(50 ILCS 420/4.1)
(from Ch. 85, par. 824.1)
(a) The purpose of this Section is to provide a means for units
of local government and school districts to finance anticipated cash flow
deficits by issuing notes to anticipate the personal property tax replacement taxes.
(b) Definitions. As used in this Section, the following words or
terms shall have the meanings set forth opposite each, unless the
context clearly indicates another meaning is intended:
"Director" - the Director of the Department of Revenue.
"Entitlement" - the amount of the Replacement Tax paid or to be paid
in any given full year to a Unit of Government.
"Governing Body" - the council, board, commission, trustees, or body,
by whatever name it is known, charged with the responsibility of
governing the financial affairs of a Unit of Government.
"Note(s)" - one or more of the notes issued under this Section in
anticipation of the receipt of Replacement Taxes.
"Replacement Taxes" - the tax or taxes, as by law now or hereafter enacted
or amended, imposed by the General Assembly to replace revenue lost by Units
of Government as a result of the abolition of ad valorem personal property
taxes pursuant to Article IX, Section 5(c) of the Constitution of the State of Illinois.
(c) Authority to issue. Notes may be issued by Units of Government
as provided in this Act.
(d) Term of Notes. Notes may be issued to anticipate Personal Property
Replacement Taxes for the current and next two succeeding calendar years
from the time of issuance of the Notes. Notes shall have a specified due
date not more than 24 months after the date of issue of the Notes. The
Unit of Government shall be permitted to refund the Notes at or before the
maturity date thereof if it reasonably appears that at such maturity date
the revenues which have been pledged for the payment of the Notes have not
been or will not be collected and received by the Unit of Government. The maturity date
of the refunding Notes shall be the earliest date at which it is deemed possible
to pay the Notes coming due.
(e) Amount of Notes. Notes may be issued in an amount including
principal, interest thereon and costs of issuance thereof not to exceed 75%
of the Entitlement of Replacement Taxes for the year anticipated, less the
aggregate amount of such entitlement
which the governing body estimates will be required to be set aside for
the payment of the proportional amount of debt service and pension or retirement
obligations as required by Section 12 of "An Act in relation to State revenue
sharing with local government entities", approved July 31, 1969, as amended.
If the Entitlement for such year has not yet been certified by the Director,
Notes may be issued for such year based upon 90% of the last known Entitlement
as certified by the Director. An estimate of Entitlement may be used as
provided in subsection (f) of this Section. For the purposes of this Section,
the anticipated Entitlement of Replacement Taxes for the year shall be that
amount reasonably anticipated by a Unit of Government and shall be set forth
by such Unit of Government in an ordinance, or where appropriate, a resolution.
The adoption of said ordinance, or where appropriate, resolution, shall
precede any issue of Notes under this Section.
(f) Certification. At any time, upon the request of a Unit of Government,
the Director shall certify, under signature and seal, a Unit of Government's
last known Entitlement. During the initial period after first imposition
of the Replacement Tax, before any Entitlement is "last
known," as aforesaid, the Director, no later than two months after the
passage of an act to impose Replacement Taxes, shall certify an estimate
of a Unit of Government's first Entitlement, and such Entitlement may be
used immediately upon certification for purposes of the issuance of
Notes. Certification shall be conclusive evidence of Entitlement but
only for purposes of the issuance and validity of Notes. The Director
shall in no way be liable for error or miscalculation in certification
(g) Interest on Notes. Notes shall bear interest at a rate or rates not in
excess of that permitted in "An Act to authorize public corporations to
issue bonds, other evidences of indebtedness and tax anticipation warrants
subject to interest rate limitations set forth therein", approved May 26,
1970, as now or hereafter amended. Notes shall be sold
at a price of not less than par plus accrued interest.
(h) Source of Payment of Notes. The Notes shall be general
obligations of the Unit of Government, and the full faith and credit of
the Unit of Government shall be pledged for the punctual payment of the Notes.
