Public Act 90-0325 of the 90th General Assembly

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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.

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