093_SB1601enr

SB1601 Enrolled                      LRB093 02811 SJM 02827 b

 1        AN ACT concerning finance.

 2        WHEREAS,   The   General   Assembly   takes   note   that
 3    governmental  units  in  the  State  must borrow funds in the
 4    current bond market, and  the  issuance  of  bonds  or  other
 5    obligations as what are commonly referred to as variable rate
 6    demand  bonds,  auction  bonds,  or commercial paper bonds is
 7    ever increasing, and is frequently  the  most  advisable  and
 8    economic means of borrowing; and

 9        WHEREAS,  It is sometimes most advantageous in connection
10    with such borrowings to enter  into  cap,  collar,  swap,  or
11    other  derivative  transactions  relating  to  interest rates
12    which serve to hedge interest rate risk and it is  frequently
13    necessary to procure credit enhancement in the forms commonly
14    referred  to  as municipal bond insurance, letters of credit,
15    lines of credit, standby bond purchase agreements, or  surety
16    bonds,  and  the  like,  in  such  demand  bond  and  similar
17    transactions; and

18        WHEREAS,  Existing  law authorizes such transactions, but
19    it is advisable for the  law  to  be  more  fully  stated  to
20    accommodate  same,  expressly  permitting  certain aspects of
21    such transactions; therefore

22        Be it enacted by the People of  the  State  of  Illinois,
23    represented in the General Assembly:

24        Section  3.  The State Finance Act is amended by changing
25    Section 6z-45 as follows:

26        (30 ILCS 105/6z-45)
27        Sec. 6z-45.  The School Infrastructure Fund.
28        (a)  The School  Infrastructure  Fund  is  created  as  a
29    special fund in the State Treasury.
 
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 1        In  addition  to  any  other  deposits authorized by law,
 2    beginning January 1, 2000, on the first day of each month, or
 3    as soon thereafter as may be practical, the  State  Treasurer
 4    and  State  Comptroller  shall transfer the sum of $5,000,000
 5    from the General Revenue Fund to  the  School  Infrastructure
 6    Fund; provided, however, that no such transfers shall be made
 7    from July 1, 2001 through June 30, 2003.
 8        (b)  Subject  to the transfer provisions set forth below,
 9    money in the School Infrastructure Fund shall,  if  and  when
10    the  State of Illinois incurs any bonded indebtedness for the
11    construction  of  school  improvements   under   the   School
12    Construction  Law,  be  set aside and used for the purpose of
13    paying and discharging annually the principal and interest on
14    that bonded indebtedness then due and  payable,  and  for  no
15    other purpose.
16        In  addition to other transfers to the General Obligation
17    Bond Retirement and Interest Fund made pursuant to Section 15
18    of the General Obligation Bond Act,  upon  each  delivery  of
19    bonds  issued  for  construction of school improvements under
20    the School Construction  Law,  the  State  Comptroller  shall
21    compute  and  certify to the State Treasurer the total amount
22    of principal of, interest on, and premium, if  any,  on  such
23    bonds  during  the  then  current  and each succeeding fiscal
24    year.  With respect to the interest payable on variable  rate
25    bonds, such certifications shall be calculated at the maximum
26    rate  of interest that may be payable during the fiscal year,
27    after taking  into  account  any  credits  permitted  in  the
28    related  indenture  or other instrument against the amount of
29    such interest required to be appropriated for that period.
30        On or before the  last  day  of  each  month,  the  State
31    Treasurer  and  State  Comptroller  shall  transfer  from the
32    School Infrastructure Fund to  the  General  Obligation  Bond
33    Retirement  and Interest Fund an amount sufficient to pay the
34    aggregate of the principal of, interest on, and  premium,  if
 
