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91_HB3343
LRB9108981DJcd
1 AN ACT concerning tobacco settlement proceeds.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Article 5. General Provisions
5 Section 5-1. Short title. This Act may be cited as the
6 Tobacco Settlement Investment Act.
7 Section 5-5. Legislative intent. The General Assembly
8 finds that the most prudent way to manage the proceeds of the
9 Tobacco Settlement is to securitize a portion of the State's
10 interest in the Tobacco Settlement to enable the State to
11 diversify its interest in the Settlement, and to invest all
12 the proceeds of the Settlement, including Bond proceeds, and
13 spend only the revenue generated from the investment of the
14 proceeds.
15 Section 5-10. Definitions. In this Act:
16 "Authority" means the Tobacco Settlement Bonding
17 Authority created under Article 15.
18 "Board" means the Board of Directors of the Tobacco
19 Settlement Bonding Authority.
20 "Bond" means a bond or note or any other evidence of
21 obligation for borrowed money deemed appropriate by the Board
22 of Directors of the Tobacco Settlement Bonding Authority.
23 "Public member" means a person who is not, and is not
24 related to anyone who is, an elected official, employee,
25 consultant, agent, attorney, or accountant of the State of
26 Illinois or any political subdivision of the State of
27 Illinois.
28 "Tobacco Settlement" means the Master Settlement
29 Agreement entered in the case of the People of the State of
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1 Illinois v. Phillip Morris, et al. (Circuit Court of Cook
2 County, No. 96-L13146).
3 "Tobacco Settlement Recovery Fund" means the special fund
4 created under the Tobacco Settlement Recovery Fund Act in the
5 State treasury separate and apart from all other State moneys
6 into which the proceeds of the Tobacco Settlement are placed
7 upon receipt of payments by the State.
8 "Trust Fund" means the Tobacco Settlement Investment
9 Trust Fund created under Article 10.
10 Article 10. Tobacco Settlement Investment Trust Fund
11 Section 10-1. Creation. There is created in the State
12 treasury the Tobacco Settlement Investment Trust Fund, a
13 special fund that shall be held by the State Treasurer
14 separate and apart from all other State moneys. The State
15 Treasurer shall deposit into the Trust Fund 60% of all
16 payments received into the Tobacco Settlement Recovery Fund
17 and 100% of the payments received by the State from the
18 Authority under Section 15-1. The Treasurer may invest the
19 moneys in the Trust Fund in the same manner, in the same
20 types of investments, and subject to the same limitations
21 provided in the Illinois Pension Code for the investment of
22 pension funds other than those established under Article 3 or
23 4 of the Code. All earnings on the investment of moneys in
24 the Trust Fund shall be credited to the Trust Fund.
25 Section 10-5. Transfer of moneys. The General Assembly
26 shall annually direct the State Treasurer to transfer from
27 the Trust Fund an amount of money that is equal to the annual
28 investment income earned by the Trust Fund for the preceding
29 year less the expenses incurred by the Treasurer for
30 administering the Trust Fund. The total expenses incurred by
31 the Treasurer shall not exceed $200,000 through the year
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1 2001. In the year 2002 and every year thereafter, the
2 expense limit shall be adjusted based on the Consumer Price
3 Index for the North Central Region as published by the United
4 States Department of Labor, Bureau of Labor Statistics for
5 the immediately preceding calendar year.
6 Section 10-10. Investment policy. The Treasurer shall
7 develop, publish, and implement an investment policy covering
8 the investment of the moneys in the Trust Fund. The policy
9 shall be published at least once each year in at least one
10 newspaper of general circulation in both Springfield and
11 Chicago. The Treasurer shall publish in a newspaper of
12 general circulation in both Chicago and Springfield any
13 changes to the previously published investment policy at
14 least 30 calendar days before implementing the changes. Any
15 such investment policy adopted by the Treasurer shall be
16 reviewed and updated if necessary within 90 days following
17 the date that a new State Treasurer takes office.
18 Article 15. Tobacco Settlement Bonding Authority
19 Section 15-1. Creation. There is created the Tobacco
20 Settlement Bonding Authority for the purpose of securitizing
21 a portion of the State's interest in the Tobacco Settlement.
