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Public Act 92-0879
HB2277 Enrolled LRB9205634MWcd
AN ACT in relation to local government bonds.
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 3, 9, 15, 16.5, and 17 and by
adding Section 5.5 as follows:
(30 ILCS 350/3) (from Ch. 17, par. 6903)
Sec. 3. Definitions. In this Act words or terms shall
have the following meanings unless the context or usage
clearly indicates that another meaning is intended.
(a) "Alternate bonds" means bonds issued in lieu of
revenue bonds or payable from a revenue source as provided in
Section 15.
(b) "Applicable law" means any provision of law,
including this Act, authorizing governmental units to issue
bonds.
(c) "Backdoor referendum" means the submission of a
public question to the voters of a governmental unit,
initiated by a petition of voters, residents or property
owners of such governmental unit, to determine whether an
action by the governing body of such governmental unit shall
be effective, adopted or rejected.
(d) "Bond" means any instrument evidencing the
obligation to pay money authorized or issued by or on behalf
of a governmental unit under applicable law, including
without limitation, bonds, notes, installment or financing
contracts, leases, certificates, tax anticipation warrants or
notes, vouchers, and any other evidences of indebtedness.
(e) "Debt service" on bonds means the amount of
principal, interest and premium, if any, when due either at
stated maturity or upon mandatory redemption.
(f) "Enterprise revenues" means the revenues of a
utility or revenue producing enterprise from which revenue
bonds may be payable.
(g) "General obligation bonds" means bonds of a
governmental unit for the payment of which the governmental
unit is empowered to levy ad valorem property taxes upon all
taxable property in a governmental unit without limitation as
to rate or amount.
(h) "Governing body" means the legislative body,
council, board, commission, trustees, or any other body, by
whatever name it is known, having charge of the corporate
affairs of a governmental unit.
(h-5) "Governmental revenue source" means a revenue
source that is either (1) federal or State funds that the
governmental unit has received in some amount during each of
the 3 fiscal years preceding the issuance of alternate bonds
or (2) revenues to be received from another governmental unit
under an intergovernmental cooperation agreement.
(i) "Governmental unit" means a county, township,
municipality, municipal corporation, unit of local
government, school district, special district, public
corporation, body corporate and politic, forest preserve
district, fire protection district, conservation district,
park district, sanitary district, and all other local
governmental agencies, including any entity created by
intergovernmental agreement among any of the foregoing
governmental units, but does not include any office, officer,
department, division, bureau, board, commission, university,
or similar agency of the State.
(j) "Ordinance" means an ordinance duly adopted by a
governing body or, if appropriate under applicable law, a
resolution so adopted.
(k) "Revenue bonds" means any bonds of a governmental
unit other than general obligation bonds, but "revenue bonds"
does include any debt authorized under Section 11-29.3-1 of
the Illinois Municipal Code.
(l) "Revenue source" means a source of funds, other than
enterprise revenues, received or available to be received by
a governmental unit and available for any one or more of its
corporate purposes.
(m) "Limited bonds" means bonds, excluding leases,
notes, installment or financing contracts, certificates, tax
anticipation warrants or notes, vouchers, and any other
evidences of indebtedness, issued under Section 15.01 of this
Act.
(Source: P.A. 89-385, eff. 8-18-95; 89-658, eff. 1-1-97.)
(30 ILCS 350/5.5 new)
Sec. 5.5. Notices.
(a) Whenever applicable law requires notice in
connection with the issuance of bonds, the notice shall be
sufficient if the notice appears above the name or title of
the person required to give the notice.
(b) Whenever applicable law requires any notice of a
hearing or meeting held in connection with the issuance of
bonds to be supplied to the members of the governing body or
news media, such notice may be supplied by facsimile
transmission (commonly referred to as fax) or electronic
transmission (commonly referred to as e-mail).
(30 ILCS 350/9) (from Ch. 17, par. 6909)
Sec. 9. Provisions for interest. (a) The proceeds of
bonds may be used to provide for the payment of interest upon
such bonds for a period not to exceed the greater of 2 years
or a period ending 6 months after the estimated date of
completion of the acquisition and construction of the project
or accomplishment of the purpose for which such bonds are
issued.
(b) In addition it shall be lawful for the governing
body of any governmental unit issuing bonds to appropriate
money for the purpose of paying interest on such bonds during
the period stated in subsection (a) of this Section. Such
appropriation may be made in the ordinance authorizing such
bonds and shall be fully effective upon the effective date of
such ordinance without any further notice, publication or
approval whatsoever.
(c) The governing body of any governmental unit may
authorize the transfer of interest earned on any of the
moneys of the governmental unit, including moneys set aside
to pay debt service, into the fund of the governmental unit
that is most in need of the interest. This subsection does
not apply to any interest earned that has been earmarked or
restricted by the governing body for a designated purpose.
This subsection does not apply to any interest earned on any
funds for the purpose of municipal retirement under the
Illinois Pension Code and tort immunity under the Local
Governmental and Governmental Employees Tort Immunity Act.
Interest earned on those funds may be used only for the
purposes authorized for the respective funds from which the
interest earnings were derived.
