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Public Act 91-0868
SB1627 Enrolled LRB9112143MWgc
AN ACT concerning local government debt.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Local Government Debt Reform Act is
amended by changing Sections 5, 13, 15, and 17 and by adding
Section 16.5 as follows:
(30 ILCS 350/5) (from Ch. 17, par. 6905)
Sec. 5. Backdoor referendum procedure. (a) Whenever
applicable law provides that the authorization or the
issuance of bonds, or the becoming effective of an ordinance
providing for the authorization or issuance of bonds, may be
subject to a backdoor referendum, the provisions of this
Section may be used as an alternative to the specific
procedures as otherwise set forth by applicable law.
(b) The governing body may adopt an authorizing
ordinance describing briefly the authority under which bonds
are proposed to be issued, the nature of the project or
purpose to be financed, the estimated total costs of the
project or purpose, including in such costs all items related
to financing the project or purpose, and the maximum amount
of bonds authorized to be issued to pay such costs. No
further details or specifications are required in such
authorizing ordinance. Such authorizing ordinance, along
with any other notice as required by applicable law,
including any notice as to the right of electors to file a
petition and the number of voters required to sign any such
petition, shall be published at least once in a newspaper of
general circulation in the governmental unit. The governing
body may, but is not required to, post the notice
electronically on its World Wide Web pages or posted as
required by applicable law. A petition may be filed after
such publication or posting during the period as provided by
applicable law; but upon the expiration of any such period
without the filing of a petition meeting the requirements of
the applicable law, the governing body shall be authorized to
issue such bonds as if they had followed all necessary
procedures set forth in such applicable law.
(c) If no petition meeting the requirements of
applicable law is filed during the petition period, then the
governing body may adopt additional ordinances or proceedings
supplementing or amending the authorizing ordinance so long
as the maximum amount of bonds as set forth in the
authorizing ordinance is not exceeded and there is no
material change in the project or purpose described in the
authorizing ordinance. Such additional ordinances or
proceedings shall in all instances become effective
immediately without publication or posting or any further act
or requirement. The authorizing ordinance, together with
such additional ordinance or proceedings, shall constitute
complete authority for the issuance of such bonds under
applicable law.
(d) If applicable law provides that notice alone shall
be given to commence a backdoor referendum, the notice shall
be published at least once in a newspaper of general
circulation in the governmental unit. The governing body
may, but is not required to, post the notice electronically
on its World Wide Web pages.
(Source: P.A. 85-1419.)
(30 ILCS 350/13) (from Ch. 17, par. 6913)
Sec. 13. Certain pledges. A governmental unit may
pledge, as security for the payment of its bonds, (1)
revenues derived from the operation of any utility system or
revenue producing enterprise, (2) moneys deposited or to be
deposited into any special fund of the governmental unit, (3)
grants or other revenues or taxes expected to be received by
the governmental unit from the State or federal government,
including taxes imposed by the governmental unit pursuant to
grant of authority by the State, such as sales or use taxes
or utility taxes, (4) special assessments to be collected
with respect to a local improvement financed with the
proceeds of bonds, or (5) payments to be made by another
governmental unit pursuant to a service, user or other
similar agreement with such governmental unit.
Any such pledge made by a governmental unit shall be
valid and binding from the time such pledge is made. The
revenues, moneys and other funds so pledged and thereafter
received by the governmental unit shall immediately be
subject to the lien of such pledge without any physical
delivery thereof or further act; and, subject only to the
provisions of prior agreements, the lien of such pledge shall
be valid and binding as against all parties having claims of
any kind in tort, contract or otherwise against the
governmental unit irrespective of whether such parties have
notice thereof. Pursuant to any such pledge, a governmental
unit may bind itself to impose rates, charges or taxes to the
fullest extent permitted by applicable law. No ordinance,
resolution, trust agreement or other instrument by which such
pledge is created need be filed or recorded except in the
records of the governmental unit.
