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92nd General Assembly

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Public Act 92-0879

HB2277 Enrolled                                LRB9205634MWcd

    AN ACT in relation to local government bonds.

    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 3, 9, 15, 16.5, and  17  and  by
adding Section 5.5 as follows:

    (30 ILCS 350/3) (from Ch. 17, par. 6903)
    Sec.  3.  Definitions.   In this Act words or terms shall
have the following  meanings  unless  the  context  or  usage
clearly indicates that another meaning is intended.
    (a)  "Alternate  bonds"  means  bonds  issued  in lieu of
revenue bonds or payable from a revenue source as provided in
Section 15.
    (b)  "Applicable  law"  means  any  provision   of   law,
including  this  Act, authorizing governmental units to issue
bonds.
    (c)  "Backdoor referendum"  means  the  submission  of  a
public  question  to  the  voters  of  a  governmental  unit,
initiated  by  a  petition  of  voters, residents or property
owners of such governmental unit,  to  determine  whether  an
action  by the governing body of such governmental unit shall
be effective, adopted or rejected.
    (d)  "Bond"   means   any   instrument   evidencing   the
obligation to pay money authorized or issued by or on  behalf
of  a  governmental  unit  under  applicable  law,  including
without  limitation,  bonds,  notes, installment or financing
contracts, leases, certificates, tax anticipation warrants or
notes, vouchers, and any other evidences of indebtedness.
    (e)  "Debt  service"  on  bonds  means  the   amount   of
principal,  interest  and premium, if any, when due either at
stated maturity or upon mandatory redemption.
    (f)  "Enterprise  revenues"  means  the  revenues  of   a
utility  or  revenue  producing enterprise from which revenue
bonds may be payable.
    (g)  "General  obligation  bonds"  means   bonds   of   a
governmental  unit  for the payment of which the governmental
unit is empowered to levy ad valorem property taxes upon  all
taxable property in a governmental unit without limitation as
to rate or amount.
    (h)  "Governing   body"   means   the  legislative  body,
council, board, commission, trustees, or any other  body,  by
whatever  name  it  is  known, having charge of the corporate
affairs of a governmental unit.
    (h-5)  "Governmental  revenue  source"  means  a  revenue
source that is either (1) federal or  State  funds  that  the
governmental  unit has received in some amount during each of
the 3 fiscal years preceding the issuance of alternate  bonds
or (2) revenues to be received from another governmental unit
under an intergovernmental cooperation agreement.
    (i)  "Governmental   unit"   means  a  county,  township,
municipality,   municipal   corporation,   unit   of    local
government,   school   district,   special  district,  public
corporation, body  corporate  and  politic,  forest  preserve
district,  fire  protection  district, conservation district,
park  district,  sanitary  district,  and  all  other   local
governmental   agencies,  including  any  entity  created  by
intergovernmental  agreement  among  any  of  the   foregoing
governmental units, but does not include any office, officer,
department,  division, bureau, board, commission, university,
or similar agency of the State.
    (j)  "Ordinance" means an ordinance  duly  adopted  by  a
governing  body  or,  if  appropriate under applicable law, a
resolution so adopted.
    (k)  "Revenue bonds" means any bonds  of  a  governmental
unit other than general obligation bonds, but "revenue bonds"
does  include  any debt authorized under Section 11-29.3-1 of
the Illinois Municipal Code.
    (l)  "Revenue source" means a source of funds, other than
enterprise revenues, received or available to be received  by
a  governmental unit and available for any one or more of its
corporate purposes.
    (m)  "Limited  bonds"  means  bonds,  excluding   leases,
notes,  installment or financing contracts, certificates, tax
anticipation warrants  or  notes,  vouchers,  and  any  other
evidences of indebtedness, issued under Section 15.01 of this
Act.
(Source: P.A. 89-385, eff. 8-18-95; 89-658, eff. 1-1-97.)

    (30 ILCS 350/5.5 new)
    Sec. 5.5.  Notices.
    (a)  Whenever   applicable   law   requires   notice   in
connection  with  the  issuance of bonds, the notice shall be
sufficient if the notice appears above the name or  title  of
the person required to give the notice.
    (b)  Whenever  applicable  law  requires  any notice of a
hearing or meeting held in connection with  the  issuance  of
bonds  to be supplied to the members of the governing body or
news  media,  such  notice  may  be  supplied  by   facsimile
transmission  (commonly  referred  to  as  fax) or electronic
transmission (commonly referred to as e-mail).

    (30 ILCS 350/9) (from Ch. 17, par. 6909)
    Sec. 9.  Provisions for interest.  (a)  The  proceeds  of
bonds may be used to provide for the payment of interest upon
such  bonds for a period not to exceed the greater of 2 years
or a period ending 6  months  after  the  estimated  date  of
completion of the acquisition and construction of the project
or  accomplishment  of  the  purpose for which such bonds are
issued.
    (b)  In addition it shall be  lawful  for  the  governing
body  of  any  governmental unit issuing bonds to appropriate
money for the purpose of paying interest on such bonds during
the period stated in subsection (a)  of  this  Section.  Such
appropriation  may  be made in the ordinance authorizing such
bonds and shall be fully effective upon the effective date of
such ordinance without any  further  notice,  publication  or
approval whatsoever.
    (c)  The  governing  body  of  any  governmental unit may
authorize the transfer of  interest  earned  on  any  of  the
moneys  of  the governmental unit, including moneys set aside
to pay debt service, into the fund of the  governmental  unit
that  is  most in need of the interest.  This subsection does
not apply to any interest earned that has been  earmarked  or
restricted  by  the  governing body for a designated purpose.
This subsection does not apply to any interest earned on  any
funds  for  the  purpose  of  municipal  retirement under the
Illinois Pension Code  and  tort  immunity  under  the  Local
Governmental  and  Governmental  Employees Tort Immunity Act.
Interest earned on those funds  may  be  used  only  for  the
purposes  authorized  for the respective funds from which the
interest earnings were derived.
(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 debt service 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 debt
service 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
1.25 figure in the preceding sentence  shall  be  reduced  to
1.10  if the revenue source is a governmental revenue source.
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  (or  .10  for
governmental revenue sources) 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; 91-868, eff. 6-22-00.)
    (30 ILCS 350/16.5)
    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  expects  to  receive  a   school
construction  grant from the State of Illinois 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)  expects  to  receive a
    school construction grant from the State of Illinois  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, based on (i) a grant entitlement from the
    State Board of  Education  and  (ii)  current  recognized
    project  costs  determined  by  the  Capital  Development
    Board.
(Source: P.A. 91-868, eff. 6-22-00.)

    (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;  provided,  however,
that   investments,   investment  agreements,  or  investment
services purchased in connection with a  bond  issue  may  be
paid  through  installments  made  at  stated intervals for a
period of time not in excess of the maximum term of such bond
issue.   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 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; 91-868, eff. 6-22-00.)

    Section  99.  Effective date.  This Act takes effect upon
becoming law.
    Passed in the General Assembly January 06, 2003.
    Approved January 13, 2003.

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