds are to be executed and delivered to us in accordance with the terms of this bid accompanied by the approving legal opinion of Chapman and

Cutler LLP, Chicago, Illinois. The City will pay for the legal opinion. The underwriter agrees to apply for CUSIP numbers within 24 hours and pay the fee charged by the CUSIP Service Bureau and will accept the Bonds with the CUSIP numbers as entered on the Bonds.

If the competitive sale requirements are not met, we elect to use the (circle one): 10% test / hold-the-offering-price rule to determine the issue price of the

Bonds. As evidence of our good faith, if we are the winning bidder, we will wire transfer the amount of TWO PERCENT OF PAR (the “Deposit”) WITHIN

TWO HOURS after the bid opening time to the City’s good faith bank and under the terms provided in the Official Notice of Sale for the Bonds. Alternatively, we have wire transferred or enclosed herewith a check payable to the order of the Treasurer of the City in the amount of the Deposit under the terms provided in the Official Notice of Sale for the Bonds. In submitting this bid, we represent that (i) this bid constitutes a firm offer to purchase the Bonds, on the terms set forth in this bid form and the Official Notice of Sale, and is not subject to any conditions, except as permitted by the Official Notice of Sale, and (ii) we have an established industry reputation for underwriting new issuances of municipal bonds.

Form of Deposit (Check One) Account Manager Information Bidders Option Insurance Prior to Bid Opening: Name Certified/Cashier’s Check [ ] Wire Transfer [ ] Address Within TWO hours of Bidding: By Wire Transfer [ ] City State/Zip Amount: $192,900 Direct Phone ( ) FAX Number ( ) E-Mail Address

The foregoing bid was accepted and the Bonds sold by ordinance of the City on March 18, 2020, and receipt is hereby acknowledged of the Deposit

which is being held in accordance with the terms of the annexed Official Notice of Sale.

CITY OF ELGIN, KANE AND COOK COUNTIES, ILLINOIS *Subject to change. Mayor

----------------------- NOT PART OF THE BID ----------------------- (Calculation of true interest cost)

Bid Post Sale Revision

Gross Interest $

Less Premium/Plus Discount $

True Interest Cost $

True Interest Rate % %

TOTAL BOND YEARS 84,065.08

AVERAGE LIFE 8.716 Years Years

We have purchased insurance from:

Name of Insurer

(Please fill in) _____________________ Premium: _____________ Maturities: (Check One) [__] ______________Years [__] All

OFFICIAL NOTICE OF SALE

$9,645,000*


General Obligation Corporate Purpose Bonds, Series 2020B

(Open Speer Auction)

The City of Elgin, Kane and Cook Counties, Illinois (the “City”), will receive electronic bids on the SpeerAuction (“SpeerAuction”) website address “www.SpeerAuction.com” for its $9,645,000* General Obligation Corporate Purpose Bonds, Series 2020B (the “Bonds”), on an all or none basis between 10:00 A.M. and 10:15 A.M., C.D.T., Wednesday, March 18, 2020. To bid, bidders must have: (1) completed the registration form on the SpeerAuction website, and (2) requested and received admission to the City’s sale (as described below). Award will be made or all bids rejected at a meeting of the City on that date. The City reserves the right to change the date or time for receipt of bids. Any such change shall be made not less than twenty-four (24) hours prior to the revised date and time for receipt of the bids for the Bonds and shall be communicated by publishing the changes in the Amendments Page of the SpeerAuction webpage and through Thomson Municipal News. The Bonds are valid and legally binding upon the City and are payable from any funds of the City legally available for such purpose, and all taxable property in the City is subject to the levy of taxes to pay the same without limitation as to rate or amount. Bidding Details Bidders should be aware of the following bidding details associated with the sale of the Bonds.

(1) All bids must be submitted on the SpeerAuction website at www.SpeerAuction.com. No telephone, telefax or personal delivery bids will be accepted. The use of SpeerAuction shall be at the bidder’s risk and expense and the City shall have no liability with respect thereto, including (without limitation) liability with respect to incomplete, late arriving and non-arriving bid. Any questions regarding bidding on the SpeerAuction website should be directed to Grant Street Group at (412) 391-5555 x 370.

(2) Bidders may change and submit bids as many times as they like during the bidding time period; provided, however, each and any bid submitted subsequent to a bidder’s initial bid must result in a lower true interest cost (“TIC”) with respect to a bid, when compared to the immediately preceding bid of such bidder. In the event that the revised bid does not produce a lower TIC with respect to a bid the prior bid will remain valid.

