December 19, 2007 Meeting Minutes

	MINUTES
	DRYCLEANER ENVIRONMENTAL RESPONSE TRUST FUND COUNCIL of ILLINOIS HOLIDAY INN SELECT - NAPERVILLE NAPERVILLE, ILLINOIS DECEMBER 19, 2007
	John Polak, Chairperson, called the Drycleaner Environmental Response Trust Fund Council of Illinois meeting to order at 10:06 a.m. A quorum was present. Roll call was taken with the following members present:
	John Bredenkamp David Gibson (arrived at 10:13 a.m.) Young B. Kim Paul Kwak Charles Kwon Jerry Lewicki John Polak Also present were: H. Patrick Eriksen, Program Administrator's Office John J. McCarthy, Program Counsel Randall Jackson, Program Administrator's Office Dr. Juho So, Program Administrator's Office
	PRELIMINARY BUSINESS
	The minutes from the November 14, 2007 Council meeting were reviewed. On a motion by Mr. Lewicki and a second by Mr. Bredenkamp, the minutes were approved by a vote of 6-0.
	APPEAL OF LICENSE LATE PAYMENT FEES
	Dry Cleaning Station (Facility #0003160) - 195 North Farnsworth Ave, Aurora, IL Mr. Eriksen reviewed with the Council the appeal request of Dry Cleaning Station, owned by Kelly Squared, Inc of Aurora, IL. The facility began drycleaning operations in December 2006 and the drycleaner operator listed on the license application was Mr. Kurt Gabrielse. The license fees were timely paid prior to beginning operations of the facility and no late fees were incurred for 2006. In December 2006, a 2007 license renewal application was mailed to Mr. Gabrielse. On February 7, 2007, a second renewal application was sent via certified mail to the drycleaner operator. The Fund sent a third letter on April 24, 2007 and made a follow-up telephone call on May 11, 2007 to Mr. Gabrielse. On September 26, 2007, the Administrator’s office received a telephone call from Mr. John Beem informing us he was the new manager for the facility. He indicated in the telephone conversation that the facility had been closed at the end of May for a period of time but there had been no change in ownership. Mr. Beem was informed the facility needed to be licensed for 2007 and was advised there would be late fees of $5 per day until the 2007 license fee was paid. Mr. Beem took the necessary steps to license the facility and the license fee for 2007 was paid on October 18, resulting in the late fees owning for the year of $1,450. Mr. Been addressed the Council stating the owner of the facility is headquartered in Oregon. The prior manager began defrauding the owner of the facility in the early part of 2007. Mr. Beem outlined in detail the fraud that had taken place and that it was not discovered until late September 2007. He requested leniency as he feels the owner has made a good faith effort in trying to rectify the problems that occurred due to fraudulent activities by an employee. Mr. Gibson arrived at 10:13 a.m. After additional discussion by the Council, on a motion by Mr. Bredenkamp and a second by Mr. Lewicki, the Council voted 7-0 to waive the late payment fees for 2007 in the amount of $1,450.
	APPEAL OF CANCELLATION OF INSURANCE COVERAGE
	Cicero 1 Hr Cleaners (Facility #0002143) -  5933 W. Roosevelt Rd in Cicero, IL Mr. Eriksen reviewed background information with the Council noting Mr. Yong S. Park is the drycleaner owner/operator of Cicero 1 Hr Cleaners located at 5933 W. Roosevelt Road in Cicero, IL. The facility had pollution liability insurance coverage with the Fund from June 27, 2000 through July 8, 2007, when the insurance expired for failure to renew the coverage. Mr. Eriksen reviewed with the Council in detail the contacts the Administrator’s office had made with Mr. Park regarding the renewal of the insurance coverage. Dr. Juho So assisted Mr. Park by translating his presentation to the Council. Mr. Park addressed the Council stating Mr. Richard Kim of the ESM Compliance Program has been helping him since he began drycleaning with compliance program, insurance and licensing issues and he had given Mr. Kim his insurance application and premium check on June 29, 2007 when Mr. Kim had stopped by his plant. Since he had given the information and premium check to Mr. Kim he assumed the matter was handled and there was no further follow-up. After general discussion between the Council and Mr. Park, the Council asked if the check had been cashed. Mr. Park indicated it had not been. He was asked if it was a new procedure for him to have Mr. Kim send the application and premium to the Fund. Mr. Park replied, no, that he has been having Mr. Kim assist him on these issues for the past seven (7) years. After additional discussion by the Council, on a motion by Mr. Lewicki and a second by Mr. Kim, the Council voted 7-0 to reinstate Mr. Park’s insurance coverage back to July 8, 2007 and reinstate his remedial program benefits.