An escrow account may be established, at the option of the Unit of Government
into which the revenues from the Replacement Tax, less the amount of such
revenues which the Unit of Government is required by Section 12 of "An Act
in relation to State revenue sharing with local government entities", approved
July 31, 1969, as amended, to set aside for the payment of the proportional
amount of debt service and pension or retirement obligations, shall be deposited
immediately upon collection and receipt by the Unit of Government. The escrow
account may not be commingled with any other account
or fund of the Unit of Government, and shall be reserved exclusively for
the payment of the Notes and interest thereon. Any revenues collected in
excess of those required to repay the Notes and interest thereon in full
shall be used for the purposes of the fund for which the Notes had been
levied. The Notes shall be payable as follows:
(1) First, to the extent possible, the Notes shall be payable from
the Replacement Tax anticipated by the Notes.
(2) Second, the Notes shall be payable, if necessary, from the
proceeds of Notes issued to anticipate a subsequent year's or years'
(3) Third, the Notes shall be payable, if necessary, from any other
available funds of the Unit of Government at the time payment is due on
(4) Fourth, the Notes shall be payable, if necessary, from the levy
of taxes, without limitation as to rate or amount, on all the taxable
property situated within the Unit of Government. Such levy shall be
made only at such time as it appears, in the absolute discretion of the
Governing Body, to be necessary to avoid a default on the notes.
Warrants or notes may be issued against such tax levy, as provided by
other laws of the State for the issuance thereof, so as to assure the
timely availability of funds to pay the Notes.
(5) Whenever funds are used to pay Notes under paragraphs (3) or (4)
of this subsection, such funds shall be considered an advance without
interest or penalty against all of the next available Replacement Taxes,
for as many years as may be, and when received such Replacement Taxes
shall be used as follows:
(i) for an advance made under paragraph 3 of this subsection the
advance shall be repaid to the fund from which made, and (ii) for an
advance under paragraph 4, the advance shall be used first, to abate the
tax levied to make such advance, to the extent possible, and second, to
abate taxes levied for general or corporate purposes of any kind.
The Treasurer of a Unit of Government shall be required to keep a
record in accordance with good accounting practice of advances made
under paragraphs (3) and (4) hereof, and of the repayment of such
(6) In the event any court of competent jurisdiction shall adjudge
that Notes may not be repaid from the sources set forth in paragraphs
(1), (2), (3) and/or (4) of this subsection, such judgment shall not
affect either the validity of the Notes or the repayment thereof under
any other of subsections 1, 2, 3 and/or 4 of this subsection not
affected by such judgment, it being hereby declared that such means of
repayment are severable from one another.
(7) The Governing Body of school districts or community college
districts in cities having a population exceeding 500,000 shall demand
and direct the city council of such city to provide by ordinance for any
levy provided for herein, and such city council is hereby authorized to
adopt such ordinance.
(i) Other Terms of Notes. Repayment of the Notes shall be made
quarterly within 10 days of receipt of the quarterly distribution by the
except that no such payment shall be made until the amount has been set
aside for payment of the proportionate amount of debt service and pension
or retirement obligations as required by Section 12 of "An Act in relation
to State revenue sharing with local government entities", approved July
31, 1969, as amended.
The Notes may be issued upon such other terms, including
without limitation, terms of call and redemption, exchange,
denomination, whether by public or privately negotiated sale, type of
execution (provided that at least one signature thereon shall be
manual), the provision for any trust or indenture for the further
securing of Notes, and the place or places of payment of Notes, as shall
be determined by the Governing Body.
(j) Statutory Limitations as to Debt -Home Rule Units. The Notes
may be issued in excess of any statutory limitation as to debt and shall
not operate to reduce the debt incurring power otherwise authorized for
any such Unit of Government. This Act shall not be construed to limit
in any manner any power or authority or the amount of debt which home
rule units may incur under Sections 6(a), (j) or (k) of Article VII of
the Constitution of the State of Illinois nor shall this Act be
construed as requiring a referendum to incur such debt.
(k) Authority for Issuance of Notes. This Section, without
reference to any other statute, shall be deemed full and complete
authority for the issuance of the Notes as hereinabove provided and
shall be construed as an additional or alternate method thereof.
(Source: P.A. 84-953.)