98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
HB5419

 

Introduced , by Rep. C.D. Davidsmeyer

 

SYNOPSIS AS INTRODUCED:
 
20 ILCS 3501/830-20
20 ILCS 3501/830-30
20 ILCS 3501/830-35
20 ILCS 3501/830-45

    Amends the Illinois Finance Authority Act. In Sections concerning State guarantees for loans to farmers, provides that the total amount of the guarantees shall not exceed $2,000,000 per farmer (instead of $500,000). Provides that guarantees may be made if the farmer's net worth does not exceed $2,000,000 (instead of $500,000). In a Section concerning guarantees for existing debt, provides that the Illinois Agricultural Loan Guarantee Fund shall guarantee receipt of payment of 90% (instead of 85%) of the principal and interest owed on the State Guarantee Loan by the farmer to the guarantee holder. Effective immediately.


LRB098 15887 HLH 50932 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB5419LRB098 15887 HLH 50932 b

1    AN ACT concerning finance.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Finance Authority Act is amended by
5changing 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
17rounded to the nearest multiple of $100. No proceeds from any
18bonds issued by the Authority shall be loaned to any natural
19person who has a net worth in excess of $2,000,000 $500,000 for
20the purchase of new depreciable agricultural property or to any
21agribusiness that, including all affiliates and subsidiaries,
22has more than 100 employees and a gross income exceeding
23$2,000,000 for the preceding calendar year; provided, however,

 

 

HB5419- 2 -LRB098 15887 HLH 50932 b

1that the employee size and gross income limitations shall not
2apply to any loans to agribusinesses for research and
3development purposes, and provided further that the Authority
4shall retain the power to waive such limitations for any
5agribusiness that, at the time of application, does not operate
6a facility within this State.
7(Source: P.A. 96-531, eff. 8-14-09.)
 
8    (20 ILCS 3501/830-30)
9    Sec. 830-30. State Guarantees for existing debt.
10    (a) The Authority is authorized to issue State Guarantees
11for farmers' existing debts held by a lender. For the purposes
12of this Section, a farmer shall be a resident of Illinois, who
13is a principal operator of a farm or land, at least 50% of
14whose annual gross income is derived from farming and whose
15debt to asset ratio shall not be less than 40%, except in those
16cases where the applicant has previously used the guarantee
17program there shall be no debt to asset ratio or income
18restriction. For the purposes of this Section, debt to asset
19ratio shall mean the current outstanding liabilities of the
20farmer divided by the current outstanding assets of the farmer.
21The Authority shall establish the maximum permissible debt to
22asset ratio based on criteria established by the Authority.
23Lenders shall apply for the State Guarantees on forms provided
24by the Authority and certify that the application and any other
25documents submitted are true and correct. The lender or

 

 

HB5419- 3 -LRB098 15887 HLH 50932 b

1borrower, or both in combination, shall pay an administrative
2fee as determined by the Authority. The applicant shall be
3responsible for paying any fees or charges involved in
4recording mortgages, releases, financing statements, insurance
5for secondary market issues and any other similar fees or
6charges as the Authority may require. The application shall at
7a minimum contain the farmer's name, address, present credit
8and financial information, including cash flow statements,
9financial statements, balance sheets, and any other
10information pertinent to the application, and the collateral to
11be used to secure the State Guarantee. In addition, the lender
12must agree to bring the farmer's debt to a current status at
13the time the State Guarantee is provided and must also agree to
14charge a fixed or adjustable interest rate which the Authority
15determines to be below the market rate of interest generally
16available to the borrower. If both the lender and applicant
17agree, the interest rate on the State Guarantee Loan can be
18converted to a fixed interest rate at any time during the term
19of the loan. Any State Guarantees provided under this Section
20(i) shall not exceed $2,000,000 $500,000 per farmer, (ii) shall
21be set up on a payment schedule not to exceed 30 years, and
22shall be no longer than 30 years in duration, and (iii) shall
23be subject to an annual review and renewal by the lender and
24the Authority; provided that only one such State Guarantee
25shall be outstanding per farmer at any one time. No State
26Guarantee shall be revoked by the Authority without a 90-day

 

 

