State of Illinois
90th General Assembly
Legislation

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90_SB1043

      5 ILCS 220/15
          Amends the Intergovernmental Cooperation Act.    Provides
      that  risk  management  entities  may invest up to 50% of the
      aggregate book value of all of their investments as  measured
      at  the  time  the  investments  are  made.   Authorizes  the
      entities to invest in any combination of common and preferred
      stocks,  convertible  debt  securities,  and investment grade
      corporate bonds authorized  for  investment  of  trust  funds
      provided  that  the  stock  or convertible debt meets certain
      requirements,  commercial  grade  real  estate   located   in
      Illinois  if  the real estate is necessary to provide offices
      for   the   day-to-day    business    operations    of    the
      intergovernmental risk management entity, and mutual funds or
      commingled funds that meet certain requirements.  Removes the
      authorization for other types of investments. Provides that a
      risk  management  entity may not accept the deposit of public
      funds  except  for  risk   management   purposes.   Effective
      immediately.
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                                               LRB9000726DNmb
 1        AN  ACT to amend the Intergovernmental Cooperation Act by
 2    changing Section 15.
 3        Be it enacted by the People of  the  State  of  Illinois,
 4    represented in the General Assembly:
 5        Section  5.   The  Intergovernmental  Cooperation  Act is
 6    amended by changing Section 15 as follows:
 7        (5 ILCS 220/15)
 8        Sec. 15.  Authorized investments. In  addition  to  other
 9    investments  authorized  by  law,  an  intergovernmental risk
10    management entity created under Section 6 of  this  Act  with
11    assets  of  at  least  $5,000,000  and adopting an investment
12    policy under Section 16 of this Act may invest up to  50%  of
13    the  aggregate  book  value  of  all  of  its  investments as
14    measured  at  the  time  the  investments  are  made  in  any
15    combination of the following:
16             (1)  common and  preferred  stocks  and  convertible
17        debt  securities  and  investment  grade  corporate bonds
18        authorized for investment of trust funds under  the  laws
19        of the State of Illinois, provided:
20                  (i)  the  common  stocks, except as provided in
21             subparagraph  (vi),  are  listed   on   a   national
22             securities   exchange  as  defined  in  the  federal
23             Securities Exchange Act, or quoted in  the  National
24             Association    of   Securities   Dealers   Automated
25             Quotation  System  (NASDAQ)  or   other   recognized
26             exchange  or  market  as  defined  in the investment
27             policy adopted pursuant to Section 16 of this Act;
28                  (ii)  the  securities  are  of  a   corporation
29             created  or  existing  under  the laws of the United
30             States or any state, district, or territory  of  the
31             United States;
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 1                  (iii)  the  corporation  is  not  in arrears on
 2             payment of dividends on its preferred stock;
 3                  (iv)  the book value of stock  and  convertible
 4             debt  investments  in  any one corporation shall not
 5             exceed 5% of the total investment  account  at  book
 6             value  in  which the securities are held, determined
 7             as  of  the  date  of  the   investment,   and   the
 8             investments  in  the  stock  of  any one corporation
 9             shall not exceed 5% of the total  outstanding  stock
10             of  that  corporation,  and  the  investments in the
11             convertible debt of any one  corporation  shall  not
12             exceed  5%  of the total amount of the debt that may
13             be outstanding;
14                  (v)  the   straight   preferred    stocks    or
15             convertible  preferred  stocks  and convertible debt
16             securities are issued or guaranteed by a corporation
17             whose common stock qualifies for investment  by  the
18             intergovernmental   risk   management  entity  under
19             subparagraph (i) or (vi); and
20                  (vi)  any common stocks not listed or quoted as
21             provided in subparagraph (i) above shall be  limited
22             to  the  following  types  of institutions: any bank
23             that is a member of the  Federal  Deposit  Insurance
24             Corporation  having  capital  funds  represented  by
25             capital  stock,  surplus and undivided profits of at
26             least $20,000,000; any life insurance company having
27             capital funds represented by capital stock,  special
28             surplus  funds,  and unassigned surplus totalling at
29             least  $50,000,000;  and  any   fire   or   casualty
30             insurance   company,   or  a  combination  of  those
31             companies,  having  capital  funds  represented   by
32             capital  stock,  net surplus, and voluntary reserves
33             of at least $50,000,000; the common stocks listed on
34             a recognized exchange or market;
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 1             (2)  stock  and  convertible  debt  investments,  or
 2        investment grade corporate bonds, in  or  issued  by  any
 3        corporation  the  book value of which shall not exceed 5%
 4        of the total intergovernmental risk  management  entity's
 5        investment   account   at   book  value  in  which  those
 6        securities are held, determined as of  the  date  of  the
 7        investment, provided that investments in the stock of any
 8        one   corporation  shall  not  exceed  5%  of  the  total
 9        outstanding  stock  of  the  corporation  and  that   the
10        investments   in   the   convertible   debt  of  any  one
11        corporation shall not exceed 5% of the  total  amount  of
12        such debt that may be outstanding;
13             (3)  the  straight  preferred  stocks or convertible
14        preferred stocks and convertible debt  securities  issued
15        or  guaranteed  by  a  corporation  whose common stock is
16        listed on a recognized exchange or market;
17             (2) (4)  mutual funds or commingled funds that  meet
18        the following requirements:
19                  (i)  the  mutual  fund  or  commingled  fund is
20             managed by an  investment  company  as  defined  and
21             registered  under the federal Investment Company Act
22             of 1940 and registered under the Illinois Securities
23             Law of 1953 or an investment adviser as defined  and
24             registered under the federal Investment Advisers Act
25             of 1940 and registered under the Illinois Securities
26             Law of 1953;
27                  (ii)  the mutual fund has been in operation for
28             at least 5 years; and
29                  (iii)  the  mutual fund has total net assets of
30             $250,000,000 or more; and
31                  (iv)  the fund is comprised solely of common or
32             preferred stocks, bonds, money  market  instruments,
33             or    other    types   of   investments   that   the
34             intergovernmental   risk   management   entity    is
                            -4-                LRB9000726DNmb
 1             authorized to invest in directly; and
 2             (3)  commercial  grade  real  estate  located in the
 3        State of Illinois necessary to provide  offices  for  the
 4        day-to-day  business  operations of the intergovernmental
 5        risk management entity.
 6             (5)  commercial grade real  estate  located  in  the
 7        State of Illinois.
 8        Any  investment  advisor  retained  by  the  board of the
 9    intergovernmental risk management entity must be a fiduciary,
10    who has the power to manage, acquire, or dispose of any asset
11    of  the  intergovernmental  risk   management   entity,   has
12    acknowledged  in  writing  that he or she is a fiduciary with
13    respect to the intergovernmental risk management  entity  and
14    that he or she has read and understands the intergovernmental
15    risk management entity's investment policy and will adhere to
16    all of the principles and standards set forth in that policy,
17    and is one or more of the following:
18             (i)  registered  as  an investment adviser under the
19        federal Investment Adviser Act of 1940;
20             (ii)  registered as an investment adviser under  the
21        Illinois Securities Law of 1953;
22             (iii)  a  bank, as defined in the federal Investment
23        Adviser Act of 1940;
24             (iv)  an insurance company  authorized  to  transact
25        business in this State.
26        Nothing  in  this Section shall be construed to authorize
27    an intergovernmental risk management  entity  to  accept  the
28    deposit of public funds except for risk management purposes.
29    (Source: P.A. 89-592, eff. 8-1-96.)
30        Section  99.  Effective date.  This Act takes effect upon
31    becoming law.

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