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Packet - 12/4/2023 - City Council
AGENDA REGULAR CITY COUNCIL MEETING Monday, December 4, 2023, 7:00 p.m. City Council Chambers, 333 S Green St, McHenry, IL 60050 1.Call to Order. 2.Roll Call. 3.Pledge of Allegiance 4. Public Comment 5.Presentation: Annual Financial Report for the Fiscal Year ending April 30, 2023 (Eccezion) 6. Consent Agenda. Motion to Approve the following Consent Agenda Items as presented: A.Resolution for the release of Executive Session Minutes and Destruction of Executive Session Recordings more than 18 Months Old. (Deputy Clerk Johnson) B.Shamrocks the Fox Event Approvals (Recreation Director Hobson) C.Parks & Recreation Facilities & Special User Permit Requests D.November 20, 2023 City Council Meeting Minutes. E.Issuance of Checks in the amount of $2,753,062.62 7.Individual Action Item Agenda A.Amendments to Downtown Parking Permits Motion to pass an Ordinance amending Title 7, Chapter 4, Section 7: Permit Parking, of the McHenry City Code. (Deputy City Clerk Johnson) B.Annexation of Land Motion to pass an Ordinance annexing a 2.68-Acre Tract of Land located on the southeast corner of Lake Shore Drive and McCullom Lake Road (Community Development Director Polerecky) C.Conditional Use Permit – Hickory Creek Barn Pending the passage of agenda item 7.B., a motion to pass an Ordinance granting a Zoning Map Amendment to A-1 Agriculture District, Conditional Use Permit for the Continued Operation of 1 a Horse Stable, Indoor/Outdoor Horse Arena, Equestrian Related Agritourism, and Zoning Variations for the property commonly known as Hickory Creek Farm (Community Development Director Polerecky) 8. Discussion Item Agenda A. Recreation Center Expansion B. Hickory Creek Barn 9. Staff Reports. Provided the 1st meeting of each month. 10. Mayor’s Report. 11. City Council Comments. 12. Executive Session to discuss the purchase or lease of real property for the use of the public body (5 ILCS 120/2(c)(5).). 13. Adjourn. The complete City Council packet is available for review online via the City website at www.cityofmchenry.org. For further information, please contact the Office of the City Administrator at 815-363-2108. This meeting will be live streamed with a quorum of the City Council physically present. Public comments may only be heard by members of the public physically present at the meeting. Remote public comments will not be heard. The public can listen and view the meeting from the following link: https://cityofmchenry.zoom.us/j/84697577610 2 Office of Finance & Accounting Carolyn Lynch, Director McHenry Municipal Center 333 Green Street McHenry, Illinois 60050 Phone: (815) 363-2100 Fax: (815) 363-2119 www.cityofmchenry.org PRESENTATION DATE: December 4, 2023 TO: Mayor and City Council FROM: Carolyn Lynch, Finance Director RE: FY22/23 Audit ATTACHMENTS: FY22/23 SAS Letter FY22/23 Audit Report _____________________________________________________________________________ Attached is the Annual Financial Report for the year ending April 30, 2023 that was completed by the firm of Eccezion (formerly Eder, Casella, and Company). The audit document was received by staff and the document includes important information about the City’s results for the 2022/23 fiscal year and current financial condition. There are a few areas of the report that are important to highlight. First, the Combining Schedule of Revenues, Expenditures, and Changes in Fund Balance – General Fund on page 61-62 of the audit includes the year end results and the total fund balance for the General Fund. The total fund balance is $16,857,124, which is an increase of $2,154,168 over April 30, 2023. Per the Fund Balance and Reserve Policy a transfer to the Capital Improvements Fund of excess Fund Balance is not proposed this year because during the FY23/24 budget process it was proposed to use $2,106,085 in fund balance for capital projects and $3.6 million is reserved from the ARPA funds for capital expenses related to the Route 31 widening project. As a reminder according to the Fund Balance and Reserve policy, the General Fund unassigned balance should be approximately 120 days of the estimated operating expenditures . Second, the Statement of Revenues, Expenses and Changes in Net Position – Proprietary Funds (pg. 20) show the annual operating income and expenses for the Water and Sewer Fund. The Water and Sewer Fund has an operating income of $1,076,211. Even with this operating income, Water/Sewer rates will still need to be annually reviewed and adjusted as operating revenues have increased due to debt service fees for the IEPA loan (as well as increases to water and sewer rates). These IEPA loan fees cover principal payments that are not presented on this statement, they are presented on the Statement of Net Position. 3 Third, the Police Pension Plan Schedule of Changes in the Employer’s Net Pension Liability and Related Ratios report (p. 54) still shows a high Total Pension Liability of $60,0674,242. On this same page the Plan Net Position has decreased even with the issuance of the Pension Obligation Bond due to lower investment returns to $55,718,518. The Police Pension Fund is still in a really good position at 93% funded as of April 30, 2023. A representative from Eccezion is in attendance to present a summary of the audit and answer any questions Council may have. 4 CITY OF McHENRY, ILLINOIS ANNUAL FINANCIAL REPORT APRIL 30, 2023 5 CITY OF McHENRY, ILLINOIS TABLE OF CONTENTS APRIL 30, 2023 PAGE INDEPENDENT AUDITOR’S REPORT 1 INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTORL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 4 REQUIRED SUPPLEMENTARY INFORMATION Management’s Discussion and Analysis 6 BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements Statement of Net Position 13 Statement of Activities 14 Fund Financial Statements Balance Sheet – Governmental Funds 15 Reconciliation of the Balance Sheet to the Statement of Net Position 16 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds 17 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities 18 Statement of Net Position – Proprietary Funds 19 Statement of Revenues, Expenses, and Changes in Net Position – Proprietary Funds 20 Statement of Cash Flows – Proprietary Funds 21 Statement of Fiduciary Net Position – Fiduciary Funds 22 Statement of Changes in Fiduciary Net Position – Fiduciary Funds 23 Notes to Financial Statements 24 REQUIRED SUPPLEMENTARY INFORMATION Illinois Municipal Retirement Fund – Schedule of Changes in the Employer’s Net Pension Liability and Related Ratios 52 6 CITY OF McHENRY, ILLINOIS TABLE OF CONTENTS APRIL 30, 2023 PAGE REQUIRED SUPPLEMENTARY INFORMATION (Continued) Illinois Municipal Retirement Fund – Schedule of Employer Contribution 53 Police Pension Plan – Schedule of Changes in the Employer’s Net Pension Liability and Related Ratios 54 Police Pension Plan – Schedule of Employer Contribution 55 Other Post-Employment Benefit – Schedule of Changes in the Employer’s Total OPEB Liability and Related Ratios 56 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual – General Fund 57 Notes to Required Supplementary Information 59 SUPPLEMENTAL FINANCIAL INFORMATION Combining Balance Sheet – General Fund 60 Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances – General Fund 61 Combining Balance Sheet – Other Governmental Funds 63 Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances – Other Governmental Funds 64 Combining Schedule of Net Position – Water and Sewer Funds 65 Combining Schedule of Revenues, Expenses, and Changes in Net Position – Water and Sewer Funds 66 Combining Schedule of Net Position – Internal Service Funds 67 Combining Schedule of Revenues, Expenses, and Changes in Net Position – Internal Service Funds 68 Combining Schedule of Net Position – Custodial Funds 69 Combining Schedule of Changes in Fiduciary Net Position – Custodial Funds 70 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual – Special Revenue Fund – Tax Increment Financing Fund 71 7 INDEPENDENT AUDITOR’S REPORT To the Mayor and City Council Members City of McHenry McHenry, Illinois Report on the Audit of the Financial Statements Opinions We have audited the accompanying financial statements of the governmental activities, the business- type activities, each major fund, and the aggregate remaining fund information of City of McHenry as of and for the year ended April 30, 2023, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of McHenry as of April 30, 2023, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of City of McHenry and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Change in Accounting Principle As described in Note 22 to the financial statements, the City implemented GASB Statement No. 87, Leases. Our opinion is not modified with respect to this matter. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America; this includes 8 the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for one year after the date that the financial statements are issued. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS and Government Auditing Standards, we: •Exercise professional judgment and maintain professional skepticism throughout the audit. •Identify and assess the risk of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. •Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of City of McHenry’s internal control. Accordingly, no such opinion is expressed. •Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. •Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about City of McHenry’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the required supplementary information, as listed on the table of contents, be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic 9 financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The supplementary information, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 10, 2023 on our consideration of City of McHenry’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City of McHenry’s internal control over financial reporting and compliance. Eccezion Consulting • CPAs • Technology McHenry, Illinois November 10, 2023 10 INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Mayor and City Council Members City of McHenry McHenry, Illinois We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of McHenry as of and for the year ended April 30, 2023, and the related notes to the financial statements, which collectively comprise City of McHenry’s basic financial statements, and have issued our report thereon dated November 10, 2023. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered City of McHenry’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of City of McHenry’s internal control. Accordingly, we do not express an opinion on the effectiveness of City of McHenry’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the City’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 11 Compliance and Other Matters As part of obtaining reasonable assurance about whether City of McHenry’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Eccezion Consulting • CPAs • Technology McHenry, Illinois November 10, 2023 12 REQUIRED SUPPLEMENTARY INFORMATION 13 CITY OF McHENRY, ILLINOIS MANAGEMENT’S DISCUSSION AND ANALYSIS APRIL 30, 2023 As management of City of McHenry (City), we offer readers of the City’s statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended April 30, 2023. We encourage readers to consider the information presented here in conjunction with additional information found in the notes to the financial statements. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. Both perspectives (government-wide and fund level financial statements) allow the user to address relevant questions, broaden a basis for comparison (year to year or government to government) and enhance the City’s accountability. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide Financial Statements. The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private business. The Statement of Net Position presents information on all the City’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources with the difference amongst those being reported as net position. Increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating when comparing year to year results. The Statement of Activities presents information showing how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). Both government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general office, public safety, public works, and parks and recreation. The business-type activities of the City include a water and sewer division. Fund Financial Statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. 14 Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the City’s near-term financing decisions. Both the governmental fund Balance Sheet and the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains 14 individual governmental funds. Information is presented separately in the governmental fund Balance Sheet and in the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances for the General Fund which is considered to be a major fund. Data from the other 13 governmental funds are combined into a single, aggregated presentation. The other 13 funds include Pageant, Audit, Recreation Center, Capital Improvements, Capital Asset Maintenance and Replacement, Capital Equipment, Debt Service, Motor Fuel Tax, Municipal Motor Fuel Tax, Developer Donations, Tax Increment Financing, and two Special Service Areas. Proprietary Funds. The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses an enterprise fund to account for the Water and Sewer Division. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for its employee insurance, risk management, and information technology. Because these services predominately benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the water and sewer functions. Internal service funds are combined into a single, aggregate presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements. Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the City. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The City’s fiduciary funds include the Police Pension Trust Fund and two Custodial Funds. Notes to the Financial Statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Other Information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City’s appropriation to actual for the General Fund. GOVERNMENT-WIDE FINANCIAL ANALYSIS Net position may serve over time as a useful indicator of a government’s financial position. In the case of the City, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $148,516,513 at April 30, 2023. By far, the largest portion of the City’s net position, 93%, reflects its net investment in capital assets (e.g., land, construction in progress, buildings, and equipment); less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt 15 must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. 4/30/2023 4/30/2022 4/30/2023 4/30/2022 4/30/2023 4/30/2022 Assets Current and Other Assets 32,992,919$ 33,833,389$ 13,576,743$ 11,953,256$ 46,569,662$ 45,786,645$ Capital Assets 96,526,534 95,044,404 77,053,660 79,296,456 173,580,194 174,340,860 Net Pension Asset - IMRF - 1,915,256 - 884 - 1,916,140 Total Assets 129,519,453$ 130,793,049$ 90,630,403$ 91,250,596$ 220,149,856$ 222,043,645$ Deferred Outflows of Resources 11,959,807$ 8,234,178$ 1,325,114$ 537,931$ 13,284,921$ 8,772,109$ Liabilities Long-Term Liabilities Outstanding 26,838,310$ 28,826,835$ 30,747,863$ 32,696,374$ 57,586,173$ 61,523,209$ Net Pension Liability - IMRF 5,508,725 - 1,769,693 - 7,278,418 - Net Pension Liability - Police 4,348,724 469,026 - - 4,348,724 469,026 Total OPEB Liability 948,640 1,200,063 174,609 129,680 1,123,249 1,329,743 Other Liabilities 2,673,995 2,422,222 354,638 520,673 3,028,633 2,942,895 Total Liabilities 40,318,394$ 32,918,146$ 33,046,803$ 33,346,727$ 73,365,197$ 66,264,873$ Deferred Inflows of Resources 10,456,210$ 15,751,752$ 1,096,857$ 1,187,812$ 11,553,067$ 16,939,564$ Net Position Net Investment in Capital Assets 91,764,145$ 90,072,809$ 46,377,371$ 46,698,746$ 138,141,516$ 136,771,555$ Restricted 2,036,911 5,894,047 - - 2,036,911 5,894,047 Unrestricted (3,096,400) (5,609,527) 11,434,486 10,555,242 8,338,086 4,945,715 Total Net Position 90,704,656$ 90,357,329$ 57,811,857$ 57,253,988$ 148,516,513$ 147,611,317$ City of McHenry's Statement of Net Position TotalBusiness-Type ActivitiesGovernmental Activities An additional portion of the City’s net position, 1%, represents resources that are subject to external restrictions on how they may be used (e.g. Highways and Streets, Capital Projects, Police Pension and Special Service Areas). The remaining balance of unrestricted net position ($8,338,086) may be used to meet the City’s ongoing obligations to citizens and creditors. Governmental Activities. Governmental activities increased the City’s net position by $1,208,651, which was then partially offset by a net position adjustment of $(861,324). Key differences from the prior year are as follows: 16 FY 2023 FY 2022 FY 2023 FY 2022 FY 2023 FY 2022 Revenues Program Revenues Charges for Services 7,241,916$ 7,142,687$ 9,427,881$ 10,247,466$ 16,669,797$ 17,390,153$ Operating Grants and Contributions 46,113 3,716,047 - - 46,113 3,716,047 Capital Grants and Contributions 773,717 5,119,713 - 2,454,222 773,717 7,573,935 General Revenues Taxes Property Taxes 5,711,748 5,565,378 - - 5,711,748 5,565,378 Intergovernmental Sales Taxes 13,346,454 12,807,479 - - 13,346,454 12,807,479 Other Taxes 7,702,910 6,433,338 - - 7,702,910 6,433,338 Other 541,044 21,008 189,104 30,872 730,148 51,880 Total Revenues 35,363,902$ 40,805,650$ 9,616,985$ 12,732,560$ 44,980,887$ 53,538,210$ Expenses General Office 8,125,923$ 4,118,881$ -$ -$ 8,125,923$ 4,118,881$ Public Safety 13,663,828 9,328,245 - - 13,663,828 9,328,245 Public Works 7,469,021 5,068,211 - - 7,469,021 5,068,211 Parks and Recreation 4,069,254 4,305,299 - - 4,069,254 4,305,299 Interest and Fees 689,635 714,641 - - 689,635 714,641 Depreciation 245,712 227,178 - - 245,712 227,178 Water - - 2,196,433 2,160,744 2,196,433 2,160,744 Sewer - - 5,651,641 5,328,003 5,651,641 5,328,003 Utility Work - - 1,122,120 930,611 1,122,120 930,611 Total Expenses 34,263,373$ 23,762,455$ 8,970,194$ 8,419,358$ 43,233,567$ 32,181,813$ Increase/(Decrease) in Net Position Before Transfers 1,100,529$ 17,043,195$ 646,791$ 4,313,202$ 1,747,320$ 21,356,397$ Transfers 94,922 93,048 (94,922) (93,048) - - Gain on Sale of Capital Assets 13,200 20,300 6,000 32,760 19,200 53,060 Increase/(Decrease) in Net Position 1,208,651$ 17,156,543$ 557,869$ 4,252,914$ 1,766,520$ 21,409,457$ Net Position - Beginning of Year 90,357,329 73,200,786 57,253,988 53,292,140 147,611,317 126,492,926 Net Position Adjustment (861,324) - - (291,066) (861,324) (291,066) Net Position - End of Year 90,704,656$ 90,357,329$ 57,811,857$ 57,253,988$ 148,516,513$ 147,611,317$ City of McHenry's Change in Net Position Governmental Activities Business-Type Activities Total Revenues decreased in the current year due to decreases in operating grants and contributions as well as capital grants and contributions which was mainly due to the receipt of the American Rescue Plan funds during FY’22 but not during the current year, as well as developer donations of over $3.1 million in the prior year but only $20,000 during FY’23. Expenses increased mainly due to increases in the expenses related to the Police Pension and IMRF Pension liabilities, increases related to OPEB expense, and increased repairs and maintenance expenses. Business-Type Activities. Business-type activities increased the City’s net position by $557,869. Revenues for business-type activities decreased in the current year due to a decrease in capital grants and contributions from developer donations. Expenses for business-type activities increased in the current year due to slight increases across the water, sewer, and utility work departments from miscellaneous personnel expenses and also increased expenses related to IMRF and OPEB liabilities. 17 FINANCIAL ANALYSIS OF THE CITY’S FUNDS As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. Governmental Funds. The focus of the City’s governmental funds is to provide information on near- term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of the City’s net resources available for spending at the end of the fiscal year. At April 30, 2023, the City’s governmental funds reported combined ending fund balances of $24,338,475, an increase of $652,175 in comparison with the prior year, which includes a fund balance adjustment of $(861,324). Approximately 39% of this total amount constitutes unassigned fund balance which is available for spending at the City’s discretion. Of the remaining fund balance, 52% constitutes assigned fund balance, with the remainder of the fund balance restricted to indicate that it is not available for new spending because it has already been restricted for specific purposes or is nonspendable. The General Fund is the chief operating fund of the City. At April 30, 2023, the fund balance of the General Fund was $19,553,883, of which $9,739,783 is unassigned. As a measure of the General Fund’s liquidity, it may be useful to compare unassigned fund balance to total fund expenditures. Unassigned fund balance represents 36% of total General Fund expenditures. The General Fund’s fund balance increased by $2,436,254 during the year ended April 30, 2023, which includes a fund balance adjustment of $(861,324). This was mainly due to increases in state sales tax and state income taxes. There was also an increase in Federal grants, which was mainly due to the receipt of the American Rescue Plan grant. Other significant highlights in the governmental funds for the year ended April 30, 2023 are outlined below: • Debt service expenses of $2,677,337 were paid to meet the debt service requirements of the City. • Other governmental funds show a total decrease in fund balance of $1,784,079. Proprietary Funds. The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Fiduciary Funds (Police Pension and Custodial Funds). At April 30, 2023, the Police Pension Fund’s net position amounted to $55,718,519. Deductions exceeded additions during the year, resulting in a decrease of $919,521 in net position. The decrease was largely due to losses on sales of investments. GENERAL FUND BUDGETARY HIGHLIGHTS The City amended their budget during the year ended April 30, 2023. A significant difference between original and final budget was an increase in capital outlay expenditures of $960,000. The General Fund actual revenue exceeded budgeted revenue by $5,265,609. This difference was primarily due to more than expected revenue from state sales and income taxes, receipt of the American Rescue Plan grant, and interest income. Budgeted expenditures exceeded actual expenditures by $746,982. The difference was mainly due to less than expected expenditures in all areas, aside from Public Safety and Parks and Recreation which were slightly higher than expected. 18 CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets. The City’s investment in capital assets for its governmental and business-type activities as of April 30, 2023 amounts to $173,580,194 (net of accumulated depreciation). This investment includes land, land improvements, art and historical treasures, intangibles, construction in progress, buildings, vehicles, systems and equipment, and infrastructure. 4/30/2023 4/30/2022 4/30/2023 4/30/2022 4/30/2023 4/30/2022 Land 43,651,504$ 42,664,844$ 2,208,117$ 2,208,117$ 45,859,621$ 44,872,961$ Land Improvements 2,946,509 2,584,275 - - 2,946,509 2,584,275 Art and Historical Treasures 1,658,927 1,658,927 - - 1,658,927 1,658,927 Intangibles 300,000 300,000 - - 300,000 300,000 Construction in Progress 1,831,979 1,463,648 92,944 57,193 1,924,923 1,520,841 Buildings 12,924,652 12,352,919 334,701 361,206 13,259,353 12,714,125 Vehicles 1,810,670 1,574,244 727,933 778,748 2,538,603 2,352,992 Systems and Equipment 1,505,373 1,468,179 73,689,965 75,891,191 75,195,338 77,359,370 Infrastructure 29,896,920 30,977,368 - - 29,896,920 30,977,368 Total 96,526,534$ 95,044,404$ 77,053,660$ 79,296,455$ 173,580,194$ 174,340,859$ City of McHenry's Capital Assets (net of depreciation) Governmental Activities Business-Type Activities Total Major capital asset events during the year ended April 30, 2023 included the following: • Construction in progress additions totaling $2,715,606 • The purchase of three land parcels totaling $986,660 • The purchase of eleven new vehicles totaling $634,484 For further information on the City’s capital assets see Note 3 in the notes to the financial statements. Long-Term Debt. At April 30, 2023, the City had total bonded debt outstanding of $29,155,000, all of which is backed by the full faith and credit of the City. 4/30/2023 4/30/2022 4/30/2023 4/30/2022 4/30/2023 4/30/2022 General Obligation Bonds 25,530,000$ 27,205,000$ 3,625,000$ 3,995,000$ 29,155,000$ 31,200,000$ IEPA Revolving Loan Fund - - 26,742,871 28,275,383 26,742,871 28,275,383 Notes Payable 635,548 956,419 - - 635,548 956,419 Bond Premium 32,169 40,547 280,809 327,327 312,978 367,874 Bond Discount (182) (371) - - (182) (371) Total 26,197,535$ 28,201,595$ 30,648,680$ 32,597,710$ 56,846,215$ 60,799,305$ City of McHenry's Outstanding Debt Governmental Activities Business-Type Activities Total For further information on the City’s long-term debt see Note 5 in the notes to the financial statements. ECONOMIC FACTORS AND NEXT YEAR’S BUDGET AND RATES The City has a diversified economy with the manufacturing and health fields being its primary base. McHenry is among the State’s fastest growing communities with the official population increasing from 16,177 in 1990 to 27,135 in 2020. In addition, the City experienced significant growth in the retail, office, and industrial space, and a downtown revitalization plan has spurred residential and commercial development in the Downtown TIF District. The City’s economic conditions are as follows: • The average unemployment rate for McHenry County in 2021 was 4.3 percent, which is 10.4 percent lower than a year ago. This is lower than the State’s average unemployment rate of 4.6 percent. 19 • Inflation in the area compares to the national consumer price index. Similar to a nationwide trend, residential growth in the City has slowed, but has been increasing over the last few years. The number of single family residential building permits issued by the City has decreased from 139 in 2007 to 85 in 2020 and 22 in 2022. However, there has been a large increase in multi-family from 0 in 2012 to 378 in 2021. The total value of all commercial and residential improvements and new permits increased from $15.2 million in 2012 to $73.3 million in 2021 and $56.3 million in 2022. Development and adoption of the 2023/24 budget was premised on providing core municipal services while having an operationally balanced budget. It was expected there was going to be a volatile economic forecast when the pandemic began, but the City is fortunate to be in a favorable financial situation because of rebounding revenues and controlled operating expenses. Property tax revenues were increased for the first time since 2010 in 2021, but then left flat for 2022. EAV values have been gradually increasing which caused the City’s tax rate to continue to decrease from $0.605781 in 2021 to $0.555713 in 2022. In April 2023, the City Council approved the proposed fiscal year 2023/24 General Fund budget increasing the prior year’s budget by $3,759,316. These increases were primarily due to personnel and capital outlay expenses. In the last few years, capital expenditures have been funded with Fund Balance Reserves which have been built up due to cost reduction measures necessary to adopt a balanced budget in the past years as well as rebounding state shared revenues. These reserves have been decreasing over the years due to this Capital Spending Policy which has highlighted the need for a dedicated revenue source for the replacement and maintenance of capital assets. With the adoption of the Electric Utility Tax (adopted February 2, 2022 and placed in effect June 1, 2022), there is now a dedicated revenue stream for the replacement and maintenance of City capital assets. Management is always closely monitoring revenues as well as expenses for any changes. REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the City’s finances for all those with an interest in the City’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to: City of McHenry, 333 South Green St., McHenry, Illinois, 60050. 20 BASIC FINANCIAL STATEMENTS 21 Governmental Business-Type Activities Activities Total ASSETS Cash and Cash Equivalents 18,663,151$ 4,899,474$ 23,562,625$ Deposit with Paying Agent 32,240 - 32,240 Investments 3,574,643 6,637,249 10,211,892 Prepaid Items 266,209 42,118 308,327 Receivables (Net of Allowance for Estimated Uncollectible Amounts) Accounts Receivable - Billed 472,544 48,211 520,755 Accounts Receivable - Unbilled 281,102 1,333,209 1,614,311 Property Taxes 5,875,439 - 5,875,439 Accrued Interest 13,145 14,187 27,332 Due from Other Governmental Units 3,328,801 97,714 3,426,515 Grants Receivable 178,164 - 178,164 Cable Franchise Fee Receivable 122,912 - 122,912 Inventory 184,569 - 184,569 Right-of-Use Lease Receivable - 504,581 504,581 Capital Assets Land, Construction in Progress, and Other Non-Depreciable Assets 47,442,410 2,301,061 49,743,471 Other Capital Assets, Net of Depreciation 49,084,124 74,752,599 123,836,723 TOTAL ASSETS 129,519,453$ 90,630,403$ 220,149,856$ DEFERRED OUTFLOWS OF RESOURCES Pension Expense/Revenue - IMRF 3,744,278$ 1,054,909$ 4,799,187$ Pension Expense/Revenue - Police Pension 6,729,641 - 6,729,641 OPEB Expense/Revenue 1,485,888 270,205 1,756,093 TOTAL DEFERRED OUTFLOWS OF RESOURCES 11,959,807$ 1,325,114$ 13,284,921$ LIABILITIES Accounts Payable and Accrued Expenses 1,869,257$ 238,775$ 2,108,032$ Security Deposits Held - 3,000 3,000 Due to Other Governmental Units 49,041 - 49,041 Due to Other Funds 129,766 (129,766) - Due to Police Pension Fund 4,908 - 4,908 Unearned Revenue 399,787 - 399,787 Accrued Interest 221,236 242,629 463,865 Non-Current Liabilities Due Within One Year 2,672,661 2,101,849 4,774,510 Due in More Than One Year 24,165,649 28,646,014 52,811,663 Police Pension Liability 4,348,724 - 4,348,724 IMRF Net Pension Liability 5,508,725 1,769,693 7,278,418 Total OPEB Liability 948,640 174,609 1,123,249 TOTAL LIABILITIES 40,318,394$ 33,046,803$ 73,365,197$ DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Property Taxes 5,875,439$ -$ 5,875,439$ Unavailable Revenue - Right-of-Use Leases - Lessor - 545,559 545,559 Pension Expense/Revenue - IMRF 426,822 120,253 547,075 Pension Expense/Revenue - Police Pension 1,783,585 - 1,783,585 OPEB Expense/Revenue 2,370,364 431,045 2,801,409 TOTAL DEFERRED INFLOWS OF RESOURCES 10,456,210$ 1,096,857$ 11,553,067$ NET POSITION Net Investment in Capital Assets 91,764,145$ 46,377,371$ 138,141,516$ Restricted for: Highways and Streets 1,608,945 - 1,608,945 Capital Projects 195,936 - 195,936 Special Service Areas 29 - 29 Tax Increment Financing 232,001 - 232,001 Unrestricted/(Deficit)(3,096,400) 11,434,486 8,338,086 TOTAL NET POSITION 90,704,656$ 57,811,857$ 148,516,513$ APRIL 30, 2023 CITY OF MCHENRY, ILLINOIS STATEMENT OF NET POSITION GOVERNMENT-WIDE FINANCIAL STATEMENTS Page 13 The Notes to Financial Statements are an integral part of this statement. 22 Operating Capital Charges for Grants and Grants and Governmental Business-Type Expenses Services Contributions Contributions Activities Activities Total Functions/Programs Governmental Activities General Office 8,125,923$ 5,593,799$ -$ 279,073$ (2,253,051)$ -$ (2,253,051)$ Public Safety 13,663,828 1,229,601 - - (12,434,227) - (12,434,227) Public Works 7,469,021 - 46,113 494,644 (6,928,264) - (6,928,264) Parks and Recreation 4,069,254 418,516 - - (3,650,738) - (3,650,738) Interest and Fees on Long-Term Debt 689,635 - - - (689,635) - (689,635) Depreciation - Unallocated 245,712 - - - (245,712) - (245,712) 34,263,373$ 7,241,916$ 46,113$ 773,717$ (26,201,627)$ -$ (26,201,627)$ Business-Type Activities Water 2,196,433$ 3,405,570$ -$ -$ -$ 1,209,137$ 1,209,137$ Sewer 5,651,641 6,021,470 - - - 369,829 369,829 Utility Work 1,122,120 841 - - - (1,121,279) (1,121,279) 8,970,194$ 9,427,881$ -$ -$ -$ 457,687$ 457,687$ Total Primary Government 43,233,567$ 16,669,797$ 46,113$ 773,717$ (26,201,627)$ 457,687$ (25,743,940)$ General Revenues Taxes Property Tax, Levied for General Purposes 5,711,748$ -$ 5,711,748$ Intergovernmental State Sales Tax 13,346,454 - 13,346,454 State Income Tax 4,384,429 - 4,384,429 State Motor Fuel Tax 1,503,741 - 1,503,741 Other Taxes 1,814,740 - 1,814,740 Unrestricted Investment Earnings 541,044 189,104 730,148 Gain on Sale of Capital Assets 13,200 6,000 19,200 Transfers 94,922 (94,922) - Total General Revenues and Transfers 27,410,278$ 100,182$ 27,510,460$ Change in Net Position 1,208,651$ 557,869$ 1,766,520$ Net Position - May 1, 2022 90,357,329 57,253,988 147,611,317 Net Position Adjustment (Note 9)(861,324) - (861,324) Net Position - April 30, 2023 90,704,656$ 57,811,857$ 148,516,513$ CITY OF MCHENRY, ILLINOIS GOVERNMENT-WIDE FINANCIAL STATEMENTS STATEMENT OF ACTIVITIES FOR THE YEAR ENDED APRIL 30, 2023 Net (Expense) Revenue and Changes in Net PositionProgram Revenues Page 14 The Notes to Financial Statements are an integral part of this statement. 23 Other Total General Governmental Governmental Fund Funds Funds ASSETS Cash and Cash Equivalents 14,948,173$ 3,376,949$ 18,325,122$ Deposit with Paying Agent - 32,240 32,240 Investments 2,055,728 1,510,620 3,566,348 Prepaid Items 173,819 - 173,819 Receivables (Net of Allowance for Estimated Uncollectible Amounts) Accounts Receivable - Billed 443,728 28,517 472,245 Accounts Receivable - Unbilled 158,311 114,553 272,864 Property Taxes 5,017,348 858,091 5,875,439 Accrued Interest 3,121 9,884 13,005 Due from Other Governmental Units 3,176,525 152,276 3,328,801 Grants Receivable - 178,164 178,164 Cable Franchise Fee Receivable 122,912 - 122,912 Inventory 184,569 - 184,569 TOTAL ASSETS 26,284,234$ 6,261,294$ 32,545,528$ LIABILITIES Accounts Payable and Accrued Expenditures 1,264,703$ 567,170$ 1,831,873$ Due to Other Governmental Units - 49,041 49,041 Due to Other Funds 133,401 - 133,401 Unearned Revenue 314,899 2,400 317,299 TOTAL LIABILITIES 1,713,003$ 618,611$ 2,331,614$ DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Property Taxes 5,017,348$ 858,091$ 5,875,439$ TOTAL DEFERRED INFLOWS OF RESOURCES 5,017,348$ 858,091$ 5,875,439$ FUND BALANCES Nonspendable 173,819$ -$ 173,819$ Restricted for: Capital Projects - 195,936 195,936 Highways and Streets - 1,608,945 1,608,945 Special Service Areas - 29 29 Tax Increment Financing - 232,001 232,001 Assigned for: Alarm 1,106,887 - 1,106,887 Tourism 161,550 - 161,550 Band 11,040 - 11,040 Highways and Streets - 926,898 926,898 Capital Projects 8,050,248 1,878,224 9,928,472 Revolving Loan 302,408 - 302,408 Civil Defense 8,148 - 8,148 Debt Service - 7,611 7,611 Parks and Recreation - 114,087 114,087 Unassigned 9,739,783 (179,139) 9,560,644 TOTAL FUND BALANCES 19,553,883$ 4,784,592$ 24,338,475$ TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES 26,284,234$ 6,261,294$ 32,545,528$ CITY OF MCHENRY, ILLINOIS FUND FINANCIAL STATEMENTS BALANCE SHEET GOVERNMENTAL FUNDS APRIL 30, 2023 Page 15 The Notes to Financial Statements are an integral part of this statement. 