093_HB0273enr

 
HB0273 Enrolled                      LRB093 04311 MKM 04358 b

 1        AN ACT concerning bonds.

 2        Be it enacted by the People of  the  State  of  Illinois,
 3    represented in the General Assembly:

 4        Section  5. The Public Funds Investment Act is amended by
 5    changing Section 2 as follows:

 6        (30 ILCS 235/2) (from Ch. 85, par. 902)
 7        Sec. 2.  Authorized investments.
 8        (a)  Any public agency may invest  any  public  funds  as
 9    follows:
10             (1)  in  bonds, notes, certificates of indebtedness,
11        treasury bills  or  other  securities  now  or  hereafter
12        issued, which are guaranteed by the full faith and credit
13        of  the  United  States  of  America  as to principal and
14        interest;
15             (2)  in bonds, notes, debentures, or  other  similar
16        obligations  of  the  United  States  of  America  or its
17        agencies;
18             (3)  in    interest-bearing    savings     accounts,
19        interest-bearing     certificates     of    deposit    or
20        interest-bearing time deposits or any  other  investments
21        constituting direct obligations of any bank as defined by
22        the Illinois Banking Act;
23             (4)  in   short  term  obligations  of  corporations
24        organized in the  United  States  with  assets  exceeding
25        $500,000,000  if  (i)  such  obligations are rated at the
26        time of purchase at one of the 3 highest  classifications
27        established  by  at  least 2 standard rating services and
28        which mature not later than 180 days  from  the  date  of
29        purchase,  (ii)  such  purchases do not exceed 10% of the
30        corporation's outstanding obligations and (iii)  no  more
31        than  one-third  of  the  public  agency's  funds  may be
 
HB0273 Enrolled             -2-      LRB093 04311 MKM 04358 b
 1        invested in short term obligations of corporations; or
 2             (5)  in money market mutual funds  registered  under
 3        the  Investment  Company  Act  of 1940, provided that the
 4        portfolio of any such money market mutual fund is limited
 5        to obligations described in paragraph (1) or (2) of  this
 6        subsection   and   to   agreements   to  repurchase  such
 7        obligations.
 8        (a-1)  In addition to any  other  investments  authorized
 9    under this Act, a municipality may invest its public funds in
10    interest   bearing  bonds  of  any  county,  township,  city,
11    village, incorporated town, municipal corporation, or  school
12    district, of the State of Illinois, of any other state, or of
13    any  political subdivision or agency of the State of Illinois
14    or of any other state, whether the interest earned thereon is
15    taxable or tax-exempt under federal law.  The bonds shall  be
16    registered  in  the  name of the municipality or held under a
17    custodial agreement at a bank.  The bonds shall be  rated  at
18    the   time   of   purchase   within  the  4  highest  general
19    classifications established by a rating service of nationally
20    recognized expertise in rating  bonds  of  states  and  their
21    political subdivisions.
22        (b)  Investments  may  be  made  only  in banks which are
23    insured by the Federal  Deposit  Insurance  Corporation.  Any
24    public  agency  may  invest  any  public  funds in short term
25    discount  obligations  of  the  Federal   National   Mortgage
26    Association or in shares or other forms of securities legally
27    issuable  by  savings  banks or savings and loan associations
28    incorporated under the laws of this State or any other  state
29    or  under  the laws of the United States.  Investments may be
30    made  only  in  those  savings  banks  or  savings  and  loan
31    associations the shares, or investment certificates of  which
32    are insured by the Federal Deposit Insurance Corporation. Any
33    such  securities  may  be purchased at the offering or market
34    price  thereof  at  the  time  of  such  purchase.  All  such
 
