Rep. C.D. Davidsmeyer

Filed: 4/8/2014

 

 


 

 


 
09800HB4902ham001LRB098 16532 HLH 58355 a

1
AMENDMENT TO HOUSE BILL 4902

2    AMENDMENT NO. ______. Amend House Bill 4902 by replacing
3everything after the enacting clause with the following:
 
4    "Section 5. The Illinois Finance Authority Act is amended
5by changing Sections 830-20, 830-30, 830-35, and 830-45 as
6follows:
 
7    (20 ILCS 3501/830-20)
8    Sec. 830-20. The Authority may not pass a resolution
9authorizing the issuance of any notes or bonds in excess of
10$2,000,000 $450,000 for any one agricultural real estate
11borrower. In any calendar year after 2007, the $450,000 amount
12shall be increased by an amount equal to such dollar amount
13multiplied by the inflation percentage determined under
14Section 305(c) of the federal Consolidated Farm and Rural
15Development Act (7 U.S.C. 1925) as of June 18, 2008. Any
16increase determined under the preceding sentence shall be

 

 

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1rounded to the nearest multiple of $100. No proceeds from any
2bonds issued by the Authority shall be loaned to any natural
3person who has a net worth in excess of $2,000,000 $500,000 for
4the purchase of new depreciable agricultural property or to any
5agribusiness that, including all affiliates and subsidiaries,
6has more than 100 employees and a gross income exceeding
7$2,000,000 for the preceding calendar year; provided, however,
8that the employee size and gross income limitations shall not
9apply to any loans to agribusinesses for research and
10development purposes, and provided further that the Authority
11shall retain the power to waive such limitations for any
12agribusiness that, at the time of application, does not operate
13a facility within this State.
14(Source: P.A. 96-531, eff. 8-14-09.)
 
15    (20 ILCS 3501/830-30)
16    Sec. 830-30. State Guarantees for existing debt.
17    (a) The Authority is authorized to issue State Guarantees
18for farmers' existing debts held by a lender. For the purposes
19of this Section, a farmer shall be a resident of Illinois, who
20is a principal operator of a farm or land, at least 50% of
21whose annual gross income is derived from farming and whose
22debt to asset ratio shall not be less than 40%, except in those
23cases where the applicant has previously used the guarantee
24program there shall be no debt to asset ratio or income
25restriction. For the purposes of this Section, debt to asset

 

 

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1ratio shall mean the current outstanding liabilities of the
2farmer divided by the current outstanding assets of the farmer.
3The Authority shall establish the maximum permissible debt to
4asset ratio based on criteria established by the Authority.
5Lenders shall apply for the State Guarantees on forms provided
6by the Authority and certify that the application and any other
7documents submitted are true and correct. The lender or
8borrower, or both in combination, shall pay an administrative
9fee as determined by the Authority. The applicant shall be
10responsible for paying any fees or charges involved in
11recording mortgages, releases, financing statements, insurance
12for secondary market issues and any other similar fees or
13charges as the Authority may require. The application shall at
14a minimum contain the farmer's name, address, present credit
15and financial information, including cash flow statements,
16financial statements, balance sheets, and any other
17information pertinent to the application, and the collateral to
18be used to secure the State Guarantee. In addition, the lender
19must agree to bring the farmer's debt to a current status at
20the time the State Guarantee is provided and must also agree to
21charge a fixed or adjustable interest rate which the Authority
22determines to be below the market rate of interest generally
23available to the borrower. If both the lender and applicant
24agree, the interest rate on the State Guarantee Loan can be
25converted to a fixed interest rate at any time during the term
26of the loan. Any State Guarantees provided under this Section

 

 