22 The State Treasurer shall transfer to the Authority 40% of
23 all payments received into the Tobacco Settlement Recovery
24 Fund. The Authority shall pay its administrative expenses
25 and debt service expenses from the payments that it receives
26 from the Tobacco Settlement Recovery Fund, provided that its
27 administrative expenses are approved by the Board of
28 Directors and do not exceed 0.5% of the payments transferred
29 to the Authority. The Authority shall, by April 14 of each
30 year, after payment of debt service and administrative
31 expenses, remit to the State Treasurer for deposit into the
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1 Trust Fund the remainder of the proceeds of the Tobacco
2 Settlement that it has received from the Tobacco Settlement
3 Recovery Fund, including investment earnings and any bond
4 proceeds including earnings on the investment of the bond
5 proceeds prior to remittance to the Treasurer. The State
6 Treasurer shall invest the payments that are not needed for
7 debt service and administrative expenses, on behalf of the
8 Authority in interest-bearing accounts prior to the
9 remittance of the moneys to the State Treasurer for deposit
10 into the Trust Fund.
11 Section 15-5. Board of Directors. The State Treasurer,
12 or his or her designee, shall serve as the Chairman of the
13 Board. The Governor and the Attorney General shall each
14 appoint one member of the Board for an initial term expiring
15 July 1, 2001. The President of the Senate and the Speaker of
16 the House of Representatives shall each appoint a public
17 member to the Board for an initial term expiring July 1,
18 2002. The Minority Leader of the Senate and the Minority
19 Leader of the House of Representatives shall each appoint a
20 public member to the Board for an initial term expiring July
21 1, 2003. At the expiration of the term of any member, or in
22 the case of a vacancy, a successor shall be appointed by the
23 elected official, or the successor of the elected official,
24 who made the appointment for the initial term. All
25 successors of Board members shall hold office for a term of 3
26 years from the first day of July of the year in which they
27 are appointed, except in case of an appointment to fill a
28 vacancy. Vacancies for members shall be filled in the same
29 manner as original appointments for the balance of the
30 unexpired term. In case of a vacancy during the recess of
31 the Senate, the Governor, the Attorney General, the
32 Comptroller, the Speaker of the House or the Senate President
33 shall make a temporary appointment until the next meeting of
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1 the Senate, when he/she shall appoint some person to fill the
2 vacancy. Any person so appointed whom the Senate confirms
3 shall hold office during the remainder of the term and until
4 his successor is appointed and qualified. The initial
5 appointments by the Governor, the Attorney General, the
6 Comptroller, the Speaker of the House or the Senate President
7 shall be effective immediately, but shall remain in effect no
8 longer than 30 calendar days after commencement of the next
9 Senate session unless the appointee is confirmed by the
10 Senate within that time. Nothing shall preclude a member
11 from serving consecutive terms.
12 Section 15-10. Actions of members. Four members of the
13 Authority constitute a quorum for the purpose of conducting
14 business. Actions of the Authority must receive the
15 affirmative vote of at least 4 members. The Authority shall
16 determine the times and places of its meetings. The members
17 of the Authority shall serve without compensation for service
18 as a member but are entitled to reimbursement of reasonable
19 expenses incurred in the performance of their official
20 duties.
21 Section 15-15. Executive Director. The Authority shall
22 appoint an Executive Director, who is the chief executive
23 officer of the Authority. In addition to any other duties
24 set forth in this Act, the Executive Director shall:
25 (1) Direct and supervise the administrative affairs
26 and activities of the Authority, in accordance with its
27 rules, regulations, and policies.
28 (2) Attend meetings of the Authority.
29 (3) Keep minutes of all proceedings of the
30 Authority.
31 (4) Approve all accounts for salaries and all other
32 allowable expenses of the Authority and its employees and
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1 consultants and approve all expenses incidental to the
2 operation of the Authority.
3 (5) Perform any other duty that the Authority
4 requires for carrying out the provisions of this Act.
5 Section 15-20. Powers. In addition to the powers set
6 forth elsewhere in this Act, the Authority may:
7 (1) Adopt and alter an official seal.
8 (2) Sue and be sued and plead and be impleaded, all
9 in its own name, and agree to binding arbitration of any
10 dispute to which it is a party.
11 (3) Adopt bylaws, rules, and regulations to carry
12 out the provisions of this Article.
13 (4) Maintain an office or offices at such place as
14 the Authority may designate.
15 (5) Employ, either as regular employees or
16 independent contractors, consultants, accountants,
17 attorneys, financial experts, managers and other
18 professional personnel, and such other personnel as may
19 be necessary in the judgment of the Authority, and fix
20 their compensation.
21 (6) Enter into contracts of any kind.
22 (7) Issue bonds under Section 15-25.
