Public Act 90-0325 of the 90th General Assembly
Public Act 90-0325
HB1880 Enrolled LRB9003959MWksA
AN ACT to amend the Illinois Farm Development Act by
changing Sections 11, 12.1, 12.2, and 12.4.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Farm Development Act is amended
by changing Sections 11, 12.1, 12.2, and 12.4 as follows:
(20 ILCS 3605/11) (from Ch. 5, par. 1211)
Sec. 11. Bonded indebtedness limitation. The Authority
shall not have outstanding at any one time bonds and notes
for any of its corporate purposes in an aggregate principal
amount exceeding $300,000,000, $50,000,000 of which shall be
used for research and development purposes, excluding bonds
and notes issued to refund outstanding bonds and notes and
excluding the State Guarantees under Sections 12.1, 12.2,
12.4, and 12.5. The Authority shall not have outstanding at
any one time State Guarantees under Section 12.1 in an
aggregate principal amount exceeding $160,000,000. The
Authority shall not have outstanding at any one time State
Guarantees under Sections 12.2, 12.4, and 12.5 in an
aggregate principal amount exceeding $50,000,000 $35,000,000.
(Source: P.A. 89-527, eff. 7-19-96.)
(20 ILCS 3605/12.1) (from Ch. 5, par. 1212.1)
Sec. 12.1. State Guarantees for existing debt.
(a) The Authority is authorized to issue State
Guarantees for farmers' existing debts held by a lender. For
the purposes of this Section, a farmer shall be a resident of
Illinois, who is a principal operator of a farm or land, at
least 50% of whose annual gross income is derived from
farming and whose debt to asset ratio shall not be less than
40%, except in those cases where the applicant has previously
used the guarantee program there shall be no debt to asset
ratio or income restriction. For the purposes of this
Section, debt to asset ratio shall mean the current
outstanding liabilities of the farmer divided by the current
outstanding assets of the farmer. The Authority shall
establish the maximum permissible debt to asset ratio based
on criteria established by the Authority.
Lenders shall apply for the State Guarantees on forms
provided by the Authority and certify that the application
and any other documents submitted are true and correct. The
lender or borrower, or both in combination, shall pay an
administrative fee as determined by the Authority. The
applicant shall be responsible for paying any fees or charges
involved in recording mortgages, releases, financing
statements, insurance for secondary market issues and any
other similar fees or charges as the Authority may require.
The application shall at a minimum contain the farmer's name,
address, present credit and financial information, including
cash flow statements, financial statements, balance sheets,
and any other information pertinent to the application, and
the collateral to be used to secure the State Guarantee. In
addition, the lender must agree to bring the farmer's debt to
a current status at the time the State Guarantee is provided
and must also agree to charge a fixed or adjustable interest
rate which the Authority determines to be below the market
rate of interest generally available to the borrower. If
both the lender and applicant agree, the interest rate on the
State Guarantee Loan can be converted to a fixed interest
rate at any time during the term of the loan.
Any State Guarantees provided under this Section (i)
shall not exceed $500,000 $300,000 per farmer, (ii) shall be
set up on a payment schedule not to exceed 30 years, and but
shall be no longer than 30 10 years in duration, and (iii)
shall be subject to an annual review and renewal by the
lender and the Authority; provided that only one such State
Guarantee shall be outstanding per farmer at any one time.
No State Guarantee shall be revoked by the Authority without
a 90 day notice, in writing, to all parties. In those cases
were the borrower has not previously used the guarantee
program, the lender shall not call due any loan during the
first 3 years for any reason except for lack of performance
or insufficient collateral. The lender can review and
withdraw or continue with the State Guarantee on an annual
basis after the first 3 years of the loan, provided a 90 day
notice, in writing, to all parties has been given.
(b) The Authority shall provide or renew a State
Guarantee to a lender if:
(i) A fee equal to 25 basis points on the loan is
paid to the Authority on an annual basis by the lender.
(ii) The application provides collateral acceptable
to the Authority that is at least equal to the State's
portion of the Guarantee to be provided.
(iii) The lender assumes all responsibility and
costs for pursuing legal action on collecting any loan
that is delinquent or in default.
(iv) The lender is responsible for the first 15% of
the outstanding principal of the note for which the State
Guarantee has been applied.
