Sen. Don Harmon
Filed: 3/3/2004
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1 | AMENDMENT TO HOUSE BILL 2626
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2 | AMENDMENT NO. ______. Amend House Bill 2661 by replacing | ||||||
3 | everything after the enacting clause with the following:
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4 | "Section 1. Short title. This Act may be cited as the Bond | ||||||
5 | Issuance Expense Limitation Act. | ||||||
6 | Section 5. Definitions. For the purposes of this Act: | ||||||
7 | "Bond" or "bonds" means any general obligation bond, | ||||||
8 | revenue bond, alternate bond, refunding or advance refunding | ||||||
9 | bond, or other bond, note, or evidence of borrowing or | ||||||
10 | indebtedness issued by a public issuer. | ||||||
11 | "Bond issuance expenses" means the fees and charges payable | ||||||
12 | by the issuer, either directly or out of the bond proceeds, for | ||||||
13 | the issuance and sale of bonds. The term does not, however, | ||||||
14 | include the costs of bond insurance, capitalized interest, | ||||||
15 | credit or liquidity enhancements, interest rate swaps or | ||||||
16 | guarantees, or financial futures contracts. | ||||||
17 | "Public issuer" means the State or any of its agencies or | ||||||
18 | instrumentalities. | ||||||
19 | Section 10. Applicability. This Act applies to all bonds | ||||||
20 | issued by or through a public issuer pursuant to an authorizing | ||||||
21 | resolution or contract for issuance adopted or entered into | ||||||
22 | after the effective date of this Act, regardless of the | ||||||
23 | statute, Omnibus Bond Act, or other source of authority under |
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1 | which the issuance of those bonds is authorized. This Act does | ||||||
2 | not apply to bonds issued by a public issuer pursuant to an | ||||||
3 | authorizing resolution or contract for issuance adopted or | ||||||
4 | entered into on or before the effective date of this Act. | ||||||
5 | Section 15. Bond issuance expense limitations. | ||||||
6 | (a) Except as provided in subsection (b), bond issuance | ||||||
7 | expenses shall not exceed 0.5% of the principal amount of the | ||||||
8 | proceeds realized from the sale of the bonds. | ||||||
9 | (b) Bond issuance expenses for refunding and advance | ||||||
10 | refunding bonds shall not exceed 0.3% of the principal amount | ||||||
11 | of the proceeds realized from the sale of the refunding or | ||||||
12 | advance refunding bonds. | ||||||
13 | Section 20. Refunding bonds; net present value savings. A | ||||||
14 | public issurer may not issue refunding or advance refunding | ||||||
15 | bonds unless, before issuing the bonds, the public issurer | ||||||
16 | files with the Governor and the General Assembly a written | ||||||
17 | certification demonstrating that the issuance will result in a | ||||||
18 | net present value savings of at least 3%. | ||||||
19 | Section 25. Violation. | ||||||
20 | (a) The issuance of bonds or payment of bond issuance | ||||||
21 | expenses in violation of this Act does not invalidate the | ||||||
22 | bonds. | ||||||
23 | (b) The amount of any bond issuance expenses paid in excess | ||||||
24 | of the limitation imposed by Section 15 of this Act may be | ||||||
25 | recovered from the payee in an action brought by the public | ||||||
26 | issuer or the Illinois Attorney General. In addition, a payee | ||||||
27 | who knowingly accepts payment of bond issuance expenses in | ||||||
28 | violation of this Act shall be liable to the State for a civil | ||||||
29 | penalty of 3 times the amount in violation or $100,000, | ||||||
30 | whichever is greater. | ||||||
31 | (c) Excess payments and penalties recovered under this |
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1 | Section by the State or any of its agencies or | ||||||
2 | instrumentalities or by the Attorney General shall be deposited | ||||||
3 | into the General Revenue Fund. | ||||||
4 | Section 30. Competitive procurement. A public issuer | ||||||
5 | issuing bonds to which this Act applies must employ authorized | ||||||
6 | competitive procedures. Negotiated sale may be used only if (i) | ||||||
7 | it is permitted by the law authorizing issuance of the bonds | ||||||
8 | and (ii) it is preceded by a competitive request for proposal | ||||||
9 | procedure substantially similar to that required to be followed | ||||||
10 | by the State in the issuance of General Obligation Bonds under | ||||||
11 | Section 11 of the General Obligation Bond Act and the Illinois | ||||||
12 | Procurement Code. | ||||||
13 | Section 35. Guidance. The Governor's Office of Management | ||||||
14 | and Budget shall, upon request, provide guidance to any | ||||||
15 | potential public issuer on conforming its bond sale to the | ||||||
16 | requirements of this Act. | ||||||
17 | Section 90. The Statute on Statutes is amended by changing | ||||||
18 | Section 8 as follows:
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19 | (5 ILCS 70/8) (from Ch. 1, par. 1107)
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20 | Sec. 8. Omnibus Bond Acts.
