SB2562 103RD GENERAL ASSEMBLY

LRB103 31695 MXP 60231 b

103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
SB2562

Introduced 4/18/2023, by Sen. Willie Preston

SYNOPSIS AS INTRODUCED:

20 ILCS 3105/21 new
30 ILCS 105/8s new
605 ILCS 10/40 new

Amends the Capital Development Board Act and the Toll Highway Act. Provides that the Capital Development Board and the Illinois Highway Toll Authority may make low-interest loans from the Working Capital Revolving Loan Fund to disadvantaged business enterprises or minority-owned businesses. Establishes a loan selection committee to review applications and select eligible businesses. Provides that the Board and Authority may set eligibility requirements for loans by administrative rule. Provides that loans shall not be used for: (1)the refinancing or payment of existing long-term debt; (2) the payment of non-current taxes; (3) the payment, advance, or loan to a stockholder, officer, director, partner, or member owner of a limited liability company; or (4) the purchase or lease of non-construction motor vehicles or equipment. Provides that loans may be made with interest. Limits the number of loans a business may receive. Provides that the Board and Authority shall give annual reports to the Governor and the General Assembly on the program. Provides that the authority to issue loans expires on June 1, 2028. Amends the State Finance Act. Establishes the Working Capital Revolving Loan Fund. Provides that transfers shall not exceed $20,000,000 a year, for a period of 5 years, from the Road Fund to the Working Capital Revolving Loan Fund as requested by the Commissioner of the Board or the Director of the Authority. Provides that no transfer will occur if the available balance in the Working Capital Revolving Loan Fund is equal to or greater than $40,000,000.

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 Capital Development Board Act is amended by adding Section 21 as follows:

(20 ILCS 3105/21 new)

Sec. 21. Disadvantaged business revolving loan and grant program.

(a) As used in this Section is to provide for assistance to disadvantaged business enterprises and minority-owned businesses with project financing costs for those firms that are ready, willing, and able to participate on Board construction contracts. The Board's disparity study recommends and supports a financing program to address this barrier faced by disadvantaged business enterprises and minority-owned businesses.

(b) As used in this Section:

"Construction" means building, altering, repairing, improving, or demolishing any public structure or building, or making improvements of any kind to public real property. "Construction" does not include the routine operation, routine repair, or routine maintenance of existing structures, buildings, or real property.

"Construction-related services" includes construction design, layout, inspection, support, feasibility or location study, research, development, planning, or other investigative study undertaken by a construction agency concerning construction or potential construction.

"Disadvantaged business enterprise" has the meaning given to that term in 49 CFR Part 26.

"Escrow account" means a fiduciary account established with:

(1) a banking corporation which is both organized under the Illinois Banking Act and authorized to accept and administer trusts in this State; or

(2) a national banking association that has its principal place of business in this State and that is authorized to accept and administer trusts in this State.

"Fund Control Agent" means a person who provides managerial and technical assistance to disadvantaged business enterprises or minority-owned businesses and holds the authority to manage a loan under this Section. The Fund Control Agent will be procured by the Board under a request for proposal process governed by the Illinois Procurement Code and rules adopted under that Code.

"Loan" or "loan assistance funds" means a low-interest line of credit made available to a selected disadvantaged business enterprise or minority-owned business under this program for the purposes set forth in subsection (f).

"Minority-owned business" means a business which is at least 51% owned by one or more minority persons, or in the case of a corporation, at least 51% of the stock in which is owned by one or more minority persons; and the management and daily business operations of which are controlled by one or more of the minority individuals who own it, as defined by Section 2 of the Business Enterprise for Minorities, Women, and Persons with Disabilities Act.

(c) The Board may enter into agreements to make loans to disadvantaged business enterprises or minority-owned businesses certified by the Board for participation on Board-procured construction and construction-related contracts.

The Board shall establish a loan selection committee to review applications and select eligible disadvantaged business enterprises or minority-owned businesses for low-interest loans under this program. A selection committee shall be comprised of at least 3 members appointed by the Commissioner of the Board and shall include at least one public member from the construction or financing industry. The public member may not be employed or associated with any disadvantaged business enterprise or minority-owned business holding a contract with the Board nor may the public member's firm be considered for a contract with the Board while he or she is serving as a public member of the committee. Terms of service for public members shall not exceed 5 years. No public member of the loan selection committee shall hold consecutive terms, nor shall any member receive any compensation other than for reasonable expenses for service related to this committee.