(c) There is hereby created outside of the State
Treasury a special fund to be known as the Illinois
Agricultural Loan Guarantee Fund. The State Treasurer shall
be custodian of this Fund. Any amounts in the Illinois
Agricultural Loan Guarantee Fund not currently needed to meet
the obligations of the Fund shall be invested as provided by
law, and all interest earned from these investments shall be
deposited into the General Revenue Fund until the Fund
reaches the maximum amount established in this Section;
thereafter, interest earned shall be deposited into the
General Revenue Fund., except that After September 1, 1989,
annual investment earnings equal to 1.5% of the Fund shall
remain in the Fund to be used for the purposes established in
Section 12.3 of this Act.
The Authority is authorized to transfer no more than
$45,000,000 to the Fund during the duration of the State
Guarantee program to secure State Guarantees issued under
this Section and the State shall not be liable for more than
$45,000,000 to secure State Guarantees issued under this
Section. If for any reason the General Assembly fails to make
an appropriation sufficient to meet these obligations, this
Act shall constitute an irrevocable and continuing
appropriation of an amount necessary to secure guarantees as
defaults occur up to an amount equal to the difference
between the $45,000,000 obligation and all amounts previously
transferred to the Illinois Agricultural Loan Guarantee Fund
and the irrevocable and continuing authority for, and
direction to, the State Treasurer and the Comptroller to make
the necessary transfers to the Illinois Agricultural Loan
Guarantee Fund, as directed by the Governor, out of the
General Revenue Fund. Any amounts transferred from the
Illinois Agricultural Loan Guarantee Fund to the General
Revenue Fund, under powers granted to the Governor by Public
Act 87-14, shall not be considered in determining if the
maximum of $45,000,000 has been transferred into the Illinois
Agricultural Loan Guarantee Fund.
Within 30 days after November 15, 1985, the Authority may
transfer up to $7,000,000 from available appropriations into
the Illinois Agricultural Loan Guarantee Fund for the
purposes of this Act. Thereafter, the Authority may transfer
additional amounts into the Illinois Agricultural Loan
Guarantee Fund to secure guarantees for defaults as defaults
occur.
In the event of default by the farmer, the lender shall
be entitled to, and the Authority shall direct payment on,
the State Guarantee after 90 days of delinquency. All
payments by the Authority shall be made from the Illinois
Agricultural Loan Guarantee Fund to satisfy claims against
the State Guarantee. The Illinois Agricultural Loan
Guarantee Fund shall guarantee receipt of payment of the 85%
of the principal and interest owed on the State Guarantee
Loan by the farmer to the guarantee holder.
It shall be the responsibility of the lender to proceed
with the collecting and disposing of collateral on the State
Guarantee within 14 months of the time the State Guarantee is
declared delinquent; provided, however, that the lender shall
not collect or dispose of collateral on the State Guarantee
without the express written prior approval of the Authority.
If the lender does not dispose of the collateral within 14
months, the lender shall be liable to repay to the State
interest on the State Guarantee equal to the same rate which
the lender charges on the State Guarantee; provided, however,
that the Authority may extend the 14 month period for a
lender in the case of bankruptcy or extenuating
circumstances. The Fund shall be reimbursed for any amounts
paid under this Section upon liquidation of the collateral.
The Authority, by resolution of the Board, may borrow sums
from the Fund and provide for repayment as soon as may be
practical upon receipt of payments of principal and interest
by a farmer. Money may be borrowed from the Fund by the
Authority for the sole purpose of paying certain interest
costs for farmers associated with selling a loan subject to a
State Guarantee in a secondary market as may be deemed
reasonable and necessary by the Authority.
(Source: P.A. 88-571, eff. 8-11-94; 89-154, eff. 7-19-95.)
(20 ILCS 3605/12.2) (from Ch. 5, par. 1212.2)
Sec. 12.2. State Guarantees for loans to farmers and
agribusiness; eligibility.
(a) The Authority is authorized to issue State
Guarantees to lenders for loans to eligible farmers and
agribusinesses for purposes set forth in this Section. For
purposes of this Section, an eligible farmer shall be a
resident of Illinois (i) who is principal operator of a farm
or land, at least 50% of whose annual gross income is derived
from farming, (ii) whose annual total sales of agricultural
products, commodities, or livestock exceeds $20,000, and
(iii) whose net worth does not exceed $500,000. An eligible
agribusiness shall be that as defined in Section 2 of this
Act.
The Authority may approve applications by farmers and
agribusinesses that promote diversification of the farm
economy of this State through the growth and development of
new crops or livestock not customarily grown or produced in
this State or that emphasize a vertical integration of grain
or livestock produced or raised in this State into a finished
agricultural product for consumption or use. "New crops or
livestock not customarily grown or produced in this State"
shall not include corn, soybeans, wheat, swine, or beef or
dairy cattle. "Vertical integration of grain or livestock
produced or raised in this State" shall include any new or
existing grain or livestock grown or produced in this State.
