This meeting is bei1tg held via telephonic attendance

AGENDA FINANCE COMMITTEE Village of Hoffman Estates June 22, 2020

Immediately following Public Health & Safety

Members: Gary Pilafasj Chairperson Karen Mills, Trustee Anna Newell, Vice Chairperson Gary Stanton, Trustee Michael Gaeta, Trustee Karen Arnet, Trustee William McLeod, Mayor I. Roll Call II. Approval of Minutes - June 1, 2020

NEW BUSINESS 1. Presentation of the Comprehensive Annual Financial Report for the year ended December 31, 2019.

2. Presentation of the Economic Development Area Special Tax Allocation Fund Annual Financial Report for the year ended December 31, 2019.

3. Request approval of an Ordinance and Naming Rights Agreement with NOW Health Group, Inc. renaming the Sears Centre Arena to the NOW Arena, in an amount of $11.25 Million over a fifteen year term.

4. Request approval of a Termination Agreement and Mutual Release with Transform SR LLC terminating the existing Naming Rights Agreement.

5. Request approval of The Third Amended and Restated Commercial Rights Marketing Agreement with Spectra Partnerships to service the Naming Rights Agreement for NOW Health Group, Inc.

REPORTS (INFORMATION ONLY} 1. Finance Department Monthly Report. 2. Information System Department Monthly Report. 3. Sears Centre Monthly Report.

III. President's Report IV. Other V. Items in Review VI. Adjournment

Further detalls and i11/om1atlo11 can be found in the agenda packet alJached hereto and incorporated herein a11d can also be viewed online at www.hoffnumestates.org and/or in person in the V"dlage Clerk's office.

The Village of Hoffman Estates complies with the Americans with Disabilities Act (ADA). For accessibility assistance, call the ADA Coordinator at 847/882-9100. Village of Hoffman Estates DRAFT

FINANCE COMMITTEE MEETING MINUTES June 1, 2020

I. Roll call

Members in Attendance: Trustee Gary Pilafas, Chairman Trustee Anna Newell, Vice Chairperson Trustee Michael Gaeta Trustee Gary Stanton Trustee Karen Mills Trustee Karen Arnet Mayor William McLeod

Management Team Members James Norris, Village Manager in Attendance: Dan O'Malley, Deputy Village Manager Patti Cross, Asst. Corporation Counsel Joe Nebel, Director of Public Works Rachel Musiala, Finance Director Richard Signorella, CATV Coordinator Bev Romanoff, Village Clerk Pat Fortunato, Fire Chief Peter Gugliotta, Director of Dev. Services Jennifer Horn, Dir. Of Planning and Trans.

The Finance Committee meeting was called to order at 7:00 p.m.

II. Approval of Minutes - April 27, 2020 May 11, 2020 (Special)

Motion by Trustee Gaeta, seconded by Trustee Stanton to approve the Finance Meeting minutes for April 27, 2020. Voice vote taken. All ayes. Motion carried.

Motion by Trustee Gaeta, seconded by Trustee Stanton to approve the Special Finance Meeting minutes for May 11, 2020. Voice vote taken. All ayes. Motion carried.

NEW BUSINESS

1. Request approval of an ordinance to amend the FY2019 Budget as a result of the completed financial audit and to close out the fiscal year.

An item summary sheet from Rachel Musiala was presented to Committee.

Motion by Trustee Gaeta, seconded by Trustee Stanton to amend the FY2019 Budget as a result of the completed financial audit and to close out the fiscal year. Voice vote taken. All ayes. Motion carried. Finance Committee -2- June 1, 2020

REPORTS (INFORMATION ONLY)

1. Finance Department Monthly Report

The Finance Department Monthly Report was received and filed.

2. Information System Department Monthly Report

The Information System Department Monthly Report was received and filed.

3. Sears Centre Monthly Report

The Sears Centre Monthly Report was received and filed.

III. President's Report IV. Other V. Items in Review VI. Adjournment

Motion by Trustee Gaeta, seconded by Trustee Arnet, to adjourn the meeting at 7:02 p.m. Voice vote taken. All ayes. Motion carried.

Minutes submitted by:

Jennifer Djordjevic / Director of Operations Date & Outreach, Office of the Mayor & Board NBl COMMITTEE AGENDA ITEM VILLAGE OF HOFFMAN ESTATES

SUBJECT: 2019 Comprehensive Annual Financial Report MEETING DATE: June 22, 2020 COMMITTEE: Finance FROM: Rachel Musiala, Director of Finance

PURPOSE: To present the Comprehensive Annual Financial Report for the fiscal year ended December 31, 2019. A portion of the draft report is attached to this agenda item and a CD of the entire draft report is included as well.

BACKGROUND: Each year the Village retains a CPA firm to perform an audit of the Village's annual financial statements. This year, the firm of BKD CPA's & Advisors performed the audit. The 2019 audit was the first year ofa five-year contract with BKD.

DISCUSSION: BKD has given the 2019 Comprehensive Annual Financial Report (CAFR) their "unmodified opinion." This means that the financial statements are fairly presented and are prepared in accordance with generally accepted accounting principles.

A detailed summary of the Village's financial condition can be found in the Management's Discussion and Analysis (MD&A), which is located within the attached CAFR, directly following the General Purpose External Financial Statements tab.

In the case of the Village of Hoffman Estates, liabilities exceeded assets by $54,714,730 as of December 31, 2019 compared to liabilities exceeding assets of $50,528,560 as of December 31, 2018. The Village's combined net position decreased by $4,186,170. This is primarily due to a planned drawdown in net position for capital projects.

The Village is required to report over $119 million of liabilities related to the Economic Development Area (EDA), with no corresponding asset. These liabilities, however, are only payable if and to the extent incremental EDA property taxes are received and will never be a true liability of the Village's operating funds. If we exclude EDA activity, the Village is reporting a positive net position of assets exceeding liabilities by $62,184,868 as of December 31, 2019.

The statement ofnet position (pages 4 and 5 of the CAFR, which includes all EDA activity) presents information on all of the Village's assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Village is improving or deteriorating. Related specifically to the General Fund, which includes the Municipal Waste System Fund in the CAFR, the fund balance increased by $878,936 during the current fiscal year, which was a very positive result when compared to the planned drawdown of $1,192,300. At the end of FY2019, unassigned fund balance of the General Fund was $20,242,741, while total fund balance equaled $25,798,131. The Village's current fund balance policy states that the Village will strive to maintain an unassigned fund balance within the General Fund equal to 25 percent of the preceding year's annual operating budget. Unassigned fund balance as of December 31, 2019 represents 32.2 percent of the total budgeted General Fund expenditures.

RECOMMENDATION: Request acknowledgement of receipt and filing of the Comprehensive Annual Financial Report for the year ended December 31, 2019.

ArrACHMENT (DRAFT 2019 COMPREHENSIVE ANNUAL FINANCIAL REPORT- PORTION PRINTED AND ENTIRE DOCUMENT ON CD) DRAFT

COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED DECEMBER 31, 2019

VILLAGE OF HOFFMAN ESTATES, ILLINOIS DRAFT

Village of Hoffman Estates, Illinois Comprehensive Annual Financial Report

Fiscal Year Ended December 31, 2019

Prepared by Finance Department

Rachel Musiala Director of Finance DRAFT Village of Hoffman Estates December 31, 2019

Contents

Introductory Section Principal Officials ...... i Organization Chart ...... ii Certificate of Achievement for Excellence in Financial Reporting ...... iii Letter ofTrans111ittal ...... iv

Financial Section Independent Auditor's Report ...... I

Management's Discussion and Analysis ...... MD&A 1-14

Basic Financial Statements

Government-Wide Financial Statements Statement of Net Position ...... 4 Statement of Activities ...... 6 Fund Financial Statements Governmental Funds Balance Sheet ...... 8 Reconciliation of Fund Balances of Governmental Funds to the Governmental Activities in the Statement of Net Position ...... 9 Statement of Revenues, Expenditures and Changes in Fund Balances ...... I0 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Governmental Activities in the Statement of Activities...... 11 Proprietary Funds Statement ofNet Position ...... 13 Statement of Revenues, Expenses and Changes in Net Position ...... 15 State1nent of Cash Flows ...... 16 Fiduciary Funds Statement of Fiduciary Net Position ...... 18 Statement of Changes in Fiduciary Net Position ...... 19 Notes to Financial Statements ...... 20 DRAFT Village of Hoffman Estates December 31, 2019

Required Supplementary Information Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual General Fund ...... 71 EDA General Account Fund- Budget and Actual ...... 72 Notes to Required Supplementary Information ...... 73 Schedule of Village Contributions Illinois Municipal Retirement Fund ...... 74 Police Pension Fund ...... 75 Firefighters' Pension Fund ...... 77 Schedule of Changes in the Village's Net Pension Liability and Related Ratios Illinois Municipal Retirement Fund ...... 79 Police Pension Fund ...... 80 Firefighters' Pension Fund ...... 82 Schedule of Changes in the Village's Total OPEB Liability and Related Ratios - Other Postemployment Benefit Plan ...... 84 Schedule of Investment Returns Police Pension Fund ...... 85 Firefighters' Pension Fund ...... 86

Combining and Individual Fund Financial Statements and Schedules Major Governmental Funds Comparative Balance Sheet by Account - General Fund ...... 87 Comparative Schedule of Revenues, Expenditures and Changes in Fund Balance by Account - General Fund ...... 88 Schedule of Expenditures - Budget and Actual - General Account...... 90 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Municipal Waste System Account ...... 92 EDA General Account Fund ...... 93 Nonmajor Governmental Funds Combining Balance Sheet ...... 94 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ...... 95 DRAFT Village of Hoffman Estates December 31, 2019

Nonmajor Special Revenue Funds Combining Balance Sheet ...... 96 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ...... 98 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Motor Fuel Tax Fund ...... I 00 Community Development Block Grant Fund ...... IO I Asset Seizure Fund...... I 02 Roselle Road TIF Fund ...... I 03 Barrington/Higgins TIF Fund ...... I 04 Higgins/Hasse 11 TIF Fund ...... I 05 Lakewood Tl F Fund ...... I 06 Nonmajor Debt Service Funds Combining Balance Sheet ...... 107 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ...... 109 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual 2008A General Obligation Debt Service Fund ...... 111 2009A General Obligation Debt Service Fund ...... 112 2015B General Obligation Debt Service Fund ...... 113 2016 General Obligation Refunding Debt Service Fund ...... 114 20 I 7 A&B General Obligation Debt Service Fund ...... 115 2018 General Obligation Refunding Debt Service Fund ...... 116 Nonmajor Capital Projects Funds Combining Balance Sheet ...... 117 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ...... 119 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Central Area Road Improvement Impact Fee Fund 121 Central Road Corridor Improvement Fund ...... 122 Traffic lmprove1nent Fund ...... 123 Prairie Stone Capital Fund ...... 124 DRAFT Village of Hoffman Estates December 31, 2019

Western Area Traffic Improvement Fund ...... 125 Capital Improve1nents Fund ...... 126 Western Area Road improvement Impact Fee Fund ...... 127 Capital Vehicle and Equipment Fund ...... 128 Hoffman Boulevard Bridge Fund ...... 129 Capital Replacement Fund ...... 130 Western Corridor Fund ...... 131 2015/201 7/20 I 9 Capital Projects Fund ...... 132 Road hnprove1nent Fund ...... 133 Stonnwater Management Fund ...... 134

Major Enterprise Funds Waterworks and Sewerage Fund Statement of Net Position ...... 135 Schedule of Revenues, Expenses and Changes in Net Position - Budget and Actual - Budgetary Basis ...... 13 7 Sears Centre Operating Fund Statement ofNet Position ...... 138 Schedule of Revenues, Expenses and Changes in Net Position - Budget and Actual - Budgetary Basis ...... 139

Internal Service Funds Combining Statement of Net Position ...... 140 Combining Statement of Revenues, Expenses and Changes in Net Position ...... 141 Combining Statement of Cash Flows ...... 142 Information Systems Fund Schedule of Revenues, Expenses and Changes in Net Position - Budget and Actual - Budgetary Basis ...... 143 Insurance Fund Schedule of Net Position - by Program ...... 144 Schedule of Revenues, Expenses and Changes in Net Position - Budget and Actual ...... 145 DRAFT Village of Hoffman Estates December 31, 2019

Schedule of Revenues, Expenses and Changes in Net Position - by Program ...... 146

Fiduciary Funds Combining Statement of Fiduciary Net Position - Pension Trust Funds ...... 147 Combining Statement of Changes in Fiduciary Net Position - Pension Trust Funds ...... 148 Schedule of Changes in Fiduciary Net Position - Budget and Actual Police Pension Fund ...... 149 Firefighters' Pension Fund ...... 150 Statement of Net Position - Custodial Fund ...... 151 Statement of Changes in Net Position - Custodial Fund ...... 152

Other Supplemental Information Consolidated Year End Financial Report ...... 153

Supplemental Data Schedule of Insurance in Force ...... 154 Long-Term Debt Requirements General Obligation Refunding Bond Series of2015A ...... 155 General Obligation Bond Series of2015B ...... 156 General Obligation Refunding Bond Series of20 I SC ...... 157 General Obligation Refunding Bond Series of2016 ...... 158 GeneraI ObIi gation Bond Series of 20 l 7 A ...... I 5 9 General Obligation Refunding Bond Series of 20178 ...... 160 General Obligation Refunding Bond Series of2018 ...... 161 General Obligation Bond Series of2019 ...... 162 Hoffman Estates Economic Development Project Area Tax Increment Revenue Notes ...... 163

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...... 167 DRAFT Village of Hoffman Estates December 31, 2019

Statistical Section Financial Trends Net Position by Component ...... 169 Net Position by Component Excluding FDA TIF Ac1ivity ...... 171 Change in Net Position ...... 173 Change in Net Position Excluding EDA TIF Activity ...... 177 Fund Balances of Governmental Funds ...... 181 Changes in Fund Balances of Governmental Funds...... 183 Revenue Capacity Assessed Value and Actual Value of Taxable Property ...... 185 Property Tax Rates - Direct and Overlapping Governments Schaumburg Township ...... ,...... 186 Barrington Township ...... 187 Palatine Township ...... 188 Hanover Township ...... 189 Principal Property Taxpayers ...... 190 Property Tax Levies and Collections ...... 191 Debt Capacity Ratios of Outstanding Debt by Type ...... 192 Ratios of Net General Bonded Debt Outstanding ...... 193 Direct and Overlapping Governmental Activities Debt ...... 194 Schedule of Legal Debt Margin ...... 195 Pledged-Revenue Coverage ...... 196 Demographic and Economic Information Demographic and Economic Information ...... 197 Principal Employers ...... 198 Full-Time Equivalent Employees ...... 199 Operating Information Operating Indicators ...... 200 Capital Assets Statistics ...... 201 DRAFT Village of Hoffman Estates December 31, 2019

Continuing Disclosure ~ Annual Financial Information - Annual Report Comparative General Fund Balance Sheet...... 202 Genernl Furni Revenues and Expenditures ...... 203 Combined Statement - Fund Balances - All Funds ...... 204 Budgetary Summary - All Funds ...... 205 Combined Statement - Cash and Investments - All Funds ...... 206 General Fund - Major Sources of Revenue ...... 207 Direct and Overlapping General Obligation Debt...... 208 Total General Obligation Bond Debt Service ...... 209 Local Share of State Sales Tax History by Month - Cash Basis ...... 214 Home Rule Sales Tax History by Month - Cash Basis ...... 215 DRAFT

Introductory Section VILLAGEOFHOFFMANESTATES,ILLC RA FT PRINCIPAL OFFICIALS

December 31, 2019

T.EGTSLATIVE

Village Board of Trustees

William D. McLeod, President

Gary G. Stanton Karen V. :Mills

Michael Gaeta Anna Newell

Karen J. Arnet Gary J. Pilafas

Bev Romanoff, Village Clerk

ADMINISTRATIVE

James H. Norris, Village Manager

FINANCE DEPARTMENT

Rachel Musiala, Director of Finance VILLAGE OF HOFFMAN ESTATES ORGANIZATION CHART

1,L~ILJLr"I I U BOARDS & COMMISSIONS I STANDING COMMITTEES Arts Firefighters Pension Finance Bicycle & Pedestrian Fourth of July General Admin . & Personnel Advisory Committee Historical Sites VILLAGE PRESIDENT Transoortalion & Road Improve. Capital Improvements Local Historian AND TRUSTEES CLERK Plannina, Buildlna & Zonina Celebrations Planning & Zoning Public Health & Safety Celtic Fest Platzkonzert Public Wor~s & Utilities Com. for Disabled Citizens Police Pension Com. for Senior Citizens Road lmprov. Impact Comi;rehensive Plan Fee Traffic Advisory Ad•1isory Committee Sister Cities Cultural Awareness Stormwater Mgmt I I I Economic :::>evelopmenl Sustainability Electrical Utility CORPORATION ,- VILLAGE VILLAGE TREASURER Emerging Technologies Veterans Memorial COUNSEL PROSECUTOR MANAGER Fire & Police Youth

DEPUTY ViLLAGE MANAGER I I I I I I I I I HEALTH& DEVELOPMENT GENERAL INFORMATION PUBLIC GENERAL FIRE POLICE HUMAl-1 BOARDS& SERVICES GOVERNMENT SYSTEMS SERVICES WORKS GOVERNMENT COMMISSIONS

I I I I I I -Admin - Finance - Aclmin. -Admin -Admin • Adrrin - Four1hof July - Planning - Water Billing - Public -Juvenije -Snow&. Ice Control • Hurran Resources Commission -Cocle Education Investigations -Pa\lement Ma,agement - Fire & Police Enforcement • Fire Suppression -Tactical MaLn.ten.:1nc.e • Corr munications Commission - Transportation • Eme

ii DRAFT

Government Finance Officers Association

Certificate of Achievement for Excellence in Financial Reporting

Presented to Village of Hoffman Estates Illinois

For its Comprehensive Annual Financial Report for the Fiscal Year Ended

December 31, 2018

~P-~ Executive Director/CEO

Iii DRAFT it:·, HOFFMAN ESTATES

'>~ ~1.,.,.... ~ ,S''./ ~

_____, 2020

The Honorable William Mcleod, President Board of Trustees Village Manager James H. Norris Citizens of the Village of Hoffman Estates

State law requires that every general-purpose local government publish within six months of the close of each fiscal year a complete set of audited financial statements. This report is published to fulfill that requirement for the fiscal year ended December 31, 2019.

Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal control that it has established for this purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements.

State statutes require an annual audit by independent certified public accountants. The accounting firm of BKD, CPAs & Advisors performed the audit this year The independent auditor's report is included in the Financial Section of this report. The auditors have given this report an unmodified ("clean") opinion, meaning that the financial statements fairly present the Village's financial position at December 31, 2019, and the changes in financial position for the year then ended.

Management's discussion and analysis (MD&A) immediately follows the independent auditor's report and provides a narrative introduction, overview, and analysis of the basic financial statements. MD&A complements this letter of transmittal and should be read in conjunction with it.

Profile of the Government

The Village of Hoffman Estates, incorporated in 1959, operates under the council/manager form of government. The legislative body consists of the Village President and Board of six Trustees, all elected on an at-large basis to overlapping four-year terms. The Village Manager is responsible for the day-to-day administration of the Village. The Village is a home rule municipality as defined by the Illinois Constitution. Located approximately thirty miles northwest of Chicago, in the Counties of Cook and Kane, the Village occupies a land area of approximately 22.1 square miles.

Results of the 2010 Census were received in May, 2011 and show the Village's total population at 51,895. This figure represents an increase of 2,400 from the last decennial census, which was completed in 2000. The Village is projected to reach its population maximum at 58,000 residents.

Additional demographic information about the Village may be found in the Statistical Section of this report.

The Village provides a full range of general governmental services, including police and fire protection, health and social services, water and sewer utilities, street construction and maintenance, code enforcement, planning and zoning, and general administrative services. The financial reporting entity of the

IV DRAFT Village of Hoffman Estates is comprised of all funds of the primary government (i.e., the Village of Hoffman Estates as legally defined) including its pension (and other employee benefit) trust funds: the Hoffman Estates Police Pension Fund and the Hoffman Estates Firefighters' Pension Fund. These funds were determined to be pension (and other employee benefit) trust funds due to their fiduciary and fiscal relationship with the Village as their sole purpose is to provide retirement benefits to the Village's sworn police officers and firefighters. Tax increment financing (TIF) districts have been reported as funds in the Village's financial statements, as they are not legally separate No other legally separate entity qualifies as a component unit of the Village.

The anni1.:il budget serves as the foundation for the Village's financial planning and control. State law requires that a municipality operating under the budget system adopt its annual budget prior to the start of its fiscal year. Through the budget, spending aulhurily is conveyed by expenditure object. Budgetary control is maintained by the use of encumbrance accounting under which purchase orders, contracts, and other commitments are effectively recorded as temporary expenditures in order to reserve the proper portion of the applicable budgetary account. The legal level of budgetary control is the department level, or, where no departmental segregation of a fund exists, the fund level.

Local Economy

The national economy seems to be improving from FY2018. The national unemployment rate has decreased to 3 5% in December 2019 compared to 3.9% in December 2018. The stock market has grown significantly this year. As of December 2019, the market is at 28,538, up 5,211 points or 22.3% from December 31, 2018. Both of these are positive signs regarding the national economy at this point in time. However, some economists are forecasting a recession in the near future.

Unfortunately, the Village is starting to experience signs of early recession-like trends for certain revenues. State-shared sales tax and Home Rule sales tax revenues have declined in FY2019, not over one specific reporting category (i.e. automotive sales or retail sales), but amongst all of them Projections show a decline of 6.2% and 11.8%, respectively, compared to FY2019 budget. Fortunately, in FY2019, the Village received greater development revenue related to building permits and engineering fees that helped off-set declining sales taxes. In addition, the Village received several one-time revenues that alleviated the loss of those sales tax revenues. The sale of a large building doubled our real estate transfer tax budget projection and a major outdoor concert at the Sears Centre Arena produced a boost in entertainment tax. However, these were one-time occurrences that may not repeat in future years.

The economy has grown through most sectors in Hoffman Estates during 2019 including retail, entertainment, residential and industrial

Office/Light Industrial: The Village continued to promote the Lakewood Campus (formerly the AT&T headquarters) as an area for reuse and redevelopment. As a result, Somerset Development purchased the site for its Metroburb vision for the campus, named Bell Works. The 1.6 million square foot former office site is transforming into a mixed-use hub for office, residential, retail, service, hotel and conference center uses, and where residents can live, work, explore and play. In January 2019, the Village formed a Tax Increment Financing District as a tool to entice redevelopment, while Somerset purchased the property later in March.

The first phase of construction at Bell Works began in 2019, including a remodel of the existing main building, while Village staff began discussions with a developer on new residential construction on the east side of the site. Office and retail tenants are expected to begin occupying the space mid-2020. In order to promote this community-changing project, staff spent 2019 speaking at nine separate conferences, sessions, and seminars, educating attendees on the Metroburb.

Swiss company, Bystronic, neared completion on a new 163,000 square foot North American headquarters in the Village just east of Barrington Road, along 1-90. The facility will feature offices, manufacturing space, a showroom, and warehouses. They plan to open in the first quarter of 2020, employing 50-150 people. This use, like other high tech industrial nearby, should bring the ancillary

V DRAFT benefit of local hotel stays for their out-of-town customers. These businesses represent the most ideal land uses for their respective areas and will significantly contribute to the Village's local property, sales, and hotel tax bases. Recognizing the impact of industrial on the tax base, Hoffman Estates rezoned a 15-acre parcel east of the Fountain Crossing Shopping Center along Barrington Road to manufacturing at the request of the land owner, who received great interest from industrial users. This followed on the heels of a possible new industrial park, the Hoffman Tech Park, on 53 acres north of Bell Works along Lakewood Boulevard. The nearly 700,000 square foot development could begin construction in 2020.

Taking an important step in long-range planning, the Village finalized a new Western Area Plan while working with The Lakota Group. The study provided a clear qoal for economic and planning efforts in Prairie Stone and the surrounding area, and will eventually be integrated into the Village-wide Comprehensive Plan updal~. In lale 2019, tl,e Village began the implementation of a [3arrington Road Interchange Plan by completing the consultant selection process. Farr Associates was hired and the Village worked with the consultant in participating in the initial phase of information gathering. This study will provide a clear goal for economic and planning efforts around the new full interchange at Barrington Road and 1-90 which will eventually be integrated into the Village-wide Comprehensive Plan update, anticipated to begin in 2020.

Retail/Restaurants: Several new businesses opened their doors in 2019, including Old Navy, Crank Revolution Bike Shop, QP Greek Food, Ricky Rockets Fuel Center, OrangeTheory Fitness, Burnt Pizza Company, Clinical Computer Systems, and Cross Kicks Fitness while other businesses completed remodels and expansions like Omron, Poplar Creek Bowl, Aldi and Country Inn and Suites. Finally, the Village again leased space at the Village Green for Levy Food Service to operate the Hideaway Brew Garden. These businesses offer services for Village residents and produce tax revenue for Village operations.

Public Transportation: Village staff continued to work with Pace on the bus rapid transit station and Park­ n-Ride facility at the reconstructed Barrington Road and 1-90 interchange. Construction of the Park-N-Ride pedestrian bridge over 1-90 was completed in 2017, with Pace bus service activated in fall 2018, connecting to the CTA blue line station in Rosemont and to downtown Chicago. The Kiss-n-Ride construction completed in 2019 as ridership _on the bus lines continued to grow.

Village TIF Districts: Roselle Road TIF District. In 2019, the Village continued to focus on the promotion and improvement of the Hoffman Plaza Shopping Center while seeking redevelopment on key parcels. By the end of 2019, Golf Center was nearly fu lly leased, as Robin Realty, the center owner, worked to retain and attract tenants. Sterling Organization, the owner of Hoffman Plaza, worked to redevelop the center by starting construction on an outlot on the south side of the center with a drive-thru food tenant Sterling also submitted preliminary plans for another outlot along Roselle Road with the hope of getting approval in 2020. Lastly, the Village issued an RFP to find a new developer for the 75 and 85 East Golf Road site. No developer was selected following the submittals, so the search will continue·in 2020.

Higgins Hassell TIF District: Reconstruction of the facade of Poplar Creek Bowl, the last phase of the seven-year facade reconstruction project finished in 2019. Additionally, plans were approved and construction began to rebuild the Buona Beef on the same site, but in a new, smaller format. Construction is expected to be completed in May 2020. A portion of the site will remain as another outlet for development Finally, plans were submitted and approved for a 7/11 convenience store and gas station on the former McDonalds outlet site at the corner of Higgins Rd and Governors Lane. Construction is expected to begin in 2020.

Barrington Higgins TIF District: In 2019, the Village finished dredging the Stonegate pond between the Conference Center and the restaurants. The reconstruction of the pond improved public infrastructure and beautified the common area, thereby enhancing the economic viability of the properties in the district by attracting more business The Village also approved a contract to engineer, design and install a new handrail along the sidewalk protecting

Vl DRAFT pedestrians from the open pond below. Design work began in 2019 and is expected to be installed in 2020.

Residential: 2019 saw the completion of several single-family residential subdivisions. M/1 Homes finished construction on their 81-unit Bergman Pointe subdivision on the north side of the Village. Lennar Homes' investment in the western portion of Hoffman Estates neared completion on their 108 single-family lot subdivision, Amber Meadows, with nearly all lots sold by the end of 2019.

Long-term Financial Planning

ThP. Vill;:ige has a history of sound planning and financial practices. The Village's first Comprehensive Plan was prepared by outside consultants and was adopted in 1969 and has been updated several times since then, most recently in April, 2009. A full update is plarm~d in FY2021 . The Comprehensive Plan is intended to guide the long range development policy of the Village. A broad array of development related issues are discussed in the plan, including transportation, land use, and economic development. The general guidance provided by the plan is considered when new developments are proposed and when specific programs are considered for implementation by the Village. Over time, it is expected that the broad policies in the plan may need to be adapted to meet changing conditions. Many of the policies of the plan are proposed with this need for flexibility in mind.

The Village also takes stringent steps in preparing for long-term capital planning. Every year, the Village produces an eight-year Capital Improvements Program (CIP) budget, which focuses on all vehicles and all capital items that are over $25,000. The CIP is the result of an ongoing infrastructure and vehicles/equipment planning process. These planning decisions are made with regard to both existing and new facilities and equipment. For existing facilities, the planning process addresses appropriate maintenance strategies and repair versus replacement of facilities. New service demands are also considered since they will affect capital facility requirements as well.

In addition, the Village continues to implement its Sustainability Plan. This plan formally recognizes the green initiatives that the Village has already undertaken, assists in prioritizing future green initiatives and capital projects, identifies potential financial savings, and better positions the Village for future grant and rebate opportunities The Plan calls for consideration of efficiency, environmental impact, and the long-term viability of the Village's fiscal health.

The Village Board has established guidelines for budgetary and planning purposes of the amount of unassigned fund balance in the General Fund that should be kept as a reserve. This policy states:

"The Village will strive to maintain an Unassigned Fund Balance within the General Fund equal to 25% of the preceding year's annual operating budget (not including transfers to fund capital projects), barring any unforeseen circumstances that may arise as a result of the State of Illinois' financial condition While the General Fund is above this level of fund balance, any year where year-end revenues exceed expenditures, the amount of surplus will remain in the General Fund or be transferred to other funds to address known future financial needs. This utilization of General Fund surplus will be brought before the Village President and Board of Trustees annually, when applicable, during the Operating Budget process via a recommendation by the Village Manager."

As of December 31, 2019, General Fund unassigned fund balance is 32.2 percent of budgeted operating expenditures and transfers.

Relevant Financial Policies

The Village has established several specific policies to guide its financial operations. Those policies relate to financial stability and reporting, debt issuance, investment and cash management, purchasing, and budget development and adjustment. Some of the most significant policies include:

• Issue a Comprehensive Annual Financial report within 180 days of the end of each fiscal year that complies with generally accepted accounting principles. {Financial Stability and Reporting) DRAFT • Capitalize building improvements, land improvements, infrastructure, vehicles, and equipment having a minimum acquisition cost of $10,000 or more on an individual asset basis. (Financial Stability and Reporting)

• The budget of a fund shall be considered "balanced" when planned revenues or existing fund equity equal or exceed planned expenditures, that is, total outlays or disbursements, for a fiscal year. (Budget Development and Adjustment)

• Invest public funds in a manner that will provide a competitive investment return with the m::iximum security while meeting daily cash flow demands of the Village and conform to all state statutes governing the investment of public tunds. (Investment and Cash Management)

• Require that all bank deposits be collateralized with high-quality securities having a market value of at least 110% of the underlying securities. (Investment and Cash Management)

• Place all investment securities with a third-party custodian for safekeeping. (Investment and Cash Management)

• Conduct a formal competitive bidding process (newspaper publication) for purchases of $20,000 or more. (Purchasing)

Major Initiatives

The Village of Hoffman Estates is dedicated to constantly improving the delivery of its services, thereby enhancing the quality of life for its residents and the operating environment for its businesses. The Village Board sets goals that provide valuable input into the financial planning and practices that will take place throughout the rest of the year, specifically during the budgeting process. The most recently established goals are:

Short-Term Goals.

• Sustainability - Continue to provide green programs and an enhanced sustainability/recycling program through an updated Sustainability Plan and by exploring new environmentally-friendly programs and recycling efforts such as LED streetlight conversion, alternative fuels, and textile recycling.

• Transportation - Partner with local, regional, and state agencies to improve and promote transportation facilities and opportunities within the Village through initiatives with PACE, including the new Park & Ride/Kiss & Ride and the Bus Rapid Transit plan; with Cook County, regarding expanded/improved bike paths along Central and Beverly Roads; and locally, through the Subsidized Taxi Program.

• Infrastructure - Enhance the quality of neighborhoods by continuing the annual Street Revitalization Program and reviewing maintenance of the utility infrastructure through engineering studies, including water/sewer mains; evaluation of public facilities/building; and a storm water utility capital plan.

• Public Safety - Continue contingency planning for the provision of reliable police, fire, and emergency services in disasters and extreme events. Promote awareness of the Village's Emergency Operations Plan/disaster preparedness by increasing outreach efforts to inform and educate residents and the business community.

• Public Safety- Maintain high-quality public safety services, including emergency medical services, fire, police, and health services. Collaborate with Northwest Central Dispatch on implementation

viii DRAFT of new computer-aided dispatch system for emergency 911 operations. Research expanding the Administrative Service Officer program to augment law enforcement efforts Evaluate opportunities for improving Fire Stations 21 and 22. Explore increased collaboration with neighboring agencies on public safety services. Increase awareness of the affordable health and wellness services available to residents and businesses.

• Fiscal Responsibility - Remain fiscally responsible through operational efficiencies and protecting revenue streams. Examine refinancing of existing debt to capture interest savings; explore performance contracting options; evaluate fleet leasing; continue debt collection efforts through the State Comrtroller program; promote intergovernmental collaborations such as equipment/personnel sharing to reduce cost of services; and develop a contingency plan to address continued revenue reductions by the State.

• Economic Development - Promote thedevelopmentof available properties to create a thriving local economy; update the Comprehensive Plan; undertake area plans for the Entertainment District and the I-90/Barrington Road Interchange area; support the redevelopment of the AT&T campus into a "Metroburb". Continue the redevelopment of Hoffman Plaza and encourage continued investment in other shopping centers.

• Technology- Investigate and analyze technology options and alternatives to improve operational efficiencies, service delivery, and convenience for residents and businesses, Implement file storage/management systems; integrate tablets info field reporting, locating, and inspections; and automate the employment application process. Pilot an offsite kiosk program to enhance resident payment options. Evaluate a new or improved mobile application. Research and explore the differing components of the Smart City Initiative, including fil Iable o nl ine forms, outward facing GI S, and online document retrieval.

• Organizational Development - Continue to advance a progressive work environment through employee training and organizational development programs and initiates. Prepare for organizational succession by providing a leadership training program and advanced workforce planning. Conduct specific training for Time Management, Crisis Intervention, and Ethics education, and budget for position specific and technology training.

Ongoing Goals:

• Sustainability - Explore and implement sustainable programs and practices as outlined in the Sustainability Plan by applying for grant opportunities, and integrate sustainability into Village operations where feasible.

• Transportation - Collaborate with local, regional, state, and national agencies to identify and implement initiatives to improve all modes of public transportation, including bicycle and pedestrian travel, throughout the Village.

• Infrastructure - Maintain and improve the Village's infrastructure, including designing, funding, and implementing a comprehensive and continuing revitalization program for Village streets, water, sanitary sewer, sidewalks, and storm water management projects.

• Public Safety- Ensure the health, welfare, and safety of Village residents and businesses through provision of excellent public safety services, including EMS, fire, police, and emergency management, as well as affordable physical and mental health and wellness services.

• Fiscal Responsibility- Provide municipal services in a fiscally sustainable manner given current economic cond iti ans, and continue to be a leader in legislative advocacy to protect local governmental revenue streams and oppose unfunded mandates,

IX DRAFT • Economic Development - Create a thriving and vital local economy with a strong blend of retail, clean-industrial, commercial, and residential properties.

• Technology - Evaluate and integrate emerging technology and communication tools where feasible to streamline operations, improve service delivery, foster sustainability, and increase accessibility and convenience to residents and businesses.

• Organizational Development- Enhance the Village's operations through employee development and training in core skill sets that will develop our employees and create a cadre of future leaders for the organization.

Awards and Acknowledgements

The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Village of Hoffman Estates for its comprehensive annual financial report for the fiscal year ended December 31, 2018. This was the thirty­ sixth consecutive year the Village has achieved this prestigious award In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate.

In addition, the Village of Hoffman Estates received the GFOA's Distinguished Budget Presentation Award for its annual budget for the 2019 fiscal year. In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan, and as a communications device. This is the eleventh year the Village has received this award.

The preparation of this report on a timely basis was made possible by the efficient and dedicated services of the entire staff of the Finance Department. Each member of the department has my sincere appreciation for the contributions made in the preparation of this report. In addition, I would like to thank the Village President, the Village Trustees and the Village Manager for their leadership and support in planning and conducting the financial affairs of the Village in a responsible and progressive manner.

Respectfully submitted, [ad✓ rl4<~_, Rachel Musiala Director of Finance

X DRAFT

Financial Section DRAFT

Independent Auditor's Report DRAFT

Independent Auditor's Report

The Honorable Village President Members of the Board of Trustees Village of Hoffinan Estates, 111inois

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the Village of Hoffman Estates, Illinois (Village) as of and for the year ended December 31, 2019, and the related notes to financial statements which collectively comprise the Village's basic financial statements as listed in the table of contents.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the EDA Special Tax Allocation Fund, which represent 5%, 6% and 25%, respectively, of the assets, fund balance/net position and revenues/additions of the aggregate remaining fund information. Those statements were audited by other auditors whose report has been furnished to us, and our opinion on the aggregate remaining fund information, insofar as it relates to the amounts included for the EDA Special Tax Allocation Fund, is based solely on the report of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. The financial statements of the EDA Special Tax Allocation Fund were not audited in accordance with Government Auditing Standards.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Village's preparation and fair presentation of the financial statements in order to design audit procedures that are

1 DRAFT The Honorable Village President Members of the Board of Trustees Village of Hoffman Estates, Illinois appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Village's internal control. Accordingly, we express no such opinion. An audit a!so includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinions

In our opinion, based on our audit and the report of the other auditors, 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 the Village of Hoffman Estates, II lino is, as of December 31, 2019, 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.

Prior Year Audited by Other Auditors

The 2018 financial statements, which are not presented herein, were audited by other auditors, and their report thereon, dated June I I , 201 9, expressed an unmodified opinion.

Emphasis of Matter

As described in Note 14, the Village adopted GASB Statement No. 84, Fiduciary Activities, which established standards for identifying, classifying and reporting fiduciary activities and modified certain disclosures in the notes to financial statements. Our opinions are not modified with respect to this matter.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management's discussion and analysis, pension and other postemployment benefit information, as listed in the Table of Contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We 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 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.

2 DRAFT The Honorable Village President Members of the Board of Trustees Village ofHoffinan Estates, Illinois

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Village of Hoffman Estates, Illinois' basic financial statements. The introductory section, combining and individual fund financial statements and schedules, supplemental data and the statistical section as listed in the table of contents are presented for purposes of additional analysis an

The 2019 combining and individual fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the 2019 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 2019 basic financial statements or to the 2019 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 combining and individual fund financial statements and schedules as of and for the year ended December 31, 2019, are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The other information included in the combining and individual fund statements and schedules as of and for the year ended December 31, 2018, was audited by other auditors whose report dated June 11, 2019, expressed an unmodified opinion on such information in relation to the basic financial statements as of and for the year ended December 31, 2018, taken as a whole.