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 1    any, on the bonds payable on their next payment date, divided
 2    by the number of monthly transfers occurring between the last
 3    previous  payment  date  (or  the delivery date if no payment
 4    date has yet occurred) and the next succeeding payment  date.
 5    Interest payable on variable rate bonds shall  be  calculated
 6    at  the  maximum rate of interest that may be payable for the
 7    relevant  period,  after  taking  into  account  any  credits
 8    permitted  in  the  related  indenture  or  other  instrument
 9    against  the  amount  of  such  interest   required   to   be
10    appropriated for that period.  Interest for which moneys have
11    already  been deposited into the capitalized interest account
12    within the General Obligation Bond  Retirement  and  Interest
13    Fund  shall not be included in the calculation of the amounts
14    to be transferred under this subsection.
15        (c)  The surplus, if any, in  the  School  Infrastructure
16    Fund  after  the  payment  of  principal and interest on that
17    bonded indebtedness  then  annually  due  shall,  subject  to
18    appropriation, be used as follows:
19        First  -  to  make  3  payments  to the School Technology
20    Revolving Loan Fund as follows:
21             Transfer of $30,000,000 in fiscal year 1999;
22             Transfer of $20,000,000 in fiscal year 2000; and
23             Transfer of $10,000,000 in fiscal year 2001.
24        Second - to pay  the  expenses  of  the  State  Board  of
25    Education  and the Capital Development Board in administering
26    programs  under  the  School  Construction  Law,  the   total
27    expenses not to exceed $1,200,000 in any fiscal year.
28        Third  -  to  pay  any  amounts due for grants for school
29    construction projects  and  debt  service  under  the  School
30    Construction Law.
31        Fourth  -  to  pay  any amounts due for grants for school
32    maintenance projects under the School Construction Law.
33    (Source: P.A.  91-38,  eff.  6-15-99;  91-711,  eff.  7-1-00;
34    92-11, eff. 6-11-01; 92-600, eff. 6-28-02.)
 
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 1        Section  5.   The  Bond  Authorization  Act is amended by
 2    changing Sections 7, 9, 14 and 15 as follows:

 3        (30 ILCS 305/7) (from Ch. 17, par. 6607)
 4        Sec.  7.  Interest  rate  swaps.  For  purposes  of  this
 5    Section, terms are as defined in the  Local  Government  Debt
 6    Reform  Act.  With  respect  to  all or part of any currently
 7    outstanding or proposed issue of its  bonds,  a  governmental
 8    unit  public  corporation whose aggregate principal amount of
 9    bonds  outstanding  or  proposed  exceeds  $10,000,000   may,
10    without   prior   appropriation,  enter  into  agreements  or
11    contracts with  any  necessary  or  appropriate  person  (the
12    counter party) that will have the benefit of providing to the
13    governmental  unit:  (i)  public corporation an interest rate
14    basis, cash flow basis, or other basis  different  from  that
15    provided  in  the  bonds  for the payment of interest or (ii)
16    with respect to a future delivery of bonds, one or more of  a
17    guaranteed  interest  rate,  interest  rate  basis, cash flow
18    basis, or purchase price.     Such  agreements  or  contracts
19    include  without  limitation agreements or contracts commonly
20    known as "interest rate  swap,  collar,  cap,  or  derivative
21    agreements",   "forward   payment   conversion   agreements",
22    interest  rate  locks, forward bond purchase agreements, bond
23    warrant agreements, or bond purchase  option  agreements  and
24    also  include  agreements or contracts providing for payments
25    based on levels of or changes in interest rates, including  a
26    change in an interest rate index, to exchange cash flows or a
27    series  of  payments,  or  to  hedge payment, rate spread, or
28    similar exposure (such agreements or contracts, collectively,
29    being "swaps").  Without limiting other permitted terms which
30    may be included in swaps, the following provisions may or, if
31    hereinafter so required, shall apply:
32        (a) Payments made pursuant to a swap (the swap  payments)
33    which  are to be made by the governmental unit may be paid by
 