The State Treasurer, the State Comptroller, the
Department of Revenue, the Department of Transportation, the
State Superintendent of Education, or any Regional
Superintendent of Schools shall deposit or cause to be
deposited any amount of grants or other revenues or taxes
expected to be received by a governmental unit from that
official or entity that have been pledged to the payment of
bonds of the governmental unit, in accordance with the
authorization of the governmental unit, directly into a
designated escrow account established by the governmental
unit. The ordinance authorizing that disposition shall,
within 10 days after adoption by the governing body of the
governmental unit, be filed with the official or entity
having custody of the pledged grants or other revenues or
taxes.
(Source: P.A. 85-1419.)
(30 ILCS 350/15) (from Ch. 17, par. 6915)
Sec. 15. Double-barrelled bonds. Whenever revenue bonds
have been authorized to be issued pursuant to applicable law
or whenever there exists for a governmental unit a revenue
source, the procedures set forth in this Section may be used
by a governing body. General obligation bonds may be issued
in lieu of such revenue bonds as authorized, and general
obligation bonds may be issued payable from any revenue
source. Such general obligation bonds may be referred to as
"alternate bonds". Alternate bonds may be issued without any
referendum or backdoor referendum except as provided in this
Section, upon the terms provided in Section 10 of this Act
without reference to other provisions of law, but only upon
the conditions provided in this Section. Alternate bonds
shall not be regarded as or included in any computation of
indebtedness for the purpose of any statutory provision or
limitation except as expressly provided in this Section.
Such conditions are:
(a) Alternate bonds shall be issued for a lawful
corporate purpose. If issued in lieu of revenue bonds,
alternate bonds shall be issued for the purposes for which
such revenue bonds shall have been authorized. If issued
payable from a revenue source in the manner hereinafter
provided, which revenue source is limited in its purposes or
applications, then the alternate bonds shall be issued only
for such limited purposes or applications. Alternate bonds
may be issued payable from either enterprise revenues or
revenue sources, or both.
(b) Alternate bonds shall be subject to backdoor
referendum. The provisions of Section 5 of this Act shall
apply to such backdoor referendum, together with the
provisions hereof. The authorizing ordinance shall be
published in a newspaper of general circulation in the
governmental unit. Along with or as part of the authorizing
ordinance, there shall be published a notice of (1) the
specific number of voters required to sign a petition
requesting that the issuance of the alternate bonds be
submitted to referendum, (2) the time when such petition must
be filed, (3) the date of the prospective referendum, and
(4), with respect to authorizing ordinances adopted on or
after January 1, 1991, a statement that identifies any
revenue source that will be used to pay the principal of and
interest on the alternate bonds. The clerk or secretary of
the governmental unit shall make a petition form available to
anyone requesting one. If no petition is filed with the
clerk or secretary within 30 days of publication of the
authorizing ordinance and notice, the alternate bonds shall
be authorized to be issued. But if within this 30 days
period, a petition is filed with such clerk or secretary
signed by electors numbering the greater of (i) 7.5% of the
registered voters in the governmental unit or (ii) 200 of
those registered voters or 15% of those registered voters,
whichever is less, asking that the issuance of such alternate
bonds be submitted to referendum, the clerk or secretary
shall certify such question for submission at an election
held in accordance with the general election law. The
question on the ballot shall include a statement of any
revenue source that will be used to pay the principal of and
interest on the alternate bonds. The alternate bonds shall be
authorized to be issued if a majority of the votes cast on
the question at such election are in favor thereof provided
that notice of the bond referendum, if held before July 1,
1999, has been given in accordance with the provisions of
Section 12-5 of the Election Code in effect at the time of
the bond referendum, at least 10 and not more than 45 days
before the date of the election, notwithstanding the time for
publication otherwise imposed by Section 12-5. Notices
required in connection with the submission of public
questions on or after July 1, 1999 shall be as set forth in
Section 12-5 of the Election Code. Backdoor referendum
proceedings for bonds and alternate bonds to be issued in
lieu of such bonds may be conducted at the same time.