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1(i) shall not exceed $2,000,000 $500,000 per farmer, (ii) shall
2be set up on a payment schedule not to exceed 30 years, and
3shall be no longer than 30 years in duration, and (iii) shall
4be subject to an annual review and renewal by the lender and
5the Authority; provided that only one such State Guarantee
6shall be outstanding per farmer at any one time. No State
7Guarantee shall be revoked by the Authority without a 90-day
8notice, in writing, to all parties. In those cases where the
9borrower has not previously used the guarantee program, the
10lender shall not call due any loan during the first 3 years for
11any reason except for lack of performance or insufficient
12collateral. The lender can review and withdraw or continue with
13the State Guarantee on an annual basis after the first 3 years
14of the loan, provided a 90-day notice, in writing, to all
15parties has been given.
16    (b) The Authority shall provide or renew a State Guarantee
17to a lender if:
18        (i) A fee equal to 25 basis points on the loan is paid
19    to the Authority on an annual basis by the lender.
20        (ii) The application provides collateral acceptable to
21    the Authority that is at least equal to the State's portion
22    of the Guarantee to be provided.
23        (iii) The lender assumes all responsibility and costs
24    for pursuing legal action on collecting any loan that is
25    delinquent or in default.
26        (iv) The lender is responsible for the first 10% 15% of

 

 

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1    the outstanding principal of the note for which the State
2    Guarantee has been applied.
3    (c) There is hereby created outside of the State treasury a
4special fund to be known as the Illinois Agricultural Loan
5Guarantee Fund. The State Treasurer shall be custodian of this
6Fund. Any amounts in the Illinois Agricultural Loan Guarantee
7Fund not currently needed to meet the obligations of the Fund
8shall be invested as provided by law, and all interest earned
9from these investments shall be deposited into the Fund until
10the Fund reaches the maximum amount authorized in this Act;
11thereafter, interest earned shall be deposited into the General
12Revenue Fund. After September 1, 1989, annual investment
13earnings equal to 1.5% of the Fund shall remain in the Fund to
14be used for the purposes established in Section 830-40 of this
15Act. The Authority is authorized to transfer to the Fund such
16amounts as are necessary to satisfy claims during the duration
17of the State Guarantee program to secure State Guarantees
18issued under this Section. If for any reason the General
19Assembly fails to make an appropriation sufficient to meet
20these obligations, this Act shall constitute an irrevocable and
21continuing appropriation of an amount necessary to secure
22guarantees as defaults occur and the irrevocable and continuing
23authority for, and direction to, the State Treasurer and the
24Comptroller to make the necessary transfers to the Illinois
25Agricultural Loan Guarantee Fund, as directed by the Governor,
26out of the General Revenue Fund. Within 30 days after November

 

 

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115, 1985, the Authority may transfer up to $7,000,000 from
2available appropriations into the Illinois Agricultural Loan
3Guarantee Fund for the purposes of this Act. Thereafter, the
4Authority may transfer additional amounts into the Illinois
5Agricultural Loan Guarantee Fund to secure guarantees for
6defaults as defaults occur. In the event of default by the
7farmer, the lender shall be entitled to, and the Authority
8shall direct payment on, the State Guarantee after 90 days of
9delinquency. All payments by the Authority shall be made from
10the Illinois Agricultural Loan Guarantee Fund to satisfy claims
11against the State Guarantee. The Illinois Agricultural Loan
12Guarantee Fund shall guarantee receipt of payment of 90% the
1385% of the principal and interest owed on the State Guarantee
14Loan by the farmer to the guarantee holder. It shall be the
15responsibility of the lender to proceed with the collecting and
16disposing of collateral on the State Guarantee within 14 months
17of the time the State Guarantee is declared delinquent;
18provided, however, that the lender shall not collect or dispose
19of collateral on the State Guarantee without the express
20written prior approval of the Authority. If the lender does not
21dispose of the collateral within 14 months, the lender shall be
22liable to repay to the State interest on the State Guarantee
23equal to the same rate which the lender charges on the State
24Guarantee; provided, however, that the Authority may extend the
2514-month period for a lender in the case of bankruptcy or
26extenuating circumstances. The Fund shall be reimbursed for any

 

 

