[ Search ] [ PDF text ] [ Legislation ]
[ Home ] [ Back ] [ Bottom ]
| [ Introduced ] | [ Engrossed ] | [ House Amendment 002 ] |
| [ House Amendment 003 ] | [ Senate Amendment 001 ] |
92_HB2277enr HB2277 Enrolled LRB9205634MWcd 1 AN ACT in relation to local government bonds. 2 Be it enacted by the People of the State of Illinois, 3 represented in the General Assembly: 4 Section 5. The Local Government Debt Reform Act is 5 amended by changing Sections 3, 9, 15, 16.5, and 17 and by 6 adding Section 5.5 as follows: 7 (30 ILCS 350/3) (from Ch. 17, par. 6903) 8 Sec. 3. Definitions. In this Act words or terms shall 9 have the following meanings unless the context or usage 10 clearly indicates that another meaning is intended. 11 (a) "Alternate bonds" means bonds issued in lieu of 12 revenue bonds or payable from a revenue source as provided in 13 Section 15. 14 (b) "Applicable law" means any provision of law, 15 including this Act, authorizing governmental units to issue 16 bonds. 17 (c) "Backdoor referendum" means the submission of a 18 public question to the voters of a governmental unit, 19 initiated by a petition of voters, residents or property 20 owners of such governmental unit, to determine whether an 21 action by the governing body of such governmental unit shall 22 be effective, adopted or rejected. 23 (d) "Bond" means any instrument evidencing the 24 obligation to pay money authorized or issued by or on behalf 25 of a governmental unit under applicable law, including 26 without limitation, bonds, notes, installment or financing 27 contracts, leases, certificates, tax anticipation warrants or 28 notes, vouchers, and any other evidences of indebtedness. 29 (e) "Debt service" on bonds means the amount of 30 principal, interest and premium, if any, when due either at 31 stated maturity or upon mandatory redemption. HB2277 Enrolled -2- LRB9205634MWcd 1 (f) "Enterprise revenues" means the revenues of a 2 utility or revenue producing enterprise from which revenue 3 bonds may be payable. 4 (g) "General obligation bonds" means bonds of a 5 governmental unit for the payment of which the governmental 6 unit is empowered to levy ad valorem property taxes upon all 7 taxable property in a governmental unit without limitation as 8 to rate or amount. 9 (h) "Governing body" means the legislative body, 10 council, board, commission, trustees, or any other body, by 11 whatever name it is known, having charge of the corporate 12 affairs of a governmental unit. 13 (h-5) "Governmental revenue source" means a revenue 14 source that is either (1) federal or State funds that the 15 governmental unit has received in some amount during each of 16 the 3 fiscal years preceding the issuance of alternate bonds 17 or (2) revenues to be received from another governmental unit 18 under an intergovernmental cooperation agreement. 19 (i) "Governmental unit" means a county, township, 20 municipality, municipal corporation, unit of local 21 government, school district, special district, public 22 corporation, body corporate and politic, forest preserve 23 district, fire protection district, conservation district, 24 park district, sanitary district, and all other local 25 governmental agencies, including any entity created by 26 intergovernmental agreement among any of the foregoing 27 governmental units, but does not include any office, officer, 28 department, division, bureau, board, commission, university, 29 or similar agency of the State. 30 (j) "Ordinance" means an ordinance duly adopted by a 31 governing body or, if appropriate under applicable law, a 32 resolution so adopted. 33 (k) "Revenue bonds" means any bonds of a governmental 34 unit other than general obligation bonds, but "revenue bonds" HB2277 Enrolled -3- LRB9205634MWcd 1 does include any debt authorized under Section 11-29.3-1 of 2 the Illinois Municipal Code. 3 (l) "Revenue source" means a source of funds, other than 4 enterprise revenues, received or available to be received by 5 a governmental unit and available for any one or more of its 6 corporate purposes. 7 (m) "Limited bonds" means bonds, excluding leases, 8 notes, installment or financing contracts, certificates, tax 9 anticipation warrants or notes, vouchers, and any other 10 evidences of indebtedness, issued under Section 15.01 of this 11 Act. 12 (Source: P.A. 89-385, eff. 8-18-95; 89-658, eff. 1-1-97.) 13 (30 ILCS 350/5.5 new) 14 Sec. 5.5. Notices. 15 (a) Whenever applicable law requires notice in 16 connection with the issuance of bonds, the notice shall be 17 sufficient if the notice appears above the name or title of 18 the person required to give the notice. 