(c) To the extent payable from enterprise revenues, such
revenues shall have been determined by the governing body to
be sufficient to provide for or pay in each year to final
maturity of such alternate bonds all of the following: (1)
costs of operation and maintenance of the utility or
enterprise, but not including depreciation, (2) debt service
on all outstanding revenue bonds payable from such enterprise
revenues, (3) all amounts required to meet any fund or
account requirements with respect to such outstanding revenue
bonds, (4) other contractual or tort liability obligations,
if any, payable from such enterprise revenues, and (5) in
each year, an amount not less than 1.25 times debt service of
all (i) alternate bonds payable from such enterprise revenues
previously issued and outstanding and (ii) alternate bonds
proposed to be issued. To the extent payable from one or
more revenue sources, such sources shall have been determined
by the governing body to provide in each year, an amount not
less than 1.25 times debt service of all alternate bonds
payable from such revenue sources previously issued and
outstanding and alternate bonds proposed to be issued. The
conditions enumerated in this subsection (c) need not be met
for that amount of debt service provided for by the setting
aside of proceeds of bonds or other moneys at the time of the
delivery of such bonds.
(c-1) In the case of alternate bonds issued as variable
rate bonds (including refunding bonds), debt service shall be
projected based on the rate for the most recent date shown in
the 20 G.O. Bond Index of average municipal bond yields as
published in the most recent edition of The Bond Buyer
published in New York, New York (or any successor publication
or index, or if such publication or index is no longer
published, then any index of long-term municipal tax-exempt
bond yields selected by the governmental unit), as of the
date of determination referred to in subsection (c) of this
Section. Any interest or fees that may be payable to the
provider of a letter of credit, line of credit, surety bond,
bond insurance, or other credit enhancement relating to such
alternate bonds and any fees that may be payable to any
remarketing agent need not be taken into account for purposes
of such projection. If the governmental unit enters into an
agreement in connection with such alternate bonds at the time
of issuance thereof pursuant to which the governmental unit
agrees for a specified period of time to pay an amount
calculated at an agreed-upon rate or index based on a
notional amount and the other party agrees to pay the
governmental unit an amount calculated at an agreed-upon rate
or index based on such notional amount, interest shall be
projected for such specified period of time on the basis of
the agreed-upon rate payable by the governmental unit.
(d) The determination of the sufficiency of enterprise
revenues or a revenue source, as applicable, shall be
supported by reference to the most recent audit of the
governmental unit, which shall be for a fiscal year ending
not earlier than 18 months previous to the time of issuance
of the alternate bonds. If such audit does not adequately
show such enterprise revenues or revenue source, as
applicable, or if such enterprise revenues or revenue source,
as applicable, are shown to be insufficient, then the
determination of sufficiency shall be supported by the report
of an independent accountant or feasibility analyst, the
latter having a national reputation for expertise in such
matters, demonstrating the sufficiency of such revenues and
explaining, if appropriate, by what means the revenues will
be greater than as shown in the audit. Whenever such
sufficiency is demonstrated by reference to a schedule of
higher rates or charges for enterprise revenues or a higher
tax imposition for a revenue source, such higher rates,
charges or taxes shall have been properly imposed by an
ordinance adopted prior to the time of delivery of alternate
bonds. The reference to and acceptance of an audit or
report, as the case may be, and the determination of the
governing body as to sufficiency of enterprise revenues or a
revenue source shall be conclusive evidence that the
conditions of this Section have been met and that the
alternate bonds are valid.
