June 18, 2014 Meeting Minutes

  MINUTES
 

DRYCLEANER ENVIRONMENTAL RESPONSE TRUST FUND
COUNCIL of ILLINOIS

CHICAGO MARRIOTT NAPERVILLE
NAPERVILLE, ILLINOIS

June 18, 2014

John Polak, chairperson, called the Drycleaner Environmental Response Trust Fund Council of Illinois meeting to order at 10:02 a.m. A quorum was present. Roll call was taken with the following members present:

John Bredenkamp (via telephonic conference)
Sung Do Kang (arrived at 10:09 am)
Daniel Kim
Young B. Kim
Paul Kwak
Jerry Lewicki
John Polak (via telephonic conference)

Also present were:

H. Patrick Eriksen, Program Administrator’s Office
John J. McCarthy, Program Counsel

Dr. Juho So, Program Administrator’s office

 

PRELIMINARY BUSINESS

The minutes from the April 23, 2014 Council meeting were reviewed. On a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the Council approved the minutes by a vote of 6–0.

  OPERATIONAL ISSUES
  A.

Legislation Update

   

Mr. Eriksen reviewed with the Council the only piece of legislation impacting the Fund was HB6095 which appropriated operating money for the Council for FY15. The appropriation request totaled $5,360,000.

The governor has not yet signed the bill but at this time we have no reason to believe the Council’s appropriation request will be reduced. A concern does exist that a fund sweep could occur during the fiscal year due to the expiration of the increase in the personal income tax rate effective January 1, 2015. Mr. Eriksen stated he would keep the Council apprised of any issues that would impact the FY15 appropriation request.

Mr. Kang arrived at 10:09 a.m.

  B. Review of FY13 Audit Report
   

Mr. Eriksen reviewed the auditor general’s compliance examination for the year ended June 30, 2013 with the Council noting there was only one finding which is the same finding as the prior six years dealing with expired council member appointments. The auditor general’s office was informed the Council continues to make inquiries with the governor’s office as to the status of the appointments but it is up to the governor to make the appointments.

There were no immaterial findings. The examination performed by the auditor general’s office involves a compliance examination as well as a review of the financial statements. The compliance examination focuses on whether the Council is operating in accordance with the Trust Fund Act and related regulations. Mr. Polak congratulated the Administrator on doing a good job of complying with the laws and regulations and maintaining accurate financial records for the Council.

  C. Strategic Planning Topics
   

Mr. Eriksen noted the Council has tentatively scheduled Wednesday, August 27, 2014, as the date of their annual strategic planning meeting. The annual strategic planning session provides the Council an opportunity to review the previous year’s activities as well as plan for the current fiscal year activities. Due to scheduling conflicts with the hotel, Mr. Eriksen asked if it would be possible to move the meeting from Wednesday, August 27th to Thursday, August 28th. By consensus the Council agreed to move the meeting date from August 27th to August 28th.

Tentative planning topics as outlined in the Council packet memo were reviewed. Mr. Kang asked why item number two, “Discussion of Fund’s January 1, 2020 sunset date” was listed as an agenda item? It was his understanding the Council had already taken a position on this issue at last year’s strategic planning meeting and then subsequently deferred seeking legislative action until the issue could be reviewed by the Drycleaner Trust Fund Task Force. Mr. Eriksen responded since the Task Force has not yet been appointed and it is uncertain at this time when the Task Force will meet, it is the Council’s fiduciary responsibility to review this issue again since the sunset deadline is approximately 5 ½ years away and a substantial funding shortfall exists to settle all remedial claims.

  D. Third Party Administrator Contract
   

Mr. John McCarthy led the discussion regarding the third party administrator’s contract noting the contract expires on December 7, 2014. The contract has been publicly bid three times: in 1998, 2003 and 2009. Each contract was for five years except that the state extended the contract for one year in 2008. When the third-party administrator’s contract was last publicly bid in 2009, only one bid was submitted and that was from Williams and Company Consulting, Inc. who has been the only third-party administrator of the Fund since inception.

The contract states that the state reserves the right to renew the contract with Williams and Company for the same or lesser length of term as the initial term and on the same terms and conditions. In addition, the contract entered into by the Council must be approved by the director of the Illinois Environmental Protection Agency (IEPA).  Mr. McCarthy contacted IEPA asking for their input on the contract. This week he received a telephone call from Art Moore, purchasing officer for IEPA, who relayed that it was the preference of IEPA’s Director that the contract be renewed for two years. Mr. Moore stated the two-year request was due to the uncertainty of when the Drycleaner Trust Fund Task Force would meet and that a one-year renewal was not appropriate.