The introductory, supplemental data and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them.

Other Reporting Required by Government Auditing Standards

In accordance ·with Government Auditing Standards, we have also issued our report dated ______, 2020, on our consideration of the Village'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 the Village's 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 the Village's internal control over financial reporting and compliance.

Oakbrook Terrace, lllinois _____;, 2020

3 DRAFT

Management's Discussion and Analysis DRAFT VILLAGE OF HOFFMAN ESTATES, ILLINOIS MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2019

As management of the Village of Hoffman Estates (the "Village"), we offer readers of the Village's financial statements this narrative overview and analysis of the fmancial activities of the Village for the fiscal year ended December 31, 2019. Since the Management's Discussion and Analysis (MD&A) is designed to focus on the current year's activities, resulting changes and currently known facts, please read it in conjunction with the Transmittal Letter (beginning on page iv) and the Village's financial statements (beginning on page 4).

OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis are intended to serve as an introduction to the Village's basic financial statements. The Village's basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. 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 Village's finances, in a manner similar to a private-sector business.

The statement of net position presents information on all of the Village's assets, deferred outflows of resources, liabilities and deferred inflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Village is improving or deteriorating.

The statement of activities presents information showing how the Village's net position changed during the most recent fiscal year. All changes in net position are reported as soon as 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.

Both of the government-wide financial statements distinguish functions of the Village that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities reflect the Village's basic services, including general government, public safety, highways and streets, sanitation, health and welfare, economic development, and culture and recreation. The business-type activities include the water and sewer operations and the operation of the Sears Centre Arena.

The government-wide financial statements can be found on pages 4 through 7 of this report.

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 Village, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the Village 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 balances of spendable resources available at the end of

MD&A- 1 VILLAGE OF HOFFMAN ESTATES. ILLINOln RAFT MANAGEMENT'S DISCUSSION AND ANALYSIS (Cw)

the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements.

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 government's near-term financing decisions Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to fucilitate this comparison between governmental funds and !=!Overnmental activities.

The Village maintains 29 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 and EDA General Account Fund, both of which are considered to be major funds Data from the other 27 governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non major governmental funds is provided in the form of combining statements elsewhere in this report.

The Village adopts an annual budget for its General Fund, Special Revenue Funds, Debt Service Funds, Capital Projects Funds, Enterprise Funds, Internal Service Funds, and Fiduciary Funds. A budgetary comparison statement has been provided for each of these funds to demonstrate compliance with this budget.

The basic governmental fund financial statements can be found on pages 8 through 12 of this report.

Proprietary Funds. The Village maintains two different types of proprietary funds: enterprise funds and internal service funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The Village uses enterprise funds to account for its water and sewer system as well as the operation of the Sears Centre Arena. Ownership of the Sears Centre Arena was taken over by the Village in late 2009. Internal service funds are an accounting device used to accumulate and allocate costs internally among the Village's various functions. The Village uses internal service funds to account for the costs of property and casualty insurance, workers' compensation insurance, and its information systems Because both of these services predominantly · 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 Waterworks and Sewerage Fund, which is considered to be a major fund of the Village. Conversely, the internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report.

The basic proprietary fund financial statements can be found on pages 13 through 16 of this report.

Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outside of the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the Village's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The Village maintains two different types of fiduciary funds: pension trust funds and custodial funds.

The basic fiduciary fund financial statements can be found on pages 18 and 19 of this report.

MD&A- 2 VILLAGE OF HOFFMAN ESTATES, ILLINOIC MANAGEMENT'S DISCUSSION AND ANALYSIS (C tin ) RAFT

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. The notes to the financial statements can be found on pages 20 through 70 of this report.

Other Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the Village's progress in funding its obligation to provide pension and other post-employment benefits to its employees Required supplementary information can be found on pages 71 through 86 of this report.

The combining statements referred to earlier in connection with non major governmental funds and internal service funds are presented immediately following the required supplementary information on pensions. Combining and individual fund statements and schedules can be found on pages 87 through 152 of this report

FINANCIAL ANALYSIS OF THE VILLAGE AS A WHOLE Beyond presenting current-year financial information in the government-wide and major individual fund formats, the Village also presents comparative information from the prior years in the Management's Discussion and Analysis. By doing so, the Village believes that it is providing the best means of analyzing its financial condition and position as of December 31, 2019.

Net Position The table below reflects the condensed Statement of Net Position.

Table 1 Statement of Net Position As of December 31, 2019 and 2018 (in thousands)

Governmental Busl,,e-ss-Type Total Primary Activities Activities Government 2018 2019 201'8 2.019 2018 2019

Current and other Assets $ 69,165.1 $ 76,017.6 $ 17,753.3 $ 26,611 .7 $ 86,918.4 $ 102,629.3 Capital Assets 152,237.8 147,808.4 92,506.9 89,293.6 244.744.7 23r 102.0 Total Assets 221,402.9 223,826.0 110,260.2 115,905.3 331,663.1 339,731 .3

Deferred Outflows of Resources 27,724.0 26,700.2 1,660.0 29,384.0 30,290.9

Long-Term Liabilities 300,047.3 304,718.8 58,644.5 67,071 .5 358,691 .8 371,790.3 Other Liabilities 11 ,576.3 12,864.3 3,579.8 3,815.0 15,156.1 16,679.3 Total Liabilities 311,623.6 317,583.1 62,224.3 70,886.5 373,847.9 388,469.6

Deferred Inflows of Resources 36,253.5 35,833.9 1,474.3 433.5 37,727.8 36,267.4 otal ·a Ii es and De erred lnffows &W,817.1 531417.0 6~,69,8.6 i-1,320.0 111 ,575.7, 424,7.-37.Q

Net Position: Net Investment in Capital Assets 107,355.4 104,398.5 43,632.4 41.205.1 150,987.8 145,603.6 Restricted 1,993.8 4,499.2 12,204.4 1,993.8 16,703.6 Unrestricted (208,099.4) {211,788.4) 4,589.2 (5,233.5) (203,510.2) (217,021 .9) I Teta1 Net Position ·$ (98,1 ·50.2~ $,(1.02,89(!).1) $, 48r221,6 $ 48,W6,0 ,$, (90,52/3.6) $ (~.714.V)j

MD&A-3 VILLAGE OF HOFFMAN ESTATES. ILLINO!n MANAGEMENT'S DISCUSSION AND ANALYSIS (Cw ) RA FT

The increased deficit in unrestricted net position is primarily attributable to net pension liabilities totaling $113,549,877 as of December 31, 2019, compared to $107,607,591 as of December 31, 2018. These items pertain to the Village's participation in the Hoffman Estates Firefighters' Pension Fund, Hoffman Estates Police Pension Fund, and Illinois Municipal Retirement Fund. Additionally, the Village made a determination to report information from the December 31, 2018 actuarial valuation from the Illinois Municipal Retirement Fund in order to continue its dedication to timely financial reporting. Finally, another aspect of the deficit in unrestricted net position is the total Other Post-Employment Benefits (OPEB) obligation. The total OPEB liability is $14,803,537 and $20,213,865 as of December 31, 2018 and 2019, respectively, a liability increase of $5,410,328. The changes in net position of governmental activities and business-type activities are decreases of $4,140,533 and $45,637, respectively.

Finally, a portion of the deficit in unrestricted net position is the result of the Village sponsoring one of the largest economic development area (EDA) tax increment financing (TIF) districts in the State of Illinois to induce the relocation of the headquarters of a major retailer to the Village and keeping the jobs within the state. As part of the inducement, the Village issued $65,400,000 Senior Lien Tax Increment Revenue Bonds, Series 2005 (expired in 2010), $68,947,092 Junior Lien Tax Increment Revenue Bonds, Series 1991 (expired in 2007), and Tax Increment Revenue Notes in the amount of $119,186,441 (as of December 31, 2019). These bonds and notes did not produce a capital asset that is owned by the Village, and even though the Village is not generally obligated for the retirement of the debt as it is payable solely from the incremental taxes generated by the EDA, the bonds and notes are, nonetheless, required to be reported as a liability of the Village. If sufficient funds are not available in the EDA to pay the debt as of the end of the useful life of the EDA, then the obligations would be cancelled and the Village would report a gain on the cancellation of said debt. Therefore, the deficit will be reduced and eliminated over the remaining life of the EDA. It should be noted that the end of the life of the EDA was originally scheduled for 2012. However, legislation enacted by the State of Illinois has extended the EDA for an additional 15 years and it will now end in 2027

Since the EDA distorts the financial position and results of operations of the ongoing operations of the Village, the following table displays the Village's net position without the EDA activity, which is a better measure of the financial position of the Village.

Table 1-a Statement of Net Position Excluding EDA TIF Activity As of December 31, 2019 and 2018 (in thousands)

Governmental Business-Type Total Primacy, Activities Activities Government 2018 2019 2018 2019 2018 2019

Current and Other Assets $ 67,732.9 $ 73,722.4 $ 17,753.3 $ 26,611.7 $ 85,486.2 $100,334.1 Capital Assets 152,237.8 147,808.4 92,506.9 89.293.6 244,744.7 237,102.0 Total Assets 219,970.7 221,530.8 110,260.2 115,905.3 330,230.9 337,436.1

Deferred Outflows of Resources 27 724.0 26.700.2 1,660.0 3,590.7 29,384.00 30,290.9 I Total Assets and DeferNd 0 utl1ows 24'7!694. 7,' 248,231.0 ~ 11,92.0,·2 119,496.0 359,61,ii,;9 367,72'1:.0 Long-Term Liabilities 177,358.4 185.532.3 58,644.5 67,071 .5 236,002.9 252,603.8 Other Liabilities 11 ,555.7 12.855.9 3.579.8 3,815.0 15,135.5 16,67 0.9 Total Liabi/iries 188,914.1 198,388.2 62,224.3 70,886.5 251 ,138.4 269,274.7

Deferred Inflows of Resources 36,253.5 35,833.9 1,4 74.3 433.5 37.727.8 36.267.4 I Total Liabilities an"'d Deferred Inflows 2:.25;167.6, 23412~2.1 63,69816 n.32.0.0. 288,866.2 305,542.1 Net Position: Net Investment in Capital Assets 107,355.4 104,398.5 43,632.4 41,205.1 150,987.8 145,603.6 Restricted 582.0 2,212.3 12,204.4 582.0 14,416.7 Unrestricted 85,410.4 92,601 .9 4 589.2 5,233.5 80,821.2 97,835.4 TotarNet Position $ 2 ,527:.0. $ 14008,9 $ 48 221;6 $ 4.8. 176.0 '.$ 70 748.fii $ 62•1·84.9

MD&A-4 VILLAGE OF HOFFMAN ESTATES. ILLINOln RAFT MANAGEMENT'S DISCUSSION AND ANALYSIS (Cw)

As noted earlier, net position may serve over time as a useful indicator of a government's financial position. After excluding EDA TIF activity, in the case of the Village of Hoffman Estates, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $62,184,868 as of December 31, 2019. The Village's combined net position decreased by $8,563,775 from 2018 which is primarily attributable to the aforementioned net pension liabilities and total OPEB liability increases.

The largest portion of the Village's net position is its investment in capital assets (e.g., land, infrastructure, buildings machinery, and equipment) less any related debt used to acquire those assets that is still outstanding. The Village uses these capit8.I ;:issets to provide services to citizens; consequently, these assets are not available for future spending

Table 2 Net Position: Net Investment in Capital Assets As of December 31, 2019 and 2018 (in thousands)

Governmental Business-Type Activities Activities Total 2018 201!l 2018 2019 2018 I 2019

Capital Assets $ 152,237.8 $ 147,808.4 $ 92,506.9 $ 86,293.6 $ 244,744.7 $ 234,102.0 Less Outstanding Related Debt 2015A G.O. Bonds (17,755.0) (15 930,0) (17,755.0) (15,930.0) 2015B G.0 . Bonds (1,315.0) (1,195.0) (3,720.0) (3,435.0) (5,035.0) (4,630.0) 2015C G.O. Bonds (21,765.0) (21,765.0) (21,765.0) (21,765.0) 2016 G.O. Bonds (8,550.0) (8,450.0} (8,550.0) (8,450.0) 2017A G.O. Bonds (515.0) (475.0) (5,530.0) (5,260.0) (6,045.0) (5.735.0) 2017B G.O. Bonds (2,420.0) (2,390.0) (805.0) (800.0) (3,225.0) (3,190.0) 201 B G.O. Bonds (29,580.0) {28,210.0) (5,600,0) (5,600.0) (35,180.0) (33,810.0) 2019 G.O. Bonds (1,727.9) (7,897.9) (9,625.8) Less Outstanding Premiums {3,473.7) (3,266 9) (914,5) (860.4) (4,388.2) (4,127.3) Plus Outstanding Discounts 270.1 244.7 270.1 244.7 Plus Loss on Refunding 971 .3 895.9 1,203.8 1.102.3 2. 175.1 1,998 2 Plus Unspent Bond Proceeds 1,409.0 5,741 .1 15,112.8 5,741 .1 16,521.8 I J:otal $ 107,355;4 ,$ 10"4;398.5 $ '43,632.4 $ 41 ,2'05.1 $ t50,987.8 s 145,6.0·3.6 I The second portion of the Village's net position, excluding EDA TIF Activity, in the amount of $14,416,736 represents resources that are subJect to external restrictions on how they may be used (i.e. capital projects). The final portion of the Village's net position, excluding EDA TIF Activity, in the amount of ($97,835,476) represents funds that are unrestricted.

For more detailed information, see the Statement of Net Position on page 4 and 5.

Activities The table below summarizes the revenue and expenses of the Village's activities.

MD&A- 5 VILLAGE OF HOFFMAN ESTATES. ILLINOln RAFT MANAGEMENT'S DISCUSSION AND ANALYSIS (Cw)

Table 3 Changes in Net Position For the Fiscal Year Ended December 31, 2019 and 2018 (in thousands)

Governmental Business-Type Total Primary Activities Activities Government 20.18 2019 201,8 2019 2018~ 2019

REVENUES Program Revenues: Charges for Services $ 13,438.5 $ 13,973.4 S 28,486.8 $ 30,262.2 $ 41,925.3 $ 44,235.6 Operating Grants 2,073.5 2,650.1 2,073.5 2,650.1 Capital Grants/Contributions 107.9 33.9 30.9 37.4 138.8 71.3 General Revenues: Property Taxes 26,653.6 34.449.0 26,653.6 34,449.0 other Taxes 27.634.3 27,651.0 2,314.5 2,662.1 29,948.8 30,313.1 Other 1,428.8 2,103.0 1,292.5 1,420.0 2,721 .3 3,523.0 Total Revenues 80',860.4! 32,124.7 103.461 ,3 115,2.i2.1

EXPENSES General Government 6,457.4 6,846.7 6,457.4 6,846.7 Public Safety 43,887.8 46,590.0 43,887.8 46,590.0 Highways and Streets 8,510.5 16,146.9 8,510.5 16,146.9 Sanitation 3,589.7 3,037.1 3,589.7 3,037.1 Health and Welfare 1,971.3 2,231.2 1,971.3 2,231 .2 Culture and Recreation 335.0 299.2 335.0 299.2 Economic Development 2,384.6 3,052.6 2,384.6 3 052.6 Water and Sewer 18,863.4 19,131 .5 18,863.4 19,131.5 Sears Centre 14,711.5 15,929.0 14,711.5 15,929.0 Interest on Lon -Term Debt 6,217.4 6,164.0 6,217.4 6,164.0 Total,Ex ens@ 7,3,353, 7. 84,367.7 33,57'4.9 35,0:60.5 1tfM28.6 119.4M.2

Excess (Deficiency) Before Transfers (2,017.1) (3,507.3) (1,450.2) (678.8) (3,467.3) (4,186.1)

Transfers In (Out) (774.5) (633.2) 774.5 633.2

€hange In Net Position $ (?,7.91 .6) $ f4,14O.5)' $ (67,5.7) ·$ (45.6) s (3.467.a~ s· (4,1ae.1>

Net Position, January 1 $ (84,152.5) $ (98,750.2) $ 50,423.3 S 48,221.6 $ (33,729.2) S (50,528.6)

Change in Accounting Principle (11,806.1) (1,526.0) (13,332.1)

Net Position, January 1 $ (95,958.6) $ (98,750.2) $ 48,897.3 S 48,221.6 $ (47,061 .3) S (50,528.6)

Net Position, December31 $ (98.750.2) $ (102,890.7) $ 48,221 .6 S 48,176.0 $ (50,528.6) $ (54.714,7)

For the fiscal year ended December 31, 2019, revenues from governmental activities totaled $80,860,425. The Village benefits from a highly diversified revenue base. Revenues from the Village's largest single source, property taxes, amounted to $34,449,008. Property taxes support governmental activities and include the Village's contribution to the Police Pension Fund and Firefighters' Pension Fund

The "other taxes" clas~ification includes a number of different revenue sources. Among those are sales taxes, income taxes, and telecommunications taxes. The two major types of sales taxes are the retailer's occupation tax {ROT) and the home-rule sales tax. Both of these sales taxes are collected by the State of Illinois. A portion of the ROT is shared by the state with its municipalities based upon the point of sale.

MD&A- 6 VILLAGE OF HOFFMAN ESTATES, ILLINOIC MANAGEMENT'S DISCUSSION AND ANALYSIS (C tin ) RA FT

While the ROT is currently at 9.00%, the equivalent of a 1. 00% tax is remitted to Hoffman Estates, in addition to another 1.00% for the Village's home-rule sales tax portion.

In 2019, total sales tax revenues, both state-shared and home-rule, were $9,856,695 compared to $11,697,682 in 2018, a decrease of $1,840,987, or 15.74%. This steep decrease is primarily attributable to a business in the Village incorrectly paying sales tax on products that were sales-tax exempt. This change resulted in an approximate $1.3 million decrease to Village sales tax revenues.

Chart 1 Revenues by Source- Primary Government For the Fiscal Year Ended December 31, 2019

Other 3%

Other Taxes 26% Charges for Services 39%

Operating Grants 2% Property Taxes 30%

Income and local use taxes are also shared by the state, but on a per-capita basis. Between 2018 and 2019, the Village's income and local use tax revenues increased from $6,508,950 to $7,310,628.

A major revenue component of the "Charges for Services" classification is fees from the Village's water and sewer utility. Water and sewer fee revenue was $19,105,209 in 2019 compared to $18,491,333 in 2018. A 5-year water rate study was conducted in 2014 to plan needed rate increases. The Village imposed a 4.25% water rate increase in January, 2019 as a result of the water rate study. The Village conducted another rate study in 2019.

MD&A- 7 VILLAGE OF HOFFMAN ESTATES. ILLINOln MANAGEMENT'S DISCUSSION AND ANALYSIS (Cw) RA FT

As you can see by the chart below, very few Village programs are self-funded through program revenues. This is where general revenues like property taxes and sales taxes come in. These non-program revenues are what make it possible to fund necessary functions within the Village.

Chart 2 Expenses and Program Revenues For the Fiscal Year Ended December 31, 2019 (Dollars in Thousands)

■ Expenses ■ Program Revenues $50,000

$45,000 $40,000

$35,000

$30,000 $25,000

$20,000 $15,000

$10,000 $5,000 I I_ I so I ■ •• -- •-

Village expenses amounted to $119,428,257 in 2019. The largest share is related to Public Safety in the amount of $46,590,040.

MD&A-8 VILLAGE OF HOFFMAN ESTATES. ILLINOln MANAGEMENT'S DISCUSSION AND ANALYSIS (Cw) RA FT

With a high demand for skilled employees in both the public and private sectors in this region, it is important that the Village provide competitive compensation levels for our employees. However, due to economic uncertainty in terms of recovery and continuing the effort to reduce General Fund expenditures, the annual funding of the Village's performance based employee compensation package was kept at a minimum with only an average of a 2.50% increase given to non-union employees. Each of the collective bargaining units (Police, Fire, and Public Works) received salary increases based on their contractual agreements. Those agreements provided for various step (seniority) and general cost of living increases

Chart 3 Expenses by Function For the Fiscal Year Ended December 31, 2019

General Interest Government 5% 6% Sears Centre 13%

Public Safety Water and 39% Sewer 16%

Other Govt Activities 5% Economic Development • r ' 3%

MD&A-9 VILLAGE OF HOFFMAN ESTATES. ILLINOln MANAGEMENT'S DISCUSSION AND ANALYSIS (C~} RA FT

Once again it needs to be mentioned that the inclusion of the EDA activity distorts the results of operations of the governmental activities. Removing all EDA activity from the governmental activities results in the following: Table 3-a Changes in Net Position Excluding EDA TIF Activity For the Fiscal Year Ended December 31, 2019 and 2018 (in thousands)

Go1ternmental Business-Type Total Primary Activities Activitie.s Governmet>t 2018 2019 201'8 2019 2018 2019

REVENUES Program Revenues: Charges for Services $ 13,374.9 s 13,926.5 $ 28.486.8 $ 30,262.2 s 41.861.7 $ 44,188.7 Operating Grants 2,073.5 2,650.1 2,073.5 2,650.1 Capital Grants/Contributions 107.9 33.9 30.9 37.4 138.8 71 .3 General Revenues: Property Taxes 26,653.6 26,787.0 26,653.6 26,787.0 Other Taxes 27,634.3 27,651.0 2,314.5 2,662.1 29,948.8 30,313.1 Other 1,398.5 1,162.4 \292.5 1,420.0 2,691.0 2,582.4 Total Revenues 71 ,242-,7 72,'2:10.9 32,124.7 34,;381.7/ 103,387.4 106.592.6 !

EXPENSES General Government 6,457.4 6,846.7 6.457.4 6,846.7 Public Safety 43,887.8 46.590.0 43,887.8 46,590.0 Highways and Streets 8,510.5 16,146.9 8,510.5 16,146.9 Sanitation 3,589.7 3,037.1 3,589.7 3,037.1 Health and Welfare 1,971 .3 2,231 .2 1,971.3 2,231 .2 Culture and Recreation 335.0 299.2 335.0 299.2 Economic Development 2,101 .8 2.966.7 2,101 .8 2,966.7 Water and Sewer 18,863.4 19,131.5 18,863.4 19,131.5 Sears Centre 14,711.5 15,929.0 14,711.5 15,929.0 Interest on Lon -Term Debt 2,143.2 1,998.0 2 ,143.2 1,998.0 Total & enses ,$.8,996.7 80,115.8 33,57i4.9 35,060.5 102,571.6 11~ 176.3

Excess (Deficiency) Before Transfers & Adjustments 2,246.0 (7,904.9) (1,450.2) (678.8) 795.8 (8,583.7)

Transfers In (Out) (771 .2) (613.2) 774.5 633.2 3.3 20.0

· €hange In Net Position $:, 1,474.8 $ (8,5j8.1) $ {675,7-5 $ (~5.6) ,$ 7.-99.1 :$,. (8,563.7)

Net Position, January 1 $ 32,858.3 $ 22,527.0 $ 50,423.3 $ 48,221.6 $ 175.9 $ 70,748.6

Change in Accounting Principle (11,806.1) (1,526.0) (13,332.1)

Net Position, January 1, as Restated $ 21,052.2 $ 22,527.0 $ 48 897.3 $ 48,221.6 $ 69,949.5 $ 70,748.6

Net Position, December31 $ 22,527.0 $ 14,008.9 $ 48,221.6 $ 48,176.0 $ 70,748.6 $ 62,184.9

For 2019, the Village is showing a total decrease change in net position of $8,563,775 primarily due to decreased TIF/economic development activity.

MD&A-10 VILLAGE OF HOFFMAN ESTATES, ILLINOIO MANAGEMENT'S DISCUSSION AND ANALYSIS (C tin ) RAFT

FINANCIAL ANALYSIS OF THE VILLAGE'S FUNDS

As noted earlier, the Village uses fund accounting to ensure and demonstrate compliance with finance­ related legal requirements.

For the fiscal year ended December 31, 2019, the governmental funds reported combined ending fund balances of $36,654,403 The General Fund is the chief operating fund of the Village. At the end of the current fiscal year, unassigned fund balance of the General Fund was $20,242,741, while total fund balance equaled $25,798,131. Unassigned fund balance may serve as a useful measure of;, government's net resources available for spending at the end of the fiscal year and as a measure of the General Fund's liquidity. It may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 32.20% of budgeted General Fund expenditures and transfers, while total fund balance represents 41.03% of that same amount.

Table 4 General Fund Budgetary Highlights For the Fiscal Year Ended December 31, 2019 (in thousands)

Original Amended Actual Blil'Glget Budg,et 2019 2018

REVENUES & SALE OF CAPITAL ASSETS Taxes $32,024.0 $32,681.3 $31,960.4 $31,602.7 lnte r-Govern mental 15,281.2 15,479.7 15,191.2 15,237.1 Other 13,040.6 13,507.4 14,488.8 13,848.7 Transfers In T0tal Revenues, 6Q.~45.8 61,668..4 61,6~0.i4 60,688.§

EXPENDITURES AND TRANSFERS Expenditures (58,301.6) (58,950.8) (57,116.9) (55,267.1) Transfers Out (3,236.5) (3,767.0) (3,644.6) (2,873.0) Total Expenditures and Transfers (61,538.1) (62,717.8) (€>0~761 .§) ~§8·,140.1)

Change in Fund Balance ($1, 192.3,) ($1,049.4} $878.9 $2,548.4

The fund balance of the Village's General Fund increased by $878,936 during the current fiscal year. This was a positive result when compared to the original planned drawdown of $1,192,300. In years where revenues exceed expenditures within the General Fund, excess funds are utilized according to the Village's Fund Balance Policy. This policy states that the Village will strive to maintain an unassigned fund balance within the General Fund equal to 25.00% of the preceding year's annual operating budget. While the General Fund is above this level of fund balance, any year where year-end revenues exceed expenditures, the amount of surplus will be transferred to other funds to address known future financial needs. The utilization of General Fund surplus will be brought before the Village President and Board of Trustees annually, when applicable, during the Operating Budget process via a recommendation by the Village Manager.

Actual General Fund revenues were more than originally budgeted revenues by $1,294,574 during fiscal year 2019. These higher revenue levels can be attributed to increased building permit revenue, real estate transfer tax revenue, income tax revenue, and investment income. Actual General Fund expenditures and transfers ended up being less than the amended budget by $1,833,976 in 2019.

The EDA General Account Fund is a major fund due to the amount of revenues and expenditures that are in this fund for 2019. This fund is used to account for EDA Revenue Note payments that are made when MD&A-11 VILLAGE OF HOFFMAN ESTATES, ILLINOIO MANAGEMENT'S DISCUSSION AND ANALYSIS (C tin ) RAFT

surplus revenues are available related to the EDA. Since this fund has revenues matching the expenditures, there is no fund balance as of December 31, 2019.

With respect to the business-type activities, in 2019, the Waterworks and Sewerage Fund recorded an increase in net position in the amount of $412,751. This increase in net position was from normal operations. The Village budgets from a cash flow perspective; therefore, depreciation expense is not part of the annual budgeted costs. Also, fewer water & sewer projects were completed than originally budgeted. Restricted and unrestricted net position of the Waterworks and Sewerage Fund at the end of the year amounted to $12,204,432 and (~6,768,772), respectively.

The Sears Centre Operating Fund was created in 2009 when the Village took over ownership of the arena. This fund is used to account for all operations of the Sears Centre arena. As of December 31, 2019, this fund had an unrestricted net position in the amount of $1,535,234.

The Village Board amended the fiscal year 2019 budget twice throughout the year. The budget amendments were primarily for the following purposes

■ Increase in Department Equipment ($96,000) and Motor Vehicles ($350,750) in Capital Vehicle & Equipment Fund for the purchase of public works equipment, a rapid response fire vehicle, and police in-car cameras.

■ Usage of Federal Asset seizure monies to aid the in the replacement of police department personnel ($142,820).

■ Increase in Other Capital Improvements ($125,000) in Capital Improvements Fund for the purchase and installation of a new Village Hall entrance sign.

■ $7,661,980 represented EDA incremental property taxes to pay outstanding EDA revenue notes.

■ Increase in Professional Services ($183,150) and Principal Expense ($182,100) in Higgins/Hassell TIF for payment of Village and Developer distributions per TIF agreement.

CAPITAL ASSET AND DEBT ADMINISTRATION

Capital Assets The Village's investment in capital assets for both its governmental and business-type activities as of December 31, 2019 amounted to $237,101,971 (net of accumulated depreciation). This investment in capital assets includes land, buildings, improvements, machinery and equipment, vehicles, roads, bridges, and storm sewers. The total investment in capital assets for the current fiscal year decreased by 3.12% from 2018.

Major capital asset events during 2019 included the following:

■ The Village reconstructed four (4) streets and resurfaced 34 streets in 2019, resulting in the addition of $1, 176,492 in new streets.

■ The Village purchased nine (9) new vehicles totaling 687,166 four for Public Works, one for Police Department, three for the Fire Department, and one for general government.

■ The Village had various building improvements totaling $253,178 located at Fire Stations, Village Hall, and Children's Advocacy Center.

■ The Village purchased numerous pieces of equipment for departments totaling $202,119 including Village Hall Board room upgrade, two public message signs, new tornado siren and battery, CPR device, and public works diesel fuel cabinet.

MD&A- 12 VILLAGE OF HOFFMAN ESTATES. ILLINOln RAFT MANAGEMENTS DISCUSSION AND ANALYSIS (Cw )

The following schedule reflects the Village's capital asset balances as of December 31, 2019.

Table 5 Capital Assets As of December 31, 2019 and 2018 (in thousands)

Govefnmen'lal Business-Type Activities Activities Total 2018 2019 201f8 201.9 2018 2019

La rid arid Land Right of Way $ 49,261 .6 $ 49,261 .6 $ 6,499.0 $ 6,499.0 $ 55,760.6 $ 55,760.6 Plarit System and Equipment 56,167.0 56,340.2 56,167.0 56,340.2 Buildings arid Improvements 50,554.1 49,167.6 75,128.6 75,249.9 125,682.7 124,417,5 Machinery, Vehicles and Equipment 16,432.6 16,211 .7 8,158.4 8,099.4 24,591 .0 24,311 ,1 Infrastructure 128,857.1 129,968.2 128,857.1 129,968.2 Constructiori in Progress 1,009.1 1 ,367,3 75.8 177.0 1,084.9 1,544.3 Less: Accumulated Depreciation (93,876.7) (98,168.0) (53,521 .9 57,071.9) (147,398.6) (1 55,239.9) Total $, H52;23,Z.8 $ 147,80,8.4 $ 92,506.9 $ 89 ,293.6 $ 24:4,744.7 $ 237,102.0

Additional information on the Village's capital assets can be found in note 4 on pages 30 and 31 of this report.

Long-Term Debt The following table summarizes the Village's bonded and similar indebtedness.

Table 6 Bonded and Similar Indebtedness As of December 31, 2019 and 2018 (in thousands)

Governmental Business-Type Activities Activities Total 2018 20f9 2018 2019 2018 2019

General Obligation Bonds $ 42,380.0 $ 42,447.9 S 55,175.0 $ 60,687.9 $ 97,555,0 $ 103,135.8 Unamortized Prem/(Discount) 3,473.7 3,266.9 644.4 615.6 4,118.1 3,882.5 TIF Revenue Notes 131,721 .1 127,935.1 131,721 .1 127,935.1 Compensated Absences 2,501 .8 2,673.8 328.8 341 .0 2,830.6 3,014.8 Total OPEB Liability 13,252.3 18,192.5 1,551.3 2,021.4 14,803.6 20,213.9 Net Pension Liability - IMRF 2,945.4 10,784.1 930.1 3,405.5 3,875.5 14,189.6 Net Pension Liability - Police 59,249.9 61,445.3 59,249.9 61,445.3 Net Pension Liability - Fire 44,482.1 37,915.1 44,482.1 37,915.1 Termination Benefit 41.0 58,1 14.9 55.9 58.1 I Total $ 3(!)0 ,047.3 $ 3~,7Hl,,8 $ S{l_.'.~.5 ,$ 67 ,071-.4 $ @&8,§~~.8 $ 3,711., 7190. 2 At the end of the current fiscal year, the Village had total debt outstanding of $371,790,213. Of this amount, $103,135,850 comprises general obligation bonds backed by the full faith and credit of the Village. The Village also issues notes where the Village pledges incremental tax income derived from a separately created tax increment financing district. These notes are not obligations of the Village and are secured only by the incremental revenues generated by the TIF districts and the EDA.

Compared to restated 2018 figures, the Village's total long-term debt increased by $13,098,371, or 3.65%, in 2019. This increase is primarily due to IMRF net pension liability totaling $3,875,630 at December 31, 2018 and $14,189,548 at December 31, 2019, an increase of $10,313,918. The debt increase was also due to total OPEB liability increasing from $14,803,537 in 2018 to $20,213,865 in 2019. On the other hand, police and fire net pension liabilities decreased by $4,371,632, or 421%, in 2019. Also, tax increment financing note payables decreased by $3,785,996, or 2.87% in 2019. MD&A- 13 VILLAGE OF HOFFMAN ESTATES, ILLINOIC MANAGEMENT'S DISCUSSION AND ANALYSIS (C tin ) RA FT

The Village issued $9,625,850 of General Obligation Refunding Bonds Series 2019, which will fund the results of a 2019 Performance Contract study the Village underwent. The results of the study were a Village­ wide water meter change-out program and improving streetlight efficiencies.

As an Illinois home-rule community, the Village is not subject to any debt limitation. The Village's general obligation bonds have been given a credit rating of AA+ from Standard & Poor's, which was reaffirmed in July 2018. Standard & Poor's rating reflected the Village's strong economy and management, and highlighted the Village's budgetary flexibility and strong liquidity.

Additional information on the Village's long-term debt can be found in note 5 on pages 32 through 37 of this report.

ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES

Property taxes imposed on property within the Village's corporate limits provide a stable revenue source. The levies for the police and fire pension plans, which are actuarially determined, increased slightly in tax levy year 2019 (fiscal year 2020). Pension funding comes from three sources: employee contributions, employer contributions and investment returns. Since employee contributions are capped by the Illinois General Assembly, the fiscal burden falls upon Village contributions (local taxpayers) to keep these funds financially solvent. By law, Hoffman Estates is mandated to fund the pension benefits of police, firefighters and other municipal employees.

All Village Sworn Police Officers and Firefighters are covered under the downstate police pension plan and fire pension plan, respectively, as governed by Illinois Compiled Statutes and amended only by the Illinois Legislature. All other Village employees are covered under the Illinois Municipal Retirement Fund {IMRF).

The 2010 census found that the median household income was $75,506 and the median home value was $301,500. The Village's population, per the 2010 census, is 51,895, an increase of 2,400 from the 2000 census figure of 49,495. This increase in population means that the Village will be entitled to larger portions of state-shared revenues such as income taxes and motor fuel taxes.

All of these factors were considered in preparing the Village's budget for the 2020 fiscal year.

During the current fiscal year, unassigned fund balance in the General Fund decreased to $20,242,741 from $23,610,274. The assigned fund balance for subsequent budgets increased $2,135,410, which transitioned from unassigned fund balance. The Village is planning on utilizing $3,239,630 of this fund balance in the 2020 fiscal year budget for more capital projects.

A water & sewer rate study was completed and presented to the Village Board in 2019. The results of the study included recommended routine rate increases to the Village water & sewer rates to adequately fund operations of the Water & Sewer Fund In FY2019, the Village implemented a four and a quarter percent (4.25%) increase to water and sewer rates. In the 2020 budget, the Village proposed a three and a half percent (3.50%) increase to help fund operations in the Water & Sewer Fund.

CONTACTING THE VILLAGE'S FINANCIAL MANAGEMENT

This financial report is designed to provide our citizens, customers, investors and creditors with a general overview of the Village's finances and to demonstrate the Village's accountability of the money it receives. Questions concerning this report or requests for additional financial information should be directed to Rachel Musiala, Director of Finance, Village of Hoffman Estates, 1900 Hassell Road, Hoffman Estates, IL 60169.

MD&A-14 DRAFT

Basic Financial Statements DRAFT Village of Hoffman Estates, Illinois Statement of Net Position December 31, 2019

Primary Government Governmental Business-Type Activities Activities Total Assets

Cash and investments $ 43,571,955 $ 22,097,402 $ 65,669,357 Receivables (net, where applicable, of allowances for uncollectibles) Property taxes 22,840,489 22,840,489 Accounts 513,550 3,216,272 3,729,822 Accrued interest 200,378 5,543 205,921 Other 3,347,150 1,111,173 4,458,323 Deposits 55,000 55,000 Prepaid expenses 637,234 26,648 663,882 Inventories I 09,36 I 154,667 264,028 Asset held by agents 110,910 110,910 Due from other governments 4,567,681 4,567,681 Due from fiduciary funds 63,959 63,959 Capital assets Not depreciated 50,628,958 6,675,961 57,304,919 Depreciated ( net of accumulated depreciation) 97,179,411 82,617,641 179,797,052

Total assets ??3,826,036 115,905,307 339,731,343

Deferred Outflows of Resources

Pension items IMRF 6,457,687 2,039,269 8,496,956 Firefighters' Pension 4,561,299 4,561,299 Police Pension 10,744,005 10,744,005 OPES 4,041,322 449,036 4,490,358 Unamortized loss on refunding 895,887 I, 102,338 1,998,225

Total deferred outflows of resources 26,700,200 3,590,643 30,290,843

(Cont.)

