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Public Act 91-0493
HB1117 Enrolled LRB9103156MWpc
AN ACT concerning local government debt, amending named
Acts.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Local Government Debt Reform Act is
amended by changing Sections 15, 16, and 17 and by adding
Section 17.5 as follows:
(30 ILCS 350/15) (from Ch. 17, par. 6915)
Sec. 15. Double-barrelled bonds. Whenever revenue bonds
have been authorized to be issued pursuant to applicable law
or whenever there exists for a governmental unit a revenue
source, the procedures set forth in this Section may be used
by a governing body. General obligation bonds may be issued
in lieu of such revenue bonds as authorized, and general
obligation bonds may be issued payable from any revenue
source. Such general obligation bonds may be referred to as
"alternate bonds". Alternate bonds may be issued without any
referendum or backdoor referendum except as provided in this
Section, upon the terms provided in Section 10 of this Act
without reference to other provisions of law, but only upon
the conditions provided in this Section. Alternate bonds
shall not be regarded as or included in any computation of
indebtedness for the purpose of any statutory provision or
limitation except as expressly provided in this Section.
Such conditions are:
(a) Alternate bonds shall be issued for a lawful
corporate purpose. If issued in lieu of revenue bonds,
alternate bonds shall be issued for the purposes for which
such revenue bonds shall have been authorized. If issued
payable from a revenue source in the manner hereinafter
provided, which revenue source is limited in its purposes or
applications, then the alternate bonds shall be issued only
for such limited purposes or applications. Alternate bonds
may be issued payable from either enterprise revenues or
revenue sources, or both.
(b) Alternate bonds shall be subject to backdoor
referendum. The provisions of Section 5 of this Act shall
apply to such backdoor referendum, together with the
provisions hereof. The authorizing ordinance shall be
published in a newspaper of general circulation in the
governmental unit. Along with or as part of the authorizing
ordinance, there shall be published a notice of (1) the
specific number of voters required to sign a petition
requesting that the issuance of the alternate bonds be
submitted to referendum, (2) the time when such petition must
be filed, (3) the date of the prospective referendum, and
(4), with respect to authorizing ordinances adopted on or
after January 1, 1991, a statement that identifies any
revenue source that will be used to pay the principal of and
interest on the alternate bonds. The clerk or secretary of
the governmental unit shall make a petition form available to
anyone requesting one. If no petition is filed with the
clerk or secretary within 30 days of publication of the
authorizing ordinance and notice, the alternate bonds shall
be authorized to be issued. But if within this 30 days
period, a petition is filed with such clerk or secretary
signed by electors numbering the greater of (i) 7.5% of the
registered voters in the governmental unit or (ii) 200 of
those registered voters or 15% of those registered voters,
whichever is less, asking that the issuance of such alternate
bonds be submitted to referendum, the clerk or secretary
shall certify such question for submission at an election
held in accordance with the general election law. The
question on the ballot shall include a statement of any
revenue source that will be used to pay the principal of and
interest on the alternate bonds. The alternate bonds shall be
authorized to be issued if a majority of the votes cast on
the question at such election are in favor thereof provided
that notice of the bond referendum, if heretofore or
hereafter held, has been or shall be given in accordance with
the provisions of Section 12-5 of the Election Code, at least
10 and not more than 45 days before the date of the election,
notwithstanding the time for publication otherwise imposed by
Section 12-5. Backdoor referendum proceedings for bonds and
alternate bonds to be issued in lieu of such bonds may be
conducted at the same time.
(c) To the extent payable from enterprise revenues, such
revenues shall have been determined by the governing body to
be sufficient to provide for or pay in each year to final
maturity of such alternate bonds all of the following: (1)
costs of operation and maintenance of the utility or
enterprise, but not including depreciation, (2) debt service
on all outstanding revenue bonds payable from such enterprise
revenues, (3) all amounts required to meet any fund or
account requirements with respect to such outstanding revenue
bonds, (4) other contractual or tort liability obligations,
if any, payable from such enterprise revenues, and (5) in
each year, an amount not less than 1.25 times debt service of
all (i) alternate bonds payable from such enterprise revenues
previously issued and outstanding and (ii) alternate bonds
proposed to be issued. To the extent payable from one or
more revenue sources, such sources shall have been determined
by the governing body to provide in each year, an amount not
less than 1.25 times debt service of all alternate bonds
payable from such revenue sources previously issued and
outstanding and alternate bonds proposed to be issued. The
conditions enumerated in this subsection (c) need not be met
for that amount of debt service provided for by the setting
aside of proceeds of bonds or other moneys at the time of the
delivery of such bonds.