19 (b) Whenever applicable law requires any notice of a 20 hearing or meeting held in connection with the issuance of 21 bonds to be supplied to the members of the governing body or 22 news media, such notice may be supplied by facsimile 23 transmission (commonly referred to as fax) or electronic 24 transmission (commonly referred to as e-mail). 25 (30 ILCS 350/9) (from Ch. 17, par. 6909) 26 Sec. 9. Provisions for interest. (a) The proceeds of 27 bonds may be used to provide for the payment of interest upon 28 such bonds for a period not to exceed the greater of 2 years 29 or a period ending 6 months after the estimated date of 30 completion of the acquisition and construction of the project 31 or accomplishment of the purpose for which such bonds are 32 issued. HB2277 Enrolled -4- LRB9205634MWcd 1 (b) In addition it shall be lawful for the governing 2 body of any governmental unit issuing bonds to appropriate 3 money for the purpose of paying interest on such bonds during 4 the period stated in subsection (a) of this Section. Such 5 appropriation may be made in the ordinance authorizing such 6 bonds and shall be fully effective upon the effective date of 7 such ordinance without any further notice, publication or 8 approval whatsoever. 9 (c) The governing body of any governmental unit may 10 authorize the transfer of interest earned on any of the 11 moneys of the governmental unit, including moneys set aside 12 to pay debt service, into the fund of the governmental unit 13 that is most in need of the interest. This subsection does 14 not apply to any interest earned that has been earmarked or 15 restricted by the governing body for a designated purpose. 16 This subsection does not apply to any interest earned on any 17 funds for the purpose of municipal retirement under the 18 Illinois Pension Code and tort immunity under the Local 19 Governmental and Governmental Employees Tort Immunity Act. 20 Interest earned on those funds may be used only for the 21 purposes authorized for the respective funds from which the 22 interest earnings were derived. 23 (Source: P.A. 85-1419.) 24 (30 ILCS 350/15) (from Ch. 17, par. 6915) 25 Sec. 15. Double-barrelled bonds. Whenever revenue bonds 26 have been authorized to be issued pursuant to applicable law 27 or whenever there exists for a governmental unit a revenue 28 source, the procedures set forth in this Section may be used 29 by a governing body. General obligation bonds may be issued 30 in lieu of such revenue bonds as authorized, and general 31 obligation bonds may be issued payable from any revenue 32 source. Such general obligation bonds may be referred to as 33 "alternate bonds". Alternate bonds may be issued without any HB2277 Enrolled -5- LRB9205634MWcd 1 referendum or backdoor referendum except as provided in this 2 Section, upon the terms provided in Section 10 of this Act 3 without reference to other provisions of law, but only upon 4 the conditions provided in this Section. Alternate bonds 5 shall not be regarded as or included in any computation of 6 indebtedness for the purpose of any statutory provision or 7 limitation except as expressly provided in this Section. 8 Such conditions are: 9 (a) Alternate bonds shall be issued for a lawful 10 corporate purpose. If issued in lieu of revenue bonds, 11 alternate bonds shall be issued for the purposes for which 12 such revenue bonds shall have been authorized. If issued 13 payable from a revenue source in the manner hereinafter 14 provided, which revenue source is limited in its purposes or 15 applications, then the alternate bonds shall be issued only 16 for such limited purposes or applications. Alternate bonds 17 may be issued payable from either enterprise revenues or 18 revenue sources, or both. 19 (b) Alternate bonds shall be subject to backdoor 20 referendum. The provisions of Section 5 of this Act shall 21 apply to such backdoor referendum, together with the 22 provisions hereof. The authorizing ordinance shall be 23 published in a newspaper of general circulation in the 24 governmental unit. Along with or as part of the authorizing 25 ordinance, there shall be published a notice of (1) the 26 specific number of voters required to sign a petition 27 requesting that the issuance of the alternate bonds be 28 submitted to referendum, (2) the time when such petition must 29 be filed, (3) the date of the prospective referendum, and 30 (4), with respect to authorizing ordinances adopted