(3) If any bid in the auction becomes a leading bid two (2) minutes prior to the end of the auction, then the auction will be automatically extended by two (2) minutes from the time such bid was received by SpeerAuction. The auction end time will continue to be extended, indefinitely, until a single leading bid remains the leading bid for at least two minutes.

(4) The last valid bid submitted by a bidder before the end of the bidding time period will be compared to all other final bids submitted by others to determine the winning bidder or bidders.

(5) During the bidding, no bidder will see any other bidder’s bid, but bidders will be able to see the ranking of their bid relative to other bids (i.e., “Leader”, “Cover”, “3rd” etc.)

(6) On the Auction Page, bidders will be able to see whether a bid has been submitted. Establishment of Issue Price

The winning bidder will be required to provide, in a timely manner, certain information necessary to compute the yield on the Bonds pursuant to the provisions of the Internal Revenue Code of 1986, as amended, and to provide a certificate which will be provided by Bond Counsel upon request.

(a) The winning bidder shall assist the City in establishing the issue price of the Bonds and shall execute and deliver to the City at Closing an “issue price” or similar certificate satisfactory to Bond Counsel setting forth the reasonably expected initial offering price to the Public or the sales price or prices of the Bonds, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit A to this Official Notice of Sale, with such modifications as may be appropriate or necessary, in the reasonable judgment of the winning bidder, the City and Chapman and Cutler LLP, Chicago, Illinois (“Bond Counsel”). All actions to be taken by the City under this Official Notice of Sale to establish the issue price of the Bonds may be taken on behalf of the City by the City’s municipal advisor, Speer Financial, Inc., Chicago, Illinois (“Speer”) and any notice or report to be provided to the City may be provided to Speer.

*Subject to change.

City of Elgin, Kane and Cook Counties, Illinois $9,645,000* General Obligation Corporate Purpose Bonds, Series 2020B Official Notice of Sale, Page 2 of 6 *Subject to change.

(b) The City intends that the provisions of Treasury Regulation Section 1.148-1(f)(3)(i) (defining "competitive sale" for purposes of establishing the issue price of the Bonds) will apply to the initial sale of the Bonds (the "competitive sale requirements") because:

(1) The City shall disseminate this Official Notice of Sale to potential underwriters in a manner that is reasonably designed to reach potential underwriters;

(2) all bidders shall have an equal opportunity to bid; (3) the City may receive bids from at least three underwriters of municipal bonds who have established industry

reputations for underwriting new issuances of municipal bonds; and (4) the City anticipates awarding the sale of the Bonds to the bidder who submits a firm offer to purchase the

Bonds at the lowest TIC, as set forth in this Official Notice of Sale.

Any bid submitted pursuant to this Official Notice of Sale shall be considered a firm offer for the purchase of the Bonds, as specified in this bid.

(c) If all of the competitive sale requirements are not satisfied, the City shall advise the winning bidder of such fact prior to the time of award of the sale of the Bonds to the Underwriter. In such event, any bid submitted will not be subject to cancellation or withdrawal and the City agrees to use the rule selected by the Underwriter on its bid form to determine the issue price for the Bonds. On its bid form, each Underwriter must select one of the following two rules for determining the issue price of the Bonds: (1) the first price at which 10% of a maturity of the Bonds (the "10% test") is sold to the public as the issue price of that maturity or (2) the initial offering price to the public as of the sale date as the issue price of each maturity of the Bonds (the "hold-the-offering-price rule") in each case applied on a maturity-by-maturity basis. If the winning bidder selects to hold-the-offering-price rule, the winning bidder shall promptly advise the City, at or before the time of award of the Bonds, which maturities (and if different interest rates apply within a maturity, which separate CUSIP number within that maturity) of the Bonds have not satisfied the 10% test and will be subject to the hold-the-offering-price rule. Bidders should prepare their bids on the assumption that some or all of the maturities of the Bonds will be subject to the hold-the-offering-price rule or the 10% test, as selected on the bid form, in order to establish the issue price of the Bonds. In addition, if the 10% test has not been satisfied with respect to any maturity of the Bonds prior to closing, then the winning bidder shall provide the City with a representation as to the price or prices as the date of closing at which the winning bidder reasonably expects to sell the remaining Bonds of such maturity.

(d) If all of the competitive sale requirements are not satisfied and the Underwriter selects the hold-the-offering price rule, the winning bidder shall (i) confirm that the underwriters have offered or will offer the Bonds to the public on or before the date of award at the offering price or prices (the "initial offering price"), or at the corresponding yield or yields, set forth in the bid submitted by the winning bidder and (ii) agree, on behalf of the underwriters participating in the purchase of the Bonds, that the underwriters will neither offer nor sell unsold Bonds of any maturity to which the hold-the-offering-price rule shall apply to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following:

(1) the close of the fifth (5th) business day after the sale date; or (2) the date on which the underwriters have sold at least 10% of that maturity of the Bonds to the public at a

price that is no higher than the initial offering price to the public.