See Notes to Financial Statements 4 DRAFT Village of Hoffman Estates, Illinois Statement of Net Position December 31, 2019

Primary Government Governmental Business-Type Activities Activities Total Liabilities

Accounts payable $ 4,538,392 $ 2,657,791 $ 7,196,183 Accrued payroll 1,349,256 161,224 1,510,480 Accrued interest payable 153,078 196,150 349,228 Claims payable 814,806 814,806 Benefits payable 499,890 499,890 Unearned revenues 431,577 771,983 1,203,560 Due to FSA participants 79,810 79,810 Deposits payable 4,997,512 27,917 5,025,429 Long-term liabilities Due within one year 4,147,421 3,146,082 7,293,503 Due in more than one year 300,571,334 63,925,376 364,496,710

Total liabilities 317,583,076 70,886.523 388,469,599

Deferred Inflows of Resources

Pension items IMRF 985,807 311,308 1,297,115 Firefighters' Pension 5,806,913 5,806,913 Police Pension 5,115,215 5,115,215 OPEB items 1,099,424 122,158 1,221,582 Property taxes 22,826,492 22,826,492

Total deferred inflows of resources 35,833,851 433,466 36,267,317

Net Position (Deficit)

Net investment in capital assets 104,398,541 41,205,067 I 45,603,608 Restricted for Employee loan program 47,469 47,469 Highways and streets 373,924 373,924 Capital improvements 1,724,909 12,204,432 13,929,341 Public safety 1,078,463 1,078,463 Economic development 1,246,587 1,246,587 Debt service 27,794 27,794 Unrestricted deficit {211,788,378) (5,233,538) (217,021,916)

Total net position (deficit) $ (102,890,691) $ 48,175,961 $ (54,714,730)

See Notes to Financial Statements 5 DRAFT Village of Hoffman Estates, Illinois Statement of Activities Year Ended December 31, 2019

Program Revenues Operating Capital Functions/Programs Charges for Grants and Grants and Primary Government Expenses Services Contributions Contributions

Governmental Activities General government s 6,846,664 $ 3,758,732 $ 77,875 $ Public safety 46,590,040 4,168,562 646.825 33,592 Highways and streets 16,146,855 97,470 1,711,735 314 Sanitation 3,037,119 3,600,984 Health and welfare 2,231,229 1,177,656 Culture and recreation 299,224 766.970 Economic development 3,052,597 403,059 213,669 Interest 6,164,040 Total governmental activities 84,367,768 13.973.433 2,650,104 33.906

Business-Type Activities Waterworks and sewerage 19,131,469 19,105,209 Scars Centre 15,929,020 11,156,948 37,423 Total business-type activities 35,060,489 30,262,157 37,423

Total primary government $ 119,428.257 $ 44,235,590 $ 2,650,104 $ 71 ,329

General Revenues Taxes Property Home rule sales (nonsales) Real estate transfer 1-lotel/motel Telecommunications Food and beverage Entertainment Replacement Other Unrestricted intergovernmental revenues Sales tax Income and local use tax Investment income Gain on sale of capital assets Miscellaneous Transrers in (out)

Total general revenues

Change in Net Position

Net Position, January 1

Net Position, December 31

See Notes to Financial Statements 6 DRAFT

Net (Expense) Revenue and Changes in Net Position

Governmental Business-Type Activities Activities Total

$ (3,010,057) $ $ (3,010,057) (41,741.061) (41,741,061) (14,337,336) (14,337,336) 563,865 563.865 (1,053.573) (1,053,573) 467,746 467.746 (2.435,869) (2,435,869) (6,164,040) (6.164.040) (67.710.325) (67,710.325)

(26.260) (26,260) (4,734.649) (4,734,649! (4,760.909) (4,760,909)

(67,710,325) (4,760,909) (72.4 71,234)

34,449,008 34,449,008 2,735,010 2,735,010 1,937,262 1,937,262 1,359,133 1,359, I 33 1.333.814 1.333,814 550.580 550.580 477.753 2,662,088 3,139,841 325.867 325,867 4,499,192 4,499,192

7,121,685 7,121,685 7.310.628 7,310,628 996,174 227,124 1,223,298 220,548 220,548 886,328 1, I 92,870 2.079, 198 (633.190) 633.190

63,569,792 4,715,272 68,285,064

(4,140,533) (45,637) ( 4,186,170)

(98,750,158) 48,221,598 (50,528.560)

$ (102,890,691) $ 48, 175,96 l $ (54. 714.730)

7 DRAFT Village of Hoffman Estates, Illinois Balance Sheet - Governmental Funds December 31, 2019

EDA General Nonmajor General Account Governmental Fund Fund Funds Total Assets

Cash and investments $ 24,501)84 $ $ 15,262,799 $ 39,764,083 Receivables (ncL where applicable, of allowances for uncollectiblcs) Property taxes 19385J60 3,455,129 22,840,489 Accounts 378,971 128,985 507,956 Accrued interest 121,768 4L364 163_!32 Olhcr 2,789,078 558.072 3,347,150 Prepaid items 62A59 573551 636,010 Asset held by agents 110,910 110,910 Inventory \09J61 109,361 Uue from other governments 4,339,878 227,803 4,567,681 Due from other fonds 15,605 15,605 Due from fiduciary funds 63,959 63.959

Tolal assets $ 51,878.633 $ $ 20,247J03 $ 72)26,336

Liabilities Deferred Inflows of Resources and Fund Balances

Liabilities Accounts payable $ 2.351,928 $ $ 2,081,352 $ 4,433,280 Accrued payro11 1,310,239 IJ 10,239 llncamed revenues 383,057 48,520 431,577 Due to FSA participants 79,810 79,810 Due to other funds 15,605 15,605 Deposits payable 1,204,590 3,792,922 4,997,512 Total liabilities 5,329,624 5.938J99 11,268,023

Deterred Innows or Rcsourc~s Property taxes 19,373,460 3,453,032 22,826,492 Unavailable state taxes JJ77,418 1.377.418 Total deferred inflows of resources 20.750,878 3.453,032 24,203,910

Total liabilities and deferred inflows ofresources 26,080,502 9.391.43 I 35,47L933

Fund Bal~ nres Nonspendable Prepaid items 62,459 573,551 636,010 Jnventories 109,361 109,361 Restricted Employee loan program 47.469 47,469 Highways and streets 373,924 373,924 Public safety 1,078,463 1,078,463 Capital improvements 1,724,909 1,724,909 Economic dcvclopme11t - ~talc statute 1,246,587 1,246,587 Debt service 27,794 27,794 Assigned Employee health 2,096,471 2,096,471 Subsequent budget 3,239,630 3,239,630 Capital improvcmc11ts 5,845,727 5,845,727 Unassigned 20.242.741 (14,683) 20,228,058 Total fund balances 25,798,131 10 856,272 36.654,403

Total liabilities, deferred inflows ofresources and fund balances $ 51,878,633 =$======$ 20,247,703 $ 72,126.336

See Notes to Financial Statements 8 DRAFT Village of Hoffman Estates, Illinois Reconciliation of Fund Balances of Governmental Funds to the Governmental Activities in the Statement of Net Position December 31, 2019

Fund Balances ufGovernmtntal Funds $ 36,654,403

Amounts reported for govcmmcntal acliv1tics in tl1e statement of net position arc different because

Capital assets used in governmental activities are nol financial resources and. there fore. arc not reported in the fonds Capital assets 14 7.808,369 Less capital assets of internal service fonds ini.:ludcd above (246,973)

Long-term liabilities, including bonds payable, arc not due and payable in the current period alld. therefore, arc not reported in lhe governmental funds Compensated absence (2.6 73. 776) Plus compensated absences of internal service fullds included above 45.276 Unamortized bond premium (3.266.923) Loss on refundings 895,887 General obligation bonds payable (42.447.945) Tax increment financing notes payable (127,935.095)

Total other postemploymrnt benefit liabilities and related tcm1inalion benefits ( I 8,250.631) Plm total other pos(emplo)~nent benefit liabilities ofin(cmal service funds included above 404,278

Differences between expected and actual experiences. assumption changes, net differences between projected and actual earnings for lhe total OPl:::B liabilities are recognized as deferred outflows and inflows of resources on the statement ornet position 2,941,898 Less toial OPF.B liability of internal service funds included above {65,375)

Net pension liability for the Illinois Municipal Retiremenl Fund is slmwn as a liability on the statement of net position { 1(),784.056) Less net pension liability ofintemal service funds included above 567,582

Differences between expected and actual experiences, assumption changes, net differences between projected and actual earnings forthc Illinois Municipal Retirement Fund are recognized as deferred outflows and inflows ofresources on !he statement of net position 5,471,880 Less net pension liability of internal service funds included ahove (287.994)

Net pension liability for the Pol ice and l'irefighters' Pension Funds is shown as a Iiability on the statement of net position (99.360.329)

Differences betV1'Cen expected and actual experiences, assumption changes, net differences between projected and actual earnings for the Police and Firefighters' Pension Funds are recognized as deferred outflows and inflows of resources on the statement ofnet position 4,383,176

Accrued interest on long-term Iiabilities is sho\vn as a liability on the statement ofnet position (153,078)

Certain revenues that arc deferred in governmental funds are recognized as revenue on the statement ofnet position 1.377,418

The net position ofthe internal service filnds is included in lhe governmental activities in the statement of net position 2,031,317

N ct Position of Govern mental Activities $ ( 102,890,69 l)

See Notes to Financial Statements 9 DRAFT Village of Hoffman Estates, Illinois Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds Year Ended December 31, 2019

EDA General Nonmajor General Account Governmental Fund Fund Funds Total

Revenues Taxes $ 31,960,387 $ 7,661,977 $ 7,253,564 $ 46,875,928 Licenses and permits 2,008,952 2,008,952 Intergovcrnmental 15,191,181 2,212,924 17,404,105 Charges for services 9,478,178 754.542 10,232,720 F incs and forfeits 1,343,809 646.825 1,990,634 Investment income 701,272 294.902 996.174 Miscellaneous 956.625 30,449 987,074 Total revenues 61,640,404 7.661.977 11,193.206 80.495.587

Expenditures Current General government 6,386,268 6,386,268 Public safety 36,704,779 254,265 36,959,044 Highvv"ays and streets 6,436,679 1.556,342 7,993,021 Sanitation 3,037,119 3.037.1 l 9 Health and welfare 2,166,630 2.166,630 Culture and recreation 275,239 275,239 Economic development 2,110.140 813,521 2,923,661 Capital outlay 6,080,497 6,080,497 Debt service Principal retirement 7,661,977 1,943,522 9,605,499 Interest and fiscal charges 2,138,825 2,138,825 Total expenditures 57,116,854 7,661,977 12,786,972 77.565.803

Excess (Deficiency) of Revenues O\'er Expenditures 4,523,550 (1,593,766) 2,929.784

Other Financing Sources (Uses) Transfers in 4,811,010 4,811,010 Transfers out (3,644,614) (I,766,000) (5,410,614) Proceeds from sale or capital assets 890.146 890,146 Proceeds from bond issuance 1,727,945 1,727.945 Total other financing sources (uses) (3,644,6 I 4) 5,663,101 2,018.487

Net Change in Fund Balances 878,936 4,069,335 4,948,271

Fund Balances January 1 24,919.195 6,786.937 31,706,132

December 31 $ 25,798,131 $ $ 10,856,272 $ 36,654.403

See Notes to Financial Statements 10 DRAFT Village of Hoffman Estates, Illinois Reconciliation of Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Governmental Activities in the Statement of Activities Year Ended December 31, 2019

Net Change in Fund Balances - Total Governmental Funds $ 4.948.271

Amounts reported for governmental activities in the statement of activities arc different because:

Governmental funds report capital outlay as expenditures: however. they are capitalized and depreciated in the statement of activities 2.203.662

Sales of capital a~sets are reported as a proceed in governmental funds but as a gain (loss) from sale on the statement of activities (669.598)

The repayment of the principal on long-term debt is reported as an expenditure when due in governmental funds but as a reduction of principal outstanding on the statement of activities 9.605.499

Certain items are reported as interest expense on the statement of activities Accretion of interest on notes payable (4.159.503) Change in accrued interest payable 2.972 Amortization of bond pn:miums 206.750 Amortization of gain or loss on refunding (75,435)

Depreciation expense does not require the use of current financial resources and. therefore, is not reported as expenditures in governmental funds (5,902.919) Less dcpreci at ion expense of internal service fund 24.099

Certain revenues recognition is different on the full accrual basis than on the modified accrual basis 144,290

The issuance oflong-term deht is shown as an other financing source in governmental funds but the principal outstanding is shown as long-term liability on the statement of net positi,:,n Bonds i~sued (1,727.945)

The change in the total other postcmploymenl benefit Iiabilities and related termination benefits is shows as an increase in expense on the statement of activities (4,957.356) Less change in the total other postemploymcnt liabilities obligation and related tmnination of internal service fund 94.024

The change in deferred inflows and outflows of resources for the other po~temployment benefit Fund is reported only on the statement of activities 2,970.808 Less change in deferred inflows and outflows of resources for the other postcmploymcnt benefit of internal service fund (94.285)

The change in the net pension liability for the Illinois Municipal Retirement Fund is reported only on the statement of activities (7,838,577) Less change in the net pension liability for the Illinois Municipal Retirement Fund of internal service fund 412,557

(Cont.)

See Notes to Financial Statements 11 DRAFT Village of Hoffman Estates, Illinois Reconciliation of Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Governmental Activities in the Statement of Activities Year Ended December 31, 2019

The change in deferred inflows and outflows of resources for the Illinois Municipal Retirement Fund is reported only in the statement of activities ~ 8,238,395 Less change in deferred inflows and outflows of resources for the Illinois Municipal Retirement of imemal service fund (433.600)

The change in the net pension liabi I ity for the Pol ice and Firefighters' Pension Funds is reported only on the statement of activities 4J71.632

lne change in deferred inflows and outflows for the Police and Firefighters' Pension Funds is reported only on the in the statement of activities (10,981,040)

The change in compensated absences payable is shown as an expense on the statement of activities ( 171.948) Less change in compensated absences payable is shown as an expense on the statement of of internal service fund 8.890

The change in net position of certain activities of i ntcrnal service funds (360,176)

Change in Net Position of Governmental Activities $ (4,140,533)

See Notes to Financial Statements 12 DRAFT Village of Hoffman Estates, Illinois Proprietary Funds Statement of Net Position December 31, 2019

Business-Type Governmental Activities Activities Waterworks Sears Centre Internal and Sewerage Operating Service Fund Fund Total Fund Assets

Current Assets Cash and investments $ 19,407,022 $ 2,690,380 $ 22,097,402 $ 3,807,872 Receivables Accounts 3,113,887 102,385 3,216,272 5,594 Accrued interest 3,248 2,295 5,543 37,246 Oilier 2,078 1,109,095 l.111.173 Deposits 55,000 Prepaid expenses 26.648 26.648 1,224 Inventories 154,667 I 54,667 Total cun-en! assets 22,680,902 3.930,803 26,611,705 3,906,936

Capital Assets Not dcprccialed 675,961 6,000,000 6,675,961 I )cprcciated 60,958,254 78,731,331 139,689,585 406,019 Accumulated depreciation (34,538,499) (22,533,445) (57,071,944) (159.046) Net capital assets 27,095,716 62,197,886 89,293,602 246.973

Total assets 49,776,618 66,128,689 115,905,307 4,153.909

Deferred Outflows of Resources

Pension items - IMRF 2,039,269 2,039,269 339,878 OPEB items 449.036 449,036 89,807 Unamortized loss on refunding 251,983 850,355 1,102,338 Total deferred outflows of resources 2,740,288 850,355 3,590,643 429,685

(Cont.)

See Notes to Financial Statements 13 DRAFT Village of Hoffman Estates, Illinois Proprietary Funds Statement of Net Position December 31, 2019

Business-Type Governmental Activities Activities Water and Sears Centre Internal Sewerage Operating Service Fund Fund Total Fund Liabilities

Current Liabilities Accounts payable $ 1,166,599 $ 1,491,192 $ 2,657,791 $ 105,1 !2 Accrued payroll 161,224 161,224 39,017 Accrued interest payable 63.756 132,394 196, 150 Unearned revenue 77L983 771,983 Claims payable 814,806 Benefits payable 499,890 Deposits payable 27.917 27,917 General obligation honds payable 1,015.455 1,915,000 2,930,455 Total OPEB liability 58.012 58,012 11,602 Compensated absences payable 157,615 157,615 45,276 Total current liabilities 4.310.569 6,961,147 1,515,703

Long-Term I.ia bilitics General obligation bonds payable 22,837,812 35,535,265 58,373,077 Compensated absences payable 183,432 183,432 J\'et pension liability 3,405.492 3,405,492 567,582 Total OPEB liability 1,963,375 1,963,375 392,676 Total long-term liabilities 28,390,111 35,535,265 63,925,376 960,258

Total liabilities 31,040,689 39,845,834 70,886,523 2,475,961

Deferred Inflows of Resources

Pension item - IMRr 31 l.308 311,308 51,884 OPES items 122.158 122,158 24,432

Jotal deferred inflows of resources 433,466 433,466 76,316

Net Position

Net investmelll in capital assets 15,607,091 25,597,976 41,205,067 246,973 Restricted for Capital improvements 12,204,432 12,204,432 Unrestricted (6,768,772) 1,535,234 (5,233.53-8) 1,784,344

Total net position $ 21,042,751 $ 27,)33,210 $ 48,175,961 =$======2f::,0:::::3=\,=31=7=

See Notes to Financial Statements 14 DRAFT Village of Hoffman Estates, Illinois Proprietary Funds Statement of Revenues, Expenses and Changes in Net Position Year Ended December 31, 2019

Business-Type Governmental Activities Activities Wateiworks Sears Centre Internal and Sewerage Operating Service Fund Fund Total Fund

Operating Revenues Charges for services $ 19.105,209 s 11,156,948 $ 30.262.157 $ 3,066.5 IO

Operating Expenses Operations 1.717.167 Claims and insurance 1.942.4 79 Water division 14.215.532 14.215.532 Sewer division 2,738,465 2.738.465 Sears Centre 1 l.779.550 11.779.550 Depreciation 1,426,819 2,374,644 3,801,463 24,099 Total operating expenses 18.380.816 14.154.I 94 32,535,0 I 0 3,683,745

Operating Income (Loss) 724,393 (2,997,246) (2.272,853) (617.235)

Nonoperating Revenues (Expenses) Entertainment and food and beverage ta"X 2,662,088 2.662.088 Charges for services 68.079 68,079 Investment income 203,173 23,951 227,124 90.201 Interest expense (607.515) (1.737,606) (2,345,121) Terminal reserve 241.300 Gain (loss) on sale of capital assets (143.138) (37,220) ( 180.358) Misc~llaneous revenue (expense) 302,648 822.143 1.!24.79 ! (40,856) Total nonoperating revenues (expenses) (244,832) 1.801.435 1.556.603 290.645

Net Income (Loss) Before Transfers and Contributions 479,561 (I,! 95,8 11) (716,250) (326,590)

Transfers Transfers in 700.000 700.000 116.414 Transfers (out) (66,810) (66,810) (1 50.000) Total rransfi:rs (66,810) 700.000 633.190 (33,586)

Contributions Intergovernmental 37.423 37,423

Change in Net Position 412.751 (458,388) (45,637) (360.176)

Net Position, January 1 20,630,000 27,591,598 48,221,598 2,391,493

Net Position, December 31 $ 21,042,751 $ 27,133.210 $ 48, 175,96! $ 2,031,317

See Notes to Financial Statements 15 DRAFT Village of Hoffman Estates, Illinois Proprietary Funds Statement of Cash Flows Year Ended December 31, 2019

Business-Type Governmental Activities Activities Waterworks Sears Centre Internal and Sewerage Operating Service Fund Fund Total Fund

Cash Flows From Operating Activitits Receipts from customers and users $ l 9.030.502 $ 10.404,939 $ 29,435.441 $ Receipts from inlcrfimd services trnnsactions 3.061,189 Payments to suppliers ( 12.560,728) (11,157,498) (23,718,226) (2.413,678) Payments to employees for services (4.230. 980) (4,230,980) (1,124.078) Net cash provided by (used in) operating activities 2,238.794 (752,559) 1,486.235 (476,567)

Cash Flows From :'I/on capital Financing Activities Transfers in 700,000 700,000 116,414 Transfers out (66.810) (66,810) ( 150.000) Entertainment and food and bevernge lax 2.662.0!;8 2,662,088 Miscellaneous income 302.648 890,222 1.192,870 T crmin al re serve 241,300 Reimbursements and recoveries 18,476 lntergovcmmental income 37,423 37,423 Ne! cash provided hy noncapital financing m:tivitics 235,838 4,289,733 4.525,571 226.190

Cash Flows From Capital anti Related Finanting Acti,·i ties Capital assets pLtrchascd (705,683) (62,822) (768.505) Principal payment on bonds (560,000) ( 1,825.000) (2.385.000) Proceeds from the issuance o rbonds 7,897,905 7,897,905 Interest and fiscal charges paid on bonds (634,138) ( I.627.512) (2.261,650 l Net cash provided by (used in) capital an

Cash Flows From Investing Activities Jn terest recei vcd 263.519 22,191 285,710 87,852

Nel Increase (Decrease) in Cash and Cash Equivalents 8,736.235 44.03] 8,780.266 (162,525)

Cash and Cash Equivalents January I I 0,670,787 2,646,349 13,317,136 3,970)97

December 31 $ 19,407,022 5 2,690,380 $ 22,097,402 $ 3,807,872

(Cont.)

See Notes to Financial Statements 16 DRAFT Village of Hoffman Estates, Illinois Proprietary Funds Statement of Cash Flows Year Ended December 31, 2019

Business-Type Governmental Activities Activities Waterworks Sears Centre Internal and Sewerage Operating Service Fund Fund Total Fund

Reconciliation of Operating Income (Loss) to Net Cash Provided by (llscll in) Operating Acfo·ities Operating income (loss) $ 724,393 $ (2,997,246) $ (2,272.853) $ (617.235) /\djustrnenls to reconcile operating income (loss) to net cash provided by operating activities Depreciation 1,426.819 2,374,644 3,801-463 24,099 Changes in Receivables (73,579) (112,122) ( 185,701) (5,321) Inventories (1,607) ( 1.607) Deposits (5,000) Prepaid cxpcnscs 50,605 50.605 (488) J\ cco unts payab1 c 256,368 571,447 827,815 82,942 Unearned revenue (639,887) {639,887) Accrued payroll 37,753 37,753 12,554 Claims payable l 0 1.986 Beueiils payable [57.690) Deposits payable (I, 128) (1,128) Compensated Ebsences payable 12,275 12.275 8,890 De ferrcd omflows ofresources - pension (1,583,108) ( 1,583. I 08) (263,851) Deferred outflows ofrcsources - OPEl3 (449,036) (449,036) (89,807) Net pension liabilities 2,475,341 2,475,341 412,557 Total OPEl3 liability 455,183 455.183 94,024 Deferred inflows of resources - pension (1,018,489) (1,018,489) ( I 69,749) Deferred inflows of resources - OPEB (22,391) (22,391) (4,478)

Net cash provided by (used in) operating activities $ 2,238,794 $ (752,559) $ 1,486,235 $ (476,567)

See Notes to Financial Statements 17 DRAFT Village of Hoffman Estates, Illinois Fiduciary Funds Statement of Fiduciary Net Position December 31, 2019

Pension and Other Employee Benefit Trust Custodial Funds Fund Assets

Cash and short-tenn investments $ 2,020,778 $ 10,945,947 Investments, at fair value U.S. Treasury securities 14,509,720 U.S. agency securities 14,943,038 Corporate bonds 24,291,501 Municipal bonds 1,494,469 Mutual funds 93,985,562 Money market mutual funds 2,756,389 Equity securities 19,717,445 Receivables (net, where applicable, of allowances for uncollectibles) Accrued interest 322,746 Prepaid expenses 11,031

Total assets 174,052,679 10,945,947

Liabilities

Accounts payable 10,624 Due to Village 63,959

Tota! liabilities 10,624 63,959

Net Position

Restricted for pensions 174,042,055 Restricted for economic development 10,881,988

Total net position $ 174,042,055 $ 10,881,988

See Notes to Financial Statements 18 DRAFT Village of Hoffman Estates, Illinois Fiduciary Funds Statement of Changes in Fiduciary Net Position Year Ended December 31, 2019

Pension and Other Employee Benefit Trust Custodial Funds Fund

Additions Contributions Employer $ 7,155,270 $ Employee 1,770,638

Total contributions 8,925,908

Property taxes 16,512,501

Investment income Net increase in fair value of investments 23,429,883 Investment income 5,185,649 417,415 Total investment income 28,615,532 417,415 Less investment expense (265,376) Net investment income 28,350,156 417,415

Total additions 37,276,064 16,929,916

Deductions Benefits and refunds 12,376,815 M isce 1laneous 104,639 Economic development 23,896,924

Total deductions 12,481,454 23,896,924

Net Increase (Decrease) in Fiduciary Net Position 24,794,610 (6,967,008)

Net Position January I 149,247,445 17,848,996

December 31 $ 174,042,055 $ 10,881,988

See Notes to Financial Statements 19 NB2 COMMITTEE AGENDA ITEM VILLAGE OF HOFFMAN ESTATES

SUBJECT: 2019 Economic Development Area Annual Financial Report MEETING DATE: June 22, 2020 COMMITTEE: Finance FROM: Rachel Musiala, Director of Finance

PURPOSE: To present the Annual Financial Report for the Economic Oevelopment Area (EDA) Special Tax.Allocation Fund for the fiscal year ended December 31, 2019 as required by Public Act 097-0636. The report is included herewith.

BACKGROUND: Effective June 1, 2012 the state enacted legislation to extend the EDA for an additional 15 years. As part of that new legislation, a financial audit specifically ofthe EDA Special Tax Allocation Fund is required. The Village retained Sikich LLP to conduct this special audit for fiscal year 2019.

DISCUSSION: Sikich LLP has given the 2019 Annual Financial Report for the EDA Special Tax Allocation Fund their "unmodified opinion." This means that the financial statements are fairly presented and are prepared in accordance with generally accepted accounting principles.

As of December 31, 2019, the EDA Special Tax Allocation Fund had total assets of $10,945,947. Fiscal year 2019 is the sixth year under the new legislation that extended the EDA, and as part of that legislation, the Village is required to disburse all incremental property taxes to the Developer and the taxing districts prior to December 31st of each year. However, due to on­ going litigation, the Village was directed not to disburse the property taxes until the litigation has concluded or pursuant to court order. Total incremental property taxes received throughout the year were in excess of $16 million.

This audit, along with a compliance report prepared by Village staff, will be sent to all overlapping taxing districts as required by state legislation.

RECOMMENDATION: Request acknowledgement of receipt and filing of the Economic Development Area Special Tax Allocation Fund Annual Financial Report for the year ended December 31, 2019.

ATTACHMENT (2019 ANNUAL FINANCIAL REPORT FOR THE EDA) !:::iSIKICH®

VILLAGE OF HOFFMAN ESTATES, ILLINOIS

ECONOMIC DEVELOPMENT AREA SPECIAL TAX ALLOCATION FUND

ANNUAL FINANCIAL REPORT VILLAGE OF HOFFMAN ESTATES, ILLINOIS ECONOMIC DEVELOPMENT AREA SPECIAL TAX ALLOCATION FUND TABLE OF CONTENTS

Page(s)

INDEPENDENT AUDITOR'S REPORT...... 1-2

BASIC FINANCIAL STATEMENTS

Statement of Fiduciary Net Position...... 3

Statement of Changes in Fiduciary Net Position ...... 4

Notes to Financial Statements...... 5-9

INDEPENDENT ACCOUNTANT'S REPORT ON COMPLIANCE "11TH PUBLIC ACT 97-0636...... 10

SUPPLEMENTARY INFORMATION

Schedule of Revenues, Expenditures and Changes in Fund Balance...... 11

Schedule of Fund Balance by Source...... 12 INDEPENDENT AUDITOR'S REPORT CERTIFIED PUBLIC ACCOUNTANTS & ADVISORS Members ofAmerican institute of Certified Public Accountants

1415 West Diehl Road, Suite 400 Naperville; IL 60563 630.566.8400

SIKICH.COM

INDEPENDENT AUDITOR'S REPORT

The Honorable Village President Members of the Board of Trustees Village of Hoffman Estates, Illinois

We have audited the accompanying basic financial statements of the Economic Development Area Special Tax Allocation Fund (the Fund), a custodial fund of the Village of Hoffman Estates, Illinois, as of and for the year ended December 31, 2019, and the related notes to financial statements, as listed in the table of contents.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Fund's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

ACCOUNTING TECHNOLOGY ADVISORY - 1 - Opinion

In our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of the Economic Development Area Special Tax Allocation Fund, a custodial fund of the Village of Hoffman Estates, Illinois, as of December 31, 2019, and the change in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Emphasis of Matter

As

Other Matters

Other Information

Our audit was conducted for the purpose of forming an opinion on the basic financial statements. The supplementary information (the information) is presented for pwposes of additional analysis and is not a required part of the basic financial statements. The 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. The 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 information is fairly stated in all material respects in relation to the basic financial statements as a whole.

Naperville, Illinois April 6, 2020

- 2 - BASIC FINANCIAL STATEMENTS VILLAGE OF HOFFMAN ESTATES, ILLINOIS

ECONOMIC DEVELOPMENT AREA SPECIAL TAX ALLOCATION FUND

STATEMENT OF FIDUCIARY NET POSITION

December 31, 2019

ASSETS Cash and Investments $ 10,945,947

TOTAL ASSETS $ 10,945,947

LIABILITIES Due to Other Governments $ 63,959

TOTAL LIABILITIES $ 63,959

NET POSITION Restricted for Economic Development 10,881,988

TOTAL NET POSITION $ 10,945,947

See accompanying notes to financial statements. - 3 - VILLAGE OF HOFFMAN ESTATES, ILLINOIS

ECONOMIC DEVELOPMENT AREA SPECIAL TAX ALLOCATION FUND

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION

December 31, 2019

Custodial

ADDITIONS Propery Taxes $ 16,512,501 Investment Income 417,415

TOTAL ADDITIONS 16,929,916

DEDUCTIONS Economic Development Municipal Contribution 5,000,000 Administrative Fees 461,584 Property Tax Payments 633,969 Governmental Share Distribution 10,139,394 Tax Increment Revenue Note Distribution 7,661,977

TOTAL DEDUCTIONS 23,896,924

CHANGE IN NET POSITION (6,967,008)

NET POSITION January 1 17,848,996

December 31 $ 10,881,988

See accompanying notes to financial statements. - 4 - VILLAGE OF HOFFMAN ESTATES, ILLINOIS

ECONOMIC DEVELOPMENT AREA SPECIAL TAX ALLOCATION FUND

NOTES TO FINANCIAL STATEMENTS

December 3 1, 2019

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements of the Economic Development Area Special Tax Allocation Fund (the Fund) of the Village of Hoffman Estates, Illinois have been prepared in accordance with accounting principles generally accepted in the United States of America, as applied to government units (hereinafter referred to as generally accepted accounting principles (GAAP)). The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the accounting policies are described below.

A. Reporting Entity

The Fund is a fiduciary fund of the Village of Hoffman Estates, Illinois (the Village).

B. Fund Accounting

The Fund uses one fund to report its financial information. FWld accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain governmental functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. Funds are classified in this report into the fiduciary category.

Fiduciary funds are used to account for fiduciary activities that meet the definition contained in GASB Statement No. 84, Fiduciary Activities. The Village utilizes a custodial fund for the its Economic Development Economic Area Special Tax Allocation fund, which are generally used to account for assets that the Village holds in a fiduciary capacity.

C. Basis of Accounting

The custodial fund uses the economic resources measurement focus. With this measurement focus, all assets and liabilities associated with the operation of this fund are included on the statement of fiduciary net position. The custodial fund presents increases (e.g., additions) and decreases (e.g., deductions) in net position.

- 5 - VILLAGE OF HOFFMAN ESTATES, ILLINOIS ECONOMIC DEVELOPMENT AREA SPECIAL TAX ALLOCATION FUND NOTES TO FINANCIAL STATEMENTS (Continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

D. Investments

lnvestments with maturity greater than one year at time of purchase, if any, are stated at fair value. Non-negotiable certificates of deposit, if any, are reported at cost. The Fund categorizes its fair value measurements within the fair value hierarchy established by GAAP. 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; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs. The Fund held no investments to measure at fair value at December 31, 2019.

2. DEPOSITS AND INVESTMENTS

The deposits and investments of the Fund are held separately from those of the Village.

The Village's investment policy authorizes the Village to invest in bonds, notes, certificates of indebtedness, treasury bills or other securities, including obligations of the Government National Mortgage Association, which are guaranteed by the full faith and credit of the United States Government as to principal and interest, bonds, notes, debentures or other similar obligations of the Unites States Government or its agencies, interest-bearing savings accounts, interest-bearing certificates of deposit or interest-bearing time deposits or any investment constituting direct obligations of any bank, as defined by the Illinois Banking Act, that is insured by the Federal Deposit Insurance Corporation, certain insured short-term obligations of corporations organized in the United States and certain Money Market Mutual Funds registered under the Investment Company Act of 1940. In addition to any other investments authorized under the Public Funds Investment Act, the Village may invest its public funds in interest-bearing bonds of any county, township, city, village, incorporated town, municipal corporation or school district, short­ term discount obligations of the Federal National Mortgage Association (FNMA) or in the shares or other forms of securities legally issuable by savings banks or savings and loan associations incorporated under the laws of the State of Illinois or any other state or under the laws of the United States Government, dividend-bearing share accounts and share certificate accounts or class of share accounts of a credit union chartered under the laws of the State of Illinois or the laws of the United States Government.

It is the policy of the Village to invest their funds in a manner which will provide the highest investment return with the maximum security while meeting the operating demands of the Village and conforming to all state and local statutes governing the investment of public funds, using the "prudent person" standard for managing the overall portfolio. The primary objective of the policy is safety (preservation of capital and protection of investment principal), liquidity and yield.

-6- VILLAGE OF HOFFMAN ESTATES, ILLINOIS ECONOMIC DEVELOPMENT AREA SPECIAL TAX ALLOCATION FUND NOTES TO FINANCIAL STATEMENTS (Continued)

2. DEPOSITS AND INVESTMENTS (Continued)

The Village maintains a cash and investment pool that is available for use by all funds. In addition, investments are separately held by several of the Village's funds.

A. Deposits with Financial Institutions

Custodial credit risk for deposits with financial institutions is the risk that in the event of bank failure, the Village's deposits may not be returned to it. The Village's investment policy requires pledging of collateral not less than 110% of fair market value for all bank balances in excess of federal depository insurance with the collateral held by an agent of the Village in the Village's name.

B. Investments

Interest rate risk is the risk that change in interest rates will adversely affect the fair value of an investment. In accordance with its investment policy, the Village limits its exposure to interest rate risk by structuring the portfolio to provide liquidity for operating funds and ma,"'(imizing yields for funds not needed currently. The investment policy limits the maximwn maturity lengths of most investments to two years.

The Village limits its exposure to credit risk, the risk that the issuer of a debt security will not pay its par value upon maturity, by requiring investments primarily in obligations guaranteed by the United States Government or securities issued by agencies of the United States Government that are explicitly guaranteed by the United States Government.

Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to the investment, the Village will not be able to recover the value of its investments that are in possession of an outside party. To limit its exposure, the Village investment policies requires all security transactions that are exposed to custodial credit risk to be processed on a delivery versus payment (DVP) basis with the underlying investments held by a third party acting as the Village's agent separate from where the investment was purchased.

Concentration of Credit Risk - The Village's investment policy has the following diversification guidelines: no financial institution shall hold more than 50% of the Village's investment portfolio, commercial paper shall not exceed 10% of the Village's investment portfolio and continuously investing a portion of the portfolio in readily available funds such as the Illinois Treasurer's Pool or money market funds to ensure that appropriate liquidity is maintained in order to meet on-going obligations.

- 7 - VILLAGE OF HOFFMAN ESTATES, ILLINOIS ECONOMIC DEVELOPMENT AREA SPECIAL TAX ALLOCATION FUND NOTES TO FINANC[AL STATEMENTS (Continued)

2. DEPOSITS AND INVESTMENTS (Continued)

B. Investments (Continued)

The Village's investment policy states that investments in derivatives and participation in securities lending transactions are prohibited.

3. LONG-TERM DEBT

A. Tax Increment Revenue Note Disclosures

The Village, pursuant to an economic development agreement dated February 25, 1990, has agreed to reimburse Sears Roebuck and Co. (Sears) for certain project costs Sears has incurred as the Village's agent in furthering the economic development plan and project. The economic development agreement requires that an economic development tax increment revenue note be executed each time Sears makes such an advance. These notes are payable from and secured solely by the pledged incremental revenues deposited from time-to-time in the Sears EDA General Account Fund created by the indenture of the Series 2005 and Series 1991 tax increment revenue bonds.

Prior to January I, 2012, the interest rates on the notes changed every March 1, June 1, September 1 and December 1, indexed to a percentage of the weekly 25 Revenue Bond Index as published by "The Bond Buyer." For project cost notes, the interest rate was 90% of the index. For developer cash advance notes, the interest rate was 75% of the index. Effective January 1, 2012, the interest rate for all project cost notes and developer advance notes is 4%. Payments on the notes are due annually as, and to the extent, monies are available in the Sears EDA General Account Fund. Any amount of interest not paid on the due date is to be added to the principal balance of the note then outstanding. Tax increment revenue notes currently outstanding are as follows:

Fund Debt Balances Issuances or Retirements Balances Current Issue Retired by January 1 Accretions or Accretions December 31 Portion

Tax Increment Revenue Notes Due in Annual [nsta\lments Only ifTax Increment Revenues Debt are Available Service $ 122.688.915 $ 4,159,503 $ 7.661.977 $ 119. 186,441 $

TOTAL TAX INCREMENT REVENUE NOTES $ 122,688 915 $ 4.159,503 $ 7,661.977 $ 119,186,441 $

The increase of $4, 159,503 in the Tax Increment Revenue Notes is interest due as of December 31, 2019 that accrues to the principal balance if not paid.

- 8 - VILLAGE OF HOFFMAN ESTATES, ILLINOIS ECONOMIC DEVELOPMENT AREA SPECIAL TAX ALLOCATION FUND NOTES TO FINANCIAL STATEMENTS (Continued)

3. LONG-TERM DEBT (Continued)

B. Debt Service Requirements to Maturity

The Hoffman Estates Economic Development Project Area Tax Increment Revenue Notes provide that the payment of principal and interest on the notes are due only if tax increment revenues are available for payment of debt service in the Sears EDA General Account Fund before the TIF expires in 2027. Any amount of unpaid interest at the interest due dates is added to the principal balance of the note.

4. CONTINGENT LIABILITIES

A. Litigation

The Village is a defendant in a lawsuit related to the Fund. Although the outcome of this lawsuit is not presently determinable, in the opinion of the Village's attorney, the resolution of this matter will not have a material adverse effect on the financial condition of the Fund.

