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90_SB0185 30 ILCS 350/15 from Ch. 17, par. 6915 Amends the Local Government Debt Reform Act. Provides that alternate bonds shall be payable from property taxes only when all other sources of payment have been exhausted. Deletes provision stating that alternate bonds remain until paid or defeased the general obligation of the governmental unit, and shall be paid from the levy of taxes used to pay for general obligations. Effective immediately. SRS90S0019NCsa SRS90S0019NCsa 1 AN ACT in relation to taxes, amending named Acts. 2 Be it enacted by the People of the State of Illinois, 3 represented in the General Assembly: 4 Section 5. The Local Government Debt Reform Act is 5 amended by changing Section 15 as follows: 6 (30 ILCS 350/15) (from Ch. 17, par. 6915) 7 Sec. 15. Double-barrelled bonds. Whenever revenue bonds 8 have been authorized to be issued pursuant to applicable law 9 or whenever there exists for a governmental unit a revenue 10 source, the procedures set forth in this Section may be used 11 by a governing body. General obligation bonds may be issued 12 in lieu of such revenue bonds as authorized, and general 13 obligation bonds may be issued payable from any revenue 14 source; provided, however, that in no event shall property 15 taxes be the sole or primary revenue source. Such general 16 obligation bonds may be referred to as "alternate bonds". 17 Alternate bonds may be issued without any referendum or 18 backdoor referendum except as provided in this Section, upon 19 the terms provided in Section 10 of this Act without 20 reference to other provisions of law, but only upon the 21 conditions provided in this Section. Alternate bonds shall 22 not be regarded as or included in any computation of 23 indebtedness for the purpose of any statutory provision or 24 limitation except as expressly provided in this Section. 25 Such conditions are: (a) Alternate bonds shall be issued 26 for a lawful corporate purpose. If issued in lieu of revenue 27 bonds, alternate bonds shall be issued for the purposes for 28 which such revenue bonds shall have been authorized. If 29 issued payable from a revenue source in the manner 30 hereinafter provided, which revenue source is limited in its 31 purposes or applications, then the alternate bonds shall be -2- SRS90S0019NCsa 1 issued only for such limited purposes or applications. 2 Alternate bonds may be issued payable from either enterprise 3 revenues or revenue sources, or both. Notwithstanding any 4 other provision to the contrary, alternate bonds shall be 5 payable from property taxes only when all other revenue 6 sources have been exhausted. 7 (b) Alternate bonds shall be subject to backdoor 8 referendum. The provisions of Section 5 of this Act shall 9 apply to such backdoor referendum, together with the 10 provisions hereof. The authorizing ordinance shall be 11 published in a newspaper of general circulation in the 12 governmental unit. Along with or as part of the authorizing 13 ordinance, there shall be published a notice of (1) the 14 specific number of voters required to sign a petition 15 requesting that the issuance of the alternate bonds be 16 submitted to referendum, (2) the time when such petition must 17 be filed, (3) the date of the prospective referendum, and 18 (4), with respect to authorizing ordinances adopted on or 19 after January 1, 1991, a statement that identifies any 20 revenue source that will be used to pay the principal of and 21 interest on the alternate bonds. The clerk or secretary of 22 the governmental unit shall make a petition form available to 23 anyone requesting one. If no petition is filed with the 24 clerk or secretary within 30 days of publication of the 25 authorizing ordinance and notice, the alternate bonds shall 26 be authorized to be issued. But if within this 30 days 27 period, a petition is filed with such clerk or secretary 28 signed by electors numbering the greater of (i) 7.5% of the 29 registered voters in the governmental unit or (ii) 200 of 30 those registered voters or 15% of those registered voters, 31 whichever is less, asking that the issuance of such alternate 32 bonds be submitted to referendum, the clerk or secretary 33 shall certify such question for submission at an election 34 held in accordance with the general election law. The -3- SRS90S0019NCsa 1 question on the ballot shall include a statement of any 2 revenue source that will be used to pay the principal of and 3 interest on the alternate bonds. The alternate bonds shall be 4 authorized to be issued if a majority of the votes cast on 5 the question at such election are in favor thereof. Backdoor 6 referendum proceedings for bonds and alternate bonds to be 7 issued in lieu of such bonds may be conducted at the same 8 time. 9 (c) To the extent payable from enterprise revenues, such 10 revenues shall have been determined by the governing body to 11 be sufficient to provide for or pay in each year to final 12 maturity of such alternate bonds all of the following: (1) 13 costs of operation and maintenance of the utility or 14 enterprise, but not including depreciation, (2) debt service 15 on all outstanding revenue bonds payable from such enterprise 16 revenues, (3) all amounts required to meet any fund or 17 account requirements with respect to such outstanding revenue 18 bonds, (4) other contractual or tort liability obligations, 19 if any, payable from such enterprise revenues, and (5) in 20 each year, an amount not less than 1.25 times debt service of 21 all (i) alternate bonds payable from such enterprise revenues 22 previously issued and outstanding and (ii) alternate bonds 23 proposed to be issued. To the extent payable from one or 24 more revenue sources, such sources shall have been determined 25 by the governing body to provide in each year, an amount not 26 less than 1.25 times debt service of all alternate bonds 27 payable from such revenue sources previously issued and 28 outstanding and alternate bonds proposed to be issued. The 29 conditions enumerated in this subsection (c) need not be met 30 for that amount of debt service provided for by the setting 31 aside of proceeds of bonds or other moneys at the time of the 32 delivery of such bonds. 