Coins stacked in front of clock

Park Districts & Governments Must Know the New Overtime Rules and Other Legal Developments

We invite elected officials, officers, and administrative employees of local governments or park districts, and other interested parties to review how new Fair Labor Standards Act (FLSA) overtime rules will automatically extend overtime pay to over 4 million newly eligible employees. This focused seminar will also address new travel and expense reimbursement rules, as well as practical advice on implementing email and cell phone policies following recent Illinois Attorney General’s decisions subjecting private employee emails to the Freedom of Information Act (FOIA).

The seminar will include materials and educate attendees as to the following:

New FLSA Overtime Rules Impact  Local Governments & Park Districts and as of December 1, 2016

  • What will change and how the new rules apply to your employees.
  • How to identify employees exempt from the overtime requirements after the changes.
  • How to evaluate exemptions for employees who do not work year-round.
  • Whether you can still offer compensatory time instead of paying overtime.
  • Special considerations for local governments and park districts.
  • How to prepare for and minimize the impact of the new regulations.
  • Penalties for failure to comply with the new rules.

Illinois Travel and Expense Reimbursement Requirements (P.A. 99-604)

  • New prohibitions on reimbursement for “entertainment” expenses.
  • Required policies that must be adopted before employees, officers and officials may be reimbursed for travel, meal and lodging expenses.
  • How FOIA impacts records related to reimbursement under the new law.
  • The regularly “misunderstood deadline” for implementing the new travel expense reimbursement requirements.

Employee Emails and Text Messages Subject to FOIA

  • What issues and pitfalls email and text messages pose with respect to FOIA and the Open Meetings Act (OMA).
  • Important FOIA and OMA considerations that email and text-message policies should address.
  • Impacts of recent decisions regarding electronic messages, including the recent August, 2016 decision finding that employees’ private emails can be subject to FOIA.

OUR SPEAKERS

Herman presents seminar on New Overtime Rules
Joshua Herman presents seminar on New Overtime Rules to area business leaders.

Joshua HermanJoshua concentrates in advising schools and educational institutions, focusing on labor and employment, commercial law, and related litigation. He has previously been interviewed regarding the impact of the new overtime regulations by WMBD, WYZZ, and the Peoria Journal Star. In August, Joshua also lectured on the impact of the new overtime regulations in cooperation with the Small Business Development Center at Bradley University to local Small Business Leaders (pictured above). Joshua has focused on educational and local government law since 2008. He received his Bachelor’s degree in 2003 from Bradley University in Peoria, Illinois. After his deployment to Iraq as an Army Reservist 2003-2005, Joshua attended the Chicago-Kent and the University of Illinois Colleges of Law, graduating Summa Cum Laude.  Joshua was selected by the Illinois State Bar Association as Young Lawyer of the Year in 2011 and he is one of the 2014 Peoria 40 Leaders Under Forty.

Richard M. Joseph
Richard M. Joseph

Richard JosephRick has authored on the subject of the new Illinois Local Government Travel Expense Control Act and regularly advises units of local government on related matters. Rick has over 30 years’ experience in representing public bodies in all areas of practice, including experience with acquisition and sale of real estate, procurement, construction matters, public and bond financing, taxation, open meetings and public records laws, review and revision of policies and assisting public officials and employees with understanding their roles and duties, including legal  and ethical standards and assisting key staff members in fulfillment of their responsibilities.  Rick received his Bachelor’s degree in 1982 from the University of Notre Dame and his Juris Doctor from Marquette University, Cum Laude, in 1985.

Christopher Oswald
Christopher Oswald

Christopher OswaldChris has 14 years of experience counseling public bodies, and those interacting with public bodies with respect to FOIA and the Open Meetings Act.  Chris’ practice is focused on assisting local governments and private clients as general counsel and in structuring transactions relating to real estate, development incentives, construction, taxation, finance, acquisitions, and special matters unique to public bodies.   Chris received his Bachelor of Science degree in Agricultural Economics with honors from the University of Illinois at Urbana-Champaign and his Juris Doctor, Cum Laude, from Northern Illinois University College of Law.

Join us for this informative lunch and learn on October 26, 2016

5:00 p.m.  – 6:30 p.m.
Jump Trading & Simulation Center, OSF
1306 N. Berkeley Avenue • Peoria, Illinois 61603

Cost: $35 (includes handouts and Hors d’Oeuvres)
4:30 p.m. – 5:00 p.m.:    Registration and Hors d’Oeuvres
5:00 p.m. –  6:30 p.m.: Presentation, Q & A

Tiled sheet of $1 Bills

What Schools Need to Know Now about the New FLSA Overtime Regulations and Other Legal Developments

We invite school administrators, board members and other interested parties to review how new Fair Labor Standards Act (FLSA) overtime rules will automatically extend overtime pay to over 4 million newly eligible employees. The October 26, 2016 lunch-and-learn seminar will also address new travel and expense reimbursement rules, as well as practical advice on implementing email and cell phone policies following recent Illinois Attorney General’s decisions subjecting private employee emails to the Freedom of Information Act (FOIA). Do not wait to learn about these changes at the Illinois Association of School Boards’ conference – it could be too late!

The seminar will include materials and educate attendees as to the following:

New FLSA Overtime Rules Impact Schools as of December 1, 2016

  • What will change and how the new rules apply to your employees.
  • How to identify employees exempt from the overtime requirements after the changes.
  • How to evaluate exemptions for employees who do not work year-round.
  • Whether you can still offer compensatory time instead of paying overtime.
  • Special considerations for schools and educational institutions.
  • How to prepare for and minimize the impact of the new regulations.
  • Penalties for failure to comply with the new rules.

Illinois Travel and Expense Reimbursement Requirements (P.A. 99-604)

  • New prohibitions on reimbursement for “entertainment” expenses.
  • Required policies that must be adopted before employees, officers and officials may be reimbursed for travel, meal and lodging expenses.
  • How FOIA impacts records related to reimbursement under the new law.
  • The regularly “misunderstood deadline” for implementing the new travel expense reimbursement requirements.