(e) The enterprise revenues or revenue source, as
applicable, shall be in fact pledged to the payment of the
alternate bonds; and the governing body shall covenant, to
the extent it is empowered to do so, to provide for, collect
and apply such enterprise revenues or revenue source, as
applicable, to the payment of the alternate bonds and the
provision of not less than an additional .25 times debt
service. The pledge and establishment of rates or charges
for enterprise revenues, or the imposition of taxes in a
given rate or amount, as provided in this Section for
alternate bonds, shall constitute a continuing obligation of
the governmental unit with respect to such establishment or
imposition and a continuing appropriation of the amounts
received. All covenants relating to alternate bonds and the
conditions and obligations imposed by this Section are
enforceable by any bondholder of alternate bonds affected,
any taxpayer of the governmental unit, and the People of the
State of Illinois acting through the Attorney General or any
designee, and in the event that any such action results in an
order finding that the governmental unit has not properly set
rates or charges or imposed taxes to the extent it is
empowered to do so or collected and applied enterprise
revenues or any revenue source, as applicable, as required by
this Act, the plaintiff in any such action shall be awarded
reasonable attorney's fees. The intent is that such
enterprise revenues or revenue source, as applicable, shall
be sufficient and shall be applied to the payment of debt
service on such alternate bonds so that taxes need not be
levied, or if levied need not be extended, for such payment.
Nothing in this Section shall inhibit or restrict the
authority of a governing body to determine the lien priority
of any bonds, including alternate bonds, which may be issued
with respect to any enterprise revenues or revenue source.
In the event that alternate bonds shall have been issued
and taxes, other than a designated revenue source, shall have
been extended pursuant to the general obligation, full faith
and credit promise supporting such alternate bonds, then the
amount of such alternate bonds then outstanding shall be
included in the computation of indebtedness of the
governmental unit for purposes of all statutory provisions or
limitations until such time as an audit of the governmental
unit shall show that the alternate bonds have been paid from
the enterprise revenues or revenue source, as applicable,
pledged thereto for a complete fiscal year.
Alternate bonds may be issued to refund or advance refund
alternate bonds without meeting any of the conditions set
forth in this Section, except that the term of the refunding
bonds shall not be longer than the term of the refunded bonds
and that the debt service payable in any year on the
refunding bonds shall not exceed the debt service payable in
such year on the refunded bonds.
Once issued, alternate bonds shall be and forever remain
until paid or defeased the general obligation of the
governmental unit, for the payment of which its full faith
and credit are pledged, and shall be payable from the levy of
taxes as is provided in this Act for general obligation
bonds.
The changes made by this amendatory Act of 1990 do not
affect the validity of bonds authorized before September 1,
1990.
(Source: P.A. 90-812, eff. 1-26-99; 91-57, eff. 6-30-99;
91-493, eff. 8-13-99; revised 10-9-99.)
(30 ILCS 350/16.5 new)
Sec. 16.5. Proposition for bonds. For all elections
held after July 1, 2000, the form of a proposition to
authorize the issuance of bonds pursuant to either a
referendum or backdoor referendum may be as set forth in this
Section as an alternative to the form of proposition as
otherwise set forth by applicable law. The proposition
authorized by this Section shall be in substantially the
following form:
Shall (name of governmental unit) (state purpose for
the bond issue) and issue its bonds to the amount of $
(state amount) for the purpose of paying the costs
thereof?
If a school district has received a grant entitlement
from the Illinois State Board of Education pursuant to the
School Construction Law for a school construction project to
be financed in part with proceeds of a bond authorized by
referendum, then the form of proposition may at the option of
the school district additionally contain substantially the
following language:
(Name of school district) has received a grant
entitlement in the amount of $ (state amount) from the
Illinois State Board of Education pursuant to the School
Construction Law for the school construction project to
be financed in part with proceeds of the bonds.
(30 ILCS 350/17) (from Ch. 17, par. 6917)
Sec. 17. Leases and installment contracts.