-9- CERTIFIED PUBLIC ACCOUNTANTS & ADVISORS ~ SIKICH® Members ofAmerican Institute of Certified Public Accountants

1415 West Diehl Road, Suite 400 Naperville, IL 60563 630,566.8400

SIKICH.COM

INDEPENDENT ACCOUNTANT'S REPORT ON COMPLIANCE WITH PUBLIC ACT 97-0636

The Honorable Village President Members of the Board of Trustees Village of Hoffman Estates, Illinois

We have examined management's assertion, included in its representation letter dated April 6, 2020 that the Village of Hoffman Estates, Illinois (the Village) complied with the provisions of subsection ( e) of Section 3 of the Economic Development Area Tax Allocation Act (Illinois Public Act 97- 063 6) during the year ended December 31, 2019. Management is responsible for the Village's assertion and for compliance with those requirements. Our responsibility is to express an opinion on management's assertion about the Village compliance based on our examination.

Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and, accordingly, included examining, on a test basis, evidence about the Village's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on the Village's compliance with statutory requirements.

In our opinion, management's assertion that the Village complied with the aforementioned requirements for the year ended December 31, 2019 is fairly stated, in all material respects.

This report is intended solely for the information and use of the President, the Board of Trustees, management of the Village, Illinois State Comptroller's Office and the joint review boards and is not intended to be and should not be used by anyone other than these specified parties.

Naperville, Illinois April 6, 2020

ACCOUNTING TECHNOLOGY ADVISORY -10 - SUPPLEMENTARY INFORMATION VILLAGE OF HOFFMAN ESTATES, ILLINOIS

ECONOMIC DEVELOPMENT AREA SPECIAL TAX ALLOCATION FUND

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE

For the Year Ended December 31, 2019

REVENUES Property Taxes $ 16,512,501 Investment Income 417,415

Total Revenues 16,929,916

EXPENDITURES Economic Development Municipal Contribution 5,000,000 Administrative Fees 461,584 Property Tax Payments 633,969 Governmental Share Distribution 10,139,394 Tax Increment Revenue Note Distribution 7,661,977

Total Expenditures 23,896,924

NET CHANGE IN FUND BALANCE (6,967,008)

FUND BALANCE,JANUARY 1 17,848,996

FUND BALANCE, DECEMBER 31 $ 10,881,988

(See independent auditor's report.) - 11 - VILLAGE OF HOFFMAN ESTATES, ILLINOIS

ECONOMIC DEVELOPMENT AREA SPECIAL TAX ALLOCATION FUND

SCHEDULE OF FUND BALANCE BY SOURCE

For the Year Ended December 31, 2019

BEGINNING BALANCE, JANUARY 1 $ 17,848,996

DEPOSITS Property Taxes 16,512,501 Investment Income 417,415

Total Deposits 16,929,916

Balance Plus Deposits 34,778,912

EXPENDITURES Economic Development Municipal Contribution 5,000,000 Administrative Fees 461,584 Property Tax Payments 633,969 Governmental Share Distribution 10,139,394 Tax Increment Revenue Note Distribution 7,661,977

Total Expenditures 23,896,924

ENDING BALANCE, DECEMBER31 $ 10,881,988

ENDING BALANCE BY SOURCE Property Taxes* $ 10,464,573 Interest Income 417,415

Subtotal 10,881,988

Less Surplus Funds

ENDING BALANCE, DECEMBER 31 $ 10,881,988

*Monies are designated to pay the Tax Increment Revenue Notes due in annual installments only if tax increment revenues are available.

(See independent auditor's report.) - 12 - COMMITTEE AGENDA ITEM NB3 VILLAGE OF HOFFMAN ESTATES

SUBJECT: Request approval of an Ordinance and Naming Rights Agreement with NOW Health Group, Inc. renaming the Sears Centre Arena to the NO\V Arena, in an amount of $11.25 Million over a fifteen year term.

MEETING DA TE: June 22, 2020

COMMITTEE: Finance Committee

FROM: James Norris / Dan O'Malley / Arthur Janura / Patricia Cross/ Mark Koplin/ Ben Gibbs I Michael Czopek

REQUEST: Request approval of an Ordinance and Naming Rights Agreement with NOW Health Group, Inc. renaming the Sears Centre Arena to the NOW Arena, in an amount of $11.25 Million over a fifteen year term, starting September 1, 2020 and continuing through August 31, 2035.

BACKGROUND: MadKatStep was an LLC created by Sears, Roebuck and Co. and Ryan Companies US to own the arena they co-developed and opened in 2006. As a partner, Sears provided an initial ten year Naming Rights agreement as a financial contribution to the partnership. The Naming Rights Agreement was the vehicle for Sears to make the capital contribution necessary for the project to proceed. MadKatStep ceased its involvement in the Arena in 2009, but the Sears Naming Rights continued under Village ownership of the Arena, with the final of ten payments made to the Village in September 2015. The Village and Sears agreed to extensions of the Naming Rights Agreement in 2016 and again in 2018. Sears made the most recent payment in September 2019. Sears has been a great community partner since the company moved to Hoffman Estates in 1992, getting involved with and sponsoring local events. Sears has remained a steadfast supporter of the Village and has also been a great naming rights sponsor and partner with the Sears Centre Arena since 2006. Under the more recent rebranding to the Sears Centre Arena powered by Shop Your Way, Sears increased its visibility and presence at the Arena and efforts to connect with the community. For 16 years, Sears has provided consistent support as a committed naming rights partner. The relationship with Sears has grown annually through the years. -2-

More recently, since Sears filed its bankruptcy petition in 2018, the naming rights agreement has been assumed by and assigned to its related company Transform SR LLC, which purchased the Arena naming rights asset in February 2019.

However, by mutual agreement, Transform SR LLC and the Village wish to terminate the Naming Rights Agreement at this time. The Village values its relationship with Sears and with Transform SR LLC and looks forward to continuing the positive relationship. The current (2018) Naming Rights Agreement expires on August 31, 2022. That agreement included ~ provision for Sears (now Transform SR LLC) to exclusively negotiate an extension. However, at the Village's request, Transform SF LLC has waived that provision and allowed the Village to initiate discussions with a third party who had shown interest in acquiring the Arena's naming rights.

DISCUSSION:

NOW Health Group, Inc. (NOW), a Bloomingdale-based company selling vitamins, health foods and supplements, sports nutrition and personal care products since 1968, approached the Village to inquire about Naming Rights for the Arena. It was explained that an extension to the Naming Rights Agreement with Sears had been recently approved and what that contract required for a new partner. In recent months, the Village and Transformholdco have engaged in discussions regarding an early termination of the Agreement and a mutual and amicable parting, so long as the Village could come to agreement with a new Naming Rights partner.

Discussions with NOW ensued and upon agreement to the basic business points, the parties drafted a new, proposed Naming Rights Agreement modeled on the form and content of the current Sears Naming Rights Agreement. The proposed Naming Rights Agreement is attached for consideration.

If approved, the NOW name will be branded on the interior and exterior of the Arena, along with the website, social media, printed materials, tickets, and other collaterals. NOW will pay the costs of updating or replacing signage and the other rebranding costs. NOW will be allowed to use the Arena on non-event days for up to four non-ticketed corporate events per year and one outdoor event. Should it desire to sponsor an event (e.g. a tradeshow for its products or supplier products), NOW will work with the Arena on dates and logistics. The Village grants an "exclusive" to NOW and will not allow its competitors in the health supplements business to be an advertising sponsor at the Arena. NOW will rebrand the southeast portion of the concourse to the "NOW Lounge" and the cell phone recharging station. NOW may provide free product sampling during exiting of events and can work with Levy Foods to incorporate some of its products into concessions stands. The new Naming Rights Agreement respects the Windy City Bulls agreement and the rights granted thereunder. -3-

This proposed agreement would start on September 1, 2020 with the first of fifteen payments due on that date. The Term continues for fifteen years and expires on August 31, 2035. However, Section 16.1 of the Agreement gives NOW the option to opt out of the agreement after the tenth year (terminate on August 31, 2030), by giving notice 18 months prior to the end of the first ten years (provide notice by March 31, 2028).

The new Naming Rights Agreement mirrors the 2018 agreement in format and much of the content. Similar to the old agreement, nnd providing NOW decides not to opt out, NOW has an exclusive renegotiation window 18 months prior to expiration of the fifteenth Term (March 2033).

An ordinance approving the new Naming Rights Agreement is also attached.

FINANCIAL IMPACT:

Under the proposed Naming Rights Agreement, NOW will pay the Village $7.5 million over the ten year term, with the first payment due on September 1, 2020 and the potential for an additional five (5) years totaling $11.25 million over the 15-year term.

NOW provided confidential financial information that was vetted by Village staff and the Legal Department, as well as the Village's Financial Advisor.

RECOMMENDATION:

Request approval of an Ordinance and Naming Rights Agreement with NOW Health Group, Inc. renaming the Sears Centre Arena to the NOW Arena, in an amount of $11.25 Million over a fifteen year term, starting September 1, 2020 and continuing through August 31, 2035.

cc: Dan Richards, NOW ORDINANCE NO. ______- 2020

VILLAGE OF HOFFMAN ESTATES

AN ORDINANCE AUTHORIZING APPROVAL OF A NAMING RIGHTS AGREEMENT BETWEEN THE VILLAGE OF HOFFMAN ESTATES AND NOW HEALTH GROUP, INC. AND THE TERMINATION AGREEMENT AND MUTUAL RELEASE BETWEEN THE VILLAGE OF HOFFMAN ESTATES AND TRANSFORM SR LLC

WHEREAS, the Village of Hoffman Estates is a home rule unit of local government as defined in Section 6(a), Article VII of the 1970 Constitution of the State of Illinois and as such may exercise any power and perform any function pertaining to its government and affairs; and WHEREAS, tht: Villagll ufHoffman Estates is the owner in fee simple of the roal property located at 5333 Prairie Stone Parkway in Hoffman Estates, on which there is located a multi­ purpose sports and entertainment arena, commonly known as the "Sears Centre Arena"; and WHEREAS, on December 16, 2009, MadKatStep Entertainment, LLC, a Delaware limited liability company, ("MadKatStep") executed its Quit Claim Deed in Lieu ofForeclosure (Illinois) conveying to the Village of Hoffman Estates all of MadKatStep's interest in and to that real property and the Sears Centre Arena that were then owned by MadKatStep; and WHEREAS, at all times since being deeded the real property on December 16, 2009, the Village of Hoffman Estates has continued to operate the Sears Centre Arena for that purpose; and WHEREAS, effective July 21, 2005, Sears, Roebuck and Co., MadKatStep and CCO Entertainment, LLC, a Delaware limited liability company, had entered into an exclusive ten ( 10) year "Naming Rights Agreement" granting Sears, Roebuck and Co, its successors and assigns, the right and opportunity to designate the name of the arena and to require the use of the registered Sears Centre name and logo in connection with advertising, signage and promotions of the arena; and WHEREAS, effective September 1. 2016, Sears, Roebuck and Co. and the Village of Hoffman Estates had entered into an exclusive three (3) year "Naming Rights Agreement" granting Sears, Roebuck and Co, its successors and assigns, the right and opportunity to continue to designate the name of the arena and to require the use of the registered Sears Centre name and logo in connection with advertising, signage and promotions of the arena; and WHEREAS, effective October 8, 2018, Sears, Roebuck and Co. and the Village of Hoffman Estates entered into an extension of that exclusive three (3) year "Naming Rights Agreement" granting Sears, Roebuck and Co. the further right and opportunity to continue to designate "Sears Centre Arena" and "Sears Centre Arena Powered by Shop Your Way" as the name of the arena upon Sears, Roebuck and Co.'s payment of an annual naming rights fee to the Village of Hoffman Estates commencing September I, 2019, and its sub!icensing to the Village of Hoffman Estates the use of the registered "Sears Centre" name, logo, trademark and/or service mark, and the domain name and website associated therewith, at locations and in such manner as are more fully set forth therein, in all public advertising, specialty advertising, signage, promotions, and other arena designations used within or in connection with the Sears Centre Arena and the events occurring at or within the Sears Centre Arena; and WHEREAS, it is at this time in the best interests of the Village of Hoffman Estates and Sears Roebuck & Co., together with Sears' naming rights agreement asset purchaser Transform SR LLC, for the Village to enter into a separate and new naming rights agreement with Now Health Group, Inc., an Illinois corporation, for the Arena located at 5333 Prairie Stone Parkway in Hoffman Estates, on the property belonging to the Village; and WHEREAS, Transform SR LLC, as the 2019 asset purchaser of the Sears Naming Rights Agreement through the Sears' bankruptcy court proceedings, has agreed as well to the termination of the 2018 Naming Rights Agreement with the Village effective June 22, 2020 and the parties' mutual release. - 2 -

NOW, THEREFORE, BE IT ORDAlNED by the President and Board of Trustees of the Village of Hoffman Estates, Cook and Kane Counties, Illinois, as follows: Section I : The Village President and Village Clerk are duly authorized to execute the2020 NOW Health Group, Inc. Naming Rights Agreement, attached as Exhibit "A", between the Village of Hoffman Estates and NOW Health Group, Inc. effective June 20, 2020 for the naming rights to the Arena belonging to the Village of Hoffman Estates and located at 5333 Prairie Stone Parkway, and by this action, the Board of Trustees approves, accepts and ratifies the 2020 NOW Health Group, Inc. Naming Rights Agreement. Section 2: The Village President and Village Clerk are duly authorized to execute the 2020 Sears Naming Rights Termination Agreement and Mutual Release, attached as Exhlbit "B", for the naming rights to the Arena belonging to the Village of Hoffman Estates and located at 5333 Prairie Stone Parkway, and by this action, the Board of Trustees approves, accepts and ratifies the 2020 Sears Naming Rights Termination Agreement and Mutual Release. Section 3: The Village Clerk is hereby authorized to publish this Ordinance in pamphlet form. Section 4: This Ordinance shall be in full force and effect immediately from and after its passage and approval.

PASSED THIS ___ day of ______, 2020

VOTE AYE NAY ABSENT ABSTAIN Trustee Karen V. Mills Trustee Anna Newell Trustee Gary J. Pilafas Trustee Gary G. Stanton Trustee Michael Gaeta Trustee Karen Arnet President William D. McLeod

APPROVED THIS DAY OF ______, 2020

Village President

ATTEST:

Village Clerk

Published in pamphlet form this ___ day of ______, 2020. EXECUTION VERSION

NAMING RIGHTS AGREEMENT

This Naming Rights Agreement ("Agreement") is made and entered into as of the __ day of June, 2020 (''Effective Date"), by and between the VILLAGE OF HOFFMAN ESTATES. an Illinois home-rule municipal corporation ("Village"), and NOW HEALTH GROUP, lNC. ("Sponsor"). The Village and Sponsor are also referred to herein individually as a "Party" and collectively as "Parties."

WITNESS ETH:

WHEREAS, the Village, as owner of the Arena (defined below), has the right to designate the name of the Arena ("Naming Rights") and to license such right to others and to grant certain other sponsorship, promotional, advertising and similar rights and benefits associated with the Arena as more fully specified in this Agreement; and

WHEREAS, Sponsor and the Village desire that the Village grant Sponsor the rights as set forth herein to name the Arena on the terms set forth herein.

NOW, THEREFORE, in consideration ofthe mutual covenants and promises herein set forth, and for other good and valuable consideration, the receipt and sufficiency of which are herewith acknowledged, Sponsor and the Village agree as follows:

AGREEMENT:

I. RECITALS: The recitals set forth above are incorporated herein by this reference.

2. DEFINITIONS: The following capitalized tenns used herein shall have the following meanings:

2.1 "Additiooal Insureds" has the meaning ascribed in Section 12.1 .

2.2 "Arena" or "NOW Arena" means that certain Arena in the Prairie Stone Business Park located at 5333 Prairie Stone Parkway, Hoffman Estates, lllinois, on land legally described in Exhibit A, which accommodates approximately 11 ,000 patrons, approximately 67 suites, and approximately 3,300 parking spaces.

2.3 ''Arena Advertising Rights" has the meaning ascribed in Section 14.2.

2.4 "Arena Domain Name" has the meaning ascribed in Section 4.4.

2.5 "Arena Logo" has the meaning ascribed in Section 3.2. I.

2.6 "Arena Manager" means Global Spectrum LP d/b/a Spectra, as the entity engaged by the Village to manage the day-to-day operations and sponsorship sales of the Arena, and any successor manager designated by the Vi llage.

2.7 "Arena Name" has the meaning ascribed in Section 3.2.1.

2. 8 "Basketball Inventory" has the meaning ascribed in Exhibit H.

2.9 "Capital Expenditures" has the meaning ascribed in Section 15.3. 2. IO "Category Exclusivity" has the meaning ascribed in Section 7.

2.11 "Charitable Suite" has the meaning ascribed in Section 9.2.

2.12 "Competitor" has the meaning ascribed in Section 7.1.

2.13 "Customer Engagement'' has the meaning ascribed in Section 8.

2.14 "Effective Date" has the meaning ast:ribe

2.15 "Event of Default" has the meaning ascribed in Section 16.3.

2.16 "Exit Sampling" has the meaning ascribed in Section 8.4.

2.17 "First Class Operations Standard" has the meaning ascribed in Section 15, I.

2.18 "Force Majeure" has the meaning ascribed in Section 20.10.

2. I 9 "Guidelines" has the meaning ascribed in Section 3.1. l.

2.20 "'Hospitality Rights" has the meaning ascribed in Section 9.

2.21 "Invitees" has the meaning ascribed in Section 9.8.

2.22 "Intellectual Property" or "IP" means all trademarks, service marks, copyrights, patents, and all other intellectual property rights and fonns of protection of a similar nature.

2.23 "Local Sponsors" has the meaning ascribed in Section 7.4.

2.24 "Maintenance and Repair Standard" has the meaning ascribed in Section 15.2.

2.25 "Marquee" has the meaning ascribed in Section 6.5.

2 .26 "Merchandising Rights" has the meaning ascribed in Section 14.4.

2.27 "Naming Rights" has the meaning ascribed in the Preamble.

2.28 "NOW Lounge" has the meaning ascribed in Section 8.2.

2.29 "Recharge Corner" has the meaning ascribed in Section 8.3.

2.30 "Renewal Deadline" has the meaning ascribed in Section 16.2.

2.31 "Sponsor" has the meaning ascribed in the Preamble.

2.32 "Sponsor Events" has the meaning ascribed in Section 5.3.

2.33 "Sponsor IP" has the meaning ascribed in Section 3.1.2.

2.34 "Sponsor Personnel" has the meaning ascribed in Section 13.1.8.

2 2.35 "Sponsor Suite" has the meaning ascribed in Section 9. 1.

2.36 "Sponsorship Fee" has the meaning ascribed in Section 4.1.

2.37 "Team" has the meaning ascribed in Section 10.

2.38 "Tenant" hus the meaning ascribed in Section 10.

2.39 ''Term" has the meaning ascribed in Section 16.

2.40 "Term Commencement Date" means September I, 2020.

2.41 ''Trademarks" has the meaning ascribed in Section (4.3.

2.42 "Village IP" means any Intellectual Property of the Village, including, without limitation, the right to use of which is licensed hereunder.

2.43 ·'Vitamin Product" has the meaning ascribed in Section 7.1.

2.44 "Windy City Bulls" has the meaning ascribed in Section IO.I.

3. RIGHTS GRANTED:

3.1 Rights Granted to Village and Arena Manager.

3.1.1 Sponsor hereby grants to the Village a non-exclusive, royalty-free, worldwide license to use, and allow Arena Manager and a Team and/or Tenant to use, Sponsor IP, but only for the purpose of advertising and promoting the Arena and events therein, and to the extent Sponsor JP is incorporated in the Arena Domain Name, Arena Logo and Arena Name the perpetual right to use for historical and archival use related to the Arena and/or a Team or Tenant or third party doing business with the Arena, in either case with the right to sublicense same to Arena Manager, Teams and Tenants. The Vi llage shall follow the applicable guidelines as provided by Sponsor and as may be modified from time to time to describe and detail the standards ("Guidelines") for the Vi II age's use of the Sponsor IP on all signage, advertising, promotions and all similar or related materials. Except for use in the Arena Domain Name, Arena Logo and Arena Name, which shall remain the property of the Village, all uses by the Village of Sponsor JP hereunder shall inure solely to the benefit of Sponsor.

3.1.2 Without limiting the foregoing, and in addition to other rights granted herein, Sponsor hereby grants the Village a li mited. non-exclusive. royalty-free, worldwide license to use, and allow Arena Manager and a Team and/or Tenant or third pa11Y event doing business with the Arena to use, the following lnte llectual Property of Sponsor (collectively, "Sponsor IP"): "NOW Health Group", and "NOW Foods" and all names, logos, trademarks and/or service marks related thereto (expressly excluding the Arena Name, Arena Logo and Arena Domain Name, each of which is and shall constitute Village IP) including use of Sponsor JP, at locations and in such manner as more fully set forth herein, including the attached Exhibits, and in all public advertising, specialty advertising, signage, promotions, and other Arena designations used within or in connection with the Arena and the events occurring at or within the Arena, all as more fully specified in this Agreement.

3 3 .2 Rights Granted to Sponsor.

3.2.1 Exclusive Naming Rights. The Village agrees that the Arena will be referred to as "NOW Arena'' (as may be modified in accordance with this Agreement, the ''Arena Name") during the Term hereof. Sponsor and Arena Manager shall jointly develop an Arena logo, which shall include the Arena Name (as may be modified in accordance with this Agreement, the "Arena Logo"), e,ich of which shall be registered (at the option of the Village) and owned by the Village, and the current logo and accepted variations shall be attached to this Agreement as Exhibit B hereto; provided, however, exnipl as µiuvided in this Agreement the Village shall have no rights to any Sponsor IP, including, without limitation, the NOW logo and NOW name, separate and apart from the Arena Name, Arena Logo and Arena Domain Name (as defined in Section 4.4). The Village, at its sole cost and expense, shall have the right to file a trademark application or seek and/or secure a trademark registration for the Arena Name, Arena Logo (and tag lines incorporated in the Arena Logo) and Arena Domain Name for use in connection with goods and services related to this Agreement. Notwithstanding anything to the contrary set fonh herein, the Village agrees that nothing in this Agreement shall be understood as granting the Village, expressly or by implication, any rights to the Sponsor IP except as provided herein in respect of the Arena Logo, Arena Name and Arena Domain Name, and that any and all goodwill associated with the Sponsor IP is owned and is reserved for the benefit of Sponsor. Further, except as otherwise permitted in Sections 3.1 and 16.7 herein, upon termination or expiration of this Agreement, the Village shall cease all use of Sponsor IP, including, without limitation, any Sponsor IP incorpornted in the Arena Name, Arena Domain Name or Arena Logo unless approved by Sponsor, whicl, approval shall not be unreasonably withheld.

3.2.2 Village IP. The vmage hereby grants to Sponsor a limited, nonexclusive, royalty-free, worldwide license during the Term to use the Village IP, which includes, without limitation, the Arena Name, the Arena Logo and the Arena Domain Name, in advertising and promoting its rights under this Agreement during the Term. The right to use the Village IP is nonexclusive, nonassignable and nontransferable. All uses by or on behalf of Sponsor of the Village IP shall inure solely to the benefit of the Village. Except as it relates to the Arena Logo, Arena Name and Arena Domain Name as provided herein, nothing contained herein shall in any way limit Sponsor's right to use Sponsor !P.

3 .2.3 Sponsor Advertising. Sponsor shall have the right to purchase its own advertising and promotional campaign in connection with its sponsorship of the Arena, including but not limited to video and print ads, websites and other electronic media, using the Village IP, all subject to the Vil lage's prior approval, which shall not be unreasonably withheld or delayed.

4.1 Sponsorship Fee. Sponsor agrees to pay to the Village the sum of Seven Hundred Fifty Thousand and No/100 Dollars ($750,000.00) per year ("Sponsorship Fee") throughout the Term of this Agreement for the rights granted hereunder. Payments will be fully vested and earned by Sponsor on the date payments are made. The Sponsorshi p Fee shall be due and payable in full on or in advance of the first day of each September of each year during the Term, commencing September I, 2020. This payment schedule can be found in its entirety in Exhibit J. All sums quoted are exclusive of any agency fees, commissions or the like that may be payable by Sponsor to its advertising and media agencies (if any) and applicable taxes (if any), all of which are the responsibility of Sponsor.

4.2 Late Payments. If Sponsor fails to timely pay any amount due under this Agreement, including without limitation the Sponsorship Fee, interest shall be imposed and payable at the

4 rate of the lesser of one and one-half percent ( 1-112%) per month or a po1tion of the month from the date such payment was due until paid in full, or the highest rate permitted by law.

4.3 Payment Method. The Sponsorship Fee payments shall be made by Sponsor by wire transfer payable to the Village, no later than the dates set forth above and in Exhibit J.

4.4 Arena Domain Name. The Village, at its sole expense, has purchased and registered the Arena domain name (www.NowArena.com) ("Arena Domain Name") and shall maintain the Arena Domain Name and all annual renewals thereof at Its sole .ixpense lhrnugliout the Tenn of this Agreement.

4.5 Name, Logo and Customer Engagement Costs. Any costs associated with renaming the Arena to "NOW Arena," replacing all existing previous Naming Rights branding or implementing any other provisions under this Agreement shall be at the sole expense of Sponsor, including, but not limited to, all items listed under Exhibit K. Sponsor sha!! be responsible for all production and installation costs related to its signage and adve11ising, including, without limitation, any future prodL1ction and installation costs during the Term of tl1is Agreement. Sponsor shall be solely responsible for the costs associated with producing creative content and design. The costs to be borne by Sponsor as described in this Section 4 and its subsections are in addition to the Sponsorship Fee due from Sponsor as set forth in Section 4.1.

4.6 Customer Engagement Costs. Sponsor will be solely responsible for all costs associated with the changeover and continued engagement of the NOW Lounge, Recharge Comer, and Exit Sampling throughout the Term. This includes, but is not limited to, leases or outright purchases of the interactive photo booth and two (2) new eel I phone charging stations, Sponsor representative staffing, content creation, product samples, printing of coupons or any further enhancements or changes to the spaces and activations.

5. PARTNERSH IP RIGHTS:

5. t Printed Material and Publicity. During the Tenn, the Arena Name, or Arena Logo where applicable, shall appear on all printed material and publicity used in connection with the Arena, including: Arena tickets sold by the box office; event programs as controlled by the Arena Manager; marketing collateral; public and media relations materials; identifying accessories of employees of the Arena; parking tickets/coupons/passes, contracts or legal documents; and any media advertising or other adve1tising, whether printed or electronically reproduced, relating to events at the Arena. The Village shall not be responsible for any error or omission by third parties; provided, however, that the Village shall use its reasonable efforts to make such third parties aware of and cause such third pmties to comply with this requirement. With respect to this Section 5.1, the Village may also allow the names or logos of other companies (other than Competitors as defined in Section 7.1) to appear on such items.

5.2 Website, Social Media and Emails. During the Term, all pages of the Arena website (www.NowArena.com) will include the Arena Logo, and the Arena home page will contain the Arena Logo with a link towww.nowfoods.com. The applicable changeover costs shall be paid by Sponsor. Arena Manager will have the Arena Name and Arena Logo featured on all emails sent out during the Tenn to the email database, as managed by Arena Manager, to send out marketing content and event information. All social media platforms, including Facebook, Twitter, and lnstagram, will be changed to reflect the Arena Name or Arena Logo as soon as practicable and will remain so during tl1e Term.

5.3 Sponsor Events. Sponsor shall have the right to develop and stage events ("Sponsor Events") at the Arena in number and on dates and times mutually agreed by Sponsor and Arena

5 Manager. Unless mutually agreed upon between Sponsor and Arena Manager, bookings from three hundred and sixty-five (3_65) days to one hundred and twenty ( 120) days prior to an event date may be booked on a Monday, Tuesday, or Wednesday during the months of April, July, August, and October. All other mutually agreed upon Sponsor Event bookings can be made one hundred and twenty (120) days to sixty (60) days prior to an event date, but no confirmations will be made prior to one hundred and twenty (120) days. Sponsor will provide three (3) potential dates per event and Arena Manager will make reasonable best efforts to provide requested dates. The Windy City Bulls will be given priority during the months of their season. Sponsor also shall ensure that Sponsor Events do not inte1Tupt standard publicly ticketed events at the Arena. Examples of Sponsor Events which may be stagt!c.l al llit: Arena include, but are not limited to, employee or client holiday parties, conferences, annual meetings, vendor shows and promotional events. Sponsor Event days may be of three (3) types and categories, as follows:

5.3. ! Indoor Employee/Client Event Days. Sponsor sl1all be entitled to use the Arena for follr (4) private, non-ticketed indoor employee and/or client internal Sponsor Events per year. Sponsor will be responsible for covering all programming costs of these Sponsor Events. Sponsor will be required to pay Arena Manager only for the direct costs of labor, catering and materials incurred in connection with the Sponsor Event and the direct operating costs (i.e., security and janitorial service) associated with the Sponsor Event, without being required to pay any amounts of rent, overhead, or other fixed costs that would be incurred by the Arena in all Sponsor Events, even if the Sponsor Event was not held.

5.3.2 Outdoor Summer Event Day. Sponsor shall be entitled to host one (1) Sponsor Event per year at the corresponding outdoor space for employees and/or clients. Sponsor will be responsible for covering all programming costs of these Sponsor Events. Sponsor will be required to pay Arena Manager only for the direct costs of labor, catering and materials incurred in connection with the Sponsor Event and the direct operating costs (i.e., security and janitorial service) associated with the Sponsor Event, without being required to pay any amounts of rent, overhead, or other fixed costs that would be incurred by the Arena in all Sponsor Events, even if the Sponsor Event was not held.

5 .3 .3 Charitv Event Day. Sponsor shall be entitled to coordinate one (I) charitable day per year at the Arena that may be open to the public. Sponsor will be responsible for covering all programming costs of these Sponsor Events. Sponsor wil I be required to pay Arena Manager only for the direct costs of labor, catering and materials incurred in connection with the Sponsor Event and the direct operating costs (i.e., security and janitorial service) associated with the Sponsor Event, without being required to pay any amounts of rent, overhead, or other fixed costs that would be incurred by the Arena in all Sponsor Events, even if the Sponsor Event was not held.

5.3.4 Event License and Insurance Requirements. Sponsor will be required to sign an event license agreement with Arena Manager and obtain and provide proof of insurance during Sponsor-coordinated or organized events.

5.3.5 Open-Door Policy. Sponsor shall be able to reasonably access the Arena on non-Sponsor Event days during regular business hours as needed for small scale meetings, tours, and other business activity of less than twenty (20) people at a time. Sponsor will give advance notice and coordinate these occurrences directly witl1 Arena Manager. Sponsor shall conduct business around pre-existing activities (i.e., event changeovers, Team practices, cleaning, and other day-to-day activities) and act in compliance with Arena Manager's requests.

6 6. SlGNAGE: All signage at the Arena shall confom1 to applicable ordinances, laws, rules, and regulations un less and only to the extent a valid waiver or variance therefrom has been granted by governmental authorities having jurisdiction over such signage, in which case, such signage shall comply with the conditions of such waiver or variance. The F'a1iies further agree as follows:

6.1 Name and Logo Changeover Process. Arena Manager will facilitate all signage d1anges in conjunction with Sponsor. Arena Manager will work with third pa1iy companies to provicle cost estimates and fonnal quotes. The Village shall invoice Sponsor for these costs in advance. and Sponsor shall pay the Village prior to the commencement of the work of the third pa1iy companies and within thirty (30) days of receiving the invoices.

6.2 Existing External Signage to be Changed. Signage identified on E1'hibit C that is in existence on the Effective Date shall, at Sponsor's sole cost and expense, be changed to the Arena Name or Arena Logo. The depictions on Exhibit C are for illustrative purposes only. Final dimensions, specifications and artwork shall be mmually agreed upon in writing by Sponsor and the Village.

6.3 Existing Internal Signage to be Changed. Signage identified on Exhibit D tl1at is in existence on the Effective Date shall, at Sponsor's sole cost and expense, be changed to the Arena Name or Arena Logo. The depictions on Exhibit D are for illustrative purposes only. Final dimensions, specifications and artwork shall be mutually agreed upon in writing by Sponsor and the Village.

6.4 New Signage to be Added. Signage identified on Exhibit E and any mutually agreed upon future signage such as adding a large NOW® vitamin bottle that is not in existence on the Effective Date shall be installed, at Sponsor's sole cost and expense, by the Village and shall include the Arena Name or Arena Logo as indicated on the depiction. The depictions on Exhibit E are for illustrative purposes only. Final dimensions, specifications and artwork shall be mutually agreed upon in wrlting by Sponsor and the Village.

6.5 Marquee. The freestanding digital structure located between the Arena and Jane Adams Memorial Tollway 1-90, which promotes sponsors and upcoming events ("Marquee"), shall reflect the Arena Name and Arena Logo during the Tenn. In the event Sponsor requests the Village to enhance or replace the Marquee (to the extent permitted hereunder), and the Village agrees to such changes, Sponsor shall be responsible, at its cost, for the design, production and installation of such replacement Marquee. Once installed, title to any replacement Marquee shall vest with the Village. Any and all changes to the Marquee are subject to the approval of the Village, and shall meet all regulations, legal requirements and third party rights.

6.6 Roof Signage. If Sponsor wishes to advertise on the roof of the Arena, Sponsor will be solely responsible for all costs and expenses associated with production, fabrication, and insta1lation ofsuch signage as well as for the removal expenses of such roofsignage at the end of the Term. If Sponsor proceeds with roof signage, Sponsor will deposit the amount quoted for removal of such signage to the Village to hold or provide credit equal to the removal amount for removal purposes over the Tenn of this Agreement. Finni dimensions, specifications and artwork shall be mutually agreed upon in wrlting by Sponsor and the Village.

6.7 Changes During Term. In the event Sponsor requests that any Sponsor signage be changed, rotated, or altered during the Term, subject to the Village's prior written approval, Sponsor shall be responsible for the production and fabrication thereof and for all associated costs, including the installation and removal expenses incurred by or on behalf of the Village as a result thereof.

7 6.8 Signage Evolution. Sponsor and the Village acknowledge that signage and advertising opportunities in and/or relating to the Arena may evolve over the course of the Term, and the advertising and sponsorship elements described in this Section 6 may be changed by mutual written agreement of the Parties. In addition, if any of the original elements enumerated herein are for any reason discontinued or no longer available, the Village shall have the right, without being deemed in breach hereat: to modify the elements and/or substitute others of at least approximate equivalent value (in the aggregate), as such value is detennined by the Village in its remmnahle discretion based upon Arena Manager's then­ applicable rates. Frnthermore, the Parties each recognize that laws, rules or regulations may, from time to time, preclude various rights from being exercised under this Agreement, which may dilute the promullo11al value granted to Sponsor hereunder. In such event, the Village and Sponsor will negotiate in good faith with respect to new and/or additional elements which may restore substantially all ofthe promotional val Lie herein granted, but in no event shall the Sponsorship Fee paid by Sponsor to the Village hereunder be reduced as a result of the preclusive effect of such laws, rules or regulations.

6.9 Signage Maintenance. The Village shall use reasonable efforts to maintain in a state of good condition and repair, reasonable wear and tear as excepted, the Marquee and all other signs identifying the Arena or advertising Sponsor as required by this Agreement after installation.

6.10 Content. Sponsor shall be solely responsible for furnishing all creative content and ,he costs associated with creating advertising and promotional materials for the Customer Engagement activities ascribed herein. This includes, but is not limited to, any digital, video and photo content for the NOW Lounge, Recharge Comer, and the LED Lobby Board and Marquee Digital Ads.

6.11 Signage Limitations. Anything herein 10 the contrary notwithstanding, the Pa11ies agree to comply with all rules and requirements promulgated or imposed by the NBA, NBA G-League, NCAA, all USA Olympic sports such as USA Volleyball and USA Gymnastics, the 810®, the IHSA, or any other governing body or league with respect to display of corporate names, logos or similar advertising during events sanctioned by such body or league being held at the Arena, and such comp Iiance, notwithstanding efforts by the Parties, shall not give rise to a claim by Sponsor for breach by the Village of this Agreement. Subject to the foregoing limitation, the Village represents that Sponsor shal I have the right to display the Arena Logo in a similar manner as shown on Exhibit Din connection with the Tenant events, Display and, if applicable, illumination of interior signage may be limited to public Arena events, and illumination .of interior signage shall further be lirn ited to those events in which illumination is appropriate. Such display and interior illumination shall further be subject to any restrictions imposed by any third paity event promoters.

6.12 Village Approvals. The Village shall have the absolute right to approve all signage and other advertising features which are to be furnished by Sponsor hereunder, which approval shall not be unreasonably withheld or delayed.

7. EXCLUSIVITY: Sponsor shall have the following exclusive advertising, sig11age and promotional rights with respect to permanent signage within or at the Arena within the exclusive category as defined in Section 7.1 (''Category Exclusivity") during the Term of this Agreement:

7.1 Vitamin Product. Unless Sponsor shal I expressly consent otherwise in writing, no vi tam in supplement other than Sponsor's products shal I be adve1tised in or on the Arena ("Vitamin Product"). The Village shall not pennit any Competitor (defined below) to advertise or promote themselves generally or any products within the Vitamin Product categoty on pe1111anent signage at the Arena. For purposes of th is Agreement, ''Competitor" sh al I mean any firm, company or other person other than Sponsor that is predominantly engaged in the business of vitamin supplements that compete with

8 Sponsor's products. including, without limitation, Nature's Way, Garden of Life, Natural Factors, New Chapter, Gaia Herbs, Solaray, GNC and The Vitamin Shoppe.

7 .2 Event Sponsorship Exclusivity Exceptions. Notwithstanding the above, the Village may engage or permit its promoters or sponsors of events at the Arena to engage national or regional sponsors or advertisers of one-time or limited engagement public events at the Arena ( for exam pie, if GNC were to be a title sponsor or presenter of a nationwide concert tour). The related display of temporary banners, signs and similar event-specific materials for such sponsor, or any Local Sponsor (defined below), or their products or services shall not be deemed a violation of the Village's grant ofCategury Exclusivity to Sponsor provided herein, and hospitality and associated promotional announcements at the Arena shall also be permitted. The Village shall, however, use commercially reasonable efforts to prevent a national or regional event sponsor that is determined as a Competitor from physically displaying actual products at the Arena in conjunction with such an event. Except in situations described herein, in no event shall any event sponsorship pem1itted hereunder afford any other sponsor, or Arena Manager or the Village, any right, privilege, or entitlement to cover or otherwise obscure the Arena Name or Arena Logo.