The winning bidder will advise the City promptly after the close of the fifth (5th) business day after the sale date whether it has sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public. Within one hour of the award, the winning bidder will inform the City of the initial offering price for each maturity of the Bonds.

(e) If the competitive sale requirements are not satisfied and the winning bidder selects the 10% test, then until the 10% test has been satisfied as to each maturity of the Bonds, the winning bidder agrees to promptly report to the City the prices at which the unsold Bonds of that maturity have been sold to the public. That reporting obligation shall continue, whether or not the closing date has occurred, until either (i) all Bonds of that maturity have been sold or (ii) the 10% test has been satisfied as to the Bonds of that maturity, provided that, the winning bidder’s reporting obligation after the closing date may be at reasonable periodic intervals or otherwise upon request of the City or Bond Counsel. In addition, if the 10% test has not been satisfied with respect to any maturity of the Bonds prior to closing, then the winning bidder shall provide the City with a representation as to the price or prices as of the date of closing at which the winning bidder reasonably expects to sell the remaining Bonds of such maturity. (f) The City acknowledges that in making the representation set forth above, the winning bidder will rely on:

(i) the agreement of each underwriter to comply with requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-price rule, if applicable to the Bonds, as set forth in an agreement among underwriters and the related pricing wires,

(ii) in the event a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds, as set forth in a selling group agreement and the related pricing wires, and

(iii) in the event that an underwriter or dealer who is a member of the selling group is a party to a third party distribution agreement that was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker-dealer that is party to such agreement to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds, as set forth in the third-party distribution agreement and the related pricing wires. The City further acknowledges that each underwriter shall be solely liable for its failure to comply with its agreement regarding the requirements for establishing issue price rule of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds, and that no underwriter shall be liable for the failure of any other underwriter, or of any dealer who is a member of a selling group, or of any broker-dealer that is a party to a third-party distribution agreement to comply with its corresponding agreement to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule as applicable to the Bonds.


(g) By submitting a bid, each bidder confirms that:

(i) any agreement among underwriters, any selling group agreement and each third-party distribution agreement (to which the bidder is a party) relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each underwriter, each dealer who is a member of the selling group, and each broker-dealer that is party to such third-party distribution agreement, as applicable, to:

(A) report the prices at which it sells to the public the unsold Bonds of each maturity

allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold to the public or it is notified by the winning bidder that either the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the City or bond counsel.

(B) comply with the hold-the-offering-price rule, if applicable, in each case if and for so long as directed by the winning bidder and as set forth in the related pricing wires, which shall be until the 10% test has been satisfied as to the Bonds of that maturity or until the close of business on the fifth (5th) business day following the date of award,

(C) to promptly notify the winning bidder of any sales of Bonds that, to its knowledge, are made to a winning bidder who is a related party to an underwriter participating in the initial sale of the Bonds to the public, and

(D) to acknowledge that, unless otherwise advised by the underwriter, the winning bidder shall assume that each order submitted by the underwriter is a sale to the public.

(ii) any agreement among underwriters or selling group agreement relating to the initial sale of the Bonds to the

public, together with the related pricing wires, contains or will contain language obligating each underwriter, each dealer who is a member of the selling group and each broker dealer that is a party to a third-party distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require each broker-dealer that is a party to such third-party distribution agreement to:

(A) report the prices at which it sells to the public the unsold Bonds of each maturity

allocated to it, whether or not the closing date has occurred, until either all Bonds of that maturity allocated to it have been sold or until it is notified by the winning bidder or such underwriter that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the closing date may be at reasonable periodic intervals or otherwise upon request of the winning bidder or such underwriter, and

(B) comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the winning bidder or the underwriter and as set forth in the related pricing wires, which shall be at least until the 10% test has been satisfied as to the Bonds of that maturity or until the close of business on the fifth (5th) business day following the date of the award.

(h) Sales of any Bonds to any person that is a related party to an underwriter participating in the initial sale of the Bonds to the public (each term

being used as defined below) shall not constitute sales to the public for purposes of this Official Notice of Sale. Further, for purposes of this Official Notice of Sale:

(i) "public" means any person other than an underwriter or a related party, (ii) "underwriter" means (A) any person that agrees pursuant to a written contract with the City (or with the lead

underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public, including, specifically, the purchaser, and (B) any person that agrees pursuant to a written contract directly or indirectly with person described in clause (A) to participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a third-party distribution agreement participating in the initial sale of the Bonds to the public),

(iii) a purchaser of any of the Bonds is a "related party" to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (A) more than 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (B) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (C) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other), and

(iv) "sale date" means the date that the Bonds are awarded by the City to the winning bidder.

