Illinois General Assembly - Full Text of HB2830
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Full Text of HB2830  98th General Assembly




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1    AN ACT concerning State government.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Illinois Housing Development Act is amended
5by changing Sections 2, 8, and 10 as follows:
6    (20 ILCS 3805/2)  (from Ch. 67 1/2, par. 302)
7    Sec. 2. As used in this Act:
8    (a) "Authority" means the Illinois Housing Development
9Authority created in this Act.
10    (b) "Development costs" means the costs approved by the
11Authority as appropriate expenditures which may be incurred
12prior to commitment and initial closing of assisted mortgage
13financing or of housing related commercial facilities,
14including but not limited to: (1) payments for options to
15purchase properties for the proposed development or
16facilities, deposits on contracts of purchase, or, with the
17prior approval of the Authority, payments for the purchases of
18such properties; (2) legal, organizational and consultants'
19expenses; (3) payment of fees for preliminary feasibility
20studies and engineering and architectural work; (4) necessary
21application and other fees to federal, State and local
22government agencies; and (5) such other expenses as the
23Authority may deem appropriate to effectuate the purposes of



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1this Act.
2    (c) "Assisted mortgage financing" means a below market
3interest rate mortgage insured or purchased, or a loan made, by
4the Secretary of the United States Department of Housing and
5Urban Development or by any other federal agency or
6governmental corporation or by any political subdivision of the
7State of Illinois or by any Illinois public corporation; a
8market interest rate mortgage insured or purchased, or a loan
9made in combination with, or as augmented by, a program of rent
10supplements, interest subsidies, leasing, contributions or
11grants, or other programs as are now or hereafter authorized by
12federal law to serve low or moderate income persons; a mortgage
13or loan made pursuant to this Act; or a mortgage or loan from
14any private or public source with an interest rate and terms
15satisfactory to the Authority and which will meet the
16requirements and purposes of this Act.
17    (d) "Lending institution" means any bank, trust company,
18savings bank, savings and loan association, credit union,
19national banking association, mortgage banking association,
20federal savings and loan association or federal credit unit
21maintaining an office in the State, any insurance company or
22any other entity or organization which makes or acquires loans
23secured by real property.
24    (e) "Residential mortgage" means a loan owed to a lending
25institution, to the Authority or to a trustee for holders of
26bonds or notes of the Authority or to a trustee for owners of



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1pools of mortgages, and secured by a lien on real property
2located in the State and improved by a residential structure or
3a mixed residential and commercial structure, or unimproved if
4the proceeds of such loan shall be used for the erection of a
5residential structure or a mixed residential and commercial
6structure thereon, whether or not such loan is insured or
7guaranteed by the United States of America or any agency or
8corporation thereof.
9    (f) "Development" means a specific work or improvement
10undertaken to provide dwelling accommodations, including the
11acquisition, construction or rehabilitation of lands,
12buildings and community facilities and in connection therewith
13to provide nonhousing facilities which are a part of a planned
14large-scale project or new community.
15    (g) "Persons and families of low and moderate income" and
16"Low income or moderate income persons" means families and
17persons who cannot afford to pay the amounts at which private
18enterprise, without assisted mortgage financing, is providing
19a substantial supply of decent, safe and sanitary housing. The
20income limits for the admission of such families and persons to
21developments shall be those established pursuant to the rules
22applicable to the assisted mortgage financing program under
23which such developments are financed.
24    (h) "Moderate rentals" means rent charges less than those
25rents generally charged for new dwelling units of comparable
26size and location built by the unassisted efforts of private



