HB1076 96TH GENERAL ASSEMBLY

LRB096 10449 RCE 20621 b

96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
HB1076

Introduced 2/11/2009, by Rep. Timothy L. Schmitz

SYNOPSIS AS INTRODUCED:

30 ILCS 550/3

Amends the Public Construction Bond Act. Provides that refund of a cash bond is subject to satisfaction of the requirements of the bond. Provides that bonds, irrevocable letters of credit, surety bonds, and letters of commitment are deemed to contain undertakings set forth in the Act and persons furnishing material or performing labor have a right to sue thereon.

A BILL FOR

AN ACT concerning finance.

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

Section 5. The Public Construction Bond Act is amended by changing Section 3 as follows:

(30 ILCS 550/3)

Sec. 3. Builder or developer cash bond or other surety.

(a) A county or municipality may not require a cash bond, irrevocable letter of credit, surety bond, or letter of commitment issued by a bank, savings and loan association, surety, or insurance company from a builder or developer to guarantee completion of a project improvement when the builder or developer has filed with the county or municipal clerk a current, irrevocable letter of credit, surety bond, or letter of commitment issued by a bank, savings and loan association, surety, or insurance company, deemed good and sufficient by the county or municipality accepting such security, in an amount equal to or greater than 110% of the amount of the bid on each project improvement. A builder or developer has the option to utilize a cash bond, irrevocable letter of credit, surety bond, or letter of commitment, issued by a bank, savings and loan association, surety, or insurance company, deemed good and sufficient by the county or municipality, to satisfy any cash bond requirement established by a county or municipality. Except for a municipality or county with a population of 1,000,000 or more, the county or municipality must approve and deem a surety or insurance company good and sufficient for the purposes set forth in this Section if the surety or insurance company is authorized by the Illinois Department of Insurance to sell and issue sureties in the State of Illinois.

(b) If a county or municipality receives a cash bond, irrevocable letter of credit, or surety bond from a builder or developer to guarantee completion of a project improvement, the county or municipality shall (i) register the bond under the address of the project and the construction permit number and (ii) give the builder or developer a receipt for the bond. The county or municipality shall establish and maintain a separate account for all cash bonds received from builders and developers to guarantee completion of a project improvement.

(c) The county or municipality shall refund a cash bond to a builder or developer, or release the irrevocable letter of credit or surety bond, within 60 days after the builder or developer notifies the county or municipality in writing of the completion of the project improvement for which the bond was required, subject to satisfaction of the requirements of the bond. For these purposes, "completion" means that the county or municipality has determined that the project improvement for which the bond was required is complete or a licensed engineer or licensed architect has certified to the builder or developer and the county or municipality that the project improvement has been completed to the applicable codes and ordinances. The county or municipality shall pay interest to the builder or developer, beginning 60 days after the builder or developer notifies the county or municipality in writing of the completion of the project improvement, on any bond not refunded to a builder or developer, at the rate of 1% per month.

(c-5) Each such cash bond, irrevocable letter of credit, surety bond, or letter of commitment is deemed to contain the provisions set forth in Section 1 of this Act for bonds required by that Section whether those provisions are inserted in the instrument or not. Further, every person furnishing material or performing labor, either as an individual or as a subcontractor for any contractor that is required to furnish such an instrument under this Section, shall have the same right to sue thereon, and in the same manner, as is provided for actions brought pursuant to Section 2 of this Act.

(d) A home rule county or municipality may not require or maintain cash bonds, irrevocable letters of credit, surety bonds, or letters of commitment issued by a bank, savings and loan association, surety, or insurance company from builders or developers in a manner inconsistent with this Section. This Section supercedes and controls over other provisions of the Counties Code or Illinois Municipal Code as they apply to and guarantee completion of a project improvement that is required by the county or municipality, regardless of whether the project improvement is a condition of annexation agreements. This Section is a denial and limitation under subsection (i) of Section 6 of Article VII of the Illinois Constitution on the concurrent exercise by a home rule county or municipality of powers and functions exercised by the State.

(Source: P.A. 92-479, eff. 1-1-02.)