School Emails and Text Messages Subject to FOIA

  • What issues and pitfalls email and text messages pose with respect to FOIA and the Open Meetings Act (OMA).
  • Important FOIA and OMA considerations that email and text-message policies should address.
  • Impacts of recent decisions regarding electronic messages, including the recent August, 2016 decision finding that employees’ private emails can be subject to FOIA.

OUR SPEAKERS

Herman presents seminar on New Overtime Rules
Joshua Herman presents seminar on New Overtime Rules

Joshua HermanJoshua concentrates in advising schools and educational institutions, focusing on labor and employment, commercial law, and related litigation. He has previously been interviewed regarding the impact of the new overtime regulations by WMBD, WYZZ, and the Peoria Journal Star. In August, Joshua also lectured on the impact of the new overtime regulations in cooperation with the Small Business Development Center at Bradley University to local Small Business Leaders. Joshua has focused on educational and local government law since 2008. He received his Bachelor’s degree in 2003 from Bradley University in Peoria, Illinois. After his deployment to Iraq as an Army Reservist 2003-2005, Joshua attended the Chicago-Kent and the University of Illinois Colleges of Law, graduating Summa Cum Laude.  Joshua was selected by the Illinois State Bar Association as Young Lawyer of the Year in 2011 and he is one of the 2014 Peoria 40 Leaders Under Forty.

 

Richard M. Joseph
Richard M. Joseph

Richard JosephRick has authored on the subject of the new Illinois Local Government Travel Expense Control Act and regularly advises units of local government on related matters. Rick has over 30 years’ experience in representing public bodies in all areas of practice, including experience with acquisition and sale of real estate, procurement, construction matters, public and bond financing, taxation, open meetings and public records laws, review and revision of policies and assisting public officials and employees with understanding their roles and duties, including legal  and ethical standards and assisting key staff members in fulfillment of their responsibilities.  Rick received his Bachelor’s degree in 1982 from the University of Notre Dame and his Juris Doctor from Marquette University, Cum Laude, in 1985.

 

Christopher Oswald
Christopher Oswald

Christopher OswaldChris has 14 years of experience counseling public bodies, and those interacting with public bodies with respect to FOIA and the Open Meetings Act.  Chris’ practice is focused on assisting local governments and private clients as general counsel and in structuring transactions relating to real estate, development incentives, construction, taxation, finance, acquisitions, and special matters unique to public bodies.   Chris received his Bachelor of Science degree in Agricultural Economics with honors from the University of Illinois at Urbana-Champaign and his Juris Doctor, Cum Laude, from Northern Illinois University College of Law.

Join us for this informative lunch and learn on October 26, 2016

12:00 p.m.  – 1:30 p.m.
Jump Trading & Simulation Center, OSF
1306 N. Berkeley Avenue • Peoria, Illinois 61603

Cost: $35 (includes handouts and lunch)
11:30 a.m. – 12:00 p.m.:    Registration and lunch
12:00 p.m. –  1:30 p.m.: Presentation, Q & A

Using personal cell phone to create employee emails subject to FOIA

Public Employee Emails Subject to FOIA

Even when using private email or devices, employee emails are subject to FOIA and must be included in a reasonably adequate search.

By Joshua Herman

email: joshua.herman@mhtlaw.com

On August 9, 2016, the Illinois Attorney General’s Public Access Counselor (“PAC”) issued Binding Opinion 16-006, which addressed the Freedom of Information Act’s (“FOIA”) application to employee email. The opinion unequivocally held that public employee emails were subject to FOIA, requiring that public bodies conduct a reasonable search for these responsive records, which includes searching public employees’ private emails.

Background of Request for Employee Emails

In January of 2016, CNN submitted a FOIA request to the Chicago Police Department (“CPD”) that sought “all emails related to Laquan McDonald from Police Department email accounts and personal email accounts where business was discussed” for 12 specific officers during various dates. CPD eventually provided its response on April 19, 2016. CPD’s response consisted of a series of emails with attachments totaling over 500 pages. CPD did not cite any exemptions nor did it provide an explanation with its untimely response.

Request for Review by PAC

CNN filed a Request for Review with the PAC, claiming the CPD’s response did not contain any responsive records despite the fact the CPD claimed that the provided emails were “all of the records found in their search.” CNN asserted that the CPD did not conduct an adequate search because CPD’s response did not contain “a single responsive email.”

Investigation of Whether Requested Employee Emails were Subject to FOIA

The PAC began its investigation by asking the CPD for:

“A detailed description of the processing of [the] FOIA request and the measures taken by CPD to search for responsive records, including a description of the specific recordkeeping systems that were searched, the method of that search, and the specific individuals who were consulted.”

CPD responded that it searched its email system for the 12 named officers for the requested time periods, resulting in 47 e-mails being located. Some of these e-mails were described as being “News Clips” and 12 of the emails were copies of the same two emails.

CNN pointed-out that CPD’s response indicated that the CPD did not search for officers’ emails on any other platform or device, including personal email accounts. CNN argued that:

“Even if the Department does not retain control over personal email or devices, it still has a duty to request copies of such communications that relate to the officer’s public service role and/or in the performance of their government function.”

CNN further questioned how the CPD conducted its search:

“Regardless of the email accounts and devices actually searched, it is entirely unclear to us the search terms and/or parameters the Department actually undertook in conducting its search. Obviously, the search terms used, and the review procedures utilized that would identify highly-relevant documents that might not be found using a search term, are crucial to obtaining CNN’s satisfaction that the Department has engaged in a fulsome search responsive to CNN’s FOIA request.”

The PAC then requested that CPD describe the methods it used to search CPD e-mail accounts, including the particular search terms used.

CPD responded by stating that it searched the email accounts of the 12 named police officers for the search term “Laquan McDonald” during the date ranges requested. CPD also confirmed that it had not conducted a search of any personal e-mail accounts, arguing that e-mails on those accounts are not “public records.” CNN responded that:

”Giving public officials like police officers carte blanche to evade FOIA laws by using personal email for public purposes would eviscerate Illinois FOIA. Moreover, public officials would have an incentive to avoid FOIA by deliberately communicating about sensitive or controversial topics on private email. This flies in the face of the very purpose of public information laws.”