(Source: P.A. 85-1419.)
(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 debt service 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 debt
service 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 held before July 1, 1999, has been given in
accordance with the provisions of Section 12-5 of the
Election Code in effect at the time of the bond referendum,
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. Notices required in connection with
the submission of public questions on or after July 1, 1999
shall be as set forth in Section 12-5 of the Election Code.
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
1.25 figure in the preceding sentence shall be reduced to
1.10 if the revenue source is a governmental revenue source.
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.
(c-1) In the case of alternate bonds issued as variable
rate bonds (including refunding bonds), debt service shall be
projected based on the rate for the most recent date shown in
the 20 G.O. Bond Index of average municipal bond yields as
published in the most recent edition of The Bond Buyer
published in New York, New York (or any successor publication
or index, or if such publication or index is no longer
published, then any index of long-term municipal tax-exempt
bond yields selected by the governmental unit), as of the
date of determination referred to in subsection (c) of this
Section. Any interest or fees that may be payable to the
provider of a letter of credit, line of credit, surety bond,
bond insurance, or other credit enhancement relating to such
alternate bonds and any fees that may be payable to any
remarketing agent need not be taken into account for purposes
of such projection. If the governmental unit enters into an
agreement in connection with such alternate bonds at the time
of issuance thereof pursuant to which the governmental unit
agrees for a specified period of time to pay an amount
calculated at an agreed-upon rate or index based on a
notional amount and the other party agrees to pay the
governmental unit an amount calculated at an agreed-upon rate
or index based on such notional amount, interest shall be
projected for such specified period of time on the basis of
the agreed-upon rate payable by the governmental unit.
(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 (or .10 for
governmental revenue sources) 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; 91-57, eff. 6-30-99;
91-493, eff. 8-13-99; 91-868, eff. 6-22-00.)
(30 ILCS 350/16.5)
Sec. 16.5. Proposition for bonds. For all elections
held after July 1, 2000, the form of a proposition to
authorize the issuance of bonds pursuant to either a
referendum or backdoor referendum may be as set forth in this
Section as an alternative to the form of proposition as
otherwise set forth by applicable law. The proposition
authorized by this Section shall be in substantially the
following form:
Shall (name of governmental unit) (state purpose for
the bond issue) and issue its bonds to the amount of $
(state amount) for the purpose of paying the costs
thereof?
If a school district expects to receive a school
construction grant from the State of Illinois has received a
grant entitlement from the Illinois State Board of Education
pursuant to the School Construction Law for a school
construction project to be financed in part with proceeds of
a bond authorized by referendum, then the form of proposition
may at the option of the school district additionally contain
substantially the following language:
(Name of school district) expects to receive a
school construction grant from the State of Illinois has
received a grant entitlement in the amount of $ (state
amount) from the Illinois State Board of Education
pursuant to the School Construction Law for the school
construction project to be financed in part with proceeds
of the bonds, based on (i) a grant entitlement from the
State Board of Education and (ii) current recognized
project costs determined by the Capital Development
Board.
(Source: P.A. 91-868, eff. 6-22-00.)
(30 ILCS 350/17) (from Ch. 17, par. 6917)
Sec. 17. 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
stated value at maturity.
This subsection 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, including investments, investment
agreements, or investment services, 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; provided, however,
that investments, investment agreements, or investment
services purchased in connection with a bond issue may be
paid through installments made at stated intervals for a
period of time not in excess of the maximum term of such bond
issue. Each governmental unit may issue certificates
evidencing the indebtedness incurred under the lease or
agreement. The governing body may provide for the treasurer,
comptroller, finance officer, or other officer of the
governing body charged with financial administration to act
as counter-party to any such lease or agreement, as nominee
lessor or seller. When the lease or agreement is executed by
the officer of the governmental unit authorized by the
governing body to bind the governmental unit thereon by the
execution thereof and is filed with and executed by the
nominee lessor or seller, the lease or agreement shall be
sufficiently executed so as to permit the governmental unit
to issue certificates evidencing the indebtedness incurred
under the lease or agreement. The certificates shall be
valid whether or not an appropriation with respect thereto is
included in any annual or supplemental budget adopted by the
governmental unit. From time to time, as the governing body
executes contracts for the purpose of acquiring and
constructing the services or real or personal property that
is a part of the subject of the lease or agreement, including
financial, legal, architectural, and engineering services
related to the lease or agreement, the governing body shall
order the contracts filed with its nominee officer, and that
officer shall identify the contracts to the lease or
agreement; that identification shall permit the payment of
the contract from the proceeds of the certificates; and the
nominee officer shall duly apply or cause to be applied
proceeds of the certificates to the payment of the contracts.
The governing body of each governmental unit may sell, lease,
convey, and reacquire either real or personal property, or
any interest in 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, acquire by
purchase agreement, or otherwise reacquire 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. 91-493, eff. 8-13-99; 91-868, eff. 6-22-00.)
Section 99. Effective date. This Act takes effect upon
becoming law.
Passed in the General Assembly January 06, 2003.
Approved January 13, 2003.
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