City Council Planning Sessions

1. City Council Planning Agenda Documents: 2016-01-11 CITY COUNCIL PLANNING AGENDA.PDF 2. City Council Planning Selection Of An Investment Consultant Ps04 Documents: 2016-01-11 CITY COUNCIL PLANNING SELECTION OF AN INVESTMENT CONSULTANT PS04.PDF 3. City Council Planning Minutes Documents: 2016-01-11 CITY COUNCIL PLANNING MINUTES.PDF 4. City Council Planning EMS-Ambulance Service Fees Ps05 Documents: 2016-01-11 CITY COUNCIL PLANNING EMS-AMBULANCE SERVICE FEES PS05.PDF 5. City Council Planning Draft 2015-11-23 Minutes Ps02 Documents: 2016-01-11 CITY COUNCIL PLANNING DRAFT 2015-11-23 MINUTES PS02.PDF  WHEATON CITY COUNCIL PLANNING SESSION WHEATON CITY HALL – COUNCIL CHAMBERS 303 W. WESLEY STREET, WHEATON, ILLINOIS MONDAY, JANUARY 11, 2016 - 7:00 P.M. AGENDA I. Call to Order II. Approval of Minutes – November 23, 2015 III. Public Comment IV. Selection of an Investment Consultant – Marquette Associates, Inc. V. EMS/Ambulance Service Fees VI. City Council/Staff Comments VII. Adjournment During the Public Comment portion of the agenda, the presiding officer shall recognize any person requesting to be heard on any of the planning session agenda items only. Persons speaking during Public Comment shall not speak longer than three (3) minutes and shall be permitted to speak only once. Visitors must remain quiet and not engage in behavior that interferes with the Planning Session. The presiding officer may, or upon a majority vote of the council, request any visitor who violates any provision of this paragraph to leave the council chambers, and such visitor shall thereupon leave. Any person providing public comment shall address the presiding officer only and shall not proceed with remarks until recognized. When recognized, the person shall state his or her name and address. Cross floor discussions are prohibited. If a member of the City Council has questions of any person who has provided public comment, that person may address the specific question.  Robert R Lehnl]ordt Director of Finance Memorandum To: Honorable Mayor and City Council Date: January 5, 2016 Re: Selection of an Investment Consultant — Marquette Associates, Inc. Background The City issued a Request for Proposal (RFP) soliciting qualified firms to provide investment consulting services and portfolio performance monitoring services for the City’s operating funds. Challenges exist for the City’s investmeit portfolio with interest rates still near their 60- year lows. Short-term rates and real yields (yields after inflation) on some fixed income investments are close to zero. Asset allocation remains a primary driver of investment returns. Engaging the expertise of an investment consultant to assist with asset allocation will help to optimize the City’s investment returns. Scope of Services The City’s expectation of the investment consultant is to provide a recommendation of an investment strategy, in compliance with Illinois Compiled Statutes, to meet the City’s daily cash flow needs (liquidity), minimize risk (safety), and maximize earnings (return). The consultant will provide the following services: 1. Review of Current Investment Policy and Guidelines. The City Investment Policy was last updated in September, 2005. The investment consultant will provide initial and ongoing advice and technical support in the refinement of the investment policy objectives, goals and asset allocation parameters in order to comply with Federal and Illinois Compiled State Statutes and to maximize return on investment. 2. Selection of Investment Manager(s). The consultant will assist the City in selecting an investment manager(s), including but not limited to: a. Assist in the preparation of the Request for Proposal for these services. b. Review submitted proposals. c. Review qualifications of investment manager candidates. d. Arrange and participate in investment manager candidate interviews. e. Perform due diligence on investment managers under consideration. f. Assist with the final selection of investment manager. Page lof 3 3. Performance Monitoring and Evaluation of Investment Manager. The consultant will provide performance monitoring and evaluation of the external investment manager, including but not limited to: a. Implementation of investment strategy. b. Actual performance to benchmark(s). c. Adherence to investment management contract. d. Compliance with City’s investment policy. e. Organizational stability. f. Should underperformance be identified or anticipated within the portfolio, the investment consultant will recommend corrective action and participate in the implementation of the recommendation. 4. Performance Reporting of Investment Portfolio. The consultant will provide quarterly investment portfolio performance reports, including but not limited to: a. An analysis and summary of the most recent events in the financial markets. b. An analysis of the allocation of the City’s investments across asset classes and/or managers and changes in that allocation. c. A review of the investment results of manager(s), funds and asset classes in the context of their objectives and benchmarks, along with specific commentary on factors affecting performance. 5. Meeting attendance. Attend quarterly meetings with the Director of Finance and City staff to discuss portfolio performance and the investment program. Evaluation of Proposals The City received eight (8) proposals to the Request for Proposal (RFP). The proposals were evaluated based on the following criteria: 1. Qualifications of the Firm. The firm’s experience in managing investment portfolios for governmental institutions, including public funds in Illinois and the experience of the personnel that will be assigned to the City. 2. Approach. The firm’s investment management philosophy, strategies for adding value to portfolios and strategy for selecting investment managers. 