City Council Meeting
City of Carmi
May 5, 2014
The Carmi City Council met Monday, May 5, 2014 at 5:30 p.m. in the Council Room of the Municipal Building, 225 East Main Street, Carmi, Illinois.
Prior to opening the Council meeting, Mayor Pollard asked Alderman Steve Winkleman to give the invocation followed by the Pledge of Allegiance.
Mayor Pollard presided with the following aldermen present: Steve Winkleman, Mark W. Blake, Keith Davis, Kenny Carter, Mike Knight, Doug Hays, Jack Lamont and Sheila Jo Headlee.
Minutes for the April 21, 2014 Council meeting were presented. A motion was made by Alderman Headlee and seconded by Alderman Davis to approve the minutes as presented. The motion carried on roll call by each alderman answering “yes.”
Mayor Pollard presented for Council consideration and approval to accept a memorial contribution from the Dillman family and to name the pond at Burrell Woods the “Gregory W. Dillman Memorial Pond.” A motion was made by Alderman Winkleman and seconded by Alderman Blake to approve and accept a memorial contribution from the Dillman family and name the pond at Burrell Woods the “Gregory W. Dillman Memorial Pond” as presented. The motion carried on roll call by each alderman answering “yes”, with Alderman Davis abstaining from the vote (Alderman Davis is an employee of the Dillman’s).
Mayor Pollard presented Alderman Hays Chairman of the Police Committee to ask for Council consideration and approval to allow the Police Commission to hire a police officer to replace Sergeant Tim Whitaker when Police Chief Randy Hamblin retires in June of this year. Alderman Hays noted after Chief Hamblin retires the police department will be down to eight (8) officers, the ordinance requires that they have nine (9) officers and he also stated that summer is not the time to be understaffed. Alderman Hays then noted that the department has tried to operate on eight (8) officers before which lead to overtime and officer fatigue. Deputy Chief Jason Carter added that there were four (4) officers on the eligibility list and only three (3) are currently interested in the job. A motion was made by Alderman Knight and seconded by Alderman Headlee to approve the Police Commission to hire a police officer as presented. The motion carried on roll call by each alderman answering “yes.”
Mayor Pollard presented Ordinance No. 1477, an ordinance regulating No Parking zones within the City of Carmi and rescinding Ordinance No. 846. Mayor Pollard stated that the fine would move from two (2) dollars to the same amount of the one-way street fine, which is not less than fifty (50) dollars but no more than one hundred (100) dollars. He then said that there would be no parking on Fifth Street, 371 feet north of the Evansville Western Railway, which puts the no parking zone right at the house next to the old elevator. A motion was made by Alderman Lamont and seconded by Alderman Winkleman to approve Ordinance No. 1477 as presented. The motion carried on roll call by each alderman answering “yes.”
Mayor Pollard presented Alderman Lamont Chairman of Street and Alley Department to ask for Council consideration and approval to allow Mayor Pollard to seek bids for a new backhoe. Alderman Lamont stated that they finally got the backhoe running but, it is on its last leg. They can’t take it out of town because of a circuit board that is burned up, which would cost two thousand dollars (2,000) to fix. Alderman Lamont then added that if it tears up again, it would take a major amount of money to fix it. Alderman Lamont stated that if the backhoe were running that they might get eight to ten thousand (8,000-10,000) dollars out of it. He then stated that if it wasn’t running that it would be ready for the salvage yard. Mayor Pollard added that they were hoping to be able to trade it in, depending on when they could take bids. A motion was made by Alderman Lamont and seconded by Alderman Hays to approve Mayor Pollard to seek bids for the Street and Alley Department a new backhoe as presented. The motion carried on roll call by each alderman answering “yes.
Mayor Pollard presented WEDG Director Sandra Irvine to present proposals for review and asks Council to accept and approve a bid for appraisals for the FEMA Hazard Mitigation Program. Director Irvine stated that she had only received two (2) bids. One from Stinson Appraisal in the amount of eleven thousand six hundred (11,600) dollars and one from Lane Appraisal in White Hall, Illinois in the amount of thirty thousand (30,000) dollars. She then said that once the grant documents are signed that they can go ahead and start the appraisals. Alderman Winkleman commented that there was a huge difference between the two appraisals. Director Irvine agreed and added that the homeowners can reject the appraisal and the appraiser has forty five (45) days to appraise all properties. A motion was made by Alderman Knight and seconded by Alderman Carter to accept the bid from Kay Stinson of Stinson Appraisal Service as presented. The motion carried on roll call by each alderman answering “yes.”
