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


Rep. William Davis

Filed: 3/22/2013





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2    AMENDMENT NO. ______. Amend House Bill 3267 by replacing
3everything after the enacting clause with the following:
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.



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1    (b) For the purposes of this Section:
2    "Construction" means building, altering, repairing,
3improving, or demolishing any public structure or building, or
4making improvements of any kind to public real property.
5Construction does not include the routine operation, routine
6repair, or routine maintenance of existing structures,
7buildings, or real property.
8    "Construction-related services" means those services
9including construction design, layout, inspection, support,
10feasibility or location study, research, development,
11planning, or other investigative study undertaken by a
12construction agency concerning construction or potential
14    "Contractor" means one who participates, through a
15contract or subcontract at any tier, in a United States
16Department of Transportation-assisted or Illinois Department
17of Transportation-assisted highway, rail, transit, or airport
19    "Escrow account" means a fiduciary account established
20with (1) a banking corporation which is both organized under
21the Illinois Banking Act and authorized to accept and
22administer trusts in this State; or (2) a national banking
23association which has its principal place of business in this
24State and which is authorized to accept and administer trusts
25in this State.
26    "Fund Control Agent" means a person who provides managerial



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1and technical assistance to disadvantage business enterprises
2and holds the authority to manage a loan under this Section.
3The Fund Control Agent will be procured by the Department under
4a request for proposal process governed by the Illinois
5Procurement Code and rules adopted under that Code.
6    "Loan" or "loan assistance funds" means a low-interest line
7of credit made available to a selected disadvantaged business
8enterprise under this program for the purposes set forth in
9subsection (f) below.
10    (c) The Department may enter into agreements to make loans
11to disadvantaged business enterprises certified by the
12Department for participation on Department-procured
13construction and construction-related contracts. For purposes
14of this Section, the term "disadvantaged business enterprise"
15has the meaning ascribed to it by 49 CFR Part 26.
16    The Department shall establish a loan selection committee
17to review applications and select eligible disadvantaged
18business enterprises for low-interest loans under this
19program. A selection committee shall be comprised of at least 3
20members appointed by the Secretary of the Department and shall
21include at least one public member from the construction or
22financing industry. The public member may not be employed or
23associated with any disadvantaged business enterprise holding
24a contract with the Department nor may the public member's firm
25be considered for a contract with the Department while he or
26she is serving as a public member of the committee. Terms of



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1service for public members shall not exceed 5 years. No public
2member of the loan selection committee shall hold consecutive
3terms, nor shall any member receive any compensation other than
4for reasonable expenses for service related to this committee.
5    The Department shall establish through administrative
6rules the requirements for eligibility and criteria for loan
7applications, approved use of funds, amount of loans, interest
8rates, collateral, and terms. The Department is authorized to
9adopt rules to implement this Section.
10    The Department shall notify the prime contractor on a
11project that a subcontractor on the same project has been
12awarded a loan from the Working Capital Revolving Loan Fund. If
13the loan agreement is amended by the parties of the loan
14agreement, the prime contractor shall not be a party to any
15disadvantaged business enterprise loan agreement between the
16Department and participating subcontractor and shall not incur
17any liability for loan debt accrued as a result of the loan
19    (d) Loan funds shall be disbursed to the escrow account,
20subject to appropriation, from the Working Capital Revolving
21Loan Fund established as a special fund in the State treasury.
22Loaned funds that are repaid to the Department shall be
23deposited into the Working Capital Revolving Loan Fund. Other
24appropriations, grants, awards, and donations to the
25Department for the purpose of the revolving loan program
26established by this Section shall be deposited into the Working



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1Capital Revolving Loan Fund.
2    (e) A funds control process shall be established to serve
3as an intermediary between the Department and the contractor to
4verify payments and to ensure paperwork is properly filed. The
5Fund Control Agent and contractor shall enter into an agreement
6regarding the control and disbursement of all payments to be
7made by the Fund Control Agent under the contract. The
8Department shall authorize and direct the Fund Control Agent to
9review all disbursement requests and supporting documents
10received from the contractor. The Fund Control Agent shall
11direct the escrow account to disburse escrow funds to the
12subcontractor, material supplier, and other appropriate
13entities by written request for the disbursement. The
14disadvantaged business enterprise shall maintain control over
15its business operations by directing the payments of the loan
16funds through its relationship with the Funds Control Agent.
17The funds control process shall require the Fund Control Agent
18to intercept payments made from a contractor to a subcontractor
19receiving a loan made under this Act and allow the Fund Control
20Agent to deduct any unpaid loan repayments owed to the State
21before releasing the payment to the subcontractor.
22    (f) Loan assistance funds shall be allowed for current
23liabilities or working capital expenses associated with
24participation in the performance of contracts procured and
25awarded by the Department for transportation construction and
26construction-related purposes. Loan funds shall not be used