7 .3 Bookings. The Village and Arena Manager shall be permitted to negotiate and enter into contracts for any events with Competitors at the Arena, which activities shall not be subject to the foregoing limitations contained in Section 7.1. Notwithstanding the foregoing, the Village and Arena Manager shall ensure any contracts for events adhere to the requirements set fo1th in Section 7.2,

7.4 Local Sponsors. Sponsor understands and acknowledges that local sponsorships are critical for mid.size arenas to generate sufficient revenue to cover operating costs. On occasion, Arena Manager will seek to create limited strategic relationships with businesses ("Local Sponsors") that are designated as health-centric, but do not directly compete with Sponsor (for example, Fisher Nuts or Chiro One sponsoring Northwest Fou1th Fest, or PetSmart sponsoring a Windy City Bulls game). While it is possible these businesses may sell similar or competing products to Sponsor, these businesses do not represent significant competition and the Village shall be allowed undei- this Agreement to obtain such sponsorships.

8. CUSTOMER ENGAGEMENT: Various non-exclusive use spaces of the Arena and interactive occurrences shall be available for customer engagement activities during most events as follows ("Customer Engagement"):

8.1 Press Conference & Kickoff Event. The Village and Arena Manager will coordinate a press conference and kickoff event on a mutually agreed date with Sponsor to publicize and promote the new Arena Name and Arena Logo.

8.2 NOW Lounge. The Southeast corner of the concourse will be rebranded to the "NOW Lounge." The location, design, furnishings, and signage for the NOW Lounge are included in Exhibit F, which depictions are for illustrative purposes only. Final dimensions, specifications and artwork shall be mutually agreed upon in writing by Sponsor and the Village. Except as provided herein, the Village will allow Sponsor to place representatives in the NOW Lounge at Arena events for promotion and support, at Sponsor's sole expense. Said representatives shall coordinate their arrival with Arena Manager no less than twenty-four (24) hours in advance of an event and shall defer to the direction of Arena Manager, should their presence or location within the NOW Lounge need to be limited 01· restricted during an Arena event. Arena Manager may, upon timely notice to Sponsor, prohibit said representatives from appearing during Arena events. Sponsor's representatives shal I be prohibited from appearing at all Tenant events without the express written consent of the Tenant, including the Windy City Bulls, as further outlined herein.

9 8.3 Recharge with NOW Comer. A new cell phone charging area ("Recharge Corner") will be implemented in the Nortl1west corner of the Arena. The location, design, furnishing, and signage of the Recharge Corner are described in Exhibit G, which depictions are for illustrative purposes only. Final dimensions, specifications and artwork shall be mutually agreed upon in writing by Sponsor and the Village. Arena Manager reserves the right to relocate moveable pieces of the space in advance of events should their presence present safety and capacity issues in the judgment of Arena M11nagcr. 8.4 Exit Sampling. Sponsor will be allowed to provide Are11a Manager wilh pr~- packaged sample-sized products or coupons at no cost to Arena Manager or the Yi II age, which Arena ushers will distribute such products or coupons to patrons on their way out of Arena events ("Exit Sampling"). Arena Manager may, upon timely notice to Sponsor, prohibit Exit Sampling at Arena events. Sponsor will conform and agree Lo all sampling guidelines and legal requirements regarding product quality and health standards prior to supplying Arena Manager with product. Sponsor is prohibited from Exit Sampling during Tenant events without the express written consent of the Tenant, including the Windy City Bulls, as further outlined herein.

8.5 Concession Product Inclusion. Arena Manager will work with Sponsor and the Arena concessionaire to provide select, pre-packaged Sponsor concession items for sale at Arena concession stands during events. Price and type of product shall be mutually agreed upon in writing between Sponsor and Arena Manager throughout the Te1m. Sponsor shall become an authorized vendor of the Arena concessionaire and meet all insurance, health, and safety requirements. Sponsor shall conform and agree to all guidelines and legal requirements regarding product quality and health standards prior to supplying Arena Manager or the Arena concessionaire with product.

8.6 Customer Engagement Team Limitations. As further described in Section 10.1.2, Sponsor is required to receive express written consent by any Tenant, including the Windy City Bulls, to place representatives on the premises or provide Exit Sampling during Tenant events.

9. HOSPITALITY RIGHTS: The Village and Arena Manager agree that during the Term, Sponsor shall be entitled to the following hospitality rights ("Hospitality Rights"):

9. I Sponsor Suite. Sponsor shall be entitled to use of the Sponsor Suite, Suite# 124, which is located on the lower level of the Arena and accommodates fifteen (15) guests ("Sponsor Suite").

9.1. l Suite Tickets and Capacity. Sponsor shall receive fifteen (1 S) complimentary tickets for Suite# I 24 for all publicly ticketed events at the Arena in which suites are sold by Arena Manager.

9.1.2 Parking Passes. Sponsor will be provided with six (6) annual parking passes for al I events at the Arena each year of the Term. Sponsor will also be provided with sixty (60) single event use parking passes each year of the Term.

9.1.3 Suite Branding and Design. Sponsor has the option to brand and design the Sponsor Suite to Sponsor's liking at Sponsor's sole expense with prior written approval from Arena Manager.

9.1.4 Suite Food and Beverage. Sponsor will have the ability to cater food and beverage for events through the Arena concessionaire, at Sponsor's sole expense. 9.1.5 Suite Relocation. In the case that the view from the Sponsor Suite is obstructed due to the scaling and production of an event, Sponsor Suite locati on may be temporarily changed to a different suite location at Arena Manager's discretion. Arena Manager will, to the best of its ability, relocate the Sponsor Suite to a comparable location. This location may contain less than fifteen (15) tickets, but no less than twelve ( 12) tickets. Any inability to relocate the Sponsor Suite due to production restraints wi II not be deemed a breach of this Agreement.

9.2 Charitable Donation Suite. An additional complimentary suite that will include no less than ten ( 10) tickets shall be made available to Sponsor without additional cost solely for distribution to charities for direct use by such charity or for charitable fundraising purposes (''Charitable Suite"). Use of this suite will be limited to availability, but available lo Sponsor for most publicly ticketed events at the Arena in which suites are sold by Arena Manager, but is not guaranteed for all Arena events. The suite is not transferable to general seating tickets, and shall not be unreasonably withheld by Arena Manager.

9.3 Additional Ticket Allotment. In addition to the Sponsor Suite tickets referred to above, upon request and if available at the time of the request, Sponsor shall be entitled to forty (40) additional complimentary tickets for all publicly ticketed events at the Arena.

9.4 Additional Ticket Purchases. Sponsor shall have the right and option (but not the obligation) to purchase reasonable quantities or additional tickets for events at the Arena at the most favorable prices offered to the public, subject to availability.

9.5 Cluh Memberships. If the Arena shall establish public memberships or preferred/special access clubs at the Arena, Sponsor shall be entitled to memberships in such clubs as is mutually agreeable by Sponsor and Arena Manager.

9.6 Limiration. Anything herein to the contrary notwithstanding, the Parties agree to comply with all rules and requirements promulgated or imposed by the NBA, NBA G-League, NCAA, all USA Olympic sports such as USA Volleyball and USA Gymnastics, the BIG®, the IHSA, or any other governing body, league or event promoter with respect to hospitality during events sanctioned by such body or league being held at the Arena.

9.7 Substitute Hospitality Rights. The Patties agree to cooperate and to use their commercially reasonable effo1ts to negotiate substitute and alternative Hospitality Rights of equal or comparable value if any existing or planned Hospitality Rights are no longer available or possible. In each such case, Arena Manager will suggest an alternative to Sponsor. If the Parties cannot agree on an alternative promotion, sign, or right, the dispute resolution provisions of Section 17 will apply.

9.8 Assumed Hospitalitv Liability. Sponsor is responsible and liable for all occupants, guests of and invitees (collectively, "In vitees") to the Sponsor Suite. Sponsor sha ll ensure that Invitees that consume alcohol in rhe Sponsor Suite are of legal dri nking age and drink 1·esponsibly. Further, to maintain compliance with the rules and regulations set forth by the Village and the State oflllinois, Sponsor shall adhere to the following: Alcoholic beverages cannot be brought into or taken out of the Arena. It is the responsibility of Sponsor or its representative to monitor and control alcohol consumption within the Sponsor Suite. It is unlawful to serve alcoholic beverages to an intoxicated person. During some events, alcohol consumption may be restricted.

10. TENANTS AND TEAM SPONSORSHIPS: A sports team or perfo11ning arts group (in either case a "Team" or "Tenant") may sell sponsorships that include temporary advertising in the Arena. Sponsor acknowledges and agrees that restrictions arising from tbe Category Exclusivity in this Agreement

11 shall not be applied to, but will not be limited to, ads placed upon uniforms, programs and the internet websites of the Teams or Tenants.

10.1 Windy City Bulls. 171e NBA G-League Team which serves as the main Tenant of the Arena is licensed by Northwest Sports l,LC, an Illinois limited liability company ("Windy City Bulls").

10.1.1 Included Windy City Rulls Assets. Pursuant to the 20 15 license agreement between the Village and the Windy City Bulls, the Windy City Bulls grants Sponsor the right to display Sponsor Logo or Arena Logo on the Arena basketball court, subject to the tenns hereof. The Windy City Bulls shall also provide Sponsor the opportunity to display video advertising for Sponsor on the digital Arena scoreboard for thirty (30) seconds per half of each home game.

I 0.1.2 Other Windy City Bulls Assets. All other Windy City Bulls sponsorship and advertising assets are property of the Windy City Bui Is and not included in this Agreement. A partial list of these Windy City Bulls assets ("Basketball Inventory") can be found and defined in Exhibit H. If Sponsor is interested in Exit Sampling, having Sponsor representatives in the NOW Lounge or simply expanding their exposure at Windy City Bulls events further than the assets described in Section 10.1.1 hereof, Sponsor will be required to receive express written permission separately from the Windy City Bulls. Pursuant to the license agreement between the Village and Windy City Bulls, Windy City Bulls will not enter into any new sponsorship agreements in which Basketball Inventory is used to promote goods and services of Sponsor Category Exclusivity.

10.1.3 Windy City Bulls Scheduling Priorities. Pursuant to the 20 J 5 license agreement between the Village and the Windy City 13ulls, Arena Manager must provide the Windy City Bulls with twenty-four (24) weekend dates for event day scheduling priority. Sponsor understands and acknowledges this may limit the days available to Sponsor as described under Section 5.3.

11. REPRESENTATIONS, WARRANTIES AND COVENANTS:

11.1 Of the Village. The Village represents, warrants and covenants that:

I 1.1 . I the Village has the sole and full right and legal authori ty to enter into and fully perform this Agreement in accordance with its terms without violating tl1e rights of any other party;

11.1.2 the Village !P does not infringe the trademarks or trade names or other rights of any other person;

11.1.3 the Vil Ia ge has or shall obtain, as the case may be, all government licenses, permits or other authorizations necessary to convey the rights provided to Sponsor hereunder and to conduct the events as contemplated under and related to this Agreement;

11.1.4 the Village will comply with all applicable laws, regulations and ordinances pertaining to this Agreement and its obligations hereunder;

11.1.5 except as otherwise provided herein, the Village shall be responsible for the maintenance and operation of the Arena and ensuring the Arena's compliance with all applicable laws, rules, ordinances and regulations; and

12 11 . 1.6 except as otherwise provided herein, the Village shall be responsible for any and all events booked by the Village or Arena Manager or any Teamrrenant Event and will ensure that such events are promoted and operated in compliance with all applicable laws, rules. ordinances and regulations.

I 1.2 Of Sponsor. Sponsor represents, warrants and covenants that:

11.2.1 Sponsor owns all Sponsor IP, and possesses all rights necessary to grant the licenses set forth herein, with the full right and legal authority to ente1· into and fully perform this Agreement in accordance with its te1111s without violating the Intellectual Property rights of any other party;

11 .2.2 the granting of the licenses hereunder, and the performance of its obligations hereunder, shall not conflict with or otherwise cause Sponsor to be in breach of any other agreement;

I J.2.3 Sponsor has all government licenses, permits or other authorization necessary to conduct its business;

11 .2.4 Sponsor IP does not infringe the trademarks or trade names or other rights of any other person; and

11.2.5 except as otherwise provided herein, Sponsor shall be responsible for any and all Sponsor Events and will ensure that such Sponsor Events are promoted and operated in compliance with all applicable laws, rules, ordinances and regulations.

11 .3 Ongoing Obligations of Sponsor.

11.3. 1 Exclusive Use of Arena Name. Arena Domain Name and Arena Logo: Other than use of the Arena Name, Arena Domain Name and Arena Logo permitted hereLmder during the Term, Sponsor shall not use, or permit others to use, the Arena Name, Arena Domain Name or Arena Logo, or any confusingly similar names or marks, in conjunction with any other pub lie access event facility. Notwithstanding the foregoing, nothing contained herein shal I prevent Sponsor, exclusive of the Arena Name, Arena Domain Na me and Arena Logo, from using Sponsor IP for marketing and promotional events hosted at other venues for the purpose of promoting Sponsor and Sponsor's products.

12. INSURANCE:

12. I The Village. The Village shall at all times during the Term carry, from insurance companies licensed to do business in Ill inois and with a minimum rating of"A- VII" or bener (as detennined by A.M. Best Company): (a) commercial general liability insurance with a minimum combined bodily injury and property damage limit of at least ten million dollars ($!0,000,000); (b) personal injury and advertising liability coverage, with a minimum limit of at least live million dollars ($5,000,000) and providing coverage against any and all Losses (as defined below) arising out of any offense in any advertising or promotion related to the Arena; (c) workers' compensation insurance in compliance with state statutory laws, including employers' liability, with minimum limits of $1 ,000,000 each accident, $ 1,000,000 disease (each employee), and $1,000.000 disease (policy li mit); (d) commercial automobile liability insurance, covering owned, non-owned, leased or hired automobiles, with a minimum combined single limit of$ I million each accident; and (e) umbrella liability insurance, in excess of each of the above,

13 with minimum limits of$ I0,000,000 each occurrence and $\ 0,000,000 general aggregate. All liabi lity insurance policies must name NOW Health Group, Inc. ("Additional Insureds") as additional insureds and further must contain cross liability endorsements or their equivalents. Further, coverage for the Additional Insureds shal I apply on a primary and non-contributory basis irrespective of any other insurance, whether collectible or not. Any policy deductibles or retentions, whether self-insured or self-funded, shall be the obligation of the Village and shall not apply to Sponsor. All policies shall be endorsed to provide a waiver of subrogation in favor of the "Additiom1I Insureds." The Village shall furnish Sponsor with certificates of insurance evidencing compliance with all insurance provisions noted above within thirty (30) days after the execution of this Agreement and annually at least ten (10) days prior to the expiration of each required insurance policy.

12.2 Sponsor. Sponsor shall at all times during the Term carry, from insurance companies licensed to do business in Illinois and with a minimum rating of''A-Vil" or better (as detennined by A.M. Best Company): (a) commercial general liability insurance with a minimum combined bodily injury and property damage limit of at least three million dollars ($3,000,000); (b) personal injury and advertising liability coverage, with a minimum limit of at least three million dollars ($3,000,000) and providing coverage against any and all Losses (as defined below) arising out of any offense in any advertising or promotion related to Sponsor or Sponsor's exploitation of the Naming Rights or Arena Advertising Rights; (c) workers' compensation insurance in compliance with state statutory laws, including employers' liability, with minimum limits of $1 ,000,000 each accident, $1,000,000 disease (each employee), and $1 ,000,000 disease (policy limit); (d) commercial automobile liability insurance, covering owned, non-owned, leased or hired automobiles, with a minimum combined single limit of $1 million each accident; and (e) products I iability insurance, with minimum limits of $5,000,000.00 each occu11·ence/aggregate; (t) umbrella liability insurance, in e~cess of each of the above, with minimum limits of$5,000,000 each occurrence and $5,000,000 general aggregate. Sponsor shall furnish the Village with certificates of insurance evidencing compliance with all insurance provisions noted above within thirty (30) days after the execution of this Agreement and annually at least ten (I 0) days prior to the expiration ofe ach required insurance policy.

13, INDEMNIFICATION:

13.l Indemnification by Sponsor. Sponsor agrees to indemnify, defend and hold harmless the Village, Arena Manager, the Arena concessionaire and their respective officers, directors, trustees, contractors, employees, agents, representatives, and their respective heirs, successors, and assigns, from any and al! claims, actions, liabilities and costs and expenses, including reasonable attorneys' fees (" Losses"), arising from or in connection with any of the following:

13.1.1 Third Party Contracts. Sponsor's failure to observe or perform any duties or obligations to be obse,ved or performed on or after the Effective Date by or on behalf of Sponsor under third party contracts to which Sponsor is a party or otherwise bound;

13. I .2 Village IP. Sponsor's breach of its obligations with respect to Village JP;

13.1 .3 Infringement. Infringement or misappropriation or alleged infringement or alleged misappropriation of a third party's Intellectual Prope11y rights;

13.1.4 Government Claims. Claims for fines, penalties, sanctions, interest or other monetary remedies imposed by a governmental body, regulatoiy agency or standards organization resulting from Sponsor's failure to petform its responsibilities under this Agreement;

14 13.1.5 Taxes. Taxes, together with interest and penalties, that are the responsibility of Sponsor hereunder;

13 .1.6 Claims Arising in Customer Engagement Activities. Claims arising from services or products provided by Sponsor to a third party as part of Customer Engagement activities, including the consumption or any distribution of any samples or concession items;

13.1.7 Affiliate, Subcontractor or Assignee Claims. Any claim initiated by (i) a Sponsor affiliate or subcontractor asserting rights under this Agreement or (ii) any entity to whk:h Sponsor assigned, transferred, pledged, hypothecated or otherwise encumbered its rights under this Agreement;

13.1.8 Claims. Any claim by Invitees or Sponsor employees or contractors ("Sponsor Personnel") for death or bodily injury suffered on or around the Arena to the extent caused by Sponsor's gross negligence or willful misconduct or breach of its obligations contained herein; and

13.1.9 Employment Claims. Any claim relating to any (a) violation by Sponsor, Sponsor affiliates or subcontractors, or their respective officers, directors, employees, representatives or agents, of any laws or any common law protecting persons or members of protected classes or categories, including laws prohibiting discrimination or harassment on the basis of a protected characteristic; (b) liability arising or resulting from the employment of Sponsor Personnel by Sponsor, Sponsor affiliates or subcontractors (including liability for any social security or other employment taxes, workers' compensation claims and premium payments, and contributions applicable to the wages and salaries of such Sponsor Personnel); (c) payment or failure to pay any salary, wages or other cash compensation due and owing to any Sponsor Personnel, (d) employee pension or other benefits of any Sponsor Personnel, or (e) other aspects of the employment relationship of Sponsor Personnel with Sponsor, Sponsor affiliates or subcontractors or the tennination of such relationship, including claims for wrongful discharge, claims for breach of express or implied employment contract and claims of joint employment.

13.2 Indemnification by the Village. The Village agrees to indemnify, defend and hold harmless Sponsor and its respective officers, directors, trustees, contractors, employees, agents, representatives, and their respective heirs, SL1ccessors and assigns, from any and all Losses arising from or in connection with any of the following:

13,2.1 Arena Events. Any claims, including, without limitation, for death, bodily injury or property damage suffered on or around the Arena to the extent caused by Village's or Arena Manager's gross negligence or willful misconduct or breach of their obligations contained herein, or from any Team/Tenant event or any event booked by Arena Manager or the Village.

14. INTELLECTUAL PROPERTY:

14, l In the event of any expiration or termination of Sponsor's authority to use and to license to the Village the use of the Sponsor IP, the Parties shall have the obligation and authority, at the sole expense of Sponsor, to promptly cause the same to be removed from the Arena and all uses associated with the Arena. If this Agreement shall terminate by breach, lapse of time, or non-renewal, Arena Manager and the Village shall promptly discontinue use of the Sponsor IP and the Parties shall promptly cause all Sponsor IP to be removed from use in connection with the Arena. Notwithstanding the foregoing, the

15 continued use of the Arena Domain Name, Arena Logo and Arena Name or the display of any Sponsor IP on any materials created during the Tenn shall not be deemed a breach hereof.

14.2 Limitation on Rights. All rights not expressly granted to Sponsor herein are hereby reserved to the Village and the Arena's various present and future Tenants and licensees from time to time. Sponsor hereby acknowledges and agrees that the Village has retained the sole and exclusive right to enter into signage and advertising commitments with other parties and cause additional signage and advertising to be displayed throughout and with respect to the Arena. provided only that such signage and advertising does not infringe upon the Category Exclusivity rights gmnted pursuant to hereto ("Arcnn Advertising Rights").

14.3 Use of Name. During the Tenn hereof, the Village, when making reference to the Arena (including, without limitation, in its contracts, agreements, arrangements, writings, and communications pertaining to the Arena and to and with Arena Manager. Teams, Tenants, licensees and other users, the media and others), shall use the Arena Name, Arena Logo, Arena Domain Name and, where applicable, the Sponsor IP comprised of its logos, u·ademarks and/or service marks, to the extent it is incorporated into the Arena Name, Arena Domain Name or the Arena Logo (collectively, "Trademarks"), and shall use reasonable efforts to require all parties contracting with the Village, including without limitation, Arena Manager and any other Team or Tenants leasing the Arena, to refer to and designate the Arena as aforementioned. This permitted use shall include, but not be limited to: Internet websites related to the Arena or referencing the Arena (if any), to the extent controlled by the Village and Arena Manager; printed materials generated by or on behalf of the Village with reference to the Arena and its address; advertising by the Arena's users which refers to the Arena; schedules and admission tickets issued by any Teams and/or Tenants or users for Arena events; event programs as controlled by the Arena Manager; and public relations releases issued by or on behalf of the Village; provided, however, that the Village shall not be responsible for any error or omission by third parties.

14.4 Merchandising Rights. Except as otherwise provided herein, the Village and Arena Manager shall have in perpetuity the exclusive merchandising rights for all commercial marketing and merchandising of goods displaying or using the Arena Name, Arena Domain Name or Arena Logo (including any Trademarks) established under this Agreement ("Merchandising Rights"); provided, however, that nothing herein limits such Merchandising Rights of Sponsor for Sponsor Events and giveaways and promotions on behalfofSponsor. The Village and Arena Manager shall require its licensees of the Merchandising Rights to use the Arena Name, Arena Domain Name and Arena Logo in a lasteful manner.

14.5 Inadvertent Omission. The undertakings of the Village as set forth in this Agreement are material terms of this Agreement. However, isolated, inadve11ent omissions of the Arena Name, Arena Domain Name or Arena Logo by the Village, Arena Manager, Tenants, Teams, licensees or any other person shall not be deemed a violation of this Agreement.

15. FIRST CLASS OPERA TlONS STAND ARD:

15. I First Class Operations. The Village and Arena Manager shall, at the Vil!age's sole cost and expense, manage and operate the Arena in a professional manner and at a First Class level of quality and consistency intended to provide a positive attendee experience for all events, including: sufficient on-site uniformed security in accordance with industry standards for customer safety in and around the Arena, First Class standards of cleanliness in all Arena faci lities open to pa1rons suppo,ied by regular, prompt and quality janitorial and housekeeping staff, and clean, efficient and well-staffed concessions operations appropriate to provide adequate services to patrons in a professional, businesslike and efficient manner. The obligations set forth in this Section IS.I shall be referred to hereinafter as the

16 "First Class Operations Standard.'' For purposes of rhis Agreement, "First Class" shall mean above the median level (i.e., in the top half) of mid-size arenas in No1th America during the Term.

15.2 Maintenance and Repair. The Village, at its cost and expense, shall undertake timely maintenance and repairs at the Arena at a level such that the Arena maintains a commercially reasonable standard for all events ('·Main tenance and Repair Standard"). In fu1therance of the foregoing, the Village shall operate Ano maintain in good, clean order, condition and repair the Arena, including its fixtures, machinery. equipment, improvements and all other components, so that the Arena satisfies the Maintenance and Repair Standard. The Village or Art:11a Ma11ager shall provide adequately trained janitorial, pest control, maintenance and support staff to perform the Village's obligations. If and to the extent Sponsor wishes to further enhance elements of the Arena beyond the Maintenance and Repair Standard, Sponsor will be responsible for any additional labor or other costs associated with such elements, including expenses as set forth in the then-existing labor union agreement.

15.3 Capital E>..:penditures. The Village shall be responsible for and, at its sole cos1 and expense shall timely make, all capital expenditures to the Arena ("Capital Expenditures") required in order to meet the Maintenance and Repair Standard. The Village shall undertake such Capital Expenditures with reasonable efforts and perform such work in a timely manner.

15 .4 Operatjon of Events. The Village shall be responsible for ensuring it, its Arena Manager and the Team and Tenants operate any and all events in compliance with all applicable laws, !'Liles, ordinances and regulations.

15 .5 Advertising. The Village, its Arena Manager and the Team and Tenants shall be responsible for any and all advertising, promotional materials and other content relating to the Arena not provided by Sponsor and any advertising, promotional material and other content related to any third party event or promotion.

16. TERM AND TERMINATION: Unless otherwise terminated as permitted herein, this Agreement, and the rights and obligations arising hereunder, shall remain in full force and effect for the following tenn unless earlier tennina1ed as provided herein (the "Term"):

16.1 Term. This Agreement shall be binding from and after the Effective Date. This Agreement shall be in effect for fifteen ( 15) years, commencing on September I, 2020 ("Term Commencement Date") and shall expire August 31, 2035 unless earlier terminated as provided herein; provided, however, Sponsor may in its sole discretion opt out of the last five (5) years of this Agreement (i.e., September l, 2030 through and including August 31, 2035) by providing, on or before March 31, 2028, written notice to the Village in accordance with Section 19 hereof. On the Term Commencement Date, the Arena may begin to be publicly referred to as "NOW Arena" in advertising and writing.

16.2 Renewal Deadline. In the event that Sponsor is not in default of this Agreement, the Village and Sponsor may negotiate in good faith prior to March 31, 2033 ("Renewal Deadline") with respect to the extension of the licenses and rights granted hereunder that can become effective upon stated expiration of this Agreement. Any extension agreement approved by Sponsor must then be presented to the Village Board for its consideration by April 15, 2033. In the event the Parties do not reach an agreement regarding the extension of this Agreement before the Renewal Deadline, the Village shall thereafter be free to accept third party offers regarding Arena Naming Rights to become effective after the expiration of this Agreement

17 16.3 Even! of Default Except as otherwise pl'ovided herein, an event of default ("Event of Default") shall occur if:

16.3. I any Party hereto shall fai I to fulfill any material obligation arising under this Agreement and such failure shall continue for a period of thirty (30) calendar days after written notice of such failure;

16.3 .2 either Party shall (a) make an assignment for the benefit ofcredi tors, (b) be adjudicated bankrupt, (c) file a voluntary petition in bankruptcy or a voluntary petition or au nnswer seeking reorganization, arrangement, readjustment of irs debts or for any other relief under Title 11 ofthe United States Code or any successor or other federal or state insolvency law ("Bankruptcy Law"), (d) have filed against it an involuntary petition in bankruptcy or seeking reorganization, arrangement, readjustment of its debts or for any other relief under any Bankruptcy Law, which petition is not discharged within thirty (30) days, or (e) apply for or permit the appointment of a receiver or trustee for its assets;

16.3.3 in lhe case of Sponsor or any C-Level officer or majority owner of Sponsor who is an individual, pleading guilty or nolo contendere to, or being convicted of (a) a felony offense or (b) a non-felonious criminal offense involving theft, fraud, embezzlement, forgery, misappropriation, wi llful misapplication or moral turpitude in the conduct of the business of Sponsor; or

16.3 .4 any of the representations or warranties made by the other Party in this Agreement shall prove to be untrue or inaccurate in any material respect.

In the event of the occurrence of an Event of Default, each Party shall have al I remedies avai Iable at law or in equity. The Parties hereto recognize that the rights granted pursuant to this Agreement are valuable property rights for which there may be no adequate remedy at law. In the event a temporary restraining order or temporary or permanent injunction is entered to enforce this Agreement, each Party stipulates that the same may be entered without the need to post a bond.

16.4 Village Remedies. Upon the occun-ence of an Event of Default by Sponsor, the Village shall have the right to terminate this Agreement and/or any of Sponsor's rights hereunder, seek monetary damages, and/or the right to remove, cover or replace all signage and other references to the Arena Name, Arena Logo and Arena Domain Name. In addition, in such evenl, Sponsor shall be responsible for all costs associated with removing or changing the Arena Name, Arena Logo (including any roofsignage) and Arena Domain Name, and the Village shall be permitted continued use of the Sponsor IP for a reasonable period of time thereafter not to exceed twelve (1 2) calendar months after expiration or termination of this Agreement.

16.5 Sponsor Remedies. Upon the occurrence of an Event of Default by the Village, Sponsor shall have the right to seek specific performance or injunctive relief without resorting to Section 17 solely in the event of a material breach hereof which is a threat to the value of the Sponsor IP where irreparable injury is likely to result and for which monetary damages would not be a sufficient remedy,

16.6 Limitations of Liability. SUBJECT TO ANY LIABILITY OR ANY INDEMNIFICAT ION OBLIGATION WHICH CANNOT BE LAWFULLY EXCLUDED OR LIMITED, EACH PARTY ACKNOWLEDGES AND AGREES THAT IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTH ER FOR ANY CONSEQUENT IAL, INCIDENTAL, INDIRECT, ECONOMIC, OR SPECIAL DA MAGES ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED UNDER THIS AGREEMENT, EVEN IF SUCH

18 PART\' HAS BEEN ADVISED OF THE LIKELCHOOD OF SUCH DAMAGES OCCURRING; PROVIDED, THAT THE LIMJTATION OF DAMAGES PROVISIONS SET FORTH IN THIS SECTION 16.6 SHALL NOT BE APPLICABLE TO ANY INDEMNIFICATION OBLIGATIONS HEREUNDERt OR ANY DAMAGES RES UL TING FROM INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF ANY THIRD PARTY, OR USE EXCEEDING THE LICENSES GRANTED HEREUNDER.

16. 7 Transition. Sponsor agrees that, following termination or expiration hereof for any reason, Sponsor wi II reasonably cooperate with the Vil lagt:: a11d Arena Manager in its efforts to transition to a new or replacement Naming Rights sponsor. ln such event, the Village shall be permitted continued use of the relevant Sponsor IP and the Arena Name, At'ena Logo, and Arena Domain Name for a reasonable period of lime thereafter not to exceed twelve (12) calendar months after expiration or termination of this Agreement.

16.8 Effect of Termination. Upon termination of this Agreement for any reason prior to the end ofthe Term, the Village will be free to rename the Arena and shall cease and desist from referring to the Arena by the Arena Name and using the Arena Logo, except that reference by others to the established name or logo shall not be a violation of this Agreement or give rise to any legal or equitable claim or cause of action against either Party hereto. The Village shall notify parties contracting with the Village or its agents to cease and desist from referring to the Arena by the Arena Name. In addition, upon any such termination, Sponsor will cease and desist from referring to the Arena by the Arena Name, using the Arena Logo or Arena Domain Name or including sL1ch reference in any marketing literature or campaign. Notwithstanding anything co the contrary contained herein, nothing contained herein shal I prevent Sponsor from using Sponsor IP in connection with any venue or entertainment services upon termination or expiration of this Agreement.

17. DISPUTE RESOLUTION: Except under those limited circumstances entitling either Party to seek and obtain an injunction or order of specific performance or other equitable relief as provided hereunder, any dispute arising under this Agreement, including any claimed Event of Default or the failure of the Patties to agree upon a matter that must be mutually acceptable, may be resolved in the manner set forth in this Section 17. Prior to the initiation of any further proceedings wirh respect to such dispute or matter, the Pa11ies will discuss the dispute or matter among one (I) or more representatives of the Parties who has the power to resolve such dispute or matter and who will endeavor in good faith to resolve such dispute or matter. Such discussions will commence within ten ( 10) days after either Party gives the other notice that it wishes to commence such discussions and be concluded within thlrty (30) days after such notice.

18. ASSIGNABILITY AND TRANSFERABILITY: SALE OF RIGHTS: Except as otherwise provided in this Section 18, the rights and obligations created by this Agreement are personal to and shall not be delegated, transferred or assigned by Sponsor, in whole or in part, except by prior written agreement of the Village.

18.1 Sponsor shall not assign or transfer this Agreement and/or its rights or duties hereunder (by operation of law or otherwise) without the prior written consent of the Village, which may be granted or withheld in the Village's sole discretion.

18.2 Sponsor acknowledges and agrees that Sponsor does not have the right to sub- license any of its rights hereunder and, therefore, may not engage in any co-branding or partnering arrangement with any other advertiser or sponsor with respect to any of the rights or benefits granted hereunder without the prior written approval of the Village, which approval may be withheld in the Village's sole discretion.

19 18.3 The Village may assign this Agreement and/or its rights or duties hereunder, in whole or in part, for administrative, operational, financing or other purposes or reasons to another entity. The Parties agree that the assignee of the Village, if such an assignment should be made, shall be able to enforce the provisions of this Agreement pursuant to such assignment without the further consent of Sponsor.

18.4 The Parties acknowledge and agree that the Village may delegate certain or all of its duties in connection with this Agreement to Arena Manager or to any other party (including any successor manager of the Arena), alid the Village has ,Megated the management and operation of the Arcnu to Arena Manager.

18.5 If, during the Tem1 of this Agreement, the Village sells, transfers or conveys the Village's interest in the Arena (including its right to name the Arena), such sale, transfer or conveyance shall be subject to the rights of Sponsor as contained in this Agreement, and the Village shall provide as pait of said transaction to a third party transferee that the transferee assumes the Village's rights and obligations herein. Upon such transfer to a third party transferee, Sponsor shall look to the transferee for perfonnance of the Village's duties and obligations under this Agreement, and the Village will be fully and completely released from liability to Sponsor under this Agreement.

18.6 Any attempted assignment or transfer in violation of the foregoing shall be null and void.

19. NOTICE TO PARTIES: Except in the event ofan emergency and for any notice required under applicable law to be given in another manner, any notice, demand, request, or other communication which any Party hereto may be required or may desire to give hereunder shall be in writing and shall be deemed to have been properly given (a) if hand delivered, effective upon receipt or refusal, or (b) if delivered by overnight courier service, effective on the day following delivery to such courier service, or (c) if mailed by United States certified mail, postage prepaid, return receipt requested, effective on the second (2nd) business day after deposit in the United States mails; addressed in each case as follows:

lfto Sponsor: NOW Health Group, Inc. 244 Knollwood Drive Bloomingdale, IL 601 08 ATTN: Dan Richard

With a copy to: NOW Health Group, Inc. 244 Knollwood Drive Bl00111 ingdale, fL 60 I 08 ATTN: CEO

If to the Village: Village of Hoffman Estates 1900 Hassel I Road Hoffman Estates, IL 60169 ATTN: Village Manager

With copies to: Village of Hoffman Estates 1900 Hassell Road Hoffman Estates, IL 60 J 69 ATTN: Village Clerk

20 Village of Hoffman Estates 1900 Hassel I Road Hoffman Estates, IL 60169 ATTN: Owner's Representative

Global Spectrum LP d/b/a Spectra 5333 Prairie Stone Parkway Hoffman Estates, IL 60192 ATTN: General Manager

20. MISCELLANEOUS:

20.1 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Parties hereto, their respective successors and assigns, and said Parties do hereby agree for themselves and their respective successors and assigns to be bound hereby and to execute any and all instruments in writing, and to do any and all acts which may be necessary, convenient, or expedient to carry out the purposes and intent of this Agreement.

20.2 Governing Law: Venue. This Agreement, and all of the obligations of the Parties arising hereunder, sbal I be governed, construed, and interpreted in accordance with the laws of the State of Illinois (without giving effect to any Illinois choice of law principles which would require construction under the laws ofa different jurisdiction), nnd Cook County, !llinois shall he deemed the proper venue for any action arising hereunder or in connection herewith.

20.3 Severability. Each provision hereof is intended to be severable, and the invalidity or unenforceability of any portion of this Agreement shall not affect the validity or enforceability of the remainder hereof, provided the overall intentions of the Parties and the purposes of this Agreement, each as expressed herein, are not materially impaired.

20.4 Partial Invalidity. If any term or provision of this Agreement, in whole or in part, shall be held invalid or unenforceable, the remaining terms and provisions hereof shall not be affected thereby and each such remaining te1m and provision shall be val id and enforceable to the fullest extent permitted by law.

20.5 Entire Agreement. This Agreement and Exhibits contain the entire agreement of the Parties hereto with respect to the subject matter hereof, supersedes any and all prior agreements and negotiations which may have heretofore been entered into or conducted relating to tl1e subject matter hereof.

20.6 Amendment. Modification. or Alteration. No amendment, modification or alteration of the terms of this Agreement shall be binding unless in writing, dated subsequent to the date hereon and duly approved and executed by the Parties hereto.

20. 7 Headings. The headings set forth herein are for convenience of reference only and shall not be deemed to impair, enlarge, or otherwise affect the substantive meaning of any provision to which such heading may relate.

20.8 Counterparts. This Agreement may be executed in multiple counterpa11s, each one of which shall be deemed an original but all of which, taken collectively, shall be deemed a single

21 instrument; provided that this Agreement shall not be enforceable against any Party hereto unless all Parties hereto have executed at least one (I) counterpart.

20.9 Consents/Approvals. Except where otherwise specifically provided, whenever the consent or approval of any Party to this Agreement Is required, such consent or approval shall not be unreasonably withheld, conditioned, or delayed.

20. 10 Force Majeure. Notwithstanding any provision to the contrary, no damages, penalties, or termination or si milar fees (whether perfo1111ance or cancelalion, or other) shall be due as 11 result of either Party's failure to perform due to any circumstance or occurrence beyond the Parties' control, and if such Party shal I have used its reasonable best efforts to mitigate its effects, which makes it inadvisable, illegal, commercially impracticable, or impossible for the obligation to be fulfilled or the event to take place as planned, including, without limitation: {a) acts of God, (b) disasters (including, but not limited to, fire, flood, severe weather, and earthquake), (c) war. (d) civil disorder, (e) suspected or actual terrorism in or near the borders of the continental United States, (t) government regulation (including, but not limited to, declared states of emergency), (g) national or international public health authorities' (including, without limitation, the Centers for Disease Control or the World Health Organization) declaration of public health emergencies, communicable disease, epidemic or pandemic advisories or alerts, (h) strikes or work stoppages (other than those involving the staff of the impacted Party), (i) curtailment of transportation services (including, without limitation, travel bans and advisories), or G) public or private policies which restrict or prohibit participants traveling to or at1ending an event (collectively, "Force Majeure"); provided, however, such Force Majeure shall not excuse Sponsor's obligation to pay all amounts otherwise due and owing Lmder this Agreement. TI1e Party impacted by a Poree Majeure event shall promptly provide notice (which in the case ofan emergency may be sent via e-mail) ofa cancellation or rescheduling request due to such Force Majeure event.

