North Riverside Fire Lawsuit

7/27/2019 North Riverside Fire Lawsuit

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IN THE CIRCUIT COURT OF COOK COUNTY

COUNTY DEPARTMENT, CHANCERY DIVISION

VILLAGE OF NORTH RIVERSIDE, )

)

Plaintiff, )v. ) Case No.

)

NORTH RIVERSIDE FIREFIGHTERS AND )

LIEUTENANTS UNION LOCAL 2714 )

INTERNATIONAL ASSOCIATION OF )

FIREFIGHTERS AFL-CIO, CLC, )

)

Defendant. )

COMPLAINT FOR DECLARATORY JUDGMENT AND RELATED RELIEF

Plaintiff, Village of North Riverside, by its attorney, Burton S. Odelson, Odelson &

Sterk, Ltd. and John B. Murphey, Rosenthal, Murphey, Coblentz & Donahue files this Complaint

for Declaratory Judgment and Related Relief.

NATURE OF THE ACTION

1. The Village of North Riverside (Village) seeks a declaration from this Court

that because of the extraordinary present and prospective devastating financial consequences

faced by the Village if it maintains a fire department staffed by full-time, pension-eligible

municipal employees, the Village has the right to outsource its fire protection services rather than

maintaining a full-time and pension eligible municipal employee. The Village further seeks a

declaration that nothing in either (a) the Villagesnow expired collective bargaining agreement

with the union representing its full-time firefighters, or (b) the Illinois Public Labor Relations

Act, prevents the implementation of this outsourcing decision.

VENUE

2. The Villages address is 2401 Des Plaines Avenue, North Riverside, Cook

County, Illinois, 60546. Accordingly, venue is proper in this Court.


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THE VILLAGE

3. The Village is a municipal corporation located in west central Cook County.

According to the 2010 census, the Village has a population of 6,672.

4. From a geographical and future development standpoint, the Village is completely

landlocked. While it is experiencing some redevelopment of existing commercial retail space in

and about the North Riverside Mall at 22nd Street and Harlem Avenue, the Village has no

realistic prospect of substantially expanding or otherwise growing its tax base.

5. The Village is a non-home rule municipality. Without the authority and power

granted to a home-rule municipality under Article VII, Section 6 of the Illinois Constitution of

1970, the Village derives all of its powers, including the power to raise revenue, from the Illinois

General Assembly, or by way of referendum.

THE VILLAGES BUDGET LIMITATIONS

6. The Village has annual general fund revenues of approximately $14.4 million

dollars. The Village has general fund expenses of approximately $15.1 million dollars. The

primary sources of revenue available to fund general governmental expenses are the following,

with the approximate revenue based on currently available data:

Revenue Source Amount Percentage of Total Revenue

(a) Property Tax $ 490,000 3%

(b) Sales Tax $8,835,000 61%

(c) Income Tax $ 650,000 5%

(d) Other taxes $1,100,000 8%

(e) Licenses and Permits $ 984,950 7%

(f) Fines, Fees, etc. $2,370,000 16%


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7. Because of the Villages non-home rule status, the Village only has the ability to

increase its property tax revenues on an annual basis by the lesser of 5% or the increase in the

Consumer Price Index for all urban consumers. Over the last two years, the Consumer Price

Index has not risen by more than approximately 1.7%:

CPI Index: 2011 3%

2012 1.7%

2013 1.5%

8. The amount of income tax the Village receives is based on the Villages

population, which is static or declining.

9. The amount of sales tax received by the Village in any year is also relatively static

and is a function of the general state of the retail economy in the Village and its general vicinity.

10. For these reasons, the Village has no realistic prospect of substantially increasing

its revenues for purposes of defraying general governmental expenses at any time in the

forseeable future.

THE VILLAGES GENERAL GOVERNMENT EXPENSES

11. The Villages general governmental expenses (which exclude proprietary funds

such as the water fund and categorical revenues and expenditures such as State of Illinois motor

fuel tax) consist primarily of salaries, benefits, and pension contributions for its employees.

Approximately 72% of the Villages revenues are used to defray employment-related costs.

12. The Village has approximately 70 full-time employees. Of those employees,

approximately 25 are employed in clerical or public works related jobs. As such, they are

members of the Illinois Municipal Retirement Fund (IMRF), a state-wide pension fund to which


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the Village contributes an employer share and withholds and contributes money to IMRF on

behalf of each IMRF covered employee.