HB0273 Enrolled             -3-      LRB093 04311 MKM 04358 b
 1    securities so purchased shall mature or be  redeemable  on  a
 2    date or dates prior to the time when, in the judgment of such
 3    governing  authority,  the  public  funds so invested will be
 4    required  for  expenditure  by  such  public  agency  or  its
 5    governing authority.  The  expressed  judgment  of  any  such
 6    governing authority as to the time when any public funds will
 7    be  required  for  expenditure  or be redeemable is final and
 8    conclusive.  Any public agency may invest any public funds in
 9    dividend-bearing share accounts, share  certificate  accounts
10    or  class of share accounts of a credit union chartered under
11    the laws of this State or the  laws  of  the  United  States;
12    provided,  however,  the  principal office of any such credit
13    union  must  be  located  within  the  State   of   Illinois.
14    Investments  may  be  made  only  in  those credit unions the
15    accounts of which are insured by applicable law.
16        (c)  For purposes of this Section, the term "agencies  of
17    the United States of America" includes:  (i) the federal land
18    banks,   federal   intermediate   credit   banks,  banks  for
19    cooperative, federal farm credit banks, or any  other  entity
20    authorized  to  issue  debt obligations under the Farm Credit
21    Act of 1971 (12 U.S.C. 2001  et  seq.)  and  Acts  amendatory
22    thereto;  (ii)  the  federal  home loan banks and the federal
23    home loan mortgage corporation; and (iii)  any  other  agency
24    created by Act of Congress.
25        (d)  Except   for  pecuniary  interests  permitted  under
26    subsection (f) of Section 3-14-4 of  the  Illinois  Municipal
27    Code  or  under  Section 3.2 of the Public Officer Prohibited
28    Practices Act, no person acting  as  treasurer  or  financial
29    officer  or who is employed in any similar capacity by or for
30    a public agency may do any of the following:
31             (1)  have any interest, directly or  indirectly,  in
32        any  investments  in  which  the  agency is authorized to
33        invest.
34             (2)  have any interest, directly or  indirectly,  in
 
HB0273 Enrolled             -4-      LRB093 04311 MKM 04358 b
 1        the sellers, sponsors, or managers of those investments.
 2             (3)  receive,  in  any  manner,  compensation of any
 3        kind  from  any  investments  in  which  the  agency   is
 4        authorized to invest.
 5        (e)  Any  public  agency may also invest any public funds
 6    in a Public Treasurers' Investment Pool created under Section
 7    17 of the State Treasurer Act.  Any public  agency  may  also
 8    invest  any  public  funds  in  a fund managed, operated, and
 9    administered by a bank, subsidiary of a bank,  or  subsidiary
10    of  a  bank  holding  company  or use the services of such an
11    entity to hold and invest or advise regarding the  investment
12    of any public funds.
13        (f)  To  the  extent a public agency has custody of funds
14    not owned by  it  or  another  public  agency  and  does  not
15    otherwise  have  authority  to  invest such funds, the public
16    agency may invest such funds as if they were  its  own.  Such
17    funds  must  be  released  to  the  appropriate person at the
18    earliest reasonable time, but in no case exceeding  31  days,
19    after  the  private person becomes entitled to the receipt of
20    them.  All earnings accruing on any investments  or  deposits
21    made pursuant to the provisions of this Act shall be credited
22    to  the  public  agency  by  or for which such investments or
23    deposits were made, except as provided otherwise  in  Section
24    4.1  of  the  State Finance Act or the Local Governmental Tax
25    Collection  Act,  and  except  where  by  specific  statutory
26    provisions such earnings are directed to be credited  to  and
27    paid to a particular fund.
28        (g)  A public agency may purchase or invest in repurchase
29    agreements  of  government  securities having the meaning set
30    out in the Government Securities Act of 1986 subject  to  the
31    provisions of said Act and the regulations issued thereunder.
32    The  government securities, unless registered or inscribed in
33    the name of the public agency,  shall  be  purchased  through
34    banks  or  trust  companies  authorized to do business in the
 
