50 ILCS 415/ Local Government Defeasance of Debt Law.

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50 ILCS 415/0.01

(50 ILCS 415/0.01) (from Ch. 85, par. 4400)

Sec. 0.01.

Short title.

This Article may be cited as the

Local Government Defeasance of Debt Law.

(Source: P.A. 86-1324.)

50 ILCS 415/1

(50 ILCS 415/1) (from Ch. 85, par. 4401)

Sec. 1.

As used in this Article:

(a) "Unit of local government" means any county, city, village,
incorporated town, township, school district, special district, and unit,
designated as a unit of local government by law, which exercises limited
governmental powers or powers in respect to limited governmental subjects.

(b) "Debt" means indebtedness incurred by a unit of local government
through the issuance and sale of bonds, or through an equivalent manner of
borrowing for which notes or other evidences of indebtedness are issued
fixing the amount of principal and interest from time to time payable to
retire the indebtedness.

(c) "Gross defeasance" means the deposit in escrow of cash or cash
equivalents in an amount sufficient to pay all remaining principal and
interest until maturity of any debt outstanding.

(d) "Net defeasance" means the deposit in escrow of moneys in an amount
sufficient, when added to guaranteed interest earnings of such funds, to pay
all remaining principal and interest until maturity of any debt outstanding.

(e) "Escrow" means a fiduciary account established with (i) any banking
corporation which is both organized under the Illinois Banking Act, as
amended and authorized to accept and administer trusts in this State, or
(ii) any national banking association which has its principal place of
business in this State and which also is authorized to accept and
administer trusts in this State.

(Source: P.A. 83-1536.)

50 ILCS 415/2

(50 ILCS 415/2) (from Ch. 85, par. 4402)

Sec. 2.

Whenever it is advantageous and in the public interest to do
so, a unit of local government is empowered to effect the net defeasance
or the gross defeasance of any outstanding debt lawfully incurred by such
unit of local government.  When an escrow has been established to effect
such net defeasance or gross defeasance of an outstanding debt, the moneys
or cash equivalents deposited in such escrow shall be invested and reinvested,
pursuant to the direction of the governing authority of such unit of local
government, in bonds and other interest bearing obligations of the State
of Illinois, or in such accounts, certificates, bills, obligations, shares,
pools or other securities as are authorized for the investment of public
funds under "An Act relating to certain investments of public funds by public
agencies", approved July 23, 1943, as amended; and all interest income or
profit derived therefrom in excess of the amounts needed for expenses of
administration of the escrow and for payment of all remaining principal
and interest until maturity of the debt which is the subject of that escrow
shall be transmitted when earned to such unit of local government, pursuant
to directions from its governing authority, to be credited to such funds as
the governing authority of such unit of local government shall by ordinance
or resolution direct.

(Source: P.A. 83-1536.)

50 ILCS 415/3

(50 ILCS 415/3) (from Ch. 85, par. 4403)

Sec. 3.

Nothing in this Act shall be construed to permit any invested
or reinvested moneys or cash equivalents or any income or profit derived
therefrom to be transmitted out of any escrow established pursuant to Section
2 of this Act until such time as there are sufficient moneys or cash
equivalents invested or reinvested in such escrow, independent of future
interest income or profit to be derived therefrom, to pay all remaining
principal and interest until maturity of the debt which is the subject of
that escrow, nor to permit any invested or reinvested moneys or cash
equivalents or any income or profit derived therefrom to be transmitted out
of such escrow if such action would reduce the amount of such escrow below
the amount needed for payment of all remaining principal and interest until
maturity of the debt which is the subject of that escrow.

(Source: P.A. 83-1536.)