Mr. Bredenkamp made a motion to extend Williams and Company Consulting Inc.’s existing contract for a two-year period. The motion was seconded by Mr. Lewicki.

Mr. Kang commented that he had not been thinking about the administrator’s contract and needed some additional time before he was prepared to vote on this issue.

Mr. McCarthy stated that if the Council chooses not to renew the contract for the two-year period recommended by the Director of IEPA, the public bidding process would need to be begin immediately and cannot be deferred until the Council’s next scheduled meeting which is August 28th. He noted the bidding process would take approximately 4 to 5 months to complete.

Mr. Bredenkamp called for the question. Mr. Kang asked if there was a legal position from IEPA? Mr. McCarthy responded that it was the preference of the Director of IPEA to extend the contract for two years. Mr. Kang asked if the contract can legally be extended without public bidding? Mr. McCarthy responded yes and referenced page 2 of his Council memo on this topic. Mr. Kwak asked if contract is extended would it be under the same terms and conditions that exist today? Mr. McCarthy responded “yes”, the terms and conditions would be the same.

Mr. Polak asked for a roll call vote on the motion. Voting in favor of the motion were Mr. Bredenkamp, Mr. Daniel Kim, Mr. Young Kim, Mr. Lewicki, Mr. Kwak and Mr. Polak. Mr. Kang voted against the motion. The motion passed 6-1.

Mr. McCarthy stated he would contact Mr. Moore to begin the paperwork process of extending the contract for two years.

  APPROVAL OF PROGRAM BILLINGS
 

Mr. Eriksen noted that there were four bills before the Council for their review and approval. They were as follows:

 

1. Williams & Company Consulting, Inc         $68,313.00
Standard flat fee billing for April 2014, licensing, underwriting, claims processing and site inspections.

 

2. John J. McCarthy                                       $2,9880.00
Professional legal services to the Council for the period of March 4, 2014 through April 11, 2014.

 

3. Hinshaw & Culbertson, LLP                                     $330.78
Professional legal services to the Council for the period of March 2014 through December 18, 2014.

  4. Williams & Company Consulting, Inc         $55,101.00
Standard flat fee billing for May 2014, licensing, underwriting, claims processing and site inspections.
 

On a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the Council approved the bills as presented by a vote of 6-0.

  REVIEW OF MONTHLY ACTIVITY REPORT AND FINANCIAL STATEMENTS
 

Mr. Eriksen reviewed the monthly activity report for May 31, 2014 noting 894 licenses were in effect at the end of the month. Forty nine (49) drycleaner’s have not renewed their 2014 license but provided documentation they are no longer an active dry-cleaning facility.

518 active dry-cleaning facilities had pollution liability insurance coverage with the fund and open claims totaled 203, with estimated reserves of $23.8 million.

The May 31, 2014 financial statements reflect a fund balance of $1,988,039. Year-to-date claim payments total $2,314,641. Legal expenses for the year exceed the estimated budget by $8,385.

  CLAIM PAYMENTS IN EXCESS OF $75,000
 

Mr. Eriksen noted there were eight claim payment requests for Council review and approval and two claim funding requests.

 

A.

One Hour Cleaners, Mundelein, IL; Claim #50568, Site #0001424.

   

Dr. So reviewed background information noting active remediation has taken place at this facility due to the high level of contamination in the soil. The remedial technology used was in situ soil blending with persulfate in the source area with injection of ABC in the dissolved groundwater plume. Previous treatments have significantly reduced the contamination level but have not met the remedial objectives. The environmental consultant believes the injections are still active and will continue to reduce the contamination at the site for an additional six months. The budget request is for additional confirmation sampling to determine if the remedial objectives have been met and to close the existing monitoring wells. The total budget request for these activities is $23,100.

After discussion by the Council, on a motion by Mr. Lewicki and a second by Mr. Young Kim, the Council approved the $23,100 in additional remedial funding by a vote of 7-0.

 

B.

Betty Brite Cleaners, Chicago, IL; Claim #50062, Site #0001056

   

Dr. So reviewed background information noting active remediation has taken place at this facility. The remedial technology utilized has been slow feed injection of Regenox. This initial remedial effort was effective at reducing the PCE by approximately 90%. Additional remediation is necessary to address the remaining contamination area that exceed the Csat limit. The budget request is $67,000.

After discussion by the Council, on a motion by Mr. Lewicki and a second by Mr. Young Kim, the Council approved the budget request of $67,000 by a vote of 7-0.

  C.

