SB0566 94TH GENERAL ASSEMBLY

LRB094 10676 BDD 41048 b

94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
SB0566

Introduced 2/17/2005, by Sen. Louis S. Viverito

SYNOPSIS AS INTRODUCED:

New Act

Creates the Energy Infrastructure Authority Act. Establishes the Illinois Energy Infrastructure Authority for the purpose of (i) planning, financing, constructing, developing, acquiring, maintaining, and operating electric transmission facilities and (ii) financing certain energy-related projects not owned by the Authority. Sets forth requirements for the creation and operation of the Board of Directors of the Authority. Sets forth the powers of the Authority. Provides that the Authority may not compete with private persons concerning electric transmission facilities. Authorizes the Authority to issue revenue bonds in connection with both Authority-owned and privately-owned facilities and projects and sets forth requirements for those bonds. Effective July 1, 2005.

FISCAL NOTE ACT MAY APPLY

STATE DEBT IMPACT NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning State government.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

ARTICLE 1. GENERAL PROVISIONS

Section 1-1. Short title. This Act may be cited as the Energy Infrastructure Authority Act.

Section 1-5. Legislative purpose. The purpose for which the Authority is created is the diversification and expansion of the State economy through improvements in the State's electric transmission infrastructure and to facilitate the consumption of Illinois energy by planning, financing, constructing, developing, acquiring, maintaining, and operating electric transmission facilities and related supporting infrastructure and undivided or other interests therein to facilitate the transmission of energy. In order to provide for the financing, construction, development, maintenance, upgrade, and operation of existing and new electric transmission facilities, the Authority may own, lease, or rent facilities constructed under the powers conferred under this Act and all facilities, structures, and properties incidental and necessary thereto in order to facilitate the transmission of energy.

Section 1-10. Definitions. As used in this Act:

"Authority" means the Illinois Energy Infrastructure Authority created under Section 5-5 of this Act.

"Board" means the Board of Directors of the Authority.

"Facilities" means electric transmission facilities and related supporting infrastructure, including any interests therein.

"Person" means any individual, corporation, partnership, firm, organization, or association, acting individually or as a group.

ARTICLE 5. ILLINOIS ENERGY INFRASTRUCTURE AUTHORITY

Section 5-5. Authority created; composition and operation of Board of Directors.

(a) There is created the Illinois Energy Infrastructure Authority, which is a political subdivision, body politic, and municipal corporation.

(b) The Authority is governed and administered by a Board of Directors, composed of 5 members appointed by the Governor, with the advice and consent of the Senate. The directors of the initial Board shall be appointed for staggered terms as follows: 2 members for terms of one year each; one member serving for a term of 2 years; one member serving for a term of 3 years; and one member, who shall serve as chair of the Board, serving for a term of 4 years, as designated at the time of appointment. Thereafter all members shall be appointed for 4-year terms.

A majority of persons appointed and serving as members must be qualified voters of the State of Illinois with special knowledge, as evidenced by (i) college degrees or courses or (ii) at least 5 years experience in managerial positions, in the field of electric transmission or generation development or natural gas or coal production, transportation, marketing, or industrial or municipal consumption. The members shall elect from the membership a vice-chairman and secretary. The Governor may remove any member in case of incompetence, neglect of duty, or malfeasance in office. Vacancies shall be filled in the same manner as the initial appointment. Board members shall serve without compensation, but may be reimbursed for their reasonable travel expenses from funds available for that purpose.

(c) Any agency, board, commission, department, or institution of the State and the governing authorities of political subdivisions may make surveys, reports, and investigations and furnish records, information, and other assistance and advice as may be required by the Authority.

Section 5-10. Powers of the Authority.

(a) In exercising the rights and powers granted to it, the Authority may:

(i) employ officers, agents, and employees as it deems necessary for the performance of its powers and duties and prescribe the powers and duties and fix the compensation of the officers, agents, and employees;

(ii) contract, upon terms as it may agree upon, for legal, financial, engineering, and other professional services necessary or expedient in the conduct of its affairs;

(iii) use the services of executive departments of the State upon mutually agreeable terms and conditions;

(iv) plan, finance, construct, develop, acquire, own, maintain, and operate within and outside the State of Illinois, property, structures, equipment, facilities, and works of public improvement necessary or useful for the accomplishment of the purposes for which the Authority was created, including the obtaining of permits and the acquisition of rights of way;

(v) acquire by condemnation within the State of Illinois any properties necessary or useful for its purposes, provided the Authority does not have the power to condemn mineral leases, gas supplies, gas reserves, oil refineries, existing electric transmission, distribution, and generation facilities, minerals, water rights, mineral rights, or pipelines used in connection therewith;

(vi) receive by gift, grant, donation, or otherwise, any sum of money, aid, or assistance from the United States, the State of Illinois, any political subdivision, or any other public or private entity;