HB5419- 4 -LRB098 15887 HLH 50932 b

1notice, in writing, to all parties. In those cases where the
2borrower has not previously used the guarantee program, the
3lender shall not call due any loan during the first 3 years for
4any reason except for lack of performance or insufficient
5collateral. The lender can review and withdraw or continue with
6the State Guarantee on an annual basis after the first 3 years
7of the loan, provided a 90-day notice, in writing, to all
8parties has been given.
9    (b) The Authority shall provide or renew a State Guarantee
10to a lender if:
11        (i) A fee equal to 25 basis points on the loan is paid
12    to the Authority on an annual basis by the lender.
13        (ii) The application provides collateral acceptable to
14    the Authority that is at least equal to the State's portion
15    of the Guarantee to be provided.
16        (iii) The lender assumes all responsibility and costs
17    for pursuing legal action on collecting any loan that is
18    delinquent or in default.
19        (iv) The lender is responsible for the first 10% 15% of
20    the outstanding principal of the note for which the State
21    Guarantee has been applied.
22    (c) There is hereby created outside of the State treasury a
23special fund to be known as the Illinois Agricultural Loan
24Guarantee Fund. The State Treasurer shall be custodian of this
25Fund. Any amounts in the Illinois Agricultural Loan Guarantee
26Fund not currently needed to meet the obligations of the Fund

 

 

HB5419- 5 -LRB098 15887 HLH 50932 b

1shall be invested as provided by law, and all interest earned
2from these investments shall be deposited into the Fund until
3the Fund reaches the maximum amount authorized in this Act;
4thereafter, interest earned shall be deposited into the General
5Revenue Fund. After September 1, 1989, annual investment
6earnings equal to 1.5% of the Fund shall remain in the Fund to
7be used for the purposes established in Section 830-40 of this
8Act. The Authority is authorized to transfer to the Fund such
9amounts as are necessary to satisfy claims during the duration
10of the State Guarantee program to secure State Guarantees
11issued under this Section. If for any reason the General
12Assembly fails to make an appropriation sufficient to meet
13these obligations, this Act shall constitute an irrevocable and
14continuing appropriation of an amount necessary to secure
15guarantees as defaults occur and the irrevocable and continuing
16authority for, and direction to, the State Treasurer and the
17Comptroller to make the necessary transfers to the Illinois
18Agricultural Loan Guarantee Fund, as directed by the Governor,
19out of the General Revenue Fund. Within 30 days after November
2015, 1985, the Authority may transfer up to $7,000,000 from
21available appropriations into the Illinois Agricultural Loan
22Guarantee Fund for the purposes of this Act. Thereafter, the
23Authority may transfer additional amounts into the Illinois
24Agricultural Loan Guarantee Fund to secure guarantees for
25defaults as defaults occur. In the event of default by the
26farmer, the lender shall be entitled to, and the Authority

 

 

HB5419- 6 -LRB098 15887 HLH 50932 b

1shall direct payment on, the State Guarantee after 90 days of
2delinquency. All payments by the Authority shall be made from
3the Illinois Agricultural Loan Guarantee Fund to satisfy claims
4against the State Guarantee. The Illinois Agricultural Loan
5Guarantee Fund shall guarantee receipt of payment of 90% the
685% of the principal and interest owed on the State Guarantee
7Loan by the farmer to the guarantee holder. It shall be the
8responsibility of the lender to proceed with the collecting and
9disposing of collateral on the State Guarantee within 14 months
10of the time the State Guarantee is declared delinquent;
11provided, however, that the lender shall not collect or dispose
12of collateral on the State Guarantee without the express
13written prior approval of the Authority. If the lender does not
14dispose of the collateral within 14 months, the lender shall be
15liable to repay to the State interest on the State Guarantee
16equal to the same rate which the lender charges on the State
17Guarantee; provided, however, that the Authority may extend the
1814-month period for a lender in the case of bankruptcy or
19extenuating circumstances. The Fund shall be reimbursed for any
20amounts paid under this Section upon liquidation of the
21collateral. The Authority, by resolution of the Board, may
22borrow sums from the Fund and provide for repayment as soon as
23may be practical upon receipt of payments of principal and
24interest by a farmer. Money may be borrowed from the Fund by
25the Authority for the sole purpose of paying certain interest
26costs for farmers associated with selling a loan subject to a