(d) The determination of the sufficiency of enterprise
revenues or a revenue source, as applicable, shall be
supported by reference to the most recent audit of the
governmental unit, which shall be for a fiscal year ending
not earlier than 18 months previous to the time of issuance
of the alternate bonds. If such audit does not adequately
show such enterprise revenues or revenue source, as
applicable, or if such enterprise revenues or revenue source,
as applicable, are shown to be insufficient, then the
determination of sufficiency shall be supported by the report
of an independent accountant or feasibility analyst, the
latter having a national reputation for expertise in such
matters, demonstrating the sufficiency of such revenues and
explaining, if appropriate, by what means the revenues will
be greater than as shown in the audit. Whenever such
sufficiency is demonstrated by reference to a schedule of
higher rates or charges for enterprise revenues or a higher
tax imposition for a revenue source, such higher rates,
charges or taxes shall have been properly imposed by an
ordinance adopted prior to the time of delivery of alternate
bonds. The reference to and acceptance of an audit or
report, as the case may be, and the determination of the
governing body as to sufficiency of enterprise revenues or a
revenue source shall be conclusive evidence that the
conditions of this Section have been met and that the
alternate bonds are valid.
(e) The enterprise revenues or revenue source, as
applicable, shall be in fact pledged to the payment of the
alternate bonds; and the governing body shall covenant, to
the extent it is empowered to do so, to provide for, collect
and apply such enterprise revenues or revenue source, as
applicable, to the payment of the alternate bonds and the
provision of not less than an additional .25 times debt
service. The pledge and establishment of rates or charges
for enterprise revenues, or the imposition of taxes in a
given rate or amount, as provided in this Section for
alternate bonds, shall constitute a continuing obligation of
the governmental unit with respect to such establishment or
imposition and a continuing appropriation of the amounts
received. All covenants relating to alternate bonds and the
conditions and obligations imposed by this Section are
enforceable by any bondholder of alternate bonds affected,
any taxpayer of the governmental unit, and the People of the
State of Illinois acting through the Attorney General or any
designee, and in the event that any such action results in an
order finding that the governmental unit has not properly set
rates or charges or imposed taxes to the extent it is
empowered to do so or collected and applied enterprise
revenues or any revenue source, as applicable, as required by
this Act, the plaintiff in any such action shall be awarded
reasonable attorney's fees. The intent is that such
enterprise revenues or revenue source, as applicable, shall
be sufficient and shall be applied to the payment of debt
service on such alternate bonds so that taxes need not be
levied, or if levied need not be extended, for such payment.
Nothing in this Section shall inhibit or restrict the
authority of a governing body to determine the lien priority
of any bonds, including alternate bonds, which may be issued
with respect to any enterprise revenues or revenue source.
In the event that alternate bonds shall have been issued
and taxes, other than a designated revenue source, shall have
been extended pursuant to the general obligation, full faith
and credit promise supporting such alternate bonds, then the
amount of such alternate bonds then outstanding shall be
included in the computation of indebtedness of the
governmental unit for purposes of all statutory provisions or
limitations until such time as an audit of the governmental
unit shall show that the alternate bonds have been paid from
the enterprise revenues or revenue source, as applicable,
pledged thereto for a complete fiscal year.
Alternate bonds may be issued to refund or advance refund
alternate bonds without meeting any of the conditions set
forth in this Section, except that the term of the refunding
bonds shall not be longer than the term of the refunded bonds
and that the debt service payable in any year on the
refunding bonds shall not exceed the debt service payable in
such year on the refunded bonds.
Once issued, alternate bonds shall be and forever remain
until paid or defeased the general obligation of the
governmental unit, for the payment of which its full faith
and credit are pledged, and shall be payable from the levy of
taxes as is provided in this Act for general obligation
bonds.
The changes made by this amendatory Act of 1990 do not
affect the validity of bonds authorized before September 1,
1990.
(Source: P.A. 90-812, eff. 1-26-99.)
(30 ILCS 350/16) (from Ch. 17, par. 6916)
Sec. 16. Levy for bonds. A governmental unit may levy a
tax for the payment of principal of and interest on general
obligation bonds or limited bonds at any time prior to March
1 of the calendar year during which the tax will be
collected. The county clerk shall accept the filing of the
ordinance levying such tax notwithstanding that such time is
subsequent to the end of the calendar year next preceding the
calendar year during which such tax will be collected. In
extending taxes for general obligation bonds, the county
clerk shall add to the levy for debt service on such bonds an
amount sufficient, in view of all losses and delinquencies in
tax collection, to produce tax receipts adequate for the
prompt payment of such debt service.
(Source: P.A. 88-676, eff. 12-14-94.)