on or 31 after January 1, 1991, a statement that identifies any 32 revenue source that will be used to pay debt servicethe33principal of and intereston the alternate bonds. The clerk 34 or secretary of the governmental unit shall make a petition HB2277 Enrolled -6- LRB9205634MWcd 1 form available to anyone requesting one. If no petition is 2 filed with the clerk or secretary within 30 days of 3 publication of the authorizing ordinance and notice, the 4 alternate bonds shall be authorized to be issued. But if 5 within this 30 days period, a petition is filed with such 6 clerk or secretary signed by electors numbering the greater 7 of (i) 7.5% of the registered voters in the governmental unit 8 or (ii) 200 of those registered voters or 15% of those 9 registered voters, whichever is less, asking that the 10 issuance of such alternate bonds be submitted to referendum, 11 the clerk or secretary shall certify such question for 12 submission at an election held in accordance with the general 13 election law. The question on the ballot shall include a 14 statement of any revenue source that will be used to pay debt 15 servicethe principal of and intereston the alternate bonds. 16 The alternate bonds shall be authorized to be issued if a 17 majority of the votes cast on the question at such election 18 are in favor thereof provided that notice of the bond 19 referendum, if held before July 1, 1999, has been given in 20 accordance with the provisions of Section 12-5 of the 21 Election Code in effect at the time of the bond referendum, 22 at least 10 and not more than 45 days before the date of the 23 election, notwithstanding the time for publication otherwise 24 imposed by Section 12-5. Notices required in connection with 25 the submission of public questions on or after July 1, 1999 26 shall be as set forth in Section 12-5 of the Election Code. 27 Backdoor referendum proceedings for bonds and alternate bonds 28 to be issued in lieu of such bonds may be conducted at the 29 same time. 30 (c) To the extent payable from enterprise revenues, such 31 revenues shall have been determined by the governing body to 32 be sufficient to provide for or pay in each year to final 33 maturity of such alternate bonds all of the following: (1) 34 costs of operation and maintenance of the utility or HB2277 Enrolled -7- LRB9205634MWcd 1 enterprise, but not including depreciation, (2) debt service 2 on all outstanding revenue bonds payable from such enterprise 3 revenues, (3) all amounts required to meet any fund or 4 account requirements with respect to such outstanding revenue 5 bonds, (4) other contractual or tort liability obligations, 6 if any, payable from such enterprise revenues, and (5) in 7 each year, an amount not less than 1.25 times debt service of 8 all (i) alternate bonds payable from such enterprise revenues 9 previously issued and outstanding and (ii) alternate bonds 10 proposed to be issued. To the extent payable from one or more 11 revenue sources, such sources shall have been determined by 12 the governing body to provide in each year, an amount not 13 less than 1.25 times debt service of all alternate bonds 14 payable from such revenue sources previously issued and 15 outstanding and alternate bonds proposed to be issued. The 16 1.25 figure in the preceding sentence shall be reduced to 17 1.10 if the revenue source is a governmental revenue source. 18 The conditions enumerated in this subsection (c) need not be 19 met for that amount of debt service provided for by the 20 setting aside of proceeds of bonds or other moneys at the 21 time of the delivery of such bonds. 22 (c-1) In the case of alternate bonds issued as variable 23 rate bonds (including refunding bonds), debt service shall be 24 projected based on the rate for the most recent date shown in 25 the 20 G.O. Bond Index of average municipal bond yields as 26 published in the most recent edition of The Bond Buyer 27 published in New York, New York (or any successor publication 28 or index, or if such publication or index is no longer 29 published, then any index of long-term municipal tax-exempt 30 bond yields selected by the governmental unit), as of the 31 date of determination referred to in subsection (c) of this 32 Section. Any interest or fees that may be payable to the 33 provider of a letter of credit, line of credit, surety bond, 34 bond insurance, or other credit enhancement relating to such HB2277 Enrolled -8- LRB9205634MWcd 1 alternate bonds and any fees that may be payable to any 2 remarketing agent need not be