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 1    such governmental unit, without limitation, from proceeds  of
 2    the bonds, including bonds for future delivery, identified to
 3    such  swaps,  or  from  bonds issued to refund such bonds, or
 4    from  whatever  enterprise  revenues   or   revenue   source,
 5    including  taxes  pledged  or to be pledged to the payment of
 6    such bonds, which enterprise revenues or revenue  source  may
 7    be increased to make such swap payments, and swap payments to
 8    be  received by the governmental unit, which may be periodic,
 9    up-front, or on termination, shall be  used  solely  for  and
10    limited  to  any lawful corporate purpose of the governmental
11    unit.
12        (b)  Up-front or periodic net swap payments to be paid by
13    the governmental unit under  the  swaps  (the  standard  swap
14    payments)  such  agreements  or contracts shall be treated as
15    interest for the purpose of  calculating  any  interest  rate
16    limit  applicable  to  the bonds, provided, however, that for
17    purposes of making such standard swap payments only (and  not
18    with  respect  to  the  bonds so issued or to be issued), the
19    bonds shall be deemed not exempt from income  taxation  under
20    the  Internal  Revenue  Code  for  purposes  of State law, as
21    contained in this Bond Authorization  Act,  relating  to  the
22    permissible  rate  of  interest  to  be  borne  thereon, and,
23    provided further, that  if  payments  of  any  standard  swap
24    payments  are  to  be  made  by the governmental unit and the
25    counterparty on different  dates,  the  net  effect  of  such
26    payments  for purposes of such interest rate limitation shall
27    be determined using a true interest cost (yield) calculation.
28        (c)  Any such agreement or contract and the swap payments
29    to be made thereunder shall not be taken  into  account  with
30    respect to any debt limit applicable to the governmental unit
31    public corporation.
32        (d)  Swap  payments  upon the termination of any swap may
33    be paid to a counterparty upon any terms customary for swaps,
34    including,  without  limitation,  provisions   using   market
 
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 1    quotations  available  for giving the net benefit of the swap
 2    at the time of termination to the  persons  entitled  thereto
 3    (viz.,   the   governmental  unit  or  the  counterparty)  or
 4    reasonable fair market value determinations of the  value  at
 5    termination made in good faith by either such persons.
 6        (e)  The  term  of  the swap shall not exceed the term of
 7    any currently outstanding bonds identified to such  swap  or,
 8    for  bonds to be delivered, not greater than 5 years plus the
 9    term of years proposed for such bonds to be delivered, but in
10    no event longer than 40 years, plus, in each case,  any  time
11    period necessary to cure any defaults under such swap.
12        (f)  The choice of law for enforcement of swaps as to any
13    counterparty  may  be  made  for  any  state  of these United
14    States, but the law which shall apply to the  obligations  of
15    the  governmental  unit  shall  be  the  law  of the State of
16    Illinois, and jurisdiction to enforce the  swaps  as  against
17    the  governmental units shall be exclusively in the courts of
18    the State of Illinois or  in  the  applicable  federal  court
19    having jurisdiction and located within the State of Illinois.
20        (g)  Governmental  units, in entering into swaps, may not
21    waive any sovereign immunities from time  to  time  available
22    under  the  laws of the State of Illinois as to jurisdiction,
23    procedures, and remedies, but such swaps shall  otherwise  be
24    fully  enforceable  as  valid and binding contracts as and to
25    the extent provided herein and by other applicable law.
26    (Source: P.A. 87-1176.)

27        (30 ILCS 330/9) (from Ch. 127, par. 659)
28        Sec. 9.  Conditions for Issuance  and  Sale  of  Bonds  -
29    Requirements for Bonds.
30        (a)  Bonds shall be issued and sold from time to time, in
31    one or more series, in such amounts and at such prices as may
32    be  directed  by  the  Governor,  upon  recommendation by the
33    Director of the Bureau of the Budget. Bonds shall be in  such
 