HB0273 Enrolled             -5-      LRB093 04311 MKM 04358 b
 1    State of Illinois.
 2        (h)  Except  for  repurchase  agreements  of   government
 3    securities which are subject to the Government Securities Act
 4    of   1986,  no  public  agency  may  purchase  or  invest  in
 5    instruments which constitute repurchase  agreements,  and  no
 6    financial  institution  may enter into such an agreement with
 7    or on behalf of any public agency unless the  instrument  and
 8    the transaction meet the following requirements:
 9             (1)  The  securities, unless registered or inscribed
10        in the name of the public agency, are  purchased  through
11        banks or trust companies authorized to do business in the
12        State of Illinois.
13             (2)  An authorized public officer after ascertaining
14        which firm will give the most favorable rate of interest,
15        directs   the  custodial  bank  to  "purchase"  specified
16        securities from a designated institution. The  "custodial
17        bank"  is  the  bank  or  trust  company,  or  agency  of
18        government,   which   acts   for  the  public  agency  in
19        connection  with  repurchase  agreements  involving   the
20        investment  of  funds  by  the  public  agency. The State
21        Treasurer may act as custodial bank for  public  agencies
22        executing  repurchase  agreements.   To  the  extent  the
23        Treasurer  acts in this capacity, he is hereby authorized
24        to pass through  to  such  public  agencies  any  charges
25        assessed by the Federal Reserve Bank.
26             (3)  A  custodial  bank must be a member bank of the
27        Federal Reserve System or maintain accounts  with  member
28        banks.   All  transfers  of book-entry securities must be
29        accomplished on a Reserve Bank's computer records through
30        a member  bank  of  the  Federal  Reserve  System.  These
31        securities  must  be credited to the public agency on the
32        records of the custodial bank and the transaction must be
33        confirmed  in  writing  to  the  public  agency  by   the
34        custodial bank.
 
HB0273 Enrolled             -6-      LRB093 04311 MKM 04358 b
 1             (4)  Trading  partners  shall be limited to banks or
 2        trust companies authorized to do business in the State of
 3        Illinois or to registered primary reporting dealers.
 4             (5)  The security interest must be perfected.
 5             (6)  The public agency enters into a written  master
 6        repurchase    agreement    which   outlines   the   basic
 7        responsibilities  and  liabilities  of  both  buyer   and
 8        seller.
 9             (7)  Agreements  shall be for periods of 330 days or
10        less.
11             (8)  The authorized public  officer  of  the  public
12        agency  informs  the  custodial  bank  in  writing of the
13        maturity details of the repurchase agreement.
14             (9)  The custodial bank must take  delivery  of  and
15        maintain the securities in its custody for the account of
16        the  public agency and confirm the transaction in writing
17        to the public agency.  The  Custodial  Undertaking  shall
18        provide  that  the  custodian  takes  possession  of  the
19        securities  exclusively  for  the public agency; that the
20        securities are free of any  claims  against  the  trading
21        partner;  and any claims by the custodian are subordinate
22        to  the  public  agency's  claims  to  rights  to   those
23        securities.
24             (10)  The  obligations  purchased by a public agency
25        may only be sold or presented for redemption  or  payment
26        by  the  fiscal  agent  bank or trust company holding the
27        obligations upon the written instruction  of  the  public
28        agency or officer authorized to make such investments.
29             (11)  The  custodial  bank  shall  be  liable to the
30        public agency for  any  monetary  loss  suffered  by  the
31        public agency due to the failure of the custodial bank to
32        take and maintain possession of such securities.
33        (i)  Notwithstanding   the   foregoing   restrictions  on
34    investment in instruments constituting repurchase  agreements
 
HB0273 Enrolled             -7-      LRB093 04311 MKM 04358 b
 1    the Illinois Housing Development Authority may invest in, and
 2    any   financial   institution   with   capital  of  at  least
 3    $250,000,000 may  act  as  custodian  for,  instruments  that
 4    constitute  repurchase agreements, provided that the Illinois
 5    Housing  Development   Authority,   in   making   each   such
 6    investment, complies with the safety and soundness guidelines
 7    for   engaging   in  repurchase  transactions  applicable  to
 8    federally insured banks,  savings  banks,  savings  and  loan
 9    associations or other depository institutions as set forth in
10    the Federal Financial Institutions Examination Council Policy
11    Statement Regarding Repurchase Agreements and any regulations
12    issued,  or  which  may  be issued by the supervisory federal
13    authority pertaining  thereto  and  any  amendments  thereto;
14    provided  further  that  the  securities  shall be either (i)
15    direct general obligations of, or obligations the payment  of
16    the principal of and/or interest on which are unconditionally
17    guaranteed  by,  the  United  States  of  America or (ii) any
18    obligations of any agency, corporation or subsidiary  thereof
19    controlled  or supervised by and acting as an instrumentality
20    of the United States Government pursuant to authority granted
21    by the Congress of the United  States  and  provided  further
22    that  the  security  interest must be perfected by either the
23    Illinois Housing Development Authority, its custodian or  its
24    agent   receiving   possession   of   the  securities  either
25    physically or transferred  through  a  nationally  recognized
26    book entry system.
27        (j)  In  addition  to  all  other  investments authorized
28    under this Section, a community college district  may  invest
29    public  funds  in  any  mutual funds that invest primarily in
30    corporate investment grade or global  government  short  term
31    bonds.  Purchases  of  mutual  funds that invest primarily in
32    global government short term bonds shall be limited to  funds
33    with  assets  of  at least $100 million and that are rated at
34    the time of purchase as one of the 10 highest classifications
 