3. Samples of Work. The firm’s reporting capabilities and types of reports that would be provided to the City. 4. Cost of Services and Fees. Based on the evaluation criteria and evaluation of the proposals, three (3) firms were selected for an interview: Marquette Associates, Inc., Graystone Consulting (a business of Morgan Stanley Smith Barney, LLC), and PFM Asset Management, [[C. Following the interview process, it was determined that Marquette Associates, Inc. and Graystone Consulting were both qualified and capable of providing the services requested. PFM Asset Management, [[C expressed their desire to be both the investment consultant and the investment manager for the City. Annual Firm Cost Graystone Consulting $ 29,500 Marquette Associates, Inc. $ 30,000 PFM Asset Management LLC $ 45,000 Page2of3 Recommendation Marquette Associates was the final selection based on: their sole focus as an independent investment consulting firm, familiarity with Illinois Compiled Statutes, and experience with Illinois public funds, including those of the City of Naperville and Wheaton Firefighters Pension Fund. At the January 11, 2016 Planning Session, Marquette Associates, Inc. will make a presentation on their proposal and answer any questions for the City Council. Page 3 of 3 Investment Stewardship Guidance fl sr MarquetteAssociates Paul Marchese, Assistant Vice President  M a rq u ette At a G lance Client Breakdown by Assets • Founded in 1986 High Net Worth (1%) Corporate (6%) V • Headquartered in Chicago • Over $128B under advisement As of September3a 2015 Taft-Hartley (29%) Nonprofit & Healthcare (20%) • 100% employee owned • Sole focus is investment consulting Public (44%) • 23rd largest consulting firm As of June 30, 2014 per P&/DaLIy Data as of 9/30/15 •r MarquetteAssociates City of Wheaton J December 11, 2015 2 Why Choose an Independent Consultant? • No broker/dealer • No soft dollars a No money management a No investment management database fees a No cross selling a No SEC issues 100% Independent Absence of Conflicts = Alignment of Interests 5 2 O CityofWbeat l onJDecernbe rfl I 3  We Provide Conflict-Free Advice “Is consulting your (or your affiliat&s) only No Yes source of revenue?” “Do you (or your affiliate) earn trading Yes No commissions?” “Do you (or your affiliate) get paid by outside Yes No managers?” “Are you (or your affiliate) tied to other Yes No service providers?” “Do you recommend your (or your affiliate’s) Yes No own investments?” Read the SECAD V forms City of Wheaton December 11, 2015 •r MarquetteAssociates  100% Conflict Free Advice 1 r MarquetteAssocates August 26, 201S City of Wheaton 303W. Wesley Street Wheaton, IL 60187 Re: Conflict of Interest Disclosure To the City Council of Wheatori: V\/e vv i II si g n a I ette r Recently there has been much discussion of potential conflicts of interest created by investment consulting firms and their affiliated parties accepting fees, in hard or • soft dollars, from investment management firms. The concern is that accepting a consulting firm’s independence when rev e n u e d i Sc I cs u re A key element of Marquette’s consulting philosophy is to only accept money from our clients. We do not have a Broker/Dealer, do not accept soft dollars, do not receive investment manager database fees, and do not receive investment fees. 100% of our revenue is derived from our investment • U n I q u e I n t H e I n d u St ry We welcome the increased scrutiny that is being focused on the consultant community. It is our hope that clients will recognize trust is more easily achieved when an organization is acting solely in the best interest of its clients, and its source of revenue reflects that. It is also our hope that consultants are forced to . disclose, in detail, these additional sources of revenue so clients can more easily • Nc i e n re ye n ii e judge their consultant’s “objectivity”. We have and will continue to provide completely objective investment advice to each of our clients bated on their unique circumstances. We believe this type of advice and service is valued at a premium in the marketplace. As always, we appreciate your trust in us and greatly value our relationship. If you have any additional questions, please feel free to contact me, Sincerely, Brian Wrubel President & CEO I. T City of Wheaton December 11, 2015 5 •r MarquetteAssociates  Differentiating Factors • True independent consultant providing conflict free advice • Familiarity with Illinois compiled statutes • Stability and depth of professional team • Client-focused internal culture • Accessibility to firm-wide resources • Rigorous, thoughtful & timely research • Transparent, clear, and detailed reporting MarquetteAssociates City of Wheaton December 11, 2015  Clients Come First City of Wheaton December 11, 2015 •r MarquetteAssociates  Public Clients City of Kirkwood (1989) Municipal Employees of Chicago (2008) Denver Regional Transportation District (1991) Rockford Firefighters (2008) Champaign Firefighters (1997) Milwaukee County (2009) Peoria Police (1998) City of Naperville (2010) Franklin Park Firefighters (1999) Illinois College Savings Pools (2010) Rockford Police (1999) Springfield Police & Firefighters (2010) Elgin Police (2000) Aurora Firefighters (2011) Freeport Firefighters (2000) Aurora Police (2011) Orland Firefighters (2000) Pittsburgh Comprehensive Municipal (2011) Elgin Firefighters (2002) Wheaton Firefighters (2011) Oak Park Firefighters (2002) Elk Grove Firefighters (2013) Downers Grove Firefighters (2003) Elk Grove Police (2013) Downers Grove Police (2003) Illinois Education Association (2013) Rolling Meadows Police (2003) Illinois International Port District (2013) Waukegan Firefighters (2003) Metropolitan Pier & Exposition Authority (201 3) Waukegan Police (2003) Pontiac Police & Fire (2013) Intergovernmental Risk Management