taken into account for purposes 3 of such projection. If the governmental unit enters into an 4 agreement in connection with such alternate bonds at the time 5 of issuance thereof pursuant to which the governmental unit 6 agrees for a specified period of time to pay an amount 7 calculated at an agreed-upon rate or index based on a 8 notional amount and the other party agrees to pay the 9 governmental unit an amount calculated at an agreed-upon rate 10 or index based on such notional amount, interest shall be 11 projected for such specified period of time on the basis of 12 the agreed-upon rate payable by the governmental unit. 13 (d) The determination of the sufficiency of enterprise 14 revenues or a revenue source, as applicable, shall be 15 supported by reference to the most recent audit of the 16 governmental unit, which shall be for a fiscal year ending 17 not earlier than 18 months previous to the time of issuance 18 of the alternate bonds. If such audit does not adequately 19 show such enterprise revenues or revenue source, as 20 applicable, or if such enterprise revenues or revenue source, 21 as applicable, are shown to be insufficient, then the 22 determination of sufficiency shall be supported by the report 23 of an independent accountant or feasibility analyst, the 24 latter having a national reputation for expertise in such 25 matters, demonstrating the sufficiency of such revenues and 26 explaining, if appropriate, by what means the revenues will 27 be greater than as shown in the audit. Whenever such 28 sufficiency is demonstrated by reference to a schedule of 29 higher rates or charges for enterprise revenues or a higher 30 tax imposition for a revenue source, such higher rates, 31 charges or taxes shall have been properly imposed by an 32 ordinance adopted prior to the time of delivery of alternate 33 bonds. The reference to and acceptance of an audit or 34 report, as the case may be, and the determination of the HB2277 Enrolled -9- LRB9205634MWcd 1 governing body as to sufficiency of enterprise revenues or a 2 revenue source shall be conclusive evidence that the 3 conditions of this Section have been met and that the 4 alternate bonds are valid. 5 (e) The enterprise revenues or revenue source, as 6 applicable, shall be in fact pledged to the payment of the 7 alternate bonds; and the governing body shall covenant, to 8 the extent it is empowered to do so, to provide for, collect 9 and apply such enterprise revenues or revenue source, as 10 applicable, to the payment of the alternate bonds and the 11 provision of not less than an additional .25 (or .10 for 12 governmental revenue sources) times debt service. The pledge 13 and establishment of rates or charges for enterprise 14 revenues, or the imposition of taxes in a given rate or 15 amount, as provided in this Section for alternate bonds, 16 shall constitute a continuing obligation of the governmental 17 unit with respect to such establishment or imposition and a 18 continuing appropriation of the amounts received. All 19 covenants relating to alternate bonds and the conditions and 20 obligations imposed by this Section are enforceable by any 21 bondholder of alternate bonds affected, any taxpayer of the 22 governmental unit, and the People of the State of Illinois 23 acting through the Attorney General or any designee, and in 24 the event that any such action results in an order finding 25 that the governmental unit has not properly set rates or 26 charges or imposed taxes to the extent it is empowered to do 27 so or collected and applied enterprise revenues or any 28 revenue source, as applicable, as required by this Act, the 29 plaintiff in any such action shall be awarded reasonable 30 attorney's fees. The intent is that such enterprise revenues 31 or revenue source, as applicable, shall be sufficient and 32 shall be applied to the payment of debt service on such 33 alternate bonds so that taxes need not be levied, or if 34 levied need not be extended, for such payment. Nothing in HB2277 Enrolled -10- LRB9205634MWcd 1 this Section shall inhibit or restrict the authority of a 2 governing body to determine the lien priority of any bonds, 3 including alternate bonds, which may be issued with respect 4 to any enterprise revenues or revenue source. 