24 Total Fund Balances - Governmental Funds 24,338,475$ Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. Capital Assets, net of accumulated depreciation 96,526,534 Deferred charges and credits for debt issue discounts or premiums and other debt issue costs are not financial resources and therefore are not reported in the funds. Bond Discounts, net of related amortization 182 Some liabilities are not due and payable in the current period and therefore are not reported in the funds. Bonds and Notes Payable (26,165,548)$ Bond Premiums, net of related amortization (32,169) Accrued Interest on Long-Term Debt, net of receivable (221,236) Compensated Absences (640,775) Total OPEB Liability (948,640) Net Pension Asset/(Liability) - IMRF (5,508,725) Net Pension Asset/(Liability) - Police Pension (4,348,724) (37,865,817) Deferred pension and OPEB costs in governmental activities are not financial resources and therefore are not reported in the funds. Pension Deferred Outflows - Police Pension 6,729,641$ Pension Deferred Outflows - IMRF 3,744,278 Pension Deferred Inflows - Police Pension (1,783,585) Pension Deferred Inflow - IMRF (426,822) OPEB Deferred Outflows 1,485,888 OPEB Deferred Inflows (2,370,364) 7,379,036 Internal service funds are used by management to charge the cost of certain activities, such as insurance and information technology, to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the government-wide Statement of Net Position (net of amount allocated to business-type activities). Internal service fund balances are not included in other reconciling items above except for long-term debt and long-term pension items. Current Assets 447,391$ Current Liabilities (121,145) 326,246 Net Position of Governmental Activities 90,704,656$ CITY OF MCHENRY, ILLINOIS FUND FINANCIAL STATEMENTS RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NET POSITION APRIL 30, 2023 Page 16 The Notes to Financial Statements are an integral part of this statement. 25 Other Total General Governmental Governmental Fund Funds Funds REVENUES Local Taxes Property Tax 4,975,755$ 735,993$ 5,711,748$ Intergovernmental State Sales Tax 13,346,454 - 13,346,454 State Income Tax 4,384,429 - 4,384,429 State Replacement Tax 246,433 - 246,433 State Motor Fuel Tax - 1,503,741 1,503,741 State Pull Tab/Games Tax 1,312 - 1,312 Inter Track Wagering Tax 39,296 - 39,296 State Telecommunications Tax 198,361 - 198,361 State Grants - 474,644 474,644 Cannabis Use Tax 42,240 - 42,240 Federal Grants 1,841,293 - 1,841,293 Other Local Sources Hotel/Motel Tax 243,574 - 243,574 Electric Use Tax - 1,043,524 1,043,524 Franchise Fees 379,078 - 379,078 Licenses and Permits 1,247,056 - 1,247,056 Fines and Forfeitures 451,894 - 451,894 Charges for Services 1,423,862 537,711 1,961,573 Interest 454,024 87,020 541,044 Local Grants 46,113 - 46,113 Miscellaneous Rent 14,489 59,238 73,727 Royalties 175,000 - 175,000 Donations 13,348 265,725 279,073 Reimbursements 2,554,441 104,425 2,658,866 Other Miscellaneous 255,656 59,066 314,722 32,334,108$ 4,871,087$ 37,205,195$ EXPENDITURES Current General Office 4,897,571$ 163,187$ 5,060,758$ Public Safety 12,386,012 - 12,386,012 Public Works 4,189,954 182 4,190,136 Parks and Recreation 2,847,744 730,418 3,578,162 Capital Outlay 2,383,586 5,600,783 7,984,369 Debt Service Principal 296,769 1,675,000 1,971,769 Interest and Fees 29,800 675,768 705,568 27,031,436$ 8,845,338$ 35,876,774$ EXCESS OR (DEFICIENCY) OF REVENUES OVER EXPENDITURES 5,302,672$ (3,974,251)$ 1,328,421$ OTHER FINANCING SOURCES/(USES) Transfers (2,018,294)$ 2,190,172$ 171,878$ Sale of City Property 13,200 - 13,200 (2,005,094)$ 2,190,172$ 185,078$ NET CHANGE IN FUND BALANCES 3,297,578$ (1,784,079)$ 1,513,499$ FUND BALANCES - MAY 1, 2022 17,117,629 6,568,671 23,686,300 FUND BALANCE ADJUSTMENT (Note 9)(861,324) - (861,324) FUND BALANCES - APRIL 30, 2023 19,553,883$ 4,784,592$ 24,338,475$ FOR THE YEAR ENDED APRIL 30, 2023 CITY OF MCHENRY, ILLINOIS FUND FINANCIAL STATEMENTS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS Page 17 The Notes to Financial Statements are an integral part of this statement. 26 Net Change in Fund Balances - Total Governmental Funds 1,513,499$ Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlay exceeds depreciation expense in the current period. Depreciation Expense (3,387,313)$ Capital Outlays 4,823,587 1,436,274 Donated capital assets used in governmental activities are not current financial resources and therefore are not reported as revenue in the governmental funds.20,000 Some revenue/expenses reported in the Statement of Activities do not provide/use current financial resources and therefore are deferred in the governmental funds. Prior Year Fund Deferred Grant Revenue (1,841,293) Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. Accrued Interest on Long-Term Debt 7,743$ Bond Discount - Amortization (189) Bond Premium - Amortization 8,378 Pension Expense - Police (1,756,911) Pension Expense - IMRF (1,772,114) OPEB Expense 190,758 Compensated Absences (11,189) (3,333,524) Employer Pension and OPEB Contributions are expensed in the fund financial statements but are treated as a reduction in the Net Pension Liability on the government-wide financial statements. Pension Employer Contributions - IMRF 665,638$ Pension Employer Contributions - Police Pension 621,970 OPEB Employer Contributions 107,490 1,395,098 Repayment of long-term debt requires the use of current financial resources of governmental funds and is therefore shown as an expenditure in the Statement of Revenues, Expenditures, and Changes in Fund Balances, but the repayment reduces long-term liabilities in the Statement of Net Position and is therefore not reported in the Statement of Activities. Repayment of Long-Term Debt 1,971,768 Internal service funds are used by management to charge the costs of certain activities, such as insurance and information technology, to individual funds. The net revenue of the internal service funds is reported with governmental activities in the government-wide Statement of Activities (net of amount allocated to business-type activities). Change in Net Position (42,233)$ Pension Expense - IMRF (included in Pension - IMRF Expense above)58,100 IMRF Employer Contributions (included in IMRF Contributions above)(23,522) OPEB Expense (included in OPEB Expense above)3,820 OPEB Employer Contributions (included in OPEB Employer Contributions above)(2,275) Depreciation Expense (included in Change in Net Position above)52,939 46,829 Change in Net Position of Governmental Activities 1,208,651$ CITY OF MCHENRY, ILLINOIS FUND FINANCIAL STATEMENTS RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND FOR THE YEAR ENDED APRIL 30, 2023 CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES Page 18 The Notes to Financial Statements are an integral part of this statement. 27 Business Type Governmental Activities -Activities - Enterprise Fund Internal Water and Sewer Service Funds ASSETS Current Assets Cash and Cash Equivalents 4,899,474$ 338,029$ Investments 6,637,249 8,295 Prepaid Items 42,118 92,390 Receivables (Net of Allowance for Estimated Uncollectible Amounts) Accounts Receivable - Billed 48,211 299 Accounts Receivable - Unbilled 1,333,209 8,238 Accrued Interest 14,187 140 Due from Other Governmental Units 97,714 - Due from Other Funds 129,766 - 13,201,928$ 447,391$ Non-Current Assets Right-of-Use Lease Receivable 504,581$ -$ Capital Assets Land 2,208,117 - Buildings 2,736,098 - Systems and Equipment 112,701,173 716,613 Vehicles 1,679,661 - Construction in Progress 92,944 - Less: Accumulated Depreciation (42,364,333) (547,155) 77,558,241$ 169,458$ TOTAL ASSETS 90,760,169$ 616,849$ DEFERRED OUTFLOWS OF RESOURCES Pension Expense/Revenue - IMRF 1,054,909$ 122,761$ OPEB Expense/Revenue 270,205 31,444 TOTAL DEFERRED OUTFLOWS OF RESOURCES 1,325,114$ 154,205$ LIABILITIES Current Liabilities Accounts Payable and Accrued Expenses 238,775$ 37,384$ Security Deposits Held 3,000 - Due to Other Funds - 1,273 Unearned Revenue - 82,488 Accrued Interest 242,629 - Compensated Absences - Current 99,183 7,993 IEPA Loan Payable - Current 1,561,149 - Bonds Payable - Current 441,517 - 2,586,253$ 129,138$ Non-Current Liabilities IMRF Net Pension Liability 1,769,693$ 214,432$ Total OPEB Liability 174,609 14,992 IEPA Loan Payable (Net of Current Portion Shown Above)25,181,722 - Bonds Payable (Net of Current Portion Shown Above)3,464,292 - 30,590,316$ 229,424$ TOTAL LIABILITIES 33,176,569$ 358,562$ DEFERRED INFLOWS OF RESOURCES Pension Expense/Revenue - IMRF 120,253$ 13,994$ OPEB Expense/Revenue 431,045 50,161 Unavailable Revenue - Right-of-Use Leases - Lessor 545,559 - TOTAL DEFERRED INFLOWS OF RESOURCES 1,096,857$ 64,155$ NET POSITION Net Investment in Capital Assets 46,377,371$ 163,592$ Unrestricted/(Deficit)11,434,486 184,745 TOTAL NET POSITION 57,811,857$ 348,337$ APRIL 30, 2023 CITY OF MCHENRY, ILLINOIS FUND FINANCIAL STATEMENTS STATEMENT OF NET POSITION PROPRIETARY FUNDS Page 19 The Notes to Financial Statements are an integral part of this statement. 28 Business Type Governmental Activities -Activities - Enterprise Fund Internal Water and Sewer Service Funds OPERATING REVENUES Charges for Services Customer Fees 5,712,050$ -$ Capital Fees 1,055,565 - Debt Service Fees 2,346,224 - Penalties 134,143 - Water Meter Sales 20,650 - Other 29,922 - Internal Service Funds - 5,555,806 9,298,554$ 5,555,806$ OPERATING EXPENSES Water Department Personnel Salaries 432,534$ -$ Miscellaneous Personnel Expenses 233,500 - Other Operating Expenses 849,256 - Depreciation 647,212 - Sewer Department Personnel Salaries 790,937 - Miscellaneous Personnel Expenses 515,086 - Other Operating Expenses 1,474,307 - Depreciation 2,157,391 - Utility Work Department Personnel Salaries 640,079 - Miscellaneous Personnel Expenses 427,624 - Other Operating Expenses 54,417 - Internal Service Funds Personnel Salaries - 221,138 Miscellaneous Personnel Expenses - 3,686,832 Other Operating Expenses - 1,563,864 Depreciation - 52,939 8,222,343$ 5,524,773$ OPERATING INCOME/(LOSS)1,076,211$ 31,033$ NON-OPERATING REVENUE/(EXPENSE) Interest Income 136,664$ 3,690$ Unrealized Gain/Loss 52,440 - Rental Income 82,810 - Interest and Fees (747,851) - Amortization 46,517 - Gain/(Loss) on Sale of Fixed Asset 6,000 - (423,420)$ 3,690$ INCOME/(LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS 652,791$ 34,723$ TRANSFERS (TO)/FROM OTHER FUNDS (94,922) (76,956) CHANGE IN NET POSITION 557,869$ (42,233)$ NET POSITION - MAY 1, 2022 57,253,988 390,570 NET POSITION - APRIL 30, 2023 57,811,857$ 348,337$ FOR THE YEAR ENDED APRIL 30, 2023 CITY OF MCHENRY, ILLINOIS FUND FINANCIAL STATEMENTS STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION PROPRIETARY FUNDS Page 20 The Notes to Financial Statements are an integral part of this statement. 29 Business Type Governmental Activities -Activities - Enterprise Fund Internal Water and Sewer Service Funds CASH FLOWS FROM OPERATING ACTIVITIES Receipts from Customers 9,391,967$ -$ Receipts from Employees for Services - (10,738) Receipts from Other Funds for Services - 5,555,806 Payments to Suppliers for Goods and Services (3,573,878) (5,269,795) Payments to Employees for Services (1,471,222) (180,669) Payments to Other Funds for Services (2,390) (69,161) Internal Activity - Payments (to)/from Other Funds (66,336) 1,273 Net Cash Provided/(Used) by Operating Activities 4,278,141$ 26,716$ CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Transfers (to)/from Other Funds (94,922)$ (76,956)$ Net Cash Provided/(Used) by Non-Capital Financing Activities (94,922)$ (76,956)$ CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from the Sale of Capital Assets 6,000$ -$ Purchase of Capital Assets (561,808) (25,857) Interest Paid on Capital Debt, Net of Rebate (763,811) - Principal Paid on Capital Debt (1,902,513) (24,103) Other Receipts/(Payments)57,113 - Net Cash Provided/(Used) by Capital and Related Financing Activities (3,165,019)$ (49,960)$ CASH FLOWS FROM INVESTING ACTIVITIES Interest on Cash and Cash Equivalents and Investments 123,115$ 3,548$ Purchase of Investments (3,961,121) - Net Cash Provided/(Used) by Investing Activities (3,838,006)$ 3,548$ NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (2,819,806)$ (96,652)$ CASH AND CASH EQUIVALENTS BALANCE - MAY 1, 2022 (INCLUDING RESTRICTED CASH AND OVERDRAFTS)7,785,955 434,681 CASH AND CASH EQUIVALENTS BALANCE - APRIL 30, 2023 (INCLUDING RESTRICTED CASH AND OVERDRAFTS)4,966,149$ 338,029$ RECONCILIATION OF OPERATING INCOME/(LOSS) TO NET CASH PROVIDED/(USED) BY OPERATING ACTIVITIES Operating Income/(Loss)1,076,211$ 31,033$ Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation Expense 2,804,603 52,939 Change in assets, liabilities and deferred amounts: Receivables, net (39,598) (4,423) Prepaid Items (5,015) (11,118) Accounts Payable and Other Payables (16,544) (71,522) Unearned Revenue 66,675 (6,315) Pension Liabilities 1,770,577 221,798 OPEB Liabilities 44,929 (2,828) Deferred Pension Expenses/Revenues (1,484,082) (187,221) Deferred OPEB Expenses/Revenue 60,385 4,373 Net Cash Provided/(Used) by Operating Activities 4,278,141$ 26,716$ NONCASH CAPITAL FINANCING ACTIVITIES -$ -$ FOR THE YEAR ENDED APRIL 30, 2023 CITY OF MCHENRY, ILLINOIS FUND FINANCIAL STATEMENTS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS Page 21 The Notes to Financial Statements are an integral part of this statement. 30 POLICE PENSION CUSTODIAL TRUST FUND FUNDS ASSETS Cash and Cash Equivalents 1,162,974$ 42,364$ Investments, at fair value Illinois Police Pension Consolidated Investment Fund 54,550,697 - Receivables (Net of Allowance for Estimated Uncollectible Amounts) Accounts Receivable - Unbilled - 13,938 Due from General Fund 3,635 - Due from Internal Service Fund 1,273 - TOTAL ASSETS 55,718,579$ 56,302$ LIABILITIES Accounts Payable 60$ 243$ TOTAL LIABILITIES 60$ 243$ NET POSITION Restricted for Pensions 55,718,519$ -$ Restricted for Developers, Property Owners, and Others - 56,059 TOTLA NET POSITION 55,718,519$ 56,059$ CITY OF MCHENRY, ILLINOIS STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS APRIL 30, 2023 FUND FINANCIAL STATEMENTS Page 22 The Notes to Financial Statements are an integral part of this statement. 31 POLICE PENSION CUSTODIAL TRUST FUND FUNDS ADDITIONS Contributions Employer 621,970$ -$ Plan Members 491,717 - Developers, Property Owners, and Others - 34,573 Other Additions 16,531 - Total Contributions 1,130,218$ 34,573$ Investment Income Interest and Dividends 1,326,285$ 24$ Gain/(Loss) on Sale of Investments (5,542,682) - Net Appreciation/(Depreciation) in Fair Value of Investments 4,572,665 - 356,268$ 24$ Less: Investment Management Fees 102,095 - Net Investment Income 254,173$ 24$ TOTAL ADDITIONS 1,384,391$ 34,597$ DEDUCTIONS Benefits 2,279,928$ -$ Administrative Expenses 23,631 - Engineering and Legal Fees 353 34,573 TOTAL DEDUCTIONS 2,303,912$ 34,573$ CHANGE IN NET POSITION (919,521)$ 24$ NET POSITION - MAY 1, 2022 56,638,040 56,035 NET POSITION - APRIL 30, 2023 55,718,519$ 56,059$ CITY OF MCHENRY, ILLINOIS FUND FINANCIAL STATEMENTS STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS FOR THE YEAR ENDED APRIL 30, 2023 Page 23 The Notes to Financial Statements are an integral part of this statement. 32 CITY OF McHENRY, ILLINOIS NOTES TO FINANCIAL STATEMENTS APRIL 30, 2023 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES City of McHenry, Illinois’ (City) financial statements are prepared in accordance with generally accepted accounting principles (GAAP) as applied to local governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The most significant accounting policies used by the City are discussed below. A.Reporting Entity The accompanying financial statements comply with the provisions of GASB statements, in that the financial statements include all organizations, activities, and functions that comprise the City. Component units are legally separate entities for which the City (the primary entity) is financially accountable. Financial accountability is defined as the ability to appoint a voting majority of the organization’s governing body and either (1) the City’s ability to impose its will over the organization or (2) the potential that the organization will provide a financial benefit to, or impose a financial burden on, the City. Using these criteria, the City has determined that the Police Pension Fund meets the above criteria. The Police Pension Fund is blended into the City’s primary government financial statements as a fiduciary fund although it remains a separate legal entity. In addition, the City is not included as a component unit in any other governmental reporting entity as defined by GASB pronouncements. B.Basic Financial Statements – Government-Wide Statements The City’s basic financial statements include both government-wide (reporting the City as a whole) and fund (reporting the City’s major funds) financial statements. Both the government-wide and fund financial statements categorize primary activities as either governmental or business-type. The City’s general office, public safety, public works, and parks and recreation services are classified as governmental activities. The City’s water and sewer services are classified as business-type activities. In the government-wide Statement of Net Position, both the governmental and business-type activities columns (a) are presented on a consolidated basis by column, and (b) are reported on a full accrual, economic resource basis, which recognizes all long-term assets and receivables as well as long-term debt and obligations. The City’s net position is reported in three parts – net investment in capital assets; restricted net position; and unrestricted net position. The City first utilizes restricted resources to finance qualifying activities. The government-wide Statement of Activities reports both the gross and net cost of each of the City’s functions and business-type activities. The functions are also supported by general government revenues (property taxes, sales taxes, unrestricted investment earnings, etc.). The Statement of Activities reduces gross expenses (including depreciation) by related program revenues, operating and capital grants. Program revenues must be directly associated with the function (public safety, public works, parks and recreation, etc.) or a business-type activity. Program revenues include charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment. Program revenues also include grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Operating grants include operating-specific and discretionary (either operating or capital) grants while the capital grants column reflects capital-specific grants. In the process of aggregating data for the government-wide financial statements, some amounts reported as interfund activity and balances were eliminated or reclassified. Interfund services provided and used are not eliminated in the process of consolidation. 33 The net costs (by function or business-type activity) are normally covered by general revenue (property taxes, sales taxes, unrestricted investment earnings, etc.). The City does not allocate indirect costs. This government-wide focus is more on the sustainability of the City as an entity and the change in the City’s net position resulting from the current year’s activities. C. Basic Financial Statements – Fund Financial Statements The financial transactions of the City are reported in individual funds in the fund financial statements. Each fund is accounted for by providing a separate set of self-balancing accounts that comprise its assets, liabilities, reserves, fund equity, revenues, and expenditures/expenses. The various funds are reported by generic classification within the financial statements. The emphasis in fund financial statements is on the major funds in either the governmental or business- type activities categories. Nonmajor funds by category are summarized into a single column. GASB Statement No. 34 sets forth minimum criteria (percentage of the assets, liabilities, revenues, or expenditures/expenses of either fund category or the governmental and enterprise combined) for the determination of major funds. The following fund types are used by the City: 1. Governmental Funds The focus of the governmental funds’ measurement (in the fund statements) is upon determination of financial position and changes in financial position (sources, uses, and balances of financial resources) rather than upon net income. The City reports these governmental funds and fund types: General Fund – The General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. The Annexation, Alarm Board, Band, Civil Defense, Revolving Loan, Tourism, and Employee Flex Funds are included in this fund. Special Revenue Funds – The Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. Debt Service Fund – The Debt Service Fund is used to account for the accumulation of funds for the periodic payment of principal, interest, and related fees on general long-term debt. Capital Projects Funds – The Capital Projects Funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by business- type/proprietary funds). The activities reported in these funds are reported as governmental activities in the government-wide financial statements. 2. Proprietary Fund Types The focus of proprietary fund measurement is upon determination of operating income, changes in net position, financial position, and cash flows. The generally accepted accounting principles applicable are those similar to businesses in the private sector. The City reports the following proprietary fund types: Enterprise Funds – Enterprise Funds are required to be used to account for operations for which a fee is charged to external users for goods or services and the activity is financed with debt that is solely secured by a pledge of the net revenues. The activities reported in these funds are reported as business-type activities in the government-wide financial statements. 34 Internal Service Funds – Internal Service Funds are used to account for the financing of goods or services provided by an activity to other departments or funds of the City on a cost-reimbursement basis. Because the principal users of the internal services are the City’s governmental activities, the financial statement of the Internal Service Fund is consolidated into the governmental column when presented in the government-wide financial statements. 3. Fiduciary Fund Types Fiduciary Funds are used to report assets held in a trustee or custodial capacity for others and therefore are not available to support City programs. The reporting focus is on net position and changes in net position and is reported using accounting principles similar to proprietary funds. The City’s Fiduciary Funds are presented in the Fiduciary Fund financial statements by type (pension and custodial). Since by definition these assets are being held for the benefit of a third party (pension participants, developers, etc.) and cannot be used to address activities or obligations of the City, these funds are not incorporated into the government-wide statements. D. Basis of Accounting Basis of accounting refers to the point at which revenues or expenditures/expenses are recognized in the accounts and reported in the financial statements. It relates to the timing of the measurements made regardless of the measurement focus applied. 1. Accrual Both governmental and business-type activities in the government-wide financial statements and the proprietary and fiduciary fund financial statements are presented on the accrual basis of accounting. Property tax revenues are recognized in the period for which levied. Other nonexchange revenues, including intergovernmental revenues and grants, are reported when all eligibility requirements are met. Fees and charges and other exchange revenues are recognized when earned and expenses are recognized when incurred. 2. Modified Accrual The governmental fund financial statements are presented on the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual; i.e., both measurable and available. “Available” means collectible within the current period or within 60 days after year-end. Property tax revenues are recognized in the period for which levied provided they are also available. Intergovernmental revenues and grants are recognized when all eligibility requirements are met and the revenues are available. Expenditures are recognized when the related liability is incurred. Exceptions to this general rule include principal and interest on general obligation long-term debt and employee vacation and sick leave, which are recognized when due and payable. E. Cash and Cash Equivalents and Investments Separate bank accounts are not maintained for all of the City’s funds. Instead, the funds maintain their uninvested cash balances in common checking accounts, with accounting records being maintained to show the portion of the common bank account balances attributable to each participating fund. Occasionally certain of the funds participating in the common bank accounts will incur overdrafts (deficits) in the accounts. Such overdrafts in effect constitute cash borrowed from other City funds and are, therefore, interfund loans that have not been authorized by City Board action. The following funds incurred overdraft balances at April 30, 2023: 35 Audit Fund 536$ Rec reation Center Fund 260,833 Capital Improvements Fund 781,040 Debt Service Fund 40,993 SSA #4 Lakewood Fund 382 SSA #6 Huntersville Fund 179,115 1,262,899$ Cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with an original maturity of three months or less from the date of acquisition. Investments are stated at fair value. Fair value is determined by quoted market prices. Gains or losses on the sale of investments are recognized as they are incurred. F. Receivables Receivables are reported net of estimated uncollectible amounts. No property tax receivable allowance is recorded as the City receives approximately 100% of the amount levied. The allowance for water and sewer accounts receivable is $53,512 and all other allowances for other accounts receivable is $555,624. G. Prepaid Items Prepaid items are for payments made by the City in the current year for goods and services received in the subsequent fiscal year. H. Inventories Inventories consist of the cost of unused salt for the roads. The salt inventory as of April 30, 2023 is $184,569. I. Interfund Activity Interfund activity is reported either as loans, services provided, reimbursements or transfers. Loans are reported as interfund receivables and payables as appropriate and are subject to elimination upon consolidation. Services provided, deemed to be at market or near market rates, are treated as revenues and expenditures/expenses. Reimbursements are when one fund incurs a cost, charges the appropriate benefiting fund and reduces its related cost as a reimbursement. All other interfund transactions are treated as transfers. Transfers between governmental or between proprietary funds are netted as part of the reconciliation to the government-wide financial statements. J. Capital Assets Capital assets purchased or acquired with an original cost of $5,000 or more, and $10,000 or more for construction projects, are reported at historical cost or estimated historical cost. Donated capital assets, donated works of art and similar items, and capital assets received in a service concession arrangement are reported at acquisition value. Additions, improvements and other capital outlays that significantly extend the useful life of an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred. Depreciation on all assets is provided on the straight-line half-year basis over the following estimated useful lives: Vehicles 5-15 years Sy stems and Equipment 5-40 years Building and Improvements 5-62 years Infrastructure 10-40 years 36 GASB Statement No. 34 required the City to report and depreciate new infrastructure assets effective as of May 1, 2003. Infrastructure assets include roads, bridges, underground pipe (other than related to utilities), traffic signals, etc. These infrastructure assets constitute the largest asset class of the City. K. Deferred Outflows and Inflows of Resources In addition to assets and liabilities, the Balance Sheets and Statements of Net Position will sometimes report separate sections for deferred outflows of resources and deferred inflows of resources. Deferred outflows of resources represent a consumption of net position that applies to a future period and so will not be recognized as an outflow of resource until then. Deferred inflows of resources represent an acquisition of net position that applies to a future period and so will not be recognized as an inflow of resource until that time. L. Compensated Absences The City accrues accumulated unpaid vacation and associated employee-related costs when earned (or estimated to be earned) by the employee. The noncurrent portion (the amount estimated to be used in subsequent fiscal years) for governmental funds is reported only as a general long-term debt obligation in the government-wide Statement of Net Position and represents a reconciling item between the fund and government-wide presentations. In accordance with the provisions of Statement of Financial Accounting Standards No. 43, “Accounting for Compensated Absences”, no liability is recorded for nonvesting accumulating rights to receive sick pay benefits. M. Long-Term Obligations In the government-wide financial statements and proprietary fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities or business-type activities and proprietary fund Statement of Net Position. Bond premiums and discounts are amortized over the life of the bonds on a straight-line basis, rather than expensed in the current year. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as debt service expenditures in the year they occur. In the fund financial statements, governmental funds recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. N. Government-Wide and Proprietary Fund Net Position Government-wide and proprietary fund net position is divided into three components: 1. Net investment in capital assets – consists of the historical cost of capital assets less accumulated depreciation and less any debt that remains outstanding that was used to finance those assets. 2. Restricted net position – consists of net position that is restricted by the City’s creditors (for example, through debt covenants), by the state enabling legislation (through restrictions on shared revenues), by grantors (both federal and state), and by other contributors. 3. Unrestricted – all other net position is reported in this category. O. Governmental Fund Balances Governmental fund balances are divided between nonspendable and spendable. 37 Nonspendable fund balances are balances that cannot be spent because they are not expected to be converted to cash or they are legally or contractually required to remain intact. The spendable fund balances are arranged in a hierarchy based on spending constraints. 1. Restricted – Restricted fund balances are restricted when constraints are placed on the use by either (a) external creditors, grantors, contributors, or laws or regulations of other governments or (b) law through constitutional provisions or enabling legislation. 2. Committed – Committed fund balances are amounts that can only be used for specific purposes as a result of constraints of the City Council. Committed amounts cannot be used for any other purpose unless the City Council removes those constraints by taking the same type of action (e.g. legislation, resolution, ordinance). Committed fund balances differ from restricted balances because the constraints on their use do not come from outside parties, constitutional provisions, or enabling legislation. 3. Assigned – Assigned fund balances are amounts that are constrained by the City’s intent to be used for specific purposes but are neither restricted nor committed. Intent is expressed by an appointed body (e.g. a budget or finance committee) or official to which the Board of Trustees has delegated the authority to assign, modify or rescind amounts to be used for specific purposes. Pursuant to resolution #R-12-019 by the City Council, the Finance Director has been delegated this authority, with the advice and consent of the Finance and Personnel Committee. Assigned fund balances also include (a) all remaining amounts that are reported in governmental funds (other than the General Fund) that are not classified as nonspendable, restricted or committed, and (b) amounts in the General Fund that are intended to be used for a specific purpose. Specific amounts that are not restricted or committed in a special revenue fund are assigned for purposes in accordance with the nature of their fund type. Assignment within the General Fund conveys that the intended use of those amounts is for a specific purpose that is narrower than the general purpose of the City itself. All assigned fund balances are the residual amounts of the fund. 4. Unassigned – Unassigned fund balance is the residual classification for the General Fund. This classification represents the General Fund balance that has not been assigned to other funds, and that has not been restricted, committed, or assigned to specific purposes within the General Fund. This classification is also used to represent negative fund balances in other funds. The City permits funds to be expended in the following order: Restricted, Committed, Assigned and Unassigned. P. Minimum Fund Balance The City has adopted a formal minimum fund balance policy. For the General, Recreation Center, and Information Technology Funds, fund balance will be maintained at 120 days of estimated operating expenditures. If the balance falls below this minimum a plan will be developed to return to the minimum balance within a reasonable period of time. Funds in excess of the minimum may be considered for the funding of one-time, nonrecurring expenditures, assigned for future capital activities, or used for the funding of other long-term obligations. Q. Property Tax Calendar and Revenues The City’s property tax is levied each calendar year on all taxable real property located in the City’s district on or before the last Tuesday in December. The 2022 levy was passed by the Board on December 19, 2022. Property taxes attach as an enforceable lien on property as of January 1 of the calendar year they are for and are payable in two installments early in June and early in September of the following calendar year. The City receives significant distributions of tax receipts approximately one month after these dates. 38 R. Lease Arrangements The City recognizes a right-to-use liability and a right-to-use asset for various lease agreements in the government-wide financial statements. At the commencement of a lease, the City initially measures the right-to-use liability at the present value of payments expected to be made during the agreement term. Subsequently, the right-to-use liability is reduced by the principal portion payments made. The right-to-use asset is initially measured as the initial amount of the right-to-use liability, adjusted for payments made at or before the commencement date, plus certain initial direct costs. Subsequently, the right-to-use asset is amortized on a straight-line basis over the term of the lease agreement. Key estimates and judgments related to lease agreements include how the City determines (1) the discount rate it uses to discount the expected payments to present value, (2) lease term, and (3) lease payments. The City currently does not have any material lessee lease agreements that fall under this type of arrangement. The City is a lessor for a lease related to the use of a cell tower by a mobile phone carrier. At the commencement of the lease, the District initially measures the lease receivable at the present value of payments expected to be made during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments made. The unavailable lease revenue is initially measured as the initial amount of the lease receivable. Subsequently, the unavailable lease revenue is recognized on a straight-line basis over the lease term. Key estimates and judgments related to leases include how the District determines (1) the discount rate it uses to discount the expected lease payments to present value, (2) lease term, and (3) lease payments. The City uses the interest rate charged by the lessor as the discount rate. When the interest rate charged by the lessor is not provided, the City uses its estimated incremental borrowing rate as the discount rate for lease agreements. The term includes the noncancellable period of the lease agreement. Payments included in the measurement of the right-to-use liability are composed of fixed payments and purchase option prices that the City is reasonably certain to exercise. The City monitors changes in circumstances that would require a remeasurement of its lease agreements and will remeasure the right-to-use asset and liability if certain changes occur that are expected to significantly affect the amount of the right-to-use liability. Right-to-use assets are reported with Capital Assets and right-to-use liabilities are reported with Long Term Liabilities on the Statement of Net Position. S. Defining Operating Revenues and Expenses The City’s proprietary funds distinguish between operating and nonoperating revenues and expenses. Operating revenues and expenses of the City’s Water and Sewer Fund consist of charges for services (including tap fees for the water function and systems development charges for the sewer function) and the costs of providing those services, including depreciation and excluding interest cost. All other revenue and expenses are reported as nonoperating. T. