The Office of the Treasurer did not comply with the time frame established in the
Public Utilities Act for the creation and subsequent use of the Municipal Economic
Development Fund. This fund was to be established by February 1999 and payments from this
fund were to begin by April 15, 1999. The first receipts were collected on September 9,
1999, and the first payment of $61,000 was to be made on October 15, 1999.
The Treasurer’s office indicated the Municipal Economic Development Fund was not
established in a timely manner because the list of solid waste facilities was not received
timely from the Illinois Commerce Commission. As a result, payments were not made by the
Treasurer’s Office to the solid waste facilities on the time schedule required by
law. (Finding 1, page 10)
The Treasurer accepted our recommendation to develop a procedure
to monitor new and amended statutes that affect the Office to ensure the statutorily
mandated responsibilities are carried out in a timely manner.
OTHER FINDING
The remaining finding was less significant and is being given attention by the
Treasurer. We will review the Treasurer’s progress toward the implementation of our
recommendation in our next audit.
Ms. Barbara Ringler, Chief Internal Auditor provided the Treasurer’s responses.
OTHER DISCLOSURES
ILLINOIS INSURED MORTGAGE PILOT PROGRAM TRUST
As of June 30, 1999 there were two properties in the Illinois Insured Mortgage Pilot
Program Trust (Trust). The Trust held the mortgage loans on the properties as underlying
collateral for the State’s investment in the program. The two properties are hotels,
the Renaissance in Springfield and the Holiday Inn in Collinsville.
The recorded value on the financial statements for these investments was $7,581,035 as
of June 30, 1999 and the loan balance was $29,440,000.
The mortgage loans on the two properties are considered nonperforming assets. Accrued
interest receivable at June 30, 1999 for the nonperforming assets approximated
$16,949,000. Interest on nonperforming assets is recognized when collected, and therefore
has not been recorded on the financial statements.
The Treasurer’s outstanding investments in the Illinois Insured Mortgage Pilot
Program which have been secured by hotel properties have been the subject of litigation.
Subsequent to the report date, a decision in the lawsuit seeking specific performance
of the buy-sell agreement terms filed by the affiliates of the owners of the Springfield
Renaissance Hotel and the Collinsville Holiday Inn was made. On December 2, 1999, the
judge in the Circuit Court of Madison County granted the motions of the plaintiffs for a
partial summary judgement. The court found that the plaintiffs were ready, willing and
able to perform the buy-sell agreements at the time originally set for closing in 1995.
Since the buy-sell agreements limited the relief available under their terms to specific
performance, the court directed preparation of a final decree allowing plaintiffs’
claim for this form of relief and providing the terms for consummating the sale. The
Treasurer is considering her options, which include the possibility of appealing the
decision.
AUDITORS' OPINION
Our auditors state the June 30, 1999 financial statements present fairly, in
all material respects, the assets, liabilities and accountabilities and the statement of
investment income of the Office of the Treasurer. The auditors noted the financial
statements have been prepared on a comprehensive basis of accounting other than generally
accepted accounting principles.
____________________________________
WILLIAM G. HOLLAND, Auditor General
WGH:RPU:pp
SPECIAL ASSISTANT AUDITORS
The firm of Kerber, Eck & Braeckel LLP were our special assistant auditors
for this audit.