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 1    form  (either  coupon,  registered  or  book  entry), in such
 2    denominations, payable  within  30  years  from  their  date,
 3    subject  to such terms of redemption with or without premium,
 4    bear interest payable at such times  and  at  such  fixed  or
 5    variable  rate  or  rates, and be dated as shall be fixed and
 6    determined by the Director of the Bureau of the Budget in the
 7    order authorizing the issuance and  sale  of  any  series  of
 8    Bonds,  which  order shall be approved by the Governor and is
 9    herein called a "Bond Sale  Order";  provided  however,  that
10    interest  payable at fixed or variable rates shall not exceed
11    that permitted in the  Bond  Authorization  Act,  as  now  or
12    hereafter amended.  Said Bonds shall be payable at such place
13    or  places,  within or without the State of Illinois, and may
14    be made registrable as to either  principal  or  as  to  both
15    principal  and  interest,  as  shall be specified in the Bond
16    Sale Order.  Bonds may be callable or subject to purchase and
17    retirement or tender and remarketing as fixed and  determined
18    in the Bond Sale Order.
19        In  the case of any series of Bonds bearing interest at a
20    variable interest rate ("Variable Rate Bonds"),  in  lieu  of
21    determining  the  rate  or  rates  at  which  such  series of
22    Variable Rate Bonds shall bear  interest  and  the  price  or
23    prices  at  which such Variable Rate Bonds shall be initially
24    sold or remarketed (in the event of purchase  and  subsequent
25    resale),  the  Bond Sale Order may provide that such interest
26    rates and prices may vary from  time  to  time  depending  on
27    criteria  established in such Bond Sale Order, which criteria
28    may include, without limitation,  references  to  indices  or
29    variations  in  interest  rates  as may, in the judgment of a
30    remarketing agent, be necessary to cause Variable Rate  Bonds
31    of  such  series  to  be  remarketable from time to time at a
32    price equal to their principal amount, and  may  provide  for
33    appointment  of  a  bank,  trust company, investment bank, or
34    other financial institution to serve as remarketing agent  in
 
SB1601 Enrolled            -8-       LRB093 02811 SJM 02827 b
 1    that  connection.    The  Bond  Sale  Order  may provide that
 2    alternative interest rates  or  provisions  for  establishing
 3    alternative  interest  rates,  different  security  or  claim
 4    priorities, or different call or amortization provisions will
 5    apply  during such times as Variable Rate Bonds of any series
 6    are  held  by  a  person  providing   credit   or   liquidity
 7    enhancement  arrangements  for  such  Bonds  as authorized in
 8    subsection (b) of this Section.  The Bond Sale Order may also
 9    provide for such variable interest rates  to  be  established
10    pursuant  to  a  process  generally  known as an auction rate
11    process and may  provide  for  appointment  of  one  or  more
12    financial   institutions  to  serve  as  auction  agents  and
13    broker-dealers in connection with the establishment  of  such
14    interest rates and the sale and remarketing of such Bonds.
15        (b)  In  connection  with  the  issuance of any series of
16    Bonds, the State  may  enter  into  arrangements  to  provide
17    additional  security and liquidity for such Bonds, including,
18    without  limitation,  bond  or  interest  rate  insurance  or
19    letters of credit, lines of credit, bond purchase  contracts,
20    or  other  arrangements  whereby  funds are made available to
21    retire or purchase Bonds, thereby  assuring  the  ability  of
22    owners of the Bonds to sell or redeem their Bonds.  The State
23    may enter into contracts and may agree to pay fees to persons
24    providing  such  arrangements,  but  only under circumstances
25    where the Director of the Bureau of the Budget certifies that
26    he or she reasonably expects the total interest paid or to be
27    paid  on  the  Bonds,  together  with  the   fees   for   the
28    arrangements (being treated as if interest), would not, taken
29    together,  cause  the  Bonds  to bear interest, calculated to
30    their stated maturity, at a rate in excess of the  rate  that
31    the Bonds would bear in the absence of such arrangements.
32        The   State   may,   with  respect  to  Bonds  issued  or
33    anticipated to be  issued,  participate  in  and  enter  into
34    arrangements  with  respect  to  interest  rate protection or
 