Analysis of whether employee emails subject to FOIA

The PAC began its analysis of whether the private emails of public employees may be subject to FOIA by determining whether they could be “public records.” The PAC addressed the definition of “public records” as it was discussed in City of Champaign v. Madigan, a case that held that some government official text messages are public records. According to the appellate court, to be a “public record,” the communication must

  1. Pertain to the transaction of public business and it must have been
  2. Prepared by,
  3. Prepared for,
  4. Used by,
  5. Received by,
  6. Possessed by, or
  7. Controlled by a public body.

After reviewing the City of Champaign case, the PAC explained that when individual public employees act in their official capacity, they are transacting the public business of the public body. The PAC found that CPD’s interpretation would “undercut the principle that public bodies act through their employees” and that excluding all communications on personal devices or accounts, regardless of whether they pertain to transaction of public business, wrongly focuses solely on the method of communication rather than on the content of the communication.

The CPD had also argued that personal email accounts are not subject FOIA because CPD does “possess or control” those records. The PAC rejected this argument, explaining that an agency always acts through its employees and officials and that if one of them possesses what would otherwise be agency records, the records do not lose their agency character just because the employee or official stores them outside of the agency.

The PAC explained that the CPD’s argument “would yield absurd results by enabling public officials to sidestep FOIA and conceal how they conduct their public duties simply by communicating via personal [electronic] devices.”

CPD also argued that searching personal email accounts would subject employees to unreasonable and unnecessary invasions of personal privacy, an exemption under Section 7(1)(c) of FOIA. However, this exemption expressly states that “disclosure of information that bears on the public duties of public employees and officials shall not be considered an invasion of personal privacy.” Consequently, according to the PAC, any emails exchanged by CPD employees pertaining to Laquan McDonald would pertain to public business and accessing them would not be an unwarranted invasion of personal privacy.

Although personal accounts can contain public records, the PAC explained:

“[t]he fact that a personal e-mail account is used to send or receive public records does not transform all communications sent or received on that account, in particular those with no connection to the transaction of public business, into public records that must be disclosed in accordance with FOIA.”

The PAC noted that the CPD did not assert that it asked employees whether they possessed responsive emails, nor did the CPD assert that any employee objected to providing responsive emails. Indeed, the CPD indicated that it took no action to ascertain whether its employee’s had responsive records. The PAC explained that although a public body need not search every record system, it cannot limit its search to only one system if others are likely to contain records responsive to a request.

While FOIA does not specify the manner in which a public body must conduct its search for records, the PAC stated that ordering the CPD officers to produce any responsive records they possessed may have satisfied CPD’s obligation to conduct a reasonable search. In support of this, the PAC cited cases that hold, absent a lack of good faith, a public employee’s search of his personal e-mail and confirmation that he did not locate responsive records satisfies the public body’s obligation to conduct an adequate search.  In light of FOIA, CPD could not simply decline to search for responsive emails on an officer’s private email account.

The PAC also addressed whether CPD’s search term of “Laquan McDonald” was adequate under the circumstances. The emails CPD did produce demonstrated that officers referred to McDonald in multiple ways, including misspellings and the use of only one part of his name. The PAC explained that under these circumstances, the singular search term was “not reasonably calculated to discover all relevant records.”

CPD Ordered to Obtain Employee Emails Subject to FOIA

The PAC found CPD’s response and underlying search to be inadequate under FOIA. The PAC’s binding opinion required the CPD to conduct a search of the personal e-mail accounts of the relevant CPD officers. The PAC suggested that, at a minimum, this requires the CPD to ask the officers whether they possess responsive records, and if so, requiring the officers to provide copies of those records to the CPD.

The PAC further directed CPD to expand its search terms to more reasonably attempt to locate responsive records by including:

  • Alternate name spellings,
  • Names of officers,
  • The incident number,
  • The location of the incident,
  • And a physical description of Laquan McDonald.

Conclusion and next steps

In summary, the PAC’s Binding Opinion held that public bodies must take reasonable steps to locate all public records responsive to a FOIA request. Because employee emails are subject to FOIA to the extent they are public records, regardless of whether they are stored in or sent by a private account or private device. Based on this opinion, in order to comply with FOIA, public bodies should investigate whether employees’ private email, devices and text messages contain responsive records. This means, at a minimum, public bodies must at least ask their employees if they possess responsive records.

This PAC opinion also requires public bodies to craft searches reasonably designed to find relevant documents by using multiple search terms that could be used in or related to relevant records.

Of course, every situation is different based on the facts and circumstances involved. A public body should consider seeking legal advice to ensure it has complied with its legal obligations under FOIA.

Click here for a copy of the complete binding opinion regarding the disclosure of E-Mails from Public Employees’ Personal E-Mail Accounts Pertaining to Transaction of Public Business and the Duty to Conduct a Reasonable Search for Responsive Records.

Image of cannabis leaves

New Law Decriminalizing Marijuana and Drug Paraphernalia

Ordinances Enacted by Units of Local Government Not Affected by New Law Decriminalizing Marijuana and Drug Paraphernalia.

By:  Kateah M. McMasters

kateah.mcmasters@mhtlaw.com

Effective July 29, 2016, the possession of certain small amounts of cannabis and drug paraphernalia are no longer criminal offenses.  The bill that was signed into law by Governor Bruce Rauner on July 29, 2016 decriminalizes the possession of small amounts of cannabis and drug paraphernalia by amending the portions of the Illinois Criminal Code pertaining to possession of cannabis and possession of drug paraphernalia.  Under the amended Cannabis Control Act (720 ILCS 550/1 et seq.), a person in possession of less than 10 grams of any substance containing cannabis is guilty of a civil law violation.  Such civil violation is punishable by a minimum fine of $100 and a maximum fine of $200.  Similarly, under the amended Drug Paraphernalia Control Act (720 ILCS 600/1 et seq.), any person who is also in possession of drug paraphernalia [during the civil cannabis violation] is guilty of a civil violation and subject to the same $100 minimum fine and $200 maximum fine.

The proceeds of the fines for these civil violations are distributed as follows:

  1. $10.00 to the Circuit Clerk;
  2. $10.00 to the law enforcement agency that issued the violation;
  3. $15.00 to the County;
  4. $10.00 to the Appellate Prosecutor;
  5. $10.00 to the State’s Attorney; and
  6. The remainder to the law enforcement agency that issued the citation ($45 to $145).

