NON-TAX REVENUE PLAN. Adopted: April 12, 2012

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1 NON-TAX REVENUE PLAN Adopted: April 12, 2012 Revised: October 8, 2015

2 NON-TAX REVENUE PLAN The Naperville Park District s mission is to provide recreation and park experiences that enrich the quality of life for our community. In support of the mission, the Naperville Park District strives to provide quality programs and services to the community at a reasonable cost. Adequate resources must be available to maintain and operate programs, services and facilities at a high level. Many park and recreation agencies rely heavily on tax dollars to fund operations. In the case of the Naperville Park District, a variety of revenue sources are used to achieve the funding necessary to operate the organization. Property tax revenue provides approximately 50% of the total operating revenue of the District. Numerous non-tax revenue sources makeup the remaining operating revenues. The information and data included within this plan do not include the thousands of hours provided by volunteers. The quality and quantity of volunteer efforts are an essential contribution toward achieving the District's mission, and thereby reducing the tax and non-tax revenue requirements. What is Non-Tax Revenue? Non-tax revenue is all revenue other than tax revenue received by the Naperville Park District through the delivery of programs, services and other District operations. The table below outlines Naperville Park District non-tax revenue sources. Bond proceeds are not considered a non-tax revenue source as debt service payments are funded from property tax dollars. Naperville Park District Non-Tax Revenue Sources Charges for Services This category represents user fees collected for programs and services. The largest components include recreation program income, golf income, pool pass and daily admission revenue for Centennial Beach. Miscellaneous Income - Comprised of various reimbursement accounts owed to the District (e.g., athletic organizations, WDSRA, City), as well as cell tower revenue and employee insurance contributions. Grants The District pursues grant funding to support capital projects and operations through local, state and national funding sources. Sales - Sales revenue represents revenue generated primarily from concessions and merchandise. Rental Income This category consists primarily of facility and athletic field rentals, and tournament income. Interest Income Revenue received from Park District investments. Sponsorships Sponsorships are sought by the District to offset the cost of capital improvements, operations and maintenance of the District s programs and facilities. Gifts/Donations This category represents in-kind or cash contributions received from individuals, 2 Naperville Park District Non-Tax Revenue Plan Adopted: , Last Revised

3 groups and businesses that support District programs, services and park amenities. Examples include contributions toward athletic field improvements, product donations, and more. Land Dedication Ordinance (Cash-in-Lieu) Represents donations from developers through the mandatory dedication of parkland or cash-in-lieu of land. Advertising This category primarily represents revenue received from Program Guide and web advertising and the athletic field banners program. Commissions Commissions are received from product sales that take place on District property. Revenue within this category consists primarily of commissions from the District s non-alcoholic beverage contract and contractual concessions. Foundation In 2011 the Naperville Parks Foundation was established. The foundation assists with raising funds to support the District s mission through grants and donations. Utilization of Non-Tax Revenue Policies and Procedures The Naperville Park District follows policies and procedures in order to maintain consistency in the management and maximization of non-tax revenues. Policies and Procedures currently in place include: Investment Policy The primary objectives of investment activities, in priority order, are: safety, liquidity and yield. A summary of the policy is as follows: The safety of principal is the foremost objective of the Naperville Park District's Investment Policy. All investments shall be undertaken in a manner that seeks to ensure the preservation of the principal. The objective will be to minimize credit risk and interest rate risk. The investment portfolio shall remain sufficiently liquid to enable the Park District to meet all of its reasonably anticipated operating requirements, thereby avoiding the need to sell securities on the open market or redeeming time deposits prior to maturity. The investment portfolio shall be designed with the objective of attaining a market rate of return throughout the budgetary and economical cycles, taking into account the investment risk constraints and liquidity needs. Return on investment is of secondary importance compared to safety and liquidity objectives described above. (Please see Appendix A for a full copy of the Investment Policy) The District s investment portfolio is comprised of certificates of deposits, money market funds and fixed income securities. Money managers are utilized to maximize returns on the fixed income portfolio in congruence with the District s investment policy. The Investment Policy is reviewed on an annual basis. 3 Naperville Park District Non-Tax Revenue Plan Adopted: , Last Revised