Agency (2004) Village of Rosemont (2013) Arlington Heights Firefighters (2006) Chicago Heights Police & Fire (2014) Cincinnati Retirement (2006) Chicago Transit Authority (2014) Freeport Police (2006) Metropolitan Water Reclamation District of Chicago (2014) Lake Forest Police (2006) City of Elgin (2014) Naperville Firefighters (2006) Joliet Police (2015) Naperville Police (2006) Metropolitan Transit Authority of Harris County (201 5) Fort Wayne Regional Transportation (2006) Milwaukee County Transit System (2015) Park Employees of Chicago (2007) Orland Police (2015) City of Baltimore (2008) Park Ridge Firefighters (2015) It L not known whether the //5tecl clients approve or &approve of the servies pro vic/ecl Marquette Associates Inc. City of Wheaton December 11, 2015 8 •r MarquetteAssociates  __ How We Serve Our Clients 30% Women, 23% Minority LEADERSHIP . Brian Wrubel Tim Fallen, CIMA® Tim Burdick, CFA Brett Christensen, CFA, CFP Karissa McDaniel President & CEO Managing Director Managing Director Managing Director Chief Operating Officer CONSULTING Consultants I Analysts Neil Capps Uli Park lmran Zahid Brian Wrubel Tim Fallon, CIMA® Tim Burdick, CFA Tom Latzke Stephanie Beranek Alex G. Fisher Lynnette Keller Brett Christenson, CFA, CFP Glenn Ross Mary Mussett Sharon Trask Nichole Roman-Bhatty, CIMA® Tim Hamann Brian Goding Mike Ni Jose Sanchez Ryan Marks Miguel Zarate Doug Oest, CAIA David Smith, CFA Jesus Jimenez Lisbet Salinas Matt Martin James Weaner, CFA Mike Piotrowski, CAIA Kweku Obed, CFA, CAIA Colleen Hyland Alberto Rivera Michael Maldonado Tom Salemy, CFA, CAIA David Wernecke Chris Caparelli, CFA Ross Williams Rogan Quinn Jessica Shamshura Paul Marchese Mike Spychalski, CAIA Eric Gaylord, CFA Adam Melone Adrian Pyk Matt Anderson RESEARCH OPERATIONS Karlssa McDaniel - Tim Hamann Greg Leorilserg.r, FSA. EA, MAAA P KelilSchrad., CMA Chief Operating Officer Chef Compliance Officer Director of Research Director of Manager Search Nat Kellogg, CFA Jeremy Dubin Hanan Hines Rita Cirullo Associate Director of Research Director of Finance & Human Resources Executive Assistant to the Accounting Manager President Ben Mohr CFA David Hemandez Olu Rosanwo, CAIA Gustavo Rodriguez Courtney Hugger Nicole Buttron Fixed Income International Equities Real Assets Staff Accountant Marketing Operations Executive Assistant Rob Britenbach, CIPM Jeremy Zirin, CAIA Jeff Hoffmeyer Manager U.S. Equities Alternatives Asset Allocation Chris Dufour Administrative Assistants Applications Architect Melissa Gyurcsik Donise Reitz Julianna Paterra Jeff Lynch Jil Froelich Marketing Operations Courtney Cox Real Estate Real Estate YJT Solutions Coordinator Staci Washington Data Analyst (Outsourced IT) Clare Vernon City of Wheaton December 11, 2015 ir MarquetteAssociates  Consulting Team Primary Consulting Team Collaborate, monitor portfoiio, lead projects, attend meetings, and respond to requests Paul Marchese (Consultant) Doug Oest, CAIA (Consultant) Michael Ni (Client Analyst) Investment Committee Research Department Consultants and research analysts collaborate Traditional investments Draw upon group’s broad experience Alternative investments City of Wheaton December 11, 2015 10 r MarquetteAssociates  Carefully Researched Guidance City of Wheaton December 11, 2015 11 r MarquetteAssociates  Marquette Associates Research Team Greg Leonberger, FSA, Kelli Schrade, CAIA Nat Kellogg, CFA EA, MAAA Director of Manager Research, Associate Director of Research Director of Research, Managing Partner Focus: Alternatives Managing Partner • BA. English, Kenyon College • B.A. History, Middlebury College • B.S. Mathematics & Economics, • M.B.A., Finance, University of North • M.B.A., Northwestern University University of Notre Dame , — Carolina Chapel Hill Kenan-Flagler J.L. Kellogg School of Management • M.B.A., Analytic Finance, Business School (In Progress) - University of Chicago Booth Ben Mohr, CFA David Hernandez Olu Rosanwo, CAIA Senior Research Analyst Senior Research Analyst Senior Research Analyst Focus: Fixed Income Focus: International Equity Focus: Real Assets • BA. Finance, DePaul University • BA. Economics, University of Chicago • B.S. Economics, C.l.T • M.B.A., Financial Analysis, M.B.A. Analytic Finance, University of • M.B.A, Finance & Accounting, - Chicago Booth School of Business - University of Chicago Booth DePaul University Kellstadt School of Business Rob Britenbach, CIPM Jeremy Zirin, CAIA Jeff Hoffmeyer, CFA Research Analyst Research Analyst Asset Allocation Analyst Focus: U.S. Equity Focus: Alternatives • BA. Finance, Marquette University • B.S. Economics, University of • B.S. Finance, Northern Illinois • Passed all three levels of CFA Illinois at Chicago University Exam and completing work • MS. Economics, University of experience requirement Illinois at Urbana-Champaign Julianna Paterra Jeff Lynch Jil Froelich Research Data Analyst Focus: Real Estate Advisory Focus: Real Estate Advisory • Over 25 years of industry • Over 20 years industry experience • B.S. Molecular Genetics with a experience • Specializes in project minor in Business, The Ohio management of real estate • Background includes State University commercial, institutional, development projects across hospitality, industrial, and retail multiple industries real estate projects nationwide BK City of Wheaton December 11,2015 12 •r MarquetteAssoCiates  Marquette’s Research Process CLIENT INDEPENDENT ASSET CLASS INVESTMENT INVESTMENT RESEARCH REVIEWS MANAGERS PORTFOLIOS Macroeconomic Risk/Return 4 Phase Review Constructing Characteristics successful Regional Ongoing Due portfolios Constraints Diligence Asset Class Managing Risk Level Opportunities Opportunity to Parameters add Value Investment Delivering Style Results City of Wheaton December 11, 2015 13 • MarquetteAssociates  Research Committees Capital markets research and trends