Illinois General Assembly - Full Text of HB3267
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Full Text of HB3267  98th General Assembly




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1    AN ACT concerning State government.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Department of Transportation Law of the
5Civil Administrative Code of Illinois is amended by adding
6Section 2705-610 as follows:
7    (20 ILCS 2705/2705-610 new)
8    Sec. 2705-610. Disadvantaged business revolving loan and
9grant program.
10    (a) Purpose. The purpose of this Section is to provide for
11assistance to disadvantaged business enterprises with project
12financing costs for those firms that are ready, willing, and
13able to participate on Department construction contracts. The
14Department's disparity study recommends and supports a
15financing program to address this barrier faced by
16disadvantaged business enterprises.
17    (b) For the purposes of this Section:
18    "Construction" means building, altering, repairing,
19improving, or demolishing any public structure or building, or
20making improvements of any kind to public real property.
21Construction does not include the routine operation, routine
22repair, or routine maintenance of existing structures,
23buildings, or real property.



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1    "Construction-related services" means those services
2including construction design, layout, inspection, support,
3feasibility or location study, research, development,
4planning, or other investigative study undertaken by a
5construction agency concerning construction or potential
7    "Contractor" means one who participates, through a
8contract or subcontract at any tier, in a United States
9Department of Transportation-assisted or Illinois Department
10of Transportation-assisted highway, rail, transit, or airport
12    "Escrow account" means a fiduciary account established
13with (1) a banking corporation which is both organized under
14the Illinois Banking Act and authorized to accept and
15administer trusts in this State; or (2) a national banking
16association which has its principal place of business in this
17State and which is authorized to accept and administer trusts
18in this State.
19    "Fund Control Agent" means a person who provides managerial
20and technical assistance to disadvantaged business enterprises
21and holds the authority to manage a loan under this Section.
22The Fund Control Agent will be procured by the Department under
23a request for proposal process governed by the Illinois
24Procurement Code and rules adopted under that Code.
25    "Loan" or "loan assistance funds" means a low-interest line
26of credit made available to a selected disadvantaged business



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1enterprise under this program for the purposes set forth in
2subsection (f) below.
3    (c) The Department may enter into agreements to make loans
4to disadvantaged business enterprises certified by the
5Department for participation on Department-procured
6construction and construction-related contracts. For purposes
7of this Section, the term "disadvantaged business enterprise"
8has the meaning ascribed to it by 49 CFR Part 26.
9    The Department shall establish a loan selection committee
10to review applications and select eligible disadvantaged
11business enterprises for low-interest loans under this
12program. A selection committee shall be comprised of at least 3
13members appointed by the Secretary of the Department and shall
14include at least one public member from the construction or
15financing industry. The public member may not be employed or
16associated with any disadvantaged business enterprise holding
17a contract with the Department nor may the public member's firm
18be considered for a contract with the Department while he or
19she is serving as a public member of the committee. Terms of
20service for public members shall not exceed 5 years. No public
21member of the loan selection committee shall hold consecutive
22terms, nor shall any member receive any compensation other than
23for reasonable expenses for service related to this committee.
24    The Department shall establish through administrative
25rules the requirements for eligibility and criteria for loan
26applications, approved use of funds, amount of loans, interest



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1rates, collateral, and terms. The Department is authorized to
2adopt rules to implement this Section.
3    The Department shall notify the prime contractor on a
4project that a subcontractor on the same project has been
5awarded a loan from the Working Capital Revolving Loan Fund. If
6the loan agreement is amended by the parties of the loan
7agreement, the prime contractor shall not be a party to any
8disadvantaged business enterprise loan agreement between the
9Department and participating subcontractor and shall not incur
10any liability for loan debt accrued as a result of the loan
12    (d) Loan funds shall be disbursed to the escrow account,
13subject to appropriation, from the Working Capital Revolving
14Loan Fund established as a special fund in the State treasury.
15Loaned funds that are repaid to the Department shall be
16deposited into the Working Capital Revolving Loan Fund. Other
17appropriations, grants, awards, and donations to the
18Department for the purpose of the revolving loan program
19established by this Section shall be deposited into the Working
20Capital Revolving Loan Fund.
21    (e) A funds control process shall be established to serve
22as an intermediary between the Department and the contractor to
23verify payments and to ensure paperwork is properly filed. The
24Fund Control Agent and contractor shall enter into an agreement
25regarding the control and disbursement of all payments to be
26made by the Fund Control Agent under the contract. The