4 Fees & Charges Policy The Board Policy for Park District fees is as follows: Fees - The Naperville Park District recognizes the need and desirability to establish program, service, and facility fees that are reasonable, but not prohibitive, in order to provide a variety of recreational opportunities to meet the leisure needs of the community and the surrounding area. In most cases Naperville Park District residents will pay a lower than or equal to fee than nonresidents. Each program season Naperville Park District residents will have the ability to register for programs, services, and facilities before nonresidents for a specified period of time. The Naperville Park District established a Fees & Charges Policy Manual to establish direction for the development of charges for services. (Please see Appendix B) As outlined within the manual, District staff will determine and monitor program and service fees on a program by program basis, for both resident and nonresident participants based upon the market feasibility, program costs, and demographic variables, with fee revisions based upon comparable seasonal data and program development. Gift Acceptance Policy The Naperville Park District welcomes and encourages support from the private sector to supplement revenue from taxes and user fees in order to assist the district in its mission. Donations will be accepted from individuals, organizations, foundations, governmental agencies, and corporations in accordance with the District s Gift Acceptance Policy (Please see Appendix C). The guidelines included within the policy are for accepting and recognizing donations, in order to ensure the integrity and appropriateness of donations as related to the mission and priorities of the Naperville Park District. Although the Park District is grateful for every offer of support, the Park District must reserve the right to decline any gift that is not beneficial to its mission and priorities or creates or has the potential to create a conflict for the District. Land Dedication Ordinance The District operates under a Land Dedication Ordinance through the City of Naperville. Under the ordinance, developers can offer cash-in-lieu of the dedication of parkland. As a condition of approval of a final plat of subdivision, or of a final plat of a planned unit development, each subdivider or developer will be required to dedicate land for park and recreational purposes and land for school sites, to serve the immediate and future needs of the residents of the development, or cash contribution in lieu of actual land dedication, or a combination of both, based on the recommendation of the public body which will be the recipient of the contribution. (Note: see below the summary pertaining to Cash-In-Lieu and Appendix D for a copy of the Land Dedication Ordinance.) Sponsorships and Grants Policy The District works to foster mutually beneficial sponsor relationships designed to increase revenue and resources in exchange for advertising and marketing opportunities. Additionally, the District pursues grants as a non-tax revenue resource. Appendix E of this plan includes a copy of the District s Sponsorships and Grants Policy. 4 Naperville Park District Non-Tax Revenue Plan Adopted: , Last Revised

5 Non-Tax Revenue History The table below provides a 5-year history of non-tax revenue and the budget for The sections following the table provide summaries of the non-tax revenue categories, followed by objectives for each area. Naperville Park District Non-Tax Revenue Year Average 2015 Budget Charges for Services $ 8,418,043 $ 8,231,424 $ 8,168,739 $ 7,822,506 $ 7,490,970 $ 8,026,337 $ 8,001,889 Miscellaneous $ 843,329 $ 1,083,761 $ 884,936 $ 1,058,934 $ 899,533 $ 954,099 $ 712,794 Grants - OSLAD $ 66,729 $ 733,271 $ 400,000 $ 100,000 $ 300,000 $ 320,000 $ - Sales $ 799,145 $ 969,853 $ 1,104,597 $ 989,294 $ 1,065,423 $ 985,663 $ 1,067,152 Rentals $ 376,648 $ 355,140 $ 476,738 $ 561,849 $ 654,878 $ 485,051 $ 693,935 Grants - Other $ 6,225 $ 384,608 $ 229,708 $ 222,711 $ 264,539 $ 221,558 $ 68,385 Interest Income $ 411,799 $ 227,546 $ 182,757 $ 151,255 $ 197,664 $ 234,204 $ 203,100 Sponsorships $ 111,921 $ 55,918 $ 76,373 $ 58,443 $ 55,965 $ 71,724 $ 59,710 Donations $ 173,554 $ 8,329 $ 12,904 $ 17,322 $ 18,304 $ 46,082 $ 4,000 Cash-in-Lieu $ 147,190 $ 226,997 $ 373,425 $ 1,952,819 $ 795,296 $ 699,145 $ - Total $ 11,354,583 $ 12,276,847 $ 11,910,176 $ 12,935,133 $ 11,742,572 $ 12,043,862 $ 10,810,965 $8,600,000 $8,400,000 $8,200,000 $8,000,000 $7,800,000 $7,600,000 $7,400,000 $7,200,000 $7,000,000 Charges for Services Budget 5 Naperville Park District Non-Tax Revenue Plan Adopted: , Last Revised

6 Charges for Services Summaries The following charts identify trends within the three major areas that represent Charges for Services (Recreation Programs, Centennial Beach, and Golf). $4,500,000 $4,400,000 $4,300,000 $4,200,000 $4,100,000 $4,000,000 $3,900,000 $3,800,000 Charges for Services - Recreation Programs Budget Revenue from Recreation Programs declined in 2012 due to a reduction within the camps program area. High school summer athletic camps, historically offered by the Park District, became schooloffered programs in Revenues in 2013 remained flat, however, a decline was experienced again in 2014 due primarily to lower participation within the Arts, Early Childhood and Aquatics program areas. Additionally, less revenue from the trapshooting program was realized due to Sportsman s Park being closed for approximately 6 months in order to complete remediation and site improvements. A portion of the projected increase in 2015 is due to a full year of trapshooting operations and changes to the Arts program area to increase participation. Additionally, new programs at the Knoch Knolls Nature Center are expected to increase overall revenues. 6 Naperville Park District Non-Tax Revenue Plan Adopted: , Last Revised