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 1    exchange  agreements,  guarantees,   or   financial   futures
 2    contracts for the purpose of limiting or restricting interest
 3    rate risk.  The arrangements may be executed and delivered by
 4    the  Director  of  the  Bureau of the Budget on behalf of the
 5    State.  Net payments for such arrangements  shall  constitute
 6    interest  on  the  Bonds  and  shall be paid from the General
 7    Obligation Bond Retirement and Interest Fund.   The  Director
 8    of  the  Bureau of the Budget shall at least annually certify
 9    to the Governor and the State Comptroller his or her estimate
10    of the amounts of such net payments to  be  included  in  the
11    calculation of interest required to be paid by the State.
12        (c)  Prior  to  the  issuance  of any Variable Rate Bonds
13    pursuant to subsection (a), the Director of the Bureau of the
14    Budget shall adopt an interest rate  risk  management  policy
15    providing  that  the  amount  of  the  State's  variable rate
16    exposure with respect to Bonds shall not  exceed  20%.   This
17    policy shall remain in effect while any Bonds are outstanding
18    and  the  issuance  of Bonds shall be subject to the terms of
19    such policy. The terms of this policy  may  be  amended  from
20    time  to time by the Director of the Bureau of the Budget but
21    in no event shall any amendment cause the permitted level  of
22    the  State's  variable rate exposure with respect to Bonds to
23    exceed 20%.
24    (Source: P.A. 91-39,  eff.  6-15-99;  91-357,  eff.  7-29-99;
25    92-16, eff. 6-28-01.)

26        (30 ILCS 330/14) (from Ch. 127, par. 664)
27        Sec. 14.  Repayment.
28        (a)  To provide for the manner of repayment of Bonds, the
29    Governor  shall include an appropriation in each annual State
30    Budget of monies in such amount as  shall  be  necessary  and
31    sufficient, for the period covered by such budget, to pay the
32    interest,  as it shall accrue, on all Bonds issued under this
33    Act, to pay and discharge the  principal  of  such  Bonds  as
 
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 1    shall,  by  their  terms, fall due during such period, and to
 2    pay a premium, if any, on Bonds to be redeemed prior  to  the
 3    maturity  date.   Amounts included in such appropriations for
 4    the payment of interest on variable rate bonds shall  be  the
 5    maximum  amounts  of  interest  that  may  be payable for the
 6    period covered by the budget, after taking into  account  any
 7    credits   permitted   in   the  related  indenture  or  other
 8    instrument against the amount of such interest required to be
 9    appropriated for  such  period.   Amounts  included  in  such
10    appropriations  for the payment of interest shall include the
11    amounts certified by the Director of the Bureau of the Budget
12    under subsection (b) of Section 9 of this Act.
13        (b)  A separate fund in the  State  Treasury  called  the
14    "General  Obligation  Bond  Retirement  and Interest Fund" is
15    hereby created.
16        (c)  The   General   Assembly   shall    annually    make
17    appropriations  to  pay  the  principal  of, interest on, and
18    premium, if any, on  Bonds  sold  under  this  Act  from  the
19    General   Obligation   Bond  Retirement  and  Interest  Fund.
20    Amounts included in such appropriations for  the  payment  of
21    interest  on variable rate bonds shall be the maximum amounts
22    of interest that may be payable during the fiscal year, after
23    taking into account any  credits  permitted  in  the  related
24    indenture  or  other  instrument  against  the amount of such
25    interest  required  to  be  appropriated  for  such   period.
26    Amounts  included  in  such appropriations for the payment of
27    interest shall include the amounts certified by the  Director
28    of the Bureau of the Budget under subsection (b) of Section 9
29    of this Act.
30        If  for any reason there are insufficient funds in either
31    the General Revenue Fund or the Road Fund to  make  transfers
32    to  the  General Obligation Bond Retirement and Interest Fund
33    as required by Section 15 of this Act, or if for  any  reason
34    the  General Assembly fails to make appropriations sufficient
 