The Cannabis Control Act was also amended by adding a new section which addresses the impact of the changes upon local ordinances.  Section 17.5 of the Act explicitly states: “The provisions of any ordinance enacted by any municipality or unit of local government which impose fines upon cannabis other than as defined in this Act are not invalidated or affected by this Act.”

Therefore, municipalities and park districts are not required to change their ordinances in order to comply with the new law.  Municipalities and park districts may still issue ordinance citations for possession of less than 10 grams of cannabis and possession of drug paraphernalia, as well as impose fines for such possession in excess of $200.  However, because the law is already in effect, municipal and park district police departments should immediately review department policies and procedures with regard to processing violations for possession of cannabis and drug paraphernalia as either ordinance violations, civil violations, misdemeanors, and/or felonies.

Keyboard overlayed with wheelchair handicap symbol

Do You Comply with Website Accessibility Laws?

Recent OCR Investigations Stress Importance of School District Website Accessibility by Individuals with Disabilities

By Kathleen M. Carter

Email: kathleen.carter@mhtlaw.com

Thousands of complaints are made to the U.S. Department of Education’s Office for Civil Rights (OCR) each year regarding disability discrimination by educational institutions. Recently, a focus of those complaints has been on the accessibility (or lack thereof) of school districts’ websites for individuals with disabilities.

Specifically, complainants are alleging that websites of many school districts and educational institutions violate the law because they present barriers to users who are visually impaired, hearing impaired, cognitively impaired, and those with disabilities affecting fine motor control. In response, OCR is aggressively investigating the accessibility of such websites. Indeed, a recent press release from OCR describes just some of the settlements that have been reached recently with school entities following such OCR investigations, each of which involves extensive policy implementation and review, training, auditing, reporting, and development of a proposed corrective action plan. It goes without saying that cooperation with the OCR investigation in each instance came at a substantial cost and time for the educational entities involved.

The underlying basis of the OCR investigations is an analysis of whether public entities’ websites are in compliance with Title II of the Americans with Disabilities Act and Section 504 of the Rehabilitation Act of 1973, both of which prohibit people from being excluded from participation in, being denied the benefits of, or otherwise being subject to discrimination by public entities or recipients of financial assistance. This prohibition against discrimination applies to all programs, services, and activities, which includes a school district’s website. Examples of accessibility violations include:

  • Websites not using “alt tags,” or text descriptions, for images, which present difficulties for individuals with visual impairments using screen readers to navigate a website;
  • Use of certain text font, size, and color that makes text difficult to read for individuals with visual impairments;
  • Website content only accessible by use of a computer mouse, which presents difficulties for individuals with visual impairments or disabilities affecting fine motor control; and
  • Audio content without accurate captions and transcripts, inhibiting individuals with hearing impairments from accessing web content.

Despite a clear indication by OCR that public school districts’ websites must address these issues and otherwise be accessible to individuals with disabilities, to date there has been no final rule or regulation issued by the DOJ as to how public entities should ensure that their website is accessible to individuals with disabilities.

In the absence of official guidance and regulation, the OCR has used as its “benchmarks for measuring accessibility,” the privately developed Web Content Accessibility Guidelines (WCAG) and Web Accessibility Initiative Accessible Rich Internet Applications Suite (WAI-ARIA), both of which can be found on the Web Accessibility Initiative Website . While these guidelines are not legally binding, in the absence of official guidance, they provide the best standard by which to measure website compliance. Another important resource is the Section 508 Standards, which Federal Agencies must follow for their own web pages and which can be found on the United States Access Board Website.

School districts should take affirmative steps to ensure the accessibility of their website.  While there are numerous technical issues that need to be taken into account for website accessibility, one way to begin to identify common accessibility problems is through “WAVE,” a free online tool to evaluate website accessibility. It can be found at http://wave.webaim.org/.  Upon review and identification of any accessibility issues, school districts should work with their IT Departments to ensure not only that the website pages are accessible, but also that proper training is given to any staff who add content to the website and that additional content is accessible.

Image of cashbox with money

New Overtime Rules Double Salary Requirements for Exempt Employees

On December 1, 2016, Most Employees’ Annual Salaries Must be at Least $47,476 to Qualify as Exempt from Overtime Pay Requirements

By Kathleen M. Carter

kathleen.carter@mhtlaw.com

On May 23, 2016, the Department of Labor issued new rules regarding the Fair Labor Standards Act (“FLSA”) that almost double the threshold salary requirements for employees to qualify as exempt from overtime pay requirements, raising the minimum salary from $455/weekly ($22,750 annually) to $913/weekly ($47,476 annually) (the “Adjusted Salary Threshold”). The new rules take effect on December 1, 2016, and will result in nearly 4.2 million more people qualifying for overtime pay.  Although these new rules apply to all employers, including units of local government, the FLSA also contains provisions specific to local governments.

Generally, the FLSA requires that overtime compensation be paid at a rate not less than one and one-half times a non-exempt employee’s regular rate of pay for each hour worked in excess of 40 hours per work week. Certain employees, however, are exempt from these requirements and need not be paid overtime.

In order to qualify as exempt, an employee must satisfy a “duties test” and be paid a specified minimum salary. It was this minimum salary requirement that was adjusted by the new overtime rules and with which employers must comply by December 1, 2016.

In addition to the Adjusted Salary Threshold, the new rules: (1) raised the compensation level for “highly compensated individuals” to be considered exempt to $134,004, annually; (2) defined that up to 10% of an employee’s standard salary level can come from non-discretionary bonuses, incentive payments, and commission, paid at least quarterly; and (3) established a mechanism for an automatic 3-year adjustment of the salary threshold.

Not all municipal employees will be affected by the new rules. For example, the new rules will not impact currently non-exempt hourly and salaried employees, who will continue to be entitled to overtime if they work more than 40 hours in a work week. Moreover, the new rules will not affect any employees who are not covered by the FLSA, such as independent contractors.  The FLSA also provides several exemptions unique to public bodies, such as the “small-agency” exemption for law enforcement or firefighter agencies that employ fewer than five such employees.  Otherwise, the new rules will significantly impact many municipal employees previously considered to be “exempt.”