23 (8) Exercise all the corporate powers granted
24 Illinois corporations under the Business Corporation Act
25 of 1983, except to the extent that powers are
26 inconsistent with those of a body politic and corporate
27 of the State.
28 (9) Do all things necessary or convenient to carry
29 out the powers granted by this Act.
30 Section 15-25. Bonding.
31 (a) The Authority shall issue bonds that are backed by
32 the 40% of the proceeds of the Tobacco Settlement that has
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1 been committed by the State of Illinois for transfer to the
2 Authority from the Tobacco Settlement Recovery Fund. The
3 Authority may issue bonds, establish reserves, and pay the
4 interest and costs of issuance. Bonds may be issued in one
5 or more series and shall be payable solely and secured solely
6 by the portion of the tobacco settlement that the State of
7 Illinois has committed to transfer to the Authority.
8 (b) Bonds may be authorized by a resolution of the
9 Authority and may be secured by a trust agreement by and
10 between the Authority and a corporate trustee or trustees,
11 which may be any trust company or bank having the powers of a
12 trust company within or without the State. Bonds may:
13 (1) Mature at a time or times not exceeding 40 years
14 from the effective date of this Act.
15 (2) Notwithstanding the provision of the Bond
16 Authorization Act or any other provision of law, bear
17 interest at any fixed or variable rate or rates
18 determined by the method provided in the resolution or
19 trust agreement.
20 (3) Be payable at a time or times, in the
21 denominations and form, either coupon or registered or
22 both, and carry the registration and privileges as to
23 exchange, transfer, or conversion and for the replacement
24 of mutilated, lost, or destroyed bonds as the resolution
25 or trust agreement may provide.
26 (4) Be payable in lawful money of the United States
27 at a designated place.
28 (5) Be subject to the terms of purchase, payment,
29 redemption, refunding, or refinancing that the resolution
30 or trust agreement provides.
31 (6) Be executed by the manual or facsimile
32 signatures of the officers of the Authority designated by
33 the Authority, which signatures shall be valid at
34 delivery even for one who has ceased to hold office.
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1 (7) Be sold in the manner and upon the terms
2 determined by the Authority.
3 (c) Any resolution or trust agreement may contain
4 provisions that shall be a part of the contract with the
5 holders of the Bonds as to:
6 (1) Limitations on the issue of additional bonds,
7 the terms upon which additional bonds may be issued and
8 secured, and the terms upon which additional bonds may
9 rank on a parity with, or be subordinate or superior to,
10 other bonds.
11 (2) The refunding, advance refunding or refinancing
12 of outstanding bonds.
13 (3) The procedure, if any, by which the terms of any
14 contract with holders of the bonds may be altered or
15 amended, the number of bond holders that must consent
16 thereto, and the manner in which consent shall be given.
17 (4) Defining the acts or omissions which shall
18 constitute a default in the duties of the Authority to
19 holders of bonds and providing the rights or remedies of
20 such holders in the event of a default which may include
21 provisions restricting individual right of action by
22 holders of the bonds.
23 (5) Any other matter relating to the bonds which the
24 Authority determines appropriate.
25 (d) In connection with the issuance of its bonds, the
26 Authority may enter into arrangements to provide additional
27 security and liquidity for the bonds. These may include,
28 without limitation, bond insurance, letters of credit, lines
29 of credit by which the Authority may borrow funds to pay or
30 redeem its bonds, and purchase or remarketing arrangements
31 for assuring the ability of holders of the Authority's bonds
32 to sell or to have redeemed their bonds.
33 (e) A pledge by the Authority of the 40% of the proceeds
34 of the Tobacco Settlement that the State of Illinois has
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1 committed to transfer to the Authority as security for an
2 issue of bonds or for the performance of its obligations
3 under any management agreement shall be valid and binding
4 from the time when the pledge is made. The portion of the
5 Tobacco Settlement that the State of Illinois has committed
6 to transfer to the Authority pledged shall immediately be
7 subject to the lien of the pledge without any physical
8 delivery or further act, and the lien of any pledge shall be
9 valid and binding against any person having any claim of any
10 kind in tort, contract, or otherwise against the Authority,
11 irrespective of whether the person has notice. No
12 resolution, trust agreement, management agreement or
13 financing statement, continuation statement, or other
14 instrument adopted or entered into by the Authority need be
15 filed or recorded in any public record other than the records
16 of the Authority in order to perfect the lien against third
17 persons, regardless of any contrary provision of law.