Investment • Impact on asset allocation Committee • Evaluates and selects the best managers in: - U.S. equities Traditional Investment - Non-U.S equities Committee - Fixed income • Evaluates and selects the best managers in: Alternative - Hedge Funds - Private Equity Investment Cornmittee - Real Estate - Infrastructure City of Wheaton December 11, 2015 14 •r MarquetteAssociates  A Thorough Process Initial Quantitative Document Full Firm Ongoing Evaluation Review Review Evaluation Due Diligence II G I’ II — Product viability and relevance 1. Initial evaluation — Risk/reward measures, fees 2. Quantitative review — From RFIs to SEC letters 3. Document review — Including on-site visits 4. Full firm evaluation — Quarterly reviews, etc 5. On-going due diligence Cit; of Wheato ecernber 11; 2015 15 P MarquetteAssociates  Manager Meetings by Asset Class Average of 9 meetings per business day 2014 Totals U 1 S Equity Fixed Income IL 259 International Equity 166 Hedge Fund Private Equity 255 Real Assets 131 Misceflaneous Total 1811 On-Sites 103 I. City of Wheaton December 11, 2015 16 •r MarquetteAssociates  A Well-Documented Process ‘ Product Info ub Advised Pen ding Save oF Updated Record ID:2O79 1 -U Save Product In1oEditing Product 5 — _ . Product Name: F’iI,hLIrst Intitutionil Ltd. Product Vehicles: +Add !4ew dit elete Fees Manager: Coibin Capital VehicleType Name1icker/Description Lead Analyst: ogg, Nat Strategy: Active Limited Partners... Pinehurst Partners, IP. Limited Partners,,. Pinehurstlnstitutional Ltd. Class B Backup Analyst: Zirin, Jeremy Inception Date: 01.01.2002 Limited Partners... Pinehurstlnstitutional Ltd. Class c Asset Class: Hedge Fund of Fund- Mu[tr-Strate Auditor: PricewaterhouseCoopes Sub Style: sn Ast Ciss Sub Sty/e Administrator: State Street Bank & Trust Fund Type: Open-End Fund Custodian: Firm-wide communication on li-End Fundi Legal Counsel; -----z ‘Nih i Farr & Gallaçjh.r LLP iIJS1 Pioduc research-backed opinions ktoupd Dynamically tracks Fd1 Seardi Eligible: Yes 2J13J2012 multiple Due Diligence phases Alert Status: Jn-Coinphance 112812013 End Fund) Analyst Ranking: Analyst Pick 81912012 Due Diligence: 512312011 [Phase 2 Passed 5/2312_j Phase 3 Passed 6/30/2011 Phase passed 2/13/2012 jommendatIon Complete Executive Sum ! ProductUpdates Documents Statements ProductPenodicData VehiclePernodicDat AnalystOpinron ,QAdd Update ..yiew/Edit Update Print by Type Print Selected - - - Update Type - Meeting Type UpdateDueoate Date Completed Analyst Email - Letter FIRM UPDATE Email n/a 03/05/2013 Kellogg, Nat - mail Letter Email n.a 02/26/2013 Kellogg, Nat Extensive nderlyinçj Investments At Marquette na 02125/2013 Kellogg, Nat historical lient Meeting Client Meeting na OZ[19.’2013 Burdick, ]im research mail - Letter Email n/a 02113/2013 Kellogg, Nat retained cc Check By Phone n/a 01.2412013 Kellogg, Nat eneral By Phone n/a 01/24/2013 Zirin, Jeremy and At Marquette n/a Zirin, Jeremy -. W1i04..2012 reviewed mail - Letter Email n/a 10/31/2012 Kellogg, Nat a. City of Wheaton December 11, 2015 17 r MarquetteAssociates  Client-Focused Research and Education • Accessibility of Research Team • White Papers • Position Papers • In vestment Perspectives • .,_ I. • Webinars I • ChartoftheWeek • Market Environments ; - • Annual Investment Symposium October 16, 2015 City of Wheaton Decemberll,2015 18 r MarquetteAssociates  Portfolio Structure City of Wheaton December 11, 2015 19 •r MarquetteAssociates  0 c%J LI) 0 O — C o 0 ] .1_i w C), .. .. — C .— o C a) -D U cr, CD .2 -H CD o 4_J CD -H L) C o CI) (1) ci) E >I (1) 0) CD • en - o 0 C CD ‘-I- CD CD > fJ) - CD Cl) Cl) U D C 0 0 U) ci) > U E Cj) o (I) C C U) U 0 (I) Cl) U) 1< -C S I I— V ‘S I • (I) -‘ m (n S S S - U) ifi cu -n 0 -‘ (1) CD I_i) — (1) 0 > ci E CD I! 0 - CD U) 2 U) -— 0 n Cl) c: 0 CD U, (0 CD Cr) U, -o CD -7-i. CD 0 n - -‘ I  Asset Allocation Controls Portfolio Risk Portfolio Return Variability (%) 4.0% 2.1% Asset Allocation Market Timing Security Selection Other Source: Gary P. Brinson, Brian D. Singer, and Gilbert L. Beebower, “Determinants of Portfolio Performance II: An Update,” Financial Analysts Journal, May/June 1991. I. City of Wheaton J December 11, 2015 j 22 ip MarquetteAssociates  Objectives for Operating Portfolio • Security of Principal — Achieving security means protecting the invested principal amount. • Liquidity — Achieving liquidity means placing an investment in an instrument which allows the investor access to some or all of the invested amount whenever necessary. • Yield — Maximizing yield means generating the greatest possible return on investment. City of Wheaton December 11, 2015 23 MarquetteAssociates J  I . I C) - — 0 0 CD Y2. U) 0 w C c CL) Cl) CD — —1 — U) 3 CD Ck) 4’- Cl) fl -‘ c—f- — i3 3 0 -D - i = U) CD CD U) 0 (0 tJ) I. I Three Point I nvest iii e nt Approach B. City of Wheaton December 11, 2015 25 • MarquetteAssociates  Three-Point investment Approach Risk Quality Cost Asset Allocation Investment Systems Review Fee Negotiation investment Policy Portfolio Monitoring Transition Oversight Client & Fiduciary Education Investment Manager Search City of Wheaton December 11, 2015 26 r MarquetteAssociates  Getting Started - Investment Systems Review Historical Analysis implementation 4 Diagnostic Review v’ Policies and Procedures 1 Observations 1 Define Priorities ‘ Cash Flow Derrar ds Recomrrendations .j Establish Schedule Performance Attribution , Strategic lnuestrrent Plan / Coordinate Transition ‘ Cost Assessment 4—6 weeks 2—3weeks 1—2 weeks Seamless transition, completely managed by our team City of Wheaton December 11, 2015 27 MarquetteAssociates J  Next Steps • Execute investment consulting contract • Determine cash flow needs • Conduct asset allocation study • Solicit bids for custody/banking • Approve asset allocation/draft investment policy guidelines • Perform investment manager search • Choose