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. NOTE 2 - DEPOSITS, INVESTMENTS, AND FAIR VALUE MEASUREMENTS Deposits with financial institutions are fully insured or collateralized by securities held in the City’s name. 39 The City is allowed to invest in securities as authorized by the Illinois Compiled Statutes, Chapter 30, Act 235/Articles 2 and 6, and Chapter 40, Act 5/Article 3 – Pensions. Investments The Police Pension Fund holds all investments within the Illinois Police Officers’ Pension Investment Fund (IPOPIF). IPOPIF was created by Public Act 101-0610 and codified within the Illinois Pension Code, becoming effective January 1, 2020, to streamline investments and eliminate unnecessary and redundant administrative costs, thereby ensuring assets are available to fund pension benefits for the beneficiaries of the participating pension funds as defined in 40 ILCS 5/22B-105. Participation in IPOPIF by Illinois suburban and downstate police pension funds is mandatory and investments were contributed to the IPOPIF Investment Fund on August 1, 2022. IPOPIF’s investment police was originally adopted by the Board of Trustees on December 17, 2021. IPOPIF has the authority to invest trust fund assets in any type of security subject to the requirements and restrictions set forth in the Illinois Pension Code and is not restricted by the Pension Code sections that pertained exclusively to the Article 3 participating police pension funds. As of April 30, 2023, the City and Police Pension had the following investments, maturities, and fair value measurements: City Credit Quality/ Segmented Time Net Asset Types of investments Ratings Distribution Amount Lev el 1 Level 2 Value (NAV) Debt Securities: U.S. Treasury Securities Not Rated less than 1 year 8,160,308$ 8,160,308$ -$ -$ External Investment Pools AAAmmf less than 1 year 21,299,653 - - 21,299,653 Certificates of Deposit N/A less than 1 year 1,729,354 - 1,729,354 - Certificates of Deposit N/A 1 to 5 years 322,228 - 322,228 - Total Debt Securities 31,511,543$ 8,160,308$ 2,051,582$ 21,299,653$ Total Investments 31,511,543$ 8,160,308$ 2,051,582$ 21,299,653$ Fair Value Measurement Using Police Pension Credit Quality/ Segmented Time Net Asset Types of investments Ratings Distribution Amount Level 1 Level 2 Value (NAV) External Investment Pool AAAmmf less than 1 year 415,414$ -$ -$ 415,414$ IPOPIF Consolidated Investment Fund Not Rated less than 1 year 54,550,697 - - 54,550,697 Total Investments 54,966,111$ -$ -$ 54,966,111$ Fair Value Measurement Using The City and Police Pension Fund categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; debt securities and certificates of deposit classified in Level 2 of the fair value hierarchy are valued using a matrix pricing technique. Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted prices; Level 3 inputs are significant unobservable inputs. Debt and equity securities classified in Level 1 of the fair value hierarchy are valued using prices quoted in active markets for those securities. Debt securities and certificates of deposit classified in Level 2 of the fair value hierarchy are valued using a matrix pricing technique. Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted prices. The Police Pension Fund held no investments subject to fair value measurement as of April 30, 2023. The Police Pension Fund’s pooled investment in IPOPIF, as noted in the table above, is valued at Net Asset Value per share. The pooled investments consist of the investments as noted in the target allocation table available at www.ipopif.org under Governing Documents, Policies, and Investment Policy 40 Statement. Investments in IPOPIF are valued at IPOPIF’s share price, which is the amount it would cost to buy the shares in the investment pool. The fair value of investments in the External Investment Pools is the same as the value of pool shares. The External Investment Pools are not SEC-registered but have regulatory oversight through the State of Illinois. Interest Rate Risk. The City will minimize the risk that the market value of securities in the portfolio will fall due to changes in general interest rates, by: • Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity. • Investing operating funds primarily in shorter-term securities, money market mutual funds, or similar investment pools. Credit Risk. The City minimizes credit risk, the risk of loss due to the failure of the security issuer or backer, by: • Limiting investments to the safest type of securities. • Pre-qualifying the financial institutions, brokers/dealers, intermediaries, and advisers with which the City will do business. • Diversifying the investment portfolio so that potential losses on individual securities will be minimized. Concentration of Credit Risk. The City places no specific limit on the amount the City may invest in any one issuer. There are currently no investments in any one organization that represent 5% or more of the City’s total investments. NOTE 3 - CAPITAL ASSETS Capital asset activity for the year ended April 30, 2023 was as follows: Balance Balance May 1, 2022 Increases Decreases April 30, 2023 Governmental Activities Capital Assets not being depreciated Land 42,664,844$ 986,660$ -$ 43,651,504$ Art and Historical Treasures 1,658,927 - - 1,658,927 Intangibles 300,000 - - 300,000 Construction in Progress 1,463,648 2,715,606 2,347,275 1,831,979 Total Capital Assets not being depreciated 46,087,419$ 3,702,266$ 2,347,275$ 47,442,410$ Other Capital Assets Land Improvements 7,040,320$ 637,489$ -$ 7,677,809$ Buildings 18,705,237 1,017,304 - 19,722,541 Vehicles 4,864,400 618,251 54,499 5,428,152 Equipment 4,868,609 337,740 11,633 5,194,716 Infrastructure 83,790,172 903,668 - 84,693,840 Total Other Capital Assets at Historical Cost 119,268,738$ 3,514,452$ 66,132$ 122,717,058$ Less Accumulated Depreciation for: Land Improvements 4,456,045$ 275,255$ -$ 4,731,300$ Buildings 6,352,318 445,571 - 6,797,889 Vehicles 3,290,156 381,825 54,499 3,617,482 Equipment 3,400,430 300,546 11,633 3,689,343 Infrastructure 52,812,804 1,984,116 - 54,796,920 Total Accumulated Depreciation 70,311,753$ 3,387,313$ 66,132$ 73,632,934$ Other Capital Assets, Net 48,956,985$ 127,139$ -$ 49,084,124$ Governmental Activities Capital Assets, Net 95,044,404$ 3,829,405$ 2,347,275$ 96,526,534$ 41 Balance Balance May 1, 2022 Increases Decreases April 30, 2023 Business-Type Activities Capital Assets not being depreciated Land 2,208,117$ -$ -$ 2,208,117$ Construction in Progress 57,193 130,739 94,988 92,944 Total Capital Assets not being depreciated 2,265,310$ 130,739$ 94,988$ 2,301,061$ Other Capital Assets Buildings 2,736,098$ -$ -$ 2,736,098$ Vehicles 1,702,060 16,233 38,632 1,679,661 Systems and Equipment 112,191,349 509,824 - 112,701,173 Total Other Capital Assets at Historical Cost 116,629,507$ 526,057$ 38,632$ 117,116,932$ Less Accumulated Depreciation for: Buildings 2,374,892$ 26,505$ -$ 2,401,397$ Vehicles 923,312 67,048 38,632 951,728 Systems and Equipment 36,300,158 2,711,050 - 39,011,208 Total Accumulated Depreciation 39,598,362$ 2,804,603$ 38,632$ 42,364,333$ Other Capital Assets, Net 77,031,145$ (2,278,546)$ -$ 74,752,599$ Business-Type Activities Capital Assets, Net 79,296,455$ (2,147,807)$ 94,988$ 77,053,660$ Depreciation expense was charged to functions as follows: NOTE 4 - NET INVESTMENT IN CAPITAL ASSET CALCULATION Net investment in capital asset calculation as of April 30, 2023 was as follows: Governmental Activities Capital Assets, Net of Accumulated Depreciation 96,526,534$ Less: Capital Related Debt (4,057,535) Capital Assets in Accounts Payable (704,854) Investment in Capital Assets 91,764,145$ Business-Type Activities Capital Assets, Net of Accumulated Depreciation 77,053,660$ Less: Capital Related Debt (30,648,680) Capital Assets in Accounts Payable (27,609) Investment in Capital Assets 46,377,371$ NOTE 5 - LONG-TERM LIABILITY ACTIVITY Long-term liability activity for the year ended April 30, 2023 was as follows: Governmental Activities Public Safety 365,184$ Public Works 2,274,259 Parks and Recreation 502,158 Unallocated 245,712 Total Governmental Activities Depreciation Expense 3,387,313$ Business-Type Activities Water 647,212$ Sewer 2,157,391 Total Business-Type Activities Depreciation Expense 2,804,603$ 42 Amounts Balance Balanc e Due Within May 1, 2022 Additions Retirements April 30, 2023 One Year Governmental Activities Bonds and Notes Payable General Obligation Bonds 27,205,000$ -$ 1,675,000$ 25,530,000$ 1,695,000$ Unamortized Bond Discount (371) 189 - (182) (182) Unamortized Bond Premium 40,547 - 8,378 32,169 8,378 Note Payable 956,419 - 320,871 635,548 328,690 Total Bonds and Notes Payable 28,201,595$ 189$ 2,004,249$ 26,197,535$ 2,031,886$ Other Long-Term Liabilities Compensated Absences 625,240$ 640,775$ 625,240$ 640,775$ 640,775$ Total Other Long-Term Liabilities 625,240$ 640,775$ 625,240$ 640,775$ 640,775$ Governmental Activities Long-Term Obligations 28,826,835$ 640,964$ 2,629,489$ 26,838,310$ 2,672,661$ Business-Type Activities Bonds and Notes Payable Gener al Obligation Bonds 3,995,000$ -$ 370,000$ 3,625,000$ 395,000$ IEPA Revolving Loan Fund 28,275,383 - 1,532,512 26,742,871 1,561,149 Unamortized Bond Premium 327,327 - 46,518 280,809 46,517 Total Bonds and Notes Payable 32,597,710$ -$ 1,949,030$ 30,648,680$ 2,002,666$ Other Long-Term Liabilities Compensated Absences 98,664$ 99,183$ 98,664$ 99,183$ 99,183$ Total Other Long-Term Liabilities 98,664$ 99,183$ 98,664$ 99,183$ 99,183$ Business-Type Activities Long-Term Obligations 32,696,374$ 99,183$ 2,047,694$ 30,747,863$ 2,101,849$ Bonds and notes payable consisted of the following at April 30, 2023: Maturity Interest Fac e Carrying Date Rate Amount Amount Governmental Activities General Obligation Bonds 2012 12/15/2027 2.00% - 2.50%850,000$ 320,000$ General Obligation Bonds 2013 5/1/2027 0.40% - 2.75%415,000 170,000 General Obligation Bonds 2015 12/15/2035 2.00% - 3.25%6,375,000 2,900,000 General Obligation Bonds 2020B 4/30/2040 0.849% - 3.376%24,265,000 22,140,000 Note Payable 2/20/2024 3.50%574,171 65,477 4 parcels of land pledged as collateral to this loan Note Payable 5/25/2024 3.10%1,300,151 570,071 26 vehicles pledged as collateral to this loan Capital Lease - Dell Financial 7/31/2022 0.00%72,310 - Total 33,851,632$ 26,165,548$ Business-Type Activities General Obligation Bonds 2012 12/15/2032 2.00% - 2.80%2,250,000$ 1,285,000$ General Obligation Bonds 2020A 4/30/2030 4.00%2,855,000 2,340,000 IEPA Revolving Loan Fund 12/30/2037 1.86%31,507,182 26,742,871 Total 36,612,182$ 30,367,871$ At April 30, 2023, the annual debt service requirements to service all long-term debt attributable to governmental activities are: 43 Year Ending April 30 Principal Interest Total 2024 2,023,690$ 670,482$ 2,694,172$ 2025 1,996,460 636,599 2,633,059 2026 1,565,398 600,660 2,166,058 2027 1,560,000 573,793 2,133,793 2028 1,595,000 543,817 2,138,817 2029 - 2033 6,770,000 2,221,895 8,991,895 2034 - 2038 7,485,000 1,243,344 8,728,344 2039 - 2040 3,170,000 161,372 3,331,372 26,165,548$ 6,651,962$ 32,817,510$ At April 30, 2023 the annual debt service requirements to service all long-term debt attributable to business-type activities are: Year Ending April 30 Principal Interest Total 2024 1,956,149$ 616,099$ 2,572,248$ 2025 2,005,322 573,217 2,578,539 2026 2,050,039 529,084 2,579,123 2027 2,100,312 483,509 2,583,821 2028 2,156,151 436,650 2,592,801 2029 - 2033 10,348,882 1,472,943 11,821,825 2034 - 2038 9,751,016 505,689 10,256,705 30,367,871$ 4,617,191$ 34,985,062$ Industrial Development Revenue Bonds, Series 2016A and 2016B During fiscal year 2017, the City issued Industrial Development Revenue Bonds on behalf of Fabrik Industries. The bonds are not obligations of the City; therefore, the City does not record the assets or liabilities resulting from the bond issuance as its primary function is to arrange financing between Fabrik and the bond holders. All funds are controlled by the trustee of the bonds (American Community Bank & Trust). The original issue of the bonds aggregated to $7,500,000, and at April 30, 2023 the outstanding balance on the bonds was $1,114,812. Long-term liabilities are being repaid from the following funds: Obligation Fund Governmental Activities General Obligation Bonds General Fund, Annexation Fund, Capital Improvements Fund, TIF Fund, Recreation Center Fund, Water and Sewer Fund Note Payable General Fund, Tourism Fund, Information Technology Fund Compensated Absences General Fund, Information Technology Fund Business-Type Activities General Obligation Bonds Water and Sewer Fund IEPA Revolving Loan Fund Water and Sewer Fund Compensated Absences Water and Sewer Fund NOTE 6 - RESTRICTED EQUITY The following amounts are restricted equity balances at April 30, 2023: Restricted Restricted Restricted for Net Position Fund Balance Governmental Activities/Governmental Funds Highways and Streets 1,608,945$ 1,608,945$ Capital Projects 195,936 195,936 Special Service Areas 29 29 Tax Increment Financing 232,001 232,001 2,036,911$ 2,036,911$ 44 NOTE 7 - DESIGNATED NET POSITION City management has designated certain Water and Sewer Fund revenues to be used only for debt service. The amount designated at April 30, 2023 was $4,998,159. NOTE 8 - DEFICIT FUND BALANCE At April 30, 2023 a deficit fund balance existed in the following funds: Audit Fund 24$ SSA #6 Huntersville Fund 179,115 179,139$ NOTE 9 - NET POSITION/FUND BALANCE ADJUSTMENT During the year, the City made the following net position/fund balance adjustments: Governmental Funds Fund Balance General Fund Adjustment to reverse FY'22 Income Tax Accrual (861,324)$ Governmental Activities Net Position Adjustment to reverse FY'22 Income Tax Accrual (861,324)$ In prior years, the City accrued two months of income and personal property from the State of Illinois. In the current year, the City began recognizing these revenues based on when the state has vouchered or allocated these payments as these amounts are not derived tax revenues at the local government level. Instead, these revenues fall in line with a voluntary non-exchange transaction, in which eligibility then availability requirements should both be determined before recognizing the revenue. In the case of revenues, these eligibility and availability requirements are not met until the month the funds are vouchered by the state. Due to this, a fund balance adjustment and corresponding net position adjustment were made for the prior year accrual amount noted above, as these eligibility requirements were not met in the prior year as well. NOTE 10 - PROPERTY TAXES Property taxes receivable and unavailable revenue recorded in these financial statements, in the amount of $5,875,439, are from the 2022 tax levy. The unavailable revenue is 100% of the 2022 tax levy. These taxes are unavailable as none of the taxes are collected before the end of the fiscal year and the City does not consider the amounts to be available and does not budget for their use in fiscal year 2023. The City has determined that 100% of the amounts collected for the 2021 levy ($5,711,748) are allocable for use in fiscal year 2023 and, therefore, are recorded in these financial statements as property taxes revenue. A summary of the assessed valuation, rates, and extensions for the years 2022, 2021, and 2020 follows: Tax Year Assessed Valuation Rates Extensions Rates Extensions Rates Extensions General 0.0427 364,100$ 0.0524 410,155$ 0.0344 255,869$ Bond 0.1953 1,665,073 0.2129 1,839,230 0.2241 1,667,294 Police Protection 0.0643 547,962 0.0701 547,965 0.0737 547,966 Insurance 0.0586 499,995 0.0639 499,998 0.0672 499,999 Retirement 0.0468 399,202 0.0510 399,197 0.0537 399,198 Social Security 0.0661 563,752 0.0721 563,749 0.0758 563,751 Audit 0.0031 26,431 0.0034 26,428 0.0036 26,431 Police Pension 0.0788 671,460 0.0800 625,607 0.0885 658,311 Total Taxes Extended 0.5557 4,737,975$ 0.6058 4,912,329$ 0.6209 4,618,819$ 2020 $743,912,520 2022 $864,035,912 2021 $782,126,233 45 Tax Year Rates Ex tensions Rates Extensions Rates Extensions Road and Bridge (from Townships)- 305,803$ - 292,407$ - 273,254$ Special Service Area #4A - 15,580$ - 15,580$ - 16,123$ Tax Increment Financing - 816,081$ - 732,268$ - 680,014$ 202020222021 NOTE 11 - EXCESS OF EXPENDITURES OVER BUDGET For the year ended April 30, 2023, the following funds had expenditures that exceeded the budget: Fund Budget Actual Audit $ 51,000 $ 51,825 825$ Recreation Center 551,463 606,912 55,449 Capital Asset Maintenance and Replacement 177,515 179,313 1,798 Excess of Actual Over Budget NOTE 12 - ILLINOIS MUNICIPAL RETIREMENT FUND A. Plan Description The City’s defined benefit pension plan for regular employees provides retirement and disability benefits, post-retirement increases, and death benefits to plan members and beneficiaries. The City’s plan is managed by the Illinois Municipal Retirement Fund (IMRF), the administrator of an agent multiple-employer public pension fund. A summary of IMRF’s pension benefits is provided in the “Benefits Provided” section of this document. Details of all benefits are available from IMRF. Benefit provisions are established by statute and may only be changed by the General Assembly of the State of Illinois. IMRF issues a publicly available Annual Comprehensive Financial Report that includes financial statements, detailed information about the pension plan’s fiduciary net position, and required supplementary information. The report is available for download at www.imrf.org. B. Benefits Provided IMRF has three benefit plans. The vast majority of IMRF members participate in the Regular Plan (RP). The Sheriff’s Law Enforcement Personnel (SLEP) plan is for sheriffs, deputy sheriffs, and selected police chiefs. Counties could adopt the Elected County Official (ECO) plan for officials elected prior to August 8, 2011 (the ECO plan was closed to new participants after that date). All three IMRF benefit plans have two tiers. Employees hired before January 1, 2011 are eligible for Tier 1 benefits. Tier 1 employees are vested for pension benefits when they have at least eight years of qualifying service credit. Tier 1 employees who retire at age 55 (at reduced benefits) or after age 60 (at full benefits) with eight years of service are entitled to an annual retirement benefit, payable monthly for life, in an amount equal to 1-2/3% of the final rate of earnings for the first 15 years of service credit, plus 2% for each year of service credit after 15 years to a maximum of 75% of their final rate of earnings. Final rate of earnings is the highest total earnings during any consecutive 48 months within the last ten years of service, divided by 48. Under Tier 1, the pension is increased by 3% of the original amount on January 1 every year after retirement. Employees hired on or after January 1, 2011 are eligible for Tier 2 benefits. For Tier 2 employees, pension benefits vest after ten years of service. Participating employees who retire at age 62 (at reduced benefits) or after age 67 (at full benefits) with ten years of service are entitled to an annual retirement benefit, payable monthly for life, in an amount equal to 1-2/3% of the final rate of earnings for the first 15 years of service credit, plus 2% for each year of service credit after 15 years to a maximum of 75% of their final rate of earnings. Final rate of earnings is the highest total earnings during any 96 consecutive months within the last ten years of service, divided by 96. Under Tier 2, the pension is increased on January 1 every year after retirement, upon reaching age 67, by the lesser of: 46 • 3% of the original pension amount, or • 1/2 of the increase in the Consumer Price Index of the original pension amount. C. Employees Covered by Benefit Terms All appointed employees of a participating employer who are employed in a position normally requiring 600 hours (1,000 hours for certain employees hired after 1981) or more of work in a year are required to participate. As of December 31, 2022, the following employees were covered by the benefit terms: Inactive plan members or beneficiaries currently receiving benefits 101 Inactive plan members entitled to but not yet receiving benefits 53 Active plan members 97 Total 251 D. Contributions As set by statute, the City’s Regular Plan Members are required to contribute 4.5% of their annual covered salary. The statute requires employers to contribute the amount necessary, in addition to member contributions, to finance the retirement coverage of its own employees. The City’s annual contribution rate for calendar year 2022 and 2023 was 10.82% and 9.42%, respectively. For the fiscal year ended April 30, 2023, the City contributed $878,407 to the plan. The City also contributes for disability benefits, death benefits, and supplemental retirement benefits, all of which are pooled at the IMRF level. Contribution rates for disability and death benefits are set by IMRF’s Board of Trustees, while the supplemental retirement benefits rate is set by statute. E. Net Pension (Asset)/Liability The components of the net pension (asset)/liability of the IMRF actuarial valuation performed as of December 31, 2022, with a measurement date as of that date, calculated in accordance with GASB Statement No. 68, were as follows: Total Pension (Asset)/Liability 47,463,892$ IMRF Fiduciary Net Position 40,185,474 City's Net Pension Liability 7,278,418 IMRF Fiduciary Net Position as a Percentage of the Total Pension Liability 84.67% See the Schedule of Changes in the Employer’s Net Pension Liability and Related Ratios in the Required Supplementary Information following the notes to the financial statements for additional information related to the funded status of the plan. F. Actuarial Assumptions The total pension liability above was determined by an actuarial valuation performed as of December 31, 2022 using the following actuarial methods and assumptions: Assumptions Inflation 2.25% Salary Increases 2.85% - 13.75% including inflation Interest Rate 7.25% Asset Cost Method Entry Age Normal Asset Valuation Method Market Value of Assets Projected Retirement Age Experience-based Table of Rates,specific to the type of eligibility condition,last updated for the 2020 valuation according to an experience study from years 2017 to 2019 47 For non-disabled retirees, the Pub-2010, Amount-Weighted, below-median income, General, Retiree, Male (adjusted 106%) and Female (adjusted 105%) tables, and future mortality improvements projected using scale MP-2020 were used. For disabled retirees, the Pub-2010, Amount-Weighted, below-median income, General, Disabled Retiree, Male and Female (both unadjusted) tables, and future mortality improvements projected using scale MP-2020 were used. For active members, the Pub-2010, Amount- Weighted, below-median income, General, Employee, Male and Female (both unadjusted) tables, and future mortality improvements projected using scale MP-2020 were used. G. Long-Term Expected Rate of Return The long-term expected rate of return on pension plan investments was determined using a building- block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense, and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return to the target asset allocation percentage and adding expected inflation. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table as of December 31, 2022: Asset Class Target Allocation Projected Return Equities 35.50% 6.50% International Equities 18.00% 7.60% Fixed Income 25.50% 4.90% Real Estate 10.50% 6.20% Alternatives 9.50% Private Equity 9.90% Hedge Funds N/A Commodities 6.25% Cash Equivalents 1.00% 4.00% 100.00% H. Single Discount Rate A Single Discount Rate of 7.25% was used to measure the total pension liability as of December 31, 2022. The projection of cash flow used to determine this Single Discount Rate assumed that the plan members’ contributions will be made at the current contribution rate, and that employer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. The Single Discount Rate reflects: 1. The long-term expected rate of return on pension plan investments (during the period in which the fiduciary net position is projected to be sufficient to pay benefits), and 2. The tax-exempt municipal bond rate based on an index of 20-year general obligation bonds with an average AA credit rating (which is published by the Federal Reserve) as of the measurement date (to the extent that the contributions for use with the long-term expected rate of return are not met). For the purpose of this discount rate, the expected rate of return on pension plan investments is 7.25%; the municipal bond rate is 4.05%; and resulting single discount rate is 7.25%. The prior year single discount rate was 7.25% and increased 0.00% to the current year single discount rate. 48 I. Changes in Net Pension (Asset)/Liability Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (A)(B)(A)-(B) Balances at December 31, 2021 46,142,272$ 48,058,375$ (1,916,103)$ Changes for the year: Service Cost 763,605$ -$ 763,605$ Interest on the Total Pension Liability 3,290,347 - 3,290,347 Differences Between Expected and Actual Experience of the Total Pension Liability (452,379) - (452,379) Contributions - Employer - 903,892 (903,892) Contributions - Employee - 375,925 (375,925) Net Investment Income - (6,083,896) 6,083,896 Benefit Payments, including Refunds of Employee Contributions (2,279,953) (2,279,953) - Other (Net Transfer)- (788,869) 788,869 Net Changes 1,321,620$ (7,872,901)$ 9,194,521$ Balances at December 31, 2022 47,463,892$ 40,185,474$ 7,278,418$ J. Sensitivity of the Net Pension (Asset)/Liability to Changes in the Discount Rate The following presents the plan’s net pension liability, calculated using a Single Discount Rate of 7.25%, as well as what the plan’s net pension liability would be if it were calculated using a single Discount Rate that is 1% lower or 1% higher than the current rate: Current 1% Decrease Dis count Rate 1% Increase 6.25%7.25%8.25% Net Pension (Asset)/Liability 13,541,084$ 7,278,418$ 2,387,521$ K. Pension Expense/(Income) and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended April 30, 2023, the City recognized pension expense/(income) of $2,271,343. At April 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outf lows of Inflows of Net Outflows Expense in Future Periods Resources Resources of Res ources Differences between expected and actual experience 1,006,560$ 357,606$ 648,954$ Changes of assumptions 76,120 189,469 (113,349) Net difference between projected and actual earnings on pension plan investments 3,439,214 - 3,439,214 Total deferred amounts to be recognized in pension expense in future periods 4,521,894$ 547,075$ 3,974,819$ Pension contributions made subsequent to the measurement date 277,293 - 277,293 Total deferred amounts related to pensions 4,799,187$ 547,075$ 4,252,112$ $277,293 reported as deferred outflows of resources related to pensions resulting from the City’s contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the reporting year ended April 30, 2024. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense in future periods as follows: 49 Net Deferred Year Ending Outflows of December 31 Resources 2023 236,167$ 2024 751,514 2025 1,159,770 2026 1,827,368 2027 - Thereafter - 3,974,819$ L. Social Security Employees not qualifying for coverage under the Illinois Municipal Retirement Fund are considered “non- participating employees”. These employees and those qualifying for coverage under the Illinois Municipal Retirement Fund are covered under Social Security. The City paid the total required contribution for the current fiscal year. NOTE 13 - POLICE PENSION PLAN A. Plan Administration Full-time police sworn personnel of the City are covered by The Police Pension Fund of the City (Plan). Although this is a single-member pension plan, the defined benefits and employee and employer contribution levels are governed by Illinois Compiled Statues (40 IL CS 5/3-1) and may be amended only by the Illinois legislature. The City accounts for the Plan as a pension trust fund. The Pension Board administers the Plan and the Illinois Department of Insurance is the oversight agency. The Board consists of five elected or appointed members. B. Plan Membership At May 1, 2022, the date of the latest actuarial valuation, Plan participation consisted of: Inactive plan members or beneficiaries currently receiving benefits 33 Terminated plan members entitled to but not yet receiving benefits 10 Active plan members 48 Total 91 C. Benefits Provided The Plan provides retirement, disability, and death benefits to Plan members and their beneficiaries. Chapter 40-Pensions-Act 5/Article 3 of the Illinois Compiled Statutes assigns the authority to establish and amend the benefit provisions of the Plan to the Illinois legislature. D. Contributions Employees are required by Illinois Compiled Statutes (ILCS) to contribute 9.91% of their base salary to the Plan. If an employee leaves covered employment with less than 20 years of service, accumulated employee contributions may be refunded without accumulated interest. The City is required to contribute the remaining amounts necessary to finance the plan and the administrative costs as actuarially determined by an enrolled actuary. Effective January 1, 2011, the City has until the year 2040 to fund 90% of the past service cost for the Plan. For the year ended April 30, 2023 the City’s contribution was 12.54% of covered payroll. 50 E. Net Pension (Asset)/Liability The components of the net pension liability of the Plan as of April 30, 2023, calculated in accordance with GASB Statement No. 68, were as follows: Total Pension Liability 60,067,242$ Plan Fiduciary Net Position 55,718,518 City's Net Pension (Asset)/Liability 4,348,724 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 92.76% See the Schedule of Changes in the Employer’s Net Pension Liability and Related Ratios in the Required Supplementary Information for additional information related to the funded status of the Plan. F. Actuarial Assumptions The total pension liability above was determined by an actuarial valuation performed as of May 1, 2022 using the following actuarial methods and assumptions: Actuarial Cost Method Entry Age Normal Amortization Method Straight Line Remaining Amortization Period 20 Years Actuarial Experience and Changes in Assumptions 6.81 Years Asset Experience 5 Years Assumptions Inflation 2.25% Salary Increases 3.75% - 10.02% Interest Rate 7.00% Payroll Growth 3.00% Asset Valuation Method Market Value Mortality rates were based on the PubS-2010(A). The other non-economic actuarial assumptions used in the May 1, 2022 valuation were based on a review of assumptions in the L&A 2020 study for Illinois Police Officers. Active Mortality follows the Sex Distinct Raw Rates as developed in the PubS-2010(A) Study. Mortality improvement uses MP-2019 Improvement Rates applied on a fully generational basis. 50% of active Member deaths are assumed to be in the Line of Duty. Retiree Mortality follows the L&A Assumption Study for Police 2020. These rates are experience weighted with the Sex District Raw Rates as developed in the PubS-2010(A) Study improved to 2017 using MP- 2019 Improvement Rates. These rates are then improved fully generationally using MP-2019 Improvement Rates. Disabled Mortality follows the Sex Distinct Raw Rates as developed in the PubS-2019 Study for disabled participants. Mortality improvement uses MP-2019 Improvement Rates applied on a fully generational basis. Spouse Mortality follows the Sex Distinct Raw Rates as developed in the PubS-2010(A) Study for contingent survivors. For all rates not provided there (ages 45 and younger) the PubG-2010 Study for general employees was used. Mortality improvement uses MP-2019 Improvement Rates applied on a fully generational basis. Other actuarial assumption (demographic) rates are based on a review of the L&A Assumption Study for Police 2020. 51 G. Discount Rate The discount rate used to measure the total pension liability was 7.00%. The discount rate used in the determination of the Total Pension Liability is based on a combination of the expected long-term rate of return on plan investments and the municipal bond rate. Cash flow projections were used to determine the extent which the plan’s future net position will be able to cover future benefit payments. To the extent future benefit payments are covered by the plan’s projected net position, the expected rate of return on plan investments is used to determine the portion of the net pension liability associated with those payments. To the extent future benefit payments are not covered by the plan’s projected net position, the municipal bond rate is used to determine the portion of the net pension liability associated with those payments. The Plan’s projected net position is expected to cover future benefit payments in full for the current employees. Projected benefit payments are determined during the actuarial process based on assumptions. More details on the assumptions are in the prior section. The expected contributions are based on the funding policy of the Plan. H. Changes in the Net Pension (Asset)/Liability Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (A)(B)(A)-(B) alances at April 30, 2022 57,107,066$ 56,638,040$ 469,026$ hanges for the year: Service Cost 1,133,068$ -$ 1,133,068$ Interest on the Total Pension Liability 3,939,393 - 3,939,393 Changes of Benefit Terms (53,189) - (53,189) Differences Between Expected and Actual Experience 226,460 - 226,460 Contributions - Employer - 621,970 (621,970) Contributions - Employee - 491,717 (491,717) Net Investment Income - 276,331 (276,331) Benefit Payments, including Refunds of Employee Contributions (2,285,556) (2,285,556) - Administrative Expense - (23,984) 23,984 Net Changes 2,960,176$ (919,522)$ 3,879,698$ alances at April 30, 2023 60,067,242$ 55,718,518$ 4,348,724$ I. Sensitivity of the Net Pension (Asset)/Liability to Changes in the Discount Rate The following presents the plan’s net pension liability, calculated using a Single Discount Rate of 7.00%, as well as what the plan’s net pension liability would be if it were calculated using a single Discount Rate that is 1% lower or 1% higher: Current 1% Decrease Discount Rate 1% Increase 6.00% 7.00% 8.00% Net Pension (Asset)/Liability 13,292,510$ 4,348,724$ (2,927,901)$ J. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended April 30, 2023, the City recognized pension expense/(income) of $1,756,911. At April 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: 52 Deferred Deferred Net Deferred Outflows of Inflows of Outflows of Expense in Future Periods Resources Resources Resources Differences between expected and actual experience 774,332$ 1,537,535$ (763,203)$ Assumption changes 561,750 246,050 315,700 Net difference between projected and actual earnings on pension investments 5,393,559 - 5,393,559 Total deferred amounts to be recognized in pension expense in future periods 6,729,641$ 1,783,585$ 4,946,056$ Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense in future periods as follows: Net Deferred Year Ending Outflows of April 30 Resources 2024 1,061,653$ 2025 818,545 2026 2,361,839 2027 743,479 2028 (43,010) Thereafter 3,550 4,946,056$ NOTE 14 - POST EMPLOYMENT BENEFIT COMMITMENTS Retiree Insurance Plan A. Plan Overview In addition to the retirement plans described in Notes 12 and 13, the City provides post-employment benefits other than pensions (“OPEB”) for retired employees through a single-employer defined benefit plan. The benefits, benefit levels, employee contributions and employer contributions are governed by the City and can be amended by the City through its personnel manual and union contracts. The plan is not accounted for as a trust fund, as an irrevocable trust has not been established to account for the plan. The plan does not issue a separate report. The activity of the plan is reported in the City’s governmental activities. B. Benefits Provided The City provides postemployment health care benefits to its retirees and certain disable employees. To be eligible for benefits, an employee must qualify for retirement under one of the City’s retirement plans or meet COBRA requirements. All health care benefits are provided through the City’s insured health plan. The benefit levels are the same as those afforded to active employees. The Plan provides the following coverage: Medical Coverage Employees may continue coverage into retirement on the City medical plans if they pay the entire premium. Coverage is also available for eligible dependents on a pay-all basis. Coverage may continue when Medicare eligibility is reached. Coverage for dependents can continue upon the death of the retiree given that contributions continue. Full-time sworn Police employees that suffer a catastrophic injury or are killed in the line of duty receive free lifetime coverage for the employee, their spouse, and each dependent child under the Public Safety Employee Benefits Act. C. Membership Membership in the plan consisted of the following at May 1, 2022, the date of the latest actuarial valuation: 53 Active employees 117 Inactive employees entitled to but not yet receiving benefits - Inac tive employees currently receiving benefits 11 Total 128 D. Total OPEB Liability The City’s total OPEB liability was measured as of April 30, 2023, and the total OPEB liability was determined by an actuarial valuation as of May 1, 2022. E. Actuarial Assumptions The total OPEB liability in the May 1, 2022 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified: Actuarial Method Entry Age Normal Dis count rate 4.14% Inflation 3.00% Salary Rate Increase 4.00% Health Care Trend Initial Trend Rate 5.00% Ultimate Trend Rate 4.50% FY the Ultimate Rate is Reached 2039 Mortality Disability Rates Election at Retirement Marital Status Active Employees: PubG.H-2010(B)Mortality Table -General (below median income) with future mortality improvements using Scale MP-2020 60% of active employees are assumed to be married and elect spousal coverage upon retirement. Males are assumed to be three years older than females. Actual spouse date was used for current retirees. Retirees: PubG.H-2010(B)Mor tality Table -General (below-median income). Male adjusted 106% and Female adjusted 105% tables,w ith future mortality improvements using scale MP-2020 Police Employees and Retirees: PubS.H-2010(A)Mortality Table -Safety w ith future mortality improvements using Scale MP-2020. IMRF Employees: Rates from the December 31, 2022 IMRF Actuarial Valuation Report Police Employees: Rates from the City of McHenry Police Pension Fund Actuarial Valuation for the Year Beginning May 1, 2021 10% of active employees are assumed to elect coverage at retirement The actuarial assumptions used in the May 1, 2022 valuation were based on information found in the most recent IMRF and Police Pension actuarial valuation reports. Assumption changes reflect a change in the discount rate of 0.16 from 3.98% for the beginning of the year values and 4.14% for the disclosure date. There is no long-term expected rate of return on OPEB plan investments because the City does not have a trust dedicated exclusively to the payment of OPEB benefits. F. Discount Rate The City does not have a dedicated trust to pay retiree healthcare benefits. Per GASB 75, the discount rate should be a yield or index rate for 20-year, tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher (or equivalent quality on another rating scale). A rate of 4.14% is used, which is the S&P Municipal Bond 20-Year High-Grade Rate Index as of April 30, 2023. 54 G. Changes in the Total OPEB Liability Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability (a)(b)(a) - (b) Balances at April 30, 2022 1,329,743$ -$ 1,329,743$ Changes for the year: Service Cost 31,957$ -$ 31,957$ Interest on Total OPEB Liability 50,394 - 50,394 Difference between Expected & Actual Experience (120,341) - (120,341) Assumption Changes (41,468) - (41,468) Benefit Payments (127,036) - (127,036) Net Changes (206,494)$ -$ (206,494)$ Balances at April 30, 2023 1,123,249$ -$ 1,123,249$ Increase/(Decrease) H. Sensitivity of the Total OPEB Liability to Changes in the Discount Rate The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using a discount rate that is 1 percentage-point lower or 1 percentage-point higher than the current discount rate: 1% Decrease 10.25%Valuation Rate 1% Increase 8.63% 1,238,358$ 1,123,249$ 1,026,334$ Plan's Total OPEB Liability/(Asset) 46 I. Sensitivity of the Total OPEB Liability to Changes in the Health Care Cost Trend Rates The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using healthcare cost trend rates that are 1 percentage-point lower or 1 percentage-point higher than the current healthcare cost trend rates: 1% Decrease Healthcare Cost 1% Increase 10.13%Valuation Rate 12.28% 1,009,423$ 1,123,249$ 1,261,192$ Plan's Total OPEB Liability/(Asset) J. OPEB Expense/(Income) and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the fiscal year ended April 30, 2023, the City recognized OPEB expense/(income) of $(65,897). At April 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Outflows Deferred Inflows Net Inflows of Resources of Resources of Resources Differences Between Expected and Actual Experience 311,144$ 1,049,479$ (738,335)$ Changes of Assumptions 1,444,949 1,751,930 (306,981) Total 1,756,093$ 2,801,409$ (1,045,316)$ Changes in total OPEB liability related to the difference in actual and expected experience, or changes in assumptions regarding future events, are recognized in OPEB expense over the expected remaining service life of all employees (9.99 years, active and retired) in the postretirement plan. 55 Amounts reported as deferred outflows of resources related to OPEB will be recognized as future OPEB expense in future periods as follows: Year ending April 30 Net Inflows of Resources 2024 (148,250)$ 2025 (148,250) 2026 (148,250) 2027 (148,250) 2028 (124,771) 2029-2032 (327,545) (1,045,316)$ NOTE 15 - INTERFUND BALANCES AND TRANSFERS Interfund balances at April 30, 2023 consisted of the following: Due From Due To Amount General Fund Water and Sewer Fund 129,766$ General Fund Police Pension Fund 3,635 Internal Service Fund Police Pension Fund 1,273 The above interfund balances resulted from a time lag between the dates that (1) revenue was collected and remitted to the appropriate funds and (2) expenditures were incurred and reimbursed between funds. Interfund transfers for the year ended April 30, 2023 consisted of the following: Transfer From Transfer To Amount Water and Sewer Fund Nonmajor Governmental Funds 94,922$ General Fund Nonmajor Governmental Funds 2,095,250 Internal Service Fund General Fund 76,956 Transfers are used to (1) move revenues from the fund that is required to collect them to the fund that is required to expend them, and (2) move receipts restricted to debt service from the funds collecting the receipts to the Debt Service Fund as debt service payments become due. The transfer from the Internal Service Fund to the General Fund nets to zero on the government-wide financials due to the internal service funds being combined into the governmental activities’ column. NOTE 16 - RISK MANAGEMENT The City is exposed to various risks related to torts; theft of, damage to, and destruction of assets; errors and omissions; and injuries to employees. The City is a member of the McHenry County Municipal Risk Management Agency (MCMRMA), a public entity risk pool through which property, general liability, automobile liability, crime, excess property, excess liability, and boiler and machinery coverage is provided in excess of specified limits for the members, acting as a single insurable unit. The relationship between the City and MCMRMA is governed by a contract and by-laws that have been adopted by resolution of each unit’s governing body. The City is contractually obligated to make all annual and supplementary contributions for MCMRMA, to report claims on a timely basis, cooperate with MCMRMA, its claims administrator and attorneys in claims investigation and settlement, and to follow risk management procedures as outlined by MCMRMA. Members have a contractual obligation to fund any deficit of MCMRMA attributable to a membership year during which they were a member. MCMRMA is responsible for administering the self-insurance program and purchasing excess insurance according to the direction of the Board of Directors. MCMRMA also provides its members with risk management services, including the defense of and settlement of claims, and establishes reasonable and necessary 56 loss of reduction and prevention procedures to be followed by the members. During fiscal year 2023 there was no significant reduction in insurance coverage for any category. There have been no settlement amounts that have exceeded insurance coverage. The City is insured under a retrospectively-rated policy for workers’ compensation coverage. Whereas the initial premium may be adjusted based on actual experience. Adjustments in premiums are recorded when paid or received. During the year ended April 30, 2023, there were no significant adjustments in premiums based on actual experience. NOTE 17 - CONSTRUCTION COMMITMENTS At any point in time, the City is involved in numerous construction contracts. For the governmental activities, there were contract commitments in place for various road projects, parking lot improvements, riverwalk construction, horse barn improvements, and other various parks projects as of April 30, 2023 totaling $2,455,285. Beginning in May 2023, the City has contract commitments in place for various road, parking lot, and other projects for $3,740,193. For the Water and Sewer Fund as of April 30, 2023, there were contract commitments in place for Well #14 engineering totaling $40,689. NOTE 18 - CONTINGENCIES There is no outstanding litigation which may have a materially adverse effect on the City’s financial position. NOTE 19 - LEGAL DEBT LIMITATION The Illinois Compiled Statutes limits the amount of indebtedness to 8.625% of the most recent available equalized assessed valuation (EAV) of the City. 2022 EAV 861,184,991$ X 8.625% Debt Margin 74,277,205$ Current Debt 29,790,548 Remaining Debt Margin 44,486,657$ NOTE 20 - TAX ABATEMENT AGREEMENTS The City negotiates property and sales tax abatement agreements on an individual basis. All abatement agreements are entered into under the authority of the Mayor, City Clerk, and City Council. The City has tax abatement agreements with various entities as of April 30, 2023 as follows: Name of Eligibility Criteria Amount of Taxes Abatement Type of Taxes and Mechanism Abated During Agreement Abated of Abatement the Fiscal Year Gary Lang Business District Development Agreement Sales taxes First $450,000 in sales tax revenues generated within the Business District Property are retained by the City, 100% of the sales tax revenue generated within the Business District Property between $450,000 and $750,000 annuallyshall be rebated to Gary Lang,60% of sales tax revenue generated within the Business District Property above $750,000 shall be rebated to Gary Lang.The total rebate for the year cannotexceed 55% of the total annual sales tax revenue generated with the Business District Property.The total rebate payments cannot exceed $8,441,377.04 or 20 years. 549,803$ 1110 N Green LLC Redevelopment Agreement TIF property taxes Rebate 100% of the TIF Increment assessed up to $624,028.-$ 57 Name of Eligibility Criteria Amount of Taxes Abatement Type of Taxes and Mechanism Abated During Agreement Abated of Abatement the Fiscal Year McHenry Commons Shopping Center Economic Incentive Agreement Sales taxes Rebate 100% of base sales tax received by the State attributable to the gross sales generated at the Hobby Lobby Store.The total rebate payments cannotexceed $677,500 or 20 years. 41,547$ CVS Pharmacy Economic Incentive Agreement Sales taxes Rebate 50% of sales tax revenues generated by CVS Pharmacy in calendar years 2016 through 2020 and 25% of sales tax revenues generated by CVS Pharmacy in calendar years 2021 through 2025.The total rebate payments cannot exceed $175,000. -$ 3017 Route 120 & Northwest Suburban Auto Group Economic Incentive Agreement Sales taxes Rebate 50% of base sales tax in calendar years 2017 through 2021 and 25% of base sales tax in calendar years 2022 through 2026 received by the State attributable to the gross sales generated atNorthwest Suburban Auto Group.The total rebate payments cannot exceed $150,000. -$ McHenry Donuts, Inc. Economic Incentive Agreement Sales taxes Rebate 100% of Non-Home Rule Sales taxes in 2017 through 2026 up to $62,500.13,818$ Sunnyside Auto Finance Company Econom ic Incentive Agreement Sales taxes Rebate percentage during years 2017-2019 75% above $66,212.Years 2020-2027 50% above $66,212. Years 2028-2036 25% above $66,212. Not to exceed $300,000. 5,387$ Curt Ames DBA Chain O'Lakes Brewing Company Redevelopment Agreement TIF Property Taxes Rebate 100% of the TIF Increment assessed up to $17,585.216$ Seth Wagner and Associates Real Estate Company Property Tax Abatement Agreement Property Taxes Abate real estate taxes levied against the subject property each year that the taxing body's propertytaxes exceed the dollar amount from the 2014 base property tax year ($3,458.64) through December 31, 2026. 5,607$ Boone Creek Crossing LLC Redevelopm ent Agreement TIF Property Taxes Rebate 100% of the TIF Increment assessed up to $25,000 2,180$ Graham Enterprise Inc Economic Incentive Agreement Sales taxes Rebate 50% ofbase and hom e rule sales tax received above $1,666.67 per month by the State attributable to the gross sales generated at McHenry BP sites at 5301 Bull Valley Road and 5520 W.Elm Street.The total rebate payments cannot exceed $1,000,000 and end December 31,2039. These rebates do not begin until buildings are torn down at 5301 Bull ValleyRoad, 5520 W.Elm St,and 4410 W.Elm St;and a new building is built at 5301 Bully Valley Road. 114,741$ BPI, Break Parts Inc LLC Property Tax Abatement Agreement Property Taxes 10-year 100% abatement over and above the 2018 taxes commencing with the 2019 tax bill payable in 2020 through the 2028 tax bill payable in 2029. 12,300$ 58 Name of Eligibility Criteria Amount of Taxes Abatement Type of Taxes and Mechanism Abated During Agreement Abated of Abatement the Fiscal Year RR McHenry LLC Economic Incentive Agreement Sales taxes Rebate 50% ofbase and home rule sales tax received by the State attributable to the property at the NW corner of IL Route 120 and Chapel Hill Road, excluding the Riverside Chocolate Factory parcel.The total rebate payments cannot exceed $1,000,000 and end after the 20th Sales Tax Incentive Year. 84,649$ Advance Real Estate Managem ent LLC Economic Incentive Agreement Sales taxes Rebate $75,000 from the base sales tax generated from the subject property, and in addition, 50% of the base sales tax in excess of the sales tax revenue baseline received by the city of$195,745. $250,000 in tenant incentive improvements are paid when improvements are made in two tenant spaces. Total rebate cannot exceed $1,500,000 and ends after the 20th anniversary of the completion date. 89,713$ Jessup Manufacturing Com pany Property Tax Abatement Agreement Property Taxes Abate real estate taxes levied against the subject property each year that the taxing body's propertytaxes exceed the dollar amount from the 2018 base property tax year ($4,570.54) through December 31, 2026 1,351$ Munson Ski & Inboard Water Sp o rts, Inc. DBA Munson Ski & Marine Economic Incentive Agreement Sales taxes Rebate 100% of base s ales tax received by the State attributable to the gross sales generated at Munson Ski &Marine at Watertower. Total rebate payments cannot exceed $500,000 and ends on December 31, 2043. 2,591$ 1325 Riverside Inc. DBA Whiskey Diablo Economic Incentive Agreement Sales taxes Rebate 100% of base s ales tax received by the State attributable to the gross sales generated at 1325 Riverside Dr McHenry,IL .Total rebate payments cannot exceed $62,149. -$ NOTE 21 - LEASE ARRANGEMENTS The City, as lessor, has the following lease arrangements: Contract Start Contract End Items Initial Terms Optional Terms Initial Contract Value Borrowing Rate (per y ear) Business-Type Activities Cell Tower 7/21/2014 7/21/2044 Cell Tower 120 months see below 300,000$ N/A Lease revenue for the fiscal year ended April 30, 2023 was $25,697. A summary of deferred inflows - leases activity during the year ended April 30, 2023 is as follows: Balance Balance May 1, 2022 Additions Deletions April 30, 2023 Business-Type Activities Deferred Inflows - Leases:571,256$ -$ -$ 571,256$ Total Deferred Inflows - Leases 571,256$ -$ -$ 571,256$ Less earned revenue amounts: Deferred Inflows - Leases -$ 25,697$ -$ 25,697$ Total Revenue Earned -$ 25,697$ -$ 25,697$ Total Deferred Inflows - Leases, Net 571,256$ (25,697)$ -$ 545,559$ 59 Revenue was recognized in rental income within the Water and Sewer Fund. The cell tower lease has an initial lease term of ten years running from July 21, 2014 through July 21, 2024. The lease also contains an optional extension provision. The parties may extend the term of the lease for four additional five-year terms by mutual agreement or terminate the lease no later than May 21, 2024. These additional terms have been taken into account as both parties are reasonably certain that the extension will take place as of the current fiscal year end. Lease payments for each five- year extension term are as follows: Lease Term Rental Payment 7/21/2024 - 7/21/2029 156,000$ 7/21/2029 - 7/21/2034 162,000 7/21/2034 - 7/21/2039 168,000 7/21/2039 - 7/21/2044 174,000 The lease payments are required to be paid up front at the start of each lease term and are shown as unavailable revenue within both the proprietary fund and government-wide financial statements. The City will recognize revenue each year as it is earned. At April 30, 2023, the annual lease payments and subsequent receipts are as follows: Year Ending April 30 Principal Interes t Total 2024 -$ -$ -$ 2025 122,324 33,676 156,000 2026 - - - 2027 - - - 2028 - - - 2029-2033 104,630 57,370 162,000 2034-2038 126,333 41,667 168,000 2039-2043 151,294 22,706 174,000 2044-2048 - - - Total 504,581$ 155,419$ 660,000$ NOTE 22 - CHANGE IN ACCOUNTING PRINCIPLE The City has implemented GASB Statement No. 87, Leases. This statement establishes financial reporting standards related to leases. Implementation of this standard resulted in recognizing the fair market value of the liability and asset at the commencement of the agreement. There have been no changes to the previously issued audited financial statements which would be required on a retrospective basis. 60 REQUIRED SUPPLEMENTARY INFORMATION 61 4/30/2023*4/30/2022*4/30/2021*4/30/2020*4/30/2019*4/30/2018*4/30/2017*4/30/2016* TOTAL PENSION LIABILITY Service Cost 763,605$ 728,190$ 805,614$ 781,612$ 740,595$ 707,796$ 704,466$ 652,882$ Interest on Total Pension Liability 3,290,347 3,102,945 2,967,915 2,796,732 2,641,076 2,542,116 2,419,748 2,286,008 Differences Between Expected and Actual Experience (452,379) 979,789 680,117 594,214 381,201 646,124 (98,080) 86,269 Changes of Assumptions - - (475,311) - 1,199,530 (1,124,675) (136,959) 44,481 Benefit Payments, Including Refunds of Member Contributions (2,279,953) (2,207,589) (1,946,703) (1,700,114) (1,543,189) (1,393,390) (1,384,293) (1,144,016) Net Change in Total Pension Liability 1,321,620$ 2,603,335$ 2,031,632$ 2,472,444$ 3,419,213$ 1,377,971$ 1,504,882$ 1,925,624$ Total Pension Liability - Beginning 46,142,272 43,538,937 41,507,305 39,034,861 35,615,648 34,237,677 32,732,795 30,807,171 Total Pension Liability - Ending 47,463,892$ 46,142,272$ 43,538,937$ 41,507,305$ 39,034,861$ 35,615,648$ 34,237,677$ 32,732,795$ PLAN FIDUCIARY NET POSITION Contributions - Employer 903,892$ 1,068,306$ 1,137,523$ 787,631$ 918,212$ 915,963$ 844,878$ 801,851$ Contributions - Member 375,925 385,024 361,437 344,894 340,841 328,547 366,710 277,350 Net Investment Income (6,083,896) 7,088,187 5,164,342 5,817,683 (1,672,533) 4,871,136 1,840,322 133,288 Benefit Payments, Including Refunds of Member Contributions (2,279,953) (2,207,589) (1,946,703) (1,700,114) (1,543,189) (1,393,390) (1,384,293) (1,144,016) Administrative Expenses (788,906) (35,322) 131,829 196,150 493,832 (352,231) 293,436 (161,598) Net Change in Plan Fiduciary Net Position (7,872,938)$ 6,298,606$ 4,848,428$ 5,446,244$ (1,462,837)$ 4,370,025$ 1,961,053$ (93,125)$ Plan Net Position - Beginning 48,058,412 41,759,806 36,911,378 31,465,134 32,927,971 28,557,946 26,596,893 26,690,018 Plan Net Position - Ending 40,185,474$ 48,058,412$ 41,759,806$ 36,911,378$ 31,465,134$ 32,927,971$ 28,557,946$ 26,596,893$ City's Net Pension Liability 7,278,418$ (1,916,140)$ 1,779,131$ 4,595,927$ 7,569,727$ 2,687,677$ 5,679,731$ 6,135,902$ Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 84.67%104.15%95.91%88.93%80.61%92.45%83.41%81.25% Covered Payroll 8,353,902$ 7,995,414$ 8,031,924$ 7,718,418$ 7,538,685$ 7,241,274$ 6,362,027$ 6,163,340$ Employer's Net Pension Liability as a Percentage of Covered Payroll 87.13%-23.97%22.15%59.54%100.41%37.12%89.28%99.55% * This information presented is based on the actuarial valuation performed as of the December 31 year end prior to the fiscal year end listed above. This schedule is presented to illustrate the requirement to show information for ten years. However, until a full ten-year trend is compiled, information is presented for those years for which information is available. CITY OF MCHENRY, ILLINOIS ILLINOIS MUNICIPAL RETIREMENT FUND SCHEDULE OF CHANGES IN THE EMPLOYER'S NET PENSION LIABILITY AND RELATED RATIOS APRIL 30, 2023 Page 52 See Accompanying Independent Auditor's Report 62 4/30/2023*4/30/2022*4/30/2021*4/30/2020*4/30/2019*4/30/2018*4/30/2017* Actuarially-Determined Contribution 903,892$ 978,639$ 983,107$ 796,541$ 918,212$ 908,056$ 844,877$ Contributions in Relation to Actuarially-Determined Contribution 903,892 1,068,306 1,137,523 787,631 918,212 915,963 844,878 Contribution Deficiency/(Excess)-$ (89,667)$ (154,416)$ 8,910$ -$ (7,907)$ (1)$ Covered Payroll 8,499,251$ 7,213,419$ 7,135,984$ 7,780,883$ 7,594,095$ 7,469,026$ 6,362,027$ Contributions as a Percentage of Covered Payroll 10.63%14.81%15.94%10.12%12.09%12.26%13.28% Notes to Schedule: Actuarially determined contribution rates are calculated as of December 31 each year, which are 12 months prior to the beginning of the fiscal year in which contributions are reported. Remaining Amortization Period: 21-year closed period Price Inflation: 2.25%, approximate; No explicit price inflation assumption is used in this valuation. Retirement Age: Experience-based table of rates that are specific to the type of eligibility condition; last updated for the 2020 valuation pursuant to an experience study of the period 2017 to 2019. Actuarial Cost Method: Aggregate Entry Age Normal Amortization Method: Level percentage of payroll, closed Asset Valuation Method: 5-year smoothed market; 20% corridor Wage Growth: 2.75% CITY OF MCHENRY, ILLINOIS ILLINOIS MUNICIPAL RETIREMENT FUND SCHEDULE OF EMPLOYER CONTRIBUTION APRIL 30, 2023 Actuarial Method and Assumptions Used on the Calculation of the 2022 Contribution Rate * Salary Increases: 2.85% to 13.75%, including inflation Investment Rate of Return: 7.25% Mortality:For non-disabled retirees,the Pub-2010, Amount-Weighted, below-median income, General, Retiree,Male (adjusted 106%)and Female (adjusted 105%) tables,and future mortality improvements projected using scale MP- retirees,the Pub-2010, Amount-Weighted, below-median income, General, Disabled Retiree,Male and Female (both unadjusted) tables,and future mortality improvements projected using scale MP-2020. For active members,the P Weighted, below-median income, General, Employee, Male and Female (both unadjusted) tables, and future mortality improvements projected using scale MP-2020. *Based on Valuation Assumptions used in the December 31, 2020 actuarial valuation; note two year lag between valuation and rate setting. This schedule is presented to illustrate the requirement to show information for ten years. However, until a full ten-year trend is compiled, information is presented for those years for which information is available. Page 53 See Accompanying Independent Auditor's Report 63 4/30/2023 4/30/2022 4/30/2021 4/30/2020 4/30/2019 4/30/2018 4/30/2017 4/30/2016 4/30/2015 TOTAL PENSION LIABILITY Service Cost 1,133,068$ 1,104,977$ 1,106,282$ 1,020,016$ 964,573$ 969,843$ 906,395$ 948,282$ 876,654$ Interest 3,939,393 3,739,492 3,687,359 3,400,174 3,244,523 3,100,186 3,130,927 2,940,204 2,804,198 Changes in Benefit Terms (53,189) - - 267,927 - - - - - Differences Between Expected and Actual Experience 226,460 (1,660,449) (143,994) 953,997 165,685 (13,601) (1,315,850) (531,862) (300,710) Changes in Assumptions - - - 1,039,838 - - (1,259,209) 4,137,023 391,028 Benefit Payments, Including Refunds of Member Contributions (2,285,556) (2,428,688) (2,441,099) (2,225,355) (2,077,032) (1,911,914) (1,890,931) (2,046,745) (1,868,756) Net Change in Total Pension Liability 2,960,176$ 755,332$ 2,208,548$ 4,456,597$ 2,297,749$ 2,144,514$ (428,668)$ 5,446,902$ 1,902,414$ Total Pension Liability - Beginning 57,107,066 56,351,734 54,143,186 49,686,589 47,388,840 45,244,326 45,672,994 40,226,092 38,323,678 Total Pension Liability - Ending 60,067,242$ 57,107,066$ 56,351,734$ 54,143,186$ 49,686,589$ 47,388,840$ 45,244,326$ 45,672,994$ 40,226,092$ PLAN FIDUCIARY NET POSITION Contributions - Employer 621,970$ 655,318$ 26,150,315$ 2,077,704$ 2,017,300$ 1,868,798$ 1,521,914$ 1,386,205$ 1,295,101$ Contributions - Member 491,717 467,800 469,279 500,202 427,378 409,415 397,515 513,111 381,363 Contributions - Other - 27,092 435,068 - 1,221 - - - - Net Investment Income 276,331 (3,752,680) 9,474,445 249,889 1,454,043 2,225,784 2,041,694 (228,847) 1,101,915 Benefit Payments, Including Refunds of Member Contributions (2,285,556) (2,428,688) (2,441,099) (2,225,355) (2,077,032) (1,911,914) (1,890,931) (2,046,745) (1,868,756) Administrative Expenses (23,984) (49,007) (25,668) (100,204) (17,813) (18,717) (41,164) (29,539) (36,845) Net Change in Plan Fiduciary Net Position (919,522)$ (5,080,165)$ 34,062,340$ 502,236$ 1,805,097$ 2,573,366$ 2,029,028$ (405,815)$ 872,778$ Plan Net Position - Beginning 56,638,040 61,718,205 27,655,865 27,153,629 25,348,532 22,775,166 20,746,138 21,151,953 20,279,175 Plan Net Position - Ending 55,718,518$ 56,638,040$ 61,718,205$ 27,655,865$ 27,153,629$ 25,348,532$ 22,775,166$ 20,746,138$ 21,151,953$ City's Net Pension Liability 4,348,724$ 469,026$ (5,366,471)$ 26,487,321$ 22,532,960$ 22,040,308$ 22,469,160$ 24,926,856$ 19,074,139$ Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 92.76%99.18%109.52%51.08%54.65%53.49%50.34%45.42%52.58% Covered-Employee Payroll 4,959,035$ 4,717,332$ 4,686,805$ 4,444,767$ 4,224,124$ 4,204,784$ 4,082,315$ 3,880,748$ 3,791,467$ Employer's Net Pension Liability as a Percentage of Covered-Employee Payroll 87.69%9.94%-114.50%595.92%533.44%524.17%550.40%642.32%503.08% 2023 2022 2021 2020 2019 2018 2017 2016 2015 Annual Money-Weighted Rate of Return, Net of Investment Expenses -1.63%4.26%32.11%-0.48%5.73%9.60%5.60%-1.53%5.41% *For the year ended April 30, 2023, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was not available due to the transition of all investments into the consolidated police pension fund. This schedule is presented to illustrate the requirement to show information for ten years. However, until a full ten-year trend is compiled, information is presented for those years for which information is available. CITY OF MCHENRY, ILLINOIS POLICE PENSION PLAN SCHEDULE OF CHANGES IN THE EMPLOYER'S NET PENSION LIABILITY AND RELATED RATIOS APRIL 30, 2023 Page 54 See Accompanying Independent Auditor's Report 64 4/30/2023 4/30/2022 4/30/2021 4/30/2020 4/30/2019 4/30/2018 4/30/2017 4/30/2016 4/30/2015 Actuarially-Determined Contribution 625,600$ 2,576,006$ 2,231,742$ 2,082,421$ 2,019,703$ 1,874,219$ 1,524,244$ 1,387,374$ 1,295,577$ Contributions in Relation to Actuarially-Determined Contribution 621,970 655,318 26,150,315 2,077,704 2,017,300 1,868,798 1,521,914 1,386,205 1,295,101 Contribution Deficiency/(Excess)3,630$ 1,920,688$ (23,918,573)$ 4,717$ 2,403$ 5,421$ 2,330$ 1,169$ 476$ Covered-Employee Payroll 4,959,035$ 4,717,332$ 4,686,805$ 4,422,539$ 4,324,167$ 4,291,809$ 4,082,315$ 3,880,748$ 3,791,467$ Contributions as a Percentage of Covered-Employee Payroll 12.54%13.89%557.96%46.98%46.65%43.54%37.28%35.72%34.16% Notes to Schedule: Mortality Rates: Pub-2010 Adjusted for plan Status, Demographics, and Illinois Public Pension Data, as described Price Inflation: 2.25% CITY OF MCHENRY, ILLINOIS POLICE PENSION PLAN SCHEDULE OF EMPLOYER CONTRIBUTION LAST TEN FISCAL YEARS Salary Increases: 3.75% to 10.02% This schedule is presented to illustrate the requirement to show information for ten years. However, until a full ten-year trend is compiled, information is presented for those years for which information is available. Actuarial Method and Assumptions Used on the Calculation of the 2022 Contribution Rate * Actuarial Cost Method: Entry age normal Amortization Method: Level percentage of payroll, closed Termination Rates: 100% of L&A 2020 Illinois Police Termination Rates Disability Rates: 100% of L&A 2020 Illinois Police Disability Rates *Based on Valuation Assumptions used in the May 1, 2021 actuarial valuation for the December 2021 tax levy, if applicable Investment Rate of Return: 7.00% Retirement Rates: 100% of L&A 2020 Illinois Police Retirement Rates Capped at Age 65 Equivalent Single Amortization Period: 100% funded over 15 years Asset Valuation Method: 5-year smoothed fair value Wage Growth: 3.00% Page 55 See Accompanying Independent Auditor's Report 65 4/30/2023 4/30/2022 4/30/2021 4/30/2020 4/30/2019 TOTAL OPEB LIABILITY Service Cost 31,957$ 38,558$ 38,278$ 36,378$ 32,964$ Interest 50,394 103,035 165,119 171,790 209,775 Changes in Benefit Terms - (3,356,991) - - - Differences Between Expected and Actual Experience (120,341) 393,032 (646,027) - (1,070,724) Benefit Payments (127,036) (174,427) (214,301) (162,019) (167,232) Changes in Assumptions (41,468) (1,390,894) 473,546 513,575 417,482 Other Changes - - - (91,626) 147,912 Net Change in Total OPEB Liability (206,494)$ (4,387,687)$ (183,385)$ 468,098$ (429,823)$ Total OPEB Liability - Beginning 1,329,743 5,717,430 5,900,815 5,432,717 5,862,540 Total OPEB Liability - Ending 1,123,249$ 1,329,743$ 5,717,430$ 5,900,815$ 5,432,717$ Covered-Employee Payroll 10,588,482$ 9,802,365$ 9,342,565$ 8,796,233$ *8,796,233$ Employer's Net OPEB Liability as a Percentage of Covered-Valuation Payroll 10.61%13.57%61.20%67.08%61.76% Notes to Schedule: The following are the discount rates used in each period:4.14%3.98%1.83%3.21%3.21% CITY OF MCHENRY OTHER POST-EMPLOYMENT BENEFIT SCHEDULE OF CHANGES IN THE EMPLOYER'S TOTAL OPEB LIABILITY AND RELATED RATIOS APRIL 30, 2023 No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75. This schedule is presented to illustrate the requirement to show information for ten years. However, until a full ten-year trend is compiled, information is presented for those years for which information is available. Changes of Assumptions. Changes of assumptions and other inputs reflect the effects of changes in the discount rate of each period. There is no actuarially-determined contribution (ADC)or employer contribution in relation to the ADC as the total OPEB liabilities are currently an unfunded obligation. * - Covered-Employee Payroll is the same as the prior year due to the valuation being a rollforward instead of a new valuation. Page 56 See Accompanying Independent Auditor's Report 66 Actual Original Final Amounts REVENUES Local Taxes Property Tax 5,037,941$ 5,037,941$ 4,975,755$ Intergovernmental State Sales Tax 12,490,464 12,490,464 13,346,454 State Income Tax 3,589,961 3,589,961 4,384,429 State Replacement Tax 80,000 80,000 246,433 State Pull Tab/Games Tax 850 850 1,312 Inter Track Wagering Tax 25,000 25,000 39,296 State Telecommunications Tax 200,000 200,000 198,361 Cannabis Use Tax 35,000 35,000 42,240 Federal Grants - - 1,841,293 Other Local Sources Hotel/Motel Tax 170,000 170,000 243,574 Franchise Fees 380,000 380,000 379,078 Licenses and Permits 1,142,500 1,142,500 1,247,056 Fines and Forfeitures 402,000 402,000 451,894 Charges for Services 1,268,789 1,268,789 1,423,862 Interest 2,500 2,500 454,024 Local Grants - - 46,113 Miscellaneous Rent 18,000 18,000 14,489 Royalties 175,000 175,000 175,000 Donations - - 13,348 Annexation Fees 50,000 50,000 - Reimbursements 1,925,394 1,925,394 2,554,441 Other Miscellaneous 75,100 75,100 255,656 Total Revenues 27,068,499$ 27,068,499$ 32,334,108$ EXPENDITURES Current General Office Administration 1,241,669$ 1,284,379$ 1,149,942$ Elected Officials 99,310 99,310 70,055 Community Development 1,319,951 1,515,236 1,262,634 Finance Department 1,533,380 1,618,380 1,750,399 Human Resources 309,057 309,057 294,344 Economic Development 405,510 415,510 370,197 4,908,877$ 5,241,872$ 4,897,571$ Public Safety Police Commission 6,953$ 6,953$ 4,584$ Police Department 9,682,259 9,785,259 9,766,599 Dispatch Center 2,447,519 2,447,519 2,614,829 12,136,731$ 12,239,731$ 12,386,012$ Public Works Administration 506,812$ 506,812$ 490,904$ Street Department 3,857,382 3,857,382 3,699,050 4,364,194$ 4,364,194$ 4,189,954$ Parks and Recreation Parks and Recreation 2,721,821$ 2,721,821$ 2,847,744$ 2,721,821$ 2,721,821$ 2,847,744$ Budgeted Amounts CITY OF MCHENRY, ILLINOIS FOR THE YEAR ENDED APRIL 30, 2023 GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL Page 57 See Accompanying Independent Auditor's Report 67 Actual Original Final Amounts Budgeted Amounts CITY OF MCHENRY, ILLINOIS FOR THE YEAR ENDED APRIL 30, 2023 GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL EXPENDITURES (Continued) Capital Outlay General Office Administration 1,708,500$ 2,668,500$ 2,106,275$ Public Safety Police Department 24,950 24,950 243,617 Public Works Street Department - - 12,876 Parks and Recreation Parks and Recreation 24,000 24,000 20,818 1,757,450$ 2,717,450$ 2,383,586$ Debt Service Principal 459,250$ 459,250$ 296,769$ Interest and Fees 34,100 34,100 29,800 493,350$ 493,350$ 326,569$ Total Expenditures 26,382,423$ 27,778,418$ 27,031,436$ EXCESS OR (DEFICIENCY) OF REVENUES OVER EXPENDITURES 686,076$ (709,919)$ 5,302,672$ OTHER FINANCING SOURCES/(USES) Transfers (2,095,250)$ (2,095,250)$ (2,018,294)$ Sale of City Property 10,000 10,000 13,200 (2,085,250)$ (2,085,250)$ (2,005,094)$ NET CHANGE IN FUND BALANCE (1,399,174)$ (2,795,169)$ 3,297,578$ FUND BALANCE - MAY 1, 2022 17,117,629 FUND BALANCE ADJUSTMENT (Note 9)(861,324) FUND BALANCE - APRIL 30, 2023 19,553,883$ Page 58 See Accompanying Independent Auditor's Report 68 CITY OF MCHENRY, ILLINOIS NOTES TO REQUIRED SUPPLEMENTARY INFORMATION APRIL 30, 2023 NOTE 1 - BUDGET Budgets are adopted on a basis consistent with generally accepted accounting principles. Annual budgets are adopted for all funds except custodial funds. All annual budgets lapse at fiscal year-end. Budgeted expenditures are controlled at the departmental level with the City Administrator’s oversight. All transfers and any revision that changes the total expenditures not contemplated of any fund must be approved by the City Council. All budget amendments must be approved by the City Council. The budget was approved on April 18, 2022 and was amended fourteen times during the fiscal year with the final amendment occurring on February 21, 2023. NOTE 2 - EXCESS OF EXPENDITURES OVER BUDGET For the year ended April 30, 2023, the fund presented as Required Supplementary Information did not have expenditures that exceeded the budget. 