18 (f) The Authority may issue bonds to refund, advance
19 refund, or refinance any of its bonds then outstanding,
20 including the payment of any redemption premium and any
21 interest accrued or to accrue to the earliest or any
22 subsequent date of redemption, purchase, or maturity of the
23 bonds, provided that the Authority shall not issue any bonds
24 that mature later than 50 years from the effective date of
25 this Act. Refunding or advance refunding bonds may be issued
26 for the public purposes of realizing savings in the effective
27 costs of debt service, directly or through a debt
28 restructuring, for alleviating impending or actual default,
29 or for paying principal of, redemption premium, if any, and
30 interest on bonds as they mature or are subject to
31 redemption, and may be issued in one or more series in an
32 amount in excess of that of the bonds to be refunded.
33 (g) At no time shall the total outstanding bonds of the
34 Authority issued under this Section exceed $1,000,000,000.
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1 Bonds which are being paid or retired by issuance, sale or
2 delivery of bonds, and bonds for which sufficient funds have
3 been deposited with the paying agent or trustee to provide
4 for payment of principal and interest thereon, and any
5 redemption premium, as provided in the authorizing
6 resolution, shall not be considered outstanding for the
7 purposes of this subsection.
8 (h) The bonds of the Authority shall not be indebtedness
9 of the State or of any political subdivision of the State.
10 The bonds of the Authority are not general obligations of the
11 State of Illinois and are not secured by a pledge of the full
12 faith and credit of the State of Illinois, and the holders of
13 bonds of the Authority may not require the levy or imposition
14 by the State of any taxes or the application of other State
15 revenues or funds to the payment of bonds of the Authority.
16 No member of the Authority or any person executing the bonds
17 shall be liable personally on the bonds or subject to any
18 personal liability by reason of the issuance of the bonds.
19 (i) The State of Illinois pledges to and agrees with the
20 holders of the bonds of the Authority issued pursuant to this
21 Act that the State will not limit or alter the rights and
22 powers vested in the Authority by this Act so as to impair
23 the terms of any contract made by the Authority with those
24 holders or in any way impair the rights and remedies of those
25 holders until the bonds, together with interest thereon, with
26 interest on any unpaid installments of interest, and all
27 costs and expenses in connection with any action or
28 proceedings by or on behalf of those holders, are fully met
29 and discharged. In addition, the State pledges to and agrees
30 with the holders of the bonds of the Authority issued
31 pursuant to this Act that the State will not limit or alter
32 the basis on which the 40% of the proceeds of the Tobacco
33 Settlement that the State of Illinois has committed to
34 transfer to the Authority are to be allocated, deposited, and
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1 paid to the Authority as provided in this Act, or the use of
2 those funds, so as to impair the terms of any such contract.
3 The Authority is authorized to include these pledges and
4 agreements of the State in any contract with the holders of
5 bonds issued pursuant to this Section.
6 Section 15-30. Records and reporting. The Executive
7 Director shall keep a record of the proceedings of the
8 Authority. The State Treasurer shall be custodian of all
9 Authority funds and shall be bonded in the amount the other
10 members of the Authority may designate. The accounts and
11 books of the Authority shall be set up and maintained in a
12 manner approved by the Auditor General, and the Authority
13 shall file with the Auditor General a certified annual report
14 within 120 days after the close of its fiscal year. The
15 Authority shall also file with the Governor, the Secretary of
16 the Senate, the Clerk of the House of Representatives, and
17 the Illinois Economic and Fiscal Commission, by March 1 of
18 each year, a written report covering its activities for the
19 previous fiscal year. After being so filed, the report shall
20 be a public record and open for inspection at the offices of
21 the Authority during normal business hours.
22 Section 15-35. Ethics; reimbursement of expenses.
23 (a) Members and employees of the Authority shall be
24 required to observe the same ethical standards as State
25 employees are required by law to observe.
26 (b) Reimbursement of expenses of members and employees
27 of the Authority shall not exceed the rates of reimbursement
28 established by the Governor's Travel Control Board for
29 employees of the State of Illinois.
30 Section 15-40. Dissolution. The Tobacco Settlement
31 Bonding Authority shall be dissolved 40 years after the
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1 effective date of this Act.
2 Article 90. Amendatory Provisions
3 Section 90-5. The State Finance Act is amended by adding
4 Section 5.540 as follows:
5 (30 ILCS 105/5.540 new)
6 Sec. 5.540. The Tobacco Settlement Investment Trust Fund.
7 Article 99. Effective date
8 Section 99-5. Effective date. This Act takes effect
9 upon becoming law.