managers/implement target portfolio of Wheaton December 11, 2015 28 I, MarquetteAssociates  The sources of information used in this report are believed to be reliable. Marquette Associates, Inc. has not independently verified all of the information and its accuracy cannot be guaranteed. Opinions, estimates, projections and comments on financial market trends constitute our judgment and are subject to change without notice. References to specific securities are for illustrative purposes only and do not constitute recommendations. Past perFormance does not guarantee future results. About Marquette Associates Marquette Associates is an independent investment consulting firm that guides institutional investment programs with a focused three-point approach and careful research. For more than 25 — years Marquette has served this mission in close collaboration with clients enabling institutions to be more effective investment stewards. Marquette is a completely independent and 100% employee-owned consultancy founded with the sole purpose of advising institutions. For more information, please visit www.marquetteassociates.com. P MarquetteAssociates City of Wheaton T December 11, 2015 29  Biographies Paul Marchese, Assistant Vice President • Lead investment consultant on client relationships • OverlO years of industry experience • Focus on public fund and Taft-Hartley clients • Prior to Marquette, Analyst, The Northern Trust Company • B.S. Finance, Purdue University • M.S. Finance, University of Notre Dame Mendoza College of Business • Member, CFA Institute and CFA Society of Chicago • Member, Chicago Council on Global Affairs City of Wheaton December 11, 2015 30 MarquetteAssociates  MEMORANDUM TO: Record FROM: Susan Bishel, Public Relations Coordinator SUBJECT: Jan. 11, 2016 City Council Planning Session Minutes DATE: Jan. 12, 2016 CC: Mayor and City Council, City Manager, City Clerk, Department Heads The Planning Session took place in the Council Chambers, Wheaton City Hall, 303 W. Wesley St., Wheaton, Illinois. Those attending the Planning Session included: Mayor Gresk, Councilwoman Fitch, Councilman Prendiville, Councilman Rutledge, Councilman Saline, Councilman Scalzo and Councilman Suess. Also in attendance were City Manager Rose, Assistant City Manager Dzugan, Director of Finance Lehnhardt, Fire Chief Schultz, and Public Relations Coordinator Bishel. The session began at 7:01 p.m. and concluded at 8:15 p.m. The following items were discussed: I. Call to Order The Wheaton City Council Planning Session was called to order at 7:01 p.m. by Mayor Gresk. II. Approval of Nov. 23, 2015 Planning Session Minutes The Council approved the Nov. 23, 2015 Planning Session Minutes. III. Public Comment There were no public comments. IV. Selection of an Investment Consultant – Marquette Associates, Inc. Director of Finance Lehnhardt stated the City issued a request for proposal soliciting qualified firms to provide investment consulting and portfolio performance monitoring services for the City’s operating funds. The goal is to engage the expertise of an investment consultant to assist with asset allocation and optimizing the City’s investment returns. The scope of services for the consultant will include: 1) reviewing the current investment policy and guidelines, 2) helping the City select an investment manager(s), 3) monitoring and evaluating the performance of the investment manager, 4) reporting on the investment portfolio’s performance, and 5) attending meetings with City staff to discuss portfolio performance and investments. The City received eight proposals and evaluated the responses based on qualifications, approach, samples of work, and costs of services and fees. City staff selected three consultants for interviews and recommends the City select Marquette Associates based on their qualifications and familiarity with state statutes that apply to the City’s investments. In response to a Council question, Director of Finance Lehnhardt stated the investment consultant would have oversight of approximately $50-55 million. Paul Marchese of Marquette Associates made a presentation to the Council. Mr. Marchese stated the Chicago-based consulting firm has approximately 250 clients, 44% of which are public funds. The company oversees finances for municipalities including Naperville and Elgin and for the Wheaton Firefighters Union. In response to Council questions, Mr. Marchese stated the firm charges a flat retainer fee of $30,000 per year. Mr. Marchese stated the company has 68 employees, and the City would have direct access to the firm’s research department. He reviewed their process for selecting investment managers and the type of reporting they would provide. He stated their key objectives are security and liquidity. The consultant would work to find the greatest yield for the City without a lot of risk, and its focus would be on selecting investment managers that best meet the City’s needs. In response to a Council question about the type of gain the City could have made over the past year if it had used an investment consultant’s services, Mr. Marchese stated depending up on the City’s investments, he would have expected a gain of approximately 3%-4% over the past 5 years, compared with approximately 1.5%. In response to a Council question about how Marquette Associates holds the investment managers they select accountable, Mr. Marchese stated they are in frequent contact with managers, and if they are not performing to the level Marquette Associates expects, they have a four-step notification system ranging from putting managers on alert up to termination, if necessary. Mr. Marchese answered a Council question about investment managers by stating the City should have a minimum of two investment managers for risk and performance purposes, and each manager would manage $20 million. Mr. Marchese