69 SUPPLEMENTAL FINANCIAL INFORMATION 70 Civil Revolving Total General Annexation Alarm Board Band Defense Loan Tourism General Fund Fund Fund Fund Fund Fund Fund Fund ASSETS Cash and Cash Equivalents 12,318,405$ 1,079,641$ 1,094,298$ 9,440$ 12,388$ 290,060$ 143,941$ 14,948,173$ Investments 2,013,579 20,292 - 1,588 - 3,691 16,578 2,055,728 Prepaid Items 173,819 - - - - - - 173,819 Receivables (Net of Allowance for Estimated Uncollectible Amounts) Accounts Receivable - Billed 395,007 6,450 31,691 - - 8,580 2,000 443,728 Accounts Receivable - Unbilled 104,201 - 38,421 - - - 15,689 158,311 Property Taxes 5,017,348 - - - - - - 5,017,348 Accrued Interest 2,394 343 - 27 - 77 280 3,121 Due from Other Governmental Units 3,176,525 - - - - - - 3,176,525 Cable Franchise Fee Receivable 122,912 - - - - - - 122,912 Inventory 184,569 - - - - - - 184,569 TOTAL ASSETS 23,508,759$ 1,106,726$ 1,164,410$ 11,055$ 12,388$ 302,408$ 178,488$ 26,284,234$ LIABILITIES Accounts Payable and Accrued Expenditures 1,185,987$ -$ 57,523$ 15$ 4,240$ -$ 16,938$ 1,264,703$ Due to Other Funds 133,401 - - - - - - 133,401 Unearned Revenue 314,899 - - - - - - 314,899 TOTAL LIABILITIES 1,634,287$ -$ 57,523$ 15$ 4,240$ -$ 16,938$ 1,713,003$ DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Property Taxes 5,017,348$ -$ -$ -$ -$ -$ -$ 5,017,348$ TOTAL DEFERRED INFLOWS OF RESOURCES 5,017,348$ -$ -$ -$ -$ -$ -$ 5,017,348$ FUND BALANCES Nonspendable 173,819$ -$ -$ -$ -$ -$ -$ 173,819$ Assigned for: Alarm - - 1,106,887 - - - - 1,106,887 Tourism - - - - - - 161,550 161,550 Band - - - 11,040 - - - 11,040 Capital Projects 6,943,522 1,106,726 - - - - - 8,050,248 Revolving Loan - - - - - 302,408 - 302,408 Civil Defense - - - - 8,148 - - 8,148 Unassigned 9,739,783 - - - - - - 9,739,783 TOTAL FUND BALANCES 16,857,124$ 1,106,726$ 1,106,887$ 11,040$ 8,148$ 302,408$ 161,550$ 19,553,883$ TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES 23,508,759$ 1,106,726$ 1,164,410$ 11,055$ 12,388$ 302,408$ 178,488$ 26,284,234$ CITY OF MCHENRY, ILLINOIS COMBINING BALANCE SHEET - GENERAL FUND APRIL 30, 2023 Page 60 See Accompanying Independent Auditor's Report 71 Alarm Civil Revolving Total Annexation Board Band Defense Loan Tourism General General Fund Fund Fund Fund Fund Fund Fund Fund REVENUES Local Taxes Property Tax 4,975,755$ -$ -$ -$ -$ -$ -$ 4,975,755$ Intergovernmental State Sales Tax 13,346,454 - - - - - - 13,346,454 State Income Tax 4,384,429 - - - - - - 4,384,429 State Replacement Tax 246,433 - - - - - - 246,433 State Pull Tab/Games Tax 1,312 - - - - - - 1,312 Inter Track Wagering Tax 39,296 - - - - - - 39,296 State Telecommunications Tax 198,361 - - - - - - 198,361 Cannabis Use Tax 42,240 - - - - - - 42,240 Federal Grants 1,841,293 - - - - - - 1,841,293 Other Local Sources Hotel/Motel Tax 44,057 - - - - - 199,517 243,574 Franchise Fees 379,078 - - - - - - 379,078 Licenses and Permits 1,247,056 - - - - - - 1,247,056 Fines and Forfeitures 451,894 - - - - - - 451,894 Charges for Services 1,194,120 - 229,742 - - - - 1,423,862 Interest 439,622 3,549 6,329 55 42 1,022 3,405 454,024 Local Grants 46,113 - - - - - - 46,113 Miscellaneous Rent 14,489 - - - - - - 14,489 Royalties - 175,000 - - - - - 175,000 Donations 13,348 - - - - - - 13,348 Reimbursements 2,554,441 - - - - - - 2,554,441 Other Miscellaneous 182,154 - - - - - 73,502 255,656 Total Revenues 31,641,945$ 178,549$ 236,071$ 55$ 42$ 1,022$ 276,424$ 32,334,108$ EXPENDITURES Current General Office Administration 1,060,342$ -$ -$ -$ -$ -$ 89,600$ 1,149,942$ Elected Officials 70,055 - - - - - - 70,055 Community Development 1,262,634 - - - - - - 1,262,634 Finance Department 1,750,399 - - - - - - 1,750,399 Human Resources 294,344 - - - - - - 294,344 Economic Development 370,197 - - - - - - 370,197 4,807,971$ -$ -$ -$ -$ -$ 89,600$ 4,897,571$ Public Safety Police Commission 4,584$ -$ -$ -$ -$ -$ -$ 4,584$ Police Department 9,645,650 - 114,964 - 5,985 - - 9,766,599 Dispatch Center 2,614,829 - - - - - - 2,614,829 12,265,063$ -$ 114,964$ -$ 5,985$ -$ -$ 12,386,012$ Public Works Administration 490,904$ -$ -$ -$ -$ -$ -$ 490,904$ Street Department 3,699,050 - - - - - - 3,699,050 4,189,954$ -$ -$ -$ -$ -$ -$ 4,189,954$ CITY OF MCHENRY, ILLINOIS FUND FINANCIAL STATEMENTS COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GENERAL FUND FOR THE YEAR ENDED APRIL 30, 2023 Page 61 See Accompanying Independent Auditor's Report 72 Alarm Civil Revolving Total Annexation Board Band Defense Loan Tourism General General Fund Fund Fund Fund Fund Fund Fund Fund CITY OF MCHENRY, ILLINOIS FUND FINANCIAL STATEMENTS COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GENERAL FUND FOR THE YEAR ENDED APRIL 30, 2023 EXPENDITURES (Continued) Current (Continued) Parks and Recreation Parks and Recreation 2,833,436$ -$ -$ 14,308$ -$ -$ -$ 2,847,744$ 2,833,436$ -$ -$ 14,308$ -$ -$ -$ 2,847,744$ Capital Outlay General Office Administration 2,106,275$ -$ -$ -$ -$ -$ -$ 2,106,275$ Public Safety Police Department 243,617 - - - - - - 243,617 Public Works Street Department 12,876 - - - - - - 12,876 Parks and Recreation Parks and Recreation 20,818 - - - - - - 20,818 2,383,586$ -$ -$ -$ -$ -$ -$ 2,383,586$ Debt Service Principal 233,555$ -$ -$ -$ -$ -$ 63,214$ 296,769$ Interest and Fees 25,794 - - - - - 4,006 29,800 259,349$ -$ -$ -$ -$ -$ 67,220$ 326,569$ Total Expenditures 26,739,359$ -$ 114,964$ 14,308$ 5,985$ -$ 156,820$ 27,031,436$ EXCESS OR (DEFICIENCY) OF REVENUES OVER EXPENDITURES 4,902,586$ 178,549$ 121,107$ (14,253)$ (5,943)$ 1,022$ 119,604$ 5,302,672$ OTHER FINANCING SOURCES/(USES) Transfers (1,900,294)$ (35,000)$ -$ 12,000$ 4,000$ -$ (99,000)$ (2,018,294)$ Sale of City Property 13,200 - - - - - - 13,200 (1,887,094)$ (35,000)$ -$ 12,000$ 4,000$ -$ (99,000)$ (2,005,094)$ NET CHANGE IN FUND BALANCE 3,015,492$ 143,549$ 121,107$ (2,253)$ (1,943)$ 1,022$ 20,604$ 3,297,578$ FUND BALANCE - MAY 1, 2022 14,702,956 963,177 985,780 13,293 10,091 301,386 140,946 17,117,629 FUND BALANCE ADJUSTMENT (Note 9)(861,324) - - - - - - (861,324) FUND BALANCE - APRIL 30, 2023 16,857,124$ 1,106,726$ 1,106,887$ 11,040$ 8,148$ 302,408$ 161,550$ 19,553,883$ Page 62 See Accompanying Independent Auditor's Report 73 Special Special Capital Asset Municipal Service Service Total Recreation Capital Maintenance and Capital Debt Motor Motor Developer Area #4 -Area #6 -Other Pageant Audit Center Improvements Replacement Equipment Service Fuel Tax Fuel Tax Donations TIF Lakewood Huntersville Governmental Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund Funds ASSETS Cash and Cash Equivalents 1,954$ -$ -$ -$ 788,018$ 29,851$ -$ 2,277,633$ 84,412$ 1,040,810$ 417,170$ -$ -$ 4,639,848$ Deposit with Paying Agent - - - - - - 32,240 - - - - - - 32,240 Investments - 503 379,019 1,026,299 - 23,786 16,405 - - 64,204 - 404 - 1,510,620 Receivables (Net of Allowance for Estimated Uncollectible Amounts) Accounts Receivable - Billed - - - - - - - - - 5,400 23,117 - - 28,517 Accounts Receivable - Unbilled - - 3,915 - 77,803 - - - 32,835 - - - - 114,553 Property Taxes - 26,430 - - - - - - - - 816,081 15,580 - 858,091 Accrued Interest - 9 6,408 1,696 - 402 277 - - 1,085 - 7 - 9,884 Due from Other Governmental Units - - - 8,351 - - - 141,223 - 2,702 - - - 152,276 Grants Receivable - - - - - - - - - - 178,164 - - 178,164 TOTAL ASSETS 1,954$ 26,942$ 389,342$ 1,036,346$ 865,821$ 54,039$ 48,922$ 2,418,856$ 117,247$ 1,114,201$ 1,434,532$ 15,991$ -$ 7,524,193$ LIABILITIES Accounts Payable and Accrued Expenditures -$ -$ 16,376$ -$ -$ 22,613$ 318$ 260$ -$ 141,153$ 386,450$ -$ -$ 567,170$ Overdrafts - 536 260,833 781,040 - - 40,993 - - - - 382 179,115 1,262,899 Due to Other Governmental Units - - - - - - - - - 49,041 - - - 49,041 Due to Other Funds - - - - - - - - - - - - - Unearned Revenue - Fees - - - - - - - - 2,400 - - - 2,400 TOTAL LIABILITIES -$ 536$ 277,209$ 781,040$ -$ 22,613$ 41,311$ 260$ -$ 192,594$ 386,450$ 382$ 179,115$ 1,881,510$ DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Property Taxes -$ 26,430$ -$ -$ -$ -$ -$ -$ -$ -$ 816,081$ 15,580$ -$ 858,091$ TOTAL DEFERRED INFLOWS OF RESOURCES -$ 26,430$ -$ -$ -$ -$ -$ -$ -$ -$ 816,081$ 15,580$ -$ 858,091$ FUND BALANCES Restricted for: Capital Projects -$ -$ -$ -$ -$ -$ -$ -$ -$ 195,936$ -$ -$ -$ 195,936$ Special Service Areas - - - - - - - - - - - 29 - 29 Tax Increment Financing - - - - - - - - - - 232,001 - - 232,001 Highways and Streets - - - - - - - 1,491,755 117,190 - - - - 1,608,945 Assigned for: Highways and Streets - - - - - - - 926,841 57 - - - - 926,898 Capital Projects - - - 255,306 865,821 31,426 - - - 725,671 - - - 1,878,224 Parks and Recreation 1,954 - 112,133 - - - - - - - - - - 114,087 Debt Service - - - - - - 7,611 - - - - - - 7,611 Unassigned - (24) - - - - - - - - - - (179,115) (179,139) TOTAL FUND BALANCES 1,954$ (24)$ 112,133$ 255,306$ 865,821$ 31,426$ 7,611$ 2,418,596$ 117,247$ 921,607$ 232,001$ 29$ (179,115)$ 4,784,592$ TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES 1,954$ 26,942$ 389,342$ 1,036,346$ 865,821$ 54,039$ 48,922$ 2,418,856$ 117,247$ 1,114,201$ 1,434,532$ 15,991$ -$ 7,524,193$ CITY OF MCHENRY, ILLINOIS COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS APRIL 30, 2023 Page 63 See Accompanying Independent Auditor's Report 74 Special Special Capital Asset Municipal Service Service Total Recreation Capital Maintenance and Capital Debt Motor Motor Developer Area #4 -Area #6 -Other Pageant Audit Center Improvements Replacement Equipment Service Fuel Tax Fuel Tax Donations TIF Lakewood Huntersville Governmental Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund Funds REVENUES Local Taxes Property Tax -$ 26,275$ -$ -$ -$ -$ -$ -$ -$ -$ 694,137$ 15,581$ -$ 735,993$ Intergovernmental State Motor Fuel Tax - - - - - - - 1,139,143 364,598 - - - - 1,503,741 State Grants - - - - - - - 296,480 - - 178,164 - - 474,644 Other Local Sources Electric Use Tax - - - - 1,043,524 - - - - - - - - 1,043,524 Charges for Services - 29,700 508,011 - - - - - - - - - - 537,711 Interest 7 22 9,325 2,362 1,610 507 1,384 55,730 57 13,368 2,622 26 - 87,020 Miscellaneous Rent - - 22,800 - - - - - - 36,438 - - - 59,238 Donations - - - - - - - - - 245,725 20,000 - - 265,725 Reimbursements - - - 39,037 - - - - - - 65,388 - - 104,425 Other Miscellaneous - - - 14,071 - - - - - 44,995 - - - 59,066 7$ 55,997$ 540,136$ 55,470$ 1,045,134$ 507$ 1,384$ 1,491,353$ 364,655$ 340,526$ 960,311$ 15,607$ -$ 4,871,087$ EXPENDITURES Current General Office -$ 51,825$ -$ -$ -$ -$ -$ -$ -$ -$ 111,362$ -$ -$ 163,187$ Public Works - - - - - - - 182 - - - - - 182 Parks and Recreation - - 606,912 - - - - - - 123,506 - - - 730,418 Capital Outlay - - - 665,857 179,313 121,346 - 2,152,726 300,000 796,702 1,384,839 - - 5,600,783 Debt Service Principal - - - - - - 1,675,000 - - - - - - 1,675,000 Interest and Fees - - - - - - 675,768 - - - - - - 675,768 -$ 51,825$ 606,912$ 665,857$ 179,313$ 121,346$ 2,350,768$ 2,152,908$ 300,000$ 920,208$ 1,496,201$ -$ -$ 8,845,338$ EXCESS OR (DEFICIENCY) OF REVENUES OVER EXPENDITURES 7$ 4,172$ (66,776)$ (610,387)$ 865,821$ (120,839)$ (2,349,384)$ (661,555)$ 64,655$ (579,682)$ (535,890)$ 15,607$ -$ (3,974,251)$ OTHER FINANCING SOURCES/(USES) Transfers - - 79,829 (151,900) - 151,900 2,351,425 - - - (225,735) (15,347) - 2,190,172 NET CHANGE IN FUND BALANCES 7$ 4,172$ 13,053$ (762,287)$ 865,821$ 31,061$ 2,041$ (661,555)$ 64,655$ (579,682)$ (761,625)$ 260$ -$ (1,784,079)$ FUND BALANCES - MAY 1, 2022 1,947 (4,196) 99,080 1,017,593 - 365 5,570 3,080,151 52,592 1,501,289 993,626 (231) (179,115) 6,568,671 FUND BALANCES - APRIL 30, 2023 1,954$ (24)$ 112,133$ 255,306$ 865,821$ 31,426$ 7,611$ 2,418,596$ 117,247$ 921,607$ 232,001$ 29$ (179,115)$ 4,784,592$ CITY OF MCHENRY, ILLINOIS COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OTHER GOVERNMENTAL FUNDS FOR THE YEAR ENDED APRIL 30, 2023 Page 64 See Accompanying Independent Auditor's Report 75 Capital Utility Marina Total Water/Sewer Development Improvements Operations Water and Fund Fund Fund Fund Sewer Funds ASSETS Current Assets Cash and Cash Equivalents 6,371,420$ 274,469$ -$ 390,061$ 7,035,950$ Investments 430,403 4,246,277 1,860,537 100,032 6,637,249 Prepaid Items 42,118 - - - 42,118 Receivables (Net of Allowance for Estimated Uncollectible Amounts) Accounts Receivable - Billed 48,211 - - - 48,211 Accounts Receivable - Unbilled 1,333,209 - - - 1,333,209 Accrued Interest 2,823 2,506 7,824 1,034 14,187 Due from Other Governmental Units 97,714 - - - 97,714 Due from Other Funds 92 129,674 - - 129,766 8,325,990$ 4,652,926$ 1,868,361$ 491,127$ 15,338,404$ Non-Current Assets Right-of-Use Lease Receivable 504,581$ -$ -$ -$ 504,581$ Capital Assets Land 2,208,117 - - - 2,208,117 Buildings 2,736,098 - - - 2,736,098 Systems and Equipment 112,701,173 - - - 112,701,173 Vehicles 1,679,661 - - - 1,679,661 Construction in Progress 63,716 - 29,228 - 92,944 Less: Accumulated Depreciation (42,364,333) - -- (42,364,333) 77,529,013$ -$ 29,228$ -$ 77,558,241$ TOTAL ASSETS 85,855,003$ 4,652,926$ 1,897,589$ 491,127$ 92,896,645$ DEFERRED OUTFLOWS OF RESOURCES Pension Expense/Revenue - IMRF 1,054,909$ -$ -$ -$ 1,054,909$ OPEB Expense/Revenue 270,205 - - - 270,205 TOTAL DEFERRED OUTFLOWS OF RESOURCES 1,325,114$ -$ -$ -$ 1,325,114$ LIABILITIES Current Liabilities Accounts Payable and Accrued Expenses 205,032$ -$ 19,938$ 13,805$ 238,775$ Overdraft - - 2,136,476 - 2,136,476 Security Deposits Held - 3,000 - - 3,000 Accrued Interest 242,629 - - - 242,629 Compensated Absences - Current 99,183 - - - 99,183 IEPA Loan Payable - Current 1,561,149 - - - 1,561,149 Bonds Payable - Current 441,517 - - - 441,517 2,549,510$ 3,000$ 2,156,414$ 13,805$ 4,722,729$ Non-Current Liabilities IMRF Net Pension Liability 1,769,693$ -$ -$ -$ 1,769,693$ Total OPEB Liability 174,609 - - - 174,609 IEPA Loan Payable (Net of Current Portion Shown Above)25,181,722 - - - 25,181,722 Bonds Payable (Net of Current Portion Shown Above)3,464,292 - - - 3,464,292 30,590,316$ -$ -$ -$ 30,590,316$ TOTAL LIABILITIES 33,139,826$ 3,000$ 2,156,414$ 13,805$ 35,313,045$ DEFERRED INFLOWS OF RESOURCES Pension Revenue/Expense - IMRF 120,253$ -$ -$ -$ 120,253$ OPEB Revenue/Expense 431,045 - - - 431,045 Unavailable Revenue - Right-of-Use Leases - Lessor 545,559 - - - 545,559 TOTAL DEFERRED INFLOWS OF RESOURCES 1,096,857$ -$ -$ -$ 1,096,857$ NET POSITION Net Investment in Capital Assets 46,368,081$ -$ 9,290$ -$ 46,377,371$ Unrestricted/(Deficit)6,575,353 4,649,926 (268,115) 477,322 11,434,486 TOTAL NET POSITION 52,943,434$ 4,649,926$ (258,825)$ 477,322$ 57,811,857$ CITY OF MCHENRY, ILLINOIS COMBINING SCHEDULE OF NET POSITION WATER AND SEWER FUNDS APRIL 30, 2023 Page 65 See Accompanying Independent Auditor's Report 76 Capital Utility Marina Total Water/Sewer Development Improvements Operations Water and Fund Fund Fund Fund Sewer Funds OPERATING REVENUES Charges for Services Customer Fees 5,330,765$ 381,285$ -$ -$ 5,712,050$ Capital Fees 1,055,565 - - - 1,055,565 Debt Service Fees 2,346,224 - - - 2,346,224 Penalties 134,143 - - - 134,143 Water Meter Sales 20,650 - - - 20,650 Other 29,922 - - - 29,922 8,917,269$ 381,285$ -$ -$ 9,298,554$ OPERATING EXPENSES Water Department Personnel Salaries 432,534$ -$ -$ -$ 432,534$ Miscellaneous Personnel Expenses 233,500 - - - 233,500 Other Operating Expenses 839,138 - 10,118 - 849,256 Depreciation 647,212 - - - 647,212 Sewer Department Personnel Salaries 790,937 - - - 790,937 Miscellaneous Personnel Expenses 515,086 - - - 515,086 Other Operating Expenses 1,432,186 - - 42,121 1,474,307 Depreciation 2,157,391 - - - 2,157,391 Utility Work Department Personnel Salaries 640,079 - - - 640,079 Miscellaneous Personnel Expenses 427,624 - - - 427,624 Other Operating Expenses 54,417 - - - 54,417 8,170,104$ -$ 10,118$ 42,121$ 8,222,343$ OPERATING INCOME/(LOSS)747,165$ 381,285$ (10,118)$ (42,121)$ 1,076,211$ NON-OPERATING REVENUE/(EXPENSE) Interest Income 104,291$ 21,577$ 9,747$ 1,049$ 136,664$ Unrealized Gain/Loss - 25,188 27,252 - 52,440 Rental Income 25,697 - - 57,113 82,810 Interest and Fees (747,851) - - - (747,851) Amortization 46,517 - - - 46,517 Gain/(Loss) on Sale of Fixed Asset 6,000 - - - 6,000 (565,346)$ 46,765$ 36,999$ 58,162$ (423,420)$ INCOME/(LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS 181,819$ 428,050$ 26,881$ 16,041$ 652,791$ TRANSFERS (TO)/FROM OTHER FUNDS (110,269) (145,000) 160,347 - (94,922) CHANGE IN NET POSITION 71,550$ 283,050$ 187,228$ 16,041$ 557,869$ NET POSITION - MAY 1, 2022 52,871,884 4,366,876 (446,053) 461,281 57,253,988 NET POSITION - APRIL 30, 2023 52,943,434$ 4,649,926$ (258,825)$ 477,322$ 57,811,857$ CITY OF MCHENRY, ILLINOIS COMBINING SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION WATER AND SEWER FUNDS FOR THE YEAR ENDED APRIL 30, 2023 Page 66 See Accompanying Independent Auditor's Report 77 Employee Risk Information Total Insurance Management Technology Internal Service Fund Fund Fund Funds ASSETS Current Assets Cash and Cash Equivalents -$ -$ 458,658$ 458,658$ Investments - - 8,295 8,295 Prepaid Items 81,376 - 11,014 92,390 Receivables (Net of Allowance for Estimated Uncollectible Amounts) Accounts Receivable - Billed 299 - - 299 Accounts Receivable - Unbilled - 8,238 - 8,238 Accrued Interest - -140 140 81,675$ 8,238$ 478,107$ 568,020$ Non-Current Assets Capital Assets Systems and Equipment -$ -$ 716,613$ 716,613$ Less: Accumulated Depreciation - - (547,155) (547,155) -$ -$ 169,458$ 169,458$ TOTAL ASSETS 81,675$ 8,238$ 647,565$ 737,478$ DEFERRED OUTFLOWS OF RESOURCES Pension Expense/Revenue - IMRF -$ -$ 122,761$ 122,761$ OPEB Expense/Revenue - - 31,444 31,444 TOTAL DEFERRED OUTFLOWS OF RESOURCES -$ -$ 154,205$ 154,205$ LIABILITIES Current Liabilities Accounts Payable and Accrued Expenses 115$ 2,877$ 34,392$ 37,384$ Overdrafts 89,079 31,550 - 120,629 Due to Other Funds 1,273 - - 1,273 Unearned Revenue 82,488 - - 82,488 Compensated Absences - - 7,993 7,993 172,955$ 34,427$ 42,385$ 249,767$ Non-Current Liabilities IMRF Net Pension Liability -$ -$ 214,432$ 214,432$ Total OPEB Liability - - 14,992 14,992 -$ -$ 229,424$ 229,424$ TOTAL LIABILITIES 172,955$ 34,427$ 271,809$ 479,191$ DEFERRED INFLOWS OF RESOURCES Pension Revenue/Expense - IMRF -$ -$ 13,994$ 13,994$ OPEB Revenue/Expense - - 50,161 50,161 DEFERRED INFLOWS OF RESOURCES -$ -$ 64,155$ 64,155$ NET POSITION Net Investment in Capital Assets -$ -$ 163,592$ 163,592$ Unrestricted/(Deficit)(91,280) (26,189) 302,214 184,745 TOTAL NET POSITION (91,280)$ (26,189)$ 465,806$ 348,337$ CITY OF MCHENRY, ILLINOIS COMBINING SCHEDULE OF NET POSITION INTERNAL SERVICE FUNDS APRIL 30, 2023 Page 67 See Accompanying Independent Auditor's Report 78 Employee Risk Information Total Insurance Management Technology Internal Service Fund Fund Fund Funds OPERATING REVENUES Charges for Services 3,561,716$ 918,502$ 1,075,588$ 5,555,806$ 3,561,716$ 918,502$ 1,075,588$ 5,555,806$ OPERATING EXPENSES Personnel Salaries -$ -$ 221,138$ 221,138$ Miscellaneous Personnel Expenses 3,560,759 - 126,073 3,686,832 Other Operating Expenses 856 955,986 607,022 1,563,864 Depreciation - - 52,939 52,939 3,561,615$ 955,986$ 1,007,172$ 5,524,773$ OPERATING INCOME/(LOSS)101$ (37,484)$ 68,416$ 31,033$ NON-OPERATING REVENUE/(EXPENSE) Interest Income 2,360 33 1,297 3,690 INCOME/(LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS 2,461$ (37,451)$ 69,713$ 34,723$ CAPITAL CONTRIBUTIONS - - - - TRANSFERS (TO)/FROM OTHER FUNDS - (76,956) - (76,956) CHANGE IN NET POSITION 2,461$ (114,407)$ 69,713$ (42,233)$ NET POSITION - MAY 1, 2022 (93,741) 88,218 396,093 390,570 NET POSITION - APRIL 30, 2023 (91,280)$ (26,189)$ 465,806$ 348,337$ CITY OF MCHENRY, ILLINOIS COMBINING SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION INTERNAL SERVICE FUNDS FOR THE YEAR ENDED APRIL 30, 2023 Page 68 See Accompanying Independent Auditor's Report 79 Retained Developmental Personnel Total Escrow Escrow Custodial Fund Fund Funds ASSETS Current Assets Cash and Cash Equivalents 6,855$ 35,509$ 42,364$ Accounts Receivable (Net of Allowance for Estimated Uncollectible Amounts)- 13,938 13,938 TOTAL ASSETS 6,855$ 49,447$ 56,302$ LIABILITIES Current Liabilities Accounts Payable and Accrued Expenses -$ 243$ 243$ TOTAL LIABILITIES -$ 243$ 243$ NET POSITION Restricted for Developers, Property Owners, and Others 6,855$ 49,204$ 56,059$ TOTAL NET POSITION 6,855$ 49,204$ 56,059$ CITY OF MCHENRY, ILLINOIS COMBINING SCHEDULE OF NET POSITION CUSTODIAL FUNDS APRIL 30, 2023 Page 69 See Accompanying Independent Auditor's Report 80 Developmental Retained Total Escrow Personnel Escrow Custodial Funds Funds Funds ADDITIONS Contributions Developers, Property Owners, and Others -$ 34,573$ 34,573$ Total Contributions -$ 34,573$ 34,573$ Investment Income Interest and Dividends 24$ -$ 24$ Net Investment Income 24$ -$ 24$ TOTAL ADDITIONS 24$ 34,573$ 34,597$ DEDUCTIONS Engineering and Legal Fees -$ 34,573$ 34,573$ TOTAL DEDUCTIONS -$ 34,573$ 34,573$ NET INCREASE/(DECREASE)24$ -$ 24$ NET POSITION - MAY 1, 2022 6,831 49,204 56,035 NET POSITION - APRIL 30, 2023 6,855$ 49,204$ 56,059$ CITY OF MCHENRY, ILLINOIS CUSTODIAL FUNDS YEAR ENDED APRIL 30, 2023 COMBINING SCHEDULE OF CHANGES IN FIDUCIARY NET POSITION Page 70 See Accompanying Independent Auditor's Report 81 Actual Original Final Amounts REVENUES Local Taxes Property Tax 720,000$ 720,000$ 694,137$ Intergovernmental State Grants 200,000 200,000 178,164 Other Local Sources Interest - - 2,622 Miscellaneous Donations - - 20,000 Reimbursements 355,000 355,000 65,388 Total Revenues 1,275,000$ 1,275,000$ 960,311$ EXPENDITURES Current General Office 50,000$ 50,000$ 111,362$ Capital Outlay 2,145,000$ 2,151,440$ 1,384,839$ Total Expenditures 2,195,000$ 2,201,440$ 1,496,201$ EXCESS OR (DEFICIENCY) OF REVENUES OVER EXPENDITURES (920,000)$ (926,440)$ (535,890)$ OTHER FINANCING SOURCES/(USES) Transfers (225,735) (225,735) (225,735) NET CHANGE IN FUND BALANCE (1,145,735)$ (1,152,175)$ (761,625)$ FUND BALANCE - MAY 1, 2022 993,626 FUND BALANCE - APRIL 30, 2023 232,001$ Budgeted Amounts CITY OF MCHENRY, ILLINOIS FOR THE YEAR ENDED APRIL 30, 2023 SPECIAL REVENUE FUND - TAX INCREMENT FINANCING FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL Page 71 See Accompanying Independent Auditor's Report 82 November 10, 2023 To the Mayor and City Council Members City of McHenry McHenry, Illinois We have audited the financial statements of City of McHenry (City) as of and for the year ended April 30, 2023, and have issued our report thereon dated November 10, 2023. Professional standards require that we advise you of the following matters relating to our audit. Our Responsibility in Relation to the Financial Statement Audit As communicated in our engagement letter dated May 31, 2023, our responsibility under generally accepted auditing standards and, if applicable, Government Auditing Standards and Uniform Guidance, is to form and express opinions about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or management of your respective responsibilities. Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over financial reporting. Accordingly, as part of our audit, we considered the internal control of the City solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you. Planned Scope and Timing of the Audit We conducted our audit consistent with the planned scope and timing we previously communicated to you. Compliance with All Ethics Requirements Regarding Independence The engagement team, others in our firm, as appropriate, our firm, and our network firms have complied with all relevant ethical requirements regarding independence. 83 Significant Risks Identified We have identified the following significant risks: Management override of controls and improper revenue recognition due to fraud, both of which are commonly identified as significant risks for audits. As both are common significant risk areas, both are addressed by performing the following standard procedures: • Incorporate an element of unpredictability in designing audit procedures: alternating test of controls at least once every two years, vary sampling techniques for detailed transaction testing, and interviewing different employees regarding fraud. • Obtain an understanding of the process and related controls over journal entries and other adjustments and test journal entries and other adjustments we believe to be of higher risk. • Review significant accounting estimates for evidence of management bias. • Finally, obtain an understanding of the entity’s rationale for significant and unusual transactions, if any. Qualitative Aspects of the Organization’s Significant Accounting Practices Significant Accounting Policies Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by the City are included in Note 1 to the financial statements. As described in Note 22 to the financial statements, during the year, the City implemented GASB Statement No. 87, Leases. There have been no changes in existing significant accounting policies or their application during fiscal year 2023. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. Significant Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s current judgment. Those judgments are normally based on knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ markedly from management’s current judgment. The most sensitive estimates affecting the financial statements are: - Management’s estimate of depreciation expense is based on estimated useful lives of the capital assets held by the City. - Management’s estimates regarding pension and OPEB liabilities were based on various actuarial assumptions regarding projected salaries, market trends, and expected mortality. - Management’s estimates regarding allowances on receivables were based on historical collection rates. - Management’s estimates of amortization expense, related to leases, is based on the terms of the specific lease agreement. The discount rate, related to leases, is either based on a rate stated/implied within the lease agreement, if available, or an estimate based on similar type arrangements. We evaluated the key factors and assumptions used to develop the above estimates and determined that they are reasonable in relation to the financial statements taken as a whole and in relation to the applicable opinion units. 84 Financial Statement Disclosures Certain financial statement disclosures involve significant judgment and are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting the City’s financial statements relate to: depreciation, pension and OPEB liabilities, and fair value estimates. Significant Unusual Transactions For purposes of this communication, professional standards require us to communicate to you significant unusual transactions identified during our audit. The following significant unusual transactions identified as a result of our audit procedures were brought to the attention of management: none noted Significant Difficulties Encountered during the Audit We encountered no significant difficulties in dealing with management relating to the performance of the audit. Uncorrected and Corrected Misstatements For purposes of this communication, professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to also communicate the effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures, and the financial statements as a whole and each applicable opinion unit. Management has corrected all identified misstatements. In addition, professional standards require us to communicate to you all material, corrected misstatements that were brought to the attention of management as a result of our audit procedures. The attached misstatements that we identified as a result of our audit procedures were brought to the attention of, and corrected by, management. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or audit matter, which could be significant to the City’s financial statements or the auditor’s report. No such disagreements arose during the course of the audit. Circumstances that Affect the Form and Content of the Auditor’s Report For purposes of this letter, professional standards require that we communicate any circumstances that affect the form and content of our auditor’s report. None Noted Representations Requested from Management We have requested certain written representations from management, which are included in the attached letter. Management Consultations with Other Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the City’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. Management 85 informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters. Other Significant Matters, Findings or Issues In the normal course of our professional association with the City, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, significant events or transactions that occurred during the year, operating and regulatory conditions affecting the City, and operating plans and strategies that may affect the risks of material misstatement. However, none of the matters discussed resulted in a condition to our retention as the City’s auditors. Other Matters We applied certain limited procedures to the required information, which is required supplemental information (RSI) that supplement the basic financial statements (as listed on the table of contents in the audit report). Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI. We were engaged to report on supplemental information which accompany the financial statements but are not RSI. With respect to the supplemental information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplemental information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. Restriction on Use This report is intended solely for the information and use of the City Council and management of City of McHenry and is not intended to be and should not be used by anyone other than these specified parties. Very truly yours, Eccezion Consulting • CPAs • Technology 86 Client:City of McHenry Engagement:City of McHenry Period Ending:4/30/2023 Workpaper:General Fund AJEs Report Account Description W/P Ref Debit Credit Adjusting Journal Entries JE # 1 100-04-6945 DEVELOPMENT EXPENSE 5,607.00 100-2160 SALES TAX DUE 5,607.00 Total 5,607.00 5,607.00 Adjusting Journal Entries JE # 2 100-2500 FUND BALANCE 861,324.00 100-00-3130 TAXES-STATE INCOME 861,324.00 Total 861,324.00 861,324.00 Adjusting Journal Entries JE # 3 100-01-3882 REIMB-MISC 4,805.00 100-1990 CASH IN POOL 4,805.00 Total 4,805.00 4,805.00 Adjusting Journal Entries JE # 4 100-04-6945 DEVELOPMENT EXPENSE 25,000.00 100-2160 SALES TAX DUE 25,000.00 Total 25,000.00 25,000.00 Adjusting Journal Entries JE # 5 100-22-3180 GRANTS 5,790.00 100-22-3883 REIMB-OFFICERS TRAINING 5,790.00 Total 5,790.00 5,790.00 I have reviewed and agree with the adjustments above: Client Signature Date Recored Fabrik Sales Tax Rebate Acrrual Prior Period Adjustment to Adjust for FY'22 Accrual of Income Taxes Cash in Pool Offset Entry from Revolving Loan Fund to Write Off Bad Debt Related to Woof & Run Business Rentention Loan Accrue for 1/3 of Fixed Sales Tax Rebate Associated with Advance Real Estate Agreement Reclass IL Law Enforcement Training Reimbursement 87 8/14/2023 12:53 PM Client:City of McHenry - City of McHenry Engagement:City of McHenry Period Ending:4/30/2023 Trial Balance:200 - Tourism Fund Workpaper:200 - Tourism Fund AJE's Report Account Description W/P Ref Debit Credit Adjusting Journal Entries JE # 1 200-00-7600 LOAN INTEREST 80.00 200-00-7610 LOAN PRINCIPAL PAYMENT 80.00 Total 80.00 80.00 Adjusting Journal Entries JE # 2 200-2100 ACCOUNTS PAYABLE 2,000.00 200-00-5110 CONTRACTUAL SERVICES 2,000.00 Total 2,000.00 2,000.00 I have reviewed and agree with the adjustment(s) above: Client Signature Date Adjust McHenry Savings Bank Loan Payment Amounts between Interest and Principal to tie to Amortization Schedule Prorate McHenry County Convention Dues Invoice in Accounts Payable 1 of 1 88 8/14/2023 1:16 PM Client:City of McHenry - City of McHenry Engagement:City of McHenry Period Ending:4/30/2023 Trial Balance:270 - Motor Fuel Tax Fund Workpaper:270 - Motor Fuel Tax Adjusting Journal Entries Report Account Description W/P Ref Debit Credit Adjusting Journal Entries JE # 1 270-1180 DUE FROM OTHER GOV'T UNITS 24,711.00 270-00-3150 MFT-ALLOTMENTS FROM STATE 24,711.00 Total 24,711.00 24,711.00 I have reviewed and agree with the adjustment(s) above: Client Signature Date Record FY'23 MFT High Growth Payment 1 of 1 89 10/16/2023 12:18 PM Client:City of McHenry - City of McHenry Engagement:City of McHenry Period Ending:4/30/2023 Trial Balance:280 - Developer Donations Fund Workpaper:280 - Developer Donations Adjusting Journal Entries Report Account Description W/P Ref Debit Credit 280-41-8800 PARK PLAYGROUND IMPROVEMENTS 7,058.00 280-2103 RETENTION PAYABLE 7,058.00 Total 7,058.00 7,058.00 I have reviwed and agree with the adjustments above: Client Signature Date Adjusting Journal Entries JE # 1 Record Retention Payable 1 of 1 90 10/16/2023 12:20 PM Client:City of McHenry - City of McHenry Engagement:City of McHenry Period Ending:4/30/2023 Trial Balance:290 - TIF Fund Workpaper:290 - TIF AJE's Report Account Description W/P Ref Debit Credit 290-00-3890 MISCELLANEOUS INCOME 12,729.00 290-00-8900 PUBLIC IMPROVEMENTS 12,729.00 Total 12,729.00 12,729.00 290-00-8900 PUBLIC IMPROVEMENTS 40,687.00 290-2103 RETENTION PAYABLE 40,687.00 Total 40,687.00 40,687.00 I have reviewed and agree with the adjustments above: Client Signature Date Adjusting Journal Entries JE # 1 Reclass Riverside Dr Parking Lot Project Expense Reimbursement Adjusting Journal Entries JE # 2 Record Retention Payable 1 of 1 91 Client:City of McHenry Engagement: Period Ending: Trial Balance: Workpaper: City of McHenry 4/30/2023 424-Lakewood SSA #4 Lakewood SSA #4 Account Description W/P Ref Debit Credit Adjusting Journal Entries JE # 1 424-2270 DEFERRED PROPERTY TAXES 543.00 424-1150 PROPERTY TAXES RECEIVABLE 543.00 Total 543.00 543.00 I have reviewed and agree with the adjustment(s) above: Client Signature Date Adjust Property Tax Receivable and Deferral 92 8/14/2023 1:11 PM Client:City of McHenry - City of McHenry Engagement:City of McHenry Period Ending:4/30/2023 Trial Balance:440 - Capital Improvements Fund Workpaper:440 - Capital Improvements AJES Account Description W/P Ref Debit Credit Adjusting Journal Entries JE # 1 440-00-3837 UNREALIZED GAIN/LOSS 4,268.00 440-2500 FUND BALANCE 4,268.00 Total 4,268.00 4,268.00 I have reviewed and agree with the adjustments above: Client Signature Date Adjust Fund Balance for Account Balance Entered Backwards during FY'22 Audit. 