	APPEAL OF LICENSE LATE PAYMENT FEES
	Pure Cleaners (Facility #0002983) -  13544 RT 30 in Plainfield, IL Mr. Eriksen reviewed background information with the Council noting Mr. Tae Um is the owner/operator of Pure Cleaners located in Plainfield, IL. He has operated this facility since February 2003.Late fees have been assessed as follows: 2006               $2,705.00 2007               $   880.00 Total                $3,585.00      Mr. Eriksen reviewed in detail the payment dates and the correspondence the Administrator’s staff had with Mr. Um regarding his 2006 and 2007 license. An initial license fee of $500 for 2006 was paid on December 30, 2005 and an additional license fee of $500 for 2006 was paid on June 26, 2007. An initial license fee of $1,500 for 2007 was paid on March 5, 2007 with an additional license fee of $750 paid on June 26, 2007. Ms. Mary Um, daughter of Tae Um, was in attendance to translate on behalf of her father. Ms. Um outlined in detail that her father had overlooked the paperwork necessary for the 2006 and 2007 license fees. She had gotten involved in early 2007 to assist him with bookkeeping and paperwork and noticed his facility was no longer licensed. She contacted the Fund and worked with the Administrator’s staff to complete the necessary paperwork and pay the correct license fee for 2006 and 2007. She noted that two (2) brothers had assisted her father from time to time in the drycleaning facility but during 2006, they were no longer available to assist her father with the bookkeeping work and this was directly attributable to the issue of not paying the correct fees for 2006 and 2007 on a timely basis. The Council discussed the appeal at length. A motion to deny waiver of the license late payment fees was made by Mr. Lewicki and seconded by Mr. Gibson. On a roll call vote, the motion failed by a vote of 4-2. After additional discussion, Mr. Bredenkamp made a motion to waive all of the 2006 license late payment fees except for $880, which would be attributable to calendar year 2007.  This in effect would halve the total license fee penalty down to a total of $1,760. The motion failed for lack of a second. After additional discussion, Mr. Kwak made a motion to waive all of the 2006 license late payment fees and only assess the $880 for calendar year 2007. The motion was seconded by Mr. Kim. On a roll call vote, the motion passed by a vote of 4-2.
	OPERATIONAL ISSUES
	A.	Fund Solvency:
		Mr. Eriksen reviewed the financial projections enclosed in the Council packet noting they were based off a model requested by the Chairman whereby the license fees were adjusted over a three (3) year period beginning January 1, 2009 through January 1, 2011, resulting in a flat rate license fee by 2011. Subsequently, the license solvent tax was reduced over the same period from $10 per gallon to $5 per gallon on perc and from $2 per gallon to $1 per gallon on petroleum solvents. Mr. Polak addressed the Council noting this issue has been one of ongoing discussion for quite some time and in looking at the overall funding needs of the Fund, the cost is approximately $3,000 per drycleaner per year until the sunset date of the Program. He noted the original license fee structure was a tiered approach whereby the drycleaners using the largest amount of solvent subsidized the drycleaners using the least amount. Over time, the solvent tax revenue has continued to diminish due to efficiencies and changes in the drycleaning business and is no longer a stable source of revenue. The license fee is a much more stable form of revenue. He tried two (2) years ago to get a consensus between the Illinois State Fabricare Association and the Korean American Drycleaner Association. They agreed to meet and try and develop a structure but to his knowledge, he is not certain if discussions were even held between the two parties. The Fund has had to prioritize payments on reimbursement of eligible remedial claims so there are already a number of drycleaners who are waiting to get their money from the Fund. Focusing on the Administrator’s draft model, he noted for the smallest user it would reflect a $40 per month increase in their license fee over an additional three (3) year period and although no one would like to see an increase in the dollars they pay the Fund, he feels it would be the best option to provide financial security and an equitable sharing of cost over the remaining life of the Fund. New sources of revenue would require legislative changes but he was open to discussion from members of the Council. Mr. Kim stated he believes the various drycleaner associations and members of the NDI Compliance Program should meet and analyze the numbers to determine what would be the most prudent solution to the ongoing solvency issue. Mr. Kim referenced that NDI has recently conducted a survey of their members. Mr. Polak stated that his impression of surveys are that everyone will vote for either no change or a reduction in their cost and not seriously look at the impact on the Fund as a whole but instead focus on their individual financial situation. He is not certain a consensus among the Council or among the industry can be reached, especially if the Council sought legislation to increase the revenue, but stated he would be more than willing to work with the Administrator and help facilitate discussion between the industry associations to address the solvency issue. Mr. Kwon stated he did not understand the need to increase the license fees at this point in time. He also concurred with letting the associations first have public hearings and then meet together and discuss. He does not believe it is in the best interest of the Council to increase the license fees without understanding the opinions of all members of the drycleaning industry.  