97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB0262

 

Introduced 01/25/11, by Rep. Linda Chapa LaVia

 

SYNOPSIS AS INTRODUCED:
 
30 ILCS 550/3

    Amends the Public Construction Bond Act concerning a cash bond or other surety from a builder or developer. Allows a county or municipality to require a cash bond or other surety (instead of requiring the county or municipality to accept a letter of credit or other instrument issued by a financial institution). Eliminates a procedure allowing an engineer or architect to certify completion of a project and requiring the county or municipality to pay interest on any unrefunded bond beginning 60 days after written notification of completion. Eliminates the preemption of home rule powers. Effective immediately.


LRB097 05064 PJG 45105 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB0262LRB097 05064 PJG 45105 b

1    AN ACT concerning local government.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Public Construction Bond Act is amended by
5changing Section 3 as follows:
 
6    (30 ILCS 550/3)
7    Sec. 3. Builder or developer cash bond or other surety.
8    (a) A county or municipality may not require a cash bond,
9irrevocable letter of credit, surety bond, or letter of
10commitment issued by a bank, savings and loan association,
11surety, or insurance company from a builder or developer to
12guarantee completion of a project improvement when the builder
13or developer has filed with the county or municipal clerk a
14current, irrevocable letter of credit, surety bond, or letter
15of commitment issued by a bank, savings and loan association,
16surety, or insurance company, deemed good and sufficient by the
17county or municipality accepting such security, in an amount
18equal to or greater than 110% of the amount of the bid on each
19project improvement. A county or municipality builder or
20developer has the option to require utilize a cash bond,
21irrevocable letter of credit, surety bond, or letter of
22commitment, issued by a bank, savings and loan association,
23surety, or insurance company, deemed good and sufficient by the

 

 

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1county or municipality, to satisfy any cash bond requirement
2established by a county or municipality. Except for a
3municipality or county with a population of 1,000,000 or more,
4the county or municipality must approve and deem a surety or
5insurance company good and sufficient for the purposes set
6forth in this Section if the surety or insurance company is
7authorized by the Illinois Department of Insurance to sell and
8issue sureties in the State of Illinois.
9    (b) If a county or municipality receives a cash bond,
10irrevocable letter of credit, or surety bond from a builder or
11developer to guarantee completion of a project improvement, the
12county or municipality shall (i) register the bond under the
13address of the project and the construction permit number and
14(ii) give the builder or developer a receipt for the bond. The
15county or municipality shall establish and maintain a separate
16account for all cash bonds received from builders and
17developers to guarantee completion of a project improvement.
18    (c) The county or municipality shall refund a cash bond to
19a builder or developer, or release the irrevocable letter of
20credit or surety bond, within 60 days after the builder or
21developer notifies the county or municipality in writing of the
22completion of the project improvement for which the bond was
23required. For these purposes, "completion" means that the
24county or municipality has determined that the project
25improvement for which the bond was required is complete or a
26licensed engineer or licensed architect has certified to the

 

 

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1builder or developer and the county or municipality that the
2project improvement has been completed to the applicable codes
3and ordinances. The county or municipality shall pay interest
4to the builder or developer, beginning 60 days after the
5builder or developer notifies the county or municipality in
6writing of the completion of the project improvement, on any
7bond not refunded to a builder or developer, at the rate of 1%
8per month.
9    (d) (Blank). A home rule county or municipality may not
10require or maintain cash bonds, irrevocable letters of credit,
11surety bonds, or letters of commitment issued by a bank,
12savings and loan association, surety, or insurance company from
13builders or developers in a manner inconsistent with this
14Section. This Section supersedes and controls over other
15provisions of the Counties Code or Illinois Municipal Code as
16they apply to and guarantee completion of a project improvement
17that is required by the county or municipality, regardless of
18whether the project improvement is a condition of annexation
19agreements. This Section is a denial and limitation under
20subsection (i) of Section 6 of Article VII of the Illinois
21Constitution on the concurrent exercise by a home rule county
22or municipality of powers and functions exercised by the State.
23(Source: P.A. 96-1000, eff. 7-2-10.)
 
24    Section 99. Effective date. This Act takes effect upon
25becoming law.