(vii) provide light, water, communications, security, and other services for its facilities as it deems advisable;

(viii) after consultation with the Illinois Commerce Commission and any other relevant governmental Authority, establish and charge reasonable fees, rates, tariffs, or other charges for the use of all facilities administered by the Authority and for all services rendered by it;

(ix) in whole or in part, operate, lease, rent, and dispose of facilities constructed pursuant to the authority conferred herein, and all facilities, structures, and properties incidental and necessary thereto;

(x) investigate, plan, prioritize, and establish corridors for the transmission of electricity;

(xi) enter into partnerships with public or private entities; and

(xii) do any and all things necessary or proper for the development, regulation, and accomplishment of the purposes of the Authority within the limitations of authority granted by this Act.

(b) Except as provided in this subsection, the Authority may not exercise any of the rights or powers granted to it under this Act to plan, finance, construct, develop, acquire, maintain, or operate a facility if a private person (i) is performing those acts, constructing or has constructed the facility, or is providing the services contemplated by the Authority, and (ii) is willing to finance and own new infrastructure to meet an identified need and market.

Prior to exercising any rights or powers granted to it in this Act, the Authority must publish in a newspaper of general circulation in Chicago, Springfield, and the area where the facilities or services are contemplated, a notice (i) describing the acts, facilities, or services contemplated by the Authority, and (ii) stating that private persons willing and able to perform the acts, finance and own, and construct the facilities, or provide the services described in the notice shall have a period of 30 days after the date of last publication of the notice within which to notify the Authority of intention and ability to perform the acts, finance and construct the facilities, or provide the services described in the notice. In the absence of notification by a private person or if a person, having given notice of intention to perform the acts, finance and construct the facilities, or provide the services contemplated by the Authority, fails to commence the same within 180 days from the date of notification of the Authority of its intention, the Authority may proceed to perform the acts, construct the facilities, or provide the services originally contemplated. A private person who has made necessary applications to acquire any federal, State, local, or private permits, certificates, or other authorizations or approvals necessary to perform the acts, construct the facilities, or provide the services within the time required is deemed to have commenced the same. The Authority may require that any person giving notice of intention to perform the acts, finance and construct the facilities, or provide the services contemplated by the Authority, submit a plan for completion of the facility within 3 years from notification to the Authority. The Authority may also require the person to provide a bond to pay liquidated damages to the Authority for the person's failure to perform the acts, finance and construct facilities, or provide the services contemplated by the Authority. The Authority is not precluded from maintaining any other action for the person's failure to perform.

ARTICLE 10. FINANCING FOR AUTHORITY PROJECTS

Section 10-5. Bonds.

(a) In order to accomplish its purposes under this Act, the Authority may borrow money and evidence the borrowing in the issuance and sale of bonds or other obligations of the Authority, the principal and interest of which are payable solely out of revenues authorized to be dedicated and pledged for the payment.

(b) Bonds issued under this Article are solely the obligation of the Authority and must recite on their face that they do not constitute obligations of the State of Illinois or any county, municipality, or other political subdivision of the State.

The bonds or other obligations shall be authorized and issued by resolution of the Authority and shall be of the series, bear the date or dates, mature at the time or times, bear interest at the rate or rates, be in the form, carry the registration and exchangeability privileges, be payable in the medium of payment and at the place or places, be subject to the terms of redemption, and be entitled to the priorities on the revenues of the Authority, as the resolution may provide. The bonds shall be executed in the form and manner provided by the resolution authorizing their issuance.

(c) The bonds or other obligations issued under this Article may be sold by the Authority at, above, or below par value, at public or private sale, in a manner and from time to time as determined by the Authority.

(d) Any bonds issued under this Article are payable from and are secured by the pledge of the revenues derived from the operation of the facilities, as constructed, acquired, extended, or improved with the proceeds of the bonds, subject only to prior payment of the reasonable and necessary expenses of operating and maintaining the facilities. The bonds may also be payable from unexpended bond proceeds. Any holder of the bonds may, by appropriate legal action, compel performance of all duties required of the Authority in order to enforce payment of the bonds when due. If any bond issued under this Article is permitted to go into default as to principal or interest, any court of competent jurisdiction may, pursuant to the application of the holder of the bonds, appoint a receiver for the facilities, who shall operate the same and collect and distribute the revenues thereof pursuant to the provisions and requirements of the resolution authorizing the bonds.

(e) If more than one series of bonds is issued payable from the revenues of the facilities or bond proceeds, priority of lien on the revenues shall be as provided by the resolution authorizing the bonds.

(f) All bonds issued under the provisions of this Article constitute negotiable instruments within the meaning of the Uniform Commercial Code. The bonds and the income thereof shall be exempt from all taxation within the State of Illinois.