(30 ILCS 350/17) (from Ch. 17, par. 6917)
Sec. 17. Interest not debt; debt on Leases and
installment contracts.
(a) Interest not debt; debt on leases and installment
contracts. Interest on bonds shall not be included in any
computation of indebtedness of a governmental unit for the
purpose of any statutory provision or limitation. For bonds
consisting of leases and installment or financing contracts,
(1) that portion of payments made by a governmental unit
under the terms of a bond designated as interest in the bond
or the ordinance authorizing such bond shall be treated as
interest for purposes of this Section (2) where portions of
payments due under the terms of a bond have not been
designated as interest in the bond or the ordinance
authorizing such bond, and all or a portion of such payments
is to be used for the payment of principal of and interest on
other bonds of the governmental unit or bonds issued by
another unit of local government, such as a public building
commission, the payments equal to interest due on such
corresponding bonds shall be treated as interest for purposes
of this Section and (3) where portions of payments due under
the terms of a bond have not been designated as interest in
the bond or ordinance authorizing such bond and no portion of
any such payment is to be used for the payment of principal
of and interest on other bonds of the governmental unit or
another unit of local government, a portion of each payment
due under the terms of such bond shall be treated as interest
for purposes of this Section; such portion shall be equal in
amount to the interest that would have been paid on a
notional obligation of the governmental unit (bearing
interest at the highest rate permitted by law for bonds of
the governmental unit at the time the bond was issued or, if
no such limit existed, 12%) on which the payments of
principal and interest were due at the same times and in the
same amounts as payments are due under the terms of the
bonds. The rule set forth in this Section shall be
applicable to all interest no matter when earned or accrued
or at what interval paid, and whether or not a bond bears
interest which compounds at certain intervals. For purposes
of bonds sold at amounts less than 95% of their stated value
at maturity, interest for purposes of this Section includes
the difference between the amount set forth on the face of
the bond as the original principal amount and the bond's
received for the sale of the bonds and their stated value at
maturity.
This subsection Section may be made applicable to bonds
issued prior to the effective date of this Act by passage of
an ordinance to such effect by the governing body of a
governmental unit.
(b) Purchase or lease of property. The governing body of
each governmental unit may purchase or lease either real or
personal property through agreements that provide that the
consideration for the purchase or lease may be paid through
installments made at stated intervals for a period of no more
than 20 years or another period of time authorized by law,
whichever is greater. Each governmental unit may issue
certificates evidencing the indebtedness incurred under the
agreements. The certificate shall be valid whether or not an
appropriation with respect thereto is included in any annual
or supplemental budget adopted by the governmental unit. The
governing body of each governmental unit may sell, convey,
and reacquire either real or personal property, upon any
terms and conditions and in any manner, as the governing body
shall determine, if the governmental unit will lease the
property, as authorized by this subsection or any other
applicable law.
All indebtedness incurred under this subsection, when
aggregated with the existing indebtedness of the governmental
unit, may not exceed the debt limits provided by applicable
law.
(Source: P.A. 85-1419.)
(30 ILCS 350/17.5 new)
Sec. 17.5. Bond authorization by referendum. Whenever
applicable law provides that the authorization of or the
issuance of bonds is subject to either a referendum or
backdoor referendum, the approval, once obtained, remains (i)
for 5 years after the date of the referendum or (ii) for 3
years after the end of the petition period for a backdoor
referendum. This Section applies only to a referendum or a
backdoor referendum held after the effective date of this
amendatory Act of the 91st General Assembly.
Section 10. The Illinois Municipal Code is amended by
changing Section 11-61-3 as follows:
(65 ILCS 5/11-61-3) (from Ch. 24, par. 11-61-3)
Sec. 11-61-3. The corporate authorities of each
municipality having a population of less than 1,000,000
inhabitants shall have the express power to purchase or lease
either real estate or personal property for public purposes
through contracts which provide for the consideration for
such purchase or lease to be paid through installments to be
made at stated intervals during a certain period of time,
but, in no case, shall such contracts provide for the
consideration to be paid during a period of time in excess of
20 10 years nor shall such contracts provide for the payment
of interest at a rate of more than that permitted in "An Act
to authorize public corporations to issue bonds, other
evidences of indebtedness and tax anticipation warrants
subject to interest rate limitations set forth therein",
approved May 26, 1970, as amended. The indebtedness incurred
under this Section when aggregated with existing indebtedness
may not exceed the debt limits provided in Division 5 of
Article 8 of this Code.
The amendatory Acts of 1972 and 1973 are not a limit upon
any municipality which is a home rule unit.
(Source: P.A. 84-283.)
Section 99. Effective date. This Act takes effect upon
becoming law.
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