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08-239 Resolution No. 08-239 RESOLUTION AUTHORIZING EXECUTION OF A GRANT AGREEMENT WITH THE FOX RIVER STUDY GROUP FOR FOX RIVER WATERSHED INVESTIGATION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN,ILLINOIS,that Olufemi Folarin, City Manager, and Diane Robertson, City Clerk, be and is hereby authorized and directed to execute a grant agreement in the amount of$75,000,payable in three annual installments of$25,000 each,with the Fox River Study Group for the Fox River Watershed Investigation,a copy of which is attached hereto and made a part hereof by reference. s/Ed Schock Ed Schock, Mayor Presented: October 22, 2008 Adopted: October 22, 2008 Omnibus Vote: Yeas: 6 Nays: 0 Attest: s/Diane Robertson Diane Robertson, City Clerk M BORHART I SPELLMEYER & _ COMPANY certified public accountants and consultants INDEPENDENT AUDITORS' REPORT Board of Trustees Fox River Study Group Oswego, Illinois We have audited the accompanying statements of financial position of Fox River Study Group (an Illinois not-for-profit corporation) as of December 31, 2007 and 2006, and the related statements of activities and cash flows for the years then ended. These financial statements are the responsibility of the Organization's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with U.S. generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit 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 Organization's internal control over financial reporting. Accordingly,we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion,the financial statements referred to above present fairly, in all material respects, the financial position of Fox River Study Group as of December 31, 2007 and 2006, and the changes in its net assets and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles. Elgin, Illinois August 1, 2008 1 FOX RIVER STUDY GROUP STATEMENTS OF FINANCIAL POSITION December 31, ASSETS 2007 2006 CURRENT ASSETS Cash Cash restricted $287,449 $ 43,822 Grant receivable 95,000 47,500 1,776 42,782 21 Contribution receivable 8.250 11,495 Total current assets 433.481 374.593 Total assets $433.481 374.593 LIABILITIES AND NET ASSETS CURRENT LIABILITIES Accounts payable $ 70,150 $ 69 169 NET ASSETS Unrestricted 268,331 257,924 Temporarily restricted 95,000 47.500 Total net assets 363.331 305,424 Total liabilities and net assets $433,481 $374,593 The accompanying notes are an integral part of these,financial statements. 2 FOX RIVER STUDY GROUP STATEMENTS OF ACTIVITIES Years ended December 31, 2007 Temporarily Unrestricted Restricted Total Support and revenue Contributions $ 92,624 $47,500 $140,124 Grants 133,217 - 133,217 Interest income 5,104 - 5,104 Total revenues 230,945 47,500 278,445 Expenses Program services State water survey 200,590 - 200,590 Consulting 15,197 - 15,197 Database - - - W ebsite 600 - 600 Total program services 216,387 - 216,387 Administrative expenses Other fees 4,151 - 4,151 Total expenses 220,538 - 220,538 Increase(decrease) in net assets 10,407 47,500 57,907 NET ASSETS- BEGINNING OF YEAR 257,924 47,500 305,424 NET ASSETS -END OF YEAR jaa331 125,000 $363,331 2006 Temporarily Unre—_stricted Restricted Total $ 86,266 $ - $ 86,266 332,907 - 332,907 10,279 - 10.279 429,452 - 429,452 206,259 - 206,259 124,268 - 124,268 10,816 7,500 18,316 700 - 700 342,043 7,500 349,543 3,951 3,951 _345,994 7.500 353,494 83,458 (7,500) 75,958 174,466 55.000 229.466 257.924 $47,500 305 424 The accompanying notes are an integral part of these financial statements. 3 1 ` FOX RIVER STUDY GROUP STATEMENTS OF CASH FLOWS Years ended December 31, 2007 2006 Cash flows from operating activities $ 57,907 $ 75,958 Change in net assets Adjustments to reconcile change in net assets tc net cash provided (used)by operating activities: (Increase)decrease in: Grant receivable 168,994 (112,682) Contribution receivable 63,245 (71,495) Increase(decrease)in: 981 1( 0,292) Accounts payable Net cash provided (used)by operating activities 291,127 (118,511) Cash flows from investing activities - Cash flows from financing activities - Net increase(decrease) in cash and cash 291,127 (118,511) equivalents Cash and cash equivalents Beginning of year 91.322 209,833 End of year 38$ 2,449 $ 91.322 The accompanying notes are an integral part of these financial statements. 