North Shore Cleaners, Glencoe, IL; Claim #50217, Site #0002228

   

Dr. So reviewed background information noting that there are three contiguous but seperate “remediation areas” defined as areas A, B, and C. A draft NFR letter dated April 22, 2014 was issued by IEPA for Area C. Significant contamination remains in Area A and B which must be remediated. The administrator is asking for $181,500 to treat these two areas using bio-remedial injection of Regenox. Mr. Eriksen noted the site is expected to exceed the remedial benefit limit of $300,000. He received on June 17, 2014 a line of credit letter in the amount of $50,000 that should be sufficient to pay for any costs in excess of $300,000.

The Administrator is also requesting the Council waive the two bid requirement for environmental consulting services as the current consultant has conducted extensive site investigation at the facility and is familiar with the site-specific conditions which are important to the cost-effective implementation of remedial activities at the site.

After discussion by the Council, on a motion by Mr. Lewicki and a second by Mr. Young Kim, the Council approved the budget request of $181,500 and waiver of the two bid requirement for environmental consulting services by a vote of 7-0.

  D. Market Square Cleaners, Schaumburg, IL; Claim #50481, Site #0001336.
   

Dr. So noted that active remediation has been conducted at the facility and has been successful in reducing the chemical of concerns in the soil to acceptable levels. Additional groundwater monitoring wells are needed in order to get additional data to complete the R–26 modeling required by IEPA. It is estimated that at this time the cleanup can be read completed and a NFR letter received for the facility for less than the $300,000 remedial benefit cap.

After discussion by the Council, on a motion by Mr. Lewicki and a second by Mr. Bredenkamp, the Council approved the budget request of $14,000 by a vote of
7-0.

  E. The Norman Laundry & Drycleaners, Decatur, IL; Claim #50006, Site #0001585:
   

Dr. So noted the Administrator is requesting budget approval of $1,500 for consulting costs for the consultant to meet with the IEPA to determine the required site characterization activities necessary to obtain approval of the FSIR/ROR.

On a motion by Mr. Lewicki and a second by Mr. Young Kim, the Council approved the $1,500 budget request by a vote of 7-0.

  F. Downtown Cleaners, Chicago, IL; Claim #50330, Site #0001163
   

Dr. So reviewed background information on the facility noting active remediation has been taking place since August 2013 utilizing in-situ chemical oxidation via gravity feeding. Recent post remedial confirmation site investigation results indicate that additional remediation is needed to address the soil contamination. The Administrator is requesting $60,740 in additional remediation costs.

After discussion by the Council, on a motion by Mr. Young Kim and a second by Mr. Lewicki, the Council approved the budget request of $60,740 by a vote of
7-0.

  G Northview Cleaners, Chicago, IL; Claim #50591, Site #0002543
   

Dr. So reviewed background information on this facility notice noting active remediation has taken place utilizing in-situ chemical oxidation via gravity feeding. Recent post remedial confirmation site investigation results show there has been a substantial reduction in the PCE contamination at the facility but additional remediation is necessary in order to get an NFR letter for the facility. The Administrator is requesting $67,470 in additional remedial action costs to complete the cleanup.

After discussion by the Council, on a motion by Mr. Lewicki and a second by Mr. Young Kim, the Council approved the budget request in the amount of $67,460 by a vote of 7-0.

  H All Pro Cleaners, Chicago, IL; Claim #50130, Site #0001702
   

Dr. So stated the Administrator is requesting two things for this site. The first is release of immediate funding based upon a revised priority ranking score for the facility. In August 2013 the Council approved release of full funding for all remedial claims with a priority ranking score of 78 and higher. At that time this claim had a priority ranking of six (6). A subsequent site investigation completed on April 15, 2014 showed significant contamination and the priority ranking score was revised to 80.

The Administrator is also requesting budget approval of $210,000 to begin active remediation at the facility as there is a high level of soil contamination (i.e. 7,700 mg/kg of PCE). The proposed remedial action plan is to conduct soil excavation in conjunction with chemical oxidation retention ponds to address the soil contamination. The depth of contamination exceeding the Csat limit seems to be isolated approximately 14 feet bgs. In addition, the Administrator is requesting waiver of the two bid requirement for environmental consulting services inasmuch is the environmental consultant has extensive knowledge of the contamination at the facility.

After discussion by the Council, on a motion by Mr. Lewicki and a second by Mr. Kim, the Council voted 7-0 to release this claim for immediate funding

On a motion by Mr. Lewicki and a second by Mr. Kang, the Council voted to approve remedial action costs of $210,000 by a vote of 7-0.