outlined what the next steps would be if Marquette is selected as an investment consultant. They would develop an investment management contract; determine the cash flow needs of the City and allocations over time; determine the type of return they might be able to expect over time; perform an investment manager search; and provide monitoring services. In response to a Council question, Mr. Marchese stated whenever there is a change in investment managers or allocations, Marquette would analyze the investment policy guidelines, which are always subject to the City Council’s approval. The City Council expressed interest in selecting Marquette Associates as an investment consultant. City Manager Rose stated City staff will prepare a contract for the Council’s formal consideration at an upcoming City Council meeting. V. EMS/Ambulance Service Fees 1/11/16 Planning Session 2 Assistant City Manager Dzugan stated the City last increased EMS/ambulance service rates in 2011, establishing a policy of collecting user fees equivalent to 70% of the City’s EMS program costs. The remaining portion of the program has been funded by the City’s General Fund. City staff sought the City Council’s direction as to whether it would like for the fees collected to cover 100% of the program’s costs. Such a change would make the program funding more like an enterprise fund, in which fees cover the total cost of a program or service. In response to questions about previous Council funding decisions, Assistant City Manager Dzugan stated the user fees previously only covered 50% of the program costs, so the City most likely selected the 70% funding level as a transition step from 50% to 100% funding through user fees. Fire Chief Schultz stated EMS/ambulance service billing is provided by Andres, a subcontractor of the EMS/ambulance service. In response to a Council question, Assistant City Manager Dzugan stated the amount the patient will be required to pay might or might not increase, depending upon their insurance. He stated that the amount that Medicare and Medicaid will reimburse the City for service will not change; the City writes off the amount it has to pay to make up the difference between what Medicare/Medicaid will pay the City and the established rate amount. Assistant City Manager Dzugan stated there are several other factors that also could affect the amount the City will receive in the future, such as the National Healthcare Act, which may reduce call volume. Assistant City Manager Dzugan stated currently the City’s General Fund is paying about $400,000 annually to fund EMS/ambulance services. City Council members expressed interest in moving toward having fees cover 100% of the program’s costs. City staff stated they would provide the Council with more information about different options using different scenarios. VI. City Council/Staff Comments There were no City Council/staff comments. VII. Adjournment The meeting was adjourned at 8:15 p.m. 1/11/16 Planning Session 3  e iriorandiirn ?IicI,aeI G. Assistant City Manager TO: The Honorable Mayor and City Council DATE: JANUARY 6, 2016 SUBJECT: EMS/AMBULANCE PROGRAM FEES OBJECTIVE In anticipation of evaluating current EMS/ambulance service rates (“Fees”), review to confirm or revise current policy established to set Fees Fees should raise sufficient revenue — to fund 70% of the City’s EMS program costs. The City last increased Fees in May 2011. HISTORY/BACKGROUND In 1986, the City initiated a City funded ambulance program. At the program’s initiation, Fees were established based upon costs, and surveying fees of other local municipalities and fire protection districts. At some point prior to 2011, a policy was established to capture 50% of the program’s cost through Fees. In a review of Fees in 2011, the City Council established a policy that Fees should fund 70% of the City’s EMS program costs. The 70% revenue/cost ratio was established at the time to move closer to having the EMS program be funded more like an enterprise fund which provides for fees or charges to cover the total cost of a program or service, e.g., water and sewer funds. The City, through contract, invoices users of the EMS services based upon the type of service delivered, plus a mileage amount for the distance to the hospital (payment is made only when transported). The Fee structure is different for residents and non-residents, with non- residents assessed a higher Fee. The resident/non-resident Fee differential is rooted in the concept that residents are funding 30% of the cost of thç EMS program through local taxes and therefclre shouldbe assessed a lesser Fee. There are also different Fees for the four types of medical service levels Advanced Life - Support (ALS), representing 60% of call volume; Basic Life Support (BLS), representing 22% of call volume; Non-Transport/Refusals, representing 16% of call volume; and Advanced Life Support II (ALS II) representing 1% of call volume. These four types of service levels match the Medicare/Medicaid Fee Schedule used by the federal government and insurance companies. Fee Pay Source Distribution Pay Sources of Fees are private insurance, patients, - Medicare, and Medicaid. Figure 1, Fee Pay Distribution, shows the gross charges and amount of revenue collected by the City for each of these Pay Sources in the 2014 calendar year. During 2014, which is very typical of the City’s collection history, the City collected 63% of the gross charges. Uncollected Fees are mainly attributed to Medicare and Medicaid regulations which restrict the amount of ambulance rates that are reimbursable under law. So regardless of the Fee established by the City, the City will only receive the Medicare/Medicaid rate approved by the federal government from those individuals qualified under Medicare/Medicaid. The Medicare/Medicaid rates are provided in Appendix