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1amounts paid under this Section upon liquidation of the
2collateral. The Authority, by resolution of the Board, may
3borrow sums from the Fund and provide for repayment as soon as
4may be practical upon receipt of payments of principal and
5interest by a farmer. Money may be borrowed from the Fund by
6the Authority for the sole purpose of paying certain interest
7costs for farmers associated with selling a loan subject to a
8State Guarantee in a secondary market as may be deemed
9reasonable and necessary by the Authority.
10    (d) Notwithstanding the provisions of this Section 830-30
11with respect to the farmers and lenders who may obtain State
12Guarantees, the Authority may promulgate rules establishing
13the eligibility of farmers and lenders to participate in the
14State guarantee program and the terms, standards, and
15procedures that will apply, when the Authority finds that
16emergency conditions in Illinois agriculture have created the
17need for State Guarantees pursuant to terms, standards, and
18procedures other than those specified in this Section.
19(Source: P.A. 93-205, eff. 1-1-04.)
 
20    (20 ILCS 3501/830-35)
21    Sec. 830-35. State Guarantees for loans to farmers and
22agribusiness; eligibility.
23    (a) The Authority is authorized to issue State Guarantees
24to lenders for loans to eligible farmers and agribusinesses for
25purposes set forth in this Section. For purposes of this

 

 

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1Section, an eligible farmer shall be a resident of Illinois (i)
2who is principal operator of a farm or land, at least 50% of
3whose annual gross income is derived from farming, (ii) whose
4annual total sales of agricultural products, commodities, or
5livestock exceeds $20,000, and (iii) whose net worth does not
6exceed $2,000,000 $500,000. An eligible agribusiness shall be
7that as defined in Section 801-10 of this Act. The Authority
8may approve applications by farmers and agribusinesses that
9promote diversification of the farm economy of this State
10through the growth and development of new crops or livestock
11not customarily grown or produced in this State or that
12emphasize a vertical integration of grain or livestock produced
13or raised in this State into a finished agricultural product
14for consumption or use. "New crops or livestock not customarily
15grown or produced in this State" shall not include corn,
16soybeans, wheat, swine, or beef or dairy cattle. "Vertical
17integration of grain or livestock produced or raised in this
18State" shall include any new or existing grain or livestock
19grown or produced in this State. Lenders shall apply for the
20State Guarantees on forms provided by the Authority, certify
21that the application and any other documents submitted are true
22and correct, and pay an administrative fee as determined by the
23Authority. The applicant shall be responsible for paying any
24fees or charges involved in recording mortgages, releases,
25financing statements, insurance for secondary market issues
26and any other similar fees or charges as the Authority may

 

 

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1require. The application shall at a minimum contain the
2farmer's or agribusiness' name, address, present credit and
3financial information, including cash flow statements,
4financial statements, balance sheets, and any other
5information pertinent to the application, and the collateral to
6be used to secure the State Guarantee. In addition, the lender
7must agree to charge an interest rate, which may vary, on the
8loan that the Authority determines to be below the market rate
9of interest generally available to the borrower. If both the
10lender and applicant agree, the interest rate on the State
11Guarantee Loan can be converted to a fixed interest rate at any
12time during the term of the loan. Any State Guarantees provided
13under this Section (i) shall not exceed $2,000,000 $500,000 per
14farmer or an amount as determined by the Authority on a
15case-by-case basis for an agribusiness, (ii) shall not exceed a
16term of 15 years, and (iii) shall be subject to an annual
17review and renewal by the lender and the Authority; provided
18that only one such State Guarantee shall be made per farmer or
19agribusiness, except that additional State Guarantees may be
20made for purposes of expansion of projects financed in part by
21a previously issued State Guarantee. No State Guarantee shall
22be revoked by the Authority without a 90-day notice, in
23writing, to all parties. The lender shall not call due any loan
24for any reason except for lack of performance, insufficient
25collateral, or maturity. A lender may review and withdraw or
26continue with a State Guarantee on an annual basis after the

 

 