7 $1,100,000 Charges for Services - Centennial Beach $1,050,000 $1,000,000 $950,000 $900,000 $850,000 $800, Budget Centennial Beach Charges for Services represent revenues associated with memberships, daily admissions, and aquatic programs was the second season in a row that Centennial Beach experienced an unseasonably cool and wet summer. With a significant number of rain days and only a few days reaching 90 degrees, Centennial Beach attendance and season pass sales were down when compared to the prior 3 years. Season pass sales were down 19% ($77,129) when compared to the prior three year average, and total attendance was down 19% (29,289) when compared to the same three years. The lower revenue in 2013 was also the result of weather. Rain and cool days in June 2013 resulted in a slow start to the season and negatively affected season pass sales. Season pass sales continue to suffer in 2014 and Season pass holders visited the Beach fewer times in 2013 and 2014, causing several previous pass holders to not renew their membership. The District is working to address lower pass sales and attendance through incentive programs. The projected revenue in 2015 is based upon a 3 year average. 7 Naperville Park District Non-Tax Revenue Plan Adopted: , Last Revised

8 $3,100,000 Charges for Services - Golf $3,000,000 $2,900,000 $2,800,000 $2,700,000 $2,600,000 $2,500, Budget Golf Charges for Services represent revenues associated with green fees, memberships, concessions, and lesson programs. Golf overall revenues were down again in 2014 for the second consecutive year, as the severe winter season delayed opening of both courses, and cool and wet weather reduced playable days. Golf and cart revenues were down 7% (158K) from 2013, with the significant number of rain days limiting play. Revenues from concessions and merchandise sales were up 6% (34K) compared with 2013, as new food choices and updated patios promoted more food sales, even with reduced rounds. For 2015, the District changed the pricing structure for golf fees, lowering several and reducing the number of fees to help promote more rounds and remain competitive. The projected revenues for 2015 were based off a 3 year average. Charges for Services Objectives Update the Fees & Charges Policy Manual. Implement the updated Recreation Programming Plan. Implement improvements to increase program participation. Identify opportunities to further expand programming of the Knoch Knolls Nature Center. Implement new software in late Begin Activity Center operations in Implement new internet tee time service with dynamic pricing Identify new opportunities to expand programming with Training Center Increase sales and margins for concessions 8 Naperville Park District Non-Tax Revenue Plan Adopted: , Last Revised

9 $1,200,000 Miscellaneous $1,000,000 $800,000 $600,000 $400,000 $200,000 $ Budget Miscellaneous Summary Ongoing revenue sources under the miscellaneous category include athletic organization billing for lights, reimbursement agreements for maintenance of the Riverwalk and Carillon, cell tower rental fees, and parking permits. Other sources that are one-time in nature include reimbursements for insurance claims and the sale of District vehicles and equipment. Revenue within this area increased significantly in 2011 and 2013 due to a large insurance reimbursement received for a major flood event that occurred in each year. In 2014, the Park District negotiated a lease agreement with Sprint to utilize the existing cell tower at Knoch Park which has the potential of yielding $1,575,673 in alternative revenue over a thirty (30) year period. The Park District approved the final lease agreement in April Miscellaneous Objectives Continue to aggressively negotiate cell tower rental lease agreements in conjunction with the District s Cell Site in the Parks administrative policy. 9 Naperville Park District Non-Tax Revenue Plan Adopted: , Last Revised

10 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $- Grants - OSLAD Budget Grants - OSLAD Summary Open Space Land Acquisition and Development grants (OSLAD) are available through the Illinois Department of Natural Resources (IDNR). The Naperville Park District applies for OSLAD grants for park development projects in the capital plan when they fit the grant program s guidelines and can be completed within the timeframe necessary for the grant. The dollar amounts in the figure above show the funds spent by the Naperville Park District on reimbursable OSLAD grant projects. In 2010 and 2011 the District was reimbursed $800,000 for OSLAD grants for construction at Seager Park and Knoch Park. The $400,000 OSLAD grant for Meadow Glens Park was recognized in The District was awarded a $400,000 OSLAD grant for the Knoch Knolls Nature Center in A total of $100,000 received from the grant was recognized in The remaining $300,000 was recognized in Grants - OSLAD Objectives Consider future OSLAD applications for projects that fit the grant guidelines and fulfill the goals of the Naperville Park District s Master Plan. $1,200,000 Sales $1,100,000 $1,000,000 $900,000 $800,000 $700,000 $600, Budget 10 Naperville Park District Non-Tax Revenue Plan Adopted: , Last Revised

