Illinois General Assembly - Illinois Compiled Statutes

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20 ILCS 3501/820-50

(20 ILCS 3501/820-50)

Sec. 820-50.

Pledge of Funds by Units of Local Government.

(a) Pledge of Funds. Any unit of local government which receives funds from
the Department of Revenue, including without limitation funds received pursuant
to
Sections 8-11-1, 8-11-1.4, 8-11-5 or 8-11-6 of the Illinois Municipal Code,
the Home Rule County Retailers' Occupation Tax Act, the Home Rule County
Service
Occupation Tax Act,
Sections 25.05-2, 25.05-3 or 25.05-10 of "An Act to revise
the law in relation to counties",
Section 5.01 of the Local Mass Transit
District Act,
Section 4.03 of the Regional Transportation Authority Act,
Sections 2 or 12 of the State Revenue Sharing
Act,
or from the Department of Transportation pursuant to
Section 8 of the Motor Fuel Tax Law, or from the State Superintendent of
Education (directly or indirectly through regional superintendents of schools)
pursuant to Article 18 of the School Code, or any unit of government which
receives other funds which are at any time in the custody of the State
Treasurer, the State Comptroller, the Department of Revenue, the Department of
Transportation or the State Superintendent of Education may by appropriate
proceedings, pledge to the Authority or any entity acting on behalf of the
Authority (including, without limitation, any trustee), any or all of such
receipts to the extent that such receipts are necessary to provide revenues to
pay the principal of, premium, if any, and interest on, and other fees related
to, or to secure, any of the local government securities of such unit of local
government which have been sold or delivered to the Authority or its designee
or to pay lease rental payments to be made by such unit of local government to
the
extent that such lease rental payments secure the payment of the principal of,
premium, if any, and interest on, and other fees related to, any local
government securities which have been sold or delivered to the Authority or its
designee. Any pledge of such receipts (or any portion thereof) shall constitute
a first and prior lien thereon and shall be binding from the time the pledge is
made.

(b) Direct Payment of Pledged Receipts. Any such unit of local government
may, by such proceedings, direct that all or any of such pledged receipts
payable to
such unit of local government be paid directly to the Authority or such other
entity (including, without limitation, any trustee) for the purpose of paying
the
principal of, premium, if any, and interest on, and fees relating to, such
local
government securities or for the purpose of paying such lease rental payments
to
the extent necessary to pay the principal of, premium, if any, and interest on,
and other fees related to, such local government securities secured by such
lease rental payments. Upon receipt of a certified copy of such proceedings by
the State Treasurer, the State Comptroller, the Department of Revenue, the
Department of Transportation or the State Superintendent of Education, as the
case may be, such Department or State Superintendent shall direct the State
Comptroller and State Treasurer to pay to, or on behalf of, the Authority or
such other entity (including, without limitation, any trustee) all or such
portion of the pledged receipts from the Department of Revenue, or the
Department of Transportation or the State Superintendent of Education (directly
or indirectly through regional superintendents of schools), as the case may be,
sufficient to pay the principal of and premium, if any, and interest on, and
other fees related to, the local governmental securities for which the pledge
was made or to pay such lease rental payments securing such local government
securities for which the pledge was made. The proceedings shall constitute
authorization for such a directive to the State Comptroller to cause orders to
be drawn and to the State Treasurer to pay in accordance with such directive.
To the extent that the Authority or its designee notifies the Department of
Revenue, the Department of Transportation or the State Superintendent of
Education, as the case may be, that the unit of local government has previously
paid to the Authority or its designee the amount of any principal, premium,
interest and fees payable from such pledged receipts, the State Comptroller
shall cause orders to be drawn and the State Treasurer shall pay such pledged
receipts to the unit of local government as if they were not pledged receipts.
To the extent that such receipts are pledged and paid to the Authority or such
other entity, any taxes which have been levied or fees or charges assessed
pursuant to law on account of the issuance of such local government securities
shall be paid to the unit of local government and may be used for the purposes
for which the pledged receipts would have been used.

(c) Payment of Pledged Receipts upon Default. Any such unit of local
government may, by such proceedings, direct that such pledged receipts payable
to such unit of local government be paid to the Authority or such other entity
(including, without limitation, any trustee) upon a default in the payment of
any
principal of, premium, if any, or interest on, or fees relating to, any of the
local government securities of such unit of local government which have been
sold or delivered to the Authority or its designee or any of the local
government securities which have been sold or delivered to the Authority or its
designee and which are secured by such lease rental payments. If such local
governmental security is in default as to the payment of principal thereof,
premium, if any, or interest thereon, or fees relating thereto, to the extent
that the State Treasurer, the State Comptroller, the Department of Revenue, the
Department of Transportation or the State Superintendent of Education (directly
or indirectly through regional superintendents of schools) shall be the
custodian at any time of any other available funds or
moneys pledged to the
payment of such local government securities or such lease rental payments
securing such local government securities pursuant to this
Section and due or
payable to such a unit of local government at any time subsequent to written
notice
to the State Comptroller and State Treasurer from the Authority or any
entity acting on behalf of the Authority (including, without limitation, any
trustee) to the effect that such unit of local government has not paid or is in
default as to payment of the principal of, premium, if any, or interest on, or
fees relating to, any local government security sold or delivered to the
Authority or any such entity (including, without limitation, any trustee) or
has
not paid or is in default as to the payment of such lease rental payments
securing the payment of the principal of, premium, if any, or interest on, or
other fees relating to, any local government security sold or delivered to the
Authority or such other entity (including, without limitation, any trustee):

(i) The State Comptroller and the State Treasurer

shall withhold the payment of such funds or moneys from such unit of local government until the amount of such principal, premium, if any, interest or fees then due and unpaid has been paid to the Authority or any such entity (including, without limitation, any trustee), or the State Comptroller and the State Treasurer have been advised that arrangements, satisfactory to the Authority or such entity, have been made for the payment of such principal, premium, if any, interest and fees; and

(ii) Within 10 days after a demand for payment by the

Authority or such entity given to such unit of local government, the State Treasurer and the State Comptroller, the State Treasurer shall pay such funds or moneys as are legally available therefor to the Authority or such entity for the payment of principal of, premium, if any, or interest on, or fees relating to, such local government securities. The Authority or any such entity may carry out this Section and exercise all the rights, remedies and provisions provided or referred to in this Section.

(d) Remedies. Upon the sale or delivery of any local government securities
of
the Authority or its designee, the local government which issued such local
government securities shall be deemed to have agreed that upon its failure to
pay interest or premium, if any, on, or principal of, or fees relating to, the
local government securities sold or delivered to the Authority or any entity
acting on behalf of the Authority (including, without limitation, any trustee)
when payable, all statutory defenses to nonpayment are thereby waived. Upon a
default in payment of principal of or interest on any local government
securities issued by a unit of local government and sold or delivered to the
Authority or its designee, and upon demand on the unit of local government for
payment, if the local government securities are payable from property taxes and
funds are not legally available in the treasury of the unit of local government
to make payment, an action in mandamus for the levy of a tax by the unit of
local government to pay the principal of or interest on the local government
securities shall lie, and the Authority or such entity shall be constituted a
holder or owner of the local government securities as being in default. Upon
the occurrence of any failure or default with respect to any local government
securities issued by a unit of local government, the Authority or such entity
may thereupon avail itself of all remedies, rights and provisions of law
applicable in the circumstances, and the failure to exercise or exert any
rights or remedies within a time or period provided by law may not be raised as
a defense by the unit of local government.

(Source: P.A. 93-205, eff. 1-1-04.)