4 FOX RIVER STUDY GROUP NOTES TO FINANCIAL STATEMENTS December 31, 2007 and 2006 NOTE A- NATURE OF ORGANIZATION Fox River Study Group (the Organization) is a nonprofit organization established to assess water quality in the Fox River watershed. The operations of Fox River Study Group are primarily supported by donor contributions and grants. NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A summary of significant accounting policies applied in the preparation of the accompanying financial statements follows. The financial statements and notes are representations of the Organization's management, which is responsible for their integrity and objectivity. 1. Basis of accounting The financial statements of the Organization have been prepared on the accrual basis of accounting and, accordingly, reflect all significant receivables, payables, and other liabilities. 2. Estimates The preparation of financial statements in conformity with the accrual basis of accounting requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. 3. Financial statement presentation The Organization has adopted Statement of Financial Accounting Standards (SFAS) No. 117, "Financial Statements of Not-for-Profit Organizations." Under SFAS No. 117, the Organization is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets,temporarily restricted net assets, and permanently restricted net assets. In addition, the Organization is required to present a statement of cash flows. 4. Grants receivable Grants receivable are uncollateralized unconditional promises to give. Management individually reviews all grant receivable balances and based on an assessment of grantor's current funding status estimates the portion, if any, of the balance that will not be collected. As of December 31, 2007 and 2006, management considers all grant receivable balances to be collectible. If amounts become uncollectible, they are expensed when that determination is made. 5. Contributions The Organization has adopted SFAS No. 116, "Accounting for Contributions Received and Contributions Made." Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted net assets depending on the existence or nature of any donor restrictions. Restricted net assets are reclassified to unrestricted net assets upon satisfaction of the time or purpose reduction. Contributions received with donor-imposed restrictions that are met in the same year in which the contributions are received are classified as unrestricted contributions. 5 ' J l 1 FOX RIVER STUDY GROUP NOTES TO FINANCIAL STATEMENTS December 31, 2007 and 2006 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-Continued 6. Donated services No amounts have been reflected in the financial statements for donated services. The Organization generally pays for services requiring specific expertise. However, many individuals volunteer their time and perform a variety of tasks that assist the Organization. 7. Income taxes The Organization is a not-for-profit organization that is exempt from income taxes under Section 501(a) as described in Section 501(c)(3)of the Internal Revenue Code. Accordingly, no provision for income tax expense is included in the accompanying financial statements. 8. Restricted and unrestricted revenue Contributions and grants received are recorded as increases in unrestricted, temporarily restricted, or permanently restricted net assets, depending on the existence and/or nature of any donor restrictions. NOTE C - RESTRICTIONS ON CASH/NET ASSETS Cash balances restricted and temporarily restricted net assets totaling $95,000 and $47,500 at December 31, 2007 and 2006, respectively, are available for phase III expenses. NOTE D - CONCENTRATIONS The Organization maintains its cash balances in a financial institution located in Oswego, Illinois. The balance is insured by the Federal Deposit Insurance Corporation up to$100,000. Uninsured balances aggregate to$282,449 and $82,546 at December 31, 2007 and 2006, respectively. 6 September 4, 2008 TO: Mayor and Members of the City Council - FROM: Olufemi Folarin, City Manager Kyla B. Jacobsen, Water System Superintendent SUBJECT: Request for Funding from the Fox River Study Group PURPOSE The purpose of this memorandum is to provide the Mayor and members of the City Council with information to consider a request to continue funding the Fox River Study Group. RECOMMENDATION It is recommended that the City Council approve the funding for the Fox River Study Group in the amount of$75,000, payable in three (3) annual installments of$25,000 each for a period of three (3)years. BACKGROUND The Fox River Study Group (FRSG) is a diverse coalition of stakeholders working together to preserve and/or enhance water quality in the Fox River watershed. The FRSG began meeting in the summer of 2001 to plan how to prepare for an upcoming study on the river, because three segments of the Fox River appeared on the Illinois Environmental Protection Agency's list of impaired waters. That listing was