11 Sales Summary Sales revenue experienced a significant increase in 2011 due to the District s opening of Centennial Grill and moving concessions operations at the Grill and the Riverwalk Eatery in-house. The addition of Centennial Grill allowed the Park District to expand the food and beverage menu at the Centennial Beach facility, thereby improving the availability of food items to Beach patrons and increasing alternative revenue potential for the District. Sales revenue increased in 2012 due to operational and service improvements that resulted in increased per person sales at the facility. Centennial Beach also experienced above average visits due to a warm, dry summer sales were significantly lower due to below average attendance as a result of inclement summer weather. Despite lower attendance in 2014, Centennial Grill sales experienced an increase due to improved operations and higher per person sales. The Riverwalk Eatery and Paddleboats operation also experienced a higher than average year in A portion of the success was due to the introduction of Kayak rentals through a third party vendor. Sales Objectives Increase per person sales at Centennial Grill. Gather resident feedback on the types of improvements desired for the Riverwalk Eatery. $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $- Rentals Budget Rentals Summary Rental revenue has increased steadily over the past five years, primarily due to increased use of park district athletic fields, improved tracking of athletic field expenditures, and renovations to the Alfred Rubin Riverwalk Community Center s, Community Hall. Rental revenue declined slightly in 2011 as a result of fewer rentals at Community Hall and the impact of construction and renovation projects at major sports complexes. Rentals increased in 2012 primarily due to income received from a full year of programming at the Nike Sports Complex synthetic turf field. Rentals increased again in 2013 due to the development of a second synthetic turf field at Commissioners Park and implementation of a sublease with Compass Church for use of classroom space at the 95 th Street Center on Sunday mornings. The Commissioners Park field was opened for the fall 2013 athletic season. The field was open for a full year of programming in 2014, resulting in another increase in rental revenues. A revised athletic field fee structure was implemented in 2015 which charges groups for the actual time they reserve a field versus tracking expenses and seeking reimbursement. Synthetic turf field rental fees also increase from $80 to $90 per hour in Naperville Park District Non-Tax Revenue Plan Adopted: , Last Revised

12 Rentals Objectives Maximize Nike Sports Complex and Commissioner Park synthetic turf field scheduling and rental revenue. Fully implement a revised athletic field fee structure in Grants - Other $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $ Budget Grants - Other Summary Over the past ten years OSLAD grants have accounted for the majority of the District s annual grant income. Other major sources of grant income in the past five years included an Illinois Bicycle Path Grant for $200, , two water quality improvement grants totaling over $600,000 in 2011, 2012 and 2013, and a $255,693 grant from the Illinois Clean Energy Community Foundation for energy efficiency and renewable energy for the Knoch Knolls Nature Center. The District was awarded a $2.5 million Park and Recreational Facility Construction (PARC) grant for the Fort Hill Activity Center in July 2014; however, the grant is currently suspended. 12 Naperville Park District Non-Tax Revenue Plan Adopted: , Last Revised

13 Grants - Other Objectives Continue to seek grants for capital improvements, especially those related to environmental initiatives. Research and apply for grants for new or renovated facilities. Research new grant opportunities for the District and collaborative partnerships. Interest Income $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $ Budget Interest Income Summary As noted above, the interest rate environment has been on a constant decline since 2010 through While interest income increased slightly in 2014, rates remain low. The overall decline in interest income primarily a reflection of lower rates as the District s investable funds have remained fairly consistent. Interest Income Objectives Maximize interest earning under the parameters of the District s Investment Policy. Conduct a monthly review of the District s investment portfolio. 13 Naperville Park District Non-Tax Revenue Plan Adopted: , Last Revised

14 $120,000 Sponsorships $100,000 $80,000 $60,000 $40,000 $20,000 $ Budget Sponsorships Summary Since the early 2000s the District has sought alternative revenue through community-based - partnerships. Early on, the sponsorship program benefited greatly from a substantial agreement with a community bank that contributed more than $60,000 in annual support, which equated to more than 50% of the revenue generated through the sponsorship program at the time. Then in 2011, after a series of mergers on the part of the financial institution, the agreement was not renewed. Later in 2011, the Corporate Relations Manager position was restructured and the Sponsorships and Events Manager role was created. For the first few years, this role divided its time between generating alternative revenue and coordinating and managing several District events. In early 2015, with the hiring of an events coordinator, the Sponsorships and Events Manager role began transitioning away from managing special events to begin focusing more on sponsorship and advertising sales. Additional responsibilities of this new role are to assist the Naperville Parks Foundation with generating revenue and creating awareness for the Foundation. Sponsorship participation has increased steadily since 2012 and the District has benefited from the program s tremendous growth with more than 60 community partnerships in existence. As key longterm relationships are formed, sponsorship revenues are expected to continue to grow. It s important to note that since 2012, sponsorship revenue has been tracked jointly between the finance and marketing departments. Previously, with the significant bank sponsorship, all dollars were accounted for under the sponsorship umbrella. Now, sponsorship dollars are tracked separately from banner production, print and web advertising, golf sponsorship and in-kind partnerships. The overall dollars received for sponsorships and advertising totaled $108,472 in 2012, $113,933 in 2013 and $127,103 in The primary goal of the sponsorship role is to evaluate and maintain an up-to-date sponsorship inventory, including identifying new opportunities, engaging new sponsors and renewing existing partnerships. 14 Naperville Park District Non-Tax Revenue Plan Adopted: , Last Revised