The Board shall establish through administrative rules the requirements for eligibility and criteria for loan applications, approved use of funds, amount of loans, interest rates, collateral, and terms. The Board is authorized to adopt rules to implement this Section.

The Board shall notify the prime contractor on a project that a subcontractor on the same project has been awarded a loan from the Working Capital Revolving Loan Fund. If the loan agreement is amended by the parties of the loan agreement, the prime contractor shall not be a party to any disadvantaged business enterprise or minority-owned business loan agreement between the Board and participating subcontractor and shall not incur any liability for loan debt accrued as a result of the loan agreement.

(d) Loan funds shall be disbursed to the escrow account, subject to appropriation, from the Working Capital Revolving Loan Fund established as a special fund in the State treasury. Loaned funds that are repaid to the Board shall be deposited into the Working Capital Revolving Loan Fund. Other appropriations, grants, awards, and donations to the Board for the purpose of the revolving loan program established by this Section shall be deposited into the Working Capital Revolving Loan Fund.

(e) A funds control process shall be established to serve as an intermediary between the Board and the contractor to verify payments and to ensure paperwork is properly filed. The Fund Control Agent and contractor shall enter into an agreement regarding the control and disbursement of all payments to be made by the Fund Control Agent under the contract. The Board shall authorize and direct the Fund Control Agent to review all disbursement requests and supporting documents received from the contractor. The Fund Control Agent shall direct the escrow account to disburse escrow funds to the subcontractor, material supplier, and other appropriate entities by written request for the disbursement. The disadvantaged business enterprise or minority-owned business shall maintain control over its business operations by directing the payments of the loan funds through its relationship with the Funds Control Agent. The funds control process shall require the Fund Control Agent to intercept payments made from a contractor to a subcontractor receiving a loan made under this Act and allow the Fund Control Agent to deduct any unpaid loan repayments owed to the State before releasing the payment to the subcontractor.

(f) Loan assistance funds shall be allowed for current liabilities or working capital expenses associated with participation in the performance of contracts procured and awarded by the Board for transportation construction and construction-related purposes. Loan funds shall not be used for:

(1) the refinancing or payment of existing long-term debt;

(2) the payment of non-current taxes;

(3) the payment, advance, or loan to a stockholder, officer, director, partner, or member owner of a limited liability company; or

(4) the purchase or lease of non-construction motor vehicles or equipment.

The loan agreement shall provide for the terms and conditions of repayment which shall not extend repayment longer than final payment made by the Board following completion and acceptance of the work authorized for loan assistance under the program. The funds shall be loaned with interest.

(g) The number of loans one disadvantaged business enterprise or minority-owned business may receive under this program is limited to 3. Loans shall not be granted simultaneously. An applicant shall not be permitted to obtain a loan under this program for a different and additional project until payment in full of any outstanding loans granted under this program has been received by the Board.

(h) The rate of interest for any loan shall be set by rule.

(i) The loan amount to any successful applicant shall not exceed 55% of the contract or subcontract supporting the loan.

(j) Nothing in this Section shall impair the contractual rights of the Board and the prime contractor or the contractual rights between a prime contractor and subcontractor.

(k) Nothing in this Section is intended nor shall be construed to vest applicants denied funds by the Board in accordance with this Section a right to challenge, protest, or contest the awarding of funds by the Board to successful applicants or any loan or agreement executed in connection with it.

(l) The debt delinquency prohibition under Section 50-11 of the Illinois Procurement Code applies to any future contracts or subcontracts in the event of a loan default.

(m) Investment income which is attributable to the investment of moneys in the Working Capital Revolving Loan Fund shall be retained in the Working Capital Revolving Loan Fund.

(n) By January 1, 2024 and January 1 of each succeeding year, the Board shall report to the Governor and the General Assembly on the utilization and status of the revolving loan program. The report shall, at a minimum, include the amount transferred from the Road Fund to the Working Capital Revolving Loan Fund, the number and size of approved loans, the amounts disbursed to and from the escrow account, the amounts, if any, repaid to the Working Capital Revolving Loan Fund, the interest and fees paid by loan recipients, and the interest earned on balances in the Working Capital Revolving Loan Fund, and the names of any contractors who are delinquent or in default of payment. The January 1, 2027 report shall include an evaluation of the program by the Board to determine the program's viability and progress towards its stated purpose.

