HB3573 97TH GENERAL ASSEMBLY

LRB097 09505 PJG 49642 b

97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB3573

Introduced 2/24/2011, by Rep. Wayne Rosenthal - Norine Hammond - Jil Tracy - Adam Brown

SYNOPSIS AS INTRODUCED:

20 ILCS 3501/830-60 new

Amends the Illinois Finance Authority Act. Creates the Rural Natural Gas Expansion Loan Guarantee Program. Authorizes the Authority to issue State Guarantees to lenders for loans to agribusinesses for the purpose of expanding or increasing capacity of natural gas lines for their agribusiness. Provides that lenders shall apply for the State Guarantees on forms provided by the Authority. Provides that the lender must agree to charge an interest rate, which may vary, that the Authority determines to be below the market rate of interest generally available to the agribusiness. Provides that a State Guarantee shall not exceed $5,000,000 per agribusiness. Provides that the Illinois Farmer and Agribusiness Loan Guarantee Fund may be used to secure State Guarantees.

FISCAL 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:

Section 5. The Illinois Finance Authority Act is amended by adding Section 830-60 as follows:

(20 ILCS 3501/830-60 new)

Sec. 830-60. Rural Natural Gas Expansion Loan Guarantee Program.

(a) The Authority is authorized to issue State Guarantees to lenders for loans to agribusinesses for the purpose of expanding or increasing capacity of natural gas lines for their agribusinesses. "Agribusiness" has the meaning provided in Section 801-10 of this Act.

(b) The Authority may approve applications for natural gas line expansions and upgrades by agribusinesses that promote expansion and diversification of the agricultural economy. Lenders shall apply for the State Guarantees on forms provided by the Authority and certify that the application and any other documents submitted are true and correct. The lender or borrower, or both in combination, shall pay an administrative fee as determined by the Authority. The application shall, at a minimum, contain the agribusiness' name, address, present credit and financial information, including cash flow statements, financial statements, balance sheets, and any other information pertinent to the application, and the collateral to be used to secure the State Guarantee. The lender must agree to charge an interest rate, which may vary, on the loan that the Authority determines to be below the market rate of interest generally available to the borrower. If both the lender and applicant agree, the interest rate on the State guaranteed loan can be converted to a fixed interest rate at any time during the term of the loan.

(c) Any State Guarantee provided under this Section (i) shall not exceed $5,000,000 per agribusiness, (ii) shall not exceed a term of 15 years, and (iii) shall be subject to an annual review and renewal by the lender and the Authority. Only one such State Guarantee shall be made per agribusiness per location. A State Guarantee shall not be revoked by the Authority without a 90-day notice, in writing, to all parties.

(d) The lender shall not call due any loan for any reason except for lack of performance, insufficient collateral, or maturity. A lender may review and withdraw or continue with a State Guarantee on an annual basis after the first 5 years following closing of the loan application if the loan contract provided for an interest rate that shall not vary. A lender shall not withdraw a State Guarantee if the loan contract provides for an interest rate that may vary, except for reasons set forth in the contract.

(e) The Authority shall provide or renew a State Guarantee to a lender if:

(i) The lender pays a fee equal to 25 basis points on the loan to the Authority on an annual basis.

(ii) The application provides collateral acceptable to the Authority that is at least equal to the State's portion of the Guarantee to be provided.

(iii) The lender assumes all responsibility and costs for pursuing legal action on collecting any loan that is delinquent or in default.

(iv) The lender is at risk for the first 15% of the outstanding principal of the note for which the State Guarantee is provided.

(f) The Illinois Farmer and Agribusiness Loan Guarantee Fund may be used to secure State Guarantees issued under this Section as provided in Section 830-35.

(g) Notwithstanding the provisions of this Section 830-60 with respect to the agribusinesses who may obtain State Guarantees, the Authority may promulgate rules establishing the eligibility of agribusinesses and lenders to participate in the State Guarantee program and the terms, standards, and procedures that will apply, when the Authority finds that emergency conditions in Illinois agriculture have created the need for State Guarantees pursuant to terms, standards, and procedures other than those specified in this Section.