Rules of SpeerAuction Bidders must comply with the Rules of SpeerAuction in addition to the requirements of this Official Notice of Sale. To the extent there is a conflict between the Rules of SpeerAuction and this Official Notice of Sale, this Official Notice of Sale shall control.

City of Elgin, Kane and Cook Counties, Illinois $9,645,000* General Obligation Corporate Purpose Bonds, Series 2020B Official Notice of Sale, Page 4 of 6 *Subject to change. Rules

(1) A bidder (“Bidder”) submitting a winning bid (“Winning Bid”) is irrevocably obligated to purchase the Bonds at the rates and prices of the winning bid, if acceptable to the City, as set forth in the related Official Notice of Sale. Winning Bids are not officially awarded to Winning Bidders until formally accepted by the City.

(2) Neither the City, Speer, nor Grant Street Group (the “Auction Administrator”) is responsible for technical difficulties that result in loss of Bidder’s internet connection with SpeerAuction, slowness in transmission of bids, or other technical problems.

(3) If for any reason a Bidder is disconnected from the Auction Page during the auction after having submitted a Winning Bid, such bid is valid and binding upon such Bidder, unless the City exercises its right to reject bids, as set forth herein.

(4) Bids which generate error messages are not accepted until the error is corrected and bid is received prior to the deadline. (5) Bidders accept and agree to abide by all terms and conditions specified in the Official Notice of Sale (including amendments, if any)

related to the auction. (6) Neither the City, Speer, nor the Auction Administrator is responsible to any bidder for any defect or inaccuracy in the Official

Notice of Sale, amendments, or Preliminary Official Statement as they appear on SpeerAuction. (7) Only Bidders who request and receive admission to an auction may submit bids. SpeerAuction and the Auction Administrator

reserve the right to deny access to SpeerAuction website to any Bidder, whether registered or not, at any time and for any reason whatsoever, in their sole and absolute discretion.

(8) Neither the City, Speer, nor the Auction Administrator is responsible for protecting the confidentiality of a Bidder’s SpeerAuction password.

(9) If two bids submitted in the same auction by the same or two or more different Bidders result in same True Interest Cost, the first confirmed bid received by SpeerAuction prevails. Any change to a submitted bid constitutes a new bid, regardless of whether there is a corresponding change in True Interest Cost.

(10) Bidders must compare their final bids to those shown on the Observation Page immediately after the bidding time period ends, and if they disagree with the final results shown on the Observation Page they must report them to SpeerAuction within 15 minutes after the bidding time period ends. Regardless of the final results reported by SpeerAuction, Bonds are definitively awarded to the winning bidder only upon official award by the City. If, for any reason, the City fails to: (i) award Bonds to the winner reported by SpeerAuction, or (ii) deliver Bonds to winning bidder at settlement, neither the City, Speer, nor the Auction Administrator will be liable for damages.

The City reserves the right to reject all proposals, to reject any bid proposal not conforming to this Official Notice of Sale, and to waive any irregularity or informality with respect to any proposal. Additionally, the City reserves the right to modify or amend this Official Notice of Sale; however, any such modification or amendment shall not be made less than twenty-four (24) hours prior to the date and time for receipt of bids on the Bonds and any such modification or amendment will be announced on the Amendments Page of the SpeerAuction webpage and through Thomson Municipal News. The Bonds will be in fully registered form in the denominations of $5,000 and integral multiples thereof in the name of Cede & Co. as nominee of The Depository Trust Company (“DTC”), New York, New York, to which principal and interest payments on the Bonds will be paid. Individual purchases will be in book-entry only form. Interest on each Bond shall be paid by check or draft of the Bond Registrar to the person in whose name such bond is registered at the close of business on the first day of the month in which an interest payment date occurs. The principal of the Bonds shall be payable in lawful money of the United States of America at the principal corporate trust office of the Bond Registrar in Chicago, Illinois. Semiannual interest is due June 15 and December 15 of each year commencing December 15, 2020, and is payable by U.S. Bank National Association, Chicago, Illinois (the “Bond Registrar”). The Bonds are dated as of the date of delivery (expected to be on or about April 1, 2020).