With respect to municipal employees to whom the new rules apply, there are several options that municipal employers may use to comply with the new rules, including:

  • Raise salaries of currently exempt employees to meet the new threshold and maintain their exempt status;
  • Maintain salaries and either prohibit overtime or pay overtime for hours worked over 40;
  • Adjust wages so that when overtime is calculated, average pay remains the same; or
  • Utilize compensatory time rather than cash overtime payments (only applicable to state and local governmental employers and in certain instances).

The penalties can be steep for violations of the FLSA overtime provisions. Accordingly, regardless of the method chosen, municipal employers should review employee compensation and their “duties” classifications to ensure that they are prepared to comply with the new rules.

MHT will soon provide a seminar to public bodies that addresses the new rules and offers guidance for how public bodies should proceed. Additional information related to the new overtime rules can also be found at http://mhtlaw.com/overtime/.

Image of people traveling

New Law Establishes Requirements for Reimbursement of Travel and Entertainment Expenses

Local Government Travel Expense Control Act Necessitates that Local Governmental Bodies Take Action by March 2, 2017

By Richard M. Joseph

richard.joseph@mhtlaw.com

On July 22, 2016, Governor Bruce Rauner signed into law the Local Government Travel Expense Control Act (Public Act 99-604).  The Act expressly prohibits local governmental bodies from reimbursing employees and elected and appointed officials for “entertainment” expenses and establishes requirements that must be adopted in regards to reimbursement for all travel, meal, and lodging expenses of officers and employees.

The Act applies to all units of local government other than those which are home rule, including non-home rule municipalities, park districts, school districts and community college districts; which such governmental bodies are defined in the Act as “Local Public Agencies.”

The Act requires that all Local Public Agencies shall, by resolution or ordinance, regulate the reimbursement of all travel, meal, and lodging expenses of all officers and employees.  The resolution or ordinance is required to specify:

  • The types of official business for which travel, meal and lodging expenses are allowed;
  • The maximum allowable reimbursement for travel, meal, and lodging expenses (which may be exceeded because of emergency or other extraordinary expenses upon approval of the governing body in manner consistent with the adopted policy);
  • A standardized form for submission of travel, meal, and lodging expenses which must be supported by the following (which the Act specifies as the “minimum” required “documentation”):
    • An estimate of the cost of travel, meals, or lodging if expenses have not been incurred or a receipt of the cost of the travel, meals, or lodging if the expense has already been incurred;
    • The name of the individual who received or is requesting the travel, meal, or lodging expense;
    • The job title or office of the individual who received or is requesting the travel, meal, or lodging expense; and
    • The date or dates and nature of the official business in which the travel, meal, or lodging expense was or will be expended.

All documents and information submitted in regards to reimbursement are specifically declared to be “public records” and subject to disclosure under the Illinois Freedom of Information Act.

Adoption of a resolution or ordinance establishing the policy and procedures for reimbursement of travel, meal or lodging expenses must occur prior to June 30, 2017, because Section 10 of the Act specifies that no travel, meal, or lodging expense shall be approved by a local public agency after that date unless regulations have been adopted.  However, and as a practical matter, the policy and procedures will need to be in place by March 2, 2017, since Section 20 of the Act specifies that on or after 60 days after the effective date of the Act, expenses for travel, meals, and lodging of any officer or employee that exceeds the maximum amount allowed under the adopted policy, may only be approved by roll call vote at an open meeting.  Thus, until the policy has been adopted, there is no established “maximum” under the policy and, effectively, all expenses in the interim period from March 2, 2017 to June 30, 2017, require formal action of the governing body.

The Act does not specify or recommend a maximum allowable amount, and, therefore, that is left to the sound discretion of the governing body in establishing the policy.

In addition, on or after March 2, 2017, expenses for travel, meals, or lodging of any member of the governing board or corporate authorities of the local public agency may only be approved at an open meeting of the governing board or corporate authorities of the local public agency.

Finally, the Act specifically prohibits reimbursement for any “entertainment expense” which is defined to include (but not be limited to) shows, amusements, theaters, circuses, sporting events, or any other place of public or private entertainment, unless ancillary to the purpose of the program or event.  The Act does not further identify what is meant by “ancillary to the purpose of the program or event” and, therefore, caution should be exercised.

In light of the Government Travel Expense Control Act it is recommended that all non-home rule municipalities, park districts, school districts and community college districts review their existing policies and procedures for reimbursement of employees and officers travel-related expenses, establish maximum allowable reimbursement amounts, create a standardized form, and adopt the policy and standardized form by resolution or ordinance, all by March 2, 2017.

MHT Regularly Assists with Low Income Housing Tax Credit Projects

Miller, Hall & Triggs, LLC, provides experienced counsel to a number of housing authorities and not-for-profit corporations seeking to develop or redevelop affordable housing through the Rental Assistance Demonstration Program (“RAD”) of the United States Department of Housing and Urban Development and/or low income housing tax credits throughout Illinois and Arkansas. We regularly work with housing authorities and not-for-profit entities, the Illinois Housing Development Authority, lenders, investors and FHA and HUD to negotiate and close extremely complex housing transactions.

Examples of low income housing tax credit projects we have worked on:

Project Name: Sunset Heights
Rock Island, IL Housing Authority and Community Housing Services, an Illinois not-for-profit corporation
Conversion of Public Housing pursuant to Rental Assistance Demonstration Program

Transaction Closed:  December 2017
Project Type: Substantial Rehabilitation
Units: 141 (70 of which target families and 71 of which target seniors)
Units Serving Low-Income: 141
Type of Construction: 11-story apartment complex
Cost of Development: $12,040,776
Bonds:  $6,100,000 Multifamily Housing Revenue Bonds issued through Illinois Housing Development Authority

IRS Funding: Low-Income Housing Tax Credits
HUD Funding: FHA 223(f) insured mortgage

HUD Funding:  Section 8 Project-Based Vouchers
Financing Structure: Equity – Loans – Grants
Current Status: Rehabilitation in process

Project Name: Pine Bluff Apartments
Pine Bluff, AR Housing Authority and Crossroads Community Development Corporation, an Arkansas not-for-profit corporation
Conversion of Public Housing pursuant to Rental Assistance Demonstration Program