20.11 No Third Party Beneficiaries. No other person shall be deemed a third pa1ty beneficiary to this Agreement.

20.12 Survival. The covenants, terms and conditions contained herein and imposed on the Parties shall survive the expiration or earlier termination of this Agreement.

20.13 Construction. In the event of a dispute between the Parties regarding this Agreement, this Agreement will be deemed to have been drafted by the Parties in equal parts so that no presumptions or inferences concerning its terms or interpretation may be construed against either Party.

20.14 Exhibits. All of the lenered Exhibits attached to this Agreement and identified herein is expressly made a part hereof as though fully stated herein.

20. 15 Waiver. No waiver shall be effective unless in writing and executed by the Pa1ty to be charged with such waiver, and no waiver shall be deemed a continuing waiver in respect of any subsequent breach or default, whether similar or dissimilar in nature, unless expressly so stated in writing.

Signature Page and Exhibits to Follow

22 IN WITNESS WHEREOF, this Naming Rights Agreement is executed by the authorized l'epresentatives of each of the Panies on the date(s) set forth below as their respective free, voluntary, and duly authorized acts for the purposes set forth herein, to be effective as of the Effective Date.

VILLAGE OF HOFFMAN EST ATES

By: ------Name: William D. McLeod Its: Village President Date: ______

Attest: ______

Date: ______

::~Nam . irn Emme - Its: CEO/. Date: • .7: ► k/,,l//1{ 2420

23 EXHIBITS

EXHIBIT A Real Property Legal Description

EXHIBIT B Arena Logos and Marks

EXHIRJTC Exterior Sigpagtl

EXHIBITD l11le1'ior Signage

EXHIBIT E New & Add itional Signage

EXHIBITF NOW Lounge

EXHIBITG Recharge With NOW Corner Buildout

EXHIBIT H WCB Basketball Inventory

EXHIBIT I [Reserved]

EXHIBIT J Sponsorship Pee Payment Schedule

EXHIBIT K Arena Changeover Costs

24 EXHIBIT A EXHIBIT A

Real Property Legal Description

All OF LOT 4A6E TOGETHER WITH THAT PART OP LOT 4A5C3 IN i'HE FINAL PLAT OF RESUBDIVISION .OF LOT 4A6 IN PRAIRIE STONE OF LOT ◄A5 IN THE RF.S'JBDMSION OF LOTS 4A AND 4D IN THE RESUBDIVISION OF LOT 4 IN SEARS BUSINESS PARK, BEING A RESUBOIVlSION OF PART OF SECTIONS ·31 AND 32, TOWNSHIP 42 NORTH, AND SECTION 4, TOWNSHIP 41 NORTH, BOTH IN RANGE 9 EAST OF ll15 THIRD PRINCIPAL MERIDIAN, ACCORDING TO TI-IE PLAT lliEREOF RECORDED OCTOBER 11, 1996AS DOCUMENT NUMBER 06779195, DESCRIBED AS FOLLOWS: BEGINNINGATTI-tEMOSTSOUTHERLYSOUTHEABTGORNER-OFSAIDLOT4A5G;THENCE WESTERLY ALONG THE SOUTH LINE OF SAID LOT 4A6G THE FOLLOWING FIVE (6) COURSES AND DISTANCES: 1) NORTH 80 DEGREES 43 MINUll:S 22 SECONDS WEST. 221.20 FEET; 2) NOR'TH 00 DEGREES 16 MINUTES 38 SECONDS· EAS:r, 80.01 FEET; S) NOR I H 89 OEGJ-

PIN: 01-32-302-019 01-32-302-014 01-32-302.021

Commr;in Addrees: 5353 Prairie S1one Parkway Hoffrrnm =state&, IL EXHIBITB EXHIBIT B

Arena Logos and Marks

• .·· ~ Arena® Ll11e Happy, Live Heilthy, Uvt NOW•

••Arena Live Happy. Live Healthy. Live NOW. 119!.U.Arena n9UIArenaLive Happy, Lf'l1! fleattby. Live NOW.

® ® ••Arena ••Arena Live Happy. Live Healthy. Live NOW. EXHIBITC EXHIBIT C

Exterior Signage (Page 1 of 3)

Southeast LED Sign- Main external illuminated LED Logo,

East Static Sign - Arena Logo placed on East side of the Arena.

North Static Sign -Arena Logo placed on North side of the Arena.

Main Entrance Window Strip- Sponsor Logo and tag line to be featured across ten ( 10) windows above the main Arena entrance. EXHIBIT C

Exterior Signage (Page 2 of 3)

Main Entrance Lettering -Arena Logo to be placed as 3-dimensional lettering above the main Arena entrance.

Exterior Glass Door Signage - Arena Logo to be centered on fourteen (14) entry doors of the Arena.

Exterior Marquee Fixed Top & Bottom - Arena Logo to be featured as a fixed element on the top and bottom. Bottom to be installed at the end of the current Wintrust agreement which ends November 30, 2020.

Parking Monuments -Arena Logo to be featured on both sides of four (4) large Parking Monuments and two (2) small Parking Monuments. EXHIBIT C

Exterior Signage (Page 3 of 3)

Entertainment District Directional Signag,e - Arena Name to be featured on a minimum of five (5) directional signs.

St.ate & County Slgnage - Arena Name to be featured on State and County directional signs along major roadways. EXHIBITD EXHIBIT D

Interior Signage

Scoreboard Signage - An LED illuminated Arena Logo will be fixated above the scoreboard dig~al display with corresponding colors in the four (4) corners of the scoreboard.

Court Logo - Per the lease Agreement with :µ., t.1 - \. , ~. the Windy City Bulls, the Arena Logo will be 1 L. ~ 0_ "• . ·• .1 • & ,, ., • • • ,, • ~'t1 of 4 main Court Logos. . ' • ·\ i " • • ~ •••·••.. ···,- ___ __,, /lft:1P=

Seat Back Branding - Arena Logo will be placed on approximately 1,900 Arena seats. EXHIBITE EXHIBIT E

New & Additional Signage

Inner Bowl Signage- - Sponsor Logo or Arena Logo will be placed as static signage in mutually agreed upon position and size within the inner bowl of the Arena.

Recharge Corner Fae;ade- Sponsor signage to be featured across the fa~ade above the Recharge Comer.

Exterior Marquee Digibl Slide - Sponsor will receive one (1) :05 second slide in constant 24-hour rotation on the i90 Marquee amongst upcoming events and sponsors. Sponsor may change graphic one (1) time per month.

LED Lobby Board Slide - Sponsor will receive one (1) :07 second slide in constant rotation on the LED Lobby Board amongst upcoming events and advertisers during all publicly ticketed events. Sponsor may change this graphic each event. EXHIBITF EXHIBIT F NOW Lounge

\ • Location o The NOW Lounge will be located in the southeast corner of the Arena, outside of Sections 117 and 118. • Design o The NOW Lounge will be re branded from the current Shop Your Way branding to NOW Foods' color scheme with accompanying branding as to be mu1ually agreed upon between NOW Foods and the Arena Owner.

" :g •... - ; i .,,,.,. .. ..

• Furnishings a The furnishings of this space will include, but not be limited to, the following: • Video wall of digital displays that provides curated social media content for NOW Foods and NOW Arena events. • Single wall with dedicated TV to NOW Foods content • Photo area that features an automated camera to be used in conjunction with a painted green screen that has the ability to provide custom backgrounds. • Two (2) digital displays placed on support columns around the NOW Lounge to provide directions and signage for the NOW Lounge. • High top tables with seating. • Video Content o NOW Foods will provide video content for the digital media described above at NOW Foods' expense, but such digital media will be powered and maintained by Arena Manager, including the delivery system and automated cu ration used for any interactive and social media furnishings. EXHIBITG EXHIBIT G

Recharge With NOW Corner Buildout

• Location o The Recharge With NOW Corner will be located in the northwest corner of the Arena, between the Women's bathroom wall adjacent to the Arena administrative offices and load-bearing column behind Section 108.

• Design o The size of the Recharge With NOW Corner will be mutually determined by the Arena Owner, Arena Manager and NOW Foods. Design depiction below:

• Furnishings o The furnishings of this space will include, but not be limited to, the following: • Four (4) HD Televisions with the ability to create a video wall that can provide NOW Foods, event, advertiser, and additional content. • Fa~ade signage including the NOW Foods logo inviting patrons to charge their phones in the area. ■ Two (2) moveable charging stations for patrons to charge their electronics. • Flooring improvement in the area to bring a cleaner, more inviting look. • High top tables.

• Video Content o NOW Foods will provide video content for the digital media described above at NOW Foods' expense, but such digital media will be powered and maintained by Arena Manager, including the delivery system and automated curation used for any interactive and social media furnishings. EXHIBITH EXHIBIT H

WCB Basketball Inventory

8. Advertising, Signage, and Sponsorships.

A. The Licensee shall have the right to enter i11lu agrt:it11,1ents, and receive, allocate, use and distribute (al lls sole and absolute discretion) all revenues, wjttl respect to all Team-related advertising, sponsorship and promotional Inventory, including, without limitation, designation as official sponsor of the Team, advertlsi~ on Team or Licensee-controlled platforms. hospitality offerings, i.lSe of Team-related inteltectual property, Basketball Inventory (as d~fined below) and advertising (e.g ..

publications. digital and $0-Cial media, commercials and pr◊-n1otional spots) in connection with the transmittal, broadcast, d\str;bution and/or exhibition of Licensee Event$ via Multlmed!a Distributlori (sueh inventory collectlvely, •ucensee lnven1ory''). "Basketball inventory· shall inciude (a) temporar~ and/or moveable advertising, sl.Jch as b.1nners, signs, displays, curtains or audio or video messages at the Arena Identifying the Licensee, the Team and/or the sponsors of the Team ta the extent they are visible and/or transmitted during I.tie Exciuslve Use Period, includtng in the following locations: the basketball court or courtside logos (except as noted in this Section 8), player benches, player chair becks, seat back coverings, co~trtside seating, basKeHn.1II goal supports' padding, 24-second clock, ball racks, basketball goals and stanchions, press table, scorer's table and any extensions attached lhe,eto (including rotatronal signage). other rota~onal courtside signage. tile Licensee, Team and trainer ~uipment and vislting team and trainer ei;iuipment. 'Team uniforms, the media are~s. Licensee Event tickets issued by the Licensee, tlckat envetopes issued by the Licensee, the vldeo matrix on electronic scoreboards (including ribbon board digital contonl (except as 11oted in this Section 8) for display or distribution of video or audio messages during Licensee Events). programs and printed material. blimps that operate inside cf the Arena and alt other marketing opportunities oxpioited by the Licensee al the Atena (which opportunities may be created by the Licensee's utilization of new technologies) and (b) advertising and other promotional activities conducted a1 the Arena during the Exclusive Use Period, including, promotional events or activities {Including on tl,e basketball court) sponsored by sponsors of the Team, the exhibition and promotion of products and services at the Arena {e.g., kiosks and special areas in ths concourse) and promotional or premium !tern give~aways. · EXHIBIT I EXHIBIT I

[Reserved - Intentionally Left Blank] EXHIBIT J EXHIBIT J

Sponsorship Fee Payment Schedule

Agreement Annual Fee Fee Due Date Contract Year Year 1 $750,000.00 September 1 , 2020 9/1/20 - 8/30/21 2 $750,000.00 September 1, 2021 9/1/21 - 8/30/22

3 $750,000.00 September 1, 2022 9/1 /22 - 8/30/23 -· .. , ...... -·- 4 $750,000.00 September 1, 2023 9/1/23 - 8/30/24

5 $750,000.00 September 1, 2024 9/1 /24 - 8/30/25

' .. ~ ,... , ~ .. 6 $750,000.00 September 1 , 2025 9/1/25 - 8/30/26

7 $750,000.00 September 1, 2026 9/1/26 - 8/30/27

8 $750,000.00 September 1, 2027 9/"1 /27 - 8/30/28 9 $750,000.00 September 1, 2028 9/1 /28 - 8/30/29 10 $750,000.00 September 1, 2029 9/1/29 - 8/30/30 11 $750,000.00 September 1 , 2030 9/1 /30 - 8/30/31 .. - • • ' , • II ~ '• ' • ., - .. . -- . 12 $750,000.00 September 1, 2031 9/1/31 - 8/30/32 13 $750,000.00 September 1, 2032 9/1 /32 - 8/30/33

14 $750,000.00 September 1, 2033 9/1 /33 - 8/30/34

15 $750,000.00 September 1, 2034 9/1/34 - 8/30/35 EXHIBITK EXHIBIT K

Arena Changeover Costs

Sponsor acknowledges that it has seen and reviewed initial quotes of main sign age changeover costs. Initial estimates for like signage to existing specs, materials and locations is estimated between $200,000-$250,000. Larger specs, different materials and different locations may cause that estimate to increase or decrease. The costs are to include, but are not limited to:

Exterior Signage to be Changed Now Lounge

• Main Exterior Southeast LED Sign • Wall Wrap Rebranding • East Static;; Sign • Photo Booth Lease/Purchase • North Static Sign • Northwest LED Sign • Front Entrance Window Vinyl Recharge Corner • Main Entrance Lettering • Recharge Corner Fa<;ade • Exterior Glass Door Signs • Four (4) TVs • Exterior Marquee Fixed Top • Content Management System for • Exterior Marquee Fixed Bottom TVs • Large Parking Monuments • Two (2) Cell Phone Charging • Small Parking Monuments Stations • Entertainment District Signage • Potential Flooring Improvement

Interior Signage to be Changed Miscellaneous • Scoreboard Top Fixed Signage • Box Office, Tech, Ops, Replacement • Scoreboard Comer Colors Staff Uniforms • Seat Back Branding • Staff identifying accessories • Suite Level & Concourse Directory • Bike Rack Covers Signage & Plaques • Stanch ion Cassettes • Website Changeover • Estimated Miscellaneous New & Added Signage Administrative Office Items • Inner Bowl Signage • Parking Slips • Suite 124 Signage • Exterior Marquee Purple Side • Potential Vitamin Bottle Tenant • Potential Roof Signage • Potential Tenant Administrative Office Items NB4 COMMITTEE AGENDA ITEM VILLAGE OF HOFFMAN ESTATES

SUBJECT: Request approval of a Termination Agreement and Mutual Release with Transform SR LLC terminating the existing Naming Rights Agreement

MEETING DATE: June ~2, 2020

COMMITTEE: Finance Committee

FROM: James Norris / Dan O'Malley / Arthur Janura / Patricia Cross / Mark Koplin ------

REQUEST: Request approval of a Termination Agreement and Mutual Release with Transform SR LLC terminating the existing Naming Rights Agreement.

BACKGROUND: MadKatStep was an LLC created by Sears, Roebuck and Co. and Ryan Companies US to own the Arena they co-developed and opened in 2006. As a partner, Sears provided an initial ten year Naming Rights agreement as a financial contribution to the partnership. The Naming Rights Agreement was the vehicle for Sears to make the capital contribution for the project to proceed. MadKatStep ceased its involvement in the Arena in 2009, but the Sears Naming Rights continued under Village ownership of the Arena, with the final of ten payments made to the Village in September 2015, The Village and Sears agreed to extensions of the Naming Rights Agreement in 2016 and again in 2018. In 2019, following the filing of Sears' bankruptcy petition. Transform SR LLC assumed the Sears Naming Rights Agreement in 2019. Sears/ Transform SR LLC made the September 2019 payment.

Sears has been a great community partner since the company moved to Hoffman Estates in 1992, getting involved with and sponsoring local events. Sears has remained a steadfast supporter of the Village and has also been a great naming rights sponsor and partner with the Sears Centre Arena since 2006. Under the more recent rebranding to the Sears Centre Arena powered by Shop Your Way, Sears increased its visibility and presence at the Arena and efforts to connect with the community. For over a decade, Sears has provided consistent support as a committed naming rights partner and the relationship with Sears has grown annually through the years. -2-

However, Transform SR LLC has now assumed the Sears naming rights through the bankruptcy court, and, by mutual agreement, the Village and Transform SR LLC now wish to terminate the Naming Rights Agreement. The Village values its history with Sears and looks forward to continuing the positive relationship with Transform.

DISCUSSION: After a long and beneficial relationship, the Village and Transform SR LLC mutually agree and desire to terminate the current Sears Centre Naming Rights Agreement. The Parties release each other from all of the obligations of the 2018 Naming Rights Agreement, with the exception of the Village's right to use the Seai-s Centre name and logo for one full year and the SEARSCENTRE.COM domain name, which extends to December 31, 2022. The Termination Agreement allows the Village to begin changing out the interior signage at the Arena to reflect the new Naming Rights partner as soon as this agreement is approved and executed. Exterior signage, including the marquee sign, will not be removed or changed until after August 31, 2020,

FINANCIAL IMPACT: The termination of the 2019 Naming Rights Agreement will allow for the immediate activation of a new agreement with NOW Health Group, Inc., avoiding a "gap" in the Naming Rights payments and allowing for a seamless transition to the new partner.

RECOMMENDATION: Request approval of a Termination Agreement and Mutual Release with Transform SR LLC terminating the existing Naming Rights Agreement allowing for the new agreement with the new naming rights partner. DocuSign Envelope ID: 82623EBA-E0F3-4965-B8F7-3D108486C42D

TERMINATION AGREEMENT AND MUTUAL RELEASE

This Termination Agreement and Mutual Release (this "Agreement") is entered into as of June_, 2020 ("Effective Date"), by and between the VILLAGE OF HOFFMAN ESTATES, an Illinois home-rule municipal corporation ("Village"), and TRANSFORM SR LLC, a Delaware corporation ("Transformco") (Village and Transformco may hereinafter be referred to collectively as the "Parties").

WHEREAS, Village and Sears, Roehuck and Co. ("Sears") are parties to that certain Amended and Restated Sears Naming Rights Agreement, effective as of October 8, 2018 ("Naming Rights Agreement"), pursuant to which, among other things, the Village granted to Sears the right and opportunity to brand that certain arena located in the Prairie Stone Business Park and owned by the Village ("Arena") in exchange for payment to the Village of an annual naming rights fee ("Naming Rights Fees");

WHEREAS, on October 15, 2018, Sears and certain of its affiliates ("Debtors") filed for bankruptcy protection in the United States Bankruptcy Court for the Southern District of New York ("Bankruptcy Court");

WHEREAS, by order dated February 8, 2019 ("Sale Order"), the Bankruptcy Court approved the sale of certain of the Debtors' assets to Transformco, including the right of Transformco to designate certain contracts and leases to be assumed by the Debtors and assigned to Transformco;

WHEREAS, by order dated April 2, 2019 ("Assignment Order"), the Bankruptcy Court established, among other things, a noticing procedure for the assumption and assignment of contracts and leases designated by Transformco;

WHEREAS, by notice dated May 2, 2019, and in accordance with the Sale Order and Assignment Order, Transformco designated, among others, the Naming Rights Agreement for assumption by Sears and assignment to Transformco, which assumption and assignment became effective that same day;

WHEREAS, the Parties have determined that it is in their respective best interests to terminate the Naming Rights Agreement pursuant to the terms and conditions set forth herein; and

WHEREAS, the Parties also desire to effect a final settlement and compromise of all claims that have been or could have been raised by them in connection with the Naming Rights Agreement as set forth herein.

NOW THEREFORE, in consideration of the above recitals, which are hereby expressly incorporated into and made a part of this Agreement, and the mutual covenants and promises contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Village and Transformco agree as follows: DocuSign Envelope ID: 82623E8A-EOF3-4965-B8F7-3D1084B6C42D

I. Termination of Naming Rights Agreement. Notwithstanding anything to the contrary contained in the Naming Rights Agreement, including, without limitation, any required notice periods, the Naming Rights Agreement shall terminate effective as of the Effective Date; provided, however, that such Effective Date shall not have occurred until later of (a) the date on which this Agreement is approved by the Village Board, and (b) the date on which this Agreement has been fully executed by the Parties.

2. Effect of Termination.

Upon the Effective Date of this Agreement, and except as otherwise provided herein:

(a) the Parties agree that the Village shall have full right and authority to remove, alter and/or othernrise discard any and all interior signage located in the Arena on account of the Naming Rights Agreement; provided, however, that any and all signage located on the exterior of the Arena, including on the marquee located on Prairie Stone Parkway, on account of the Naming Rights Agreement shall remain unaltered through and including August 31, 2020, following which the Village shall have full right and authority to remove, alter and/or otherwise discard any and all such exterior signage;

(b) any and all rights or other licenses granted by one Party to another under the Naming Rights Agreement, including, without limitation, the Naming Rights, the Hospitality Rights and the Additional Marketing Rights (each as defined in the Naming Rights Agreement) shall terminate; provided, however, that, although Transformco shall at all times continue to own the Naming Rights Assets (as defined in the Naming Rights Agreement), the Village shall be permitted to continue to use (i) the Arena Name and Arena Logo (each as defined in the Naming Rights Agreement) for a reasonable period of time not to exceed twelve (12) months following the Effective Date at no cost or expense to the Village or its agents, and (ii) the Sears Centre Domain Name (as defined in the Naming Rights Agreement) through December 31, 2022 at the Village's sole cost and expense; and

(c) each Party's remaining obligations under the Naming Rights Agreement shall immediately cease, other than as provided herein.

3. Mutual Releases.

(a) Except for the obligations contained in this Agreement, and any continuing obligations under the Naming Rights Agreement specified in Section 2 above, the Village, for itself, its predecessors, successors, assigns, estates, board of directors (or similar body), directors, officers, members, committees, insurers, employees, agents and legal representatives, does hereby absolutely, unconditionally, forever and fut ly, generally and specifically release and discharge, as of the Effective Date, Transformco, its predecessors, successors, assigns, board of directors (or similar body), directors, officers, members, stockholders, insurers, agents and legal representatives from any and all claims, 2 DocuSign Envelope ID: B2623E8A-E0F3-4965-B8F7-3D1084B6C42D

contentions, rights, debts, invoices, liabilities, demands, liens, subrogation rights, indemnification rights, damages, losses, actions, and causes of action, of any kind whatsoever, and whether based on contract, tort, pursuant to statute or other legal or equitable theory of recovery, and whether known or unknown, suspected or unsuspected, fixed or contingent, matured or unmatured, asserted or unasserted and arising out of, relating to or in any way pertaining to the Naming Rights Agreement and/or the services provided thereunder, including without limitation, any foes, costs, or expenses incurred by or on behalf of either Party pettaining to the services provided under the Naming Rights Agreement and any Naming Rights Fees payable under the Naming Rights Agreement (collectively, the "Claims").

(b) Except for the obligations contained in this Agreement, and any continuing obligations under the Naming Rights Agreement specified in Section 2 above, Transformco, for itself, its predecessors, successors, assigns, estates, board of directors (or similar body), directors, officers, members, stockholders, insurers, agents and legal representatives, does hereby absolutely, unconditionally, forever and fully, generally and specifically release and discharge as of the Effective Date the Village, its predecessors, successors, assigns, estates, board of directors (or similar body), directors, officers, members, insurers, agents and legal representatives from any and all Claims.

(c) Nothing herein shall be construed as a release of any person or entity from any claim relating to a breach of this Agreement and the terms herein, and nothing in this Agreement shall limit the right of any of the Parties to this Agreement to enforce the terms of this Agreement.

4. Miscellaneous

(a) The Parties enter into this Agreement voluntarily, knowingly and after having an opportunity to consult with counsel. This Agreement is made in good faith under applicable law and is fair and reasonable. This Agreement shall not be deemed to be drafted by any Party, and any ambiguity shall not be construed against any Party.

(b) This Agreement shall be binding and inure to the benefit of the Parties and on the respective predecessors, successors, assigns, affiliates, directors, officers, employees, agents and legal representatives of the Parties.

(c) This Agreement constitutes the entire understanding between the Parties; any promise or agreement not contained herein shall not be binding upon the Parties unless set forth in writing and signed by each Party.

(d) Each Party agrees that it will reasonably cooperate with the other Party in implementing the provisions of this Agreement and the Village's efforts to transition to a replacement sponsor, provided that such cooperation shall not entail any financial cost to either Party.

3 DocuSign Envelope ID: 82623E8A-E0F3-4965-B8F7-3D1084B6C42D

(e) Subject to the Effective Date conditions set forth hereinabove, by executing below each person signing on behalf of each of the Parties hereto represents that he or she has all requisite power, authority and legal right to sign and enter into this Agreement and to bind the entity on whose behalf he or she is signing. The execution of this Agreement and performance of the Parties' respective obligations hereunder have been duly authorized and do not and will not (i) violate any provision of any law, rule, regulation, order, judgment, injunction, decree, or determination applicable to each of the Parties or of the organizational documents of the Parties, or (ii) result in a breach of or constitute a default under any agreement, lease or instrument to which each of the Parties may be bound or affected.

(f) The Parties shall bear their own costs, expenses and attorney fees m connection with the negotiation and execution of this Agreement.

(g) This Agreement shall be construed under the laws of the State of Illinois.

(h) This Agreement may be executed in counterparts, each of which may be a separate document, and all of which together shall be deemed and considered an original of this Agreement. The Parties hereto agree to accept facsimile or electronic transmission of copies of signature pages as and in place of originals. The provisions of this Agreement are severable, and if any part of it is found to be void or unenforceable, the other paragraphs shall remain fully valid and enforceable. The Parties further agree to replace any void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the purposes and intent of the void or unenforceable provision.

[Remainder of Page Left Blank]

4 DocuSign Envelope ID: 82623E8A-E0F3-4965-B6F7-3D1084B6C42D

IN WITNESS WHEREOF, the Parties have caused this Termination Agreement and Mutual Release to be executed by their respective authorized representatives as of the Effective Date.

VILLAGE OF HOFFMAN ESTATES TRANSFORM SR LLC I.OoouSl;nod by:

By: ______By: ___~_N=::'= e~;;;..:90..:;.;E2;;...;F~;;..;.,i~;;..;.44;.;;.:8•=--- ______Naren Sinha Name:------Name:------6/17/2020 Its: ______Its: SVP, Finance

5 NB5 COMMITTEE AGENDA ITEM VILLAGE OF HOFFMAN ESTATES

SUBJECT: Request approval of The Third Amended and Restated Commercial Rights Marketing Agreement with Spectra Partnerships to service the Naming Rights Agreement for NOW Health Group, Inc.

MEETING DATE: June 22, 2020

COMMITTEE: Finance Committee

FROM: James Norris/ Dan O'Malley / Arthur Janura / Patricia Cross I Mark Koplin / Ben Gibbs / Michael Czopek

REQUEST: Request approval of The Third Amended and Restated Commercial Rights Marketing Agreement with Spectra Partnerships to service the Naming Rights Agreement for NOW Health Group, Inc.

BACKGROUND: Spectra Partnerships, then known as Front Row Marketing, began sales of contractual rights at the Sears Centre Arena on behalf of the Village in 2009. That agreement has been extended and amended several times, most recently in September 2019. The current term of that Agreement expires in December 2025.

DISCUSSION: Spectra Partnerships (SP) submitted a proposal related to servicing the new naming rights agreement with NOW Health Group, Inc. Spectra Partnerships has been instrumental as the liaison with NOW Health Group, Inc. (NOW), along with the efforts to draft the new Naming Rights Agreement. Spectra Partnerships created the PowerPoint sales presentation to NOW with the deal points illustrated, then provided analysis, comparable data to evaluate the offer, technical assistance, and navigated between the parties. SP has been the primary liaison with NOW since the Village's initial interaction with NOW. SP worked with NOW to design the arena name and logo, and worked with signage companies to obtain quotes for the signage changeover (interior and exterior), as well as the changes to the interior of the Arena listed in the Naming Rights Agreement (e.g. NOW Lounge on the concourse) and any other changes to the Arena's "branding", SP's assistance has been valuable as it took a strong role through~ut the naming rights negotiations.

Further, as the proposed Naming Rights Agreement includes a fifteen-year term, Spectra Partnerships will continue as the prima1-y liaison with NOW Health Group, Inc. going forward. The new Naming Rights Agreement includes certain provisions -2-

that allow NOW to attend events, host corporate events and even sponsor events. Spectra Partnerships will also coordinate the many details associated with these provisions, from allocating tickets, to coordinating food and beverage service, to checking availability on the Arena calenda1·, and general implementation of the benefits afforded to NOW. SP will perform daily and weekly coordination necessary throughout the term, essentially performing as a concierge. The responsibility for providing these services to the naming rights client is important to achieve and maintain its satisfaction, and also to begin the retention phase early in the term with the goal of renewal and a long-term partnership. Retention and renewal is built on relationships, and SP has already begun this important role. SP will manage the daily issues that inevitably will arise and work to resolve those quickly and amicably. SP will provide regular updates to keep the Village informed as it manages this new agreement.

An amended agreement between the Village and Spectra Partnerships is attached for consideration. The form of this agreement is its current agreement for the sale of contractual rights. The scope of its service recognizes Spectra Partnership's role in the Naming Rights process to date, as well as its role going forward and throughout the term of the NOW Naming Rights Agreement. The proposed term would coincide with its current agreement for sales of Arena contractual rights and expire December 31, 202S. The Spectra Partnerships Agreement could then be reconsidered at that time. SP's duties related to servicing the Naming Rights Agreement and working with the new Naming Rights partner are detailed in Exhibit C.

FINANCIAL IMPACT: The scope of services for companies to execute sales objectives for a naming rights partnership vary from venue to venue, as does the compensation which is usually calculated on a percentage of the annual naming rights fee. Previous research and contacts with potential companies to assist with naming rights showed a range of 15-30%, with some adding expenses in addition to the fee. Since the Village identified the new naming rights partner, SP did not need to perform that step. However, they did begin work as soon as discussions with NOW began and have been closely involved throughout the process to execute a new Naming Rights Agreement. Therefore, SP proposes a 10% annual fee, throughout the term of the NOW agreement.

RECOMMENDATION: Request approval of the Third Amended and Restated Commercial Rights Marketing Agreement with Spectra Partnerships to service the Naming Rights Agreement for NOW Health Group, Inc. THIRD AMENDED AND RESTATED COMMERCIAL RIGHTS MARKETING AGREEMENT Sears Centre Arena

This Third Amended and Restated Commercial Rights Marketing Agreement ("Agreement"), dated June____, 2020 ("Effective Date"), is entered into by and between Front Row Marketing Services, L.P ., a Pennsylvania limited partnership d/b/a Spectra Partnerships ("Front Row") and the Village of Hoffman Estates, an Illinois Home Rule municipal corporation (the "Village").

WHEREAS, the Village is the owner of Sears Centre Arena, located in Hoffman Estates, Illinois (the "Facility");

WHEREAS, the Village has engaged Global Spectrum, L.P., d/b/a Spectra Venue Management ("Global"), an affiliate of Front Row, as the Village's agent to manage the Facility on behalf of the Village (Global, or any successor manager of the Facility, is referred to herein as "Manager");

WHEREAS, Front Row is in the business of providing marketing services in connection with sports and entertainment facilities, convention centers and other public facilities; and

WHEREAS, the Village desires to engage Front Row to provide certain direct sales and marketing services related to the Commercial Rights at the Facility, and Front Row desires to accept such engagement, under the terms, conditions and provisions contained herein.

WHEREAS, the Village and Front Row entered into a Commercial Rights Marketing Agreement dated January 1, 2010, which agreement was amended by the parties September 24, 2012 and January I, 2015 (as amended, the "Original Agreement");

WHEREAS, effective October 8, 2018, the Village and Sears, Roebuck & Co. entered into an Amended and Restated Sears Naming Rights Agreement extending the parties' then existing naming rights agreement for Sears' at the Village-owned arena ("Sears Naming Rights Agreement");

WHEREAS, on October 15, 2018, Sears Holdings Corp. and its affiliated companies, including Sears, Roebuck & Co., filed for bankruptcy protection of its assets, including the Sears Naming Rights Agreement, in the United States District Court for the Southern District of New York as Case No. 18-bk-23538;

WHEREAS, on January 17, 2019 that Naming Rights Agreement was an asset of Sears' purchased by its related entity Transform Holdco LLC, now Transform SR LLC (collectively, "Transform");

WHEREAS, on May 6, 2019, the parties amended and restated the Original Agreement in its entirety ("First Amended and Restated Agrement");

WHEREAS, on October 7, 2019, the parties amended and restated the First Amended and Restated Agreement in its entirety ("Second Amended and Restated Agreement");

Front Row Marketing Services, L.P. Page I June 12, 2020 WHEREAS, the parties now desire to amend and restate the Second Amended and Restated Agreement in its entirety in this agreement;

NOW, THEREFORE, based upon the terms, conditions, covenants and considerations hereinafter set forth, the parties, intending to be legally bound, hereby agree as follows:

1. Serv ices. Front Row is hereby engaged as the sole and exclusive representative for marketing and selling the Commercial Rights at the Facility. "Commercial Rights" shall mean the Facility's naming rights, interior sub-naming rights, pouring rights, suites, club seats, loge seats, advertising signage, sponsorships and other revenue generating opportunities as agreed by the Village and Front Row (subject to restrictions in the existing naming rights agreement with Sears, Roebuck and Co. or Transform, as amended from time to time, attached as Exhibit B hereto). The scope of services to be provided by Front Row hereunder is more particularly described on Exhibits A and C hereto.

Front Row acknowledges that all sales of Commercial Rights are subject to the approval of the Village. Any contracts for the purchase and sale of Commercial Rights shall be entered into by the purchaser of such Commercial Rights and the Village. Front Row will oversee all sales pursuits and contact with potential purchasers, including pre-existing clients, and will interact with Facility staff as necessary to pursue sales opportunities, complete the execution of each such contract or renewal and assist the Facility in the fulfillment of each contractual relationship, including Sears' exclusive Naming Rights Agreement. For the purposes of this Agreement, "Naming Rights Agreement" means a Commercial Rights Agreement where the sponsor is granted the right to include its name or logo in the name of the Facility, or otherwise dictate the name of the Facility. Front Row acknowledges that it is not entitled to any Commissions or payments based on any aspect of the current Naming Rights Agreement with Sears and/or Transform or any amendment or renewal thereof, but that Front Row is entitled to Commissions on Contract Revenue, as defined below, received under any Naming Rights Agreement procured during the Term with a sponsor other than Sears or Transform. The Village hereby acknowledges and agrees that Front Row is not guaranteeing any level of purchase of, or the receipt of payment for, any Commercial Rights marketed by Front Row pursuant to this Agreement.

Front Row acknowledges that the Village may authorize the Facility's General Manager, as defined in the Management Agreement between the Village of Hoffman Estates and Global Spectrum, to sign sponsorship and premium seating agreements on behalf of the Village.

2. Contract Administration. Front Row will communicate and coordinate its activities hereunder with the Village and the Facility's General Manager. Any contracts for the purchase and sale of Commercial Rights ("Commercial Rights Agreement") shall be entered into by the purchaser of such Commercial Rights and the Village. The parties acknowledge that the Village may authorize the Facility's General Manager to sign Commercial Rights Agreements on behalf of the Village upon the written approval of the Village.

(a) The term of this Agreement ("Term") shall continue through and expire on December 31, 2025, unless sooner terminated in accordance with Section 3(6) of this Agreement.

Front Row Marketing Services, L.P. Page 2 June 12, 2020 The Village shall have the unilateral right, but not the obligation, to renew this Agreement for an additional term of three (3) years by providing written notice of renewal to Front Row no later than September 1, 2025. Any reference to a "year" refers to a typical calendar year, January I to December 31.

(b) Either party may terminate this Agreement in the event of a material breach or default hy the other party which remains uncured following thirty (30) days written notice describing such breach or default in reasonable detail.

4. Compensation.

(a) In consideration for the performance by Front Row of its duties hereunder, the Village shall pay Front Row a non-refundable monthly fee. The fee for the month of January, 20 IO is $8,500 and shall not be credited against Commissions. The fee for each remaining month of the Term thereafter shall be $6,000 per month, which fee is to be credited against Commissions earned in the year in which such fee is paid. Such monthly fee shall be paid on the first day of each month of the Term.

(b) Additionally, Front Row shall be entitled to receive a comm1ss1on ("Commission") on all Contract Revenue actually received, as set forth herein. "Contract Revenue" shal I mean (I) gross revenue from cash Commercial Rights sales (prior to any deduction for fulfillment costs, signage requirements, ticket costs, or agreed upon amounts owed to the Owner or Manager); and (2) seventy~five percent (75%) of the fair market value of any pre­ approved by the Village in-kind contributions that reduce indirect or event expenses (i.e. trade) received in exchange for rights granted by the Facility. The Commission shall be:

(i) Fifteen percent (I 5%) on Contract Revenue actually received based on Commercial Rights Agreements entered into prior to November 15, 2009 ("Pre­ Existing Commercial Rights Agreements"). If such Pre-Existing Commercial Rights Agreements are renewed at a greater rate, the Commission on such additional gross revenue shall be twenty percent (20%) and the Commission on the balance of the gross revenue (i.e., the non-incremental revenue) shall remain at fifteen p_ercent (15%).

(ii) Twenty percent (20%) on any Contract Revenue actually received based on Commercial Rights Agreements entered into between November 15, 2009 and the end of the Term ("New Commercial Rights Agreements"), except for renewals of Pre-Existing Commercial Rights Agreements (which are commissioned as described above).

(iii) Notwithstanding the provisions of Sections 4(b)(i) and 4(b)(ii) above, the Commission rate shall be ten percent (10%) with respect to Commercial Rights Agreements with sponsors that the Village initially identifies during the Term and brings to Front Row, so long as the Village has notified Front Row in writing in advance of the execution of the applicable Commercial Rights Agreement with such sponsors of the identity of such sponsors and the fact that the Village initially identified them. Additionally, any sales of suites or club box seats to Facility sports tenants (i.e., a sports teams that use the Facility as its "home" venue) shall be paid

Front Row Marketing Services, L.P. Page 3 June 12, 2020 a reduced Commission of fifteen percent (15%) on such sales rather than twenty percent (20%).and

(iv) Notwithstanding any other provision of this Agreement, Front Row shall not receive a commission on Naming Rights Agreements other than ten percent (10%) on any Contract Revenue actually received under a Naming Rights Agreement with a sponsor other than Sears and/or Transform.