Mayor Pollard presented City Attorney Greg Stewart to address the Council concerning the Phoenix Foundation and the Phoenix Foundation utility bills. Mr. Stewart presented packets of information to the council. He then stated that he started as the City Attorney under Mayor Port and that he had quite a bit of insight into the Phoenix foundation because his office represented the Carmi Township Hospital when it underwent financial troubles. Mr. Stewart said that he was present to enlighten the council and mayor of the situation that is progressing with the Phoenix Foundation. He said that the City is involved because it loaned money to the foundation. In March of 2008, the city applied for and got a grant for money to come into the revolving loan fund. The amount ended up being seven hundred thirty thousand (730,000) dollars. The city and Phoenix then entered into a loan agreement. The city gave the money to Phoenix nursing home in two (2) separate distributions, the first one being in the amount of four hundred thirty-three thousand (433,750) dollars. The second amount was two hundred ninety three thousand (293,750) dollars. Mr. Stewart then went on to explain the loan agreement that Phoenix signed with the city and all of the terms with which the loan would be repaid. One of the terms set in this loan agreement was default, if you don’t pay the monthly installments. He then went on to explain that the Phoenix Foundation owns the property where the old hospital is and that the foundation was born to re-open a hospital for the City of Carmi. They acquired the old hospital through a foreclosure type process and made a mortgage agreement to the city. There was a lease agreement between the Phoenix Foundation and the Phoenix nursing home. Phoenix nursing home was going to pay a monthly lease payment to the Phoenix Foundation to be able to run the nursing home. The Phoenix foundation pledged the property on Plum Street for the revolving loan. In the fall of 2010, roughly two and a half (2 ½) years from the loan, the city sent a letter to Phoenix that indicated that they were behind on their payments in the revolving loan account.
This letter also stated that they were ten months behind which is approximately one hundred thirty five thousand (135,000) dollars. Mr. Stewart wrote another letter to Phoenix in December of 2010 explaining again that they were behind in payments and the terms of the revolving loan agreement. In this letter, the city declared the loan in default that triggered a default interest rate of twelve percent per year. Phoenix contacted the city, not Mr. Stewart, and made some payments toward the loan and also towards some delinquent utility bills. He sent another letter in May of 2012 explaining again that the loan is in default He also noted that Phoenix is behind about three hundred thousand (300,00) dollars or twenty-two months of payments behind. Payments continue to be missed, and in June of 2013 Mr. Stewart sent yet another letter to Phoenix, but took a different approach. This time Mr. Stewart demanded records and the general ledger to see where funds were being allocated. They wanted these documents to be supplied within fourteen days. At the end of the fourteen (14) days, Mr. Stewart received some income tax returns and some balance sheets that were prepared by a new in house accountant. Mr. Stewart felt that these things didn’t have relevance to what he had asked for, but they did receive something. However, he didn’t receive the general ledger that he was looking for. The administrator of Phoenix nursing home, Lil Fortner, sent a letter to the city explaining some troubles that they were having, mainly with getting reimbursement from the state of Illinois. Other letters were sent in July and August of 2013 with no responses to either of them. Mr. Stewart then states that it was brought to his attention that the utility bills weren’t getting paid at the hospital site and the nursing home. This includes three separate bills for light and water and sewage. The amount due was right at sixty three thousand (63,000) dollars with the last payment in the fall of last year with it being delinquent before then. Mr. Stewart then explains that some federal tax liens were being filed against Phoenix and Lil Fortner for not tending to the IRS money that came out of their employees checks for federal withholding taxes, or nine forty one (941) taxes. This means that money comes out of the employee’s checks and the employer sends it to the IRS to be held. The Internal Revenue Service claimed that Phoenix didn’t do this and filed a federal tax lien. The amount on the first lien is in the amount of around seventy two thousand (72,000) dollars. The second amount was one hundred twenty three thousand (123,500) dollars approximately. He then stated that there were two new liens filed today (5/5/14.) The first is in the amount of twenty eight thousand, five hundred (28,500) dollars against Phoenix. The second, is against the administrator Lil Fortner, in the amount of fifty seven thousand, one hundred and ninety two (57,192) dollars. Mr. Stewart then stated that Badger Acquisition sued Phoenix in federal court in Benton and federal judgment was filed at one (1) dollar and three (3) cents per day against Phoenix. Mr. Stewart said that he saw the same thing happen with Carmi Township Hospital when it closed. He then says that the city needs to make a decision about what to do to with Phoenix. Mayor Pollard said that he sees a need for healthcare still in Carmi, which the city is obligated to the state for the revolving loan fund and the city may not be able to get any more funds to loan out. Mr. Stewart then added in that there has been no payment in four (4) years on the loans. Alderman Winkleman asked what happens to employee taxes. Mr. Stewart answered that the government still accepts employee’s returns and will issue refunds.