15 Sponsorships Objectives The District seeks to continue to grow sponsorship and advertising dollars and participation each year while forming strategic, complementary partnerships with area businesses and organizations. Not unlike the District s overall goal of enhancing its local outreach, the sponsorships and events manager is visible in the community by regularly attending Chamber and other community functions to make meaningful connections and grow relationships that can benefit the District. $200,000 $175,000 $150,000 $125,000 $100,000 $75,000 $50,000 $25,000 $- Donations Budget Donations Summary The Naperville Park District has not actively sought large donations from individuals, but has benefitted from donations from other community organizations and local governments. For example, in 2009 the District received a donation of $200,000 from the Forest Preserve District of Will County for the construction of the bicycle trail in DuPage River Park. In other years, the District received large donations from Naperville athletic organizations for field improvements. In 2014 the District entered into agreements with the Naperville Noon Lions and Century Walk Corporation for multi-year donations for Knoch Knolls Nature Center for a total of $65,000 pledged. Most donations are under $1,000 in value or are in the form of in-kind donations. Donations Objectives Continue to promote the opportunities for memorial donations, including Remembrance Trees, benches, and picnic tables. As upcoming capital budgets are approved, continue to inform athletic organizations and other community groups about specific and timely opportunities to enhance park facilities, such as athletic fields, by means of donations. Encourage residents to consider donations to the Park District in their Estate Planning. Coordinate donation efforts with the Naperville Parks Foundation. Continue to identify opportunities for the Foundation to assist with District needs and/or projects. 15 Naperville Park District Non-Tax Revenue Plan Adopted: , Last Revised

16 $2,500,000 Cash-in-Lieu $2,000,000 $1,500,000 $1,000,000 $500,000 $ Budget Cash-in-Lieu Summary The Naperville Municipal Ordinance 7-3-5, the Dedication of Park Lands and School Sites or for Payments or Fees in Lieu of, requires developers to provide land for park and recreational purposes and land for school sites, to serve the immediate and future needs of the residents of the development, or cash contribution in lieu of actual land dedication, or a combination of both, based on the recommendation of the public body which will be the recipient of the contribution, but subject to final determination of the City Council. The ordinance is based on a standard of 8.6 acres of park land per 1,000 population and includes a provision that requires spending monetary donations within a timeframe of ten years from the date of receipt. In 2007, the City of Naperville increased the Fair Market Value referenced in their Ordinance to $323,600 per acre. Around the same time, the Park District experienced a sudden decrease in Cash- In-Lieu funds received from the ordinance due to a decline in residential development. In February 2011, the Park District reported a Cash-In-Lieu balance of $8,901,205 primarily consisting of donations gathered before the downward shift in the economy. Later in 2011, the Park District invested a major portion of the funds for community wide capital improvement projects consisting of the revitalization of the Centennial Beach Bathhouse and site improvements as well as the 20.4 acre park expansion at Nike Sports Complex. As of December , the Park District reported the ending balance of the Cash-In-Lieu fund at $3,207,384. The Park District received Cash-In-Lieu funds averaging $200,795 over the past five years. The average amount is expected to decline due to the current state of the economy. In late 2013, the Park District identified the ending balance of the Cash-In-Lieu fund at $5,174,708. As a community wide amenity, future Cash-In-Lieu funds are proposed to be utilized to support development of the Park District s new Activity Center. The Activity Center is expected to provide much needed year-round programs and services. The Activity Center development project is slated to reach completion by fall of After the 2014 budget year, the Park District realized an ending balance of the Cash-In-Lieu fund at $5,991,309. As identified earlier, Cash-In-Lieu funds are proposed to be utilized to support development of the Park District s new Fort Hill Activity Center. The development of the center is on track to reach completion by fall of Naperville Park District Non-Tax Revenue Plan Adopted: , Last Revised