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1enterprise and financed at then current market interest rates.
2    (i) "Low rentals" means rent charges at least 10% lower
3than moderate rentals.
4    (j) "Rents" or "Rentals" shall mean fees or charges paid
5for use of a development under this Act, whether the
6development is operated on a landlord-tenant basis or as a
7condominium or cooperative.
8    (k) "Limited-profit entity" means any individual, joint
9venture, partnership, limited partnership, trust or
10corporation organized or existing under the laws of the State
11of Illinois or authorized to do business in this State and
12having articles of incorporation or comparable documents of
13organization or a written agreement with the Authority which,
14in addition to other requirements of law, provide that if the
15limited-profit entity receives any loan from the Authority as
16provided for in this Act, it shall be authorized to enter into
17an agreement with the Authority providing for regulations with
18respect to rents, profits, dividends and disposition of
19property or franchises. :
20        (1) that if the limited-profit entity receives any loan
21    from the Authority as provided for in this Act, it shall be
22    authorized to enter into an agreement with the Authority
23    providing for regulations with respect to rents, profits,
24    dividends and disposition of property or franchises; and
25        (2) that if the limited-profit entity receives a loan,
26    as provided for in this Act, the Chairman of the Authority,



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1    acting with the prior approval of the Authority, shall have
2    the power, if he determines that any such loan is in
3    jeopardy of not being repaid, or that the proposed
4    development for which such loan was made is in jeopardy of
5    not being constructed, or the limited-profit entity is
6    otherwise in violation of rules and regulations
7    promulgated by the Authority, to appoint to the board of
8    directors or other comparable controlling body of such
9    limited-profit entity a number of new directors or persons,
10    which number shall be sufficient to constitute a voting
11    majority of such board or controlling body,
12    notwithstanding any other provisions of the limited-profit
13    entity's articles of incorporation or other documents of
14    organization, or of any other provisions of law, provided
15    that this requirement set forth in this paragraph (2) is
16    not mandatory in the case of loans made solely with monies
17    from the Authority's administrative fund.
18    (l) "Land development" means the process of clearing and
19grading land, making, installing, or constructing waterlines
20and water supply installations, sewerlines and sewage disposal
21installations, steam, gas, and electric lines and
22installations, roads, streets, curbs, gutters, sidewalks,
23storm drainage facilities, and other installations or work,
24whether on or off the site, necessary or desirable to prepare
25land for residential, commercial, industrial, or other uses, or
26to provide facilities for public or common use.



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1    (m) "Nonprofit corporation" means a nonprofit corporation
2incorporated pursuant to the provisions of the Illinois General
3Not For Profit Corporation Act or the State Housing Act of 1933
4and having articles of incorporation which, in addition to
5other requirements of law, provide:
6        (1) that the corporation has been organized to provide
7    housing facilities for persons of low and moderate income;
8        (2) that all income and earnings of the corporation
9    shall be used exclusively for corporation purposes and that
10    no part of the net income or net earnings of the
11    corporation shall inure to the benefit or profit of any
12    private individual, firm, corporation, partnership, or
13    association;
14        (3) that the corporation is in no manner controlled or
15    under the direction or acting in the substantial interest
16    of private individuals, firms, corporations, partnerships,
17    or associations seeking to derive profit or gain therefrom
18    or seeking to eliminate or minimize losses in any dealings
19    or transactions therewith;
20        (4) that if the corporation receives any loan or
21    advance from the Authority as provided for in this Act, it
22    shall be authorized to enter into an agreement with the
23    Authority providing for regulation with respect to rents,
24    profits, dividends, and disposition of property or
25    franchises;
26        (5) that if the corporation receives a loan or advance,



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1    as provided for in this Act, the chairman of the Authority,
2    acting with the prior approval of the majority of the
3    members of the Authority, shall have the power if he
4    determines that any such loan or advance is in jeopardy of
5    not being repaid, or that the proposed development for
6    which such loan or advance was made is in jeopardy of not
7    being constructed, or that some part of the net income or
8    net earnings of the corporation is inuring to the benefit
9    of any private individual, firm, corporation, partnership,
10    or association, or that the corporation is in some manner
11    controlled or under the direction of or acting in the
12    substantial interest of any private individual, firm,
13    corporation, partnership, or association seeking to derive
14    benefit or gain therefrom or seeking to eliminate or
15    minimize losses in any dealings or transactions therewith,
16    or is in violation of rules and regulations promulgated by
17    the Authority to appoint to the board of directors of such
18    corporation a number of new directors, which number shall
19    be sufficient to constitute a majority of such board,
20    notwithstanding any other provisions of such articles of
21    incorporation or of any other provisions of law; and
22        (6) that each development of such corporation shall be
23    operated exclusively for the benefit of the persons who are
24    housed in such development which shall include families or
25    persons of low or moderate income as required by this Act,
26    and that such development shall reserve for families or