13. The Village also has a full-time police department and a full-time fire department.

Pursuant to 40 ILCS 5/301 et seq., and 5/4-101 et seq., the Village is obligated to maintain and

fund a police pension fund for its full-time police officers, and a fire pension fund for its full-

time firefighters.

THE FULL-TIME FIRE DEPARTMENT AND THE UNION

14. The Villages Fire Department consists of one full-time chief, and 14 full-time

firefighters.

15. Defendant, North Riverside Firefighters and Lieutenants Union Local 2714,

International Association of Firefighters AFL-CIO, CLC (Union) is a union and duly

authorized collective bargaining representative of all full-time members of the Fire Department

other than the chief.

16. The Fire Department provides only fire protection service to the Village. There

have been very few structural fires in North Riverside over the past several years. Sixty-five

(65%) percent of calls for service coming to the North Riverside Fire Department are for

paramedic service.

17. The full-time employees of the North Riverside Fire Department have no

responsibility to provide any paramedic service. Since 1985, the Village has outsourced

paramedic services to a private entity named Paramedic Services of Illinois, Inc. (PSI).


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THE PENSION CRISIS AND ITS IMPACT ON THE VILLAGES

ABILITY TO SUSTAIN ITS ABILITY TO PROVIDE SERVICES TO ITS RESIDENTS

BECAUSE OF THE FIRE DEPARTMENT PENSION OBLIGATIONS

18. Attached hereto as Exhibit 1 and made a part hereof is a recent newspaper article

summarizing the results of an extensive investigation by the Better Government Association into

the depth of the public pension crisis in Cook County, The widely-publicized and much-

discussed public pension crisis in Illinois has hit home in the Village. In particular, present and

future obligations of the Village toward its firemens pension fund are projected to have

disastrous consequences on the Villages ability to provide essential services to its residen ts

during the foreseeable future.

19. The Villages pension-related expenses attributable to the Fire Department, as

calculated by an enrolled actuary retained by the Village, have increased exponentially over the

past decade. In particular:

(a) In the year 2003, the Villages annual required contribution to the fire pension

fund was $175,793.

(b) For year 2013, the Villages annual required contribution has increased to

$773,055, an increase of 340%.

(c) In 2003, the Villages annual required contribution represented a cost of $8,371

per active fire department employee, the pension costs for 2013 represent $45,474 per active

employee, a 540% increase.

20. Because the Village is a non-home rule unit municipality, the Village lacks the

legal ability to raise revenues to continue to pay for these ever-rising fire pension costs without

having to drastically cut the essential services it is charged with providing to the citizens and

taxpayers of the Village.


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21. The Village is currently responding to a complaint from the Illinois Department of

Insurance that the Village must pay approximately $2,000,000 of additional contributions to its

police and fire pension funds.

THE PROSPECTIVE IMPACT OF THE PENSION FUNDING ACT.

22. The Illinois General Assembly adopted Public Act 96-1495, effective January 1,

2011 (the Pension Funding Act).

23. The Pension Funding Act amended Section 4-118 of the Firefighters Pension Act,

to which the Village is subject, to require that if in fiscal year 2016, the Village does not fund the

firemens pension to levels specified elsewhere in that section, the State of Illinois may withhold

up to 33% of the Village entitlement of state funds the Village receives such as sales tax and

income tax, in order to make up the shortfall. In 2017, the maximum state funding holdback

increases to 67% of all entitlements; and in fiscal year 2018 and thereafter, the maximum state

enticement funding holdback increases to 100%.

24. The Village does not have the ability to increase property taxes in order to pay for

these increasing pension obligations. In that result, the Village having to comply with the

Pension Funding Act will be that the Village stands to lose over $255,108 in 2016, $517,947 in

2017, and $773,055 in 2018 and thereon from sales tax and income tax in order to continue to

fund the Villages fire pension obligations.

25. The statutorily imposed pension payments which are likely to be withheld from

the Village as a result of the Pension Funding Act will result in a significant curtailing of the

Villages financial ability to provide essential public services to the residents and taxpayers of

the Village. The Village further estimates that as a result of the obligations of the Pension


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Funding Act, all of the Villages fund reserves will be deleted within 3 years in order to satisfy

public employee pension payment obligations.