(o) The authorization to execute additional loans or request transfers to the Working Capital Revolving Loan Fund expires on June 1, 2028. The Comptroller shall order transferred and the Treasurer shall transfer any available balance remaining in the Working Capital Revolving Loan Fund to the Road Fund on January 1, 2029, or as soon thereafter as may be practical. Any loan repayments, interest, or fees that are by the terms of a loan agreement payable to the Working Capital Revolving Loan Fund after June 20, 2028 shall instead be paid into the Road Fund as the successor fund to the Working Capital Revolving Loan Fund.

Section 10. The State Finance Act is amended by adding Section 8s as follows:

(30 ILCS 105/8s new)

Sec. 8s. Transfer to the Working Capital Revolving Loan Fund.

(a) The Working Capital Revolving Loan Fund is created as a special fund in the State treasury.

(b) Except as provided in subsection (c), upon the written request of the Commissioner of the Capital Development Board or the Director of the Illinois Highway Toll Authority, the State Comptroller shall order transferred and the State Treasurer shall transfer amounts not to exceed $20,000,000 in aggregate during a fiscal year, for a period of 5 years, from the Road Fund to the Working Capital Revolving Loan Fund as requested by the Commissioner of the Board or the Director of the Authority or as soon thereafter as may be practical.

(c) No transfer may be requested or ordered if the available balance in the Working Capital Revolving Loan Fund is equal to or greater than $40,000,000.

Section 15. The Toll Highway Act is amended by adding Section 40 as follows:

(605 ILCS 10/40 new)

Sec. 40. Disadvantaged business revolving loan and grant program.

(a) The purpose of this Section is to provide for assistance to disadvantaged business enterprises or minority-owned businesses with project financing costs for those firms that are ready, willing, and able to participate on Authority construction contracts. The Authority's disparity study recommends and supports a financing program to address this barrier faced by disadvantaged business enterprises or minority-owned businesses.

(b) As used in this Section:

"Construction" means building, altering, repairing, improving, or demolishing any public structure or building, or making improvements of any kind to public real property. "Construction" does not include the routine operation, routine repair, or routine maintenance of existing structures, buildings, or real property.

"Construction-related services" includes construction design, layout, inspection, support, feasibility or location study, research, development, planning, or other investigative study undertaken by a construction agency concerning construction or potential construction.

"Disadvantaged business enterprise" has the meaning given to that term in 49 CFR Part 26.

"Escrow account" means a fiduciary account established with:

(1) a banking corporation which is both organized under the Illinois Banking Act and authorized to accept and administer trusts in this State; or

(2) a national banking association that has its principal place of business in this State and that is authorized to accept and administer trusts in this State.

"Fund Control Agent" means a person who provides managerial and technical assistance to disadvantaged business enterprises or minority-owned businesses and holds the authority to manage a loan under this Section. The Fund Control Agent will be procured by the Authority under a request for proposal process governed by the Illinois Procurement Code and rules adopted under that Code.

"Loan" or "loan assistance funds" means a low-interest line of credit made available to a selected disadvantaged business enterprise or minority-owned business under this program for the purposes set forth in subsection (f).

"Minority-owned business" means a business which is at least 51% owned by one or more minority persons, or in the case of a corporation, at least 51% of the stock in which is owned by one or more minority persons; and the management and daily business operations of which are controlled by one or more of the minority individuals who own it, as defined by Section 2 of the Business Enterprise for Minorities, Women, and Persons with Disabilities Act.

(c) The Authority may enter into agreements to make loans to disadvantaged business enterprises or minority-owned businesses certified by the Authority for participation on Authority-procured construction and construction-related contracts.

The Authority shall establish a loan selection committee to review applications and select eligible disadvantaged business enterprises or minority-owned businesses for low-interest loans under this program. A selection committee shall be comprised of at least 3 members appointed by the Director of the Authority and shall include at least one public member from the construction or financing industry. The public member may not be employed or associated with any disadvantaged business enterprises or minority-owned business holding a contract with the Authority nor may the public member's firm be considered for a contract with the Authority while he or she is serving as a public member of the committee. Terms of service for public members shall not exceed 5 years. No public member of the loan selection committee shall hold consecutive terms, nor shall any member receive any compensation other than for reasonable expenses for service related to this committee.

The Authority shall establish through administrative rules the requirements for eligibility and criteria for loan applications, approved use of funds, amount of loans, interest rates, collateral, and terms. The Authority is authorized to adopt rules to implement this Section.

The Authority shall notify the prime contractor on a project that a subcontractor on the same project has been awarded a loan from the Working Capital Revolving Loan Fund. If the loan agreement is amended by the parties of the loan agreement, the prime contractor shall not be a party to any disadvantaged business enterprise or minority-owned business loan agreement between the Authority and participating subcontractor and shall not incur any liability for loan debt accrued as a result of the loan agreement.