 

 

HB5419- 7 -LRB098 15887 HLH 50932 b

1State Guarantee in a secondary market as may be deemed
2reasonable and necessary by the Authority.
3    (d) Notwithstanding the provisions of this Section 830-30
4with respect to the farmers and lenders who may obtain State
5Guarantees, the Authority may promulgate rules establishing
6the eligibility of farmers and lenders to participate in the
7State guarantee program and the terms, standards, and
8procedures that will apply, when the Authority finds that
9emergency conditions in Illinois agriculture have created the
10need for State Guarantees pursuant to terms, standards, and
11procedures other than those specified in this Section.
12(Source: P.A. 93-205, eff. 1-1-04.)
 
13    (20 ILCS 3501/830-35)
14    Sec. 830-35. State Guarantees for loans to farmers and
15agribusiness; eligibility.
16    (a) The Authority is authorized to issue State Guarantees
17to lenders for loans to eligible farmers and agribusinesses for
18purposes set forth in this Section. For purposes of this
19Section, an eligible farmer shall be a resident of Illinois (i)
20who is principal operator of a farm or land, at least 50% of
21whose annual gross income is derived from farming, (ii) whose
22annual total sales of agricultural products, commodities, or
23livestock exceeds $20,000, and (iii) whose net worth does not
24exceed $2,000,000 $500,000. An eligible agribusiness shall be
25that as defined in Section 801-10 of this Act. The Authority

 

 

HB5419- 8 -LRB098 15887 HLH 50932 b

1may approve applications by farmers and agribusinesses that
2promote diversification of the farm economy of this State
3through the growth and development of new crops or livestock
4not customarily grown or produced in this State or that
5emphasize a vertical integration of grain or livestock produced
6or raised in this State into a finished agricultural product
7for consumption or use. "New crops or livestock not customarily
8grown or produced in this State" shall not include corn,
9soybeans, wheat, swine, or beef or dairy cattle. "Vertical
10integration of grain or livestock produced or raised in this
11State" shall include any new or existing grain or livestock
12grown or produced in this State. Lenders shall apply for the
13State Guarantees on forms provided by the Authority, certify
14that the application and any other documents submitted are true
15and correct, and pay an administrative fee as determined by the
16Authority. The applicant shall be responsible for paying any
17fees or charges involved in recording mortgages, releases,
18financing statements, insurance for secondary market issues
19and any other similar fees or charges as the Authority may
20require. The application shall at a minimum contain the
21farmer's or agribusiness' name, address, present credit and
22financial information, including cash flow statements,
23financial statements, balance sheets, and any other
24information pertinent to the application, and the collateral to
25be used to secure the State Guarantee. In addition, the lender
26must agree to charge an interest rate, which may vary, on the

 

 

HB5419- 9 -LRB098 15887 HLH 50932 b

1loan that the Authority determines to be below the market rate
2of interest generally available to the borrower. If both the
3lender and applicant agree, the interest rate on the State
4Guarantee Loan can be converted to a fixed interest rate at any
5time during the term of the loan. Any State Guarantees provided
6under this Section (i) shall not exceed $2,000,000 $500,000 per
7farmer or an amount as determined by the Authority on a
8case-by-case basis for an agribusiness, (ii) shall not exceed a
9term of 15 years, and (iii) shall be subject to an annual
10review and renewal by the lender and the Authority; provided
11that only one such State Guarantee shall be made per farmer or
12agribusiness, except that additional State Guarantees may be
13made for purposes of expansion of projects financed in part by
14a previously issued State Guarantee. No State Guarantee shall
15be revoked by the Authority without a 90-day notice, in
16writing, to all parties. The lender shall not call due any loan
17for any reason except for lack of performance, insufficient
18collateral, or maturity. A lender may review and withdraw or
19continue with a State Guarantee on an annual basis after the
20first 5 years following closing of the loan application if the
21loan contract provides for an interest rate that shall not
22vary. A lender shall not withdraw a State Guarantee if the loan
23contract provides for an interest rate that may vary, except
24for reasons set forth herein.
25    (b) The Authority shall provide or renew a State Guarantee
26to a lender if:

 

 