1 of 1 93 10/12/2023 8:19 AM Client:City of McHenry - City of McHenry Engagement:City of McHenry Period Ending:4/30/2023 Trial Balance:510 - Water/Sewer Fund Workpaper:510 - Water Sewer Adjusting Journal Entries Report Account Description W/P Ref Debit Credit Adjusting Journal Entries JE # 1 510-31-3836 GAIN/LOSS ON SALE 26,760.00 510-31-3920 PROCEEDS FIXED ASSET SALE 26,760.00 Total 26,760.00 26,760.00 Adjusting Journal Entries JE # 2 510-2444 IMRF DEFERRED OUTFLOWS-ACT EVAL 702,451.00 510-2445 IMRF DEFERRED OUTFLOWS-CONT AFTER 14,085.00 510-2448 IMRF - DEFERRED INFLOWS 767,546.00 510-31-4420 EMPLOYER CONTRIBUTION - IMRF 66,073.00 510-32-4420 EMPLOYER CONTRIBUTION - IMRF 121,517.00 510-35-4420 EMPLOYER CONTRIBUTION - IMRF 98,905.00 510-2443 IMRF NET PENSION LIABILITY 1,770,577.00 Total 1,770,577.00 1,770,577.00 Adjusting Journal Entries JE # 3 510-2449 DEFERRED OUTFLOWS - OPEB 70,647.00 510-99-9930 OPEB EXPENSE 124,861.00 510-2450 NET OPEB LIABILITY 44,929.00 510-2451 DEFERRED INFLOWS - OPEB 131,032.00 510-99-9940 OPEB CONTRIBUTIONS 19,547.00 Total 195,508.00 195,508.00 Adjusting Journal Entries JE # 4 510-32-4010 SALARIES-REGULAR 3,961.00 510-35-4010 SALARIES - REGULAR 1,977.00 510-2170 COMPENSATED ABSENCES 5,038.00 510-31-4010 SALARIES-REGULAR 900.00 Total 5,938.00 5,938.00 Adjusting Journal Entries JE # 5 510-1387 ACCUM DEPREC - VEHICLES 14,868.00 510-1307 VEHICLES 14,868.00 Total 14,868.00 14,868.00 Adjusting Journal Entries JE # 6 510-1999 LESSOR LEASE RECEIVABLE - AT&T 504,581.17 510-31-3845 RENTAL INCOME 4,302.95 510-2530 DEFERRED REVENUE 508,884.12 Total 508,884.12 508,884.12 I have reviewed and agree with the adjustment(s) above: Client Signature Date Record GASB 68 IMRF Activity Remove Prior Year Gain/Loss on Sale of Fixed Assets and Related Proceeds Record GASB 75 Activity Adjust Compensated Absences for FY'22 Audit AJE not reversed out before FY'23 Accrual was Recorded Record Disposal of 2008 Ford F350 Add-ons Fixed Asset Adjust for GASB 87 Lessor Lease - AT&T 1 of 1 94 8/14/2023 1:45 PM Client:City of McHenry - City of McHenry Engagement:City of McHenry Period Ending:4/30/2023 Trial Balance:620 - Information Technology Fund Workpaper:620 - Information Technology Fund AJE Report Account Description W/P Ref Debit Credit 620-00-3210 INTEREST INCOME 1.00 620-2310 CAPITAL LEASE PAYABLE 1.00 Total 1.00 1.00 Adjusting Journal Entries JE # 2 620-00-4420 EMPLOYER CONTRIBUTION - IMRF 34,577.00 620-2444 IMRF DEFERRED OUTLFOWS-ACTUARIAL REPORT 74,044.00 620-2445 IMRF DEF OUTFLOWS - CONTR MADE AFTER MEAS DATE 402.00 620-2448 IMRF - DEFFERED INFLOWS 112,775.00 620-2443 IMRF NET PENSION LIABILITY 221,798.00 Total 221,798.00 221,798.00 Adjusting Journal Entries JE # 3 620-00-9930 OPEB EXPENSE 3,820.00 620-2449 DEFERRED OUTFLOWS - OPEB 2,949.00 620-2450 NET OPEB LIABILITY 2,828.00 620-00-9940 OPEB CONTRIBUTIONS 2,275.00 620-2451 DEFERRED INFLOWS - OPEB 7,322.00 Total 9,597.00 9,597.00 I have reviewed and agree with the adjustment(s) above: Client Signature Date Adjusting Journal Entries JE # 1 Zero Out Capital Lease Payable Account - Lease Paid Off in FY'23 Record GASB 68 IMRF Activity Record GASB 75 Activity 1 of 1 95 8/15/2023 1:16 PM Client:City of McHenry - City of McHenry Engagement:City of McHenry Period Ending:4/30/2023 Trial Balance:720 - Developmental Escrow Fund Workpaper:720 - Developmental Escrow Fund AJEs Account Description W/P Ref Debit Credit 720-2130 DEPOSITS-DUE CUSTOMERS 6,855.00 720-00-9999 REVENUE/EXPENSE CLOSING 24.00 720-2500 FUND BALANCE 6,831.00 Total 6,855.00 6,855.00 I have reviewed and agree with the adjustment(s) above: Client Signature Date Adjusting Journal Entries JE # 1 Remove Liability and Setup Fund Balance 1 of 1 96 8/14/2023 12:51 PM Client:City of McHenry - City of McHenry Engagement:City of McHenry Period Ending:4/30/2023 Trial Balance:740 - Retained Personnel Escrow Fund Workpaper:740 - Retained Personnel Escrow AJEs Report Account Description W/P Ref Debit Credit Adjusting Journal Entries JE # 1 740-1200 ACCOUNTS RECEIVABLE-OTHER 49,204.00 740-2500 FUND BALANCE 49,204.00 Total 49,204.00 49,204.00 I have reviewed and agree with the adjustment(s) above: Client Signature Date Record Beginning Fund Balance and Adjust Revenue and Expense Activity to Actual 1 of 1 97 Client:City of McHenry Engagement:City of McHenry Period Ending:4/30/2023 Trial Balance:750- Revolving Loan Fund Workpaper:Revolving Loan Fund Adjusting Entries Report Account Description W/P Ref Debit Credit Adjusting Journal Entries JE # 1 750-1990 CASH IN POOL 4,805.00 750-1210 LOAN RECEIVABLE- BUS RETENTION L 4,805.00 Total 4,805.00 4,805.00 I have reviewed and agree with the adjustment(s) above: Client Signature Date Write off Woof & Run Business Retention Loan Receivable Balance 98 8/14/2023 1:08 PM Client:City of McHenry - City of McHenry Engagement:City of McHenry Period Ending:4/30/2023 Trial Balance:760 - Police Pension Fund Workpaper:760 - Police Pension AJE's Report Account Description W/P Ref Debit Credit Adjusting Journal Entries JE # 1 760-00-3210 INTEREST INCOME 18,648.00 760-00-3836 GAIN/LOSS ON SALE 18,648.00 Total 18,648.00 18,648.00 Adjusting Journal Entries JE # 2 760-00-3882 REIMB-MISC 5,628.00 760-00-4930 SURVIVOR BENEFIT PAYMENTS 5,628.00 Total 5,628.00 5,628.00 I have reviewed and agree with the adjustment(s) made above: Client Signature Date Reclass IPOPIF Negative Contributions Amounts from September and December Statements Reclass L Burg Reimbursement 1 of 1 99 100 101 102 103 104 105 INDIVIDUAL ACTION ITEM DATE: December 4, 2023 TO: Mayor and City Council FROM: Monte Johnson, Deputy City Clerk RE: Semi-Annual Review of Executive Session Meeting Minutes ATT: Resolution, list of minutes and recordings _____________________________________________________________________________ AGENDA ITEM SUMMARY: Pursuant to the Illinois Open Meetings Act, a semi-annual review of minutes and recordings of all closed executive sessions that have not yet been released for public review must be conducted semi-annually. BACKGROUND: The determination of which minutes, if any that may be released is based on the advice of legal counsel. The Act also permits the destruction of executive session recordings that exists more than 18 months after the date the meeting was recorded. Executive Session minutes recommended for approval and release: 6/19/23, 7/17/23, 10/16/23, 10/26/23, 10/30/23. All of these minutes are set for approval and there is no need for confidentiality. Executive Session minutes recommended for approval but to remain confidential: 8/21/23, 11/6/23, 11/20/23. The topics of these discussions have not yet been resolved and need to remain confidential. The closed session recordings from 2/22/22, 3/21/22, 4/5/22, 4/18/22, and 5/16/22 are scheduled to be destroyed at this time. Recommendation: If Council concurs, then it is recommended a motion is made in Open Session to pass the attached Resolution approving the destruction of any executive session recordings that exist more than 18 months, and for the release of certain minutes, and to keep certain minutes confidential. 106 RESOLUTION 23- WHEREAS, the Illinois Open Meetings Act specifies that Executive Session minutes be reviewed at least once every six months; and WHEREAS, upon advice from Counsel, the McHenry City Council recommends the approval of the following Executive Session Minutes: 6/19/23 5ILCS 120/2(c)(1) Employment of Specific Employees 7/17/23 5ILCS 120/2(c)(1) Employment of Specific Employees 8/21/23 5ILCS 120/2(c)(11) Litigation 10/16/23 5ILCS 120/2(c)(1) Employment of Specific Employees 10/26/23 5ILCS 120/2(c)(1) Employment of Specific Employees 10/30/23 5ILCS 120/2(c)(1) Employment of Specific Employees 11/6/23 5ILCS 120/2(c)(5) Purchase or Lease of Real Property 11/20/23 5ILCS 120/2(c)(5, 11,1) Purchase or Lease of Real Property, Litigation, Employment WHEREAS, upon advice from Counsel, the McHenry City Council recommends the release of the following Executive Session Minutes: 6/19/23 5ILCS 120/2(c)(1) Employment of Specific Employees 7/17/23 5ILCS 120/2(c)(1) Employment of Specific Employees 10/16/23 5ILCS 120/2(c)(1) Employment of Specific Employees 10/26/23 5ILCS 120/2(c)(1) Employment of Specific Employees 10/30/23 5ILCS 120/2(c)(1) Employment of Specific Employees WHEREAS, upon advice from Counsel, the McHenry City Council recommends the following Executive Session Minutes must remain confidential: 8/21/23 5ILCS 120/2(c)(11) Litigation 11/6/23 5ILCS 120/2(c)(5) Purchase or Lease of Real Property 11/20/23 5ILCS 120/2(c)(5, 11,1) Purchase or Lease of Real Property, Litigation, Employment NOW THEREFORE, BE IT RESOLVED as specified in the Illinois Open Meetings Act that authorization is hereby granted to destroy all Executive Session recordings that exists more than 18 months prior to the date of this Resolution. BE IT FURTHER RESOLVED that a copy of this Resolution shall be made a permanent part of the City Council minutes. Passed this 4th day of December, 2023. Ayes Nays Absent Abstain Alderwoman Bassi _____ _____ _____ _____ Alderman Glab _____ _____ _____ _____ Alderman Koch _____ _____ _____ _____ Alderman McClatchey _____ _____ _____ _____ Alderwoman Miller _____ _____ _____ _____ Alderman Santi _____ _____ _____ _____ Alderman Strach _____ _____ _____ _____ ______________________ ________________________ Wayne Jett, Mayor Monte Johnson, Deputy City Clerk 107 Bill Hobson, Director of Parks and Recreation McHenry Recreation Center 3636 Municipal Drive McHenry, Illinois 60050 Phone: (815) 363-2160 Fax: (815) 363-3119 www.ci.mchenry.il.us/park_recreation CONSENT AGENDA SUPPLEMENT DATE: December 4, 2023 TO: Mayor and City Council FROM: Bill Hobson, Director of Parks and Recreation RE: McHenry ShamRocks the Fox St. Patrick’s Day Festival AGENDA ITEM SUMMARY: Authorization to host the McHenry ShamRocks the Fox event to include 1) temporary use permit to allow an event tent at 1202 Riverside Drive (Miller Point) and live music on Friday 3/17, Saturday 3/18 and Sunday 3/19; 2) special event liquor license for the sale of beer, wine and malt beverages; 3) permit open carry of alcoholic beverages in plastic cups throughout Green Street and Riverside Drive areas; 4) closure of certain sections of Kane Ave, Green Street Pearl Street, Riverside Drive, Broad Street, Park Street and Court Street from 11:45 AM to approximately 1:00 PM for the St. Patrick’s Day Parade; and 5) closure of Pearl Street from Riverside Drive to River Road from 10:00 AM to 1:30 PM during the dyeing of the Fox River and the parade. BACKGROUND: This city has partnered with local service organizations for a several years for the 5K “Shamrock Shuffle” and a St. Patrick’s Day Parade. The Kiwanis Club Shamrock Shuffle begins and ends at East Campus High School and has kicked off the day at 7am, typically lasting 2 hours. The parade is organized by the City of McHenry staff. For the last few years, the parade has been on Kane Avenue and stepped off at 12pm. The parade heads north on Green Street turning east on Pearl Street, north on Riverside Drive, wraps around and returns to Veterans Memorial Park via Broad Street. The City is the only community in McHenry County that offers a St. Patrick’s Day Parade. The parade has gained the city some notoriety, which has led to the opportunity for expanding the event and accomplishing the city’s goal of increasing awareness of our downtown and utilization of the Fox River. The city is once again proposing to partner with Blarney Island to dye the Fox River green on St. Patrick’s Day between Weber Park and the Route 120 Bridge. The only other river dyeing event occurs in the City of Chicago. This opportunity lends itself to creating a festival atmosphere throughout the Green Street and Riverside Drive areas and for the city to create an epicenter for 108 the event at Miller Point. “Event central” would include a large tent with heaters, bar, sound, stage and lighting. Live music would be in the tent on Friday 3/15 from 5pm – 11pm, Saturday 3/16 from 11a m – 11pm and on Sunday 3/17 from 12 – 6:30pm. Alcohol service of beer, wine and malt beverages would be available on Friday from 5pm – 10:45pm, Saturday from 11am to 10:45pm and on Sunday from 12pm to 6:45pm. A key element of the event is the open carry of alcohol in the areas delineated by the Riverwalk to the south, Pearl Street to the north, Green Street between Waukegan Road and Pearl Street, and River Road between Pearl/Lincoln and Route 120 to the west. Proposed hours for open carry are 11:00 AM to 6:00 PM on Saturday and 12:00 PM to 6:00 PM on Sunday. This would allow the flow of event patrons throughout downtown, encouraging businesses to have specials similar to the annual Taste of McHenry currently sponsored by the Downtown Business Association three times each year. ANALYSIS: Identified in the Strategic Plan completed by the City in the fall of 2013, were seven opportunities, two of which correlate to this proposed event - Utilization of the Fox River as a marketing tool and Public Event Coordination. This event provides the City with the opportunity to draw visitors to the downtown area and businesses. Building on solid partnerships and strong events, the City can become a weekend destination through the introduction of this event. McHenry will become a destination that people will return to repeatedly to visit our restaurants and shops. Often the challenge is to get visitors here for the first time. Staff believes that “McHenry ShamRocks the Fox” is an event accomplish this. Although the City would be the lead organizer for the event, the development of partnerships that has already begun and taking advantage of each partner’s strengths, will lead to a successful event. The proposed event schedule is as follows: “McHenry ShamRocks the Fox” Event Framework Friday March 15th : 5:00pm – 11:00pm Live Music – 5pm to 11pm Alcohol Sales – 5pm to 10:45pm 109 Saturday March 16th: 7:00am to 11:00pm Shamrock Shuffle – 7:00 to 9:00am Fox River Dyeing – 10:00am Viewing at Weber Park, Pearl Street Bridge and Miller Point Parade – 12:00pm Live Music – 11am to 11pm Alcohol Sales – 11am to 10:45pm Open Carry throughout downtown from 11am to 6pm to encourage flow to other venues downtown Sunday March 17th: 12:00pm – 6:00pm Live Music – 12:00pm to 6:45pm Alcohol Sales – 12:00pm to 6:45pm Open Carry throughout downtown from 12:00pm to 6:00pm to encourage flow to other venues downtown Fireworks show on the point –7:00pm The parameters for this event were established utilizing standards from city partnerships in other events. Event times mirror those for Fiesta Days and Blues, Brews and BBQ’s, as does the concept of the alcohol service. In this instance, instead of volunteers serving, staff from Blarney Island who are trained, and BASSET certified would staff the bar. Mr. Rob Hardman, owner of Blarney Island would also organize the live music in the tent and the City has reached out to local restaurants to identify food vendors in the tent. Open carry of alcoholic beverages is a key component to the success of the event. It takes advantage of a concept the city currently allows for the Sidewalk Sales portion of Fiesta Days and the Chamber of Commerce’s popular Downtown Uncorked Wine Walk. The goal of allowing patrons to move throughout the downtown business area during the hours of 11:00pm to 6:00pm on Saturday and 12:00 PM – 6:00 PM on Sunday is to create a flow that introduces new visitors to the many great businesses located in the downtown areas. It encourages businesses to have specials that could be advertised in the main event tent and create new partnerships. Police Chief Birk has been consulted and is supportive of this concept. Officers would be positioned at key intersections to ensure vehicular and pedestrian safety throughout the downtown areas. Staff has discussed the event with multiple downtown businesses with the message that the city is not looking to detract from their St. Patrick’s Day offerings or compete with them in anyway. The goal is to partner with businesses wherever possible to create a long-lasting and sustainable event that takes advantage of the Fox River and the Riverwalk and downtown areas, and an event that will draw many new visitors to McHenry. To be clear, the city is not looking to profit from this event, only to cover costs and bring new visitors to McHenry. There were just over $70,000 in expenses to host the event in 2023 however despite frigid weather the event was successful with a bottom-line profit after all expenses of over $1,000. This 110 money was returned to the Tourism Fund. With the impact of last year’s event and timing, it would be hopeful to garner more sponsorships for the event and its aspects this year. As a note, the street closures associated with the parade are typical. One exception is the additional closure of what amounts to the Pearl Street Bridge for spectators to view the dyeing of the river as safely as possible. In summary, this is a rare event opportunity. This event continues to make McHenry a destination in Northern Illinois on St. Patrick’s Day and other days via car or boat throughout the year. RECOMMENDATION: Therefore, if Council concurs, it is recommended that a motion be considered to approve: 1) temporary use permit to allow an event tent at 1202 Riverside Drive (Miller Point) with live music on Friday 3/17 from 5pm to 11pm, Saturday 3/18 from 11am to 11pm and Sunday 3/19 from 12pm to 6:45pm; 2) special event liquor license to permit the sale of beer, wine and malt beverages at Miller Point on Friday 3/17 from 5pm to 10:45pm, Saturday 3/18 from 11am – 10:45pm and Sunday 3/19 from 12pm to 6:30pm; 3) open carry of alcoholic beverages in plastic cups throughout Green Street and Riverside Drive Areas on 3/18 from 11pm – 6pm and on 3/19 from 12pm – 6pm; 4) street closures of Kane Avenue from Center to Green, Green Street from Kane Avenue to Pearl Street, Pearl Street from Green Street to Riverside Drive, and on Riverside Drive from Pearl Street to Broad Street and Broad Street to Court Street in conjunction with the St. Patrick’s Day Parade from 11:45 am to approximately 1pm); and 5) closure of Pearl Street from Riverside Drive to River Road from 10 am to 1pm to allow pedestrians to view the river dyeing. 111 112 113 114 115 MINUTES REGULAR CITY COUNCIL MEETING Monday, November 20, 2023, 7:00 p.m. City Council Chambers, 333 S Green St, McHenry, IL 60050 Roll Call: Mayor Jett called the roll call. Members present Alderman Santi, Alderman Glab, Alderman McClatchey, Alderwoman Bassi, Alderman Strach, Alderman Koch, Alderwoman Miller, and Mayor Jett. Others present Attorney McArdle, Administrator Morefield, Director of Community Development Polerecky, Finance Director Lynch-absent, Director of Parks and Recreation Hobson, Director of Economic Development Martin, Chief of Police Birk, City Planner Sheriff-absent, Director of Public Works Wirch, Deputy Clerk Johnson, and City Clerk Ramel. Pledge of Allegiance: Mayor Jett led the pledge. Public Comment: none Consent Agenda. Motion to Approve the following Consent Agenda Items as presented: A. Resolution establishing the date and time of Monday, December 18, 2023, at 7:00 pm for conducting a Public Hearing for establishing the 2022 City of McHenry Property Tax Levy in the amount of $3,074,352 and, upon closing the Public Hearing, the consideration of the 2023 Property Tax Levy Ordinance in the amount of $3,074,352. (Finance Director Lynch) B. Ordinance Establishing Employees’ Rights to Paid Leave. (City Attorney McArdle) C. Public improvements for Continental 601 Fund LLC (Authentix Apartments) and approve a reduction of the current bond and allow Continental 601 Fund LLC to be placed on a two-year maintenance bond for these improvements. (Community Development Director Polerecky) D. Motion to authorize the release of two (2) easements no longer needed by the City of McHenry. (City Attorney McArdle) F. Issuance of Checks in the amount of $987,354.25 G. As Needed Checks in the amount of $1,978,571.28 116 A motion was made by Alderwoman Miller and seconded by Alderman McClatchey to approve the Consent Agenda Item as presented: Roll Call: Vote: 7-ayes: Alderman Santi, Alderman Glab, Alderman McClatchey, Alderwoman Bassi, Alderman Strach, Alderman Koch, Alderwoman Miller. 0-nays, 0-abstained. Motion carried. *Clerks Note: This item was pulled by Alderwoman Bassi to adjust the wording on the final minutes from the last meeting. These will be adjusted on the final copy. E. November 6, 2023, City Council Meeting Minutes A motion was made by Alderman Strach and seconded by Alderman Koch to approve the Consent Agenda Item as presented: Roll Call: Vote: 7-ayes: Alderman Santi, Alderman Glab, Alderman McClatchey, Alderwoman Bassi, Alderman Strach, Alderman Koch, Alderwoman Miller. 0-nays, 0-abstained. Motion carried. Individual Action Item Agenda: A. Huff & Huff, Inc. Environmental Assessment Motion to authorize the execution of a proposal by Huff & Huff, Inc. for the completion of additional environmental assessment work on city-owned property at Elm Street and Green Street not to exceed $15,000. (Staff) $13,150 is the proposal total amount confirmed. A motion was made by Alderwoman Miller and seconded by Alderman Santi to approve Individual Agenda Items as presented: Roll Call: Vote: 7-ayes: Alderman Santi, Alderman Glab, Alderman McClatchey, Alderwoman Bassi, Alderman Strach, Alderman Koch, Alderwoman Miller. 0-nays. 0-abstained. Motion approved. No public comment. Discussion Item Agenda A. Direction Regarding New Video Gaming Establishments Mayor Jett and Deputy Clerk Johnson would like further feedback and direction from the council. Alderman McClatchey is not in favor of video gaming parlors. Alderwoman Bassi stated that she agrees, not comfortable with the parlors. Alderman Glab talked about the history of gaming and stated that the council at that time was ready to approve video gaming to support business here at that time. Unfortunately, stated that 117 some of the gaming that came into town and now many want gaming, would like them to be willing to be open for a year before they do receive the gaming license. Should be very careful as they move forward, stating that it is getting diversified and the income that the businesses get with more of the gaming, that it has gotten a lot larger. Alderwoman Miller would like to see a business plan before gaming could be added to revenue for the business but needs to stand alone without it. Would like to see a business have a history before the gaming, concerned over some of the approvals that have been done. Alderman Santi talked about the history of business the establishment and revenue increment of local owners and how they reinvest in the city. Alderwoman Bassi wanted to know who approves the 6 terminals the state does, want to know if we could do less, yes, confirmed by Mayor Jett. Administrator Morefield stated there are 184 machines in town, revenue has gone up every year at least 10-15% per year. There is a gaming website that allows a monthly comparison year over year as well for any establishment including the total revenue. Alderman Koch wanted to know what class A means, and confirmed it is a bar. Truck stops can as well like a Trio. Alderman Strach commented if there is another aspect to the business has no issue with gaming Attorney McArdle, stated some standards need to be followed to allow for the license regarding liquor. Gaming stated no line can be drawn but the direction is what is needed from the council. Deputy Clerk Johnson stated that he gets a call every week turning those down that are a restaurant or bar, however, those cafes are being told no, per the last four years. He has a concern about what to say to the concerns that are being brought to him now. Needs some guidance on how to proceed. Mayor Jett stated that if they are told no and then they come to the council it makes it hard, to want to be on the same page. Alderman Glab stated that we should not refuse but explain what the policy has been to apply and bring it to the council, letting them know it is highly unlikely. Chief Birk clarified the license types needed for gaming. Alderman Santi stated to allow the businesses to make the call and have it come back to the council. Alderwoman Miller spoke about the corn beef factory and that the food sales need to be greater than the gaming sales, maybe that could be incorporated by Deputy Clerk Johnson. 118 This conversation went on for some time, stating that bringing these requests to the council may be the best moving forward. Staff Reports: Provided the 1st meeting of each month. Director Polerecky stated that there is a planning workshop, per his email to the council. He is encouraging those to come if they would like it to be interactive based and the council import would be welcomed along with the Planning and Zoning Board is invited as well. Mayor’s Report: Mayor Jett talked about the 4 bands that were disclosed for the Rise Up Foundation. There will be 10 national acts, he will keep the council up to date. Alderman McClatchy asked about the leaf contract, it was in writing per Director Wirch, they are back on schedule Flood Brothers is back on track. Alderman Glab stated that he called Flood Brothers this weekend, and stated that one of the constituents that the leaves were not picked up, when they called the office stated there were no trucks out there, however was confirmed to Alderman Glab that they did go out and are trying, did hear back promptly. Would like a weekly report on where they are at with that. Alderwoman Bassi thanked Director Wirch for his communication regarding Flood Brothers and the delay in the leaf pick-up. Alderwoman Miller would like there to be a new plan for leaf pickup next year. Alderman Santi asked if we could bring this back as a discussion item, and it was agreed to do so. City Council Comments: None Executive Session Items: 5 ILCS 120/2 (c) (11) Pending Litigation 5 ILCS 12/2 (c) (5) Property Acquisition 5 ILCS 120/2 (c) (1) Employment of Employee A motion was made by Alderwoman Bassi seconded by Alderman Strach to adjourn to Executive Session at 7:46 p.m. Executive Session – To discuss: 5 ILCS 120/2 (c) (11) Pending Litigation, 5 ILCS 12/2 (c) (5) Property Acquisition, 5 ILCS 120/2 (c) (1) Employment of Employee 119 Mayor Jett reconvened the meeting from the Executive Session at 9:41 p.m. A motion was made by Alderman Bassi and seconded by Alderwoman Miller to return to an open session. Roll Call: Vote: 7-ayes: Alderman Santi, Alderman Glab, Alderman McClatchey, Alderwoman Bassi, Alderman Strach, Alderman Koch, Alderwoman Miller. 0-nays, 0- abstained. Motion carried. Motion to authorize the City Attorney and Sher Edling, LLP to opt the City out of the pending class actions relating to PFOS; PFOA, and PFAS pollutants (City Attorney McArdle). A motion was made by Alderman Strach and seconded by Alderman Koch to approve Individual Agenda Items as presented: Roll Call: Vote: 7-ayes: Alderman Santi, Alderman Glab, Alderman McClatchey, Alderwoman Bassi, Alderman Strach, Alderman Koch, Alderwoman Miller. 0-nays. 0-abstained. Motion approved. No public comment. Motion to authorize the Mayor and City Clerk to sign an Option Agreement to acquire the property and building located at 1219 Green Street. (Staff) A motion was made by Alderwoman Miller and seconded by Alderman Strach to approve Individual Agenda Items as presented: Roll Call: Vote: 7-ayes: Alderman Santi, Alderman Glab, Alderman McClatchey, Alderwoman Bassi, Alderman Strach, Alderman Koch, Alderwoman Miller. 0-nays. 0-abstained. Motion approved. No public comment. Motion to authorize the execution of an Employment Agreement for the position of City Administrator. Subject to the final negotiations, by the Mayor The new administrator Suzanne Ostrovsky would be the newly named Administrator who would be accepting the position. A motion was made by Alderman Santi and seconded by Alderwoman Miller to approve Individual Agenda Items as presented: Roll Call: Vote: 7-ayes: Alderman Santi, Alderman Glab, Alderman McClatchey, Alderwoman Bassi, Alderman Strach, Alderman Koch, Alderwoman Miller. 0-nays. 0-abstained. Motion approved. No public comment. 120 Adjourn: A motion was made by Alderman Strach and seconded by Alderman Santi to adjourn the meeting at 9:46 pm. Roll Call: Vote: 7-ayes: Alderman Santi, Alderman Glab, Alderman McClatchey, Alderwoman Bassi, Alderman Strach, Alderman Koch, Alderwoman Miller. 0-nay-, 0-abstained. Motion carried. 121 Expense Approval Register McHenry, IL List of Bills City Council Meeting - 12-4-23 Vendor Name Payable Number Post Date Description (Item) Account Number Amount Vendor: BAKER & SON CO, PETER BAKER & SON CO, PETER 44675 12/04/2023 SFC 100-33-6110 293.48 BAKER & SON CO, PETER 44797 12/04/2023 SFC 100-33-6110 273.76 Vendor BAKER & SON CO, PETER Total: 567.24 Vendor: BANK OF NEW YORK MELLON, THE BANK OF NEW YORK MELLON, CT2010119 11-1-23 12/04/2023 IL TAXABLE GOB 2020B 300-00-7100 1,100,000.00 BANK OF NEW YORK MELLON, CT2010119 11-1-23 12/04/2023 IL TAXABLE GOB 2020B 300-00-7200 282,536.25 Vendor BANK OF NEW YORK MELLON, THE Total: 1,382,536.25 Vendor: BAXTER & WOODMAN BAXTER & WOODMAN 252630 12/04/2023 SVS 510-31-8500 2,147.50 BAXTER & WOODMAN 252636 12/04/2023 RIVERSIDE SIDEWALK GAP 100-01-8900 2,258.75 Vendor BAXTER & WOODMAN Total: 4,406.25 Vendor: BENCHMARK CONSTRUCTION CO, INC BENCHMARK CONSTRUCTION 2328 12/04/2023 2023 SANITARY SEWER LINING 510-32-8500 176,152.00 Vendor BENCHMARK CONSTRUCTION CO, INC Total: 176,152.00 Vendor: CHICAGOLAND PAVING CONTRACTORS, INC CHICAGOLAND PAVING 238801 12/04/2023 N RIVERSIDE DR PARKING LOT 100-01-8900 201,341.74 Vendor CHICAGOLAND PAVING CONTRACTORS, INC Total: 201,341.74 Vendor: COMED COMED INV0015352 12/04/2023 UTIL 100-45-5510 25.23 COMED INV0015353 12/04/2023 UTIL 510-32-5510 37.12 Vendor COMED Total: 62.35 Vendor: CONSTELLATION NEWENERGY INC CONSTELLATION NEWENERGY INV0015359 12/04/2023 UTIL 100-33-5520 18.74 Vendor CONSTELLATION NEWENERGY INC Total: 18.74 Vendor: FOX VALLEY FIRE & SAFETY FOX VALLEY FIRE & SAFETY IN00643129 12/04/2023 MAINT 10/16-11/15/23 225-00-5110 3,132.00 Vendor FOX VALLEY FIRE & SAFETY Total: 3,132.00 Vendor: JH EVENTS AND FLOWERS, INC JH EVENTS AND FLOWERS, INC 5541 12/04/2023 ALDERMAN SANTI FATHER 100-01-6940 63.00 Vendor JH EVENTS AND FLOWERS, INC Total:63.00 Vendor: MARK 1 LANDSCAPE, INC MARK 1 LANDSCAPE, INC 33926 12/04/2023 SEPTEMBER 4 WEKS AND 100-33-5110 1,901.52 MARK 1 LANDSCAPE, INC 33926 12/04/2023 SEPTEMBER 4 WEKS AND MAIN 100-33-5110 635.00 MARK 1 LANDSCAPE, INC 33926 12/04/2023 SEPTEMBER 4 WEKS AND MAIN 100-45-5110 13,192.84 MARK 1 LANDSCAPE, INC 33926 12/04/2023 SEPTEMBER 4 WEKS AND 100-45-5110 210.00 MARK 1 LANDSCAPE, INC 33926-2 12/04/2023 BANK 2 SEPTEMBER MOWS 510-31-5110 480.32 MARK 1 LANDSCAPE, INC 33926-2 12/04/2023 BANK 2 SEPTEMBER MOWS 510-32-5110 364.80 MARK 1 LANDSCAPE, INC 33991 12/04/2023 OCTOBER MOWING AND 100-33-5110 2,376.90 MARK 1 LANDSCAPE, INC 33991 12/04/2023 OCTOBER MOWING AND 100-33-5110 655.00 MARK 1 LANDSCAPE, INC 33991 12/04/2023 OCTOBER MOWING AND 100-45-5110 16,491.05 MARK 1 LANDSCAPE, INC 33991 12/04/2023 OCTOBER MOWING AND 100-45-5110 210.00 MARK 1 LANDSCAPE, INC 33991-2 12/04/2023 OCTOBER MOWS -2 510-31-5110 600.40 MARK 1 LANDSCAPE, INC 33991-2 12/04/2023 OCTOBER MOWS -2 510-32-5110 456.00 Vendor MARK 1 LANDSCAPE, INC Total: 37,573.83 Vendor: MORTON SALT MORTON SALT 5402918732 12/04/2023 BULK SALT 100-33-6110 17,843.91 MORTON SALT 5402919893 12/04/2023 BULK SALT 100-33-6110 16,023.50 Vendor MORTON SALT Total: 33,867.41 Vendor: NICOR GAS NICOR GAS INV0015354 12/04/2023 UTIL 100-42-5510 319.40 11/29/2023 10:04:23 AM 122 Expense Approval Register Packet: APPKT02862 - 12-4-23 AP CKS Vendor Name Payable Number Post Date Description (Item) Account Number Amount NICOR GAS INV0015354 12/04/2023 UTIL 100-43-5510 81.72 NICOR GAS INV0015354 12/04/2023 UTIL 100-45-5510 297.58 NICOR GAS INV0015354 12/04/2023 UTIL 100-46-5510 47.31 NICOR GAS INV0015354 12/04/2023 UTIL 400-00-5510 360.63 NICOR GAS INV0015355 12/04/2023 UTIL 510-31-5510 853.71 NICOR GAS INV0015355 12/04/2023 UTIL 510-32-5510 6,044.21 Vendor NICOR GAS Total: 8,004.56 Vendor: US BANK EQUIPMENT FINANCE US BANK EQUIPMENT FINANCE 515948057 12/04/2023 PW COPIER 620-00-5110 336.21 US BANK EQUIPMENT FINANCE il23-11-104 12/04/2023 WATER WELL #7 PUMP AND 510-31-8500 54,040.50 Vendor US BANK EQUIPMENT FINANCE Total: 54,376.71 Grand Total: 1,902,102.08 11/29/2023 10:04:23 AM 123 Expense Approval Register Packet: APPKT02862 - 12-4-23 AP CKS Fund Summary Fund Expense Amount 100 - GENERAL FUND 274,560.43 225 - ALARM BOARD FUND 3,132.00 300 - DEBT SERVICE-1997A FUND 1,382,536.25 400 - RECREATION CENTER FUND 360.63 510 - WATER/SEWER FUND 241,176.56 620 - INFORMATION TECHNOLOGY FUND 336.21 Grand Total: 1,902,102.08 124 Expense Approval Register McHenry, IL #2 List City Council Meeting 12-4-23 Vendor Name Payable Number Post Date Description (Item) Account Number Amount Vendor: ADAMS STEEL SERVICE & SUPPLY, INC ADAMS STEEL SERVICE & 386054 12/04/2023 Nitrogen Refill # 386054 510-32-6110 52.75 Vendor ADAMS STEEL SERVICE & SUPPLY, INC Total: 52.75 Vendor: ALLDATA LLC ALLDATA LLC INVC03522884 12/04/2023 ALLDATA Annual Subscription 620-00-5110 1,500.00 Vendor ALLDATA LLC Total: 1,500.00 Vendor: ALTORFER INDUSTRIES, INC ALTORFER INDUSTRIES, INC PM6A0021398 12/04/2023 Generator bank load test 100-23-5110 1,941.00 Vendor ALTORFER INDUSTRIES, INC Total: 1,941.00 Vendor: APCO INTERNATIONAL INC APCO INTERNATIONAL INC 00085929 12/04/2023 CTO Training 100-23-5430 535.00 APCO INTERNATIONAL INC 1031704 12/04/2023 Membership Dues 100-23-5430 972.00 Vendor APCO INTERNATIONAL INC Total: 1,507.00 Vendor: AQUA ILLINOIS AQUA ILLINOIS MS4748100 12/04/2023 9/20-11/19 AQUA READS 510-32-5110 162.60 Vendor AQUA ILLINOIS Total: 162.60 Vendor: ARAMARK REFRESHMENT SERVICES LLC ARAMARK REFRESHMENT 06932994 12/04/2023 Coffee #06932994 100-01-6110 353.10 Vendor ARAMARK REFRESHMENT SERVICES LLC Total: 353.10 Vendor: AT&T LONG DISTANCE AT&T LONG DISTANCE 2942 11-6-23 12/04/2023 AT&T Long Distance 620-00-5320 6.90 Vendor AT&T LONG DISTANCE Total: 6.90 Vendor: AT&T AT&T 9084244808 12/04/2023 Voice Over IP - IP-Flex 620-00-5320 389.60 Vendor AT&T Total: 389.60 Vendor: AUTO TECH CENTERS INC AUTO TECH CENTERS INC INV083386 12/04/2023 314/326 (83386) 100-22-5370 1,339.08 AUTO TECH CENTERS INC INV083644 12/04/2023 225 (83644) 100-03-5370 494.84 AUTO TECH CENTERS INC INV83666 12/04/2023 805 (83666) 510-35-5370 697.28 Vendor AUTO TECH CENTERS INC Total: 2,531.20 Vendor: BROWN EQUIPMENT BROWN EQUIPMENT INV23274 12/04/2023 Ball valve,hydro tube 510-32-5370 319.73 Vendor BROWN EQUIPMENT Total: 319.73 Vendor: BUSS FORD SALES BUSS FORD SALES 5049435 12/04/2023 133 5049435 100-45-5370 152.66 BUSS FORD SALES 5049441 12/04/2023 133 5049441 100-45-5370 150.66 Vendor BUSS FORD SALES Total: 303.32 Vendor: CABAY & COMPANY INC CABAY & COMPANY INC 68707 12/04/2023 custodial suppplies 400-00-6111 116.57 CABAY & COMPANY INC 68707 12/04/2023 custodial suppplies 400-40-6110 198.26 CABAY & COMPANY INC 68739 12/04/2023 68739 100-03-5120 374.72 Vendor CABAY & COMPANY INC Total: 689.55 Vendor: CITY ELECTRIC SUPPLY CITY ELECTRIC SUPPLY MCH023401 12/04/2023 QTY-4/ 4x4 Electrical Boxes 510-32-6110 6.70 CITY ELECTRIC SUPPLY MCH023465 12/04/2023 Oxidation Ditch Light Pole 510-32-5375 12.19 CITY ELECTRIC SUPPLY MCH023506 12/04/2023 Oxidation Ditch-Electrical 510-32-5375 96.61 Vendor CITY ELECTRIC SUPPLY Total: 115.50 Vendor: COLUMBIA PIPE & SUPPLY CO COLUMBIA PIPE & SUPPLY CO 4269870 12/04/2023 valve and actuator #4269870 510-31-6110 1,552.00 Vendor COLUMBIA PIPE & SUPPLY CO Total: 1,552.00 11/29/2023 10:09:34 AM 125 Expense Approval Register Packet: APPKT02864 - RECT INV 12-4-23 Vendor Name Payable Number Post Date Description (Item) Account Number Amount Vendor: CONDUENT HR SERVICES LLC CONDUENT HR SERVICES LLC 1701500 12/04/2023 OCTOBER HSA FEES 600-00-6960 85.50 Vendor CONDUENT HR SERVICES LLC Total: 85.50 Vendor: D & L MIDWEST D & L MIDWEST 23-23211 12/04/2023 Seizure - Report 23-23211 100-22-5110 365.00 Vendor D & L MIDWEST Total: 365.00 Vendor: DAHLIN, M, PC DAHLIN, M, PC 11-16-23 12/04/2023 OCTOBER ADJUDICATION 100-03-5110 81.00 DAHLIN, M, PC 11-16-23 12/04/2023 OCTOBER ADJUDICATION 100-22-5110 729.00 Vendor DAHLIN, M, PC Total: 810.00 Vendor: DICK BUSS & ASSOCIATES LLC DICK BUSS & ASSOCIATES LLC 531 12/04/2023 Console repair 100-23-6110 845.00 Vendor DICK BUSS & ASSOCIATES LLC Total: 845.00 Vendor: DRYDON / A DXP COMPANY DRYDON / A DXP COMPANY 0000749 12/04/2023 Polymer Unit Repairs INV# 510-32-5375 7,709.07 Vendor DRYDON / A DXP COMPANY Total: 7,709.07 Vendor: EBY GRAPHICS INC EBY GRAPHICS INC 11384 12/04/2023 804 (11384) 510-35-5370 212.72 Vendor EBY GRAPHICS INC Total: 212.72 Vendor: ED'S RENTAL & SALES INC ED'S RENTAL & SALES INC 407432-1 12/04/2023 407432-1 100-03-5120 67.00 ED'S RENTAL & SALES INC 407437-1 12/04/2023 Propane 100-33-6110 185.62 ED'S RENTAL & SALES INC 407903-1 12/04/2023 Equipment Rentals: lift 100-45-6110 540.00 Vendor ED'S RENTAL & SALES INC Total: 792.62 Vendor: FIRST STUDENT, INC FIRST STUDENT, INC SF-072830 12/04/2023 Camp - Busses 100-46-6112 1,155.00 FIRST STUDENT, INC SF-075997 12/04/2023 Camp - Busses 100-46-6112 1,155.00 FIRST STUDENT, INC SF-078250 12/04/2023 Camp - Busses 100-46-6112 1,155.00 Vendor FIRST STUDENT, INC Total: 3,465.00 Vendor: GESKE AND SONS INC GESKE AND SONS INC 59374 12/04/2023 HMA N50 Surface - Potholes - 100-33-6110 69.36 Vendor GESKE AND SONS INC Total: 69.36 Vendor: GILLIDSYSTEMS GILLIDSYSTEMS 61005 12/04/2023 Rec Center - Membership Fobs 400-40-6110 470.00 Vendor GILLIDSYSTEMS Total: 470.00 Vendor: GOLDMORE MECHANICAL, LLC GOLDMORE MECHANICAL, LLC 0511 12/04/2023 Step Screen Building Boiler 510-32-5375 495.00 Vendor GOLDMORE MECHANICAL, LLC Total: 495.00 Vendor: HACH COMPAN Y HACH COMPANY 13762193 12/04/2023 Hach reagents 510-31-6110 460.27 Vendor HACH COMPANY Total: 460.27 Vendor: HANSEN'S ALIGNMENT, DON HANSEN'S ALIGNMENT, DON 5737 12/04/2023 133 (5737) 100-45-5370 100.00 Vendor HANSEN'S ALIGNMENT, DON Total: 100.00 Vendor: HAWKINS INC HAWKINS INC 6620765 12/04/2023 Chemical Delivery INV# 510-32-6110 14,147.70 HAWKINS INC 6625713 12/04/2023 Demurrage 510-31-6110 110.00 HAWKINS INC 6628375 12/04/2023 Chemicals 510-31-6110 7,885.71 HAWKINS INC 6630314 12/04/2023 Chemical Delivery 6630314 510-32-6110 8,033.40 Vendor HAWKINS INC Total: 30,176.81 Vendor: HDR, INC HDR, INC 1200572788-7 12/04/2023 COMPREHENSIVE PLAN 100-03-5110 16,000.00 Vendor HDR, INC Total: 