33 (d) The determination of the sufficiency of enterprise 34 revenues or a revenue source, as applicable, shall be -4- SRS90S0019NCsa 1 supported by reference to the most recent audit of the 2 governmental unit, which shall be for a fiscal year ending 3 not earlier than 18 months previous to the time of issuance 4 of the alternate bonds. If such audit does not adequately 5 show such enterprise revenues or revenue source, as 6 applicable, or if such enterprise revenues or revenue source, 7 as applicable, are shown to be insufficient, then the 8 determination of sufficiency shall be supported by the report 9 of an independent accountant or feasibility analyst having a 10 national reputation for expertise in such matters, 11 demonstrating the sufficiency of such revenues and 12 explaining, if appropriate, by what means the revenues will 13 be greater than as shown in the audit. Whenever such 14 sufficiency is demonstrated by reference to a schedule of 15 higher rates or charges for enterprise revenues or a higher 16 tax imposition for a revenue source, such higher rates, 17 charges or taxes shall have been properly imposed by an 18 ordinance adopted prior to the time of delivery of alternate 19 bonds. The reference to and acceptance of an audit or 20 report, as the case may be, and the determination of the 21 governing body as to sufficiency of enterprise revenues or a 22 revenue source shall be conclusive evidence that the 23 conditions of this Section have been met and that the 24 alternate bonds are valid. 25 (e) The enterprise revenues or revenue source, as 26 applicable, shall be in fact pledged to the payment of the 27 alternate bonds; and the governing body shall covenant, to 28 the extent it is empowered to do so, to provide for, collect 29 and apply such enterprise revenues or revenue source, as 30 applicable, to the payment of the alternate bonds and the 31 provision of not less than an additional .25 times debt 32 service. The pledge and establishment of rates or charges 33 for enterprise revenues, or the imposition of taxes in a 34 given rate or amount, as provided in this Section for -5- SRS90S0019NCsa 1 alternate bonds, shall constitute a continuing obligation of 2 the governmental unit with respect to such establishment or 3 imposition and a continuing appropriation of the amounts 4 received. All covenants relating to alternate bonds and the 5 conditions and obligations imposed by this Section are 6 enforceable by any bondholder of alternate bonds affected, 7 any taxpayer of the governmental unit, and the People of the 8 State of Illinois acting through the Attorney General or any 9 designee, and in the event that any such action results in an 10 order finding that the governmental unit has not properly set 11 rates or charges or imposed taxes to the extent it is 12 empowered to do so or collected and applied enterprise 13 revenues or any revenue source, as applicable, as required by 14 this Act, the plaintiff in any such action shall be awarded 15 reasonable attorney's fees. The intent is that such 16 enterprise revenues or revenue source, as applicable, shall 17 be sufficient and shall be applied to the payment of debt 18 service on such alternate bonds so that taxes need not be 19 levied, or if levied need not be extended, for such payment. 20 Nothing in this Section shall inhibit or restrict the 21 authority of a governing body to determine the lien priority 22 of any bonds, including alternate bonds, which may be issued 23 with respect to any enterprise revenues or revenue source. 24 In the event that alternate bonds shall have been issued 25 and taxes, other than a designated revenue source, shall have 26 been extended pursuant to the general obligation, full faith 27 and credit promise supporting such alternate bonds, then the 28 amount of such alternate bonds then outstanding shall be 29 included in the computation of indebtedness of the 30 governmental unit for purposes of all statutory provisions or 31 limitations until such time as an audit of the governmental 32 unit shall show that the alternate bonds have been paid from 33 the enterprise revenues or revenue source, as applicable, 34 pledged thereto for a complete fiscal year. -6- SRS90S0019NCsa 1 Alternate bonds may be issued to refund or advance refund 2 alternate bonds without meeting any of the conditions set 3 forth in this Section, except that the term of the refunding 4 bonds shall not be longer than the term of the refunded bonds 5 and that the debt service payable in any year on the 6 refunding bonds shall not exceed the debt service payable in 7 such year on the refunded bonds. 8
Once issued, alternate bonds shall be and forever9 remain until paid or defeased the general obligation of the10 governmental unit, for the payment of which its full faith11 and credit are pledged, and shall be payable from the levy of12 taxes as is provided in this Act for general obligation13 bonds.14 The changes made by this amendatory Act of 1990 do not 15 affect the validity of bonds authorized before September 1, 16 1990. 17 (Source: P.A. 85-1419; 86-1179.) 18 Section 99. Effective date. This Act takes effect upon 19 becoming law.
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