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 1    to pay the principal of, interest on, and premium, if any, on
 2    the Bonds, as the same by their terms shall become due,  this
 3    Act   shall   constitute   an   irrevocable   and  continuing
 4    appropriation of all amounts necessary for that purpose,  and
 5    the irrevocable and continuing authority for and direction to
 6    the State Treasurer and the Comptroller to make the necessary
 7    transfers,   as   directed   by  the  Governor,  out  of  and
 8    disbursements from the revenues and funds of the State.
 9        (d)  If, because of  insufficient  funds  in  either  the
10    General  Revenue  Fund  or  the  Road  Fund, monies have been
11    transferred to the General  Obligation  Bond  Retirement  and
12    Interest Fund, as required by subsection (c) of this Section,
13    this  Act  shall  constitute  the  irrevocable and continuing
14    authority for  and  direction  to  the  State  Treasurer  and
15    Comptroller  to  reimburse  these funds of the State from the
16    General Revenue Fund or the Road  Fund,  as  appropriate,  by
17    transferring,  at such times and in such amounts, as directed
18    by the Governor, an amount  to  these  funds  equal  to  that
19    transferred from them.
20    (Source: P.A. 83-1490.)

21        (30 ILCS 330/15) (from Ch. 127, par. 665)
22        Sec.   15.   Computation   of   Principal  and  Interest;
23    transfers.
24        (a)  Upon each delivery of Bonds authorized to be  issued
25    under  this Act, the Comptroller shall compute and certify to
26    the Treasurer the total amount of principal of, interest  on,
27    and  premium, if any, on Bonds issued that will be payable in
28    order to retire such Bonds and the amount  of  principal  of,
29    interest  on  and premium, if any, on such Bonds that will be
30    payable on each payment date according to the tenor  of  such
31    Bonds  during  the  then  current  and each succeeding fiscal
32    year.  With respect to the interest payable on variable  rate
33    bonds, such certifications shall be calculated at the maximum
 
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 1    rate  of interest that may be payable during the fiscal year,
 2    after taking  into  account  any  credits  permitted  in  the
 3    related  indenture  or other instrument against the amount of
 4    such interest required to be  appropriated  for  such  period
 5    pursuant  to  subsection (c) of Section 14 of this Act.  With
 6    respect to the interest payable,  such  certifications  shall
 7    include  the  amounts certified by the Director of the Bureau
 8    of the Budget under subsection (b) of Section 9 of this Act.
 9        On or before  the  last  day  of  each  month  the  State
10    Treasurer  and  Comptroller  shall transfer from (1) the Road
11    Fund with respect to Bonds  issued  under  paragraph  (a)  of
12    Section  4  of  this  Act  or Bonds issued for the purpose of
13    refunding such bonds, and from (2) the General Revenue  Fund,
14    with respect to all other Bonds issued under this Act, to the
15    General  Obligation  Bond  Retirement  and  Interest  Fund an
16    amount sufficient to pay the aggregate of the  principal  of,
17    interest  on, and premium, if any, on Bonds payable, by their
18    terms on the next payment date divided by the number of  full
19    calendar  months between the date of such Bonds and the first
20    such payment date, and thereafter, divided by the  number  of
21    months  between each succeeding payment date after the first.
22    Such computations and transfers shall be made for each series
23    of Bonds issued and delivered.  Interest payable on  variable
24    rate  bonds  shall  be  calculated  at  the  maximum  rate of
25    interest that may be payable for the relevant  period,  after
26    taking  into  account  any  credits  permitted in the related
27    indenture or other instrument  against  the  amount  of  such
28    interest required to be appropriated for such period pursuant
29    to subsection (c) of Section 14 of this Act.  Computations of
30    interest  shall include the amounts certified by the Director
31    of the Bureau of the Budget under subsection (b) of Section 9
32    of this Act.  Interest for which  moneys  have  already  been
33    deposited  into  the  capitalized interest account within the
34    General Obligation Bond Retirement and  Interest  Fund  shall
 