Mr. Polak responded that based on the current scenario, a drycleaner in the lowest license fee category would be looking at a $40 per month increase in their license fee. If that is deferred for more than a year, the monthly increase would be higher. Mr. Kwak reiterated the Council needs to wait and see until further down the road if there is going to be a shortage. It is his opinion to keep the license fee and solvent tax the same. Mr. Bredenkamp noted the primary goal of the Fund is to clean up sites that were contaminated by drycleaning solvent. He reminded the Council that every remedial claim has the same benefit cap of $300,000 and the Council must change their attitude and focus on what is in the best interest of the Fund and the industry as a whole. In his mind, the fact that everyone receives the same benefit level is basis for supporting a flat rate license fee.  Mr. Polak noted for example, all citizens who own real estate pay a real estate tax but they may never utilize the benefits of the fire department which is supported by this tax. Mr. Kwak replied the real estate tax is based on the value of the house, which is unlike the situation the Council is dealing with. Mr. Bredenkamp responded that in essence all drycleaners are purchasing $300,000 of remedial coverage. When numbers change reflecting a need for more revenue, the Council must also adjust those numbers accordingly. Mr. Gibson asked Mr. Kwak specifically what was his concern with the flat rate license fee. Mr. Kwak replied if an increase is needed, he would take a hard look at it but how are you going to increase it fairly? He noted 40% of the licensed drycleaners in the state are paying into the Fund and receiving no cleanup benefits. He would like a guarantee that if a flat rate license fee was established today of $2,750, that it would be guaranteed not to change until the sunset of the program, which he realizes may not be practical. He felt the Council had just changed the fee over a year ago and it is too soon to make another adjustment. Mr. Gibson believes a flat rate license fee would simplify the licensing process. This statement was met by strong disagreement from both Mr. Kwak and Mr. Kwon. Mr. Kwon asked why reduce the license fee for those who are purchasing over 250 gallons of perc per year as they are already paying the maximum fee?  Mr. Polak replied when the large drycleaners went from $1,500 per year to $4,500 per year, no one spoke up stating their percent of increase was disproportionate to the increase of the smaller drycleaner. Mr. Kwak replied the issue of drycleaner subsidies is one of those who are receiving benefits versus those not receiving benefits and a flat rate license fee does not simplify the licensing fee process or address that inequity. A representative of NDI explained to the Council that a recent NDI survey of 516 licensed drycleaners found 509 disagree with any change in the license fee structure and only 7 agreed with some change. He noted if any change is made, no one will be happy and the current licensing fees are “killing” all of the small drycleaners. Mr. Polak responded he does not believe the license fee is the one factor driving the drycleaner out of business. As stated earlier, under the scenario he is supporting, the differential for the smallest drycleaner is an increase in fees of $40 per month over three (3) years. If $40 per month is the number that determines whether a drycleaner is to survive or go out of business, he has much bigger issues to deal with and much higher expenses such as utility costs, labor costs, etc., than the license fee. His focus is that at the end of the day everyone should pay a reasonable amount. Mr. Kwak responded the license fees are extra, there are no benefits that a large percentage of the drycleaners are receiving from the Fund and the license fee and solvent tax structure should remain the way it is today and it is a very emotional issue for many drycleaners. Mr. Gibson suggested the Council consider freezing the maximum license fee for a three (3) year period until the smallest license fee category is at either $2,750 or $3,000 per year. Mr. Kwak responded this would make the licensing process more complicated. He suggested leaving the solvent tax at $10 per gallon but changing the license fees by small amounts for each category as needed to maintain Fund solvency. Additional discussion focused on the Council seeking legislation that would allow them to allocate any projected deficit at the end of each fiscal year to all licensed drycleaners. A drycleaner in attendance at the meeting stated that any type of fee increase would be detrimental as the economy is bad and his business is down 70%. Mr. John Hanson, a drycleaner and an officer of the Illinois State Fabricare Association, stated the dialog he heard today is consistent with what he heard over three (3) years ago at Council meetings and public hearings. He wondered if an actuarial review every year would help to determine what is the necessary funding needed. He also agreed with Mr. Bredenkamp that the Council has a fiduciary responsibility to meet the obligations of the Fund and is not beholden to any specific individual or group of individuals. Another drycleaner in attendance agreed the Council needs to postpone any decision at this time to increase fees and needs to consider the impact on small business owners. Another member of the public noted that moving towards a flat rate license fee would force at least 200+ drycleaners out of business. Mr. Polak thanked the Council members and the public in attendance for their comments and input and said the Council will consider looking at other alternatives in the future.