A. Figure 1 Fee Pay Distribution Non Resident Mutual Aid Non Resident Gross . Mutual Aid Resident Gross Resident Gross Charges Collected Collected Charges Collected Charges Medicare $81.988 $40,131 $504,729 $401,139 $22,697 $14,007 Medicaid $86.71 I $19,275 $143.490 $54,660 $6,334 $1,778 Private Ins. $257,938 $210,074 $341,330 $292,889 $17,761 $14,097 Bill Patient $120,358 $21,745 $122,455 $20,950 $12,660 $1,262 TOTAL $546,995 $291,225 $1,112,004 $769,638 $59,452 $31,144 Revenue and Expenditure History In 2011 (FY 201 1-12), the City increased Fees with — the goal of funding at least 70% of the program’s costs through Fees. Figure 2, History Revenues/Expenditures, provides 10 years of history of audited revenues, expenditures and the percentage of expenditures recouped. Figure 2 History Revenues/Expenditures Fiscal Year Revenues Expenditures % of Cost 2005-06 $686,417 $1,212,634 56.61% 2006-07 $667,441 $1 .289.277 51.77% 2007-08 $665,088 $1,355,475 49.07% 2008-09 S77 1,898 $1 ,405.563 54.92% 2009-10 $890,18a ‘. $1,535,395 57.98% 2010-Il $890,118 $1,589,621 56.00% 2011-12 $1,128,668 $1,460,367 77.29% 2012-13 $1,097,546 $1,480,458 74.14°/o 2013-14 $l,060.776 $1,531,381 69.27% 2014-15 $1,209,184 $1,573,995 76.82% 2015-16 $1,100,000 (est.) $1,617,689 (est.) 67.99% Fee Survey Figure 3, Fee Survey, shows that the City’s Fees are below the average or — median fees charged by other municipalities especially in the Residents category. ALS calls make up sixty percent of call volume, the City’s current Resident ALS Fee is 50% less than the average and Non-Resident ALS Fee is 16% less than the average.  Figure 3 Fee Survey No RESIDENT BLS ALS ALS II Transport Mileage Average $624 $791 $971 $137 $11.20 Median $550 $700 $925 $100 $10 Wheaton $444 $527 $763 $75 $10 NON-RESIDENTS No NONRESIDENT BLS ALS ALS II Transport Mileage Average $790 $995 $1,189 $194 S11.90 Median $797 $970 $1,150 $162 $10.25 Wheaton $700 $860 $1,000 $150 $11.00 Data is from Andres Aledical, June 24, 2015, who provides collection selTicesjor a number of municipal entities and provides collection for the City as a subcontractor (0 kiut:. A detailed list of the municipalities included in the survey is provided in Appendix B. ANALYISIS/RECON’IMENDATION The City last increased EMS/ambulance service rates (Fees) in 2011. The City Council’s current policy regarding Fees, raise sufficient revenue to fund 70% of the City’s EMS/ambulance program costs, has been achieved since increasing Fees in 2011. Currently, it is estimated for the 2015-16 fiscal year the established ratio will be met. However, when the City’s Fees are compared to other municipal Fees within the area, the City’s Fees are below the average or median, and in the case of Resident Fees are significantly below in all three major categories (BLS, ALS, ALS 11). Using the 70% revenue/cost ratio places a funding demand on General Fund revenues to cover the difference. Over the last few fiscal years, this difference has been over $400,000. It may be appropriate to consider establishing a higher revenue/cost ratio in an effort to reduce the revenue demand on the General Fund to fund thi difference. The City Council may want to consider establishing the ratio at 100°/s, so the EMS program would be operated like a true enterprise fund similar to the City’s water and sewer funds. The Staff believes a fee structure could be developed to achieve the 100% ratio. Since there are a number of factors that affect Fee revenue (maximum Medicare/Medicaid approved rates being most significant), the Staff would provide further analysis with the 100% ratio being the goal and presenting fee structure options to the City Council within 60 days. 3  APPENDIX A Medicare Ambulance Fee Schedule 2015 (Maximum Allowable Amounts) IL Locality 15 Urban - - Code Service Description Rate Effective Date Ground mileage, per A0425 Mileage statute mile $7.27 1/1/2015 Ambulance service, advanced life support, emergency transport, level A0427 ALS I - Emergency 1 $446.66 1/1/2015 Ambulance service, basic life support, emergency A0429 BLS - Emergency transport $376.13 1/1/2015 Advanced life support, level A0433 ALS II 2 $646.48 1/1/2015 Medicaid Ambulance Fee Schedule 2015 (Maximum Allowable Amounts) DuPage County Code Service Description Rate Effective Date Ground mileage, per A0425 Mileage statute mile $2.63 7/1/2015 Ambulance service, advanced life support, q emergency transport, level A0427 ALS I - Emrgency 1 $180.71 7/1/2015 Ambulance service, basic life support, emergency A0429 BLS - Emergency transport $111.48 7/1/2015 Advanced life support, level A0433 ALS Il 2 $180.71 7/1/2015 4  COMPARABLE AMBULANCE RATES RESIDENTS NON-RESIDENTS A152 Milage No Transport BLS ALS AL52 Milage No Transport DepartmentlOrganization BIS ALS $16.00 $1,275.00 $1,650.00 $2,100.00 $16.00 (-) Addison FED $1,275.00 $1,650.00 $2,100.00 (-) $1100.00 $13.00 $850.00 $1,200.00 $1,700.00 $15.00 (-) Bloomirigdale FPD $650.00 $850.00 (-) $8.50 $650.00 $750.00 $925.00 $8.50 $175.00 Buffalo Grove FD $475.00 $550.00 $700.00 (-) $850.00 $10.00 $500.00 $700.00 $850.00 $10.00 (-) Carol Stream FD $500.00 $700.00 (-) j $9.50 $616.00 $847.00 $901.00 $9.50 Downers Grove FD $508.00 $677.00 $731.00 (-) JI $920.00 $8.24 $797.00 $902.00 $1,190.00 $13.06 Elk Grove Village FD $535.00 $641.00 (-j $16.00 $125.00 $850.00 $1,250.00 $1,350.00 $16.00 $150.00 Elmhurst FD $750.OQ $1,150.00 $1,250.00 $15.00 (-) $910.00 $1,097.00 $1,181.00 $18.00 (-) Glen Ellyn FD $725.00 $904.00 $962.00 $10.25 $200.00 $625.00 $725.00 $975.00 $10.25 $400.00 Hanover Park FD $625.00 $725.00 $975.00 J LI U) $8.32 $654.09 $758.74 $1,020.37 $10.92 (-) Hoffman Estates FD $371.07 $440.64 $637.77 (-) j $15.00 $100.00 $700.00 $1,000.00 $1,200.00 $15.00 $200.00 Lisle-Woodridge FPD $350.00 $550.00 $750.00 $10.00 $110.00 $750.00 $970.00 $1,100.00 $11.00 $120.00 Lombard FD $440.00 $580.00 $700.00 j $100.00 $817.28 $944.80 $1,130.30 $8.28 $100.00 Naperville FD $562.25 $689.78 $944.80 $8.28 $800.00 , $900.00 $10.00 (-) $550.00 $700.00 $800.00 $10.00 (-) $650.00 Oak Brook FD $950.00 $15.00 (-) $650.00 $1,150.00 (-) Park Ridge FU $500.00 $700.00 I $950.00 $10.00 $100.00 $825.00 $1,000.00 $1,150.00 $10.00 $100.00 St. Charles FD $615.00 $800.00 $925.00 $9.62 $100.00 $840.00 $1,120.00 $1,330.00 $9.62 $100.00 Warrenville, FD $532.00 $672.00 $910.00 $10.00 $100.00 $800.00 $1,000.00 $1,200.00 $10.00 $300.00 West Chicago, FPD $650.00 $800.00 $1,000.00 $300.00 $1,250.00 $1,250.00 $1,250.00 $10.00 $300.00 Winfield FPD $1,250.00 $1,250.00 $1,250.00 $10.00 $137.22 $789.97 $995.50 $1,189.61 $11.90 $194.50 Average $624.39 $791.02 $971.35 $11.20 $10.00 $100.00 $797.00 $970.00 $1,150.00 $10.25 $162.50 Median $550.00 $700.00 $925.00 4 $75.00 $700.00 $860.00 $1,000.00 I $11.00 $150.00 Wheaton FD $444.00 $527.00 $763.00 $10.00  MEMORANDUM TO: Record FROM: Susan Bishel, Public Relations Coordinator SUBJECT: Nov. 23, 2015 City Council Planning Session Minutes DATE: Dec. 1,2015 CC: Mayor and City Council, City Manager, City Clerk, Department Heads The Planning Session took place in the Council Chambers, Wton City Hall, 303 W. Wesley St., Wheaton, Illinois. Those attending the Planning SessionA1ed: Mayor Gresk, Councilwoman Fitch, Councilman Prendiville, Councili Councilman Saline, Councilman Scalzo and Councilman Suess. Also in re City Manager Rose, Assistant City Manager Dzugan and Director of Fir The session began at 7:00 p.m. and concluded at 8:26 p.m. The following I. Call to Order The Wheaton City Council Planning Session Mayor Gresk. II. Approval of Oct. 26, 2015 Ph The Council approved the Oct. 26, Ill. Public Comment Joseph Mahady, 927 taxes over the past 10 years have ir ler not increasing the property tax levy and IV. Tax City ral recommended options for deciding on the must apThve in December. Due to uncertainty created by the difficult time making a recommendation for the 2015 tax levy. While the City at the same level for the past five years, City Manager Rose stated several into account this year, including a likely two-year property tax freeze by the State, vhich would freeze 31% of the City’s General Fund revenue at 2015 levy year levels. The State also has proposed cutting LGDF money to municipalities by half, which would result in a loss of $2,600,000 annually, or eliminating LGDF money entirely. LGDF represents approximately 13% of the City’s General Fund revenue. In addition, the major revenue sources in the General Fund have been relatively flat, and City Manager Rose stated there are limited options in dealing with lost or frozen revenue sources, such as increasing the home rule sales tax or instituting other additional taxes. He stated expenditure reduction by a significant amount would be difficult due to the personnel and program reductions that occurred in 2007-08. City staff presented several options for the City Council to consider. Alternative 1 would increase the levy by approximately 2.4% to fund police and fire pension increases. Alternative 2 would not increase the tax levy but would use General Fund reserves to fund increases for the police and fire pensions. Alternative 3 would increase the levy for the police and fire pensions plus an additional $300,000 in General Fund revenues so that if the State freezes the property tax levy and/or reduces the income tax distributions, the City will have a higher tax levy to work with going forward. Alternative 4 increases the levy for police and fire pensions plus an additional $500,000 in General Fund revenues. Alternative 4 would require the City to have a public hearing on the proposed levy, since the levy increase would be greater than 5%. City Manager Rose stated he believes it might be wise for to select an option that gives the City more financial leeway in case the State’s actio cantly impact the City’s revenue sources. Two Council members expressed an interest ich would not raise the tax levy, as they expressed that they doi to homeowners through an increase in taxes. Other City Council members expre iue to the probability that the State could signi abate taxes if the State’s actions did One Council member In response to a C0L of an increse in taxes that residents would incur if Alternative 3 or Director of Finance Lehnhardt stated for a prop 48 annually with Alternative 3 and $61 annw In r of Finance Lehnhardt stated the General Fund reserve irces, including reducing healthcare costs, the reduction in several years ago, significant real estate transfer tax revenues, and projects. The majority of the City Manager Rose outlined a number of other areas where the City may need to use some General Fund reserves in the near future, including upcoming roadwork projects, stormwater improvements and implementation of the Downtown Plan. In response to a Council question, Director of Finance Lehnhardt stated Milton Township is reassessing all properties in the township, but he has not received any information predicting how the assessed values will compare to the previous year. 11/23/15 Planning Session 2 V. City Council/Staff Comments Councilman Rutledge acknowledged the passing of Bill Black, who was a former chair of the Planning & Zoning Board. Mayor Gresk acknowledged the passing of Mary Lubko, a longtime community volunteer who advocated for senior services. VI. Closed Session: Personnel Employment Contract 5ILCS 12012(c)(1) — Councilman Scalzo moved and Councilman Suess seconded that the Wheaton City Council adjourn to closed session at 8:13 p.m. for the purpose of discuino Personnel Employment — Contract 5ILCS 120/2(c)(1). Roll Call Vote: Ayes: Councilman Scalzo Councilman Suess Mayor Gresk Councilwoman Fitch Councilman Prendi Councilman Rul Councilman Saline Nays: None The ing at 8:26 p.m. The 11/23/15 Planning Session 3