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 1    not  be  included  in  the  calculation  of the amounts to be
 2    transferred under this subsection.
 3        The transfer of monies herein and above directed  is  not
 4    required  if monies in the General Obligation Bond Retirement
 5    and Interest Fund are more than the amount  otherwise  to  be
 6    transferred  as herein above provided, and if the Governor or
 7    his authorized representative notifies  the  State  Treasurer
 8    and Comptroller of such fact in writing.
 9        (b)  After  the  effective  date of this Act, the balance
10    of, and  monies  directed  to  be  included  in  the  Capital
11    Development Bond Retirement and Interest Fund, Anti-Pollution
12    Bond  Retirement  and  Interest  Fund,  Transportation  Bond,
13    Series  A  Retirement and Interest Fund, Transportation Bond,
14    Series B Retirement and Interest Fund, and  Coal  Development
15    Bond Retirement and Interest Fund shall be transferred to and
16    deposited  in  the  General  Obligation  Bond  Retirement and
17    Interest Fund.  This Fund shall be used to make debt  service
18    payments  on  the State's general obligation Bonds heretofore
19    issued which are now outstanding and payable from  the  Funds
20    herein listed as well as on Bonds issued under this Act.
21        (c)  The  unused  portion of federal funds received for a
22    capital facilities project, as authorized  by  Section  3  of
23    this  Act, for which monies from the Capital Development Fund
24    have been expended shall be deposited upon completion of  the
25    project   in  the  General  Obligation  Bond  Retirement  and
26    Interest Fund. Any federal funds  received  as  reimbursement
27    for  the  completed  construction  of  a  capital  facilities
28    project,  as  authorized  by Section 3 of this Act, for which
29    monies from the Capital Development Fund have  been  expended
30    shall  be deposited in the General Obligation Bond Retirement
31    and Interest Fund.
32    (Source: P.A. 93-2, eff. 4-7-03.)

33        Section 10.  The Local Government Credit Enhancement  Act
 
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 1    is amended by changing Sections 2 and 3 as follows:

 2        (50 ILCS 410/2) (from Ch. 85, par. 4302)
 3        Sec.  2.  For  the  purposes  of  this  Act, terms are as
 4    defined in the Local Government Debt Reform Act.  unless  the
 5    context requires otherwise:
 6        (a)  "Unit  of  local  government" shall have the meaning
 7    ascribed to it in Article VII,  Section  1  of  the  Illinois
 8    Constitution.
 9        (b)  "School  district"  means any public school district
10    organized under the School Code or prior law and includes any
11    dual or unit school district, high school  district,  special
12    charter  district  and  non-high  school  district.   "School
13    district" also means any community college district organized
14    under the Public Community College Act or prior law.
15        (c)  "Governing board" means the corporate authorities of
16    the municipality, county board, board of trustees,  board  of
17    education, board of school directors, or other governing body
18    of the unit of local government or school district.
19    (Source: P.A. 83-1536.)

20        (50 ILCS 410/3) (from Ch. 85, par. 4303)
21        Sec. 3.  In connection with the issuance of its bonds and
22    notes,  a  governmental  unit  of  local government or school
23    district  may  enter  into  agreements  (credit   agreements)
24    arrangements to provide additional security or and liquidity,
25    or both, for the bonds and notes.  These may include, without
26    limitation,  municipal  bond  insurance,  letters  of credit,
27    lines of credit, standby  bond  purchase  agreements,  surety
28    bonds,  and the like, by which the governmental unit of local
29    government or school district may  borrow  funds  to  pay  or
30    redeem or purchase and hold its bonds and a governmental unit
31    may  enter into agreements for the purchase or remarketing of
32    bonds (remarketing agreements) arrangements for  providing  a
 