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21 | (a) A citation to the Omnibus Bond Acts is a citation to | ||||||
22 | all of the
following Acts, collectively, as amended from time | ||||||
23 | to time: the Bond
Authorization Act, the Registered Bond Act, | ||||||
24 | the Municipal Bond Reform Act,
the Local Government Debt Reform | ||||||
25 | Act, subsection (a) of Section 1-7 of the
Property Tax | ||||||
26 | Extension Limitation Act,
subsection (a) of Section 18-190 of | ||||||
27 | the Property Tax Code,
the Uniform Facsimile Signature of | ||||||
28 | Public Officials Act, the Local Government
Bond Validity Act, | ||||||
29 | the Illinois Finance Authority Act, the Public Funds
Investment | ||||||
30 | Act, the Local
Government Credit Enhancement Act, the Local |
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1 | Government Defeasance of Debt
Law, the Intergovernmental | ||||||
2 | Cooperation Act, the Local
Government Financial Planning and | ||||||
3 | Supervision Act, the Special Assessment
Supplemental Bond and | ||||||
4 | Procedure Act, Section 12-5 of the Election Code, and
any | ||||||
5 | similar Act granting additional
omnibus bond
powers to | ||||||
6 | governmental entities generally, whether enacted before, on, | ||||||
7 | or
after the effective date of this amendatory Act of 1989.
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8 | (b) The General Assembly recognizes that the proliferation | ||||||
9 | of governmental
entities has resulted in the enactment of | ||||||
10 | hundreds of statutory provisions
relating to the borrowing and | ||||||
11 | other powers of governmental entities. The
General Assembly | ||||||
12 | addresses and has addressed problems common to all such
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13 | governmental entities so that they have equal access to the | ||||||
14 | municipal bond
market. It has been, and will continue to be, | ||||||
15 | the intention of the General
Assembly to enact legislation | ||||||
16 | applicable to governmental entities in an
omnibus fashion, as | ||||||
17 | has been done in the provisions of the Omnibus Bond Acts.
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18 | (c) It is and always has been the intention of the General | ||||||
19 | Assembly that
the Omnibus Bond Acts are and always have been | ||||||
20 | supplementary grants of
power, cumulative in nature and in | ||||||
21 | addition to any power or authority
granted in any other laws of | ||||||
22 | the State. The Omnibus Bond Acts are
supplementary grants of | ||||||
23 | power when applied in connection with any similar
grant of | ||||||
24 | power or limitation contained in any other law of the State,
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25 | whether or not the other law is enacted or amended after an | ||||||
26 | Omnibus Bond
Act or appears to be more restrictive than an | ||||||
27 | Omnibus Bond Act, unless the
General Assembly expressly | ||||||
28 | declares in such other law that a specifically
named Omnibus | ||||||
29 | Bond Act does not apply.