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2        (1) refinancing or payment of existing long-term debt;
3        (2) payment of non-current taxes;
4        (3) payments, advances, or loans to stockholders,
5    officers, directors, partners, or member owners of limited
6    liability companies; or
7        (4) the purchase or lease of non-construction motor
8    vehicles or equipment.
9    The loan agreement shall provide for the terms and
10conditions of repayment which shall not extend repayment longer
11than final payment made by the Department following completion
12and acceptance of the work authorized for loan assistance under
13the program. The funds shall be loaned with interest.
14    (g) The number of loans one disadvantaged business
15enterprise may receive under this program is limited to 3.
16Loans shall not be granted simultaneously. An applicant shall
17not be permitted to obtain a loan under this program for a
18different and additional project until payment in full of any
19outstanding loans granted under this program have been received
20by the Department.
21    (h) The rate of interest for any loan shall be set by rule.
22    (i) The loan amount to any successful applicant shall not
23exceed 55% percent of the contract or subcontract supporting
24the loan.
25    (j) Nothing in this Section shall impair the contractual
26rights of the Department and the prime contractor or the



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1contractual rights between a prime contractor and
3    (k) Nothing in this Section is intended nor shall be
4construed to vest applicants denied funds by the Department in
5accordance with this Section a right to challenge, protest, or
6contest the awarding of funds by the Department to successful
7applicants or any loan or agreement executed in connection with
9    (l) The debt delinquency prohibition under Section 50-11 of
10the Illinois Procurement Code applies to any future contracts
11or subcontracts in the event of a loan default.
12    (m) Investment income which is attributable to the
13investment of moneys in the Working Capital Revolving Loan Fund
14shall be retained in the Working Capital Revolving Loan Fund.
15    (n) By January 1, 2014 and January 1 of each succeeding
16year, the Department shall report to the Governor and the
17General Assembly on the utilization and status of the revolving
18loan program. The report shall, at a minimum, include the
19amount transferred from the Road Fund to the Working Capital
20Revolving Loan Fund, the number and size of approved loans, the
21amounts disbursed to and from the escrow account, the amounts,
22if any, repaid to the Working Capital Revolving Loan Fund, the
23interest and fees paid by loan recipients, and the interest
24earned on balances in the Working Capital Revolving Loan Fund,
25and the names of any contractors who are delinquent or in
26default of payment. The January 1, 2017 report shall include an



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1evaluation of the program by the Department to determine the
2program's viability and progress towards its stated purpose.
3    (o) The Department's authority to execute additional loans
4or request transfers to the Working Capital Revolving Loan Fund
5expires on June 1, 2018. The Comptroller shall order
6transferred and the Treasurer shall transfer any available
7balance remaining in the Working Capital Revolving Loan Fund to
8the Road Fund on January 1, 2019, or as soon thereafter as may
9be practical. Any loan repayments, interest, or fees that are
10by the terms of a loan agreement payable to the Working Capital
11Revolving Loan Fund after June 20, 2018 shall instead be paid
12into the Road Fund as the successor fund to the Working Capital
13Revolving Loan Fund.
14    Section 10. The State Finance Act is amended by adding
15Sections 5.826 and 8r as follows:
16    (30 ILCS 105/5.826 new)
17    Sec. 5.826. The Working Capital Revolving Loan Fund.
18    (30 ILCS 105/8r new)
19    Sec. 8r. Transfer to the Working Capital Revolving Loan
21    (a) Except as provided in subsection (b), upon the written
22request of the Secretary of Transportation, the State
23Comptroller shall order and the State Treasurer shall transfer



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1amounts not to exceed $3,000,000 in aggregate during a fiscal
2year, for a period of 5 years, from the Road Fund to the
3Working Capital Revolving Loan Fund as requested by the
4Secretary of Transportation or as soon thereafter as may be
6    (b) No transfer may be requested or ordered if the
7available balance in the Working Capital Revolving Loan Fund is
8equal to or greater than $6,000,000.
9    Section 99. Effective date. This Act takes effect July 1,