If the winning bidder is not a direct participant of DTC and does not have clearing privileges with DTC, the Bonds will be issued as Registered Bonds in the name of the purchaser. At the request of such winning bidder, the City will assist in the timely conversion of the Registered Bonds into book-entry bonds with DTC as described herein.

MATURITIES* – DECEMBER 15 $555,000 .................. 2021 $650,000 .................. 2026 $735,000 .................. 2030 575,000 .................. 2022 675,000 .................. 2027 765,000 .................. 2031 595,000 .................. 2023 695,000 .................. 2028 790,000 .................. 2032 610,000 .................. 2024 715,000 .................. 2029 810,000 .................. 2033 635,000 .................. 2025 840,000 .................. 2034

Any consecutive maturities may be aggregated into term bonds at the option of the bidder,

in which case the mandatory redemption provisions shall be on the same schedule as above. The Bonds due December 15, 2021-2027, inclusive, are non-callable. The Bonds due December 15, 2028-2034, inclusive, are callable in whole or in part on any date on or after December 15, 2027, at a price of par and accrued interest. If less than all the Bonds are called, they shall be redeemed in such principal amounts and from such maturities as determined by the City and within any maturity by lot All interest rates must be in multiples of one-eighth or one one-hundredth of one percent (1/8 or 1/100 of 1%), and not more than one rate for a single maturity shall be specified. The rates bid shall be in non-descending order. The differential between the highest rate bid and the lowest rate bid shall not exceed three percent (3%). All bids must be for all of the Bonds, must be for not less than $9,565,000. Award of the Bonds: The Bonds will be awarded on the basis of true interest cost, determined in the following manner. True interest cost shall be computed by determining the annual interest rate (compounded semi-annually) necessary to discount the debt service payments on the Bonds from the payment dates thereof to the dated date and to the bid price. For the purpose of calculating true interest cost, the Bonds shall be deemed to become due in the principal amounts and at the times set forth in the table of maturities set forth above. In the event two or more qualifying bids produce the identical lowest true interest cost, the winning bid shall be the bid that was submitted first in time on the SpeerAuction webpage. *Subject to change.


The Bonds will be awarded to the Bidder complying with the terms of this Official Notice of Sale whose bid produces the lowest true interest cost rate to the City as determined by Speer, which determination shall be conclusive and binding on all Bidders; provided, that the City reserves the right to reject all bids or any non-conforming bid and reserves the right to waive any informality in any bid. Bidders should verify the accuracy of their final bids and compare them to the winning bids reported on the SpeerAuction Observation Page immediately after the bidding.

The premium or discount, if any, is subject to pro rata adjustment if the maturity amounts of the Bonds are changed, allowing the same dollar amount of profit per $1,000 bond as submitted on the Official Bid Form. The dollar amount of profit must be written on the Official Bid Form for any adjustment to be allowed, and is subject to verification.

The true interest cost of each bid will be computed by SpeerAuction and reported on the Observation Page of the SpeerAuction webpage immediately following the date and time for receipt of bids. These true interest costs are subject to verification by Speer, will be posted for information purposes only and will not signify an actual award of any bid or an official declaration of the winning bid. The City or Speer will notify the Bidder to whom the Bonds will be awarded, if and when such award is made.

The winning bidder will be required to make the standard filings and maintain the appropriate records routinely required pursuant to MSRB Rules G-8, G-11 and G-32. The winning bidder will be required to pay the standard MSRB charge for Bonds purchased. In addition, the winning bidder who is a member of the Securities Industry and Financial Markets Association (“SIFMA”) will be required to pay SIFMA’s standard charge per bond.

The winning bidder is required to wire transfer from a solvent bank or trust company to the City’s good faith bank the amount of TWO PERCENT OF PAR (the “Deposit”) WITHIN TWO HOURS after the bid opening time as evidence of the good faith of the Bidder. Alternatively, a Bidder may submit its Deposit upon or prior to the submission of its bid in the form of a certified or cashier’s check on, or a wire transfer from, a solvent bank or trust company for TWO PERCENT OF PAR payable to the Treasurer of the City. The City reserves the right to award the Bonds to a winning bidder whose wire transfer is initiated but not received within such two hour time period provided that such winning bidder’s federal wire reference number has been received. In the event the Deposit is not received as provided above, the City may award the Bonds to the Bidder submitting the next best bid provided such Bidder agrees to such award.

The Deposit of the successful Bidder will be retained by the City pending delivery of the Bonds and all others will be promptly returned. Should the successful Bidder fail to take up and pay for the Bonds when tendered in accordance with this Official Notice of Sale and said bid, said Deposit shall be retained as full and liquidated damages to the City caused by failure of the Bidder to carry out the offer of purchase. Such Deposit will otherwise be applied on the purchase price upon delivery of the Bonds. No interest on the Deposit will accrue to the purchaser.