5 In the event that alternate bonds shall have been issued 6 and taxes, other than a designated revenue source, shall have 7 been extended pursuant to the general obligation, full faith 8 and credit promise supporting such alternate bonds, then the 9 amount of such alternate bonds then outstanding shall be 10 included in the computation of indebtedness of the 11 governmental unit for purposes of all statutory provisions or 12 limitations until such time as an audit of the governmental 13 unit shall show that the alternate bonds have been paid from 14 the enterprise revenues or revenue source, as applicable, 15 pledged thereto for a complete fiscal year. 16 Alternate bonds may be issued to refund or advance refund 17 alternate bonds without meeting any of the conditions set 18 forth in this Section, except that the term of the refunding 19 bonds shall not be longer than the term of the refunded bonds 20 and that the debt service payable in any year on the 21 refunding bonds shall not exceed the debt service payable in 22 such year on the refunded bonds. 23 Once issued, alternate bonds shall be and forever remain 24 until paid or defeased the general obligation of the 25 governmental unit, for the payment of which its full faith 26 and credit are pledged, and shall be payable from the levy of 27 taxes as is provided in this Act for general obligation 28 bonds. 29 The changes made by this amendatory Act of 1990 do not 30 affect the validity of bonds authorized before September 1, 31 1990. 32 (Source: P.A. 90-812, eff. 1-26-99; 91-57, eff. 6-30-99; 33 91-493, eff. 8-13-99; 91-868, eff. 6-22-00.) HB2277 Enrolled -11- LRB9205634MWcd 1 (30 ILCS 350/16.5) 2 Sec. 16.5. Proposition for bonds. For all elections 3 held after July 1, 2000, the form of a proposition to 4 authorize the issuance of bonds pursuant to either a 5 referendum or backdoor referendum may be as set forth in this 6 Section as an alternative to the form of proposition as 7 otherwise set forth by applicable law. The proposition 8 authorized by this Section shall be in substantially the 9 following form: 10 Shall (name of governmental unit) (state purpose for 11 the bond issue) and issue its bonds to the amount of $ 12 (state amount) for the purpose of paying the costs 13 thereof? 14 If a school district expects to receive a school 15 construction grant from the State of Illinoishas received a16grant entitlement from the Illinois State Board of Education17 pursuant to the School Construction Law for a school 18 construction project to be financed in part with proceeds of 19 a bond authorized by referendum, then the form of proposition 20 may at the option of the school district additionally contain 21 substantially the following language: 22 (Name of school district) expects to receive a 23 school construction grant from the State of Illinoishas24received a grant entitlementin the amount of $ (state 25 amount)from the Illinois State Board of Education26 pursuant to the School Construction Law for the school 27 construction project to be financed in part with proceeds 28 of the bonds, based on (i) a grant entitlement from the 29 State Board of Education and (ii) current recognized 30 project costs determined by the Capital Development 31 Board. 32 (Source: P.A. 91-868, eff. 6-22-00.) 33 (30 ILCS 350/17) (from Ch. 17, par. 6917) HB2277 Enrolled -12- LRB9205634MWcd 1 Sec. 17. Leases and installment contracts. 2 (a) Interest not debt; debt on leases and installment 3 contracts. Interest on bonds shall not be included in any 4 computation of indebtedness of a governmental unit for the 5 purpose of any statutory provision or limitation. For bonds 6 consisting of leases and installment or financing contracts, 7 (1) that portion of payments made by a governmental unit 8 under the terms of a bond designated as interest in the bond 9 or the ordinance authorizing such bond shall be treated as 10 interest for purposes of this Section (2) where portions of 11 payments due under the terms of a bond have not been 12 designated as interest in the bond or the ordinance 13 authorizing such bond, and all or a portion of such payments 14 is to be used for the payment of principal of and interest on 15 other bonds of the governmental unit or bonds issued by 16 another unit of local government, such as a public building 17 commission, the payments equal to interest due on such 18 corresponding bonds shall be treated as interest for purposes 19 of this Section and (3) where portions of payments due under 20 the terms of a bond have not been designated as interest in 21 the bond or ordinance authorizing such bond and no portion of 22 any such payment is to be used for the payment of principal 23 of and interest on other bonds of the governmental unit or 24 another unit of local government, a portion