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 1    mechanism  for  remarketing  bonds  tendered  for purchase in
 2    accordance  with  their  terms.  The  term  of  such   credit
 3    agreements  or  remarketing  agreements  shall not exceed the
 4    term of the bonds, plus any time period necessary to cure any
 5    defaults under such agreements assuring the ability of owners
 6    of the issuing local government's or school district's  bonds
 7    to  sell  or to have redeemed their bonds.  The unit of local
 8    government or school district may enter  into  contracts  and
 9    may agree to pay fees to persons providing such arrangements,
10    including from bond proceeds.
11        Without  limiting  the terms which may be included in any
12    such  credit  agreements  or  remarketing   agreements,   the
13    ordinance  The  resolution of the governing board authorizing
14    the issuance of the bonds may or, if hereinafter so required,
15    shall provide as follows:
16        (a) that Interest rates on the bonds may vary  from  time
17    to  time depending upon criteria established by the governing
18    body board, which may include,  without  limitation:  (i),  a
19    variation  in  interest  rates  as  may be necessary to cause
20    bonds to be remarketed remarketable from time to  time  at  a
21    price  equal  to  their  principal  amount  plus  any accrued
22    interest; (ii) rates set by auctions; or (iii) rates  set  by
23    formula. and may provide for appointment of,
24        (b)  A national banking association, bank, trust company,
25    investment  banker  or  other  financial  institution  may be
26    appointed to serve as a remarketing agent in that connection,
27    and such remarketing agent may be delegated authority by  the
28    governing body to determine interest rates in accordance with
29    criteria  established  by the governing body.  The resolution
30    of the governing board authorizing the issuance of the  bonds
31    may provide that
32        (c)  Alternative  interest  rates  or provisions may will
33    apply during such times as the bonds are held by the a person
34    or persons (financial providers) providing a credit agreement
 
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 1    or remarketing agreement letter of  credit  or  other  credit
 2    enhancement  arrangement  for  those  bonds  and  during such
 3    times, the interest on the bonds may  be  deemed  not  exempt
 4    from  income  taxation  under  the  Internal Revenue Code for
 5    purposes of State law, as contained in the Bond Authorization
 6    Act, relating to the permissible rate of interest to be borne
 7    thereon.
 8        (d)  Fees  may  be  paid  to  the  financial   providers,
 9    including  all  reasonably  related  costs, including therein
10    costs of enforcement and litigation (all such fees and  costs
11    being  financial  provider  payments)  and financial provider
12    payments may be paid, without limitation,  from  proceeds  of
13    the bonds being the subject of such agreements, or from bonds
14    issued  to  refund  such  bonds,  or from whatever enterprise
15    revenues or revenue source, including taxes, pledged  to  the
16    payment  of  such bonds, which enterprise revenues or revenue
17    source may be  increased  to  make  such  financial  provider
18    payments,  and such financial provider payments shall be made
19    subordinate to the payments on the bonds.
20        (e)  The bonds need not be held in physical form  by  the
21    financial providers when providing funds to purchase or carry
22    the   bonds   from   others   but   may   be  represented  in
23    uncertificated form in the credit agreements  or  remarketing
24    agreements.
25        (f)  The  debt  or  obligation  of  the governmental unit
26    represented by a bond tendered for purchase to  or  otherwise
27    made   available  to  the  governmental  unit  and  thereupon
28    acquired by either such  governmental  unit  or  a  financial
29    provider  shall not be deemed to be extinguished for purposes
30    of State law until cancelled by the governmental unit or  its
31    agent.
32        (g)  The choice of law for the obligations of a financial
33    provider  may  be  made for any state of these United States,
34    but the law which shall  apply  to  the  obligations  of  the
 
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 1    governmental  unit shall be the law of the State of Illinois,
 2    and  jurisdiction  to  enforce  such  credit   agreement   or
 3    remarketing  agreement as against the governmental unit shall
 4    be exclusively in the courts of the State of Illinois  or  in
 5    the  applicable federal court having jurisdiction and located
 6    within the State of Illinois.
 7        (h)  The governmental unit may not  waive  any  sovereign
 8    immunities  from time to time available under the laws of the
 9    State  of  Illinois  as  to  jurisdiction,  procedures,   and
10    remedies,  but  any  such  credit  agreement  and remarketing
11    agreement shall otherwise by fully enforceable as  valid  and
12    binding contracts as and to the extent provided by applicable
13    law.
14        (i)  Such  credit  agreement or remarketing agreement may
15    provide for acceleration of the principal amounts due on  the
16    bonds,  provided,  however,  that  such acceleration shall be
17    deferred for not less than 18 months from the time  any  such
18    bond is acquired pursuant to any such agreement.
19    (Source: P.A. 83-1536.)

20        Section  99.  Effective date.  This Act takes effect upon
21    becoming law.