Transaction Closed:  November 2017
Project Type: Substantial Rehabilitation
Units: 251
Units Serving Low-Income: 251
Type of Construction: Four separate facilities, each constituting a separate apartment complex
Cost of Development: $20,581,778
Bonds:  $10,500,000 Multi-Family Housing Revenue Bonds issued through Arkansas Development Finance Authority

IRS Funding: Low-Income Housing Tax Credits
HUD Funding: FHA 223(f) insured mortgage

HUD Funding:  Section 8 Project-Based Vouchers
Financing Structure: Equity – Loans – Grants
Current Status: Rehabilitation in process

Project Name: Galena Park Terrace, Peoria, Illinois
Galena Park Terrace, an Illinois Not-for-Profit Corporation
Year Completed: 2016
Project Type: Rehabilitation
Units: 127
Units Serving Low-Income:  127
Type of Construction: One bedroom and Studio Apartment Complex
Cost of Development: $20,189,292
IRS Funding: Low-Income Housing Tax Credits
HUD Funding FHA: 221(d)(4) insured mortgage
Financing Structure: Equity – Loans
Current Status: Construction and final close-out complete
Fully leased

Project Name: Leisure Acres, East Peoria, Illinois
East Peoria Jaycees Housing Corporation, an Illinois not-for-profit corporation
Year Completed: 2015
Project Type: Rehabilitation
Units: 100
Units Serving Low-Income: 100
Type of Construction: Apartment Complex
Cost of Development: $11,271,000
IRS Funding: Low-Income Housing Tax Credits
HUD Funding:  IRP Subsidy
HUD Funding: Project-Based Rental Assistance (PBRA)
Financing Structure: Equity – Loans
Current Status: Construction and final close-out complete
Fully leased and pending final closeout

Project Name: Lynden Lane
Rock Island, IL Housing Authority
Year Completed: 2015
Project Type: New Construction (demolition and redevelopment of Public Housing)
Units: 55
Units Serving Low-Income: 43
Type of Construction: Single Family and Duplex
Cost of Development: $14,112,000
Public Funding: Illinois Affordable Housing Tax Credits
IRS Funding: Low-Income Housing Tax Credits
HUD Funding: FHA 221(d)(4) insured mortgage
Financing Structure: Equity – Loans
Current Status: Construction and final close-out complete
Fully leased and pending final closeout

Project Name: Pana Towers
Christian County Integrated Community Services (Illinois)
Year Completed: 2014
Project Type: Rehabilitation
Units: 72
Units Serving Low-Income: 72
Type of Construction: 8 Story Elevator Apartment Building
Cost of Development: $8,238,000
Public Funding: Illinois Affordable Housing Tax Credits (IAHTC),
FHLB Affordable Housing Program (AHP)
IRS Funding: Low-Income Housing Tax Credits
HUD Funding: FHA 221(d)(4) insured mortgage
HUD Funding: RAD/Project-Based Rental Assistance (PBRA)
Financing Structure: Equity – Loans – Grants
Current Status: Rehab and final close-out complete
Fully leased and pending final closeout

Project Name: Southern Crossing
Pine Bluff, AR Housing Authority
Year Completed: 2013
Project Type: New Construction – Mixed Income
Units: 65
Units Serving Low-Income: 48
Type of Construction: Single Family
Cost of Development: $10,869,370
Public Funding: HOME, FAF/BMIR
IRS Funding: Low-Income Housing Tax Credits
HUD Funding FHA: 221(d)(4) insured mortgage
HUD Funding:  Section 8 Project Based Vouchers
Financing Structure: Grants – Equity – Loans
Current Status: Stabilized with High Occupancy

Project Name: Clayton Heights
Ft. Smith, AR Housing Authority
Year Completed: 2013
Project Type: New Construction – Mixed Income
Units: 57
Units Serving Low-Income 35
Type of Construction: Single Family
Cost of Development: $9,259,568
Public Funding: HOME, FAF/BMIR
IRS Funding: Low-Income Housing Tax Credits
HUD Funding:  FHA 221(d)(4) insured mortgage
HUD Funding:  Section 8 Project Based Vouchers
Financing Structure: Grants – Equity – Loans
Current Status: Stabilized 100% occupancy

Project Name: The Meadows
Jacksonville, AR Housing Authority
Year Completed: 2013
Project Type: New Construction – Mixed Income
Units: 55
Units Serving Low-Income:  41
Type of Construction: Single Family
Cost of Development: $13,191,000
Public Funding: HOME, CDBG
IRS Funding: Low-Income Housing Tax Credits
HUD Funding: FHA 221(d)(4) insured mortgage
HUD Funding: Section 8 Project Based Vouchers
Financing Structure: Grants – Equity – Loans
Current Status: Stabilized with High Occupancy

Project Name: Cascade Gardens
Rock Island, IL Housing Authority
Year Completed: 2011
Project Type: New Construction
Units: 70
Units Serving Low-Income 70
Type of Construction: Multi-Family Special Needs Apartments
Cost of Development: $13,191,000
Public Funding: American Recovery & Reinvestment Act (ARRA)
IRS Funding: Low-Income Housing Tax Credits
HUD Funding:  Mixed-Finance
HUD Funding:  Section 8 Project Based Vouchers
HUD Funding:  Tax Credit Assistance Program (TCAP)
Financing Structure: Grants – Equity – Loans
Current Status: Stabilized with High Occupancy

Project Name: North Pointe II, Development
Ft. Smith, AR Housing Authority
Year Completed: 2010
Project Type: New Construction
Units: 67
Units Serving Low-Income
Households: 50
Type of Construction: Single-Family – Duplex
Cost of Development: $10,811,336
Public Funding: HOME – CDBG – City of Ft. Smith St. Fund
IRS Funding: Low-Income Housing Tax Credits
HUD Funding: Capital Funds
HUD Funding: Section 8 Project Based Vouchering
Financing Structure: Grants – Equity – Loans
Current Status: Stabilized with High Occupancy