HB0273 Enrolled             -8-      LRB093 04311 MKM 04358 b
 1    established by a recognized rating service.  The  investments
 2    shall  be  subject to approval by the local community college
 3    board of trustees.  Each community college board of  trustees
 4    shall  develop  a  policy  regarding  the  percentage  of the
 5    college's investment portfolio that can be invested  in  such
 6    funds.
 7        Nothing  in  this Section shall be construed to authorize
 8    an intergovernmental risk management  entity  to  accept  the
 9    deposit of public funds except for risk management purposes.
10    (Source: P.A. 90-319, eff. 8-1-97.)

11        Section  10.  The  Investment  of  Municipal Funds Act is
12    amended by changing Section 1 as follows:

13        (50 ILCS 340/1) (from Ch. 146 1/2, par. 3.1)
14        Sec. 1.  Every county, park district, sanitary  district,
15    or other municipal corporation, holding in its treasury funds
16    which   are  set  aside  for  use  for  particular  purposes,
17    including any  funds  that  are  disbursed  to  a  county  or
18    municipality  as their share of the taxes collected under the
19    "Motor Fuel Tax Law", but which are not immediately necessary
20    for those purposes, by ordinance, may use those funds, or any
21    of them, in the purchase of tax anticipation warrants  issued
22    by  the  county,  park  district, sanitary district, or other
23    municipal corporation  possessing  the  funds  against  taxes
24    levied  by  that county, park district, sanitary district, or
25    other municipal  corporation.    These  warrants  shall  bear
26    interest  not  to exceed four percent annually.  All interest
27    upon these warrants, and all  money  paid  in  redemption  of
28    these warrants, or received from the resale thereof, shall at
29    once be credited to and placed in the particular fund used to
30    purchase the specified warrants. Likewise, every county, park
31    district,  sanitary district, or other municipal corporation,
32    by resolution or ordinance may use the money in the specified
 
HB0273 Enrolled             -9-      LRB093 04311 MKM 04358 b
 1    funds in the  purchase  of  municipal  bonds  issued  by  the
 2    county,  park district, sanitary district, or other municipal
 3    corporation,  possessing  the  funds  and   representing   an
 4    obligation  and  pledging  the  credit  of  that county, park
 5    district, sanitary district, or other municipal  corporation,
 6    or bonds and other interest bearing obligations of the United
 7    States, or of the State of Illinois, or of any other state or
 8    of  any  political  subdivision  or  agency  of  the State of
 9    Illinois or of any other state, whether the  interest  earned
10    thereon is taxable or tax-exempt under federal law, including
11    savings  accounts  and savings certificates of deposit of any
12    State or National Bank if such accounts and certificates  are
13    fully  insured  by the Federal Deposit Insurance Corporation,
14    withdrawable capital accounts or deposits of State or federal
15    chartered savings  and  loan  associations  which  are  fully
16    insured   by   the   Federal   Savings   and  Loan  Insurance
17    Corporation, or treasury notes and other securities issued by
18    agencies of the United States.  All interest upon these bonds
19    or obligations and all money  paid  in  redemption  of  these
20    bonds  or  obligations  or realized from the sale thereof, if
21    afterwards sold, shall at once be credited to and  placed  in
22    the  particular  fund used to purchase the specified bonds or
23    obligations.
24        No bank or savings and  loan  association  shall  receive
25    public  funds  as  permitted  by  this Section, unless it has
26    complied  with  the  requirements  established  pursuant   to
27    Section  6  of  "An  Act  relating  to certain investments of
28    public funds by public agencies", approved July 23, 1943,  as
29    now or hereafter amended.
30        This  amendatory  Act  of 1975 is not a limit on any home
31    rule unit.
32    (Source: P.A. 84-1308.)

33        Section 99. Effective date. This Act  takes  effect  upon
 
HB0273 Enrolled             -10-     LRB093 04311 MKM 04358 b
 1    becoming law.