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1first 5 years following closing of the loan application if the
2loan contract provides for an interest rate that shall not
3vary. A lender shall not withdraw a State Guarantee if the loan
4contract provides for an interest rate that may vary, except
5for reasons set forth herein.
6    (b) The Authority shall provide or renew a State Guarantee
7to a lender if:
8        (i) A fee equal to 25 basis points on the loan is paid
9    to the Authority on an annual basis by the lender.
10        (ii) The application provides collateral acceptable to
11    the Authority that is at least equal to the State's portion
12    of the Guarantee to be provided.
13        (iii) The lender assumes all responsibility and costs
14    for pursuing legal action on collecting any loan that is
15    delinquent or in default.
16        (iv) The lender is responsible for the first 10% 15% of
17    the outstanding principal of the note for which the State
18    Guarantee has been applied.
19    (c) There is hereby created outside of the State treasury a
20special fund to be known as the Illinois Farmer and
21Agribusiness Loan Guarantee Fund. The State Treasurer shall be
22custodian of this Fund. Any amounts in the Fund not currently
23needed to meet the obligations of the Fund shall be invested as
24provided by law, and all interest earned from these investments
25shall be deposited into the Fund until the Fund reaches the
26maximum amounts authorized in this Act; thereafter, interest

 

 

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1earned shall be deposited into the General Revenue Fund. After
2September 1, 1989, annual investment earnings equal to 1.5% of
3the Fund shall remain in the Fund to be used for the purposes
4established in Section 830-40 of this Act. The Authority is
5authorized to transfer such amounts as are necessary to satisfy
6claims from available appropriations and from fund balances of
7the Farm Emergency Assistance Fund as of June 30 of each year
8to the Illinois Farmer and Agribusiness Loan Guarantee Fund to
9secure State Guarantees issued under this Section and Sections
10830-45, 830-50, and 830-55. If for any reason the General
11Assembly fails to make an appropriation sufficient to meet
12these obligations, this Act shall constitute an irrevocable and
13continuing appropriation of an amount necessary to secure
14guarantees as defaults occur and the irrevocable and continuing
15authority for, and direction to, the State Treasurer and the
16Comptroller to make the necessary transfers to the Illinois
17Farmer and Agribusiness Loan Guarantee Fund, as directed by the
18Governor, out of the General Revenue Fund. In the event of
19default by the borrower on State Guarantee Loans under this
20Section, Section 830-45, Section 830-50, or Section 830-55, the
21lender shall be entitled to, and the Authority shall direct
22payment on, the State Guarantee after 90 days of delinquency.
23All payments by the Authority shall be made from the Illinois
24Farmer and Agribusiness Loan Guarantee Fund to satisfy claims
25against the State Guarantee. It shall be the responsibility of
26the lender to proceed with the collecting and disposing of

 

 

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1collateral on the State Guarantee under this Section, Section
2830-45, Section 830-50, or Section 830-55 within 14 months of
3the time the State Guarantee is declared delinquent. If the
4lender does not dispose of the collateral within 14 months, the
5lender shall be liable to repay to the State interest on the
6State Guarantee equal to the same rate that the lender charges
7on the State Guarantee, provided that the Authority shall have
8the authority to extend the 14-month period for a lender in the
9case of bankruptcy or extenuating circumstances. The Fund shall
10be reimbursed for any amounts paid under this Section, Section
11830-45, Section 830-50, or Section 830-55 upon liquidation of
12the collateral. The Authority, by resolution of the Board, may
13borrow sums from the Fund and provide for repayment as soon as
14may be practical upon receipt of payments of principal and
15interest by a borrower on State Guarantee Loans under this
16Section, Section 830-45, Section 830-50, or Section 830-55.
17Money may be borrowed from the Fund by the Authority for the
18sole purpose of paying certain interest costs for borrowers
19associated with selling a loan subject to a State Guarantee
20under this Section, Section 830-45, Section 830-50, or Section
21830-55 in a secondary market as may be deemed reasonable and
22necessary by the Authority.
23    (d) Notwithstanding the provisions of this Section 830-35
24with respect to the farmers, agribusinesses, and lenders who
25may obtain State Guarantees, the Authority may promulgate rules
26establishing the eligibility of farmers, agribusinesses, and

 

 

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1lenders to participate in the State Guarantee program and the
2terms, standards, and procedures that will apply, when the
3Authority finds that emergency conditions in Illinois
4agriculture have created the need for State Guarantees pursuant
5to terms, standards, and procedures other than those specified
6in this Section.
7(Source: P.A. 96-897, eff. 5-24-10.)
 