If a wire transfer is used for the Deposit, it must be sent according to the following wire instructions:

Amalgamated Bank of Chicago Corporate Trust

30 N. LaSalle Street, 38th Floor Chicago, IL 60602 ABA # 071003405

Credit To: 3281 Speer Bidding Escrow RE: City of Elgin, Kane and Cook Counties, Illinois

bid for $9,645,000* General Obligation Corporate Purpose Bonds, Series 2020B

Contemporaneously with such wire transfer, the Bidder shall send an email to [email protected] with the following information: (1) indication that a wire transfer has been made, (2) the amount of the wire transfer, (3) the issue to which it applies, and (4) the return wire instructions if such Bidder is not awarded the Bonds. The City and any Bidder who chooses to wire the Deposit hereby agree irrevocably that Speer shall be the escrow holder of the Deposit wired to such account subject only to these conditions and duties: (i) if the bid is not accepted, Speer shall, at its expense, promptly return the Deposit amount to the unsuccessful bidder; (ii) if the bid is accepted, the Deposit shall be forwarded to the City; (iii) Speer shall bear all costs of maintaining the escrow account and returning the funds to the Bidder; (iv) Speer shall not be an insurer of the Deposit amount and shall have no liability except if it willfully fails to perform, or recklessly disregards, its duties specified herein; and (v) income earned on the Deposit, if any, shall be retained by Speer.

If a Financial Surety Bond is used for the Deposit, it must be from an insurance company licensed to issue such a bond in the State of Illinois and such bond must be submitted to Speer prior to the opening of the bids. The Financial Surety Bond must identify each Bidder whose deposit is guaranteed by such Financial Surety Bond. If the Bonds are awarded to a Bidder using a Financial Surety Bond, then that purchaser is required to submit its Deposit to the City in the form of a certified or cashier’s check or wire transfer as instructed by Speer, or the City not later than 3:00 P.M. on the next business day following the award. If such Deposit is not received by that time, the Financial Surety Bond may be drawn by the City to satisfy the Deposit requirement.

The City covenants and agrees to enter into a written agreement or contract, constituting an undertaking (the “Undertaking”) to provide ongoing disclosure about the City for the benefit of the beneficial owners of the Bonds on or before the date of delivery of the Bonds as required under Section (b)(5) of Rule 15c2-12 (the “Rule”) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934. The Undertaking shall be as described in the Official Statement, with such changes as may be agreed in writing by the Underwriter.

The Underwriter's obligation to purchase the Bonds shall be conditioned upon the City delivering the Undertaking on or before the date of delivery of the Bonds.

By submitting a bid, any Bidder makes the representation that it understands Bond Counsel represents the City in the Bond transaction and, if such Bidder has retained Bond Counsel in an unrelated matter, such Bidder represents that the signatory to the bid is duly authorized to, and does consent to and waive for and on behalf of such Bidder any conflict of interest of Bond Counsel arising from any adverse position to the City in this matter; such consent and waiver shall supersede any formalities otherwise required in any separate understandings, guidelines or contractual arrangements between the Bidder and Bond Counsel.

*Subject to change.