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30 | (c-5) Notwithstanding the other provisions of this Section | ||||||
31 | and of any other law, bonds issued after the effective date of | ||||||
32 | this amendatory Act of the 93rd General Assembly under the | ||||||
33 | authority of any of the Omnibus Bond Acts are subject to the | ||||||
34 | requirements of the Bond Issuance Expense Limitation Act.
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1 | (d) All instruments providing for the payment of money | ||||||
2 | executed
by or on behalf of any governmental entity organized | ||||||
3 | by or under
the laws of this State, including without | ||||||
4 | limitation the State, to carry
out a public governmental or | ||||||
5 | proprietary function, acting through its
corporate | ||||||
6 | authorities, or which any governmental entity has assumed or
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7 | agreed to pay, which were:
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8 | (1) issued or authorized to be issued by proceedings | ||||||
9 | adopted by such
corporate authorities before the effective | ||||||
10 | date of this amendatory Act of 1989;
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11 | (2) issued or authorized to be issued in accordance | ||||||
12 | with the procedures
set forth in or pursuant to any | ||||||
13 | authorization contained in any of the
Omnibus Bond Acts; | ||||||
14 | and
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15 | (3) issued or authorized to be issued for any purpose | ||||||
16 | authorized by the
laws of this State,
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17 | are valid and legally binding obligations of the governmental | ||||||
18 | entity
issuing such instruments, payable in accordance with | ||||||
19 | their terms.
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20 | (Source: P.A. 93-205, eff. 1-1-04.)
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21 | Section 92. The Illinois Finance Authority Act is amended | ||||||
22 | by adding Section 801-50 as follows: | ||||||
23 | (20 ILCS 3501/801-50 new) | ||||||
24 | Sec. 801-50. Bond Issuance Expense Limitation Act.
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25 | Notwithstanding any other provision of law, the issuance of | ||||||
26 | bonds under this Act is subject to the requirements of the Bond | ||||||
27 | Issuance Expense Limitation Act.
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28 | Section 94. The General Obligation Bond Act is amended by | ||||||
29 | changing Sections 8, 9, and 16 as follows:
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30 | (30 ILCS 330/8) (from Ch. 127, par. 658)
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1 | Sec. 8. Bond sale expenses; capitalized interest.
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2 | (a) Except as provided in subsection (a-5), an amount not | ||||||
3 | to exceed 0.5 percent of the
principal amount of the proceeds | ||||||
4 | of sale of each bond sale is authorized
to be used to pay the | ||||||
5 | reasonable costs of issuance and sale of State of
Illinois | ||||||
6 | general obligation bonds authorized and sold pursuant to this | ||||||
7 | Act.
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8 | (a-5) An amount not to exceed 0.3 percent of the
principal | ||||||
9 | amount of the proceeds of sale of each sale of refunding or | ||||||
10 | advance refunding bonds is authorized
to be used to pay the | ||||||
11 | reasonable costs of issuance and sale of State of
Illinois | ||||||
12 | general obligation bonds authorized and sold pursuant to this | ||||||
13 | Act. | ||||||
14 | (a-10) Notwithstanding any other provision of law, the | ||||||
15 | issuance of bonds under this Act is subject to the requirements | ||||||
16 | of the Bond Issuance Expense Limitation Act.
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17 | (b) The Bond Sale Order may provide for a portion of the | ||||||
18 | proceeds of
the bond sale, representing up to 12 months' | ||||||
19 | interest on the bonds, to be
deposited directly into the | ||||||
20 | capitalized interest account of the General
Obligation Bond | ||||||
21 | Retirement and Interest Fund.
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22 | (Source: P.A. 93-2, eff. 4-7-03.)
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23 | (30 ILCS 330/9) (from Ch. 127, par. 659)
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24 | Sec. 9. Conditions for Issuance and Sale of Bonds - | ||||||
25 | Requirements for
Bonds.
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26 | (a) Bonds shall be issued and sold from time to time, in | ||||||
27 | one or
more series, in such amounts and at such prices as may | ||||||
28 | be directed by the
Governor, upon recommendation by the | ||||||
29 | Director of the
Governor's Office of Management and Budget
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30 | Bureau of the Budget .