Project Name: North Pointe, Development
Ft. Smith, AR Housing Authority
Year Completed: 2007
Project Type: New Construction
Units: 50
Units Serving Low-Income
Households: 40
Type of Construction: Single-Family – Duplex
Cost of Development: $6,511,336
Public Funding: HOME – CDBG – City of Ft. Smith St. Fund
IRS Funding: Low-Income Housing Tax Credits
HUD Funding: Capital Funds
HUD Funding: Unrestricted Section 8 Reserves
HUD Funding: Section 8 Project Based Vouchering
State Funding: State Low-Income Housing Tax Credits
Financing Structure: Grants – Equity – Loans
Current Status: Stabilized Operation 100% Occupied

Project Name: County Estates
Menard County, Illinois Housing Authority
Ownership Type: Scattered Site Rentals
Project Type: New Construction
Year Completed: 2007
Units: 68 Detached Single-Family and Multi-family Rental Units
Units Serving Low-Income Households: 60
Cost of Development: $12,518,000
Public Funding: HUD HOPE VI Demolition, Capital Funds
Low-Income Housing Tax Credits
State Tax Credits
Illinois Affordable Housing Trust Fund
FHLB AHP Program
Conventional Financing
Project Based Section 8 Vouchering
Financing Structure: Grants and Loans
Under Limited Partnership Ownership
Current Status: Stabilized with High Occupancy

Project Name: Oakwood Trace Townhomes L. P.
Champaign County, Illinois Housing Authority
Ownership Type: Limited Partnership
Project Type: Rehabilitation
Year Completed: 2002
Units: 50
Units Serving Low-Income
Households: 39
Cost of Development: $7,200,000
Public Funding: HOME, CDBG, City Utility funds,
FHLB (AHP) Program, LIHTC,
HUD Upfront Grant, Fannie Mae,
Conventional Bank funding
Financing Structure: Grants and Loans under a Limited
Partnership
Current Status: Stabilized with 98% Occupancy

Click here to read testimonials and recommendations with respect to our work on Low Income Housing Tax Credit Projects, or contact Richard M. Joseph to see how we can help you.

 

Herman presents seminar on New Overtime Rules

MHT Presents Seminar on New Overtime Regulations to Local Businesses

MHT Partner Joshua D. Herman, in coordination with the Illinois Small Business Development Center at Bradley University, presented a Lunch and Learn Seminar for the New Overtime Rules on July 26, 2016.

The new Overtime Rules almost double the salary employees must be paid in order to be exempt from overtime payment protections, requiring all business – large and small – review their current employees and prepare.

The Illinois Small Business Development Center at Bradley University and Joshua Herman, a partner at the law firm of Miller, Hall & Triggs, LLC, cosponsored a lunch-and-learn regarding the new Overtime Regulations to address the significantly impact to local businesses.  Attendees learned about:

  • What the new rules change;
  • How the new rules apply to their business;
  • The need audit employee classifications and how to do so;
  • How to maintain exemptions or otherwise handle newly non-exempt employees after Dec. 1; and,
  • Severe penalties for failing to comply with the rule.

If you would like a copy of the written materials provided to attendees, or if you would like more information about what you must do to prepare for the changes in the law, contact Joshua Herman.

For more information, see the recent news broadcasts regarding the new overtime rules by visiting WMBD New Overtime Law or by reading the Peoria Journal Star article: “Many employers unaware of how new overtime rules affect them.”

Condominium Redevelopment Requirements

Requirements of Condominium Conversion Projects

Illinois Conversion Condominium Projects – Notice of Intent to Convert and Disclosure Requirements

By Michael A. Keeton

michael.keeton@mhtlaw.com

 

The Illinois Condominium Property Act (the “Act”) (765 ILCS 605/1 et seq.) contains provisions allowing for the conversion of residential apartments or other income producing property from sole ownership to individually owned condominium units.  However, in order for a sole owner to pursue this type of conversion condominium project, there are numerous requirements to be considered and met.  This article will summarize a number of the essential requirements associated with such a project.

In addition to the requirements set forth in the Act, municipalities also have the ability to govern development of conversion condominiums.  For example, the City of Chicago by ordinance has extensive additional requirements for conversion condominium projects in Chicago.  Chicago Municipal Code Ch. 13-72.  This article will focus upon the requirements of the Act.

 Notice of Intent to Convert

§30 of the Act details various requirements unique to a conversion condominium, beginning with a provision that no real estate may be made subject to the Act without first providing notice of the intent to convert to all persons who are tenants of the building located on the real estate at the time the notice is provided. 765 ILCS 605/30(a)(1).

A declaration of condominium may not be recorded against the real estate until thirty days after the notice of intent is given, and no more than one year before the declaration is recorded.  As part of the declaration of condominium, the developer of the conversion condominium project (i.e., the seller/owner) must execute a certificate that the notice of intent was given to all persons who were then tenants. Id.

The notice of intent to convert must be given to the current tenants before any agreement of sale of condominium units is made.  Id.

The notice of intent to convert must include a schedule of unit sales prices for all units that will be subject to the declaration, and the notice must include an offer to sell to the current tenant of each unit at the listed price, except for units to be vacated for rehabilitation subsequent to the notice. 765 ILCS 605/30(b).

§30 of the Act also provides additional protection to tenants of a pending conversion condominium project. For example, tenants whose current tenancy expires within 120 days of the notice of intent to convert (other than a termination for cause) have the right to extend their tenancy on the same terms and conditions as the existing tenancy until the end of a 120-day period following receipt of notice of intent to convert, if the tenants give written notice of their intention to stay during that 120-day period to the developer within 30 days after having received the notice of intent to convert. 765 ILCS 605/30(c).

A tenant also has the right to be informed by the developer at the time the notice of intent is given whether the tenant’s lease will be renewed or terminated upon expiration. If a lease is to be renewed, a tenant must be informed of all charges, rental or otherwise, in connection with the new lease, and the time-frame of the new lease. 765 ILCS 605/30(d).

For 120 days following receipt of the notice of intent to convert, tenants have a first right to purchase their unit on substantially the same terms and conditions as set forth in any duly executed contract to sell the unit made by the developer during that time  period. Also, all contracts entered into by the developer during the 120-day period following delivery of the notice of intent must conspicuously disclose the existence of the right of first refusal. The tenant may exercise the right of first refusal within 30 days of receiving notice from the developer that a contract to sell the unit has been executed, even if the 30 days extends beyond the 120-day period following delivery of the notice of intent, as long as the contract was executed inside of the 120-day period. The recording of the deed conveying the unit to the buyer which contains language indicating that the tenant of the unit either waived or failed to exercise the right of first refusal or had no right of first refusal with respect to the unit, eliminates any tenant claim to the unit arising under the right of first refusal.  However, the tenant may still have a claim against the developer for damages arising out of the right of first refusal. 765 ILCS 605/30(e).