(a) Interest not debt; debt on leases and installment
contracts. Interest on bonds shall not be included in any
computation of indebtedness of a governmental unit for the
purpose of any statutory provision or limitation. For bonds
consisting of leases and installment or financing contracts,
(1) that portion of payments made by a governmental unit
under the terms of a bond designated as interest in the bond
or the ordinance authorizing such bond shall be treated as
interest for purposes of this Section (2) where portions of
payments due under the terms of a bond have not been
designated as interest in the bond or the ordinance
authorizing such bond, and all or a portion of such payments
is to be used for the payment of principal of and interest on
other bonds of the governmental unit or bonds issued by
another unit of local government, such as a public building
commission, the payments equal to interest due on such
corresponding bonds shall be treated as interest for purposes
of this Section and (3) where portions of payments due under
the terms of a bond have not been designated as interest in
the bond or ordinance authorizing such bond and no portion of
any such payment is to be used for the payment of principal
of and interest on other bonds of the governmental unit or
another unit of local government, a portion of each payment
due under the terms of such bond shall be treated as interest
for purposes of this Section; such portion shall be equal in
amount to the interest that would have been paid on a
notional obligation of the governmental unit (bearing
interest at the highest rate permitted by law for bonds of
the governmental unit at the time the bond was issued or, if
no such limit existed, 12%) on which the payments of
principal and interest were due at the same times and in the
same amounts as payments are due under the terms of the
bonds. The rule set forth in this Section shall be
applicable to all interest no matter when earned or accrued
or at what interval paid, and whether or not a bond bears
interest which compounds at certain intervals. For purposes
of bonds sold at amounts less than 95% of their stated value
at maturity, interest for purposes of this Section includes
the difference between the amount set forth on the face of
the bond as the original principal amount and the bond's
stated value at maturity.
This subsection may be made applicable to bonds issued
prior to the effective date of this Act by passage of an
ordinance to such effect by the governing body of a
governmental unit.
(b) Purchase or lease of property. The governing body
of each governmental unit may purchase or lease either real
or personal property, including investments, investment
agreements, or investment services, through agreements that
provide that the consideration for the purchase or lease may
be paid through installments made at stated intervals for a
period of no more than 20 years or another period of time
authorized by law, whichever is greater. Each governmental
unit may issue certificates evidencing the indebtedness
incurred under the lease or agreement. The governing body
may provide for the treasurer, comptroller, finance officer,
or other officer of the governing body charged with financial
administration to act as counter-party to any such lease or
agreement, as nominee lessor or seller. When the lease or
agreement is executed by the officer of the governmental unit
authorized by the governing body to bind the governmental
unit thereon by the execution thereof and is filed with and
executed by the nominee lessor or seller, the lease or
agreement shall be sufficiently executed so as to permit the
governmental unit to issue certificates evidencing the
indebtedness incurred under the lease or agreement. The
certificates agreements. The certificate shall be valid
whether or not an appropriation with respect thereto is
included in any annual or supplemental budget adopted by the
governmental unit. From time to time, as the governing body
executes contracts for the purpose of acquiring and
constructing the services or real or personal property that
is a part of the subject of the lease or agreement, including
financial, legal, architectural, and engineering services
related to the lease or agreement, the governing body shall
order the contracts filed with its nominee officer, and that
officer shall identify the contracts to the lease or
agreement; that identification shall permit the payment of
the contract from the proceeds of the certificates; and the
nominee officer shall duly apply or cause to be applied
proceeds of the certificates to the payment of the contracts.
The governing body of each governmental unit may sell, lease,
convey, and reacquire either real or personal property, or
any interest in real or personal property, upon any terms and
conditions and in any manner, as the governing body shall
determine, if the governmental unit will lease, acquire by
purchase agreement, or otherwise reacquire the property, as
authorized by this subsection or any other applicable law.
All indebtedness incurred under this subsection, when
aggregated with the existing indebtedness of the governmental
unit, may not exceed the debt limits provided by applicable
law.
(Source: P.A. 91-493, eff. 8-13-99.)
Section 10. The Public Library District Act of 1991 is
amended by changing Section 15-90 as follows:
(75 ILCS 16/15-90)
Sec. 15-90. Transfer of contiguous territory to adjoining
district.
(a) Territory that is in a public library district and
contiguous with another library district may be transferred
to the latter district. Upon the mutual agreement of the
boards of trustees of the contiguous districts to the
transfer of the territory, each board shall enact a transfer
ordinance containing identical language describing the
territory to be transferred, the effective date of the
transfer, a statement of the assets and liabilities, if any,
that are a responsibility of the transferred territory, and
the settlement of any excess of assets or liabilities.