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1    persons of low or moderate income the number and types of
2    dwelling units required by applicable federal or State law.
3    The requirements contained in paragraphs (2), (3), (5) and
4(6) are not mandatory in the case of loans made solely from the
5Authority's administrative fund.
6    (n) "State" means the State of Illinois.
7    (o) "Community facilities" means the land, buildings,
8improvements and equipment for land development, for health,
9welfare, recreational, social, educational and commercial
10activities, and for public, common or municipal services.
11    (p) "Sinking fund payment" means the amount of money
12specified in the resolution or resolutions authorizing term
13bonds as payable into a sinking fund during a particular period
14for the retirement of term bonds at maturity after such period,
15but shall not include any amount payable by reason only of the
16maturity of a bond.
17    (q) "Housing related commercial facilities" means
18commercial facilities which are or are to be related to a
19development. Commercial facilities are related to a
20development if they are, in the sole judgment of the Authority,
21located in the same area as the development and (i) necessary
22or desirable in order to provide services for residents of that
23area in which the development is located; or (ii) a portion of
24the revenues of the commercial facilities are to be used to
25provide funds for paying costs of construction, acquisition,
26rehabilitation, operation, maintenance of or payment of debt



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1service on the development or (iii) necessary or desirable in
2order to make the development successful, such as, without
3limitation, eliminating or preventing slum or blighted
4conditions, preserving historic structures or ensuring that
5facilities are not inconsistent with the development. For
6purposes of this Section, "commercial facilities" includes
7land, buildings, improvements, equipment and all ancillary
8facilities for use for offices, stores, retirement homes,
9hotels, financial institutions, service health care,
10education, recreation or research establishments or any other
11commercial purpose.
12    (r) "Rate protection contract" means interest rate
13exchange agreements; currency exchange agreements; forward
14payment conversion agreements; contracts providing for payment
15or receipt of funds based on levels of, or changes in, interest
16rates, currency exchange rates, stock or other indices;
17contracts to exchange cash flows or a series of payments;
18contracts, including without limitation, interest rate caps;
19interest rate floors; interest rate locks; interest rate
20collars; rate of return guarantees or assurances, to manage
21payment, currency, rate, spread or similar exposure; the
22obligation, right, or option to issue, put, lend, sell, grant a
23security interest in, buy, borrow or otherwise acquire, a bond,
24note or other security or interest therein as an investment, as
25collateral, as a hedge, or otherwise as a source or assurance
26of payment to or by the Authority or as a reduction of the



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1Authority's or an obligor's risk exposure; repurchase
2agreements; securities lending agreements; and other
3agreements or arrangements similar to the foregoing.
4    (s) "Affordable Housing Program Trust Fund Bonds or Notes"
5means bonds or notes issued by the Authority pursuant to the
6provisions of this Act for the purposes of providing affordable
7housing to low and very low income persons as provided in the
8Illinois Affordable Housing Act through the use or pledge, in
9whole or in part, of Trust Fund Moneys dedicated or otherwise
10made available to the Authority.
11    (t) "Trust Fund Moneys" has the meaning given to that term
12in Section 3 of the Illinois Affordable Housing Act.
13(Source: P.A. 87-250; 88-93.)
14    (20 ILCS 3805/8)  (from Ch. 67 1/2, par. 308)
15    Sec. 8. The Authority may, pursuant to its rules or
16regulations, or pursuant to agreements with persons to whom it
17makes mortgage or other loans, provide for methods of limiting
18profits or cash flow or other distributions available to
19limited-profit entities to whom it has made or will make such
20loans. A limited-profit entity which receives loans from the
21Authority may not make distributions in any one year with
22respect to a development financed by the Authority in excess of
236% of its equity in such development, except that the right to
24such distribution shall be cumulative. This distribution
25limitation may not be increased above 6% during the life of the