  I. Lion II, Chicago, IL; Claim #50841, Site #0001914
   

Dr. So stated the Administrator is requesting this facility be released for immediate funding. The Council released all remedial claims with priority ranking score of 78 and higher at their August 2013 Council meeting. At that time this claim had a priority ranking of eighteen (18). A subsequent site investigation completed on May 3, 2014 showed significant contamination and the priority ranking score was revised to 80. At this time the Administrator is not requesting any budget approval for this claim.

After discussion by the Council, on a motion by Mr. Lewicki and a second by Mr. Young Kim, the Council approved releasing this claim for immediate funding by a vote of 7-0.

  OTHER ISSUES AS PRESENTED
 

Mr. Bredenkamp left the meeting at 11:10 AM.

Mr. Eriksen commented a Council meeting would probably be needed in late July to address end-of-the-fiscal year administrative bills and to approve budgets for several large remedial claims. The council members concurred that July 23rd was the preferable date for the meeting.

Mr. Eriksen reported that Mr. John Lee of the Asian American Small Business Assocation (AASBA) compliance program has been nonresponsive to his and staff requests for required compliance program information for calendar years 2013 and 2014. He is requesting Council approval to put on the August 28th agenda discussion on whether to decertify the AASBA compliance program. After a discussion by the Council, on a motion by Mr. Lewicki and a second by Mr. Young Kim, the Council approved by a vote of 6-0, putting discussion of the AASBA compliance program certification on the August 28, 2014 council meeting agenda.

Mr. Eriksen noted at the last Council meeting Mr. David Kay of Laicon had requested the Council consider transfering remedial benefits from a claimant to a real estate owner where the drycleaner/claimant has taken bankruptcy and no longer resides in the country. Mr. Eriksen and Mr. McCarthy researched this issue and found the Council had addressed this issue back in 2005. The Council determined at that time they did not want to allow the transfer of remedial program benefits from the drycleaner to the real estate owner. Mr. Eriksen noted in the nine years since that decision was made the remedial claims have decreased from more than 600 to 203. Mr. David Kay and Mr. Lawrence Cohen, representing a commercial real estate company, addressed the Council and requested that the Council put this on a future meeting agenda. After discussion by the Council it was their consensus not to include this issue on a future meeting agenda.

Mr. Kang addressed the Council stating that since last October he has been trying to understand the procedural process for adding items to the Council’s meeting agenda. He distributed to the Council members a copy of Mr. McCarthy’s June 16, 2014 email response to his questions regarding how to add topics to the Council’s agenda. A lengthy discussion ensued between the Council members in which Mr. Kang indicated he did not agree with Mr. McCarthy’s position as outlined in the June 16, 2014 email and stated he was still waiting for definitive legislative or regulatory information to substantiate Mr. McCarthy’s position. Mr. Kang’s position, as outlined in his June 2014 emails to Mr. McCarthy, is that a Council member should be able to put a topic on the agenda via a “motion” and a “second” without a majority vote by the other Council members. Mr. Kang was asked what legislative, regulatory or legal documentation he based his position on, and he did not respond to the question.

On a motion by Mr. Lewicki and a second by Mr. Daniel Kim, in accordance with Section 15 of Robert’s Rules of Order, the Council voted 6-0 to cease discussion of the issue on how a Council member can add an item to the Council’s agenda.

  PUBLIC COMMENT PERIOD
 

Mr. Polak asked if there were any comments from the public. Mr. Lawrence Cohen, representing a commercial real estate firm, stated he was still confused on why the Council would not consider putting on the agenda the transfer of remedial claim benefits from a bankrupt claimant/drycleaner to the real estate owner. His comments focused on the fact that the property owners have taken substantial financial risks in working with the drycleaners to keep them in business; in many cases reducing rent or even paying some of the remedial program deductible. He stated he would be happy to quantify some of that information for the Council. In addition, he believes that if the Council allowed such transfer of remedial program benefits a possible revenue source beyond the current industry sources may be available to help address the Fund’s solvency issue.

  CLOSED SESSION
 

Mr. Eriksen noted that there were matters dealing with potential litigation that needed to be discussed in closed session. On a motion by Mr. Lewicki and second by Mr. Kwak, the Council voted 6-0 to go into closed session at 12:50 pm.

The Council adjourned from closed session at 12:58 pm. On a motion by Mr. Lewicki and a second by Mr. Daniel Kim, the Council voted 6-0 to waive the 2013 license late payment penalty fees for Dry Clean City, Bloomington, IL and allow for the payment of the remaining $750 in 2013 license fee over three months.

There being no further business, on a motion by Mr. Lewicki and second by Mr. Kwak, the Council voted 6-0 to adjourn the meeting at 1 p.m.

Respectfully submitted,

 

H Patrick Eriksen

Program Administrator
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