(d) Loan funds shall be disbursed to the escrow account, subject to appropriation, from the Working Capital Revolving Loan Fund established as a special fund in the State treasury. Loaned funds that are repaid to the Authority shall be deposited into the Working Capital Revolving Loan Fund. Other appropriations, grants, awards, and donations to the Authority for the purpose of the revolving loan program established by this Section shall be deposited into the Working Capital Revolving Loan Fund.

(e) A funds control process shall be established to serve as an intermediary between the Authority and the contractor to verify payments and to ensure paperwork is properly filed. The Fund Control Agent and contractor shall enter into an agreement regarding the control and disbursement of all payments to be made by the Fund Control Agent under the contract. The Authority shall authorize and direct the Fund Control Agent to review all disbursement requests and supporting documents received from the contractor. The Fund Control Agent shall direct the escrow account to disburse escrow funds to the subcontractor, material supplier, and other appropriate entities by written request for the disbursement. The disadvantaged business enterprise or minority-owned business shall maintain control over its business operations by directing the payments of the loan funds through its relationship with the Funds Control Agent. The funds control process shall require the Fund Control Agent to intercept payments made from a contractor to a subcontractor receiving a loan made under this Act and allow the Fund Control Agent to deduct any unpaid loan repayments owed to the State before releasing the payment to the subcontractor.

(f) Loan assistance funds shall be allowed for current liabilities or working capital expenses associated with participation in the performance of contracts procured and awarded by the Authority for transportation construction and construction-related purposes. Loan funds shall not be used for:

(1) the refinancing or payment of existing long-term debt;

(2) the payment of non-current taxes;

(3) the payment, advance, or loan to a stockholder, officer, director, partner, or member owner of a limited liability company; or

(4) the purchase or lease of non-construction motor vehicles or equipment.

The loan agreement shall provide for the terms and conditions of repayment which shall not extend repayment longer than final payment made by the Authority following completion and acceptance of the work authorized for loan assistance under the program. The funds shall be loaned with interest.

(g) The number of loans one disadvantaged business enterprise or minority-owned business may receive under this program is limited to 3. Loans shall not be granted simultaneously. An applicant shall not be permitted to obtain a loan under this program for a different and additional project until payment in full of any outstanding loans granted under this program has been received by the Authority.

(h) The rate of interest for any loan shall be set by rule.

(i) The loan amount to any successful applicant shall not exceed 55% of the contract or subcontract supporting the loan.

(j) Nothing in this Section shall impair the contractual rights of the Authority and the prime contractor or the contractual rights between a prime contractor and subcontractor.

(k) Nothing in this Section is intended nor shall be construed to vest applicants denied funds by the Authority in accordance with this Section a right to challenge, protest, or contest the awarding of funds by the Authority to successful applicants or any loan or agreement executed in connection with it.

(l) The debt delinquency prohibition under Section 50-11 of the Illinois Procurement Code applies to any future contracts or subcontracts in the event of a loan default.

(m) Investment income which is attributable to the investment of moneys in the Working Capital Revolving Loan Fund shall be retained in the Working Capital Revolving Loan Fund.

(n) By January 1, 2024 and January 1 of each succeeding year, the Authority shall report to the Governor and the General Assembly on the utilization and status of the revolving loan program. The report shall, at a minimum, include the amount transferred from the Road Fund to the Working Capital Revolving Loan Fund, the number and size of approved loans, the amounts disbursed to and from the escrow account, the amounts, if any, repaid to the Working Capital Revolving Loan Fund, the interest and fees paid by loan recipients, and the interest earned on balances in the Working Capital Revolving Loan Fund, and the names of any contractors who are delinquent or in default of payment. The January 1, 2027 report shall include an evaluation of the program by the Authority to determine the program's viability and progress towards its stated purpose.

(o) The authorization to execute additional loans or request transfers to the Working Capital Revolving Loan Fund expires on June 1, 2028. The Comptroller shall order transferred and the Treasurer shall transfer any available balance remaining in the Working Capital Revolving Loan Fund to the Road Fund on January 1, 2029, or as soon thereafter as may be practical. Any loan repayments, interest, or fees that are by the terms of a loan agreement payable to the Working Capital Revolving Loan Fund after June 20, 2028 shall instead be paid into the Road Fund as the successor fund to the Working Capital Revolving Loan Fund.