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1Authority's loan, whether the loan is outstanding on or is made
2after the effective date of this amendatory Act of 1991,
3unless, by resolution of the members, the Authority determines
4that an increase is necessary to preserve the development as
5affordable to low and moderate income persons and families or
6that an increase provides for the creation of additional units
7of housing affordable to low or moderate income persons and
8families in the development or otherwise in this State. The
9equity in a development shall consist of the difference between
10the amount of the mortgage loan and the total cost of the
11development. The total cost of the development shall include
12construction or rehabilitation costs including job overhead
13and a builder's and sponsor's profit and risk fee,
14architectural, engineering, legal and accounting costs,
15organizational expenses, land value, interest and financing
16charges paid during construction, the cost of landscaping and
17off-site improvements, whether or not such costs have been paid
18in cash or in a form other than cash. With respect to every
19development the Authority shall, by resolution, establish the
20entity's equity at the time of making of the final mortgage
21advance and, for purposes of this paragraph, that figure shall
22remain constant during the life of the Authority's loan with
23respect to such development, unless adjusted pursuant to a
24resolution of the members based on criteria set forth in the
25Authority's rules or regulations. The Authority may, pursuant
26to its rules or regulations, or pursuant to agreements with



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1persons to whom it makes mortgage or other loans, provide for
2methods of limiting profits or cash flow or other distributions
3available to the person. Such alternative methods may include,
4without limitation, a limitation which may vary from period to
5period based on changes in the costs of borrowing money and may
6be changed from time to time. Such alternative methods may be
7in lieu of the 6% limitation as provided in this Section. With
8respect to mortgage loans to limited profit entities, the
9alternative method shall be such as shall, in the sole judgment
10of the Authority, result in the lowest rents consistent with
11attracting private enterprise to acquire, construct,
12rehabilitate, operate and maintain the development. The equity
13in a development shall consist of the difference between the
14amount of the mortgage loan and the total cost of the
15development. The total cost of the development shall include
16construction or rehabilitation costs including job overhead
17and a builder's and sponsor's profit and risk fee,
18architectural, engineering, legal, and accounting costs,
19organizational expenses, land value, interest and financing
20charges paid during construction, and the cost of landscaping
21and off-site improvements, whether or not such costs have been
22paid in cash or in a form other than cash.
23(Source: P.A. 87-250.)
24    (20 ILCS 3805/10)  (from Ch. 67 1/2, par. 310)
25    Sec. 10. The Prior to making a loan commitment for a



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1development under this Act, the Authority shall approve a
2tenant selection plan submitted by the applicant for the loan
3prior to disbursing any funds in connection with the
4acquisition, rehabilitation, or construction of a development.
5The Authority shall formulate regulations from time to time
6setting forth the criteria for tenant selection plans. These
7criteria shall include income limits, which may vary with the
8size and circumstances of the family unit of tenants. The
9income limits shall be sufficiently flexible to avoid undue
10economic homogeneity among the tenants of a development. The
11Authority may formulate regulations from time to time for the
12alteration of occupancies of tenants who exceed established
13income limits. The tenant selection plan shall specify how many
14units in the development shall be held available for rentals to
15persons of low or moderate income, as defined in this Act.
16    In determining the number of units which shall be so held
17available for rental to persons of low or moderate income, the
18Authority shall require that the number of dwelling units so
19held reserved for them in each development shall not be less
20than the number required by applicable federal and State law.
21    In connection with any mortgage loan for a development, the
22Authority may enter into an agreement with the owner of the
23development as a part of the loan providing that as long as the
24loan remains outstanding or such longer period as is set forth
25in the agreement, the development shall be held available for
26such rentals. Any such agreement shall, upon being recorded in



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1the manner provided for recording of deeds or registered in the
2manner specified for registration of titles, be binding upon
3any subsequent owners of the development as provided by its
5(Source: P.A. 87-250.)
6    Section 99. Effective date. This Act takes effect upon
7becoming law.