Bonds shall be in such form (either | ||||||
31 | coupon, registered or book entry), in
such denominations, | ||||||
32 | payable within 30 years from their date, subject to such
terms | ||||||
33 | of redemption with or without premium, bear interest payable at
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1 | such times and at such fixed or variable rate or rates, and be | ||||||
2 | dated
as shall be fixed and determined by the Director of
the
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3 | Governor's Office of Management and Budget
Bureau of the Budget
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4 | in the order authorizing the issuance and sale
of any series of | ||||||
5 | Bonds, which order shall be approved by the Governor
and is | ||||||
6 | herein called a "Bond Sale Order"; provided however, that | ||||||
7 | interest
payable at fixed or variable rates shall not exceed | ||||||
8 | that permitted in the
Bond Authorization Act, as now or | ||||||
9 | hereafter amended. Bonds shall be
payable at such place or | ||||||
10 | places, within or without the State of Illinois, and
may be | ||||||
11 | made registrable as to either principal or as to both principal | ||||||
12 | and
interest, as shall be specified in the Bond Sale Order. | ||||||
13 | Bonds may be callable
or subject to purchase and retirement or | ||||||
14 | tender and remarketing as fixed
and determined in the Bond Sale | ||||||
15 | Order.
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16 | In the case of any series of Bonds bearing interest at a | ||||||
17 | variable interest
rate ("Variable Rate Bonds"), in lieu of | ||||||
18 | determining the rate or rates at which
such series of Variable | ||||||
19 | Rate Bonds shall bear interest and the price or prices
at which | ||||||
20 | such Variable Rate Bonds shall be initially sold or remarketed | ||||||
21 | (in the
event of purchase and subsequent resale), the Bond Sale | ||||||
22 | Order may provide that
such interest rates and prices may vary | ||||||
23 | from time to time depending on criteria
established in such | ||||||
24 | Bond Sale Order, which criteria may include, without
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25 | limitation, references to indices or variations in interest | ||||||
26 | rates as may, in
the judgment of a remarketing agent, be | ||||||
27 | necessary to cause Variable Rate Bonds
of such series to be | ||||||
28 | remarketable from time to time at a price equal to their
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29 | principal amount, and may provide for appointment of a bank, | ||||||
30 | trust company,
investment bank, or other financial institution | ||||||
31 | to serve as remarketing agent
in that connection.
The Bond Sale | ||||||
32 | Order may provide that alternative interest rates or provisions
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33 | for establishing alternative interest rates, different | ||||||
34 | security or claim
priorities, or different call or amortization |
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1 | provisions will apply during
such times as Variable Rate Bonds | ||||||
2 | of any series are held by a person providing
credit or | ||||||
3 | liquidity enhancement arrangements for such Bonds as | ||||||
4 | authorized in
subsection (b) of this Section.
The Bond Sale | ||||||
5 | Order may also provide for such variable interest rates to be
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6 | established pursuant to a process generally known as an auction | ||||||
7 | rate process
and may provide for appointment of one or more | ||||||
8 | financial institutions to serve
as auction agents and | ||||||
9 | broker-dealers in connection with the establishment of
such | ||||||
10 | interest rates and the sale and remarketing of such Bonds.
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11 | (b) In connection with the issuance of any series of Bonds, | ||||||
12 | the State may
enter into arrangements to provide additional | ||||||
13 | security and liquidity for such
Bonds, including, without | ||||||
14 | limitation, bond or interest rate insurance or
letters of | ||||||
15 | credit, lines of credit, bond purchase contracts, or other
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16 | arrangements whereby funds are made available to retire or | ||||||
17 | purchase Bonds,
thereby assuring the ability of owners of the | ||||||
18 | Bonds to sell or redeem their
Bonds. The State may enter into | ||||||
19 | contracts and may agree to pay fees to persons
providing such | ||||||
20 | arrangements, but only under circumstances where the Director | ||||||
21 | of
the
Governor's Office of Management and Budget
Bureau of the | ||||||
22 | Budget certifies that he or she reasonably expects the total
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23 | interest paid or to be paid on the Bonds, together with the | ||||||
24 | fees for the
arrangements (being treated as if interest), would | ||||||
25 | not, taken together, cause
the Bonds to bear interest, | ||||||
26 | calculated to their stated maturity, at a rate in
excess of the | ||||||
27 | rate that the Bonds would bear in the absence of such
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28 | arrangements.