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1Department shall authorize and direct the Fund Control Agent to
2review all disbursement requests and supporting documents
3received from the contractor. The Fund Control Agent shall
4direct the escrow account to disburse escrow funds to the
5subcontractor, material supplier, and other appropriate
6entities by written request for the disbursement. The
7disadvantaged business enterprise shall maintain control over
8its business operations by directing the payments of the loan
9funds through its relationship with the Funds Control Agent.
10The funds control process shall require the Fund Control Agent
11to intercept payments made from a contractor to a subcontractor
12receiving a loan made under this Act and allow the Fund Control
13Agent to deduct any unpaid loan repayments owed to the State
14before releasing the payment to the subcontractor.
15    (f) Loan assistance funds shall be allowed for current
16liabilities or working capital expenses associated with
17participation in the performance of contracts procured and
18awarded by the Department for transportation construction and
19construction-related purposes. Loan funds shall not be used
21        (1) refinancing or payment of existing long-term debt;
22        (2) payment of non-current taxes;
23        (3) payments, advances, or loans to stockholders,
24    officers, directors, partners, or member owners of limited
25    liability companies; or
26        (4) the purchase or lease of non-construction motor



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1    vehicles or equipment.
2    The loan agreement shall provide for the terms and
3conditions of repayment which shall not extend repayment longer
4than final payment made by the Department following completion
5and acceptance of the work authorized for loan assistance under
6the program. The funds shall be loaned with interest.
7    (g) The number of loans one disadvantaged business
8enterprise may receive under this program is limited to 3.
9Loans shall not be granted simultaneously. An applicant shall
10not be permitted to obtain a loan under this program for a
11different and additional project until payment in full of any
12outstanding loans granted under this program have been received
13by the Department.
14    (h) The rate of interest for any loan shall be set by rule.
15    (i) The loan amount to any successful applicant shall not
16exceed 55% percent of the contract or subcontract supporting
17the loan.
18    (j) Nothing in this Section shall impair the contractual
19rights of the Department and the prime contractor or the
20contractual rights between a prime contractor and
22    (k) Nothing in this Section is intended nor shall be
23construed to vest applicants denied funds by the Department in
24accordance with this Section a right to challenge, protest, or
25contest the awarding of funds by the Department to successful
26applicants or any loan or agreement executed in connection with



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2    (l) The debt delinquency prohibition under Section 50-11 of
3the Illinois Procurement Code applies to any future contracts
4or subcontracts in the event of a loan default.
5    (m) Investment income which is attributable to the
6investment of moneys in the Working Capital Revolving Loan Fund
7shall be retained in the Working Capital Revolving Loan Fund.
8    (n) By January 1, 2014 and January 1 of each succeeding
9year, the Department shall report to the Governor and the
10General Assembly on the utilization and status of the revolving
11loan program. The report shall, at a minimum, include the
12amount transferred from the Road Fund to the Working Capital
13Revolving Loan Fund, the number and size of approved loans, the
14amounts disbursed to and from the escrow account, the amounts,
15if any, repaid to the Working Capital Revolving Loan Fund, the
16interest and fees paid by loan recipients, and the interest
17earned on balances in the Working Capital Revolving Loan Fund,
18and the names of any contractors who are delinquent or in
19default of payment. The January 1, 2017 report shall include an
20evaluation of the program by the Department to determine the
21program's viability and progress towards its stated purpose.
22    (o) The Department's authority to execute additional loans
23or request transfers to the Working Capital Revolving Loan Fund
24expires on June 1, 2018. The Comptroller shall order
25transferred and the Treasurer shall transfer any available
26balance remaining in the Working Capital Revolving Loan Fund to



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1the Road Fund on January 1, 2019, or as soon thereafter as may
2be practical. Any loan repayments, interest, or fees that are
3by the terms of a loan agreement payable to the Working Capital
4Revolving Loan Fund after June 20, 2018 shall instead be paid
5into the Road Fund as the successor fund to the Working Capital
6Revolving Loan Fund.
7    Section 10. The State Finance Act is amended by adding
8Sections 5.826 and 8r as follows:
9    (30 ILCS 105/5.826 new)
10    Sec. 5.826. The Working Capital Revolving Loan Fund.
11    (30 ILCS 105/8r new)
12    Sec. 8r. Transfer to the Working Capital Revolving Loan
14    (a) Except as provided in subsection (b), upon the written
15request of the Secretary of Transportation, the State
16Comptroller shall order and the State Treasurer shall transfer
17amounts not to exceed $3,000,000 in aggregate during a fiscal
18year, for a period of 5 years, from the Road Fund to the
19Working Capital Revolving Loan Fund as requested by the
20Secretary of Transportation or as soon thereafter as may be
22    (b) No transfer may be requested or ordered if the
23available balance in the Working Capital Revolving Loan Fund is



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1equal to or greater than $6,000,000.
2    Section 99. Effective date. This Act takes effect July 1,