16,000.00 Vendor: HEY AND ASSOCIATES INC HEY AND ASSOCIATES INC 23-0034-17230 12/04/2023 Miller Boatlaunch Wetland 100-33-5110 308.75 11/29/2023 10:09:34 AM 126 Expense Approval Register Packet: APPKT02864 - RECT INV 12-4-23 Vendor Name Payable Number Post Date Description (Item) Account Number Amount HEY AND ASSOCIATES INC 23-0034-17525 12/04/2023 Miller Boatlaunch Wetland 100-33-5110 753.75 Vendor HEY AND ASSOCIATES INC Total: 1,062.50 Vendor: HINCKLEY SPRINGS HINCKLEY SPRINGS 11-25-23 12/04/2023 Lab Water #23840828 112523 510-32-6110 137.44 Vendor HINCKLEY SPRINGS Total: 137.44 Vendor: IACP IACP 0316685 12/04/2023 International Chief Assoc - J. 100-22-5410 190.00 Vendor IACP Total: 190.00 Vendor: ICC ICC 1001779559 12/04/2023 1001779559 100-03-5450 54.00 Vendor ICC Total: 54.00 Vendor: IMPRESSIVE IMAGES IMPRESSIVE IMAGES 7080 12/04/2023 TM Logowear DW 100-06-5110 82.00 Vendor IMPRESSIVE IMAGES Total: 82.00 Vendor: INDUSTRIAL/ORGANIZATIONAL SOLUTIONS LLC INDUSTRIAL/ORGANIZATIONAL C58323A 12/04/2023 Dispatch tests 100-23-5110 275.00 Vendor INDUSTRIAL/ORGANIZATIONAL SOLUTIONS LLC Total: 275.00 Vendor: IN-PIPE TECHNOLOGY COMPANY INC IN-PIPE TECHNOLOGY 2440 12/04/2023 Monthly Invoice # 2440 510-32-5110 8,525.00 Vendor IN-PIPE TECHNOLOGY COMPANY INC Total: 8,525.00 Vendor: KIMBALL MIDWEST KIMBALL MIDWEST 101617002 12/04/2023 kimball stock (101617002) 100-33-5370 410.24 KIMBALL MIDWEST 101641600 12/04/2023 kimball stock (101641600) 100-33-5370 245.84 KIMBALL MIDWEST 101659566 12/04/2023 kimball stock (101659566) 510-35-5370 274.19 Vendor KIMBALL MIDWEST Total: 930.27 Vendor: KM CONSTRUCTION KM CONSTRUCTION 2041-2 12/04/2023 Horse Barn Roof 445-00-8200 167,266.00 Vendor KM CONSTRUCTION Total: 167,266.00 Vendor: KNAPHEIDE EQUIPMENT CO-CHICAGO KNAPHEIDE EQUIPMENT CO- 068F64519 12/04/2023 streets stock 068f64519 100-33-5370 1,646.42 Vendor KNAPHEIDE EQUIPMENT CO-CHICAGO Total: 1,646.42 Vendor: MARKS TREE SERVICE & SNOW PLOWING CORP MARKS TREE SERVICE & SNOW 11-4-23 12/04/2023 Tree removals 100-45-5110 3,500.00 Vendor MARKS TREE SERVICE & SNOW PLOWING CORP Total: 3,500.00 Vendor: MCMASTER-CARR SUPPLY CO MCMASTER-CARR SUPPLY CO 17144380 12/04/2023 Clarifier Skimmer Arm Rubber 510-32-5375 474.88 Vendor MCMASTER-CARR SUPPLY CO Total: 474.88 Vendor: MENARDS - WOODSTOCK MENARDS - WOODSTOCK 9976 12/04/2023 Holiday supplies 100-45-6110 143.75 Vendor MENARDS - WOODSTOCK Total: 143.75 Vendor: MID AMERICAN WATER OF WAUCONDA INC MID AMERICAN WATER OF 265436W 12/04/2023 Repair clamp,3/4 Corp and 3/4 510-31-6110 372.16 Vendor MID AMERICAN WATER OF WAUCONDA INC Total: 372.16 Vendor: MIDWEST HOSE AND FITTINGS INC MIDWEST HOSE AND FITTINGS 230257 12/04/2023 Polymer feed fitting INV# 510-32-6110 38.22 Vendor MIDWEST HOSE AND FITTINGS INC Total: 38.22 Vendor: NCL OF WISCONSIN INC NCL OF WISCONSIN INC 495926 12/04/2023 Lab Supplies INV# 510-32-6110 445.74 Vendor NCL OF WISCONSIN INC Total: 445.74 Vendor: NORTHWESTERN MEDICINE OCC HEALTH NORTHWESTERN MEDICINE 543819 12/04/2023 New Hire #543819 100-05-5110 42.00 NORTHWESTERN MEDICINE 545193 12/04/2023 Randoms & New Hires #545193 100-05-5110 588.00 Vendor NORTHWESTERN MEDICINE OCC HEALTH Total: 630.00 Vendor: OFFICIAL FINDERS LLC OFFICIAL FINDERS LLC 22819 12/04/2023 Adult B-ball Officials Invoice 100-47-5110 240.00 11/29/2023 10:09:34 AM 127 Expense Approval Register Packet: APPKT02864 - RECT INV 12-4-23 Vendor Name Payable Number Post Date Description (Item) Account Number Amount OFFICIAL FINDERS LLC 22896 12/04/2023 Invoice 22896 Adult Basketball 100-47-5110 240.00 Vendor OFFICIAL FINDERS LLC Total: 480.00 Vendor: OLSON AUTO BODY OLSON AUTO BODY 4872 12/04/2023 Tow 310 to Public Works 100-22-5370 45.00 Vendor OLSON AUTO BODY Total: 45.00 Vendor: ONEYS TREE FARM ONEYS TREE FARM 345704 12/04/2023 Holiday supplies 100-45-6110 612.00 Vendor ONEYS TREE FARM Total: 612.00 Vendor: PETROCHOICE LLC PETROCHOICE LLC 51347350 12/04/2023 October Fuel - UTY - 51347350 510-35-6250 549.96 PETROCHOICE LLC 51347359 12/04/2023 Fuel - STS - 51347359 100-33-6250 800.39 PETROCHOICE LLC 51348319 12/04/2023 Fuel - STS - 51348319 100-33-6250 1,883.52 PETROCHOICE LLC 51361471 12/04/2023 October Fuel - UTY - 51361471 510-35-6250 1,287.80 PETROCHOICE LLC 51361522 12/04/2023 Fuel - WTR - 51361522 510-31-6250 421.05 PETROCHOICE LLC 51361524 12/04/2023 Fuel - STS - 51361524 100-33-6250 2,291.02 PETROCHOICE LLC 51361525 12/04/2023 Fuel - 51361525 100-22-6250 5,441.38 PETROCHOICE LLC 51375148 12/04/2023 Fuel - UTY - 51375148 510-35-6250 932.04 PETROCHOICE LLC 51375162 12/04/2023 51375162 100-03-6250 338.22 PETROCHOICE LLC 51375163 12/04/2023 Fuel - WW - 51375163 510-32-6250 593.24 PETROCHOICE LLC 51375164 12/04/2023 Fuel - WTR - 51375164 510-31-6250 198.87 PETROCHOICE LLC 51375165 12/04/2023 Parks Fuel: 51375165 100-45-6250 629.38 PETROCHOICE LLC 51375166 12/04/2023 Fuel - STS - 51375166 100-33-6250 2,837.24 PETROCHOICE LLC 51375167 12/04/2023 Fuel - 51375167 100-22-6250 4,987.61 Vendor PETROCHOICE LLC Total: 23,191.72 Vendor: POWER DMS, INC POWER DMS, INC INV-44858 12/04/2023 PowerFTO Subscription & Setup 620-00-5110 4,175.00 Vendor POWER DMS, INC Total: 4,175.00 Vendor: PRIORITY DISPATCH PRIORITY DISPATCH SIN356014 12/04/2023 EMD Re-certifications - 100-23-5430 165.00 Vendor PRIORITY DISPATCH Total: 165.00 Vendor: RED WING SHOES RED WING SHOES 740-1-85109 12/04/2023 Henry Lobermeier Uniform 100-33-4510 241.99 Vendor RED WING SHOES Total: 241.99 Vendor: REICHE'S PLUMBING SEWER RODDING CORP REICHE'S PLUMBING SEWER 11-13-23 12/04/2023 Remove yoke install 2 valves 510-31-5110 325.00 Vendor REICHE'S PLUMBING SEWER RODDING CORP Total: 325.00 Vendor: SCHOPEN PEST SOLUTIONS INC SCHOPEN PEST SOLUTIONS INC 98176 11/28/2023 98176 100-03-5120 167.00 Vendor SCHOPEN PEST SOLUTIONS INC Total: 167.00 Vendor: SERVICEMASTER BY THACKER SERVICEMASTER BY THACKER 25150 NOV 2023 12/04/2023 1415 Industrial Cleaning (Nov 100-33-5115 500.00 Vendor SERVICEMASTER BY THACKER Total: 500.00 Vendor: SOUTHWESTERN ILLINOIS COLLEGE SOUTHWESTERN ILLINOIS SESSION151 12/04/2023 Police Academy 100-22-5430 13,360.00 Vendor SOUTHWESTERN ILLINOIS COLLEGE Total: 13,360.00 Vendor: SWAN ANALYTICAL USA INC. SWAN ANALYTICAL USA INC. CD10010175 12/04/2023 Reagents 510-31-6110 1,069.00 Vendor SWAN ANALYTICAL USA INC. Total: 1,069.00 Vendor: TODAY'S UNIFORMS TODAY'S UNIFORMS 247021 12/04/2023 Uniform Order - Hernandez 100-22-4510 140.90 TODAY'S UNIFORMS 247123 12/04/2023 Uniform Order - Noyes 100-22-4510 115.90 Vendor TODAY'S UNIFORMS Total: 256.80 Vendor: TONYAN, LUC Y TONYAN, LUCY 11-16-23 12/04/2023 Cont - The Studio Art Classes 100-46-5110 702.00 Vendor TONYAN, LUCY Total: 702.00 11/29/2023 10:09:34 AM 128 Expense Approval Register Packet: APPKT02864 - RECT INV 12-4-23 Vendor Name Payable Number Post Date Description (Item) Account Number Amount Vendor: ULINE ULINE 170351774 12/04/2023 Safety Supplies #170351774 510-32-6110 441.83 Vendor ULINE Total: 441.83 Vendor: UMB BANK UMB BANK 10-16-23 12/04/2023 12/15/23 2015 GO BOND 300-00-7100 505,000.00 UMB BANK 10-16-23 12/04/2023 12/15/23 2015 GO BOND 300-00-7200 37,189.38 Vendor UMB BANK Total: 542,189.38 Vendor: USA BLUEBOOK USA BLUEBOOK INV00190293 12/04/2023 PVC Fittings INV00190293 510-32-5375 7.38 USA BLUEBOOK INV00190407 12/04/2023 PVC Fittings INV00190407 510-32-5375 67.43 Vendor USA BLUEBOOK Total: 74.81 Vendor: VERIZON WIRELESS VERIZON WIRELESS 9948387029 12/04/2023 Monthly Cell Phone 620-00-5320 2,425.57 VERIZON WIRELESS 9948387029 12/04/2023 iPads - Wastewater 620-00-6270 854.96 Vendor VERIZON WIRELESS Total: 3,280.53 Vendor: WATER PRODUCTS - AURORA WATER PRODUCTS - AURORA 0319706 12/04/2023 Operating Nut 12" Clow 510-31-6110 35.00 Vendor WATER PRODUCTS - AURORA Total: 35.00 Vendor: WHOLESALE DIRECT INC WHOLESALE DIRECT INC 265910 12/04/2023 412 (265910) 100-33-5370 394.50 Vendor WHOLESALE DIRECT INC Total: 394.50 Grand Total: 850,960.54 11/29/2023 10:09:34 AM 129 Expense Approval Register Packet: APPKT02864 - RECT INV 12-4-23 Fund Summary Fund Expense Amount 100 - GENERAL FUND 73,132.84 300 - DEBT SERVICE-1997A FUND 542,189.38 400 - RECREATION CENTER FUND 784.83 445 - CAPITAL ASSET MAINTENANCE & REPLACEMENT 167,266.00 510 - WATER/SEWER FUND 58,149.96 600 - EMPLOYEE INSURANCE FUND 85.50 620 - INFORMATION TECHNOLOGY FUND 9,352.03 Grand Total: 850,960.54 130 131 ORDINANCE NO. 23- Amending Title 7, Chapter 4, Section 7: Permit Parking, of the McHenry City Code WHEREAS, the City of McHenry, McHenry County, Illinois, is a home rule municipality as contemplated under Article VII, Section 6, of the Constitution of the State of Illinois, and the passage of this Ordinance constitutes an exercise of the City's home rule powers and functions as granted in the Constitution of the State of Illinois. NOW, THEREFORE BE IT ORDAINED by the City Council of the City of McHenry, McHenry County, Illinois, as follows: SECTION 1: Section 7-4-7 of the McHenry City Code shall be amended as follows: 7-4-7: Permit Parking A. Residential Parking Permits: In order to accommodate residential living within the McHenry Downtown Business District, the City will offer annual Residential Parking Permits that may be utilized in specific locations within municipal parking lots. Requirements: • Must show proof of residency within the downtown business district. • Fee - Residential Permit Parking: Residential Permit Parking allows parking without 4- hour restrictions or overnight restrictions. Proof of residency is required. Available permits are defined by location and number in Section C. The annual fee for a residential parking permit is one hundred dollars ($100.00) per permit annually, payable in advance. Permits purchased after July 1 of any calendar year shall have a reduced fee of fifty dollars ($50.00) and will not be prorated further. Annual permits will be made available for purchase on December 1 of the preceding year and shall be available on a first-come, first-served basis. No portion of this permit shall be refundable under any circumstances. Purchasing a Residential Parking Permit does not guarantee a parking spot at any given time. B. Business Employee Parking Permits: In order to accommodate the downtown business district workforce on Green Street, the City will offer annual Business Employee Parking Permits for use in the designated area of the Green Street Municipal Lot. Requirements: • Must provide the name of the business within the downtown district you are employed at. • Fee – Business Employee Permit Parking: Business Employee Permit Parking allows parking without 4-hour restrictions but prohibits overnight parking between 2am and 6am. These permits are defined by location and number in Section C. The annual fee for a business employee parking permit is thirty dollars ($60.00) per permit annually, payable in advance. Permits purchased after July 1 of any calendar year shall have a reduced fee of fifteen dollars ($30.00) and will not be prorated further. Annual permits will be made available for purchase on December 1 of the preceding year and shall be available on a 132 first-come, first-served basis. No portion of this permit shall be refundable under any circumstances. Purchasing a Business Employee Parking Permit does not guarantee a parking spot at any given time. C. Locations Specified: Location: Number of Residential Permits Restrictions: Riverside Drive Central (Alleyway) Parking Lot 12 All regular parking stalls. These stalls shall not be posted or reserved solely for permit parking. All other parking restrictions will continue to be in effect. Court Street Lots – All Lots 15 All regular parking stalls. These stalls shall not be posted or reserved solely for permit parking. All other parking restrictions will continue to be in effect. Green Street Lot 10 All parking stalls located within Green Street Lot. These stalls shall not be posted or reserved solely for permit parking. All other parking restrictions will continue to be in effect. Main Street North & South Lots 13 All regular parking stalls. These stalls shall not be posted or reserved solely for permit parking. All other parking restrictions will continue to be in effect. Location: Number of Business Employee Permits Restrictions: Green Street Lot 10 All parking stalls located within Green Street Lot. These stalls shall not be posted or reserved solely for permit parking. No parking between 2am and 6am daily with this permit. Riverside Drive Central (Alleyway) Parking Lot 12 All regular parking stalls. These stalls shall not be posted or reserved solely for permit parking. No parking between 2am and 6am daily with this permit. D. Snowfall: In order to enable the City to snow plow the permit parking spaces, the parking of motor vehicles thereon shall be prohibited from the time that snowfall exceeds a depth of two inches (2") thereon until the parking spaces have been snow plowed by the City. SECTION 2: If any section, paragraph, subdivision, clause, sentence or provision of this Ordinance shall be adjudged by any Court of competent jurisdiction to be invalid, such judgment shall not effect, impair, invalidate or nullify the remainder thereof, which remainder shall remain and continue in full force and effect. SECTION 3: All ordinances, or parts thereof, in conflict herewith are hereby repealed to the extent of such conflict. SECTION 4: This ordinance shall be published in pamphlet form by and under the authority of the corporate authorities of the City of McHenry, Illinois. 133 SECTION 5: This ordinance shall be in full force and effect from and after its passage, approval and publication, as provided by law. Passed this 4th day of December, 2023. Ayes Nays Absent Abstain Alderwoman Bassi ____ _____ _____ _____ Alderman Glab ____ ____ _____ _____ Alderman Koch ____ ____ _____ _____ Alderman McClatchey ____ _____ _____ _____ Alderwoman Miller ____ _____ _____ _____ Alderman Santi ____ _____ _____ _____ Alderman Strach ____ _____ _____ _____ ______________________ ________________________ Wayne Jett, Mayor Monte Johnson, Deputy City Clerk 134 135 136 NParkStNParkStPe arl S t NParkStW El m S t W El m S t Pe a rl St Pe a r lSt NRiversideDrNRiversideDr120NRiversideD rSource: Esri, Maxar, GeoEye, Earthstar Geographics, CNES/Airbus DS, USDA, USGS, AeroGRID, IGN, and the GIS User Community~ Sources: Esri, HERE, Garmin, FAO, NOAA, USGS, © OpenStreetMap contributors, and the GIS User Community City of McHenry Riverside Drive Municipal Permit Parking Permit Parking 137 MainSt WElmSt Main S t MainSt NFrontStMarRayDance Studio NFrontSt31 NFrontStSource: Esri, Maxar, GeoEye, Earthstar Geographics, CNES/Airbus DS, USDA, USGS, AeroGRID, IGN, and the GIS User Community~ Sources: Esri, HERE, Garmin, FAO, NOAA, USGS, © OpenStreetMap contributors, and the GIS User Community City of McHenry Main Street Municipal Permit Parking Permit Parking Permit Parking 138 Department of Community Development McHenry Municipal Center 333 Green Street McHenry, Illinois 60050 Phone: (815) 363-2170 Fax: (815) 363-2173 www.cityofmchenry.org AGENDA SUPPLEMENT TO: Mayor and City Council FOR: December 4, 2023 City Council Meeting FROM: Cody Sheriff, City Planner RE: Ordinance Annexing a 2.68-Acre Tract of Land located on the southeast corner of Lake Shore Drive and McCullom Lake Road. Ordinance granting a Zoning Map Amendment to A-1 Agriculture District, Conditional Use Permit for the Continued Operation of a Horse Stable, Indoor/Outdoor Horse Arena, Equestrian Related Agritourism, and Zoning Variations for the property commonly known as Hickory Creek Farm. ATT: 1. Approved Planning and Zoning Commission Minutes dated November 15, 2023 2. Ordinance Annexing a 2.68-Acre Tract of Land located on the southeast corner of Lake Shore Drive and McCullom Lake Road. 3. Ordinance granting a Zoning Map Amendment to A-1 Agriculture District, Conditional Use Permit for the Continued Operation of a Horse Stable, Indoor/Outdoor Horse Arena, Equestrian Related Agritourism, and Zoning Variations for the property commonly known as Hickory Creek Farm. 4. Planning & Zoning Commission Staff Report AGENDA ITEM BACKGROUND/SUMMARY: The City acquired the horse farm property in a land swap deal with the Village of McCullom Lake in 1997. It wasn’t until earlier this year that staff had discovered that two smaller portions of the property were never formally annexed. Staff is proposing to annex and rezone the entire 12-acre property to bring operations into compliance with the City’s Zoning Ordinance. The site will need to be rezoned to A-1 Agriculture District in addition to being approved for a Conditional Use Permit for the operation of a horse farm and related activities. The outdoor horse arena is located within the required setback along McCullom Lake Road and therefore will require a variance. Staff have included blanket variations to accommodate all existing structures. 139 Department of Community Development McHenry Municipal Center 333 Green Street McHenry, Illinois 60050 Phone: (815) 363-2170 Fax: (815) 363-2173 www.cityofmchenry.org PLANNING & ZONING COMMISSION RECOMMENDATION AND DISCUSSION: A public hearing was held on the request on November 15, 2023. The Commission agreed with staff’s assessment that the request was based on bringing the property into compliance with the Zoning Ordinance to accommodate the site’s unique and historic agricultural features. There were no objectors present at the hearing and the Commission unanimously voted to recommend approval. If the City Council concurs, it is recommended the attached Ordinance Annexing the 2.68-Acre Tract of Land be approved (Mayor-City Council Vote, Simple Majority). If the Mayor and City Council approve the requested annexation, then it is recommended the attached Ordinance granting a Zoning Map Amendment to A-1 Agriculture District, Conditional Use Permit for the Continued Operation of a Horse Stable, Indoor/Outdoor Horse Arena, Equestrian Related Agritourism, and Zoning Variations for the property commonly known as Hickory Creek Farm be approved. (City Council Vote, Simple Majority) 140 Department of Community Development McHenry Municipal Center 333 Green Street McHenry, Illinois 60050 Phone: (815) 363-2170 Fax: (815) 363-2173 www.cityofmchenry.org Planning & Zoning Commission Minutes from November 15, 2023 File No. Z-2023-18 Petitioner: City of McHenry Request for a Zoning Map Amendment to A-1 Agriculture District, Conditional Use Permit for the continued operation of a Horse Stable, Indoor/Outdoor Horse Arena, Equestrian related Agritourism, any Zoning Variation necessary to accommodate all existing principal and accessory structures at the property commonly known as 4400 Lake Shore Drive Chairwoman Rockweiler opened the file at 5:31 p.m. Planner Sheriff stated that all publication requirements have been met. It was discovered that two smaller properties near the horse barn were never annexed and recorded from the land swap. This will legally set it up to be re-zoned properly and is in compliance with the future land use map. Chairwoman Rockweiler opened the public hearing portion of the meeting at 5:33 p.m. With no public in attendance, the hearing was closed at 5:33 p.m. All members of the Commission agreed that there were no issues with the proposal and believed it should go through. A motion as made by Commissioner Gleason and seconded by Commissioner Riley to recommend approval of the City’s request for a Zoning Map Amendment for the existing incorporated parcel from Estate District to A-1 Agriculture District and Zoning Map Amendment upon annexation for the two unincorporated parcels to A-1 Agriculture District for the property commonly known as Hickory Creek Farm. And by making said motion, I agree that the approval criteria for Zoning Map Amendments have been met as outlined in the staff report. Roll call Vote: 6-ayes: Commissioners Rockweiler, Locke, Davis, Gleason, Riley, and Lehman. 1-absent: Bremer. 0-nay; 0-abstained. Motion Carried. A motion was made by Commissioner Lehman and seconded by Commissioner Davis to recommend approval of City’s request for a Conditional Use Permit for the continued operation of a Horse Stable, Indoor/Outdoor Horse Arena, and equestrian related Agritourism at the property commonly known as Hickory Creek Farm. And by making aid motion, I agree that the approval criteria for Conditional Uses have been met as outlined in the staff report. Roll call Vote: 6-ayes: Commissioners Rockweiler, Locke, Davis, Gleason, Riley, and Lehman. 1- 141 Department of Community Development McHenry Municipal Center 333 Green Street McHenry, Illinois 60050 Phone: (815) 363-2170 Fax: (815) 363-2173 www.cityofmchenry.org absent: Bremer. 0-nay; 0-abstained. Motion Carried. File Z-2023-18 was closed at 5:36 p.m. 142 Department of Community Development McHenry Municipal Center 333 Green Street McHenry, Illinois 60050 Phone: (815) 363-2170 Fax: (815) 363-2173 www.cityofmchenry.org ORDINANCE NO. 23- ORDINANCE ANNEXING A 2.68-ACRE TRACT OF LAND LOCATED ON THE SOUTHEAST CORNER OF LAKE SHORE DRIVE AND MCCULLOM LAKE ROAD WHEREAS, the City of McHenry, McHenry County, Illinois, is a home rule municipality as contemplated under Article VII, Section 6, of the Constitution of the State of Illinois, and the passage of this Ordinance constitutes an exercise of the City’s home rule powers and functions as granted in the Constitution of the State of Illinois; and WHEREAS, a written petition has been filed with the City Clerk requesting annexation of said real estate to the City legally described on “Exhibit A”, attached hereto and incorporated herein, the “SUBJECT PROPERTY”, along with a complete and accurate plat of said real estate incorporated herein and attached hereto on “Exhibit B”, and which petition has been filed in accordance with 65 ILCS 5/7-1-8; and WHEREAS, said real estate is not located within any other municipality or subject to an annexation agreement with any other municipality, and said real estate is presently contiguous to and may be annexed to the City in accordance with 65 ILCS 5/7-1-1, et seq.; and WHEREAS, the City of McHenry does not provide library or fire protection services to said real estate, so notice to the Fire Protection District or Public Library District of the annexation of said real estate is not required; and WHEREAS, the City has determined that the annexation of said real estate is in the best interest of the City, will promote sound planning and growth of the City, and otherwise enhance and promote the general welfare of the City and its residents. NOW, THEREFORE, BE IT ORDAINED BY THE MAYOR AND CITY COUNCIL OF THE CITY OF MCHENRY, MCHENRY COUNTY, ILLINOIS AS FOLLOWS: SECTION 1: That the SUBJECT PROPERTY be and the same is hereby annexed to and made a part of the corporate limits of the City of McHenry, including any and all portions of adjacent street, roads or highways as provided by law. SECTION 2: The City Clerk is hereby directed to cause a certified copy of this ordinance, together with said plat, to be recorded in the Office of the Recorder of Deeds of McHenry County, Illinois. Following the recordation of this ordinance and plat, a copy thereof shall be filed in the Office of the Clerk of McHenry County, Illinois. SECTION 3: This Ordinance shall be published in pamphlet form by and under the authority of the corporate authorities of the City of McHenry, McHenry County, Illinois. 143 Department of Community Development McHenry Municipal Center 333 Green Street McHenry, Illinois 60050 Phone: (815) 363-2170 Fax: (815) 363-2173 www.cityofmchenry.org SECTION 4: This Ordinance shall be in full force and effect from and after its passage, approval, and publication in pamphlet form as provided by law. Passed this 4th day of December, 2023. Ayes Nays Absent Abstain Alderwoman Bassi _____ _____ _____ _____ Alderman Glab _____ _____ _____ _____ Alderman Koch _____ _____ _____ _____ Alderman McClatchey _____ _____ _____ _____ Alderwoman Miller _____ _____ _____ _____ Alderman Santi _____ _____ _____ _____ Alderman Strach _____ _____ _____ _____ ______________________ ________________________ Wayne Jett, Mayor Trisha Ramel, City Clerk 144 Department of Community Development McHenry Municipal Center 333 Green Street McHenry, Illinois 60050 Phone: (815) 363-2170 Fax: (815) 363-2173 www.cityofmchenry.org EXHIBIT A LEGAL DESCRIPTION LOTS 1 THROUGH 12, INCLUSIVE, IN BLOCK 1 OF MCCULLOM LAKE ESTATES, BEING A SUBDIVISION OF PART OF THE NORTHEAST QUARTER OF SECTION 21, AND THE NORTH HALF OF SECTION 22, TOWNSHIP 45 NORTH, RANGE 8 EAST OF THE THIRD PRINCIPAL MERIDIAN, ACCORDING TO THE PLAT THEREOF RECORDED MAY 31, 1929 AS DOCUMENT NO. 88347, IN BOOK 6 OF PLATS, PAGES 90 AND 91, IN MCHENRY COUNTY, ILLINOIS And “PARK” LOT IN BLOCK 1 AND THE ADJOINING HIGHWAY IN MCCULLUM LAKE ESTATES, BEING A SUBDIVISION OF PART OF THE NORTHEAST QUARTER OF SECTION 21, AND THE NORTH HALF OF SECTION 22, TOWNSHIP 45 NORTH, RANGE 8 EAST OF THE THIRD PRINCIPAL MERIDIAN, ACCORDING TO THE PLAT THEREOF RECORDED MAY 31, 1929 AS DOCUMENT NO. 88347, IN BOOK 6 OF PLATS, PAGES 90 AND 91, IN MCHENRY COUNTY, ILLINOIS. 145 Department of Community Development McHenry Municipal Center 333 Green Street McHenry, Illinois 60050 Phone: (815) 363-2170 Fax: (815) 363-2173 www.cityofmchenry.org EXHIBIT B PLAT OF ANNEXATION OF SUBJECT PROPERTY 146 147 148 Department of Community Development McHenry Municipal Center 333 Green Street McHenry, Illinois 60050 Phone: (815) 363-2170 Fax: (815) 363-2173 www.cityofmchenry.org ORDINANCE NO 23- ORDINANCE GRANTING A ZONING MAP AMENDMENT TO A-1 AGRICULTURE DISTRICT, CONDITIONAL USE PERMIT FOR THE CONTINUED OPERATION OF A HORSE STABLE, INDOOR/OUTDOOR HORSE ARENA, EQUESTRIAN RELATED AGRITOURISM, AND ZONING VARIATIONS FOR THE PROPERTY COMMONLY KNOWN AS HICKORY CREEK FARM. WHEREAS, the City of McHenry, McHenry County, Illinois, is a home rule municipality as contemplated under Article VII, Section 6, of the Constitution of the State of Illinois, and the passage of this Ordinance constitutes an exercise of the City’s home rule powers and functions as granted in the Constitution of the State of Illinois; and WHEREAS, a petition has been filed by the City of McHenry (“PROPERTY OWNER”) requesting approval of a Zoning Map Amendment to A-1 Agriculture District, Conditional Use Permit, and Zoning Variations to accommodate the existing operations of the horse farm on the approximate 12.16-acre property, more or less, located on the southeast corner of Lake Shore Drive and McCullom Lake Road legally described on “EXHIBIT A”, attached hereto and incorporated herein, “SUBJECT PROPERTY”; and WHEREAS, a public hearing on said petition was held before the Planning and Zoning Commission on November 15, 2023 in the manner prescribed by ordinance and statute, and as a result of said hearing, the Planning and Zoning Commission did unanimously recommend to the City Council the granting of the requested Zoning Map Amendment, Conditional Use Permit, and Zoning Variations; and WHEREAS, the City Council has considered the evidence and recommendations from the Planning and Zoning Commission and finds that the approval of the request isconsistent with the objectives of the City of McHenry Zoning Ordinance to protect the public health, safety, morals, and general welfare of its residents. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF MCHENRY, MCHENRY COUNTY, ILLINOIS, AS FOLLOWS: SECTION 1: That the SUBJECT PROPERTY is hereby granted a Zoning Map Amendment from Estate District to A-1 Agriculture District. SECTION 2: In granting said Zoning Map Amendment, the City Council finds that the Approval Criteria for Zoning Amendments listed in §11-5-5 of the City of McHenry Zoning Ordinance have been met. 149 Department of Community Development McHenry Municipal Center 333 Green Street McHenry, Illinois 60050 Phone: (815) 363-2170 Fax: (815) 363-2173 www.cityofmchenry.org SECTION 3: That the SUBJECT PROPERTY is hereby granted a Conditional Use Permit to operate a Horse Stable, Indoor/Outdoor Horse Arena, and equestrian related Agritourism. SECTION 4: In granting said Conditional Use Permit, the City Council finds that the Approval Criteria for Conditional Useslisted in §11-15-5 of the City of McHenry Zoning Ordinance have been met. SECTION 5: That the SUBJECT PROPERTY is hereby granted approval of any Zoning Variations necessary to accommodate all existing principal and accessory structures. SECTION 6: In granting said Zoning Variations, the City Council finds that the Approval Criteria for Variances listed in §11-19-5 of the City of McHenry Zoning Ordinance have been met. SECTION 7: This Ordinance shall be published in pamphlet form by and under the authority of the corporate authorities of the City of McHenry, McHenry County, Illinois. SECTION 8: This Ordinance shall be in full force and effect from and after its passage, approval, and publication in pamphlet form as provided by law. Passed this 4th day of December, 2023. Ayes Nays Absent Abstain Alderwoman Bassi _____ _____ _____ _____ Alderman Glab _____ _____ _____ _____ Alderman Koch _____ _____ _____ _____ Alderman McClatchey _____ _____ _____ _____ Alderwoman Miller _____ _____ _____ _____ Alderman Santi _____ _____ _____ _____ Alderman Strach _____ _____ _____ _____ ______________________ ________________________ Wayne Jett, Mayor Trisha Ramel, City Clerk 150 Department of Community Development McHenry Municipal Center 333 Green Street McHenry, Illinois 60050 Phone: (815) 363-2170 Fax: (815) 363-2173 www.cityofmchenry.org Exhibit A Legal Description of the Subject Property LOTS 1 THROUGH 12, INCLUSIVE, IN BLOCK 1 OF MCCULLOM LAKE ESTATES, BEING A SUBDIVISION OF PART OF THE NORTHEAST QUARTER OF SECTION 21, AND THE NORTH HALF OF SECTION 22, TOWNSHIP 45 NORTH, RANGE 8 EAST OF THE THIRD PRINCIPAL MERIDIAN, ACCORDING TO THE PLAT THEREOF RECORDED MAY 31, 1929 AS DOCUMENT NO. 88347, IN BOOK 6 OF PLATS, PAGES 90 AND 91, IN MCHENRY COUNTY, ILLINOIS And “PARK” LOT IN BLOCK 1 AND THE ADJOINING HIGHWAY IN MCCULLUM LAKE ESTATES, BEING A SUBDIVISION OF PART OF THE NORTHEAST QUARTER OF SECTION 21, AND THE NORTH HALF OF SECTION 22, TOWNSHIP 45 NORTH, RANGE 8 EAST OF THE THIRD PRINCIPAL MERIDIAN, ACCORDING TO THE PLAT THEREOF RECORDED MAY 31, 1929 AS DOCUMENT NO. 88347, IN BOOK 6 OF PLATS, PAGES 90 AND 91, IN MCHENRY COUNTY, ILLINOIS. 151 152 153 154 SStafff Reportt forr thee Cityy off McHenryy Planningg && Zoningg Commissionn Staff Comments The following comments and conclusions are based upon staff analysis and review prior to this hearing and are to be considered viable unless evidence is established to the contrary. Staff may have additional comments based upon the testimony presented during the public hearing. BACKGROUNDD && REQUESTT SUMMARYY The City of McHenry is requesting approval of the following Zoning Items: 1. Zoning Map Amendment upon annexation to A-1 Agriculture District for the two smaller unincorporated pasture parcels, and a map amendment from Estate District to A-1 Agriculture district for the larger portion of the property which contains most of the horse farm. 2. A Conditional Use Permit for the continued operation of a Horse Stable, Indoor/Outdoor Horse Arena, and equestrian related Agritourism. 3. All Zoning Variations necessary to accommodate all existing principal and accessory structures at Hickory Creek Farm. Figure 1- Hickory Creek Horse Farm The City first acquired the horse farm in a land swap deal with the Village of McCullom Lake in 1997. However, it wasn’t until earlier this year that staff had discovered that the two smaller parcels were never formally annexed. Although staff was able to locate a plat of annexation, we could not locate any recorded documents indicating an ordinance was passed and recorded with the County. The exact date of construction of the horse farm and structures in its current form is unknown; however, aerial imagery indicates it was most likely constructed between 1939 and 1953. Staff is requesting approval to rezone the entire property to A-1 Agriculture upon annexation. Staff is also requesting approval of a Conditional Use Permit for the operation of the Horse Stable, Arena, and equestrian related Agritourism operations. The existing outdoor horse arena along McCullom Lake Road appears to be within the required corner side yard setback and therefore will require a zoning variation to accommodate the structure. Out of caution staff have included a blanket zoning variance to accommodate all existing principal and accessory structures. 155 CCITY OF MCHENRY ORDINANCES • The petitioner must meet the Approval Criteria for Zoning Map Amendments, listed in §11-5-5 of the City of McHenry Zoning Ordinance. • The petitioner must meet the Approval Criteria for Conditional Uses, listed in §11-15-5 of the City of McHenry Zoning Ordinance • The petitioner must meet the Approval Criteria for Variances, listed in §11-19-5 of the City of McHenry Zoning Ordinance. STAFF ANALYSIS FUTURE LAND USE MAP RECOMMENDATION The request is in substantial conformance with the Future Land Use Map’s recommendation for Parks & Conservation. CURRENT LAND USE & ZONING The subject property is currently zoned Estate District and A-1 Agriculture (Unincorporated McHenry County) and operates as a horse farm. Given the longevity of operations as a horse farm, staff does not anticipate that approval of the request would impact the surrounding single-family homes, vacant land, or commercial area. COMPREHENSIVE PLAN OBJECTIVES & POLICIES Overall, staff believes the proposed development is consistent with the City’s Comprehensive Plan objectives and policies. Staff comments italicized. View full list of City Plans at www.cityofmchenry.org/planningdocuments x Land Use, Objective – “Allow a mixture of land uses in appropriate areas to promote responsible growth while providing a high quality of life to the residents.” (p. 27) Staff believes the proposed use of the property promotes a high quality of life for the residents by preserving unique architectural and historic properties. x Overall Goals – “[preserve] historic commercial and residential areas which give the City a sense of place, identity and a tie to the historical accomplishments of earlier generations.” (p. 22) The barn structures were constructed between 1939 and 1953. Staff believes the unique architectural features of the barn and the continued use of the site as a horse farm is supportive of preserving historical accomplishments of earlier generations. STAFF SUMMARY ANALYSIS x According to aerial imagery, the existing structures on site were first constructed between 1939 and 1953. Staff believes the operation of a horse farm has existed long before the barn was constructed. x The location of the outdoor horse arena along McCullom Lake Road encroaches within the required corner side yard setback and will require a zoning variation. x Given the longevity of operations, staff does not anticipate that approval of the requests would generate any adverse impacts on the surrounding property owners. 156 If the Planning & Zoning Commission agrees with staff’s assessment, then the following three (3) motions are recommended: 1st MOTION: I motion/move to recommend approval of the City’s request for a Zoning Map Amendment for the existing incorporated parcel from Estate District to A-1 Agriculture District and Zoning Map Amendment upon annexation for the two unincorporated parcels to A-1 Agriculture District for the property commonly known as Hickory Creek Farm. AND By making said motion, you agree that the approval criteria for Zoning Map Amendments have been met as outlined in the staff report. ZONING MAP AMENDMENT APPROVAL CRITERIA (§11-5-5). Staff comments italicized below. A. Compatible With Use Or Zoning of Environs. The surrounding land use primarily consists of residential, agricultural, and commercial. A-1 Agricultural zoning would not be out of character with the surrounding area. B. Supported by Trend of Development Staff believes the proposed request is consistent with the trend in A-1 Agriculture zoning within the adjoining area to the north. C. Consistent with Comprehensive Plan Objectives. Staff believes the preservation of the horse farm would be supportive of promoting and preserving historical character which promote a unique sense of place. D. Furthers Public Interest Staff believes the request furthers the public interest by helping continue operations of the horse farm and preserve a unique historical structure. 