	B.	Delivery of Hydrocarbon-Based Solvent:
		Mr. Eriksen reviewed with the Council that they adopted regulations in 2000 requiring hydrocarbon drycleaning facilities receiving remedial program benefits from the Fund to deliver the hydrocarbon solvents to the drycleaning machine by a direct-coupled system with an appropriate venting system. Recently, compliance program site inspections reflect drycleaners using DF2000 and equivalent-type hydrocarbon solvents are not transferring the solvent into the drycleaning machines via a direct-coupled system. In most instances, the solvent is delivered by the solvent distributor in 55-gallon drums and the drycleaner transfers the solvent from the drum into the machine via a hand pump and does not utilize a direct-coupling mechanism. The issue for Council consideration is since hydrocarbon drycleaners are not filling their hydrocarbon drycleaning machines via a direct connection, does the Council want to continue with this requirement or modify it? Two (2) drycleaners in attendance at the meeting stated they use hydrocarbon-based solvents and reported the fire marshal does not allow them to store any solvent above ground at their facility in bulk quantities. After discussion by the Council, they directed the Administrator to contact the State Fire Marshal’s office and Illinois EPA to get further information as to the existing regulations for storage of hydrocarbon solvents at drycleaning facilities and report back at a future meeting.
	C.	Potential Meeting Dates for Calendar Year 2008:
		Included in the Council packet was a listing of ten (10) meeting dates for calendar year 2008. The Council reviewed the dates, noting that at this point in time there was not a consensus on a January meeting date as several members had a conflict with January 16, 2008. The February meeting date was modified to February 27, 2008 and the July meeting date was moved from July 30 to July 23, 2008.
	APPROVAL OF PROGRAM BILLINGS
	Mr. Eriksen noted there were two (2) bills were before the Council for their review and approval.
	1. Williams & Company Consulting, Inc $46,626.00 Standard flat fee billing for November 2007, licensing, underwriting, claims processing and site inspections.
	2. John J. McCarthy $1,935.00 Professional legal services to the Council for the period of October 23, 2007 through December 11, 2007.
	On a motion by Mr. Lewicki and a second by Mr. Bredenkamp, the bills were approved by a vote of 7-0.
	REVIEW OF ACTIVITY REPORT AND FINANCIAL STATEMENTS
	Mr. Eriksen reviewed with the Council the November 30, 2007 monthly activity report, noting that there were 1,281 licensed drycleaning facilities at the end of November with 693 participating in the Fund’s insurance program. The number of open remedial claims totaled 506, with estimated reserves of $40 million on these claims. Outstanding budgets totaled $2,000, 850. The financial statements reflect a Fund balance of $4,249,727 as of November 30, 2007. Year-to-date expenses exceed revenues by $427,091 and year-to-date remedial claim payments total $1,072,077.  Also included in the Council packet was the October activity report and financial statements.
	CLAIM PAYMENTS IN EXCESS OF $75,000
	Dr. So reviewed with the Council that included in their packet was an update as to the proposed remedial action and related costs associated with Norridge Magic Touch Cleaners claim in Norridge, IL. He noted the Council had previously approved remediation costs at this facility totaling $388,183.  A pilot project was conducted comparing two (2) additional chemicals in addition to the permanganate that was initially proposed to be used. Based on the pilot study, the consultant is proposing the remediation be conducted using Persulfate activated with RegenOX. Instead of injecting the chemical via injection wells, the consultant is proposing to conduct the remediation by excavating, stockpiling the soil on site, grinding the soil using roto-tilling equipment, placement of the soil back into the excavation in one (1) foot lifts, spraying/flooding the soil with Persulfate, and thoroughly mixing the replaced soil using a mini-backhoe. Using this technology and process, the full cost of the remediation is projected to be $179,000. Assuming a 20% contingency cost, the total projected costs would be $214,800. This is a reduction of approximately $45,000 of the previous estimated cost. Dr. So noted it is projected the remedial benefit cap will be exceeded by approximately $43,000. The Fund has been in receipt of a letter since January 30, 2007 from Mr. Kaliner’s attorney indicating $100,000 of funds has been escrowed for the excess costs. On a motion by Mr. Bredenkamp and a second by Mr. Kwon, the Council approved the revised remediation budget of $214,800 by a vote of 7-0.
	OTHER ISSUES AS PRESENTED
	Mr. Eriksen reported the fiscal 2007 audit field work had been completed. A draft of the report should be issued some time in late January or early February. He indicated that he would be contacting Representative Smith regarding the possibility of getting the Council’s previously approved legislation introduced during this legislative session.
	PUBLIC COMMENT PERIOD
	Mr. Polak asked the members in attendance if there were any comments. There were none. There being no further business, on a motion by Mr. Bredenkamp and a second by Mr. Kwon, by a vote of 7-0, the Council meeting adjourned at 1:33 p.m.
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