City of Elgin, Kane and Cook Counties, Illinois $9,645,000* General Obligation Corporate Purpose Bonds, Series 2020B Official Notice of Sale, Page 6 of 6 *Subject to change. Bonds will be delivered to the successful purchaser against full payment in immediately available funds as soon as they can be prepared and executed, which is expected to be April 1, 2020. Should delivery be delayed beyond sixty (60) days from the date of sale for any reason beyond the control of the City except failure of performance by the purchaser, the City may cancel the award or the purchaser may withdraw the Deposit and thereafter the purchaser's interest in and liability for the Bonds will cease. The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates, principal amounts, and interest rates of the Bonds, and any other information required by law or deemed appropriate by the City, shall constitute a “Final Official Statement” of the City with respect to the Bonds, as that term is defined in the Rule. Any such addendum or addenda shall, on and after the date thereof, be fully incorporated herein and made a part hereof by reference. Alternatively, such final terms of the Bonds and other information may be included in a separate document entitled “Final Official Statement” rather than through supplementing the Official Statement by an addendum or addenda. By awarding the Bonds to any underwriter or underwriting syndicate, the City agrees that, no more than seven (7) business days after the date of such award, it shall provide, without cost to the senior managing underwriter of the syndicate to which the Bonds are awarded, up to 100 copies of the Final Official Statement to permit each “Participating Underwriter” (as that term is defined in the Rule) to comply with the provisions of such Rule. The City shall treat the senior managing underwriter of the syndicate to which the Bonds are awarded as its designated agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Any underwriter executing and delivering an Official Bid Form with respect to the Bonds agrees thereby that if its bid is accepted by the City it shall enter into a contractual relationship with all Participating Underwriters of the Bonds for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. By submission of its bid, the senior managing underwriter of the successful Bidder agrees to supply all necessary pricing information and any Participating Underwriter identification necessary to complete the Official Statement within 24 hours after award of the Bonds. Additional copies of the Final Official Statement may be obtained by Participating Underwriters at cost. The City will, at its expense, deliver the Bonds to the purchaser in New York, New York, through the facilities of DTC and will pay for the bond attorney’s opinion. At the time of closing, the City will also furnish to the purchaser the following documents, each dated as of the date of delivery of the Bonds: (1) the unqualified opinion of Chapman and Cutler LLP, Chicago, Illinois, stating that the Bonds are lawful and enforceable obligations of the City in accordance with their terms; (2) the opinion of Bond Counsel that the interest on the Bonds is exempt from federal income taxes as and to the extent set forth in the Official Statement for the Bonds; and (3) a no litigation certificate by the City. The Bonds are not “qualified tax-exempt obligations” under Section 265(b)(3) of the Internal Revenue Code of 1986, as amended.

The City has authorized the printing and distribution of an Official Statement containing pertinent information relative to the City and the Bonds. Copies of such Official Statement or additional information may be obtained from Ms. Debra Nawrocki, Chief Financial Officer, City of Elgin, 150 Dexter Court, Elgin, Illinois 60120 or an electronic copy of this Official Statement is available from the www.speerfinancial.com web site under “Debt Auction Center/Competitive Sales Calendar” from the Municipal Advisors to the City, Speer Financial, Inc., One North LaSalle Street, Suite 4100, Chicago, Illinois 60602, telephone (312) 346-3700. /s/ DEBRA NAWROCKI /s/ RICHARD G. KOZAL Chief Financial Officer/Budget Director City Manager CITY OF ELGIN CITY OF ELGIN Kane and Cook Counties, Illinois Kane and Cook Counties, Illinois

CERTIFICATE OF PURCHASER

The undersigned, on behalf of __________________ (the “Purchaser”), hereby certifies as set forth below with respect to the sale and issuance of the General Obligation Corporate Purpose Bonds, Series 2020B (the “Bonds”), of the City of Elgin, Kane and Cook Counties, Illinois (the “City”).

I. General

On the Sale Date the Purchaser purchased the Bonds from the City by submitting electronically an “Official Bid Form” responsive to an “Official Notice of Sale” and having its bid accepted by the City. The Purchaser has not modified the terms of the purchase since the Sale Date.

II. Price

[Competitive Sale Rules (3 bids received)]

[1. Reasonably Expected Initial Offering Price.

(a) As of the Sale Date, the reasonably expected initial offering price of each Maturity of the Bonds to the Public by the Purchaser is the price listed in Schedule A (the “Expected Offering Prices”). The Expected Offering Price is the price for such Maturity of the Bonds used by the Purchaser in formulating its bid to purchase the Bonds. Attached as Schedule B is a true and correct copy of the bid provided by the Purchaser to purchase the Bonds.

(b) The Purchaser was not given an exclusive opportunity to review other bids prior to submitting its bid.

(c) The bid submitted by the Purchaser constituted a firm offer to purchase the Bonds.]

[10% Test – All Bonds Sold]

[1. As of the date of this certificate, the first price at which at least 10% of each Maturity of the Bonds was sold to the Public is the respective price listed in Schedule C.]

[All maturities use Hold the Offer Price]

[1. The Purchaser offered each Maturity of the Bonds to the Public for purchase at the initial offering price listed in Schedule A (the “Initial Offering Price”) on or before the Sale Date. A copy of the pricing wire or equivalent communication for the Bonds is attached to this certificate as Schedule B.

Exhibit AExample Issue Price Certificate

2. As set forth in the Official Notice of Bond Sale and bid award, the Purchaser hasagreed in writing that, (i) it would neither offer nor sell any of the Bonds of such Maturity to any person at a price that is higher than the Initial Offering Price during the Holding Period for such Maturity (the “Hold-The-Offering-Price Rule”), and (ii) any selling group agreement would contain the agreement of each dealer who is a member of the selling group, and any retail distribution agreement would contain the agreement of each broker-dealer who is a party to the retail distribution agreement, to comply with the Hold-The-Offering-Price Rule.