8    (20 ILCS 3501/830-45)
9    Sec. 830-45. Young Farmer Loan Guarantee Program.
10    (a) The Authority is authorized to issue State Guarantees
11to lenders for loans to finance or refinance debts of young
12farmers. For the purposes of this Section, a young farmer is a
13resident of Illinois who is at least 18 years of age and who is
14a principal operator of a farm or land, who derives at least
1550% of annual gross income from farming, whose net worth is not
16less than $10,000 and whose debt to asset ratio is not less
17than 40%. For the purposes of this Section, debt to asset ratio
18means current outstanding liabilities, including any debt to be
19financed or refinanced under this Section 830-45, divided by
20current outstanding assets. The Authority shall establish the
21maximum permissible debt to asset ratio based on criteria
22established by the Authority. Lenders shall apply for the State
23Guarantees on forms provided by the Authority and certify that
24the application and any other documents submitted are true and
25correct. The lender or borrower, or both in combination, shall

 

 

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1pay an administrative fee as determined by the Authority. The
2applicant shall be responsible for paying any fee or charge
3involved in recording mortgages, releases, financing
4statements, insurance for secondary market issues, and any
5other similar fee or charge that the Authority may require. The
6application shall at a minimum contain the young farmer's name,
7address, present credit and financial information, including
8cash flow statements, financial statements, balance sheets,
9and any other information pertinent to the application, and the
10collateral to be used to secure the State Guarantee. In
11addition, the borrower must certify to the Authority that, at
12the time the State Guarantee is provided, the borrower will not
13be delinquent in the repayment of any debt. The lender must
14agree to charge a fixed or adjustable interest rate that the
15Authority determines to be below the market rate of interest
16generally available to the borrower. If both the lender and
17applicant agree, the interest rate on the State guaranteed loan
18can be converted to a fixed interest rate at any time during
19the term of the loan. State Guarantees provided under this
20Section (i) shall not exceed $2,000,000 $500,000 per young
21farmer, (ii) shall be set up on a payment schedule not to
22exceed 30 years, but shall be no longer than 15 years in
23duration, and (iii) shall be subject to an annual review and
24renewal by the lender and the Authority. A young farmer may use
25this program more than once provided the aggregate principal
26amount of State Guarantees under this Section to that young

 

 

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1farmer does not exceed $2,000,000 $500,000. No State Guarantee
2shall be revoked by the Authority without a 90-day notice, in
3writing, to all parties.
4    (b) The Authority shall provide or renew a State Guarantee
5to a lender if:
6        (i) The lender pays a fee equal to 25 basis points on
7    the loan to the Authority on an annual basis.
8        (ii) The application provides collateral acceptable to
9    the Authority that is at least equal to the State
10    Guarantee.
11        (iii) The lender assumes all responsibility and costs
12    for pursuing legal action on collecting any loan that is
13    delinquent or in default.
14        (iv) The lender is at risk for the first 10% 15% of the
15    outstanding principal of the note for which the State
16    Guarantee is provided.
17    (c) The Illinois Agricultural Loan Guarantee Fund and the
18Illinois Farmer and Agribusiness Loan Guarantee Fund may be
19used to secure State Guarantees issued under this Section as
20provided in Section 830-30 and Section 830-35, respectively.
21    (d) Notwithstanding the provisions of this Section 830-45
22with respect to the young farmers and lenders who may obtain
23State Guarantees, the Authority may promulgate rules
24establishing the eligibility of young farmers and lenders to
25participate in the State Guarantee program and the terms,
26standards, and procedures that will apply, when the Authority

 

 

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1finds that emergency conditions in Illinois agriculture have
2created the need for State Guarantees pursuant to terms,
3standards, and procedures other than those specified in this
4Section.
5(Source: P.A. 96-897, eff. 5-24-10.)
 
6    Section 99. Effective date. This Act takes effect upon
7becoming law.".