August 24, 2017 Meeting Minutes

 

MINUTES
DRYCLEANER ENVIRONMENTAL RESPONSE TRUST FUND
COUNCIL of ILLINOIS

CHICAGO MARRIOTT HOTEL
NAPERVILLE, ILLINOIS

AUGUST 24, 2017

  John Polak, Chairperson, called the Drycleaner Environmental Response Trust Fund Council of Illinois meeting to order at 10:03 a.m. A quorum was present. Roll call was taken with the following members present:
 

John Bredenkamp
Robert Dunham
Sung D. Kang
Dae Kim
Daniel Kim
John Polak

Also present were:

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

  PRELIMINARY BUSINESS
 

The minutes from the June 7, 2017 Council meeting were reviewed. On a motion by Mr. Bredenkamp and a second by Mr. Dunham, the minutes were approved by a vote of 6-0.

  OPERATIONAL ISSUES
  A. Legislative Update
 

Mr. Eriksen reported SB006 was the omnibus appropriation bill that included the Illinois Drycleaner Environmental Response Trust Fund Council’s appropriation request for fiscal year 2018 (FY18). The bill was passed by the legislature but vetoed by the governor. In early July, the legislature overrode the governor’s veto resulting in an approved appropriation for FY18.

Mr. Eriksen updated the Council on the status of Amendment 001 to SB1648. The bill currently resides in the Senate Committee on Assignments. The governor’s office has not indicated if the governor will sign this bill if the amendment is passed by the senate.

SB0009 creates the “Laundry and Drycleaning Excise Tax Act.” This bill proposes a 6.25% excise tax on all laundry and drycleaning services. The bill passed the Senate on May 23, 2017 but was amended in the House to remove this excise tax.

A discussion of the impact of elimination of the insurance program ensued. Mr. Eriksen noted based on the FY17 financial statements, the elimination of the insurance program and third party administrator fees would provide $191,000 in additional cash flow for IEPA to administer the licensing and claims programs.

  B. Legal Representation
 

Mr. Polak reported Mr. Eriksen sent a letter on behalf of the Council to the Attorney General’s Office (AGO) requesting the AGO provide legal counsel to the Council for fiscal year 2018. The AGO is requesting the Council reconsider engaging Mr. John McCarthy as legal counsel for fiscal year 2018. Since the Council may be eliminated by SB1648, the AGO believes the Council would be better served by Mr. McCarthy who is very knowledgeable about the Council activities versus bringing a new attorney up to speed. Mr. Polak noted Mr. McCarthy’s hourly rates are very reasonable, especially when compared to the hourly rates of Chicago area attorneys.

Mr. Bredenkamp emphasized the need to have legal counsel in attendance at Council meeting to provide legal guidance on various issues. Mr. Polak said if the Council decides to not revisit the issue of contracting with Mr. McCarthy, they need to provide a definitive reason why they declined.

A general discussion ensued about Mr. McCarthy’s past performance. Mr. Dunham made a motion for the Council to engage Mr. McCarthy to provide legal counsel to the Council for FY18. Mr. Bredenkamp seconded the motion. On a roll call vote, the motion passed 4-1-1 with Mr. Bredenkamp, Mr. Dunham, Mr. Daniel Kim and Mr. Polak voting yes. Mr. Kang voted no and Mr. Dae Kim abstained.

  C. Administrative Law Judge Contract
 

Mr. Eriksen noted the Council approved at the June 7, 2017 Council meeting to enter into a contract with Mr. Robert Wagner to provide administrative law judge services for fiscal year 2018. Prior to filing Mr. Wagner’s contract with the state, he was contacted by a representative of the Illinois Department of Central Management Services (CMS) Bureau of Administrative Hearings. This bureau was created in April of 2016 to look at ways to improve administrative hearings in Illinois by implementation of best practices, expanding professional development, and assessing the feasibility of consolidation. One aspect of the Bureau’s work has been to eliminate contract costs for administrative hearing proceedings. The Bureau has entered into intergovernmental agreements with four agencies to provide Administrative Law Judges (ALJ). Agencies eliminate their contract costs, while still paying for things like court reporting, transcripts, and necessary travel costs for the ALJ.

After general discussion, on a motion by Mr. Dunham and a second by Mr. Bredenkamp, on a roll call vote, the Council voted 5-0-1 to enter into an interagency agreement with CMS for administrative law judge services for FY18. Mr. Dae Kim abstained.

  D. Updated Financial Projections for the Period of July 1, 2017 to January 1, 2020.
 

Mr. Eriksen reviewed updated financial projections. The projected deficit as of January 1, 2020 is $16.3 million. Discussion focused on the need to address the deficit if SB1648 is not passed by the Senate and the existing remedial claims. Mr. Daniel Kim expressed his concern about the impact of SB1648 on the drycleaning industry if it becomes law. Mr. Bredenkamp and Mr. Polak concurred with his concerns. Mr. Kim stated the Council should categorize the impacts this bill will have on the drycleaning industry and provide that information to the legislature and governor.

APPROVAL OF PROGRAM BILLINGS
 

Mr. Eriksen noted there were four (4) bills before the Council for their review and approval. They were:

1. Williams & Company Consulting, Inc. $ 64,232.00

Standard flat fee billing for June 2017, licensing, underwriting, claims processing and site inspections.