17 Given the state of the economy and relatively slow housing construction, Cash-In-Lieu funding is anticipated to flow at a similar pace. Based on construction data from the last few years, infill development or reconstruction of single-family homes appear to be popular and is expected to contribute to Cash-In-Lieu funding. At this time, the City s population is projected to extend past 145,000 in As identified by local and regional planners, it is extremely difficult to project the City s population past 2015 due to multiple variables (e.g., current market conditions, active fluctuation in development trends, varying private ownership decisions). Cash-in-Lieu Objectives Continue to effectively collaborate with the City of Naperville in administering the Land Dedication Ordinance. Actively monitor and track current state of economy and residential development in Naperville. Conclusions and Recommendations 1. Optimize Alternative Revenue Capabilities of Facilities. Consistent with prior Strategic Plan Initiatives, the District must continue to evaluate existing facilities for opportunities to increase revenue potential 2. Develop Business Plans and Proformas for existing and proposed revenue facilities. A component of the District s evaluation of constructing new or renovating existing facilities should consist of an operational pro-forma to understand the projected revenues and expenses associated with major projects. The growth potential of increased sales plays an important role within the District s business plans and pro-formas. For example, the Riverwalk Eatery renovation project (currently under evaluation) is an existing facility with the potential for growth in non-tax revenues through increased food and beverage sales. 3. Research grant opportunities and submit applications for grants that support the District s goals and objectives. Park District staff continue to research possible grants that appear to align with planned capital improvement projects on an annual basis, including large-scale projects such as the Fort Hill Activity Center. In addition to using Capital funds to support the Fort Hill Activity Center project, the Park District secured a grant from the Park and Recreational Facility Construction (PARC) grant program administered by the Illinois Department of Natural Resources (IDNR) in the amount of $2.5 million. Despite the announcement of the PARC grant program being suspended in March 2015, the Park District is moving forward with the much needed Fort Hill Activity Center project and exploring other grant opportunities, including the Naperville Renewable Energy Program (NREP). 4. Review and update non-tax revenue policies. 5. Monitor investments and make adjustments per the District s Investment Policy. The District must continue to invest funds in compliance with the Investment Policy and the State of Illinois Public Funds Investment Act. The District should continue to utilize money managers to effectively manage returns and risk. While investment income is an important 17 Naperville Park District Non-Tax Revenue Plan Adopted: , Last Revised

18 alternative revenue source, the primary objectives are safety of principal, liquidity and lastly, yield. 6. Continue developing the Naperville Parks Foundation as a non-tax revenue resource. The Foundation was organized for the purpose of improving the quality of life in the Naperville community by undertaking park and recreation projects that add to the park system.. In 2015 the Naperville Parks Foundation made the decision to focus its efforts on raising funds for the District s scholarship program. The District created the scholarship program several years ago to give residents experiencing financial hardship the opportunity to enjoy recreational programs and realize the benefits of physical activity and socialization opportunities that many people take for granted. The Park District Executive Director will serve as the Foundation liaison with the Sponsorship Manager assisting in generating increased awareness for the Foundation to help result in revenue to the organization. The District will continue to work with the Foundation to further achieve its mission. 7. Continue to grow the District s sponsorship plan to highlight new inventory and increase the value of sponsorship and advertising opportunities while expanding partnerships within the community. 8. Expand the notoriety of the sponsorship program through community outreach, thereby generating interest in the business community and identifying potential sponsorship relationships. 9. Appropriately recognize non-tax revenue partners. 18 Naperville Park District Non-Tax Revenue Plan Adopted: , Last Revised

19 General Objectives Naperville Park District Financial Policy Investment Policy Appendix A Policy FN14 The primary objectives of investment activities, in priority order, shall be safety, liquidity, and yield. Safety of Principal The safety of principal is the foremost objective of the Naperville Park District's Investment Policy. All investments shall be undertaken in a manner that seeks to ensure the preservation of the principal. The objective will be to minimize credit risk and interest rate risk. a. Credit Risk The Naperville Park District will minimize credit risk, which is the risk of loss due to the failure of the security issuer or backer by; Limiting investments to the types of securities listed in the Authorized Investments section of this policy Investing with institutions designated as Federally Insured Prequalifying Institutions permitted to hold Public Funds. Diversifying the investment portfolio so that the impact of potential losses from any one type of security or from an individual issuer will be minimized. b. Interest Rate Risk The Naperville Park District will minimize interest rate risk, which is the risk that the market value of securities in the portfolio will fall due to changes in market interest rates, by: Structuring the investment portfolio so that securities mature to meet cash requirements for on-going operations, thereby avoiding the need to sell securities on the open market prior to maturity Investing operating and reserve funds in securities, money market funds, or similar investment pools permitted by this policy and the Public Funds Investment Act. Average and final maturities will be limited based on the investment parameters established for both operating and reserve funds in accordance with this policy. Liquidity of Funds The investment portfolio shall remain sufficiently liquid to enable the Park District to meet all of its reasonably anticipated operating requirements, thereby avoiding the need to sell securities on the open market or redeeming time deposits prior to maturity. This is accomplished by structuring the portfolio so that securities mature concurrent with cash needs to meet anticipated demand (static liquidity). Furthermore, since all possible cash demands cannot be anticipated, a portion of the portfolio should be placed in a money market mutual fund or local government investment pool which offer same day liquidity for short-term funds. Effective: August 10, 2006 Revised March 13, 2014 Page 1 of 7 Revised: May 12, 2011 Reviewed March 12, 2015 Reviewed: June 13, 2013 Revised February 11, 2016