26. To the extent the Village continues to maintain a fire department, the pension

expenses, both for purposes of funding the earned pensions for current retirees, and more

importantly, for continuing to absorb the actuarial expenses for firefighters currently employed

or who may be employed in the future, will grow at a rate far in excess of the Villages ability to

pay these obligations without crippling the Villages ability to provide basic municipal services

to its residents. In simple terms, based on the Villages anticipated obligations to the firemens

pension fund, unless the Village acts now to curtail its growing fire pension obligations, it will

not be able to provide basic municipal services like street repair, snow plowing, parks

maintenance, at a reasonable level. These pension obligations will also prevent the Village from

paying reasonable raises to its present and future employees.

THE DECISION TO OUTSOURCE FIRE PROTECTION SERVICES.

27. Based on the foregoing considerations, the corporate authorities of the Village

have made the legislative determination that in order for the Village to survive financially over

the long term, it is necessary to outsource the Villages fire protection services, to a private

contracted-for firm, which firm will be responsible for paying the salaries and benefits of its

employees. To that end, the Village has commenced negotiations with PSI to have that company

provide fire protection services to the Village, just as PSI has been providing paramedic services

to the Village for the past three decades.

28. The corporate authorities have further determined that the implementation of the

outsourcing decision is necessary now to slow down the rate at which the Villages fire pension

obligation is to increase over the next decades.


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29. The corporate authorities have further determined that unless the Village

outsources fire protection services on a going-forward basis, the future pension obligation will

drain the Villages budget, create substantial deficits, and ultimately eliminate the Villages

ability to provide basic municipal services to its residents, which is the reason for the existence

of the Village as a corporate entity in the first place.

30. In simplest terms, like many municipalities across the state, the crushing burden

of North Riversidespresent and future fire pension obligations has resulted in the determination

that the Village can no longer responsibly kick the pension can down the road ,by continuing

to provide fire protection services by way of a department consisting of full-time and pension-

eligible municipal employees.

THE DISPUTE WITH THE UNION

31. The Village has a collective bargaining agreement with the Union. Attached

hereto as Exhibit 2 and made a part hereof is a copy of the collective bargaining agreement

(CBA).

32. By its terms, the CBA expired on April 30, 2014. See Section 24.1 (This

Agreement and each of its provisions shall be effective as of May 1, 2009 and shall continue in

full force and effect until April 30, 2014).

33. Section 24.2 of the CBA, Continuing Effect, provides that the Agreement shall

remain in full force and effect after any expiration date while negotiations or resolution of

impasse proceedings for a newer amended contract or any part thereof are underway between the

parties.


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34. Over the past several months, the Village has met on a number of occasions with

the Union at the bargaining table. During the course of its various bargaining sessions, the

Village has:

(a) Shared with the Union information relating to the Villages current and projected

financial status;

(b) Explained to the Union why the Village can no longer sustain a municipal fire

department in light of the crushing present and future pension obligations;

(c) Offered to make arrangements to protect the future employment of bargaining

unit members by,inter alia,

assuring the Union that each and every member of the bargaining

unit would be guaranteed stable, future employment with PSI, with health insurance benefits and

post-employment pension benefits; and

(d) Assured the Union that the Village would continue to maintain its statutory

pension funding obligations.

35. The Village and Union next bargained on several occasions under the auspices of

a federal mediator. On September 3, 2014, in a final effort to address the legitimate concerns of

the Union employees, the Village offered to transition the outsourcing decision over the next

decade, in order to allow a significant number of the Unions employees the opportunity to retire

with fully-vested pension rights.

36. The Village offered the Union:

(a) An eleven-year contract with a wage and benefits opener at years five (5) and

eight (8);

(b) Total Union protection with existing grievance procedures;


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(c) Current health insurance with modest percentage increases in employee

contributions;

(d) A retirement incentive at twenty-five (25) years;

(e) Retirement health insurance incentive for next three (3) years;

(f) Layoff procedures as currently in expired contract;

(g) Current holiday, sick, and personal days;

(h) Overtime as is except current private ambulance service paramedics/firefighters

and any new PSI hires would be worked into overtime system;

(i) Three-man engine with paramedics/firefighters from PSI able to work the engine

as the fourth-man;

(j) Wages in year one of 0% to firefighters and 2% going directly into the pension

fund; 2% in year two; 2% in year three; 2!% in year four; and 2"% in year five;

(k) No Day-Lieutenant by attrition;

(l) Vacation time remains as in expired contract except all vacation to be scheduled

by the 15thof November for the next year;

(m) Call-back and holdover the same as in expired contract except PSI employees are

part of the system;

(n) Sick leave buyout phased out and used for future health care costs;

(o) Continued attendance at Union meetings as per the expired contract except no

attendance can cause an overtime situation;

(p) Reduce RDO days by two (2) and personal days by two (2); and

(q) One slot off for personal and vacation.