3. No Underwriter (as defined below) has offered or sold any Bonds of any Maturity ata price that is higher than the respective Initial Offering Price during the Holding Period.]

[Some Maturities Use Hold the Offer Price

1. As of the date of this certificate, for each Maturity of the General Rule Maturities,the first price at which at least 10% of such Maturity of the Bonds was sold to the Public is the respective price listed in Schedule A.

2. A. The Purchaser offered the Hold-the-Offering-Price Maturities to the Public for purchase at the respective initial offering prices listed in Schedule A (the “Initial Offering Prices”) on or before the Sale Date. A copy of the pricing wire or equivalent communication for the Bonds is attached to this certificate as Schedule B.

B. As set forth in the Notice of Sale and bid award, the Purchaser has agreed in writing that, (i) for each Maturity of the Hold-the-Offering-Price Maturities, it would neither offer nor sell any of the Bonds of such Maturity to any person at a price that is higher than the Initial Offering Price for such Maturity during the Holding Period for such Maturity (the “Hold-the-Offering-Price Rule”), and (ii) any selling group agreement would contain the agreement of each dealer who is a member of the selling group, and any retail distribution agreement would contain the agreement of each broker-dealer who is a party to the retail distribution agreement, to comply with the Hold-the-Offering-Price Rule.

C. No Underwriter (as defined below) has offered or sold any Maturity of the Hold-the-Offering-Price Maturities at a price that is higher than the respective Initial Offering Price for that Maturity during the Holding Period.]

III. Definitions

[1. General Rule Maturities means those Maturities of the Bonds not listed in Schedule A hereto as the “Hold-the-Offering-Price Maturities.”]

[2. Hold-the-Offering-Price Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “Hold-the-Offering-Price Maturities.”]

[3. Holding Period means, with respect to a Hold-the-Offering-Price Maturity, the period starting on the Sale Date and ending on the earlier of (i) the close of the fifth business day

after the Sale Date (__________________, 2019), or (ii) the date on which the Purchaser has sold at least 10% of such Hold-the-Offering-Price Maturity to the Public at prices that are no higher than the Initial Offering Price for such Hold-the-Offering-Price Maturity.]

4. Maturity means Bonds with the same credit and payment terms. Bonds withdifferent maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate maturities.

5. Public means any person (including an individual, trust, estate, partnership,association, company, or corporation) other than an Underwriter or a related party to an Underwriter.

6. A person is a “Related Party” to an Underwriter if the Underwriter and theperson are subject, directly or indirectly, to (i) at least 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (ii) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other).

7. Sale Date means the first day on which there is a binding contract in writing forthe sale of a Maturity of the Bonds. The Sale Date of the Bonds is ___________, 2019.

8. Underwriter means (i) any person that agrees pursuant to a written contract withthe City (or with the Underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, including, specifically, the Purchaser, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public).

IV. Use of Representations and Certifications.

The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents the Purchaser’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the City with respect to certain of the representations set forth in its documents and with respect to compliance with the federal income tax rules affecting the Bonds, and by Chapman and Cutler LLP in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of Internal Revenue Service Form 8038-G, and other federal income tax advice it may give to the City from time to time relating to the Bonds.

All terms not defined herein shall have the same meanings as in the Tax Exemption Certificate and Agreement with respect to the Bonds, to which this Certificate is attached.

Dated: _____________, 2020

Very truly yours,

________________________

By ____________________________________ Its ____________________________________

SCHEDULE A

GENERAL RULE, ALL MATURITIES SOLD

YEAR(DEC 15)

PRINCIPALAMOUNT ($)

INTEREST RATE (%)

FIRST SALEPRICE OF AT

LEAST 10% (% OF PAR)

OFFERPRICE

(% OF PAR)

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034

Total

COMPETITIVE SALE YEAR(DEC15)

PRINCIPAL AMOUNT

($)

INTEREST RATE (%)

EXPECTED FIRSTOFFER PRICE (% OF PAR)

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034

Total

HOLD THE OFFER PRICE HOLD-THE-OFFERING-

PRICEMATURITYIF MARKED

YEAR(DEC15)

PRINCIPALAMOUNT ($)

INTEREST RATE (%)

FIRST SALEPRICE OF AT

LEAST 10% (% OF PAR)

OFFERPRICE

(% OF PAR) 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034

Total

SCHEDULE B

[Pricing, Wire or Equivalent Communication][Bid]

the sale has been postponed until april 8, 2020 (go) 20b pos.pdf · 2020. 3. 16. · the bonds due...

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