20 Financial Policy Investment Policy Policy FN14 Yield The investment portfolio shall be designed with the objective of attaining a market rate of return throughout the budgetary and economical cycles, taking into account the investment risk constraints and liquidity needs. Return on investment is of secondary importance compared to safety and liquidity objectives described above. The core of investments are limited to relatively low risk securities in anticipation of earning a fair return relative to the risk being assumed. Standards of Care 1. Delegation of Authority Management responsibility for the investments is borne by the Finance Director, who shall act in accordance with this investment policy. The Finance Director may explicitly delegate authority to other persons responsibility for investment transactions and recordkeeping. Investment Managers shall have full discretion over funds subject to the guidelines established by this policy and the Board. 2. Prudence The standard of prudence to be used by the Finance Director, and her authorized delegates, shall be the prudent person standard and shall be applied in the context of managing an overall portfolio. The Finance Director acting in accordance with this investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security s credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and the liquidity and the sale of securities are carried out in accordance with the terms of this policy. The prudent person standard states that Investments shall be made with judgment and care under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived. 3. Ethics and Conflicts of Interest Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with the proper execution and management of the investment program, or that could impair their ability to make impartial decisions. Officers, employees and investment managers shall disclose any material interests in financial institutions with which they conduct business. They shall further disclose any personal financial/investments positions that could be related to the performance of the District s investment portfolio. Employees and officers shall refrain from undertaking personal investment transactions with the same individual with whom business is conducted on behalf of the Naperville Park District. Effective: August 10, 2006 Revised: March 13, 2014 Page 2 of 7 Revised: May 12, 2011 Reviewed March 12, 2015 Reviewed: June 13, 2013 Revised February 11, 2016

21 Financial Policy Investment Policy Policy FN14 Safekeeping and Custody 1. Authorized Financial Dealer and Institution With respect to bank accounts maintained at financial institutions, it shall be the policy that the Park District will not maintain funds on deposit in any financial institution that is not a member of the F.D.I.C. The financial institution must also be eligible to hold Public Funds in accordance with Section 6 of the Public Funds Investment Act. Furthermore, the District shall not deposit public funds in any financial institution unwilling or unable to post the required collateral in excess of F.D.I.C. insurance limits to the extent applicable. 2. Well Capitalized Financial Institutions Depository Institutions must meet the definition of a well capitalized bank as follows: Has a total risk-based capital ratio of 10.0 percent or greater; and Has a Tier 1 risk-based capital ratio of 6.0 percent or greater; and Has a leverage ratio of 5.0 percent or greater; and Is not subject to any written agreement, order, capital directive, or prompt corrective action directive issued by the FDIC pursuant to section 8 of the FDI Act (12 U.S.C. 1818), the International Lending Supervision Act of 1983 (12 U.S.C. 3907), or section 38 of the FDI Act (12 U.S.C. 1831o), or any regulation thereunder, to meet and maintain a specific capital level for any capital measure 3. Internal Controls The Finance Director is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the entity are protected from loss, theft or misuse. The internal control structure shall be designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management. Accordingly, the Finance Director shall establish a process for annual independent review by an external auditor to assure compliance with policies and procedures. The internal controls shall address the following points: Control of collusion Separation of transaction authority from accounting and record keeping Custodial safekeeping Avoidance of physical delivery securities Effective: August 10, 2006 Revised: March 13, 2014 Page 3 of 7 Revised: May 12, 2011 Reviewed March 12, 2015 Reviewed: June 13, 2013 Revised February 11, 2016

22 Financial Policy Investment Policy Policy FN14 Clear delegation of authority to subordinate staff members or Investment Managers Written confirmation of telephone transactions for investments and wire transfers Development of a wire transfer agreement with the lead bank or third party custodian 4. Delivery vs. Payment All trades where applicable will be executed by delivery vs. payment (DVP). This ensures that securities are deposited in the eligible financial institution prior to the release of funds. 5. Safekeeping Securities will be held by an independent third-party custodian as evidenced by safekeeping receipts in the Park District s name. Authorized Investments 1. Investment Types While striving to achieve the objectives of this investment policy and limited by the State statutes, the Park District has approved the following for investment of public funds: bonds, notes, certificates of indebtedness, treasury bills or other securities now or hereafter issued, which are guaranteed by the full faith and credit of the United States of America as to principal and interest; bonds, notes, debentures, or other similar obligations of the United States of America or its agencies, and instrumentalities interest-bearing savings accounts, interest-bearing certificates of deposit or interest-bearing time deposits or any other investments constituting direct obligations of any bank as defined by the Illinois Banking Act (201 ILCS 5/1 et seq.), provided such a bank is federally insured; or short term obligations of corporations organized in the United States with assets exceeding $500,000,000 if (i) such obligations are rated at the time of purchase at one of the 3 highest classifications established by at least 2 standard rating services and which mature no later than 270 days from the date of purchase, (ii) such purchases do not exceed 10% of the corporation s outstanding obligations and (iii) no more than one-third of the public agency s funds may be invested in short term obligations of corporations; or money market mutual funds registered under the Investment Company Act of 1940, provided that the portfolio of any such money market mutual fund is limited to obligations described in paragraph (1) or (2) of this subsection and to the agreements to repurchase such obligations; or interest bearing bonds of any county, township, city, village, incorporated town, municipal corporation, or school district, of the state of Illinois, or any other state, or any other political subdivision or agency of the State Effective: August 10, 2006 Revised: March 13, 2014 Page 4 of 7 Revised: May 12, 2011 Reviewed March 12, 2015 Reviewed: June 13, 2013 Revised February 11, 2016