of each payment 25 due under the terms of such bond shall be treated as interest 26 for purposes of this Section; such portion shall be equal in 27 amount to the interest that would have been paid on a 28 notional obligation of the governmental unit (bearing 29 interest at the highest rate permitted by law for bonds of 30 the governmental unit at the time the bond was issued or, if 31 no such limit existed, 12%) on which the payments of 32 principal and interest were due at the same times and in the 33 same amounts as payments are due under the terms of the 34 bonds. The rule set forth in this Section shall be HB2277 Enrolled -13- LRB9205634MWcd 1 applicable to all interest no matter when earned or accrued 2 or at what interval paid, and whether or not a bond bears 3 interest which compounds at certain intervals. For purposes 4 of bonds sold at amounts less than 95% of their stated value 5 at maturity, interest for purposes of this Section includes 6 the difference between the amount set forth on the face of 7 the bond as the original principal amount and the bond's 8 stated value at maturity. 9 This subsection may be made applicable to bonds issued 10 prior to the effective date of this Act by passage of an 11 ordinance to such effect by the governing body of a 12 governmental unit. 13 (b) Purchase or lease of property. The governing body 14 of each governmental unit may purchase or lease either real 15 or personal property, including investments, investment 16 agreements, or investment services, through agreements that 17 provide that the consideration for the purchase or lease may 18 be paid through installments made at stated intervals for a 19 period of no more than 20 years or another period of time 20 authorized by law, whichever is greater; provided, however, 21 that investments, investment agreements, or investment 22 services purchased in connection with a bond issue may be 23 paid through installments made at stated intervals for a 24 period of time not in excess of the maximum term of such bond 25 issue. Each governmental unit may issue certificates 26 evidencing the indebtedness incurred under the lease or 27 agreement. The governing body may provide for the treasurer, 28 comptroller, finance officer, or other officer of the 29 governing body charged with financial administration to act 30 as counter-party to any such lease or agreement, as nominee 31 lessor or seller. When the lease or agreement is executed by 32 the officer of the governmental unit authorized by the 33 governing body to bind the governmental unit thereon by the 34 execution thereof and is filed with and executed by the HB2277 Enrolled -14- LRB9205634MWcd 1 nominee lessor or seller, the lease or agreement shall be 2 sufficiently executed so as to permit the governmental unit 3 to issue certificates evidencing the indebtedness incurred 4 under the lease or agreement. The certificates shall be 5 valid whether or not an appropriation with respect thereto is 6 included in any annual or supplemental budget adopted by the 7 governmental unit. From time to time, as the governing body 8 executes contracts for the purpose of acquiring and 9 constructing the services or real or personal property that 10 is a part of the subject of the lease or agreement, including 11 financial, legal, architectural, and engineering services 12 related to the lease or agreement, the governing body shall 13 order the contracts filed with its nominee officer, and that 14 officer shall identify the contracts to the lease or 15 agreement; that identification shall permit the payment of 16 the contract from the proceeds of the certificates; and the 17 nominee officer shall duly apply or cause to be applied 18 proceeds of the certificates to the payment of the contracts. 19 The governing body of each governmental unit may sell, lease, 20 convey, and reacquire either real or personal property, or 21 any interest in real or personal property, upon any terms and 22 conditions and in any manner, as the governing body shall 23 determine, if the governmental unit will lease, acquire by 24 purchase agreement, or otherwise reacquire the property, as 25 authorized by this subsection or any other applicable law. 26 All indebtedness incurred under this subsection, when 27 aggregated with the existing indebtedness of the governmental 28 unit, may not exceed the debt limits provided by applicable 29 law. 30 (Source: P.A. 91-493, eff. 8-13-99; 91-868, eff. 6-22-00.) 31 Section 99. Effective date. This Act takes effect upon 32 becoming law.