Contract Revenue shall be calculated as the revenue is recognized (on an accrual basis). For example, if on November 1, 2009 the sponsor pays one-hundred percent (100%) of the sponsorship fee for the sponsorship calendar year 2010, Front Row shall earn the Commission in 2010 on one­ hundred percent (100%) of such fee as all of such payment shall be recognized in 2010; if, however, such fee is paid with respect to a sponsorship year that runs from October I, 2009 to September 30, 2010, Front Row shall earn a Commission only on the pro-rated portion of such fee for the period from November I 5, 2009 to September 30, 20 I 0).

(c) The parties shall hold a settlement one (I) time each year of the Term on or about December 15 (each, a "Settlement"). At each such Settlement, Front Row shall be paid all Commissions due to Front Row through such Settlement. With respect to new Commercial Rights Agreements signed since the previous Settlement, Front Row shall be paid its Commission at each such Settlement on Contract Revenue actually received and recognized under each Commercial Rights Agreement. For the sake of clarity, Front Row is only entitled to and will only be paid at Settlement those Commissions on Contract Revenue actually collected.

(d) The parties acknowledge that the Commission shall be payable to Front Row for the entire tenn of any New Commercial Rights Agreements and on the incremental revenue (above the pre-existing base revenue) on renewals of Pre-Existing Commercial Rights Agreements, including any period of such agreements extending after the Term expires or terminates. For any such post-expiration or post-termination period, the Commission shall be paid to Front Row in the same manner and at the same rate as it was due during the Term. The parties shall continue to hold annual settlements following the end of the Term with regard to such Commissions until all such agreements have fully expired or terminated. But in no event shall Commissions accrue to Front Row longer than five (5) years after termination of this Agreement.

(e) In the event of damage or destruction to the Facility that is reasonably expected to require the Facility to cease operating as a spo11s/entertainment venue for a period reasonably estimated to last at least one-hundred twenty (120) days, this Agreement, at the so le option of the Village, may be terminated upon fourteen (14) days' written notice. Additionally, if the Village permanently closes the Facility it may terminate this Agreement upon fourteen (14) days' written notice.

(f) All payments due Front Row hereunder shall be made to Front Row Marketing Services Accounting Office at 150 Rouse Blvd., Philadelphia, Pennsylvania I 9112.

(g) Notwithstanding anything to the contrary contained in this Agreement, the Commission shall not be paid on (i) credit card fees actually paid by the Village (or Global, as applicable) to the credit card companies, and (ii) any entertainment, amusement or other tax imposed by the Village, Cook County or other governmental authority on ticket, suite or

Front Row Marketing Services, L.P. Page 4 June 12, 2020 sponsorship revenue. Rather, such credit card fees and taxes shall be netted out of Contract Revenue to determine the amount which is to be commissioned to Front Row.

(h) In addition to Commission payments to be made to Front Row described above, the Village shall reimburse Front Row for all of its pre-approved travel and entertainment costs, marketing costs, and any other out-of-pocket costs incurred by Front Row performing its duties hereunder with respect to the marketing, sale and fullfillment of a Naming Rights Agreement, up to a maximum of $10,000 per year. Front Row shall, from time to time, submit an invoice to the Village for reimbursement of such expenses, together with receipts and other reasonable back-up documentation related to such expenses. The Village shall reimburse Front Row for such expenses within thirty (30) days of receive of such mv01ce.

5. Records and Reports. During the Term, Front Row will keep the Village apprised of its sales prospects and the status of any potential sales of Commercial Rights. Additionally, Front Row shall deliver to the Village and the Facility's General Manager: a) monthly reports detaillng Front Row's sales efforts at the Facility; b) an initial Business Plan discussing Front Row's direct sales and marketing initiatives under this Agreement, which shall include a complete listing of the Facility's advertising and sponsorship inventory elements, including location, current availability/status (sold, pending, open), and the rate card/fee (the Village hereby acknowledges receiving such Business Plan prior to the Effective Date), and c) projections of revenue from the sale of Commercial Rights for each year, along with an annual budget and marketing plan to be provided concurrently with the Manager's annual budget, no later than September 1st of the preceding year. Each of the parties shall keep and maintain books and records, in accordance with generally accepted accounting practices, with respect to the rendering of services provided by it hereunder. Either party may inspect the other's books and records during normal business hours, on reasonable advance notice, to confirm the amounts due hereunder.

6. Sales and Marketing Personnel of Front Row. The parties acknowledge that Front Row has engaged a full-time "Commercial Rights sales" employee whose duties include, among other things, implementing Front Row's sales efforts hereunder and coordinating with Front Row management in connection with Commercial Rights sales hereunder. Such person is an employee of Front Row, and Front Row will compensate such individual with salary, benefits and commission, as determined by Front Row in its sole discretion. The Village agrees to make provisions throughout the Term for a Facility employee (which employee may be provided through the Manager as a Manager employee) whose duties shall include fulfilling sponsorship and premium seating sales.

7. Additional Duties of the Village. To enable Front Row to perform its duties hereunder, the Village shall provide for the benefit of Front Row and its on-site employee and pay for as an operating expense of the Facility, at no cost to Front Row, the following: reasonable office space in the Facility, a computer with internet access, use of basic office equipment (phone, fax machine, etc.), use of Facility stationary, mutually agreed client entertainment functions of a group nature, and marketing materials. Front Row shall equip the on-site Front Row employee with a cell phone and be responsible for reimbursing the employee for any travel and entertainment expenses at no cost to the Village. Except with respect to those expenses reimbursable to Front Row in accordance with Section 3(h) above , the paities agree that Front Row shall be responsible for the cost of entertaining clients (or potential clients) outside of the Facility, such as the cost of client meals outside of the Facility. The Village shall pay for the cost of any Front Row Marketing Services. L.P. Page 5 June 12, 2020 entertainment of clients (or potential clients) at the Facility, such as tickets and food/beverage at a Facility event, and also for client gifts previously approved by the Facility's General Manager.

8. Non-Hiring. During the Term and for a period of one (1) year after the end of the Term, the Village shall not, without the prior written consent of Front Row, solicit for employment by the Village, or otherwise hire, any employee of Front Row with whom the Village has had dealings hy virtue of the engagement of Front Row hereunder. In the event of a breach of this provision, Front Row will be entitled (in addition to any other rights and remedies which Front Row may have at law or in equity, including money damages) to equitable relief, including an injunction to enjoin and restrain the Village from continuing such breach. Notwithstanding the foregoing, following termination of this Agreement, the Village shall not be restricted from hiring Front Row's on-site sales representative if Front Row elects not to engage such individual m connection with other Front Row employment opportunities.

9. Miscellaneous.

(a) Amendments. Neither this Agreement nor any of its terms may be modified or waived except by an instrument in writing signed by an authorized representative of each of the parties hereto.

(b) Waiver; Remedies. No failure or delay by a party hereto to insist on the strict performance of any term of this Agreement, or to exercise any right or remedy consequent to a breach thereof, shall constitute a waiver of any breach or any subsequent breach of such term. No waiver of any breach hereunder shall constitute a waiver of any subsequent breach hereunder. The remedies provided in this Agreement are cumulative and not exclusive of the remedies provided by law or in equity.

(c) Relationship of Parties. Front Row is engaged by the Village as an independent contractor to perform the services described herein, and nothing contained in this Agreement shall be deemed to create, whether express or implied, a partnership, joint venture, employment, or agency relationship between Ft·ont Row and the Village.

(d) No Third Party Beneficiaries. Nothing in this Agreement is intended, nor will be deemed, to confer rights or remedies upon any person or legal entity not a party to this Agreement.

(e) Assignment. Neither party may assign this Agreement without the prior written consent of the other. Any purported assignment in contravention of this Section shall be void.

( f) Severabi I ity. If a court of competent jurisdiction or an arbitrator dete11TJ ines that any term of this Agreement is invalid or unenforceable to any extent under applicable law, the remainder of this Agreement (and the application of this Agreement to other circumstances) shall not be affected thereby, and each remaining term shall be valid and enforceable to the fullest extent permitted by law.

Front Row Marketing Services. L.P. Page 6 June 12, 2020 (g) Governing Law. The Agreement is entered into under and pursuant to, and is to be construed and enforceable in accordance with, the laws of the State of Illinois, without regard to its conflict of laws principles.

(h) Survival. The terms of Sections 4 and 8 shall survive termination of this Agreement.

(i) Insurance. Front Row will keep General Commercial liability insurance in the amount of $1 million per occurrence, $2 million aggregate, and workers compensation insurance in accordance with Illinois law, during the Term and include the Village as an additional insured with respect to Front Row's activities under this Agreement.

(j) Prior Agreements. This Agreement supersedes and replaces all prior and contemporaneous negotiations, correspondence, conversations, agreements, and understandings between the parties concerning the subject matter hereof, including the Original Agreement, the First Amended and Restated Agreement, and the Second Amended and Restated Agreement (which is deemed terminated upon execution and delivery of this Third Amended and Restated Agreement). Accordingly, the parties agree that no deviation from the terms hereof shall be predicated upon any prior or contemporaneous representations, agreements or understandings between the parties, whether oral or written.

(k) For the duration of the Term, Front Row agrees not to provide marketing or other services to Allstate Arena, located in Rosemont, Illinois, or to any then-current sports tenants of Allstate Arena, without the prior written consent of the Village (which consent shall not be unreasonably withheld).

(I) The parties acknowledge the Amended and Restated Management Agreement dated effective January I, 2019 ("Amended and Restated Management Agreement") between the Village and Global Spectrum, LP, and specifically Section 3.4 therein. The parties agree that Front Row is a third party beneficiary of the terms in Section 3.4 of the Amended and Restated Management Agreement, and may enforce directly against the Village its right to be paid the unamortized portion of Front Row's Investment (as such term is defined in the Amended and Restated Management Agreement) in the event this Agreement terminates prior to December 31, 2021, as set forth in Section 3 .4 therein.

IN WITNESS WHEREOF, each party hereto has caused this Agreement consisting of 8 pages to be· executed on behalf of such party by an authorized representative as of the date first set forth above.

The remainder ofthis page has been intentional/ left blank.

Front Row Marketing Services, L.P. Page 7 June 12, 2020 FRONT ROW MARKETING SERVICES, L.P. d/b/a Spectra Partnerships

Byµ~ Date: June 17, 2020 Name: Brian Rothenberg Title: EVP and General Counsel

APPROVED:

VILLAGE OF HOFFMAN ESTATES, ILLINOIS

By: Date: Name: William D. McLeod Title: Vi llage President

Front Row Mark1:ting Services, L.P. Page 8 June 12, 2020 EXHIBIT A DUTIES OF FRONT ROW Advertising, Sponsorship, Naming Rights, Sub-Naming Rights and Vending Deals ♦ Create activity timeline for sales. ♦ Consult with Manager and Village on proposed new inventory of advertising elements/events opportunities at the Facility and benefits for sale. ♦ Development of RFPs and negotiation with vendors, as appropriate, and in accordance with VHE policies. ♦ Develop annual pro-formas for advertising, sponsorship, sub-naming rights and vending revenues and expenses for budgeting. ♦ Create and update rate cards and packages for sale. ♦ Develop and update relevant sales materials. ♦ Creation and ongoing updating oflocal, regional, and national target account list. ♦ Develop all necessary contracts for advertising and sponsorship agreements. ♦ Develop rights benefits and financial packages. ♦ Provide all required reporting functions with VHE and Global Spectrum. ♦ Create annual sales plans. ♦ Assist in sales team development, including conducting seminars targeting key industry issues. ♦ Create organizational processes and annual business plans. ♦ Execute sales solicitation for advertising, sponsorship, and vendor deals. ♦ Consult on all aspects of advertising and sponsorship to property holder. ♦ Set up procedures for client/property communication. ♦ Provide on-going support and supervision for sales staff. ♦ Establish client servicing plan and execute client customer service. ♦ Attend meetings and provide reports as requested. Premium Seating Services ♦ Continued research and comparative analysis of current Premium Seating pricing and industry as a whole. ♦ Ongoing evaluation of value and term versus market condition. ♦ Develop activity timeline- annually. ♦ Develop marketing plan annually. + Develop budget- annual. ♦ Develop financial analysis/pro-forma. ♦ Develop department amenity and services package- update amenities annually. ♦ Develop and update presentation sales and marketing collateral materials. ♦ Maintain and manage club seat, loge and suite leases. ♦ Solicit new accounts/prospects. ♦ Continue to service current premium seating clients with enhanced customer service. ♦ Consult on inclusive packages. ♦ Consult and maintain the premium seating services department Uob descriptions, policies and procedures, and renewal interest program). ♦ Manage sales staff. ♦ Develop and update premium seating servicing policies.

Front Row Marketing Services, L.P. Page 9 June 12, 2020 EXHIBITB SEARS NAMING RIGHTS AGREEMENT

Copy previously provided

front Row Marketing Services, LP. Page 10 June 12, 2020 EXIDBIT C NAMING RIGHTS DUTIES OF FRONT ROW

Analysis & Sales Process ♦ Asses the value and viability of selling the Naming Right elements of the Arena ♦ Oversee the full sales process from marketing, selling, and closing the venue Naming Rights ♦ Create a comprehensive Naming Rights Sales Deck ♦ Prospect partners in key categorits

Front Row Marketing Services, LP. Page 11 June 12, 2020 HOFFMAN ESTATES Rl GROWING TO GREATNESS

DEPARTMENT OF FINANCE MONTHLY REPORT MAY 2020

Water Billing

A total of 14,827 residential water bills were mailed on May 1st for March's water consumption. Average consumption was 4,504 gallons, resu lting in an average residential water bill of $63.05. Total consumption for all customers was 98 million gallons, with 67 million gallons attributable to residential consumption. When compared to the May 201 9 billing. residential consumption increased by 11.7%.

Total Water Consumption Total Water Consumption Year-To-Date Comparison Month of May Month of May

2015 2017 2018 2019 2020 2016 2017 2018 2019 2020

• Residential Commercial ■ Residential Commercial

1900 Hassell Road, Hoffman Estates, Illinois 60169 • Phone: 847-882-9100 • Fax: 847-843-4822 Web: www.hoffmanestates.org Village Investments

As of May 31, 2020, the Village's investment portfolio (not including pension trust funds) totaled $65.2 million. Of this amount, $44.6 million pertained to the various operating funds. As can be seen in the following graphs, the remaining $20.6 million is related to debt service, capital projects and trust funds.

Investment Portfolio by Fund Type Investment Portfolio by Type As May 31, 2020 As of May 31, 2020

0%1% Oo/J:J%

41%

14%

21% ■ Money Market ■ CD's Debt Service Operating Capital Projects ■ ■ ■ ■ Trust IL Funds ■ Chase Money Market

General Fund Investments

"' .!2.. "6 0 -0 "'C: ~ ':i

er, O'\ 0-, 0 0 ';' 7 7 ~ ~ C. > u .0 CIJ 0 CIJ CIJ 5. r.n z Cl u.. <(

2 Operating Funds

General Fund For the month of May, General Fund revenues totaled $2,740,589 and expenditures totaled $4,087,762 resulting in a deficit of $1,347,173.

Revenues: May year-to-date figures are detailed in the table below. Property taxes are due in March and August every year. Licenses and Permits are under budget due to business licenses renewal due date extension because of the pandemic. Fines and Forfeits are Linder budget because ticket revenue is not performing as expected. Investment income is under budget due to lower interest rates being realized. Most miscellaneous revenues are not received on a monthly basis.

YEAR-TO-DATE YEAR-TO-DATE REVENUES BUDGET ACTUAL VARIANCE Taxes $ 16,794,664 $ 12,756,603 -24.0% Licenses & Permits 1,006,542 834,317 -17.1% Intergovernmental 6,535,838 6,851,085 4.8% Charges for Services 2,871,138 2,896,174 0.9% Fines & Forfeits 580,083 392,376 -32.4% Investments 208,333 125,785 -39.6% Miscellaneous 253,208 182,725 -27.8% Operating_ Transfers 125,000 205,141 64.1% TOTAL $ 28,374,806 $ 24,244,207 -14.6%

YTD Budget and Actual Comparison

$18,000,000

$16,000,000

$14,000,000

$12,000,000

$10,000,000 ■ Budget

$8,000,000 ■ Actual

$6,000,000

$4,000,000

$2,000,000 so Taxes Lie. & lntergov't Se rv. Chgs. Fines Investments Misc. Op Transfers Permits

3 Hotel Tax

$180,000

$160,000

$140,000 +------

$120,000 -!------~ ----

$100,000 -1------■ 2019 Actual ■ 2020 Budget $80,000 - 2020 Actual

$60,000

$40,000

$20,000

$0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Cumulative Variance 2020 Actual Month Received 2019 Actual 2020 Budget 2020 Actual vs. Budget Jan $ 73,861 $ 110,417 $ 82,223 $ (28,194) Feb 71,935 110,417 74,298 (64,312) Mar 78,416 110,417 79,749 (94,980) Apr 108,026 110,417 27,149 (178,248) May 120,207 110,417 37,036 (251,628) Jun 110,051 110,417 Jul 157,865 110,417 Aug 158,661 110,417 Sep 146,721 110,417 Oct 107,205 110,417 Nov 122,463 110,417 Dec 89,727 110,417

YTD Totals $ 1,345,138 $ 1,325,000 $ 300,455

4 Real Estate Transfer Tax

$700,000

$600,000

$500,000

$400,000 1------■ 2019 Actual ■ 2020 Budget

$300,000 2020Actual

s200,000

so .b ~d-t Jan Feb Mar Apr May Jun Jul -Aug Sep Oct Nov Dec Cumulative Variance 2020 Actual Month Received 2019 Actual 2020 Budget 2020 Actual vs. Budget Jan $ 42,133 $ 81 ,250 $ 120,255 $ 39,005 Feb 43,229 81,250 32,846 (9,399) Mar 585,748 81 ,250 78,510 (12,139) Apr 244,290 81 ,250 51 ,799 (41 ,590) May 192,702 81,250 62,570 (60,270) Jun 104,977 8 1,250 Jul 137,205 81,250 Aug 70,674 81,250 Sep 183,226 81,250 Oct 49,838 81 ,250 Nov 165,212 81,250 Dec 118,029 81 ,250

YTD Totals $ 1,937,263 $ 975,000 $ 345,980

5 Home Rule Sales Tax

$450,000

$400,000

$350,000

$300,000

$250,000 - ■ 2019 Actual

$200,000

$150,000

$100,000

$50,000

$0 Jon (Nov) Feb (Dec) Mar (Jan) Apr (Feb) May (Mar) Jun (Apr) Jul (May) Aug(Jun) Sep (Jul) Oct (Aug) Nov (Sep} Dec (Oct)

Cumulative Variance Month Received 2020 Actual (Uabilitv Period} 2019 Actual 2020 Budget 2020 Actual vs. Budget Jan (Nov) $ 295,761 $ 291,667 $ 302,599 $ 10,932 Feb (Dec) 275,771 291,667 290,185 9,451 Mar (Jan) 371,809 291,667 339,755 57,539 Apr (Feb) 258,175 291,667 273,057 38,929 May (Mar) 242,128 291,667 237,508 (15,229) Jun (Apr) 268,309 291,667 Jul (May) 251,842 291,667 Aug (Jun) 181,980 291,667 Sep (Jul) 397,447 291,667 Oct (Aug) 255,542 291,667 Nov (Sep) 247,095 291,667 Dec (Oct) 253,550 291,667

YTD Totals $ 3,299,408 $ 3,500,000 $ 1,443,104

6 Telecommunications Tax

$140,0D0

$120,000

$100,000 - ■ 2019 Actlrnl

■ 2020 Budget

■ 2020 Actual $80,000

$60,000

$40,000

$0 Jan (Oct) Feb (Nov) Mar(Dec) Apr (Jan) May (Feb) Jun (Mar) Jul (Apr) Aug (May) Sep (Jun) Oct (Jul) Nov (Aug) Dec (Sep)

Cumulative Variance Month Received 2020 Actual {Liabilit~ Period} 2019 Actual 2020 Budget 2020 Actual vs. Budget Jan (Oct) $ 120,844 $ 103,500 $ 113,378 $ 9,878 Feb (Nov) 103,168 103,500 104:057 10,435 Mar (Dec) 118,778 103,500 102,651 9,586 Apr (Jan) 113,000 103,500 95,539 1,625 May (Feb) 120,765 103,500 97,540 (4,335) Jun (Mar) 117,606 103,500 Jul (Apr) 112,703 103,500 Aug (May) 113,530 103,500 Sep (Jun) 105,673 103,500 Oct (Jul) 115,884 103,500 Nov (Aug) 107,793 103,500 Dec (Sep) 107,979 103,500

YTD Totals $ 1,357,722 $ 1,242,000 $ 513,165

7 Building Permits

~ -000

I $200,000

$150,000 t---

■ 2019 Actual $100,000 ~ - • ------■ 2020 Budget ■ 2020 Actual

$50,000

$0 Jan Feb Sep Oct Nov Dec

($50,000) ~------

Cumulative Variance 2020 Actual Month Received 2019 Actyal 2020 Budget 2020 Actyal vs. Budget Jan $ 93,549 $ 89,583 $ 231,652 $ 142,069 Feb 70,614 89,583 11 6,033 168,518 Mar 102,100 89,583 37,924 116,859 Apr 123,746 89,583 (1 7,384) 9,892 May 91 ,619 89,583 32,716 (46,976) Jun 128,955 89,583 Jul 120,998 89,583 Aug 114,734 89,583 Sep 102,934 89,583 Oct 61,625 89,583 Nov 63,667 89,583 Dec 29,644 89,583

YTD Totals $ 1,104,186 $ 1,075,000 $ 400,941

8 State Sales Tax

$900,000 ------

$800,000

:;100,000

$600,000

■ 2019 ActlJal

■ 2020 Budget $400,000 - • 2020 Actual

$100,000

$0 Jan (Nov) Feb (Dec) Mar (Jan) Apr (Feb) May (Mar) Jun (Apr) Jul (May) Aug (Jun) Sep (Jul) Oct (Aug) Nov (Sep) Dec (Oct)

Cumulative Variance Month Received 2020 Actual {Liability: Period) 2019 Actui!I 2020 Budget 2020 Actual vs. Budg~t Jan (Nov) $ 647,708 $ 650,000 $ 654,701 $ 4,701 Feb (Dec) 624,801 650,000 668,077 22,778 Mar (Jan) 774,929 650,000 774,498 147,276 Apr (Feb) 542,297 650,000 561,888 59,164 May (Mar) 536,850 650,000 552,432 (38,404) Jun (Apr) 651 ,634 650,000 Jul (May) 662,407 650,000 Aug (Jun) 592,425 650,000 Sep (Jul) 748,503 650,000 Oct (Aug) 607,826 650,000 Nov (Sep) 606,345 650,000 Dec (Oct) 581,818 650,000

YTD Totals $ 7,577,540 $ 7,800,000 $ 3,211 ,596

9 Local Use Tax

$250,000 ------

■ 2019 Actual

■ 2020 Budget • 2020 Actual

Jan INov) Feb (Dec) Mar IJ

Cumulative Variance Month Received 2020 Actual jLiabiliti'. Period} 2019 Actual 2020 Budget 2020 Actual vs. Budget Jan (Nov) $ 140,169 $ 141,667 $ 166,765 $ 25,098 Feb (Dec) 155,093 141,667 156,234 39,666 Mar (Jan) 187,546 141,667 214,375 112,374 Apr (Feb) 108,793 141,667 148,444 119,151 May (Mar) 125,331 141,667 129,000 106,485 Jun (Apr) 142,480 141,667 Jul (May) 134,859 141,667 Aug (Jun) 135,442 141,667 Sep (Jul) 137,690 141,667 Oct (Aug) 141,552 141,667 Nov (Sep) 135,615 141,667 Dec (Oct) 151,887 141,667

YTD Totals $ 1,696,454 $ 1,700,000 $ 814,818

10 Income Tax

I $1,200.000

$1,000,000

■ 2019 Act ual

■ 2020 Budget • 2020 Actual

$200,000

$0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Cumulative 2018-2019 2019-2020 Variance Month Month 2020 Actual Received Liab Pd 2019 Actual Received 2020 Budget Liab fd 2020 Actual vs. Budget Jan Dec-18 $ 430,566 Jan $ 456,250 Dec-18 $ 474,910 $ 18,660 Feb Jan-19 518,005 Feb 456,250 Jan-19 489,288 51,698 Mar Jan-19 31 1,906 Mar 456,250 Jan-1 9 363,834 (40,718) Apr Jan-19 500,986 Apr 456,250 Jan-19 534,381 37,413 May Feb-19 1,042,123 May 456,250 Feb-19 523,208 104,371 Jun Feb-19 325,451 Jun 456,250 Feb-19 Jul Mar-19 486,704 Jul 456,250 Mar-19 Aug Mar-19 348,884 Aug 456,250 Mar-19 Sep Mar-19 308,780 Sep 456,250 Mar-19 Oct Apr-19 550,920 Oct 456,250 Apr-19 Nov Apr-19 359,560 Nov 456,250 Apr-19 Dec May-19 339,769 Dec 456,250 May-19

YTD Totals $5,523,654 $5,475,000 $2,385,621

11 Fines

$180,000

$160,000

$140,000 .;------

$120,000 ~

$100,000 - ■ 2019 Actua l

■ 2020 Budget $80,000 20 20 Actual

$60,000 ~

$40,000

$20,000

$0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Cumulative Variance 2020 Actual Month Received 2019 Actual 2020 Budget 2020 Actual vs. Budget Jan $ 102,529 $ 116,017 $ 99,709 $ (16,308) Feb 82,643 116,017 82,607 (49,71 7} Mar 84,003 116,017 65,923 (99,811} Apr 115,421 116,017 62,529 (153,299) May 135,100 116,017 81 ,608 (187,707) Jun 125,188 11 6,017 Jul 162,077 116,017 Aug 126,391 11 6,017 Sep 120,110 116,017 Oct 114,448 116,017 Nov 103,679 116,017 Dec 91,469 11 6,017

YTD Totals $ 1,363,058 $ 1,392,200 $ 392,376

12 Expenditures: General Fund expenditures in May were $1,129,045 below the budgeted figure of $5,216,807. The summary of year•to-date actuals versus budgeted expenditures shown below reflect mostly positive variances for the Village departments for the year. Emergency Operations is over budget due to the annual Joint Emergency Management Membership Assessment payment, which happens at the beginning of every year.

YEAR-TO-DATE YEAR-TO-DATE EXPEN DITU RES BUDGET ACTUAL VARIANCE Legislative $ 161,146 $ 157,689 2.1% Administration 285,429 277,852 2.7% Legal 231,421 122,184 47.2% Finance 481,025 473,588 1.5% Village Clerk 93,500 89,307 4.5% HRM 236,200 211,773 10.3% Communications 107,563 104,770 2.6% Cable TV 83,246 62,307 25.2% Emergency Operations 35,838 52,204 -45.7% Police 8,373,271 8,253,246 1.4% Fire 7,813,496 7,774,459 0.5% Public Works 3,195,225 2,937,040 8.1% Development Services 2,330,388 1,643,818 29.5% H&HS 320,204 310,676 3.0% Miscellaneous 2,307,544 1,802,436 21.9% TOTAL $ 26,055,494 $ 24,273,351 6.8%

YTD Budget and Actual Comparison

$9,000,000

$8,000,000

$7,000,000

$6,000,000

$5,000,000 ■ Budget

$4,000,000 ■ Actual

$3,000,000

$2,000,000

$1,000,000

$0 General Police Fire Public Works Devel. Health & Misc. Services Admin. Services Human Svcs

13 Department News

During the month of May, Finance staff attended the following training sessions: Attended multiple webinars relating to COVIO-19 and the financial aspect of 0llr emergency response (Finance Director, Assistant Director, and Fiscal Operations Manager).

Also during the month, Finance staff participated in the following events and planning meetings: • Various IGFOA training planning meetings (Finance Director)

Respectfully Submitted,

Rachel Musiala

14 MONTHLY REPORT STATISTICS II May-20 II

% Inc/ Dec May-20 YTD Majl-20 May-19 YTD Mal£•19 Month Year Credit Card Transactions Finance and Code Front Counter -49.1% Number 3 1,210 552 2,376 -99.5% -50.9% Amount $ 170 160,715 $ 74,727 327,565 -998% Internet Sales 3.2% Number 2,012 11,231 2,127 10,880 -5.4% 27.7% Amount $ 359,066 1,525,951 $ 229,483 1,194,952 56.5% Total -6.1% Number 2,015 12,441 2,679 13,256 -24.8% Amount $ 359,235 1,686,666 $ 304,210 $1,522,517 18.1% 10.8%

Credit Card Company Fees 356.3% General Fund $ 37 909 $ 37 199 0.0% 34.8% Water Fund 3,005 16,116 2,441 11,955 23.1% 40.1% Total Fees $ 3,041 $ 17,025 $ 2,477 $ 12,154 22.8%

Accounts Receivable Invoices Mailed -97.1% -72.5% Number 25 293 854 1,067 -29.7% Amount $ 43,346 414,047 $ 131,479 588,788 -67.0% Invoices Paid 28.5% Number 30 325 52 253 -42.3% -22.8% Amount $ 12,121 434,260 $ 124,804 562,466 -90.3% Reminders Sent 47.9% Number 6 71 12 48 -50.0% 56.9% Amount $ 4,303 34,845 $ 2,800 22,206 53.7%

Accounts PaJlable Checks Issued -13.7% Number 211 1,545 341 1,790 -38.1% -29.4% Amount $ 1,088,382 10,324,686 $ 899,255 14,631,670 21 .0% Manual Checks Issued -82.9% -160% Number 6 121 35 144 -2.6% As% of Total Checks 2.84% 7.83% 10.26% 8.04% -72.3% -97.9% Amount $ 24,298 180,329 $ 42,709 8,657,322 -43.1% As% of Total Checks 2.23% 1.75% 4.75% 59.17% -53.0% -97.0%

Utility Billing -11 .9% New Utility Accounts 86 524 159 595 -45.9% Bills Mailed/ Active Accounts 15,751 78,711 15,664 78,381 0.6% 0.4% Final Bills Mailed 86 524 159 595 -45,9% -11 .9% -62.3% Shut-Off Notices 2,790 1,196 7,396 -100.0% -66.8% Actual Shut-Offs 188 89 567 -100.0% 2.8% Total Billings $ 1,762,169 8,993,829 $ 1,737,972 8,751,166 1.4%

Direct Debit (ACH) Program 26.7% New Accounts 66 375 28 296 135.7% 20.1% Total Accounts 4,548 22,245 3,877 18,516 17.3% As% of Active Accounts 28.87% 28.26% 24.75% 23.62% 4.1% 19.6%

Water Payments Received in Curren! Month Total Bills Mailed 15,751 78,711 15,664 78,381 0.6% 0.4% 20.1% ACH Payments 4,548 22,245 3,877 18,516 17.3% ACH Payments-% of Total Bills 28.87% 28.26% 24.75% 23.62% 16.7% 19.6% On-line Payments (Internet Sales) 1,441 8,631 1,787 8,915 -19.4% -3.2% On-line Payments-% of Total Bills 9.15% 10.97% 11 .41% 11.37% -19.8% -3.6% Over-the-phone Payments 844 2,957 533 2,905 58.3% 1.8% Over-the-phone Payments-% of Total Bills 5.36% 3.76% 3.40% 3.71% 57.5% 1.4% -8.4% Mail-in Payments 8,369 43,035 9,326 46,958 -10.3% Mail-in Payments-% of Total Bills 53.13% 54.67% 59.54% 59.91% -10.8% -8,7% WATER Bl~Ll~G ANALYSIS Ma 31 2020

Residential Billings Average Monthly Consumption/Customer

Month Billed 2017-2018 2018-2019 2019-2020

May 4,257 4,213 4,051 June 4,595 4,633 4,326 July 5,214 4,505 4,395 August 4,965 5,439 5,438 September 4,951 4,/82 4,952 October 5,003 4,379 4,157 November 4,375 4,147 4,087 December 4,198 4,170 4,096 January 4,538 4,403 4,342 February 4,486 4,480 4,234 March 3,845 3,916 4,020 April 4,206 4,227 4,423 May 4,213 4,051 4,504

13 Month Average - 4,527 4,411 4,387 % Change - -0.3% -2.6% -0.6%

Total Water Customers Average Bill

Customer Type Customer Type May-19 % Change May-19 %Change

Residential 14,738 14,827 0.6% Residential $ 55.68 $ 63.05 13.2% Commercial 926 924 -0.2%

Total 15,664 15,751 0.6%

Total Consumption -All Customers (000,000"s)

Month-To-Date Year-To-Date

May-19 May-20 % Change May-19 May-20 % Change

Residential 60 67 11.7% Residential 311 320 2.9% Commercial 39 31 -20.5% Commercial 192 183 -4.7%

99 98 -1.0% 503 503 0.0% STATE MEN T OF INVESTMENTS-VILLAGE As of Ma 31 2020

Investment Maturity Book Market Maturity Rate of Fund Date Date Value Value Value Interest

General Fund

Illinois Funds - General 09/30/86 5,048,840.47 0.735 Illinois Funds - Veterans Memorial 05/01/92 313.56 0.735 IMET Convenience Fund 10/20/05 2,860.05 0.430 Citibank SDA 11/07/08 7,339,978.75 1.500 Chase Money Market 03/06/18 1,646,543.35 1.490 CD with PMA 08/22/13 8,017.000.00 8,017,000.00 8,166,317.67 0.375 22,055,536.18

Motor Fuel Tax

Illinois Funds 09/30/86 103,172.52 0.735

Asset Seizure - Federal

Illinois Funds 06109/99 4,366.71 0.735

Asset Seizure - State

Illinois Funds 11/30/98 55,919.60 0.735

Asset Seizure • BATTLE

Illinois Funds 07110/08 844.67 0.735

Municipal Waste System

Illinois Funds 08/31/98 7,965.19 0.735

2005A G.O. Debt Serv.

Illinois Funds 11/30/04 309,540.71 0.735

Central Road Corridor lmprov.

Illinois Funds 12/15/88 9,792.41 0.735 CilibankSDA 11/07/08 3,779.18 1.500 13,571.59

Hoffman Blvd Bridge Maintenance

Illinois Funds 07/01/98 11,242.47 0.735 Citibank SDA 02/10/11 259,429.36 1.500 270,671.83

Western Corridor

Illinois Funds 06/30/01 38,535.00 0.735 CD with PMA 08/22/13 2,197,300.00 2,197,300.00 2,243,404.03 Citibank SDA 01/07/09 1,320.886.80 1.500 3,556,721.80 STATEMENT OF INVESTMENTS-VILLAGE As of Ma 31 2020

Investment Maturity Book Market Maturity Rate of Fund Date Date Value Value Value Interest Prairie Stone Capital

0.735 Illinois Funds 08/22/91 773,634.70 Chase Money Market 700,119.07 Citibank SCA 02/10/11 241 ,502.71 1 .715,256.48

Road Improvement

Illinois Funds 01/01/15 2,243,346.36 1.490 Chase Money Market 03/06/18 500,085.05 Citibank SDA 907 427.88 1.500 3,650,859.29

Capital Improvements

0.735 Illinois Funds 12/31/96 1,253.55 Citibank SDA 01/07/09 248 459.32 1.500 249,712.87

Capital Vehicle & Equipment

0.735 Illinois Funds 12131/96 23,432.74 Citibank SDA 01/07/09 71,252.77 1.500 94,685.51

Capital Replacement

0.735 Illinois Funds 02/01/98 3,311.37 Citibank SDA 11/07/08 328,422.21 1.500 331,733.58

Water and Sewer

0.735 Illinois Funds 09/30/86 10,241.40 1.500 Citibank SDA 11/07/08 245,116.34 Chase Money Mar1o::et 03/06/18 6,244,758.73 1.490 CD with PMA 500,000.00 500,000.00 507,941.37 7,000,116.47

Water and Sewer-2017 Bond Projects

1.500 Citibank SDA 09/13/17 1,821,822.11 CD with PMA 09/13/17 1,890,000.00 1,890,000.00 1,905,046.78 3,711,822.11

Water and Sewer-2019 Bond Projects

1.500 Citibank SDA 09/13/17 4,721,638.70

Sears Operating

Illinois Funds 2,566-45 Chase Money Mar1o::et 750,154.81 Citibank SDA 144,326.91 246,600.00 252,045.19 CD with PMA 246,600.00 1,143,648.17 STATEMENT OF INVESTMENTS-VILLAGE As of Ma 31 2020

Investment Maturity Book Market Maturity Rate of Interest Fund Date Date Value Value Value Sears Centre

H.E. Community Bank-MaxSafe 223,781.59 223,781.59

Insurance 0.735 Illinois Funds ·11/10/87 16,426.80 1.500 Citibank SDA 11/07/08 1,164,095.02 0.375 CD with PMA 08/22/13 993,200.00 993,200.00 1,012,031.75 2,173,723.82

Information Systems

0.735 Illinois Funds 02/01/98 81,044.46 CitibankSDA 11/07/08 611 028.46 692,072.92

EDA Special Tax Alloc.

Citibank SDA 11/07/08 5,475,746.20 Chase Money Mark.et 03/14/19 4,000,680.38 9,476,426.58

Roselle Road TIF

0.735 Illinois Funds 09/30/03 7,609.53 Chase Money Mark.et 1,000,170.10 1.500 Citibank SDA 11/07/08 114,965.21 1,122,744.84

BarrJ Hiqgins TIF

0.735 Illinois Funds 08/26/91 118,957.31 Chase Money Mark.et 200,034.02 318,991.33

2019 Captial Project Fund

1.500 Citibank SDA 09/13/17 1,644,241.54

Hig/Hassell TIF

Chase Money Mark.et 200,034.02

2016 G.O. Debt Serv.

Chase Money Mark.et 40,024.23

2018G.O. Debt Serv.