Lenders shall apply for the State Guarantees on forms
provided by the Authority, certify that the application and
any other documents submitted are true and correct, and pay
an administrative fee as determined by the Authority. The
applicant shall be responsible for paying any fees or charges
involved in recording mortgages, releases, financing
statements, insurance for secondary market issues and any
other similar fees or charges as the Authority may require.
The application shall at a minimum contain the farmer's or
agribusiness' name, address, present credit and financial
information, including cash flow statements, financial
statements, balance sheets, and any other information
pertinent to the application, and the collateral to be used
to secure the State Guarantee. In addition, the lender must
agree to charge an interest rate, which may vary, on the loan
that the Authority determines to be below the market rate of
interest generally available to the borrower. If both the
lender and applicant agree, the interest rate on the State
Guarantee Loan can be converted to a fixed interest rate at
any time during the term of the loan.
Any State Guarantees provided under this Section (i)
shall not exceed $500,000 $300,000 per farmer or an amount as
determined by the Authority on a case-by-case basis for an
agribusiness, (ii) shall not exceed a term of 15 years, and
(iii) shall be subject to an annual review and renewal by the
lender and the Authority; provided that only one such State
Guarantee shall be made per farmer or agribusiness, except
that additional State Guarantees may be made for purposes of
expansion of projects financed in part by a previously issued
State Guarantee. No State Guarantee shall be revoked by the
Authority without a 90 day notice, in writing, to all
parties. The lender shall not call due any loan for any
reason except for lack of performance, insufficient
collateral, or maturity. A lender may review and withdraw or
continue with a State Guarantee on an annual basis after the
first 5 years following closing of the loan application if
the loan contract provides for an interest rate that shall
not vary. A lender shall not withdraw a State Guarantee if
the loan contract provides for an interest rate that may
vary, except for reasons set forth herein.
(b) The Authority shall provide or renew a State
Guarantee to a lender if:
i. A fee equal to 25 basis points on the loan is
paid to the Authority on an annual basis by the lender.
ii. The application provides collateral acceptable
to the Authority that is at least equal to the State's
portion of the Guarantee to be provided.
iii. The lender assumes all responsibility and
costs for pursuing legal action on collecting any loan
that is delinquent or in default.
iv. The lender is responsible for the first 15% of
the outstanding principal of the note for which the State
Guarantee has been applied.
(c) There is hereby created outside of the State
Treasury a special fund to be known as the Illinois Farmer
and Agribusiness Loan Guarantee Fund. The State Treasurer
shall be custodian of this Fund. Any amounts in the Fund not
currently needed to meet the obligations of the Fund shall be
invested as provided by law, and all interest earned from
these investments shall be deposited into the General Revenue
Fund until the Fund reaches the maximum amounts established
in this Section; thereafter, interest earned shall be
deposited into the General Revenue Fund., except that After
September 1, 1989, annual investment earnings equal to 1.5%
of the Fund shall remain in the Fund to be used for the
purposes established in Section 12.3 of this Act.
The Authority is authorized to transfer an amount not to
exceed $15,000,000 $10,000,000 from available appropriations
and from fund balances of the Farm Emergency Assistance Fund
as of June 30 of each year to the Illinois Farmer and
Agribusiness Loan Guarantee Fund to secure State Guarantees
issued under this Section and Section 12.4 and the State
shall not be liable for more than $15,000,000 $10,000,000 to
secure State Guarantees issued under this Section and Section
12.4. If for any reason the General Assembly fails to make an
appropriation sufficient to meet these obligations, this Act
shall constitute an irrevocable and continuing appropriation
of an amount necessary to secure guarantees as defaults occur
up to an amount equal to the difference between the
$15,000,000 $10,000,000 obligation and all amounts previously
transferred to the Illinois Farmer and Agribusiness Loan
Guarantee Fund and the irrevocable and continuing authority
for, and direction to, the State Treasurer and the
Comptroller to make the necessary transfers to the Illinois
Farmer and Agribusiness Loan Guarantee Fund, as directed by
the Governor, out of the General Revenue Fund.
In the event of default by the farmer or agribusiness on
State Guarantee Loans under this Section or Section 12.4, the
lender shall be entitled to, and the Authority shall direct
payment on, the State Guarantee after 90 days of delinquency.