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29 | The State may, with respect to Bonds issued or anticipated | ||||||
30 | to be issued,
participate in and enter into arrangements with | ||||||
31 | respect to interest rate
protection or exchange agreements, | ||||||
32 | guarantees, or financial futures contracts
for the purpose of | ||||||
33 | limiting , reducing, or managing
or restricting interest rate | ||||||
34 | exposure
risk .
The authority granted under this paragraph, |
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1 | however, shall not increase the principal amount of Bonds | ||||||
2 | authorized to be issued by law. The arrangements may be | ||||||
3 | executed and delivered by the Director
of the
Governor's Office | ||||||
4 | of Management and Budget
Bureau of the Budget on behalf of the | ||||||
5 | State. Net payments for such
arrangements shall constitute | ||||||
6 | interest on the Bonds and shall be paid from the
General | ||||||
7 | Obligation Bond Retirement and Interest Fund. The Director of | ||||||
8 | the
Governor's Office of Management and Budget
Bureau of the | ||||||
9 | Budget shall at least annually certify to the Governor and
the
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10 | State Comptroller his or her estimate of the amounts of such | ||||||
11 | net payments to
be included in the calculation of interest | ||||||
12 | required to be paid by the State.
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13 | (c) Prior to the issuance of any Variable Rate Bonds | ||||||
14 | pursuant to
subsection (a), the Director of the
Governor's | ||||||
15 | Office of Management and Budget
Bureau of the Budget shall | ||||||
16 | adopt an
interest rate risk management policy providing that | ||||||
17 | the amount of the State's
variable rate exposure with respect | ||||||
18 | to Bonds shall not exceed 20%. This policy
shall remain in | ||||||
19 | effect while any Bonds are outstanding and the issuance of
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20 | Bonds
shall be subject to the terms of such policy. The terms | ||||||
21 | of this policy may be
amended from time to time by the Director | ||||||
22 | of the
Governor's Office of Management and Budget
Bureau of the | ||||||
23 | Budget but in no
event shall any amendment cause the permitted | ||||||
24 | level of the State's variable
rate exposure with respect to | ||||||
25 | Bonds to exceed 20%.
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26 | (Source: P.A. 92-16, eff. 6-28-01; 93-9, eff. 6-3-03; revised | ||||||
27 | 8-23-03.)
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28 | (30 ILCS 330/16) (from Ch. 127, par. 666)
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29 | Sec. 16. Refunding Bonds. The State of Illinois is | ||||||
30 | authorized to issue,
sell, and provide for the retirement of | ||||||
31 | General Obligation Bonds of the State
of Illinois in the amount | ||||||
32 | of $2,839,025,000, at any time and
from time to time | ||||||
33 | outstanding, for the purpose of refunding
any State of Illinois |
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1 | general obligation Bonds then outstanding, including
the | ||||||
2 | payment of any redemption premium thereon, any reasonable | ||||||
3 | expenses of
such refunding (subject to the requirements of the | ||||||
4 | Bond Expense Limitation Act) , any interest accrued or to accrue | ||||||
5 | to the earliest
or any subsequent date of redemption or | ||||||
6 | maturity of such outstanding
Bonds and any interest to accrue | ||||||
7 | to the first interest payment on the
refunding Bonds; provided | ||||||
8 | that such refunding Bonds shall mature no later
than the final | ||||||
9 | maturity date of Bonds being refunded.
