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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.
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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"
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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.
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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
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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 service the
33 principal of and interest on the alternate bonds. The clerk
34 or secretary of the governmental unit shall make a petition
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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 service the principal of and interest on 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
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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
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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
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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
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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.)
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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 Illinois has received a
16 grant entitlement from the Illinois State Board of Education
17 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 Illinois has
24 received a grant entitlement in the amount of $ (state
25 amount) from the Illinois State Board of Education
26 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)
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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
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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
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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.
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