(g) No board or commission other than the Board may fix or supervise the making of fees and charges concerning the bonds, which shall be in amounts reasonably necessary for the purposes of this Act. When the Authority has issued bonds and pledged the revenues of the facilities for the payment thereof, the Authority shall operate and maintain the facilities and shall impose and collect fees and charges for the services furnished by the facilities, including those furnished to the Authority itself, in the amounts and at the rates as shall be fully sufficient at all times to:

(i) pay the expenses of operating and maintaining the facilities;

(ii) provide a sinking fund sufficient to assure the prompt payment of principal and interest on the bonds as each falls due;

(iii) provide a reasonable fund for contingencies as may be required by any bond underwriting or by the resolution authorizing the bonds; and

(iv) provide an adequate depreciation fund for repairs, extensions, and improvements to the facilities.

(h) Any resolution of the Board of the Authority authorizing the issuance of bonds must be published once in a newspaper of general circulation published in the City of Chicago, City of Springfield, and the area where the facilities or services are contemplated. For a period of 30 days after the date of the publication, any person in interest may contest the legality of the resolution and of the bonds to be issued pursuant thereto and the provisions securing the bonds, including the validity of any lease or other contract pledged to the payment thereof. After the expiration of 30 days no person has any right of action to contest the validity of the bonds, the validity of the security pledged to the payment thereof, or the provisions of the resolution under which the bonds were issued, and all the bonds and all proceedings relating thereto are conclusively presumed to be legal.

(j) The Board may authorize the issuance of bonds for the purpose of refunding, extending, and unifying the whole or any part of the principal, interest, and redemption premiums on any outstanding bonds issued under this Article. The refunding bonds may either be sold and the proceeds applied to or deposited in escrow for the retirement of the outstanding bonds or may be delivered in exchange for the outstanding bonds. The refunding bonds shall be authorized in all respects as original bonds are required to be authorized. The Board, in authorizing the refunding bonds, shall provide for the security of the bonds, the sources from which the bonds are to be paid, and the rights of the holders in all respects for other bonds issued under this Article. The Board may also provide that the refunding bonds shall have the same or different priority of lien on the revenues pledged for their payment as was enjoyed by the bonds refunded.

Section 10-10. Use of net revenues. The Authority, acting alone or in cooperation with any agency of the State of Illinois, may use and employ any net revenues derived from the facilities or from any other source, after providing for all the costs of maintenance and operation of the facilities and after making the required principal and interest payments on any revenue bonds issued and any other payments provided in any resolution or resolutions authorizing the issuance and sale of revenue bonds and obligations, in extending and improving the facilities as the Board determines to be warranted by the need for electric transmission facilities. If the Board determines that no need exists, then the net revenues shall be deposited into the General Revenue Fund.

ARTICLE 15. FINANCING OTHER PROJECTS

Section 15-5. Findings. The General Assembly finds that:

(i) in Illinois, there are extensive reserves of energy and insufficient facilities to warrant the timely development and marketing of those reserves;

(ii) the timely development of Illinois energy sources will stabilize and increase revenue to the State;

(iii) new infrastructure will increase development of Illinois energy sources;

(iv) it is in the public interest of the citizens of this State to promote the economic welfare of the State and its residents by increasing employment, stimulating economic activity, augmenting sources of tax revenue, fostering economic stability, and improving the balance of the State's economy; and

(v) this Article constitutes a valid public purpose of primary benefit to all citizens of this State.

Section 15-10. Authority revenue bonds; issuance; amount.

(a) In order to finance projects not owned by the Authority, the Authority may issue and have outstanding bonds to finance facilities, which must be located at least partially within Illinois, in an amount not to exceed $1,000,000,000. The Authority shall have contracts sufficient to justify the issuance of bonds.

(b) The principal amount of any bonds that have been retired, redeemed, defeased, or refunded by the Authority need not be taken into account in computing compliance with the maximum amounts of bonds authorized to be issued under subsection (a) of this Section.

(c) Subject to subsection (a), the Authority may issue bonds in principal amounts the Authority determines necessary to provide sufficient funds for achieving its purposes under this Article, including the reduction of principal, the payment of interest, the establishment of reserves, the payment of the costs of administration, and the defrayal of all other associated costs.

All bonds issued under this Article are negotiable instruments under the laws of the State unless expressly provided to the contrary on the face of the bonds. The Authority may enter into contracts to insure the payment of principal and interest, for interest rate exchange contracts, and for financial guarantees to lower the cost of its borrowing.