23 Financial Policy Investment Policy Policy FN14 of Illinois or of any other state, whether the interest earned thereon in taxable or tax-exempt under federal law or short term discount obligations of the Federal National Mortgage Association or in shares of other forms of securities legally issued by savings banks or dividend-bearing share accounts, share certificates accounts or class of share accounts of a credit union chartered under the laws of this State or the laws of the United States; provided the principal office must be located in the State of Illinois or agencies of the United State of America including: federal land banks, federal intermediate credit banks, banks for cooperative, federal farm credit banks, or any other entity authorized to issue debt obligations under the Farm Credit Act of 1971 or federal home loan banks and the federal home loan mortgage corporation; and any other agency created by Act of Congress or a Public Treasurers Investment Pool created under Section 17 of the State Treasurer Act This policy prohibits the investment in derivatives. 2. Collateral The Park District shall require that funds on deposit in excess of insured limits be secured by collateral. The District will accept any of the following assets as collateral: U.S. Government Securities. Obligations of Federal Agencies. Obligations of the State of Illinois. General Obligation municipal bonds rated A or better issued by a governing body in the State of Illinois. The amount of collateral provided shall not be less than 110 percent of the fair market value of the net amount of District funds on deposit at each financial institution. Pledged collateral shall be held by the Naperville Park District, or kept in a safekeeping account by a third party and evidenced by a custodial agreement and safekeeping receipt. Investment Parameters 1. Investment Quality Fixed income securities that are not direct obligations of the U.S. Government or FDIC insured must be rated as minimum investment grade or higher at the time of purchase. For example, minimum investment grade as defined by Standard & Poor s and Moody s is BBB and Baa respectively. 2. Diversification The investments will be diversified by security type and institution. Effective: August 10, 2006 Revised: March 13, 2014 Page 5 of 7 Revised: May 12, 2011 Reviewed March 12, 2015 Reviewed: June 13, 2013 Revised February 11, 2016

24 Financial Policy Investment Policy Policy FN14 3. Selection of Investment Instruments The Naperville Park District shall invest any surplus funds for a specific maturity date that is required for either cash flow purposes or for conformance to maturity guidelines, if such instruments which would be most advantageous under prevailing market conditions exist. Records will be kept of all investments purchased or sold by the District in compliance with statutes. 4. Select Alternatives If certificate of deposit or time deposits are to be used, the District will solicit telephone quotes from at least two (2)-approved institutions. Preference shall be given to any local institution whenever comparable opportunities arise. Money Market accounts may be used if rates are competitive. 45 Performance Benchmark In order to effectively measure investment performance for a managed portfolio, an established benchmark will be selected and approved by the Finance Director. The appropriate benchmark will be selected based on the portfolio goals and objectives as governed by guidelines in this policy. The managed portfolio will be compared to the established benchmark on a monthly/quarterly basis. Investment Parameters-Operating Funds To the extent possible, the Naperville Park District will attempt to match its investments with anticipated cash flow requirements. Maturity scheduling shall be timed according to anticipated need. The maximum maturity should not exceed three (3) years and the portfolio duration should not exceed two (2). For investment in pooled accounts or funds the duration should not exceed two (2). Investment Parameters Reserve Funds: Reserve funds and other funds with longer-term horizons may be invested in securities with the following guidelines. The maximum maturity should not exceed five (5) years and the portfolio duration should not exceed three (3) For investment in pooled accounts or funds the duration should not exceed three (3). Effective: August 10, 2006 Revised: March 13, 2014 Page 6 of 7 Revised: May 12, 2011 Reviewed March 12, 2015 Reviewed: June 13, 2013 Revised February 11, 2016

25 Financial Policy Investment Policy Policy FN14 Policy Considerations 1. Exemption Any investment held prior to the approval of this policy that does not meet the guidelines of this policy shall be exempted from the requirements of this policy. At maturity or liquidation, such monies shall be reinvested only as provided by this policy. 2. Amendment This policy shall be reviewed on an annual basis. The Board of Commissioners of the Naperville Park District must approve any changes to this policy. Reporting The Board of Park Commissioners shall receive a monthly report of all investments which reconciles to the investment account in the District s financial statements. The market value of the portfolio shall be calculated monthly. This will ensure that review of the investment portfolio, in terms of value and price volatility, has been performed. For a managed portfolio, performance data compared to the established benchmark will be reported on a monthly/quarterly basis. The report shall also contain the following: description of each holding, including the par value and issuer; the purchase and maturity dates of each security; rate of interest , v. 2 Effective: August 10, 2006 Revised: March 13, 2014 Page 7 of 7 Revised: May 12, 2011 Reviewed March 12, 2015 Reviewed: June 13, 2013 Revised February 11, 2016