Administrator of the Phoenix Foundation, Lil Fortner was then asked to speak. She began by saying that the state of Illinois owes Phoenix more money than Phoenix owes out. She said they were extremely apologetic. Mrs. Fortner reported that they were eighty five to ninety (85-90) percent completed with the hospital and that the Phoenix nursing home is a five (5) star facility despite their challenges with the state. As of April 2014, the economic reinvestment into this community is over eighteen (18) million dollars. Phoenix is in payment plans with the IRS. They also have a certificate of need permit that has been extended to December of 2015.
Mrs. Fortner then explains that if the building changes ownership, that it will be lost. She said that she has been in contact with the state and they want corrected reports in order for Phoenix to receive payments. She was also assured that the state would make the payments all at once even though they are running low on money. Mrs. Fortner then said that this doesn’t mean that they will receive the whole one point four (1.4) million dollars that they are owed in one lump sum. She then said that there were too few people doing too many jobs and some things just fell through the cracks. She offered to have meeting with board members and the city to show and reorganize payments. Mayor Pollard asked her if the work on the hospital has stopped. Mrs. Fortner answered that they let two (2) people go to put those funds towards the hospital. Alderman Headlee asked for documentation from Phoenix showing the amounts of one point four (1.4) million dollars the state of Illinois owes Phoenix. Mrs. Fortner said that she supply the documentation as soon as she gets it. Alderman Winkleman then asked how restructuring is going to help Phoenix make their payments. She said when the state pays, they will pay. Alderman Carter then stated that quick math shows that Phoenix owes the city around one point one (1.1) million dollars. He then commented that if the state did indeed pay Phoenix that amount they would be left with a very thin margin. Alderman Davis asked how many patients were at Phoenix and Mrs. Fortner answered twenty six (26) or twenty seven (27) patients with approximately thirteen (13) or fourteen (14) paying privately. Alderman Winkleman asked how many patients they have room for. She answered fifty (50) and then stated that when they have twenty-five (25) or less they lose money. Alderman Davis asked why there has been no attempt to pay their debts. Mrs. Fortner said that the money is put into medical care. Alderman Hays then asks if the city attorney, Greg Stewart, can have access to what he wants to see. She answered “yes.” Mr. Stewart asked if Phoenix contested the 941 federal liens. Mrs. Fortner said “yes” they had and that they have an attorney working on it named Carrie McCullen out of Colorado with a firm called Nova. Alderman Knight asked if the 2012 tax lien was ever resolved with the state of Illinois. Mrs. Fortner believed it was. Mr. Stewart then asked if any vendors were on COD with Phoenix. She said she wasn’t sure, but she believed that most are. Alderman Blake asked if they always made payroll. Mrs. Fortner said that they have never once missed payroll in six (6) almost seven (7) years. Mr. Stewart then asked her if any banks had to help with payroll. This had not happened to her knowledge. Alderman Winkleman asked if the city could speak to the state of Illinois. Mrs. Fortner said that she will have state supply a letter to the city. Alderman Davis then asked if the state will keep IEDS money before it pays. Mrs. Fortner said “no.” She then said that she would set up a meeting with the city. Alderman Headlee then commented that she would prefer that they would meet before the next city council meeting. Mayor Pollard then asked Mrs. Fortner to come back for the next Council meeting on May 19th.
Report and/or Updates from Mayor Pollard
Mayor Pollard gave no report.
Reports from Standing Committees
Alderman Headlee noted that the parking lot behind the city offices that was owned by First Bank was becoming a problem.
Alderman Carter noted that the transition of the new management of the Carmi Municipal Airport was going smoothly.
Business or Comments from Visitor
Wanda Mitchell Douglas a current board member with the Phoenix Foundation offered her assistance to the city with any information that was needed.
Motion made by Alderman Winkleman and seconded by Alderman Headlee to go into closed session for the purpose of discussing personnel issues with no action to follow. The motion carried on roll call by each alderman answering “yes.”
At 6:59 p.m. council went into closed session.
Motion made by Alderman Winkleman and seconded by Alderman Blake to return to open session and adjourn. The motion carried on roll call by each alderman answering “yes.”
At 8:17 p.m. council adjourned.
Brian K. Allen, City Clerk
Jeff Pollard, Mayor