(d) All bonds issued by the Authority are payable solely out of special funds consisting of all or part of its revenues, receipts, moneys, and assets, as designated in the proceedings under which the bonds are authorized. The bonds shall bear interest at the rates, be executed and delivered at times and in denominations, be of terms and maturities, be in registered form as to principal and interest or principal alone, and bear manual or facsimile signatures and seals as determined by the Authority. Bonds issued by the Authority are not general obligations of this State or of any political subdivision of this State. The bonds shall be solely the obligation of the Authority and shall recite on their face that they do not constitute obligations of the State or any political subdivision of the State.

(e) Bonds may be payable in installments and may bear maturities not exceeding 40 years from the date issued as determined by the Authority.

(f) As determined by the Authority, bonds and interest may be payable at a time or place whether within or without the State. Bonds may contain other provisions not inconsistent with this Article.

(g) Any bonds issued by the Authority may contain an option to redeem all or any part as may be specified. The price of redemption, the terms and conditions, and the procedure of notice shall be set forth in the proceedings of the Authority and may appear on the face of the bonds.

(h) Any bonds of the Authority may be sold at, above, or below par value, at public or private sale, in a manner and from time to time as determined by the Authority. The Authority may pay professional fees, insurance, expenses, premiums, and commissions that it finds necessary or advantageous to this State in connection with the issuance and sale.

(j) The Authority may provide for the issuance of its bonds to refund any bonds of the Authority then outstanding, including the payment of any redemption premium and any interest or premium accrued or to accrue to, the earliest or subsequent date of redemption, purchase, or maturity of the bonds.

Section 15-15. Authority revenue bonds; security; payments after retirement.

(a) The principal and interest on any bonds issued by the Authority under this Article shall be secured (i) by a pledge of revenues from the operation of the project financed, (ii) by a first mortgage on the facilities, (iii) by guarantees and pledges of the entity owning the project, the parent corporation owning that entity, or any combination thereof, or (iv) other security as may be determined by the Authority to be reasonable and prudent. The guarantees and pledges shall be no less favorable to the Authority than those granted other lenders of the same class.

(b) The Authority may require additional payments, as negotiated, to bondholders to be made either in a lump sum at the time of retirement of the bonds or annually from the time of retirement of the bonds until project use is terminated or may require additional incentives from the owner of the project to prospective bondholders so long as the incentives are not contrary to the Illinois Constitution.

(c) The Authority may require any other security for repayment of the bonds that it deems necessary.

(d) Each pledge, agreement, mortgage, or other instrument made for the benefit or security of any bonds of the Authority is valid and binding from the time when made. The revenues, receipts, moneys, and assets pledged are immediately subject to the lien of the pledge without delivery or further act. The lien is valid and binding against persons having claims of any kind against the Authority whether or not the persons have actual notice of the lien. Neither the resolution nor the indenture or other instrument by which a pledge is created need be recorded or filed.

Section 15-20. Exemptions from taxation. The exercise of the powers granted by this Article constitutes the performance of an essential governmental function. Any bonds issued under this Article and the income therefrom is exempt from taxation of every kind by the State, municipalities, and political subdivisions of the State.

Section 15-25. Bonds as legal investments. The bonds of the Authority are legal investments that may be used as collateral for public funds of the State, insurance companies, banks, savings and loan associations, investment companies, trustees, and other fiduciaries that may properly and legally invest funds in their control or belonging to them in bonds of the Authority.

Section 15-30. State pledge not to impair bondholder's rights and remedies. The State pledges to the holders of any bonds issued under this Article, that the State will not limit or alter the rights vested in the Authority to fulfill the terms of agreements made with the holders, or in any way impair the rights and remedies of the holders until the bonds together with the interest, with interest on any unpaid installments of interest, and all costs and expenses in connection with any action or proceeding by or on behalf of the holders are fully met and discharged. The Authority is authorized to include this pledge of the State in any agreement with the holders of the bonds.

Section 15-35. Powers; duties; limitations.

(a) The Authority has the powers granted by Article 5 of this Act as necessary to carry out the purposes of this Article. In addition to the powers otherwise granted to the Authority, the Authority shall have the power to:

(i) enter into loan or other agreements with respect to one or more projects upon the terms and conditions the Authority considers advisable; and

(ii) make and execute agreements, contracts, and other instruments necessary or convenient in the exercise of its powers and functions, including contracts, with any person, governmental agency, or other entity.

(b) The Authority may assess and collect fees that are nonrefundable from applicants seeking to obtain Authority financing of a project.

(c) The Authority shall maintain such records and accounts of revenues and expenditures as required by the Auditor General. The Auditor General shall conduct an annual financial and legal compliance audit of the accounts of the Authority and file copies thereof with the Governor and the General Assembly.

(d) The Authority shall require any project owner receiving a loan under this Article to maintain records and accounts relating to receipt and disbursements of loan proceeds, transportation costs, and information on energy sales and deliveries and make the records available to the Auditor General for inspection.

Section 99. Effective date. This Act takes effect July 1, 2005.