All payments by the Authority shall be made from the Illinois
Farmer and Agribusiness Loan Guarantee Fund to satisfy claims
against the State Guarantee.
It shall be the responsibility of the lender to proceed
with the collecting and disposing of collateral on the State
Guarantee under this Section or Section 12.4 within 14 months
of the time the State Guarantee is declared delinquent. If
the lender does not dispose of the collateral within 14
months, the lender shall be liable to repay to the State
interest on the State Guarantee equal to the same rate that
the lender charges on the State Guarantee, provided that the
Authority shall have the authority to extend the 14 month
period for a lender in the case of bankruptcy or extenuating
circumstances. The Fund shall be reimbursed for any amounts
paid under this Section upon liquidation of the collateral.
The Authority, by resolution of the Board, may borrow
sums from the Fund and provide for repayment as soon as may
be practical upon receipt of payments of principal and
interest by a farmer or agribusiness on State Guarantee Loans
under this Section or Section 12.4. Money may be borrowed
from the Fund by the Authority for the sole purpose of paying
certain interest costs for farmers or agribusinesses
associated with selling a loan subject to a State Guarantee
under this Section or Section 12.4 in a secondary market as
may be deemed reasonable and necessary by the Authority.
(Source: P.A. 87-835; 87-1268; 88-571, eff. 8-11-94.)
(20 ILCS 3605/12.4) (from Ch. 5, par. 1212.4)
Sec. 12.4. Young Farmer Loan Guarantee Program.
(a) The Authority is authorized to issue State
Guarantees to lenders for loans to finance or refinance debts
of young farmers. For the purposes of this Section, a young
farmer is a resident of Illinois who is at least 18 years of
age and who is a principal operator of a farm or land, who
derives at least 50% of annual gross income from farming,
whose net worth is not less than $10,000 and whose debt to
asset ratio is not less than 40%. For the purposes of this
Section, debt to asset ratio means current outstanding
liabilities, including any debt to be financed or refinanced
under this Section, divided by current outstanding assets.
The Authority shall establish the maximum permissible debt to
asset ratio based on criteria established by the Authority.
Lenders shall apply for the State Guarantees on forms
provided by the Authority and certify that the application
and any other documents submitted are true and correct. The
lender or borrower, or both in combination, shall pay an
administrative fee as determined by the Authority. The
applicant shall be responsible for paying any fee or charge
involved in recording mortgages, releases, financing
statements, insurance for secondary market issues, and any
other similar fee or charge that the Authority may require.
The application shall at a minimum contain the young farmer's
name, address, present credit and financial information,
including cash flow statements, financial statements, balance
sheets, and any other information pertinent to the
application, and the collateral to be used to secure the
State Guarantee. In addition, the borrower must certify to
the Authority that, at the time the State Guarantee is
provided, the borrower will not be delinquent in the
repayment of any debt. The lender must agree to charge a
fixed or adjustable interest rate that the Authority
determines to be below the market rate of interest generally
available to the borrower. If both the lender and applicant
agree, the interest rate on the State guaranteed loan can be
converted to a fixed interest rate at any time during the
term of the loan.
State Guarantees provided under this Section (i) shall
not exceed $500,000 $300,000 per young farmer, (ii) shall be
set up on a payment schedule not to exceed 30 years, but
shall be no longer than 15 years in duration, and (iii) shall
be subject to an annual review and renewal by the lender and
the Authority. A young farmer may use this program more than
once provided the aggregate principal amount of State
Guarantees under this Section to that young farmer does not
exceed $500,000 $300,000. No State Guarantee shall be
revoked by the Authority without a 90 day notice, in writing,
to all parties.
(b) The Authority shall provide or renew a State
Guarantee to a lender if:
(i) The lender pays a fee equal to 25 basis points
on the loan to the Authority on an annual basis.
(ii) The application provides collateral acceptable
to the Authority that is at least equal to the State
Guarantee.
(iii) The lender assumes all responsibility and
costs for pursuing legal action on collecting any loan
that is delinquent or in default.
(iv) The lender is at risk for the first 15% of the
outstanding principal of the note for which the State
Guarantee is provided.
(c) The Illinois Farmer and Agribusiness Loan Guarantee
Fund may be used to secure State Guarantees issued under this
Section as provided in Section 12.2.
(Source: P.A. 88-571, eff. 8-11-94; 89-154, eff. 7-19-95.)
Section 99. Effective date. This Act takes effect upon
becoming law.