HB5419- 10 -LRB098 15887 HLH 50932 b

1        (i) A fee equal to 25 basis points on the loan is paid
2    to the Authority on an annual basis by the lender.
3        (ii) The application provides collateral acceptable to
4    the Authority that is at least equal to the State's portion
5    of the Guarantee to be provided.
6        (iii) The lender assumes all responsibility and costs
7    for pursuing legal action on collecting any loan that is
8    delinquent or in default.
9        (iv) The lender is responsible for the first 10% 15% of
10    the outstanding principal of the note for which the State
11    Guarantee has been applied.
12    (c) There is hereby created outside of the State treasury a
13special fund to be known as the Illinois Farmer and
14Agribusiness Loan Guarantee Fund. The State Treasurer shall be
15custodian of this Fund. Any amounts in the Fund not currently
16needed to meet the obligations of the Fund shall be invested as
17provided by law, and all interest earned from these investments
18shall be deposited into the Fund until the Fund reaches the
19maximum amounts authorized in this Act; thereafter, interest
20earned shall be deposited into the General Revenue Fund. After
21September 1, 1989, annual investment earnings equal to 1.5% of
22the Fund shall remain in the Fund to be used for the purposes
23established in Section 830-40 of this Act. The Authority is
24authorized to transfer such amounts as are necessary to satisfy
25claims from available appropriations and from fund balances of
26the Farm Emergency Assistance Fund as of June 30 of each year

 

 

HB5419- 11 -LRB098 15887 HLH 50932 b

1to the Illinois Farmer and Agribusiness Loan Guarantee Fund to
2secure State Guarantees issued under this Section and Sections
3830-45, 830-50, and 830-55. If for any reason the General
4Assembly fails to make an appropriation sufficient to meet
5these obligations, this Act shall constitute an irrevocable and
6continuing appropriation of an amount necessary to secure
7guarantees as defaults occur and the irrevocable and continuing
8authority for, and direction to, the State Treasurer and the
9Comptroller to make the necessary transfers to the Illinois
10Farmer and Agribusiness Loan Guarantee Fund, as directed by the
11Governor, out of the General Revenue Fund. In the event of
12default by the borrower on State Guarantee Loans under this
13Section, Section 830-45, Section 830-50, or Section 830-55, the
14lender shall be entitled to, and the Authority shall direct
15payment on, the State Guarantee after 90 days of delinquency.
16All payments by the Authority shall be made from the Illinois
17Farmer and Agribusiness Loan Guarantee Fund to satisfy claims
18against the State Guarantee. It shall be the responsibility of
19the lender to proceed with the collecting and disposing of
20collateral on the State Guarantee under this Section, Section
21830-45, Section 830-50, or Section 830-55 within 14 months of
22the time the State Guarantee is declared delinquent. If the
23lender does not dispose of the collateral within 14 months, the
24lender shall be liable to repay to the State interest on the
25State Guarantee equal to the same rate that the lender charges
26on the State Guarantee, provided that the Authority shall have

 

 

HB5419- 12 -LRB098 15887 HLH 50932 b

1the authority to extend the 14-month period for a lender in the
2case of bankruptcy or extenuating circumstances. The Fund shall
3be reimbursed for any amounts paid under this Section, Section
4830-45, Section 830-50, or Section 830-55 upon liquidation of
5the collateral. The Authority, by resolution of the Board, may
6borrow sums from the Fund and provide for repayment as soon as
7may be practical upon receipt of payments of principal and
8interest by a borrower on State Guarantee Loans under this
9Section, Section 830-45, Section 830-50, or Section 830-55.
10Money may be borrowed from the Fund by the Authority for the
11sole purpose of paying certain interest costs for borrowers
12associated with selling a loan subject to a State Guarantee
13under this Section, Section 830-45, Section 830-50, or Section
14830-55 in a secondary market as may be deemed reasonable and
15necessary by the Authority.
16    (d) Notwithstanding the provisions of this Section 830-35
17with respect to the farmers, agribusinesses, and lenders who
18may obtain State Guarantees, the Authority may promulgate rules
19establishing the eligibility of farmers, agribusinesses, and
20lenders to participate in the State Guarantee program and the
21terms, standards, and procedures that will apply, when the
22Authority finds that emergency conditions in Illinois
23agriculture have created the need for State Guarantees pursuant
24to terms, standards, and procedures other than those specified
25in this Section.
26(Source: P.A. 96-897, eff. 5-24-10.)
 