(b) A copy of the transfer ordinance shall be filed with
the circuit court of the county that contains all or the
larger part of the territory. Upon receiving the ordinance,
the circuit court shall enter an order setting forth the
date, time, and place of a hearing upon the subject matter of
the ordinance, name the judge to hear the cause, and send
notice of the date, time, and place of the hearing and of the
judge assigned to the president of the board of trustees of
each of the involved public library districts and to the
secretary of the board of trustees of the public library
district containing the territory proposed to be transferred.
The date set for the hearing shall be not less than 30 days
nor more than 60 days after the circuit court enters the
order for the hearing. The secretary of the board of trustees
of the public library district containing the territory
proposed to be transferred shall, within 15 days of the
secretary's receipt of the circuit court's notice of the
hearing, publish notice of the hearing as provided in Section
1-30.
(c) At the hearing before the assigned judge of the
circuit court, the validity of the ordinance, including
substantiation of the required allegations in the petition,
the appropriateness of the location and boundary of the
territory to be voted upon for transfer, and other relevant
matters shall be considered. All persons residing in the
territory to be transferred, all other persons having an
interest in the proposed transfer, and the boards of trustees
of the involved library districts shall have a reasonable
opportunity to be heard upon the subject of the proposed
transfer. The judge's determination of the appropriateness
of the boundary of the territory proposed to be transferred
shall include the following factors:
(1) The location of the residents in relationship
to the total territory proposed to be transferred.
(2) Maintaining the pre-existing non-residential
tax bases of both libraries so far as possible.
(3) Local traditional traffic, transportation, and
marketing routes and the convenience of the residents of
the territory proposed to be transferred.
The judge, after hearing the statements, evidence, and
suggestions of the persons appearing at the hearing, shall
determine (i) whether the ordinance is valid and sufficient
according to law and (ii) whether the territory to be
transferred would receive substantially equal or greater
benefits by being transferred. If the transfer ordinance is
found to be valid and sufficient, and the territory to be
transferred would receive substantially equal or greater
benefits by being so transferred, the judge shall enter a
final judgement to transfer the territory.
(d) The judge assigned to the case shall, after a
hearing upon the merits, enter an order revising the
boundaries of the district and setting forth the liability,
if any, yet to be retired and paid by the property owners of
the transferred territory. The liability shall be collected
under Section 35-15.
(e) If there are any general obligation bonds of the
public library district (or other obligations incurred
instead of general obligation bonds under this Act) that are
outstanding and unpaid at the time the territory is
transferred from the public library district under this
Section, the territory shall remain liable for its
proportionate share of the bonded indebtedness or other
outstanding obligation incurred instead of bonded
indebtedness, and the public library district may continue to
levy and extend taxes upon the taxable property in the
territory for the purpose of amortizing the bonds or
satisfying the other outstanding obligations until sufficient
funds to retire the bonds or to satisfy the other outstanding
obligations have been collected.
(e-5) The county clerk must extend taxes to pay the
principal of and interest on any general obligation bonds
issued to refund any bond described in subsection (e), as
provided in the bond ordinances on file in the office of the
county clerk, against all taxable property in the district,
including taxable property that was in the district on the
date that the bonds being refunded were issued; provided,
however, that (i) the net interest rate on the refunding
bonds may not exceed the net interest rate on the refunded
bonds, (ii) the final maturity date of the refunding bonds
may not extend beyond the final maturity date of the refunded
bonds, and (iii) the debt service payable on the refunding
bonds in any year may not exceed the debt service that would
have been payable on the refunded bonds in that year. This
subsection is inoperative after December 31, 2000.
(f) The district secretary shall record a certified copy
of the transfer order with the recorder and file a certified
copy with the county clerk of each county affected.
(Source: P.A. 87-1277.)
Section 99. Effective date. This Act takes effect upon
becoming law.
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