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10 | Refunding Bonds may be sold from time to time pursuant to | ||||||
11 | notice of sale
and public bid or by negotiated sale in such | ||||||
12 | amounts and at such times, as
directed by the Governor, upon | ||||||
13 | recommendation by the Director of the
Governor's Office of | ||||||
14 | Management and Budget
Bureau
of the Budget . The Governor shall | ||||||
15 | notify the State Treasurer and
Comptroller of such refunding. | ||||||
16 | The proceeds received from the sale
of refunding Bonds shall be | ||||||
17 | used for the retirement at maturity or
redemption of such | ||||||
18 | outstanding Bonds on any maturity or redemption date
and, | ||||||
19 | pending such use, shall be placed in escrow, subject to such | ||||||
20 | terms and
conditions as shall be provided for in the Bond Sale | ||||||
21 | Order relating to the
Refunding Bonds. Proceeds not needed for | ||||||
22 | deposit in an escrow account shall
be deposited in the General | ||||||
23 | Obligation Bond Retirement and Interest Fund.
This Act shall | ||||||
24 | constitute an irrevocable and continuing appropriation of all
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25 | amounts necessary to establish an escrow account for the | ||||||
26 | purpose of refunding
outstanding general obligation Bonds and | ||||||
27 | to pay the reasonable expenses of such
refunding and of the | ||||||
28 | issuance and sale of the refunding Bonds. Any such
escrowed | ||||||
29 | proceeds may be invested and reinvested
in direct obligations | ||||||
30 | of the United States of America, maturing at such
time or times | ||||||
31 | as shall be appropriate to assure the
prompt payment, when due, | ||||||
32 | of the principal of and interest and redemption
premium, if | ||||||
33 | any,
on the refunded Bonds. After the terms of the escrow have | ||||||
34 | been fully
satisfied, any remaining balance of such proceeds |
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1 | and interest, income and
profits earned or realized on the | ||||||
2 | investments thereof shall be paid into
the General Revenue | ||||||
3 | Fund. The liability of the State upon the Bonds shall
continue, | ||||||
4 | provided that the holders thereof shall thereafter be entitled | ||||||
5 | to
payment only out of the moneys deposited in the escrow | ||||||
6 | account.
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7 | Except as otherwise herein provided in this Section, such | ||||||
8 | refunding Bonds
shall in all other respects be subject to the | ||||||
9 | terms and conditions of this Act.
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10 | (Source: P.A. 91-39, eff. 6-15-99; 91-53, eff. 6-30-99; 91-710, | ||||||
11 | eff.
5-17-00; revised 8-23-03.)
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12 | Section 98. The Build Illinois Bond Act is amended by | ||||||
13 | changing Section 5 as follows:
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14 | (30 ILCS 425/5) (from Ch. 127, par. 2805)
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15 | Sec. 5. Bond Sale Expenses. An amount necessary to pay the
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16 | reasonable costs of each issuance and sale of Bonds authorized | ||||||
17 | and sold
pursuant to this Act, including advertising, printing, | ||||||
18 | bond rating, travel,
security, delivery, legal and financial | ||||||
19 | advisory services, insurance, initial fees
of trustees, | ||||||
20 | registrars, paying agents and other fiduciaries, initial costs
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21 | of credit or liquidity enhancement arrangements, initial fees | ||||||
22 | of indexing
and remarketing agents, and initial costs of | ||||||
23 | interest rate swaps,
guarantees or arrangements to limit | ||||||
24 | interest rate risk, as determined in
the related Bond Sale | ||||||
25 | Order,
is hereby authorized to be paid from the proceeds of | ||||||
26 | each Bond sale.
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27 | Notwithstanding any other provision of law, the issuance of | ||||||
28 | bonds under this Act is subject to the requirements of the Bond | ||||||
29 | Issuance Expense Limitation Act.
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30 | (Source: P.A. 84-111.)
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31 | Section 99. Effective date. This Act takes effect upon |
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1 | becoming law.".
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