For 30 days after the delivery of the notice of an executed contract subject to a tenant’s right of first refusal, the developer is to grant the tenant access to any portion of the building to inspect its features or systems, and access to any reports, warranties, or other documents in the possession of the developer which reasonably pertain to the condition of the building.  Refusal of the developer to grant such access (subject to reasonable limitations) is a business offense, subject to a fine of $500.  765 ILCS 605/30(f).

Tenants have the right to privacy against undue showing of their units to prospective purchasers. The developer may show such units only a reasonable number of times and at appropriate hours, and only during the last 90 days of any expiring tenancy. 765 ILCS 605/30(h).

If the owner fails to provide a tenant with the notice of intent to convert required by §30 of the Act, the tenant permanently vacates the premises as a direct result of the nonrenewal of his/her lease by the owner, and the tenant’s unit is converted to a condominium unit, then the owner is liable to the tenant for (1) the tenant’s actual moving expenses incurred when moving from the subject property, capped at $1,500; (2) three month’s rent at the subject property; and (3) reasonable attorney’s fees and court costs.  765 ILCS 605/30(a)(2).

 Disclosure Requirements

Pursuant to §22 of the Act, before the initial sale or offering for sale of a condominium unit, the seller must provide copies of the following:

  1.  the declaration;
  1. the bylaws of the condominium association;
  1. a projected budget for the unit to be sold, including an estimated monthly payment for the unit for maintenance or management of the condominium property and monthly charges for the use of recreational facilities; and
  1. a floor plan of the unit to be purchased and the street address of the unit, if any, and if the unit has no street address, the street address of the project. 765 ILCS 605/22 (a)-(d).

In addition, §22 of the Act provides that if the development is a conversion condominium project, copies of the following must be provided:

  1. the amount of any initial or special condominium fee due from a purchaser at the time of closing and the basis for this fee;
  1. information, if available, on the actual expenditures made on all repairs, maintenance, and upkeep of the building being converted for the last two years that the building was occupied (this information should be presented in tabular form per unit, together with the proposed budget charges for each unit);
  1. a description of any provisions made in the budget for reserves for capital expenditures and the basis thereof, and if no provision is made for reserves, a statement to that effect must be made;
  1. for developments of more than six units, an engineer’s report is required as to the present condition of all structural components and major utility installations in the condominium, together with dates of construction, installation, major repairs and expected useful life of such component, and the estimated cost of replacing such items; and
  1. any release, warranty, certificate of insurance, or surety required by §9.1 of the Act.

In this regard, §9.1 of the Act provides that before conveying a unit, a developer shall record and furnish a purchaser with releases of all liens affecting that unit and its common element interest which the purchaser does not otherwise expressly agree to take subject to or assume, and the developer shall provide a surety bond or substitute collateral for or insurance against liens for which a release is not provided.  After conveyance of such unit, no mechanics lien shall be created against such unit or its common element interest by reason of any subsequent contract by the developer to improve or make additions to the property.  765 ILCS 605/9.1.  Therefore, a developer will need to ensure it has discussed the condominium conversion process with the existing lienholders against the real property to be converted, and have arrangements in place that will allow conveyance of units free of existing liens.

All of this information which is available must be furnished to the prospective buyer prior to execution of the contract.  Thereafter, no changes or amendments may be made in any of the items furnished to the prospective buyer which would materially affect the rights of the buyer or the value of the unit without obtaining the approval of 75 percent of buyers then owning an interest in the condominium.

When all the information is not available at the time the contract is formed, the buyer’s obligation to close is voidable up until five days after all of the required information is available, or the closing occurs, whichever is earlier.

Failure of the seller to make full disclosure under §22 of the Act entitles the prospective buyer to rescind the contract at any time before closing, and to receive a refund of all deposits made, plus statutory interest.  765 ILCS 605/22 (e).

Other Required Disclosures for Residential Units

When the sale is related to a residential unit, the seller will also be required by Illinois law to provide a Residential Real Property Disclosure Report, setting forth the knowledge of the seller regarding possible defects as to a number of different property items.  See 765 ILCS 77/20.

In addition, federal law requires that the seller disclose known lead-based paint and/or lead based paint hazards that exist in residential real property (or state that the seller has no knowledge of the same), provide the buyer with all available property reports on lead-based hazards, provide a prescribed pamphlet on lead-based hazards, and offer the buyer the opportunity a 10-day opportunity to test for lead-based paint and associated hazards.  42 U.S.C. §4852d(a)(1)(B).

Finally, the Illinois Radon Awareness Act (420 ILCS 46/1, et seq.), requires sellers to provide buyers of residential real estate with the following disclosures:  (1) the pamphlet entitled “Radon Testing Guidelines for Real Estate Transactions” as published by the Illinois Emergency Management Agency (IEMA), (or an equivalent pamphlet approved for use by IEMA), and (2) the Illinois Disclosure of Information on Radon Hazards, detailing the potential threats to human health related to radon exposure and requiring the seller to disclose knowledge of the same related to the property, all as set forth in §10 of the Illinois Radon Awareness Act.  420 ILCS 46/10.

Of particular relevance to the conversion of multi-story structures, §20(9) of the Illinois Radon Awareness Act does not apply to “[t]ransfers of any residential dwelling unit located on the third story or higher above ground level of any structure or building, including, but not limited to, condominium units and dwelling units in a residential cooperative.”  420 ILCS 46/20(9).

Conclusion

 In addition to the numerous statutory requirements and practical considerations associated with any condominium development in the State of Illinois, undertaking a conversion condominium adds layers of complexity and requires significant advanced planning.  The conversion process should be undertaken with care and diligence, and the developer will likely need to engage numerous professionals (e.g., architect, attorney, engineer, surveyor) in order to produce the required disclosure materials, and ensure compliance with the Act.