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37. The offer by the Village included replacing retired municipal firefighters, by

attrition, with paramedic/firefighters supplied by PSI.

38. During the duration of the proposed eleven-year contract, twelve (12) of the

fourteen (14) current firefighters would have the age (50) and length of service (20+ years), with

most having 25+ years, needed to retire with fully-vested pension rights.

39. The federal mediator attempted to bring the parties to agreement on September 3,

2014 and September 9, 2014. The Union rejected the proposal by the Village and offered other

proposals that would not save the Village $700,000 each year. The Union proposal also made

themselves part of the managerial oversight over the finances of the Village with an opener after

three (3) years if they did not like what the Village was doing with its general funds.

40. The Village rejected the Unions proposals.

41. Theparties having rejected, in total, each others proposals are now at impasse.

42. The Union maintains the legal position that: (a) the existence of the CBA and

(b) Section 14(l) of the Illinois Public Labor Relations Act (Labor Act), 5 ILCS 315/14(l)

absolutely and permanently prevent the Village from ever outsourcing fire protection services to

PSI. In other words, it is the position of the Union as expressed at the bargaining table that

regardless of the Villages financial plight, and regardless of the dire financial projections set

forth in this Complaint, the Village of North Riverside must maintain a contractual relationship

with the Union, must maintain a municipal fire department, and must continue to absorb millions

of dollars of present and future pension obligations attributable to present and future firefighters

in perpetuity.


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43. Section 14 (l) of the Labor Act addresses a public employers obligation to

maintain the status quo pending the results of an on-going negotiation/interest arbitration

culminating in a new collective bargaining agreement. Section 14(l) provides as follows:

During the pendency of proceedings before the arbitrationpanel, existing wages, hours and other conditions of employmentshall not be changed by action of either party without the consentof the other, but a party may so consent without prejudice to hisrights or position under this Act. The proceedings are deemed tobe pending before the arbitration panel upon the initiation ofarbitration procedures under this Act.

44. It is the position of the Village:

(a) That Section 14(l) is intended to prevent a public employer from unilaterally

changing certain terms and conditions of an existing collective bargaining agreement pending

negotiation toward a successor agreement or pending an interest arbitration to resolve

disagreements regarding the terms of a future collective bargaining agreement;

(b) That by virtue of the matters set forth hereinabove, the Village has determined

that it can no longer responsibly enter into a new or amended Agreement with the Union

within the contemplation of Section 24.2 of the CBA or Section 14(1) of the Act;

(c) That neither Section 14(1) of the Labor Act, nor the CBA in any way prevents the

Village from outsourcing its fire protection service following the expiration of the current

collective bargaining agreement, following a good faith legislative determination of the

present and future economic necessity to take such action, and following good faith negotiations

with the Union; and

(d) That if the interpretation of the Labor Act and the CBA advanced by the Union

were to be accepted, the Village would never be able to outsource its fire protection services,

regardless of how drastically the economic circumstances of the Village deteriorate.


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45. The Union disagrees with the position of the Village as set forth in Paragraph 37.

Accordingly, there is an actual controversy between the parties ripe for judicial determination.

WHEREFORE, the Village respectfully prays as follows:

A. That this Court declare the rights of the parties.

B. That this Court find that nothing in the CBA, the Illinois Public Labor Relations

Act, or any other law prevents the Village from outsourcing its fire protection service based on a

good faith legislative determination of economic necessity.

C. That this Court find that the Villages decision to outsource its fire protection

service is based on a good faith legislative finding of economic necessity.

D. That this Court find that the Village may outsource its Fire Department.

E. That this Court grant the Village such other and additional relief as is established

by the proofs.

Respectfully submitted,

VILLAGE OF NORTH RIVERSIDE

By:/s/Burton S. OdelsonOne of its Attorneys

Burton S. OdelsonOdelson & Sterk, Ltd.3318 West 95thStreetEvergreen Park, IL 60805Tel: 708-424-5678/Fax: 708-425-1898

John B. MurpheyRosenthal, Murphey, Coblentz & Donahue30 N. LaSalle Street, Suite 1624Chicago, IL 60602Tel: 312-541-1070/Fax: 312-541-9191


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Documents

North Riverside Fire Lawsuit