updated in 2002, and now includes the entire length of the Fox River from the Wisconsin state line to the river's mouth at Ottawa. Although the emphasis in the original meetings was on monitoring water quality, it soon became clear that the FRSG presented a unique opportunity to foster sustainable growth throughout the watershed. To guide those efforts, the FRSG reached a consensus on a work plan made up of four phases. • Phase I work, April 2002 — March, 2004, was conducted by the Illinois State Water Survey and funded with a $158,200 grant from the Illinois Environmental Protection Agency. • Phase II effort also began in April 2002 when the FRSG water quality monitoring program started collecting samples at seven sites along the Fox River and is still on- going. This program, an all-volunteer effort organized by the Fox River and Fox Metro Fox River Study Group Funding September 4, 2008 Page 2 water reclamation districts, was carefully designed to satisfy rigorous data quality requirements of the IEPA. This phase includes the development of a suite of computer models of the Fox River that will address both runoff and low flow conditions. The Illinois State Water Survey has been working on components of the model development since November, 2003. The study group has supported the model development with local funds and with a $370,600 appropriation from Congress. The US Environmental Protection Agency approved the study group's proposal to use $368,000 from a second Congressional appropriation to complete work on this phase. • Phase III involves ambient monitoring, intensive field data collection and computer model calibration. The fully calibrated model will be used to evaluate specific management alternatives to ensuring the quality of the Fox River. The FRSG will recommend that entities with the appropriate authority implement the projects which are identified as the most cost effective means to maintain and enhance the water quality. Initial monitoring under this phase will be funded with $532,000 in Congressional appropriations. The Illinois State Water Survey is currently working on the water quality monitoring plan. It is anticipated that an additional $450,000 in funding will be needed to complete this phase which is still in progress. • Phase IV, the final phase of the work plan, will be the implementation and maintenance of the watershed model as a management tool. This work has not yet commenced. This will be an on-going phase of maintenance and updating the model for use to evaluate the impact of different management measures. It will require $100,000 annually for updates and maintenance of the model. The FRSG has garnered federal funding to help cover costs and continues to solicit local matching funds by asking Fox River Valley communities to budget 25¢ per capita into their yearly budgets to support the study. Towns which have contributed to the study in the past include Port Barrington, Lakemoor, Yorkville, Algonquin, Geneva, St. Charles, Batavia, Aurora and Elgin. Also included is the Yorkville-Bristol Sanitary District. The towns of Aurora and Elgin, which take their drinking water from the Fox River, are being asked to contribute 50¢ per capita. City of Elgin staff met with members of the FRSG and the Fox River Water Reclamation District (FRWRD) earlier this summer to discuss funding the Investigation and sharing of the costs. It was agreed that the City of Elgin and FRWRD would share the contribution of 50¢ per capita. The City of Elgin has contributed in the past to this project and also participates as an in-kind contributor, donating the services of the Water Department's laboratory for testing of monthly samples collected at the 16 sites estimated to cost$2,500 annually. ti Fox River Study Group Funding September 4, 2008 Page 3 COMMUNITY GROUPSANTERESTED PERSONS CONTACTED None FINANCIAL IMPACT The total cost to assist in the 2008 funding of the Fox River Study Group is $25,000. There are sufficient funds budgeted ($90,000) and available ($40,000) in the General Fund, account number 010-6902-719.30-99, Non-Departmental-Miscellaneous Professional Services, project number 339821, to fund the initial year of the study. Future funding for this initiative will need to be addressed as part of the 2009 and 2010 budgeting process. LEGAL IMPACT None ALTERNATIVES 1. The City Council may choose to approve the funding for the Fox River Study Group's Fox River Watershed Investigation. 2. The City Council may choose to offer no financial assistance for the Fox River Study Group's Fox River Watershed Investigation. Respectfully submitted for Council consideration. KBJ Attachment