 

 

HB5419- 13 -LRB098 15887 HLH 50932 b

1    (20 ILCS 3501/830-45)
2    Sec. 830-45. Young Farmer Loan Guarantee Program.
3    (a) The Authority is authorized to issue State Guarantees
4to lenders for loans to finance or refinance debts of young
5farmers. For the purposes of this Section, a young farmer is a
6resident of Illinois who is at least 18 years of age and who is
7a principal operator of a farm or land, who derives at least
850% of annual gross income from farming, whose net worth is not
9less than $10,000 and whose debt to asset ratio is not less
10than 40%. For the purposes of this Section, debt to asset ratio
11means current outstanding liabilities, including any debt to be
12financed or refinanced under this Section 830-45, divided by
13current outstanding assets. The Authority shall establish the
14maximum permissible debt to asset ratio based on criteria
15established by the Authority. Lenders shall apply for the State
16Guarantees on forms provided by the Authority and certify that
17the application and any other documents submitted are true and
18correct. The lender or borrower, or both in combination, shall
19pay an administrative fee as determined by the Authority. The
20applicant shall be responsible for paying any fee or charge
21involved in recording mortgages, releases, financing
22statements, insurance for secondary market issues, and any
23other similar fee or charge that the Authority may require. The
24application shall at a minimum contain the young farmer's name,
25address, present credit and financial information, including

 

 

HB5419- 14 -LRB098 15887 HLH 50932 b

1cash flow statements, financial statements, balance sheets,
2and any other information pertinent to the application, and the
3collateral to be used to secure the State Guarantee. In
4addition, the borrower must certify to the Authority that, at
5the time the State Guarantee is provided, the borrower will not
6be delinquent in the repayment of any debt. The lender must
7agree to charge a fixed or adjustable interest rate that the
8Authority determines to be below the market rate of interest
9generally available to the borrower. If both the lender and
10applicant agree, the interest rate on the State guaranteed loan
11can be converted to a fixed interest rate at any time during
12the term of the loan. State Guarantees provided under this
13Section (i) shall not exceed $2,000,000 $500,000 per young
14farmer, (ii) shall be set up on a payment schedule not to
15exceed 30 years, but shall be no longer than 15 years in
16duration, and (iii) shall be subject to an annual review and
17renewal by the lender and the Authority. A young farmer may use
18this program more than once provided the aggregate principal
19amount of State Guarantees under this Section to that young
20farmer does not exceed $2,000,000 $500,000. No State Guarantee
21shall be revoked by the Authority without a 90-day notice, in
22writing, to all parties.
23    (b) The Authority shall provide or renew a State Guarantee
24to a lender if:
25        (i) The lender pays a fee equal to 25 basis points on
26    the loan to the Authority on an annual basis.

 

 

HB5419- 15 -LRB098 15887 HLH 50932 b

1        (ii) The application provides collateral acceptable to
2    the Authority that is at least equal to the State
3    Guarantee.
4        (iii) The lender assumes all responsibility and costs
5    for pursuing legal action on collecting any loan that is
6    delinquent or in default.
7        (iv) The lender is at risk for the first 10% 15% of the
8    outstanding principal of the note for which the State
9    Guarantee is provided.
10    (c) The Illinois Agricultural Loan Guarantee Fund and the
11Illinois Farmer and Agribusiness Loan Guarantee Fund may be
12used to secure State Guarantees issued under this Section as
13provided in Section 830-30 and Section 830-35, respectively.
14    (d) Notwithstanding the provisions of this Section 830-45
15with respect to the young farmers and lenders who may obtain
16State Guarantees, the Authority may promulgate rules
17establishing the eligibility of young farmers and lenders to
18participate in the State Guarantee program and the terms,
19standards, and procedures that will apply, when the Authority
20finds that emergency conditions in Illinois agriculture have
21created the need for State Guarantees pursuant to terms,
22standards, and procedures other than those specified in this
23Section.
24(Source: P.A. 96-897, eff. 5-24-10.)
 
25    Section 99. Effective date. This Act takes effect upon
26becoming law.