2nd MOTION: I motion/move to recommend approval of City’s request for a Conditional Use Permit for the continued operation of a Horse Stable, Indoor/Outdoor Horse Arena, and equestrian related Agritourism at the property commonly known as Hickory Creek Farm. AND By making said motion, you agree that the approval criteria for Conditional Uses have been met as outlined in the staff report. APPROVAL CRITERIA FOR CONDITIONAL USES (§11-15-5). Staff comments italicized below. A. Traffic: Any adverse impact of types or volumes of traffic flow not otherwise typical in the zoning district has been minimized. Staff believes there is adequate traffic infrastructure in place to service the development. B. Environmental Nuisance: Any adverse effects of noise, glare, odor, dust, waste disposal, blockage of light or air, or other adverse environmental effects of a type or degree not characteristic of permitted uses in the zoning district, have been appropriately controlled. Staff does not believe the proposed request would generate any environmental nuisances. C. Neighborhood Character: The proposed use will fit harmoniously with the existing natural or manmade character of its surroundings, and with permitted uses in the zoning district. The use will not have undue deleterious effect on the environmental quality, property values, or neighborhood character already existing in the area or normally associated with permitted uses in the district. 157 The surrounding area consists of a mix of residential, agricultural, and commercial. Staff does not anticipate approval of the request would generate any adverse impacts given the longevity of operations (+70 years). D. Public Services and Facilities: The proposed use will not require existing community facilities or services to a degree disproportionate to that normally expected of permitted uses in the district, nor generate disproportionate demand for new services or facilities, in such a way as to place undue burdens upon existing development in the area. The proposed use has operated for over 70 years on site successfully in its current capacity. Staff does not believe approval of the request would require disproportionate services. E. Public Safety and Health: The proposed use will not be detrimental to the safety or health of the employees, patrons, or visitors associated with the use nor of the general public in the vicinity. Staff believes the proposed use would not endanger local public health and safety within the vicinity of the subject property given the longevity of operations on site for over 70 years. F. Other Factors: The proposed use is in harmony with all other elements of compatibility pertinent to the conditional use and its particular location. 3rd MOTION: I motion/move to recommend approval of the City’s request for a zoning variation to accommodate all existing principal and accessory structures. AND by making said motion, I agree with staff’s assessment as outlined in the staff report and that the approval criteria for Variances have been met. VARIANCE APPROVAL CRITERIA (§11-19-5). Comments of staff italicized below. A. Special Circumstances Not Found Elsewhere. Staff believes the request is a special circumstance related to the operation of a horse farm that has existed for over 70 years which no longer meets required setbacks of the underlying zoning district. B. Circumstances Relate to the Property Only. Staff believes this is a special circumstance as it relates to this property only and not all property within the A-1 Agriculture District. C. Not Resulting From Applicant Action. The applicant did not construct the existing structures on site. D. Unnecessary Hardship. Staff believes if the city enforces the ordinance that it would cause undue hardship and endanger the preservation of historic structures. E. Preserves Rights Conferred By District: Staff believes this does not confer a special privilege for the subject property. F. Necessary For Use Of Property: Staff believes that approval of the variations are necessary for the reasonable use and enjoyment of the property. G. Not Alter Local Character: Staff believes approval of the request would be supportive of preserving the existing local character. H. Consistent With Title And Plan: Staff believes the proposed request is consistent with the Comprehensive Plan and Development Policies by preserving historic agricultural character within the area. I. Minimum Variance Recommended: Staff believes the variations requested are the minimum required. Attachments: 1) Petitioner’s Application and attachments. 2) Receipt of publication of legal notice. 158 Public Hearing Application Packet Page 5 of 14 File Number PUBLIC HEARING APPLICATION Planning and Zoning Commission City of McHenry 333 South Green Street à McHenry, IL 60050 à Tel: (815) 363-2170 à Fax: (815) 363-2173 1. Name of Applicant: City of McHenry Tel 815-363-2181 Address 333 S. Green Street Fax Email ____CSheriff@cityofmchenry.org_______________________________________________ 2. Name of Property Owner Tel (If other than Applicant) Address Fax Email ______________________________________________________ 3. Name of Engineer Tel (If represented) Address Fax Email ______________________________________________________ 4. Name of Attorney Tel (If represented) Address Fax Email______________________________________________________ 5. Common Address or Location of Property: 4400 Lake Shore Drive, McHenry 6. PIN#(s): 09-22-253-003, 09-22-253-019, 09-22-253-020 7. Requested Action(s) (check all that apply) X Zoning Map Amendment (Rezoning) Zoning Variance – Minor (Residential) X Conditional Use Permit Zoning Text Amendment X Zoning Variance (Non-residential) Use Variance ___ Planned Unit Development ___ Subdivision/Plat Development FORM A 159 Public Hearing Application Packet Page 6 of 14 NARRATIVE Provide a brief description of the Requested Action(s). For example, the operation that requires a Conditional Use Permit, the specific Zoning Variance needed, or the new zoning classification that is requested. The narrative description may also be included as a separate attachment. The City of McHenry discovered 2 parcels of the Hickory Creek Farm property (owned by the City) were never formally annexed after the property was acquired in a land swap with the Village of McCullom Lake in 1997. In order to accommodate the existing uses upon annexation, the City is requesting approval of a Zoning Map Amendment to A-1 Agriculture and a Conditional Use Permit to continue the operation of the Horse Stable with Indoor/Outdoor Riding Arena and general Agritourism related equestrian activities. The zoning requests would apply to both unincorporated areas upon annexation as well as the existing incorporated area. The City is also requesting Zoning Variations to accommodate all existing principal and accessory structures on site. 160 Public Hearing Application Packet Page 7 of 14 Current Use of Property Horse Stable, Indoor/Outdoor Horse Arena, Agritourism related to equestrian activities. 8. Current Zoning Classification of Property, Including Variances or Conditional Uses (Interactive Zoning Map) A-1 Agriculture (Unincorporated McHenry County), Estate District 9. Current Zoning Classification and Land Use of Adjoining Properties (Interactive Zoning Map) North: A-1 Agriculture (Commercial Vehicle Storage) South: Estate District (Petersen Park) East: Special Development District (Johnsburg, vacant) West: R-1 Residential (Village of McCullom Lake, Single Family) 10. Required Attachments (check all items submitted) Please refer to the Public Hearing Requirements Checklist to determine the required attachments. 1. Application Fee (amount) $ 2. Narrative Description of Request 3. FORM A – Public Hearing Application 4. FORM B – Zoning Map Amendment (Rezoning) Application 5. FORM C – Conditional Use Application 6. FORM D – Zoning Variance Application 7. FORM E – Use Variance Application 7. FORM F – Planned Unit Development Application 7. FORM G – Subdivision/Plat Development Application 8. Proof of Ownership and/or Written Consent from Property Owner in the Form of an Affidavit 9. Plat of Survey with Legal Description 10. List of Owners of all Adjoining Properties 11. Public Hearing Notice 12. Sign (Provided by the City) 13. Site Plan 14. Landscape Plan 15. Architectural Rendering of Building Elevations 16. Performance Standards Certification 17. Traffic Analysis 18. School Impact Analysis 161 Public Hearing Application Packet Page 8 of 14 11. Disclosure of Interest The party signing the application shall be considered the Applicant. The Applicant must be the owner or trustee of record, trust beneficiary, lessee, contract purchaser, or option holder of the subject property or his or her agent or nominee. Applicant is Not Owner If the Applicant is not the owner of record of the subject property, the application shall disclose the legal capacity of the Applicant and the full name, address, and telephone number of the owner(s). In addition, an affidavit of the owners(s) shall be filed with the application stating that the Applicant has the authority from the owners(s) to make the application. Applicant or Owner is Corporation or Partnership If the Applicant, owner, contract purchaser, option holder, or any beneficiary of a land trust is a corporation or partnership, the application shall disclose the name and address of the corporation’s officers, directors, and registered agents, or the partnership’s general partners and those shareholders or limited partners owning in excess of five percent of the outstanding stock or interest in the corporation or interest shared by the limited partners. Applicant or Owner is a land Trust If the Applicant or owner is a land trust or other trust or trustee thereof, the full name, address, telephone number, and extent of interest of each beneficiary shall be disclosed in the application. 12. Certification I hereby certify that I am aware of all code requirements of the City of McHenry that relate to this property and that the proposed use or development described in this application shall comply with all such codes. I hereby request that a public hearing to consider this application be held before the Planning and Zoning Commission, and thereafter that a recommendation be forwarded to the City Council for the adoption of an ordinance(s) granting the requested action(s), including any modifications to this application or conditions of approval recommended by City Council. Signature of Applicant(s) Print Name and Designation of Applicant(s) Cody Sheriff, City Planner 333 S. Green Street McHenry, IL 60050 162 Public Hearing Application Packet Page 9 of 14 AFFIDAVIT OF COMPLIANCE WITH PUBLIC NOTICE REQUIREMENTS (TO BE COMPLETED AFTER ALL PUBLIC HEARING REQUIREMENTS ARE FULFILLED) The undersigned, being first duly sworn, on oath deposes and states that the attached list of adjoining property owners have been properly notified via First Class Mail or Certified Mail, and all other public notice requirements provided in the City of McHenry Zoning Ordinance have been met in connection with the current application before the City of McHenry. Filed by: Cody Sheriff, City Planner _________________________________________________________ For approval of: See attached notice. ______________________________________ (Applicant’s Signature) _Cody Sheriff, City Planner________________ (Applicant’s Name and Address) __333 S Green Street, McHenry, IL 60050____ Subscribed and sworn to before me this ___ ______ day of ___________, 2023. __________ Notary Public REQUIRED ATTACHMENT: List of Adjoining Property Owners & Legal Notice Publication 163 Public Hearing Application Packet Page 10 of 14 FORM B File Number ZONING MAP AMENDMENT (REZONING) Planning and Zoning Commission City of McHenry 333 South Green Street à McHenry, IL 60050 à Tel: (815) 363-2170 à Fax: (815) 363-2173 §11-5-5 of the City of McHenry Zoning Ordinance provides that in recommending approval of a Zoning Map Amendment (Rezoning), the Planning and Zoning Commission shall transmit to the City Council written findings that all of the conditions listed below apply to the requested action. Please respond to each of these conditions as it relates to your request. 1. Compatible with Use or Zoning of Environs The proposed use(s) or the uses permitted under the proposed zoning classification are compatible with existing uses or existing zoning of property in the environs. The property has operated as agriculture/horse farm for almost 150 years. Staff does not believe approval of the request would generate adverse impacts given the longevity of the use as a horse farm. 2. Supported by Trend of Development The trend of development in the general area since the original zoning of the affected property was established supports the proposed use(s) or zoning classification. The rezoning is primarily resulting from the annexation of the parcels. A-1 Agriculture parcels exist in unincorporated McHenry County along the north and therefore would establish a trend in development. 3. Consistent with Comprehensive Plan Objectives The proposed use(s) or zoning classification is in harmony with the objectives of the Comprehensive Plan of the City as viewed in light of any changed conditions since the adoption of the Plan. Staff believes the continued equestrian use of the property is consistent with preserving the historic agricultural character of the City which is consistent with the Comprehensive Plan Goal of preserving… “Historic commercial and residential areas which give the City a sense of place, identity and a tie to the historical accomplishments of earlier generations” (p. 22). 4. Furthers Public Interest The proposed use(s) or zoning classification promotes the public interest and not solely the interest of the applicant. Staff believes approval of the zoning request is in the public interest to help support and preserve historic agricultural character of the City. 164 Public Hearing Application Packet Page 11 of 14 FORM C File Number CONDITIONAL USE PERMIT Planning and Zoning Commission City of McHenry 333 South Green Street à McHenry, IL 60050 à Tel: (815) 363-2170 à Fax: (815) 363-2173 §11-15-5 of the City of McHenry Zoning Ordinance provides that in recommending approval or conditional approval of a Conditional Use Permit, the Planning and Zoning Commission shall transmit to the City Council written findings that all of the conditions listed below apply to the requested action. Please respond to each of these conditions as it relates to your request. 1. Traffic Any adverse impact of types or volumes of traffic flow not otherwise typical in the zoning district has been minimized. The proposed use of the property is not changing therefore no change in traffic would occur. 2. Environmental Nuisance Any adverse effects of noise, glare, odor, dust, waste disposal, blockage of light or air, or other adverse environmental effects of a type or degree not characteristic of permitted uses in the zoning district have been appropriately controlled. The property has operated as an agricultural/equestrian use for 150 years. Staff does not believe approval of the request would generate any environmental nuisance. 3. Neighborhood Character The proposed use will fit harmoniously with the existing natural or man-made character of its surroundings and with permitted uses in the zoning district. The use will not have undue deleterious effect on the environmental quality, property values, or neighborhood character existing in the area or normally associated with permitted uses in the district. The farm has existed on the property for 150 years, staff believes approval of the request would be harmonious with the neighborhood character. 4. Public Services and Facilities The proposed use will not require existing community facilities or services to a degree disproportionate to that normally expected of permitted uses in the district, nor generate disproportionate demand for new services or facilities, in such a way as to place undue burdens upon existing development in the area. The proposed use of the property is not changing and therefore does not require new services and is expected to continue operations as planned without any additional needs for infrastructure. 165 Public Hearing Application Packet Page 12 of 14 5. Public Safety and Health The proposed use will not be detrimental to the safety or health of the employees, patrons, or visitors associated with the use nor of the general public in the vicinity. Staff does not believe the proposed use would be detrimental to the safety and health of the general public. 6. Other Factors The proposed use is in harmony with all other elements of compatibility pertinent to the Conditional Use and its particular location. 166 Public Hearing Application Packet Page 13 of 14 FORM D File Number ZONING VARIANCE Planning and Zoning Commission City of McHenry 333 South Green Street à McHenry, IL 60050 à Tel: (815) 363-2170 à Fax: (815) 363-2173 §11-19-5 the City of McHenry Zoning Ordinance provides that in recommending approval or conditional approval of a variance, the Planning and Zoning Commission shall transmit to the City Council written findings that all of the conditions listed below apply to the requested action. Please respond to each of these conditions as it relates to your request. 1. Special Circumstances Not Found Elsewhere Special circumstances exist that are particular to the property for which the variance is sought and that do not apply generally to other properties in the same zoning district; and these circumstances are not of so general or recurrent a nature as to make it reasonably practical to provide a general regulation to cover them. The proposed variance is related to the annexation of existing structures related to the operation of the horse farm. Staff believes this is related to a special circumstance not found elsewhere. 2. Circumstances Relate to Property Only Since a variance will affect the character of its surroundings long after a property changes hands, the special circumstances referenced herein relate only to the physical character of the land or building(s) for which a variance is sought, such as dimensions, topography, or soil conditions; and they do not concern any business or activity the present or prospective owner or tenant carries on or seeks to carry on therein, or to the personal, business or financial circumstances of such owner or tenant or any other party with interest in the property. Staff believes the circumstances relate to this property only as a historic property, a portion of which is being annexed into the City of McHenry. 3. Not Resulting from Applicant Action The special circumstances that are the basis for a variance have not resulted from any act of the applicant or of any other party with interest in the property. The farm structures have existed long before the City acquired the property in 1997. 4. Unnecessary Hardship The strict application of the provisions of the Zoning Ordinance would result in unnecessary and undue hardship upon the applicant, as distinguished from a mere inconvenience. Staff believes denial of the request would generate an unnecessary hardship given the longevity of the use of the property for equestrian activities. 167 Public Hearing Application Packet Page 14 of 14 5. Preserves Rights Conferred by District A variance is necessary for the applicant to preserve and enjoy a substantial property right possessed by other properties in the same zoning district and does not confer a special privilege ordinarily denied to other properties in the district. Staff believes the variance is necessary to preserve and enjoy the property. 6. Necessary for Use of Property The granting of a variance is necessary not because it will increase the applicant’s economic return, although it may have this effect, but because without a variance the applicant will be deprived of any reasonable use or enjoyment of the property. Staff believes the granting of the variance is necessary for the use of the property for equestrian activities. 7. Not Alter Local Character The granting of a variance will not alter the essential character of the locality nor substantially impair environmental quality, property values, or public safety or welfare in the vicinity. The farm and structures have been in operation for around 150 years. Staff does not believe it would alter the local character. 8. Consistent with Zoning Ordinance and Comprehensive Plan The granting of the variance will be in harmony with the general purpose and intent of the Zoning Ordinance and Comprehensive Plan of the City, as viewed in light of any changes in conditions since their adoption. Staff believes the requested variance will be in harmony with the general purpose and intent of the Zoning Ordinance and Comprehensive Plan. 9. Minimum Variance Required The variance requested is the minimum required to provide the applicant with reasonable use and enjoyment of the property. Staff believes the variance is the minimum required. 168 169 170 171 SHAW MEDIA EST. 1851 PO BOX 250 CRYSTAL LAKE IL 60039-0250 (815)459-4040 ORDER CONFIRMATION (CONTINUED) Salesperson: BARBARA BEHRENS Printed at 10/25/23 09:53 by bbehr-sm ----------------------------------------------------------------------------- Acct #: 10474 Ad #: 2118789 Status: New PUBLIC NOTICE PUBLIC HEARING NOTICE FILE Z-2023-18 Notice is hereby given that the City of McHenry Planning and Zoning Commission will hold a Public Hearing at the McHenry Municipal Center, 333 South Green Street, McHenry, Illinois 60050, at 5:30 P.M. on Wednesday, November 15, 2023 to consider an application by City of McHenry of 333 S. Green Street ("Owner of Record") for the following requests in accordance with the City of McHenry Zoning Ordinance: Request for Zoning Map Amendment to A-1 Agriculture District, Conditional Use Permit for the continued operation of a Horse Stable, Indoor/ Outdoor Horse Arena, equestrian related agri- tourism, and any Zoning Variations necessary to accommodate all existing principal and accessory structures at Hickory Creek Farm. Location: The site consists of 12.16 acres, more or less, and is located on the south corner of the intersec- tion of McCullom Lake Road and Lake Shore Drive with a common address of 4400 Lake Shore Drive, McHenry, IL. PIN: 09-22-253-003, 09-22-253-019, 09-22-253-020 The property is currently zoned: A-1 Agriculture (Unincorporated), Estate District A copy of the application is on file and may be exam- ined during regular business hours in the Community Development Department, at the McHenry Municipal Center, 333 South Green Street, McHenry, Illinois 60050, and (815) 363- 2170. An electronic copy of the application can be viewed on the City's website at www.cityofmchenry.org/ currentdevelopments. All interested parties will be given an opportunity to be heard. Published by order of the Planning and Zoning Commission, City of McHenry, McHenry County, Illinois. /s/ Stacy Rockweiler Chairwoman, Planning and Zoning Commission (Published in the Northwest Herald October 27, 2023) 2118789 172 Bill Hobson, Director of Parks and Recreation McHenry Recreation Center 3636 Municipal Drive McHenry, Illinois 60050 Phone: (815) 363-2160 Fax: (815) 363-3119 www.ci.mchenry.il.us/park_recreation DISCUSSION SUPPLEMENT DATE: December 4, 2023 TO: Mayor and City Council FROM: Bill Hobson, Director of Parks and Recreation RE: Recreation Center Expansion Referendum AGENDA ITEM SUMMARY: In 2017 the City of McHenry completed a Community Needs Assessment to provide the community with an opportunity to identify their desires for expanded recreational opportunities offered through the Department of Parks and Recreation. Both indoor and outdoor aquatics were at the top of the overall survey results. Also included on the list of wanted amenities, were a gymnasium and a walking track. Based on this information, the Parks and Recreation Department, with input from the Parks and Recreation Commi ttee, has developed a masterplan for the expansion of the McHenry Recreation Center to include identified amenities and have compiled price estimates for the expansion. With an overall $30 million price tag, funding options are limited. While the existing McHenry Recreation Center facility was able to be developed with Developer Donation funds that were collected and saved for many years, this funding source is no longer available. Additionally, developing an expanded facility with existing municipal resources is also not realistic. After exploring numerous alternative funding options (grants, partnerships, etc.), placing a question before the community in the form of a property tax referendum would provide the clearest direction as to whether or not to proceed with such an expansion and provide the funding mechanism for expansion. What is being sought at this time is direction from the City Council on whether or not to place such a question on the March 19, 2024 election ballot. BACKGROUND: In November of 2017, City Council was presented with the results of the Community Needs Assessment of the Parks and Recreation Department facilities and programs. This statistically valid survey polled an indicative cross section of the community and the results spoke to what city residents are interested in and looking for the City and the Parks and Recreation Department to provide. Excerpts from the Community Needs Assessment follow. 173 In summary, both outdoor and indoor aquatics ranked at the top of their respective lists: • 38% placed outdoor aquatic elements as their top item. Only walking paths at 40% ranked higher. • 60% of those polled ranked indoor aquatic elements as their top priority; then followed by a walking/running track and gym courts. Perhaps the largest indicator of the community’s desire to attain these elements was expressed in a question directly related to their willingness to pay for the additions through an increased property tax via referendum. • 69% either Strongly Supported or Somewhat Supported the increase in taxes for the amenities. • 13% Somewhat Opposed • 18% Strongly Opposed With this information in hand, the next step was to explore the viability of the McHenry Recreation Center as a whole, with the addition of all identified amenities. Included with this supplement are the full results from the proforma on the McHenry Recreation Center expansion performed by Heller and Heller Associates. The primary focus of the proforma was to run the full financial analytics for a 25 yard pool versus a 50 meter pool. In addition, numbers for the anticipated revenue versus expenses for the proposed gymnasium and walking track were analyzed. Highlights for the information rich proforma are as follows: • Community population trends were analyzed. o With all things remaining the same the city can expect to see slight drops in both youth and adult population, while conversely seeing larger increases in the senior demographics. • Demographic and income breakdown analysis were identified. • Numerous other factors were included to thoroughly analyze all aspects of the potential expansion. • Revenue streams were analyzed and then compared to materials and supplies and personnel costs. • Memberships are quite obviously one of the most import revenue streams and also one open to debate. All membership levels were analyzed and set to remain extremely competitive locally. Memberships at the proposed facility would be ala carte; meaning that the member decides what aspects of the facility to partake in. Indoor Aquatic Center Bottom Line Figures of Revenue after Expenses : • Revenue less expenses 5 year average (25yd pool) - ($105,404) • Revenue less expenses 5 year average (50m pool) - ($161,555) 174 Gymnasium highlights: • Annual revenue versus expenses of $63,120.15 • Potential revenue from a walking track of $5,225 (Staff is recommending that this be a free amenity to residents) The Outdoor Aquatic analysis was not included in the proforma however it was most recently completed in 2013 as a part of the original decision. Below is the graph from that 2013 study that most closely matches our current design. In summary, the proposed expansion of the facility should be looked at in totality including the existing facility’s current revenue generation. In doing so the following breakdown emerges: • 17/18 Actual Recreation Center Revenue versus Expenses - $134,701 • 18/19 Estimated Revenue versus Expense (very conservative - $102, 913 Overall Facility Expansion Bottom Line Compilation: Recreation Center existing Revenue - $102,913 Estimated Gymnasium Revenue versus Expenses - 63,120 Estimated Outdoor Aquatic Revenue versus Expenses - 9,232 $175,265 Total Existing and Estimated Revenues Less 25 yard Indoor Aquatic Revenue versus Expenses $175,265 – 105,404 = $69,861 Total Existing and Estimated Revenues Less 50 meter Indoor Aquatic Revenue versus Expenses $175,265 – 161,555 = $13,710 When all elements are present, the facility will continue to support itself and to make money that would be set aside for future capital items or improvements at the facility as they become necessary. ANALYSIS: 175 The community has expressed their desires through the survey and through comments received on social media platforms and at the facility itself. Since opening, membership levels at the McHenry Recreation Center have navigated a pandemic and continues to recover. There are over 1,200 memberships, nearly 15% of which are senior members and over 70% are residents. While the city does have an outdoor at Knox Park – Merkel Aquatic Facility - it is over 30 years old and will require costly upgrades in the coming years simply to remain open. Even with these improvements, it will still be undersized and will not have th e family elements that our community is seeking. Indoor aquatic public access options are severely limited, with West Campus providing community swim hours only one day a week. This pool is also over 30 years old and is becoming less and less of an option to serve needs outside of those of the schools. The pool affords no options for warm water therapy and aqua aerobics, two hugely popular senior programs that are no longer able to be offered after the privately -owned Shamrock Pool closed. Lastly, gymnasium space and indoor walking space are not amenities that are currently available to the public other than a weekly open gym time offered through the Parks and Recreation Department. The proposed gymnasium and walking track would be a multip urpose, multi-use space that would significantly expand programming options and offerings for our community. In closing, the identified expansion will create an amenity that has the potential to increase the quality of life for all populations within the City of McHenry. It will, no doubt, be a quality of life family-friendly amenity that potential new residents seek when looking to locate to the community. Finally, it is the facility that our community has long-deserved and one that will keep our residents from having to leave McHenry to go to communities that have these attractions. Staff has explored other funding options, yet the only real viable one lets the community truly decide whether or not facilities are expanded or not, in the form of a property tax referendum. It is estimated that the $30 million dollar referendum would amount to an additional $180/year for the median home valued at $168,000. This is $15/month to have first-class recreation options within the community. The last step in this process is for Council to provide Staff with direction in regards to the submission of an election referendum question at the General Election to be held on March 19, 2024. While still subject to amendment, an example of the proposed question, as provided by City Attorney McArdle is as follows: Shall the City of McHenry build an addition to the McHenry Recreation Center that will include an indoor pool, a gymnasium and an outdoor family aquatic park and issue City bonds in the amount of $30,000,000 for the purpose of paying the costs thereof. 176 Before finalizing the exact question, the City will consult with bond counsel to confirm compliance with relevant laws including the Property Tax Extension Limitation Law, financing and election laws. The staff may also retain the services of a bond consultant to determine funding timeframes and marketability of bonds. The next general election is March 19, 2024, so the certified ordinance containing the question should be approved and delivered to the County Clerk’s Office no later than January 2, 2024. Because the City is Home Rule, it has the power to levy the funds necessary to construct the improvements however, if direction from the residents via a referendum is most desirable, as has been previously discussed by Council, Staff is seeking direction to move forward to be able to allow the distribution of factual information to the public regarding the proposed referendum and to be able to present Council with an Authorizing Ordinance on December 18, 2023 for approval and transmittal to the County Cler k no later January 2, 2024. 177 STAFF REPORT FOR DECEMBER 2023 The purpose of this report is to provide the City Council and public with the most up-to-date information regarding the latest projects and happenings within the municipal government of the City of McHenry. This report is organized by operating department and will be updated and transmitted as part of each City Council Agenda Packet. Council is welcome to contact any Department Director for more information on any item included in this report, as well as topics from previous reports or items not included in the report. This report does not include projects or other information that is considered confidential in nature. ECONOMIC DEVELOPMENT Contact: Doug Martin, Director of Economic Development – 815/363-2110 McHenry Area Chamber of Commerce Ribbon Cutting Friday 12/1 at 11:15 am Crystal Lume 1310 Riverside Drive Holiday Markets at McHenry Riverwalk Shoppes 10 am – 6 pm: 12/2 A Christmas Carol Theme 12/9 Elves Workshop Theme 12/16 Ugly Sweater Theme Riverwalk Shoppes Staff is actively working with five of the current McHenry Riverwalk Shoppe owners on leasing brick and mortar storefronts!! COMMUNITY DEVELOPMENT Contact: Ross Polerecky, Director of Community Development – 815/363-2182 Whiskey Diablo 1325 N Riverside Drive A new water service was installed to Whiskey Diablo Harbor Freight 1742 N Richmond Road Harbor Freight has received a certificate of occupancy and is currently open for business. Trio Fueling Station The Trio fueling station at Ringwood Road and Route 120 is still waiting for final IDOT approval. 178 Comprehensive Plan Staff continues to work with consulting firm HDR on the comprehensive plan. This week HDR was on site for a community workshop, about 25 residents attended the workshop and give input on the future of McHenry. POLICE Contact: John Birk, Chief of Police – 815/363-2200 Personnel Update The following personnel have recently completed the respective years of service with the McHenry Police Department: • Communications Center Supervisor Jennifer Synek – 27 years • Officer Roger Hendrickson – 6 years • Officer Ashley O’Herron – 4 years • Officer Henri Krueger – 4 years Training Officer Roger Hendrickson attended Illinois Active Threat Master Certification training. This training was hosted in Lake Cormorant, MS. Officer Alex Lopez attended Breath Analysis for Alcohol Training hosted by the Woodstock Police Department. The police department’s Peer Support Team, consisting of Social Services Coordinator Jason Sterwerf, CALEA Accreditation Manager Stephanie Erb, Lead Telecommunicator Dexter Barrows, Detective Susan Ellis, and Officer Robert Klasek, attended Responder Readiness and Range of Resilience training. This training was sponsored by FIRST Help. Public Relations On November 29th, 2023, Mayor Wayne Jett, Chief John Birk, Public Relations Officer Michael Spohn, and Deputy City Clerk Monte Johnson, welcomed 3rd grade students from Riverwood Elementary School to the Municipal Center. The students were on a field trip to learn more about the police department and McHenry govenment. 179 PUBLIC WORKS Contact: Steve Wirch, Director of Public Works – 815/363-2205 180