2. John J. McCarthy $ 3,097.50

Professional legal services to the Council for the period of of May 30, 2017 through June 30, 2017.

3. Hinshaw & Culbertson, LLP $ 105.32

Professional legal services for the period of April 1, 2017 through May 31, 2017 regarding the NDI Compliance Program appeal.

4. Williams & Company Consulting, Inc. $ 51,395.00

Standard flat fee billing for July 2017, licensing, underwriting, claims processing and site inspections.

On a motion by Mr. Bredenkamp and a second by Mr. Dae Kim, the bills were approved by a vote of 6-0.

  REVIEW OF MONTHLY ACTIVITY REPORTS AND FINANCIAL STATEMENTS
 

Mr. Eriksen reviewed the monthly activity report for July 31, 2017 noting 789 licenses were in effect at the end of the month compared to 829 as of July 31, 2016. Four hundred twenty seven (427) active dry-cleaning facilities had pollution liability insurance coverage with the Fund. Open claims totaled 161, with estimated reserves of $17.7 million. The June 2017 report was included in the council packet.

The July 31, 2017 financial statements reflect a fund balance of $1,665,786. The June 30, 2017 financial statements were included in the council packet.

  CLAIM PAYMENTS IN EXCESS OF $75,000
 

Mr. Eriksen noted there were five claim payment requests in excess of $75,000 requiring Council review and action.

1. Smile (Dove East) Cleaners, Chicago, IL; Claim #50495, Site #0002155:

Dr. So reviewed background information on the facility noting the budget request is for construction and implementation of a chemical oxidant remedial system and interim confirmatory site investigation costs to evaluate the effectiveness of the remedial system. The Administrator requested budget approval of $174,500 and waiver of the two bid requirement.

On a motion by Mr. Bredenkamp and a second by Mr. Dunham, the Council approved the Administrator’s budget request of $174,500 and waiver of the two bid requirement by a vote of 6-0.

2. Monitor Management Corp., Chicago, IL; Claim #50491, Site #0001363:

Dr. So reviewed background information on the facility noting the budget request is for construction and implementation of a chemical oxidant remedial system and interim confirmatory site investigation costs to evaluate the effectiveness of the remedial system. The Administrator requested budget approval of $188,500 and waiver of the two bid requirement.

On a motion by Mr. Daniel Kim and a second by Mr. Bredenkamp, the Council approved the Administrator’s budget request of $188,500 and waiver of the two bid requirement by a vote of 6-0.

3. Modern Way Cleaners, Naperville, IL; Claim #50376, Site #0001670:

Dr. So reviewed background information on the facility noting the budget request is for construction and implementation of a chemical oxidant remedial system and interim confirmatory site investigation costs to evaluate the effectiveness of the remedial system. The Administrator requested budget approval of $212,500 and waiver of the two bid requirement.

On a motion by Mr. Bredenkamp and a second by Mr. Dunham, the Council approved the Administrator’s budget request of $212,500 and waiver of the two bid requirement by a vote of 6-0.

4. Modern Way Cleaners, Dolton, IL; Claim #50688, Site #0001716:

Dr. So reviewed background information on the facility noting the budget request is for installation of an engineered barrier, closure sampling and development of the remedial action completion report. The Administrator requested budget approval of $48,000.

On a motion by Mr. Bredenkamp and a second by Mr. Dae Kim, the Council approved the Administrator’s budget request of $48,000 by a vote of 6-0.

5. Kustom Kleen Cleaners, Arlington Heights, IL; Claim #50158, Site #0001297:

Dr. So reviewed background information on the facility noting the budget request is for additional site investigation costs. The Administrator requested budget approval of $19,500.

On a motion by Mr. Bredenkamp and a second by Mr. Daniel Kim, the Council approved the Administrator’s budget request of $19,500 by a vote of 6-0.

  OTHER ISSUES
 

The Council tentatively scheduled the next council meeting for Friday, August 20, 2017.

Mr. Eriksen commented the online perc training class needs to be reviewed and the Council should approve a refresher course for 2018. He will contact IEPA to determine if they have issued regulations for reporting of new solvents.

The NDI Compliance Program decertification appeal hearing is scheduled for September 1, 2017 in Cook County Circuit Court.

  PUBLIC COMMENT PERIOD
 

Mr. Polak asked for public comment. There were none.

Mr. Kang requested Mr. Tae Su Jung’s August 23, 2017 email to the Council regarding compliance program issues be added to next meeting’s agenda for discussion. By consensus, the Council agreed to Mr. Kang’s request.

Mr. Dunham commented the license fee categories should be changed to generate additional revenue for the fund. For example, the current category is 0 – 50 gallons; he believes changing the range from 0 – 75 gallons would increase revenue via increased solvent tax receipts. Such a change would require legislation. By consensus, the Council agreed to place this topic on the next meeting agenda for further discussion.

Mr. Kang stated he would also like to discuss the insurance claims and program at the next meeting. After further clarification, by consensus, the Council agreed to place discussion of existing insurance claims and the impact to the industry if the insurance program ceases on the next meeting’s agenda.

  CLOSED SESSION
 

Mr. Eriksen noted there were no issues for discussion in Closed Session.

There being no further business, on a motion by Mr. Bredenkamp and a second by Mr. Dae Kim, the Council meeting adjourned at 11:43 a.m.

Respectfully submitted,

H Patrick Eriksen
Administrator

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