Chase Money Mark.et 275,114.85

Total Investments $ 65,164,939.70 STATEMENT OF INVESTMENTS-VILLAGE As of Ma 31 2020

Investment Maturity Book Market Maturity Rate of Interest Fund Date Date Value Value Value Percent Tot.al Invested Per Institution Invested

Illinois Funds 8,872,359.98 13.62 IMET 0.00 IMET Convenience Fund 2,860.05 0.00 Chase Money Market 15,557,718.61 23.87 CD with PMA 13,844,100.00 21.24 HE Community Bank-MaxSafe 223,781.59 0.34 Bank of New York Money Market 0.00 Citibank at PMA 26.664.119.47 40.92 $65,164,939.70 100.00

Total Invested Per Institution Excluding Percent all Trust and EDA Funds Invested

Illinois Funds 8,098,725.28 15.01 IMET 2,860.05 0.01 HE Community Bank-MaxSafe 223,781.59 0.41 Chase Money Market 10,856,919.16 20.12 CD with PMA 13,844,100.00 25.65 Citibank at PMA 20,946 870.56 38.81 $53,973,256.64 100.00

Total Invested Per Fund Total Investments - Operating Funds $44,579,344.61

Total Investments - Debt Service Funds $624,679.79

Total Investments - Trust Funds $0.00

Total Investments - Capital Projects Funds $19,960,915.30

Total Investments - All Funds $65,164,939.70 PMA CERTIFICATE OF DEPOSrTS May 31, 2020

Settlement Maturi!}:'. Cost Interest Rate GENERAL FUND Granite Community Bank/First NB of Cold Spring 06/25/19 05/24/20 244,800.00 2.100% Financial Federal Bank 06/25/19 06/24/20 244,400.00 2.250% 2.327% Bank 7 05/25/19 06/24/20 244,200.00 2.249% Premier Bank 06/25/19 05/24/20 244,400.00 22,200.00 2.330% Servisfi rst □an k 06/25/19 06/74/Jrl 2.220% BankofChina, NY 08/01/19 07/30/20 1,767,000.00 1.860% Bank of China, NY 10/03/19 10/01/20 1,750,000.00 Bank of China, NY 12/05/19 12/03/20 3,500,000.00 1.597% GENERAL FUND TOTALS: $ 8,017,000.00

WEnERNCORmDORFUND 2.330% Servisfirst Bank 06/25/19 06/24/20 222,000.00 Allegiance Bank Texas 06/25/19 06/24/20 244,400.00 2.239% 2.339% Newbank, NA 06/25/19 06/24/20 244,200.00 2.589% Sonabank 06/25/19 06/24/20 243,500.00 2.220% Bank of China, NY 08/01/19 07/30/20 493,200.00 Bank of China, NY 10/03/19 10/01/20 250,000.00 1.860% 1.597% Bank of China, NY 12/05/19 12/03/20 500,000.00 WESTERN CORRIDOR TOTALS: $ 2,197,300.00

WATER & SEWER FUND Bank of China, NY 12/05/19 12/03/20 500,000.00 1.597% WATER & SEWER TOTALS: $ 500,000.00

SEARS CENTRE FUND 2.220% Bank of China, NY 08/01/19 07/30/20 246,600.00 SEARS CENTRE TOTALS: $ 246,600.00

INSURANCE FUND 2.220% Bank of China, NY 08/01/19 07/30/20 493,200.00 1.597% Bank of China, NY 12/05/19 12/03/20 500,000.00 INSURANCE TOTALS $ 993,200.00

2017 BOND PROCEEDS FUND 1.601% Bank of China, NY 12/05/19 06/04/20 1,890,000.00 2017 BOND PROCEEDS TOTALS: $ 1,890,000.00

TOTAL: $ 13,844,100.00 OPERATING REPORT SUMMARY REVENUES Mav 31 2020

CURRENT MONTH YEAR-TO-DATE ANNUA L %ACTUAL BENCH- BUDGET A CTUAL BUDGET ACTUAL BUDGET TO BUDGET MARK General Fund

Property Taxes 50,000 28,608 10,004,51 0 6,028,547 16,314,510 37.0% Hotel Tax 110,417 37,036 552,083 300,456 1,325,000 22.7% Real Estate Transfer Tax 81,250 62,570 406,250 345,980 975,000 35.5% Home Rule Sales Tax 291 ,667 237,508 1,458,333 1,443,104 3,500,000 41.2% Telecommunications Tax 103,500 97,540 517,500 513,165 1,242,000 41 .3% Properly I ax - Fire 309,658 0,620 1,548,288 1,806,377 3,715,890 48.6% Property Tax - Police 362,825 9,728 1,814,125 2,030,1 53 4,353,900 46.6% Other Taxes 86,715 30,914 433,575 l88,822 1,040,580 27.8% Total Taxes 1,396,031 512,524 16,794,664 12,756,603 32.466,880 39.3%

BLisiness Licenses 40,000 119,1 91 270,000 216,258 370,000 58.4% Liquor Licenses 17,500 143,580 283,000 216.444 283,000 76.5% Building Permits 89,583 32,716 447,917 400,943 1,075,000 37.3% Other Licenses & Permits 1,125 74 5,625 672 13,500 5.0% Total Licenses & Permits 148,208 295,560 1,006,542 834,317 1,741 ,500 47.9%

Sales Tax 650,000 552,432 3,250,000 3,211 ,596 7,800,000 41.2% Local Use Tax 141,667 129,000 708,333 814,817 1,700,000 47.9% State Income Tax 456,250 523,208 2,281 ,250 2,385,621 5,475,000 43.6% Replacement Tax 17,825 42,093 89,125 158,394 2 13,900 74.1% Other Intergovernmental 41 ,426 16,531 207,129 280,657 497,110 56.5% Total Intergovernmental 1,307,168 1,263,264 6,535,838 6,851,085 15,686,010 43.7%

Engineering Fees 25,000 12,272 125,000 25,885 300,000 8.6% Ambulance Fees 141,667 92,952 708,333 685,740 1,700,000 40.3% Police Hireback 35,417 177,083 128,663 425,000 30.3% Lease Payments 62,850 60,978 314,250 317,940 754,200 42.2% Cable TV Fees 200,000 144,198 400,000 373,475 800,000 46.7% 4th of July Proceeds ( 1,550} (1,550) 950 950 87,750 1.1% Employee Payments 108,333 131 ,153 541,667 653,889 1,300,000 50.3% Hireback - Arena 15,479 77,396 66,822 185,750 36.0% Rental Inspection Fees 2,700 150,000 256,050 300,000 85.4% Other Charges for Services 75,292 78,086 376.458 386,762 903,500 42.8% Total Charges for Services 662,488 520,789 2,871 ,138 2,896,174 6,756,200 42.9%

Court Fines-County 15,000 21,663 75,000 37,901 180,000 21 .1% Ticket Fines-Village 31,350 6,208 156,750 120,917 376,200 32.1% Overweight Truck Fines 500 650 2,500 1,830 6,000 30.5% Red Light Camera Revenue 56,667 29,637 283,333 184,080 680,000 27.1% Local Debt Recovery 12.500 23,450 62,500 47,648 150,000 31 .8% Total Fines & Forfeits 116,01 7 81 ,608 580,083 392,376 1,392,200 28.2%

Total Investment Earnings 41 ,667 17,280 208,333 125,785 500,000 25.2%

Reimbu rs a/Recoveries 22,500 3,537 112,500 53,804 270,000 19.9% $.Barrington Fuel Reimbursement 2,500 714 12,500 11 ,035 30,000 36.8% ShaLJmbLJrg Twn Fuel Reimbursement 2,500 438 12,500 11,533 30,000 N/A Tollway Payments 833 4,167 5,400 10,000 54.0% Other MiscellaneoLJs 22,308 4,689 111,542 100,952 267,700 37.7% Total MiscellaneoLJs 50,642 9,378 253,208 182,725 607,700 30.1%

Total Operating Transfers In 25,000 40,185 125,000 205,141 300,000 68.4%

Total General Fund 3,7471219 2,740,589 28,374,806 24,244,207 59,450,490 40.8%1 41.7% OPERATING REPORT SUMMARY REVENUES Mav 31 2020

CURRENT MONTH YEAR-TO-DATE ANNUAL % ACTUAL BENCH- BUDGET ACTUAL BUDGET ACTUAL BUDGET TO BUDGET MARK Water & Sewer Fund Water Sales 1,604,333 1,432,353 8,021,667 7,372,672 19,252,000 38.3% Connection Fees 4,167 6,350 20,833 10,310 50,000 20.6% Cross Connection Fees 3,167 3,206 15,833 16,041 38,000 42.2% Penalties 8,333 (628) 41,667 32,025 100,000 32,0% Investment Earnings 5,000 1,108 25,000 17,773 60,000 29.6% Other Revenue Sources 8,833 3,263 44,1 67 49,869 106,000 47.0% Capital Projects 3,145 39.415 4,138,000 1.0% Total Water Fund 1,633,833 1,448,796 8,169,167 7,538,103 23,744,000 31 .7%! 4'1.7%

Motor Fuel Tax Fund 185,667 724,042 928,333 1,439,069 2,228,000 64.6% Community Dev. Block Grant Fund 24,792 123,958 297,500 0.0% Asset Seizure Fund 333 26,751 1,667 86,177 4,000 2154.4% Municipal Waste System Fund 250,646 279,220 1,253,229 1,274,205 3,007,750 42.4% Sears Centre Operating Fund 317,798 473,482 1,588,992 1,384,471 3,813,580 36.3% Sears Centre Activity Fund 925,773 108,347 4,628,867 1,355,235 11,109,280 12.2% Stormwater Management 90,583 45,297 452.917 226,343 1,087,000 20.8% Insurance Fund 135,656 125,162 678,279 630,182 1,627,870 38.7% Roselle Road TIF 25,417 77 127,083 102,122 305,000 33.5% Barrington/Higgins TIF 50,728 103 253,642 183,145 608,740 30.1% Lakewood Center TIF 22,475 112,375 2.550 269,700 0.9% Higgins/Hassell TIF 25,042 12 125,208 202,928 300,500 67.5% Information Systems 146,457 144,314 732.283 726,573 1,757,480 41.3% Total Spec Rev. & Int. Svc. Fund 2,201,367 1,926,808 11 ,006,833 7,613,000 26,416,400 28.8%

TOTAL OPERATING FUNDS 7.582,419 6,116.193 47,550,806 39,395,310 109,610.890 35.9%1 41 .7%

Sears EDA Gen Account NIA 201 5A & C G.O. Debt Service 794,565 794,565 796,172 796,172 3,504,740 22.7% 20158 G.O. Debt Service 15,550 15,550 15,550 15,550 121 ,600 0.0% 2016 G.O Debt Service 13,1 17 13,1 17 246,868 246,868 438,800 0.0% 2017A & B G.O. Debt Service 54,175 54,1 75 54.175 54,175 179,350 0.0% 2018 G.O. Debt Service 7,249 7,249 933,245 933,245 2,750,200 0.0% 2019 G.O. Debt Service 21.259 21 .259 136,700 15.6%

TOTAL DEBT SERV. FUNDS 884,656 905,914 2,046,009 2,067,268 7,131.390 29.0%1 41 .7%

Central Rd. Corridor Fund 50 9 250 98 600 16.3% Hoffman Blvd Bridge Maintenance 417 29 2,083 787 5,000 15.7% Western Corridor Fund 4,167 3,710 20,833 32,624 50,000 65.2% Prairie Stone Capital Fund 833 687 4.1 67 9,739 10,000 97.4% Central Area Rd. lmpr. Imp. Fee 3 82 0.0% Western Area Traffic lmpr. 1 17 NIA Western Area Traffic lmpr. Impact Fee 2 43 0.0% Capital Improvements Fund 177,300 162,235 886,500 1,084.287 2,127,600 51.0% Capital Vehicle & Equipment Fund 133,243 129,359 666,21 3 647,213 1,598,910 40.5% Capital Replacement Fund 58,750 58,368 293,750 292,686 705,000 41.5% 2015 Project Fund 146 5,325 N/A Road Improvement Fund 691 759 522,900 3,458.796 2,828,622 8,301,110 34.1%

TOTAL CAP. PROJECT FUNDS 1,066,518 877,449 5,332.592 4,901 ,523 12,798,220 38.3%1 41 .7%

Police Pension Fund 506,025 9,372,813 2,530,1 25 (8. 197,986) 6,072,300 -135.0% Fire Pension Fund 490,649 6,494,223 2,453,246 (3,814,219) 5,887,790 -64.8%

TOTAL TRUST FUNDS 996,674 15,867,036 4,983,371 (12,012,205) 11,960,090 -100.4%1 41 .7%

TOTAL ALL FUNDS 10,530,267 23,766,592 59,912,778 34,351 ,896 141 ,500,590 24.3%1 41 .7% OPERATING REPORT SUMMARY EXPENDITURES Mav 31 2020

CURRENT MONTH YEAR-TO-DATE ANNUAL BENCH- BUDGET ACTUAL BUDGET ACTUAL BUDGET % MARK General Fund General Admin. Legislative 32,229 41,263 161,146 157,689 386,750 40.8% Administration 57,086 46,502 285,429 277,852 685,030 40.6% Legal 46,284 34,194 231,421 122,184 555,410 22.0% '11.0% t-Ir1ance 98,205 84,525 481,025 473,588 1,154,460 39.8% Village Clerk 18,700 16,429 93,500 89,307 224,400 Human Resource Mgmt. 47,240 36,630 236,200 211,773 566,880 37.4% Communications 21,513 23,784 107,563 104,770 258,150 40.6% Cable TV 16,649 11,181 83,246 62,307 199,790 31 .2% Emergency Operations 7,168 10,714 35,838 52,204 86,010 60.7%

Total General Admin. 343,073 305,222 1,715,367 1,551,676 4,116,880 37 7%1 41.7%1

Police Department Administration 134,009 108,243 670,046 662,417 1,608,110 41 .2% Juvenile Investigations 47,516 28,508 237,579 270,462 570,190 47.4% Tactical 89,213 58,075 446,063 442,744 1,070,550 41 .4% Patrol and Response 968,991 653,555 4,844,954 4,973,690 11,627,890 42.8% Traffic 105,236 31,504 526,179 368,316 1,262,830 29.2% Investigations 126,937 78,140 634,683 590,125 1,523,240 38.7% Community Relations 1,131 5,654 1,855 13,570 13.7% Communications 58,678 47.860 293,392 287,161 704,140 40.8% Canine 16,551 11,006 82,754 81,535 198,610 41.1% 24.5% Special Services 16,628 83,138 48,798 199,530 38.2% Records 27,008 23,404 135,038 123,688 324,090 40.5% Administrative Services 82.758 73.722 413,792 402,454 993,100

Total Police 1,674,654 1,114,017 8,373,271 8,253,246 20,095,850 41.1%1 41 7%1

Fire Department Administration 92,874 76,662 464,371 457,763 1,114,490 4·1 .1% Public Education 6,079 2,801 30,396 26,148 72,950 35.8% Suppression 742,311 527,307 3,711,554 3,682,030 8,907,730 41.3% Erner. Med. Serv. 667,320 461,557 3,336,600 3,397,235 8,007,840 42.4% Prevention 50,415 24,313 252,075 195,342 604,980 32.3% Fire Stations 3,700 245 18,500 15,941 44,400 35.9%

Total Fire 1,562,699 1,092,884 7,813,496 7,774,459 18,752,390 41.5%1 41.7%1

Public Works Department Administration 32,779 29,743 163,896 161,455 393,350 41.0% 54.7% Snow/Ice Control 154,966 154,445 774,829 1,017,150 1,859,590 Pavement Maintenance 45,396 34,159 226,979 167,842 544,750 30.8% 27.7% Forestry 97,147 77,125 485,733 322,984 1,165,760 34.3% Facilities 105,836 95,998 529,179 435,578 1,270,030 33.9% Fleet Services 108,274 62,316 541,371 440,932 1,299,290 27.1% F.A.S.T. 15,598 10,427 77,988 50,659 187,170 36.0% Storm Sewers 12,623 14,104 63,113 54,580 151,470 Traffic Control 66,428 64,214 332,138 285,859 797,130 35.9%

Total Public Works 639,045 542,531 3,195,225 2,937,040 7,668,540 38.3%1 41.7%1 OPERATING REPORT SUMMARY EXPENDITURES Mav 31 2020

CURRENT MONTH YEAR-TO-DATE ANNUAL BENCH- BUDGET ACTUAL BUDGET ACTUAL BUDGET % MARK Development Services 39.1% Administration 33,518 29,871 167,588 157,396 402,210 Planning 51,599 24,857 257,996 149,501 619,190 24.1% Code Enforcement 134,757 119,812 673,783 645,326 1,617,080 39.9% Transportation & Engineering 114,843 100,583 574,213 532,251 1,378,110 38.6% Economic Development 131,362 2:l,455 656,808 159,344 1,576,3'10 10.1%

Total Development Services 466,078 298,579 2,330,388 1,643,818 5,592,931) 29.4%1 41 .7%1

Health & Human Services 64,041 56,420 320,204 310,676 768,490 40.4%1 41 .7%1

Miscellaneous 4th of July 7,500 7,500 8,961 8,961 155,070 5.8% Police & Fire Comm. 6,975 1,804 34,875 4,008 83,700 4.8% Misc. Boards & Comm. 20,178 7,979 100,888 46,361 242,130 19.1% Misc. Public Improvements 432,564 660,826 2,162,821 1,743,106 5,190,770 33.6%

Total Miscellaneous 467,217 678,109 2,307,544 1,802,436 5,671,670 31.8%1 41.7% 1

41.7% 1 Total General Fund 5,216,807 4,087,762 26,055,494 24,273,351 62,666,750 387%1

Water & Sewer Fund Water Department 1,116,739 1,009,938 5,583,696 5,133,884 13,400,870 38.3% Sewer Department 186,904 163,268 934,521 845,857 2,242,850 37.7% Billing Division 72,843 67,372 364,217 351 ,183 874,120 40.2% Debt Service Division N/A Capital Projects Division 7,675 7,675 14,398 14,398 3,908,320 0.4% 2015 Bond Capital Projects 65,625 65,625 73,708 73,708 421,250 17.5% 2017 Bond Capital Projects 164,908 164,908 250,342 250,342 1,913,120 13.1% 2018 Bond Capital Projects 123,819 123,819 123,819 123,819 247,640 50.0% 2019 Bond Capital Projects 349,329 349,329 3,382,127 3,382,127 622,530 543.3%

Total Water & Sewer 2,087,843 1,951,935 10,726,828 10,175,319 23,630,700 43.1%1 41 .7%1

41.9% Motor Fuel Tax 236,590 236,590 1,134,204 1,134,204 2,710,000 Community Dev. Block Grant Fund 297,500 0.0% Asset Seizure Fund 26,779 36,018 133,896 184,522 321,350 57.4% 35.0% Municipal Waste System 260,069 258,348 1,300,346 1,091,634 3,120,830 Sears Centre Operating Fund 329,174 882,515 1,645,871 1,129,924 3,950,090 28.6% 13.0% Sears Centre Activity Fund 925,773 171,399 4,628,867 1,448,383 11,109,280 Stormwater Management 88,679 7,075 443,396 7,075 1,064,150 0.7% 49.9% Insurance 148,459 87,812 742,296 888,484 1,781,510 36.5% Information Systems 183,957 326,997 919,783 805,020 2,207,480 0.0% Roselle Road TIF 76,250 381,250 915,000 Barrington/Higgins TIF 375 1,875 4,500 0.0% Lakewood Center TIF 22,425 112,125 2,550 269,100 0.9% 0.0% Higgins/Hassell TIF 404 2,021 4,850

TOTAL OPERATING FUNDS 9,603,585 8,046,452 48,228,251 41 ,140,465 114,053,090 36.1%1 41.7% !

201 SA G.0 . Debt Service 794,365 794,365 794,365 794,365 3,504,740 22.7% 2015 G.O. Debt Service 15,550 15,550 15,550 15,550 121,600 12.8% 2016 G.O. Debt Service 166,900 166,900 167,375 167,375 439,300 38.1% 2017A & B G.O. Debt Service 54.175 54,175 54,175 54,175 179,350 30.2% 2018 G.O. Debt Service 654,850 654,850 654,850 654,850 2,750,200 23.8% 2019 G.O. Debt Service 21,259 21 ,259 21,259 21 ,259 136,700 15.6%

TOTAL DEBT SERV FUNDS 1,707,099 1,707,099 1,707,574 1,707,574 7,131 ,890 23.9%1 41.7% ! OPERATING REPORT SUMMARY EXPENDITURES Mav 31 2020

CURRENT MONTH YEAR-TO-DATE ANNUAL BENCH- BUDGET ACTUAL BUDGET ACTUAL BUDGET % MARK

Western Corridor Fund 23,333 23,333 93,333 116,665 280,000 41.7% Hoffman Blvd Bridge Maintenance 4,333 21,667 52,000 0.0% Prairie Stone Capital Fund 123,125 279,302 615,625 348,392 1,477,500 23.6% Capital Improvements Fund ·182,763 120,833 913,813 609,695 2,193,150 27.8% Capital Vehicle & Equipment Fund 133,076 3,406 665,379 897,439 1,596,910 56.2% Capital Replacement Fund 4,000 20,000 15,000 48,000 31 .3% 2015 Project Fund 85,992 85,992 N/A Road Improvement Fund 731,759 55,619 3,658,796 85,867 8,781,110 1.0%

TOTAL CAP. PROJECT FUNDS 1,202,389 568.485 5,988,613 2.159.050 14,428,670 15.0%1 41.7%1

Police Pension Fund 571,451 593,296 2,857,254 2,940,977 6,857,410 42.9% Fire Pension Fund 517,438 565,496 2.587,192 2,643.681 6,209,260 42.6%

TOTAL TRUST FUNDS 1,088,889 1,158,792 5,444,446 5,584.658 13,066,670 42.7%1 41.7%1

TOTAL ALL FUNDS 13,601 ,962 11,480,826 61,368,883 50,591 ,748 148,680,320 34 . □% 1 41 .7%1 R2

2020 MAY MONTHLY REPORT

Contents Centro/Square Technologies/GovQA Monthly Review ...... 2

Training ...... 5

Meetings ...... 5

Geographic Information System Review...... 6

Training ...... 7

Meetings ...... 7

Technical Support, Hardware & Software Review ...... 8

Meetings ...... 9

Training ...... 9

Director Summary ...... 9

Total Work Orders by Priority by Month ...... 11 Completed Work Orders by Location ...... 11 Completed Work Orders by Month ...... 12 Printer Usage Report ...... 12

System and Data Functions ...... 13 Sentinel /PS Attack Report ...... 13

Email Spam Report...... 14 Phishing Security Test Report ...... 15

IS Department Monthly Report Page 1 of 16 Centro/Square Technologies/GovQA Monthly Review

May Synopsis

• Primary focus remained on providing assistance to staff during the reduced staffing related to the Illinois Stay at Home Order and to work with CentralSquare to resolve issues that arose for our staff. • Performed final testing on the fixes installed by CentratSquare to fix all the components of meter data recording for field length. • Our payment processor, FirstBilling, implemented a number of changes to their website and payment reporting process to staff that created a lot of balancing issues for Finance Department Staff. Provided assistance to them to determine what actually was paid through eGov so that we could ensure that the payments were credited accurately. • Training was requested for Development Services staff for the week we return to Village Hall, prompting an analysis of access required for the 12 people involved in the training and setting up a training plan. • Smart Meter Project Planning continued during the weekly status meetings with Siemens, PMI, and Village Staff. • Continued testing and report-writing in the Cognos Analytics 11 workspace recently finalized by CentralSquare.

CentralSquare/GovQA Support Cases

• Provided CST Support with information regarding the new report required for Quarterly Wages to the State of Illinois. • Request new CST accounts for new users and removal for several terminated users. • Open and closed case to remove a retired user. • Open and closed case to add reset a user's password. • Open and closed case to add two new Fire Department Users. • Created SQL script to update RRL License Deadline date. • Closed case related to ELR issue with a Needs Correction Type is canceled, the fix was completed in the 5.2 version of FP. • Create SQL script to remove the 6/09/2020 deadline date for the remaining 290 Interior Only Inspections that have not been completed as these will be done towards the end of the year. • Create SQL script to update the RRL License Deadline date to July 1st for 100 Interior Only Licenses that had failed their inspections informing them about the new process of completing interior inspections.

IS Department Monthly Report Page 2 of 16 • Create two SQL scripts to closed nonrenewable Business Licenses and General Contractor Licenses. • Worked extensively with CentralSquare to determine the issue with eGov payments not posting back. After several hours, FirstBilling revealed they had made a change the previous Thursday night that caused the problem for three days starting Friday and continuing into Monday. We were not notified in advance of any change on their website.

Project Activities

• Tested fixes installed by CST staff for differences in the field lengths of the Meter ID field between the Swap Meter utility, the Change Meter ID utility, and the cubmeter table to ensure consistency across the application. • Had several conversations regarding how to set the blackout dates for meter changes during the time we are reading consumption for monthly billing. • Continued working with UB staff on documents related to working with the Smart Meters. • Worked on the project plan for Community Development implementation. This was necessary because four different versions were given to us by Central Square and the obsolete items needed to be removed and replaced with the actual events that had occurred or will be occurring. • Tested Cognos 11. • Took several CentralSquare U courses for Community Development (TRAKiT).

Work Orders

• Made changes to Cognos Scheduled reports for staff changes at PW. • Assisted staff with new user account access for Neptune 360, which is used to upload UB account information. • Added new Permit Type for Outdoor Dining. • Research eGov payment process for Business License fees when a Tax Credit is on the account and found that that credit has to be applied first. • Provided assistance for daily lockbox process where staff had imported the incorrect file. • Several account issues were discovered during the implementation of the Vl.4 Neptune interface and we worked with UB staff to determine how to resolve them. • Assisted PW staff with password reset. • Changed workflow for PW requests due to staff return from leave. • Provided assistance with password reset for Mayor's staff. • Due to connectivity issues, processed the payroll for General Government and Legal staff and provided reports to General Government to complete the process.

IS Department Monthly Report Page 3 of 16 • Created SQL script to update RRL License Deadline date. • Create two SQL scripts to closed nonrenewable Business Licenses and General Contractor Licenses. • Apply tax credit to a license fee owed. • Update PIN per Development Services. • Add four locations per Fire Administration. • Address issue with address on a Business License and locations table. Address was fixed on License per Development Services and Clerk's office. • Adjust two credits on two Business Licenses. • Assisted user in Finance with a Miscellaneous Billing Report. • Apply RRL Penalties. • Researched credit created by entering an overpayment for business license and determined what was needed to bring everything back in balance. • Added several new Citation Codes. • Added two new Fire Department Employees to PLUS to process Requisitions. • Assisted User with Login Info. • Removed retired user for PLUS and GovQA. • Assisted user to reset PLUS password. • Worked with Finance to set up new Fire Personnel having Department in Purchasing and Requisitions. • Researched cause of email bounce back in GovQA for a customer on a FOIA request for FOIA officers. • Assisted staff with Cash Receipt adjustments made in error. • Fixed RRL data that was incorrect due to an incorrect adjustment made. • Assisted user with adding Alarm Events. • Purged old batches in CommunityPLUS. • Fixed Zip Codes in CommunityPLUS in order to provide High-Low Address information for DACRA. • Completed and finalized seven different Cognos Letters to inform the different RRL groups based on current inspections dates and if they were INTEXT or INT only Licenses on how inspections are to be performed due to COVID-19. This required sending Centra1Square two scripts to update the deadline date due to these required COVID-19 changes. • Updated Event Studio reports to be sent to Fire Ad min Marketing Analysis.

Administration

• Prepared weekly work from home status reports. • Prepared monthly report. • Processed Payroll for department employees on 5/4/2020 and 5/18/2020.

IS Department Monthly Report Page 4 of 16 • Reviewed FinancePLUS security in preparation for training staff and had several staff added during the process. Also streamlined Roles in FinancePLUS to provide efficiency in assigning access in the future.

Training

• Developed FinancePLUS training plan for Development Services staff. • Provided training to Finance Department staff on how to open a text file in Excel to be able to perform calculations.

Meetings

• Attended GovQA Webinar. • Showed Rental Supervisor how to log into Cognos 11 and run reports. Employee tested them out and gave feedback. • Tested GoToMeeting.

IS Department Monthly Report Page 5 of 16 Geographic Information System Review __.:::::::::::::::=:::::::::::======::::::=::

May Synopsis

• Village Plat Digitization: 6 subdivisions and 4 right-of-way were digitized this month. This work required the modification of 512 parcels and the digitization of 499 survey lines. Below is an example of an inaccurale subdivision boundary that will be corrected in this process.

• Community Plus: The display map service was sent to Dan Haynes at the beginning of the month. This service will populate the visual map interface. • Cook County Municipal G/S meeting: Municipal employees discussed their inability to acquire property owner names in bulk from the Assessor1 s office. County GIS staff stated that it was a process they were attempting to work out. It is unlikely we will be able to acquire this information from the County for use in Community Plus. We1 II need to explore alternative means to enter this data. The County GIS staff inquired whether municipalities coutd assist with QA/QC with new elevation contours. I'll be coordinating this effort with the Engineering Dept.

Work Orders

• Webmap Request: start display map service (Central Square) • Map Request: utilities at Lakewood & Barrington for Jacob & Hefner (DS-TE) • Map Request: utilities at Golf & Roselle for Fullerton Engineering (PW} • Map Request: zoning wall map (05-P) • Map Request: fiber at Hassell Rd for Ledcor/MCI (DS-TE) • Map Request: storm sewer at Freeman Ct {DS-TE)

IS Department Monthly Report Page 6 of 16 • Data Request: zoning layer (Cook County) • Data Request: storm sewer at Canterbury Ln (OS-TE) • Data Request: streetlight coordinates (PW)

Administration

• Weekly & Monthly reports • Owner name use case follow up for Cook County • Cook County elevation contour OA/QC

Training

• N/A

Meetings

• Cook County M unicipal GIS (5/29)

1S Department Monthly Report Page 7 of 16 Technical Support, Hardware & Software Review

Project Activities

Project- Covid19

• With the disruption to the normal business, I.S. Staff continues to support users working rernulely. Furthermore, I.S. Staff continues to support infrastructure thilt is altered to better cater the needs of the remote users. In preparation to resume normal business, I.S. Staff relocated multiple computer workstations in order to adhere to the new social distancing rules.

Project - EOC Laptops

• Due to budgetary constraints and inability to replace aged EOC laptops, 1.5. Staff purchased new SSD hard drives. The new hardware was installed and configured in order to refresh the old laptops. The SSD drives greatly improved speed and usability of the old laptops.

Project - Sears Centre Wireless RFP

• I.S. Staff continued working on the,RFP designed to replace all wireless access points at the Sears Centre Arena. During the month of May, 1.5. Staff conducted a pre-RFP meeting and received vendor proposals for review.

Project - Security and Other Updates

• 1.5. Staff continues monitor and update Windows Servers with patches, updates and other security installations. • I.S. Staff continues to update and monitor anti-virus system to ensure at most reliability and safety. • 1.5. Staff continues to monitor and adjust if necessary all of our backup jobs. • 1.5. Staff updated and reorganized our network documentation in order to reflect new changes. • LS. Staff continues to deploy KnowBe4 email campaign.

15 Department Monthly Report Page 8 of 16 • LS. Staff relocated existing access point in Vehicle Maintenance facility in order to improve WiFi coverage. • 1.5. Staff configured new Kiosk computer for use at the Police Department. • 1.5 Staff continues communication with Panasonic about on-going audio issues with our Arbitrator System.

Meetings

• 1.5. Staff attended NWCD CAD IT conference call.

Training

• I.S. Staff conducted three new user orientation meetings for our new employees.

Technical Support, Hardware & Software Activities

• I.S. Staff deployed new spam and phishing campaign to atl Village employees. This campaign and training started on ...... • Applied necessary software updates as needed. • 176 Help desk requests were opened during the month of May. • 168 Help desk requests were closed during the month of May. • Self Service Password Resets or Account Unlocks: 4 • Email passwords reset: 0 • SunGard passwords reset: 3 • Voicemail passwords reset: 2 • User accounts unlocked: 6 • Active Directory Password Resets: 2

Director Summary

• Covid - 19 conference calls with the EOC team were scaled back to MWF

• Physical Workspace Group meetings, review of spacing issues for staff returning to work and policy review for employee screenings when they do return to work

IS Department Monthly Report Page 9 of 16 • Sears Center Wireless RFP release

• Call with Call One to identify analog/pots lines still in use within the Village

• Teleconference meetings were held throughout the month with the leads of each of the I.S. Departments divisions

o Project progress

o Division Goals Review

• Monthly MS-ISAC/EI-ISAC conference call.

IS Department Monthly Report Page 10 of 16 Total Work Orders by Priority by Month

Month May

1-Normal 145

2- High 7

3- Urgent 1

Project 2

Scheduled Event 13

Vendor intervention required 8

Total for Month 176

Completed Work Orders by Location

120

100

80

60

40

20

0 Village Hall Fire Police Public Works

IS Department Monthly Report Page 11 of 16 Completed Work Orders by Month

• 50

lOC•

SC

Printer Usage Report ---======:ieii!iiEa!!ll!!!!:Sal!SZ!!3?iii!!i!!!!!!:~

In the month of May there were 40311 pages printed across the village. The following graph breaks down printer usage by department.

PAGES PRINTED Public Works Clerk's Office 8% Police 13% Development ,/ Services !.9% -..._ / IS Depart'."T.ent _ 10%

1'% \ I HRM \ 7% I Health & Genera Human Service!G6vernmenf ire 3% 6% 7%

IS Department Monthly Report Page 12 of 16 System and Data Functions

Disk Usage

c:: Firehouse

@ Beast 4500 ser Data. 1359.3 lil ID Networks 4000 ■ GIS 3500 lll'l User Data aiooo De1:1artmel'ilts ~500 J!IP tea ton ~ODO partments, 2963.9 vi 1500 1000

500 - pplicatieA, 60.4 0 User, Department and Application files GIS Publicsafety SQL

Sentinel JPS Attack Report

External parties attacked the Village network 239947 times during the month of May Attack Volume with 5 Most Active IP Addresses

15k • 185.156.73.52. • 185.176.27.174 • 193.202.45.202 • 83.97.20.35 Ji, 92.111.234.194 • All Oilier.,

101< "'E . - - -,.,;; - ~ ---- - ~ -· - - ~ ------~-:.-~ : 0= :,. 5k

~- ~-~ - - ... 0

IS Department Monthly Report Page 13 of 16 .Email Spam. Beport

Email Percent Month Recei~ed Spam Spam January 142,032 66,118 47% February 156,829 65,958 42% March 136,810 52,307 38% April 161,711 63,774 39% May 172,442 61,874 36% June 0% July 0% August 0% September 0% October 0% November 0% December 0% Total 769,824 310,031 40%

200,000 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0

iii-iiiiiii Email Received ·Spam

IS Department Monthly Report Page 14 of 16 Phishing Security Test Report

l

Campaign: Monthly Test

Groups: AU users

f+J Statistics - -

2.9% 348 2 1 0 Q 6 ------Clicks Attacbmen1 [) pened Dala Euteroo Other failures ----Bounces ..! Recipients

Clicks by day

2

05/01/2020 05/05/2020 05/08/2020 05/14/2020 05/18/2020 05/21/2020 05/22/2020 05/26/2020

Phishing. Email St:ul

Phishing email was sent to 348 recipie11ts. Each recipient received a different email. Go to this Phishing Security Test's ~ page lo see which user received which email.

15 Department Monthly Report Page 15 of 16 Phishing

See more phishing reports Phishing Security Tests - Last 6 Months lnduslry Benehmal1< Dala CT) ,, ------YOUR LAST PHISK-PRONE% 3.6% INDUSTRY PHISrl-PRONE% 4.2%

ll1Uu:sUy:

Company Size: IMedium (250-1000 users) " I "" Program Matu~ty: li..:1...:Y'--=e=ar'-----______v...:1 • Clid

Fred Besenhoffer, Director of Information Systems

IS Department Monthly Report Page 16 of 16 R3 VILLAGE OF HOFFMAN ESTATES Memo TO: Finance Committee FROM: Mark Koplin, Owner's Representative-Sears Centre Arena RF,: OWNER'S REPRESENTATIVE MONTHLY REPORT JUNE2020

DATE: June 19, 2020

1. Working with Ben Gibbs on the response plan to the COVID-19, including staffing levels, measures for reopening, event postponements and rescheduling, and cash flow.

2. Coordination with Public Works regarding the new western area storage building sited on the SCA property.

3. Working with Assistant Corporation Counsel and SCA staff regarding the applicability of the new State Parking Excise Tax.

4. Working with SCA and Levy staff on changes and startup for the 2020 Beer Garden. With the Governor lifting some of the restrictions, the Beer Garden opened on June 5, complying with the CDC recommendations. The first two weekends were very successful.

5. Working with Ben Gibbs, Patricia Cross, and School District U-46 on a revised License Agreement for holding graduations at the SCA.

6. Due to cash flow, several capital projects are on hold for the foreseeable future and potentially into 2021.

7. Monitoring the Sears Holdings situation as it relates to the naming rights.

8. Conducted bi-weekly meetings with Public Works Facilities and SCA staff regarding building items.

9. Submitted Capital Improvement Plan project sheets for consideration in the 2021-28 CIP.

10. Conducted weekly phone calls with Ben Gibbs to discuss bookings, holds, operational items, and event coordination.

~~ . Mark Kopli~ ~ Owner's Representative, Sears Centre Arena

Attachment MAK/kr cc: J. Norris, Ben Gibbs (Spectra) Sears Centre Arena General M anager Update June 2020

1-Ea;;vaae=n=t=H=ig~h=l=ig=h=t=-s------~Notes June 5, 6, 7 - Hideaway Brew Garden June 12, 13. 14 - Hideaway Brew Garden June 18, 19, 20, 2l - Hideaway Brew Garden June 26, 27 - 1)300 Outdoor Grnduation .June 26, 27, 28 - 1J 1dcaway Brew Garden

Finance Department General Arena finished April financials. Behind budget by $8,425 Buildlng tvent Revenue YTD: $496,166 Building Sponsor/Other Revenue YTD: $102,489 Monthly Financial Statement Building Expenses YTD: $941,804 Building Income YTD: ($343,149) vs. YTD Budget {$334,724)

Operations Department Implemented new cleaning and sanitizes protocols at beer garden. Received new cleaning General equipment including electrostatic sprayers. Positions to Fill N/A Third Party Providers N/A Village Support New storage facility is nearing completion.

Events Department

General Staff working with graduation for end of June and Ju ly. Managing live events at beer garden. Positions to Fill Event Coordinator position will remain open.

Marketin De artment

Completing annual report and transitioning customer database from Paciolan to Tlcketmaster. General Working with some event concepts that can occur while maintaining social distance. Positions to Fill N/A

Group Sales Department General Group sales will be handled by a third party company.

Box Office Department looking into adding Archtlcs t o Ticketmaster account, which would add furt her functlonalltv to system. This would General benefit tenant team and suiteholders.

Food & Beverage Department General Operating at Hideaway Brew Garden

Premium Seating Department General Working on NR partnership Positions to Fill N/A

S onsorshi De artment General Concentrating on unsold categories including insurance and liquor Corporate Sale5: $S2,266 Surtes Sales: $~9,707 Monthly Financial Statement