AUTHORITY: Implementing and authorized by the Illinois Finance Authority Act [20 ILCS 3501].

SOURCE: Recodified from the Illinois Farm Development Authority (8 Ill. Adm. Code 1400), the Illinois Development Finance Authority (14 Ill. Adm. Code 1200, 1210, 1220), the Illinois Educational Facilities Authority (23 Ill. Adm. Code 2310, 2320), and the Illinois Rural Bond Bank (47 Ill. Adm. 400, 410, 420) to the Illinois Finance Authority at 31 Ill. Reg. 12104; amended at 34 Ill. Reg. 497, effective December 23, 2009; amended at 34 Ill. Reg. 3272, effective February 23, 2010; amended at 39 Ill. Reg. 4924, effective March 19, 2015; recodified at 44 Ill. Reg. 14378.

SUBPART A: ILLINOIS FINANCE AUTHORITY

 

Section 1100.50  Definitions

 

The following definitions shall apply in this Part:

 

"Act" means the Illinois Finance Authority Act [20 ILCS 3501].

 

"Application" means a potential borrower application to issue bonds through the Authority pursuant to this Part.

 

"Application Fee" means the fee required to be paid to the Authority by the potential borrower at the time the application is filed.

 

"Authority" or "IFA" means the Illinois Finance Authority created by Section 801-15 of the Act.

 

"Board" means the members of the Authority, gathered in a meeting to transact Authority business.

 

"Bond Counsel" means an attorney at law or firm of attorneys of nationally recognized standing in matters pertaining to the tax-exempt nature of interest on, and the validity of, bonds issued by states and their political subdivisions, duly admitted to the practice of law before the highest court of any state of the United States of America or of the District of Columbia.  The Authority relies on a list of bond counsels published quarterly by the Bond Buyer in the "Directory of Municipal Bond Dealers".  The bond counsel or firm must have rendered a sole legal opinion in connection with the sale of State or municipal bonds (short-term issues excluded) within the two year period preceding submission of the borrower's application to the Authority.  The legal opinion rendered may have been on either publicly offered or privately placed bond issues.  Attorneys acting only as counsel to an underwriter or placement agent do not qualify.

 

"Bondholder" or "Holder" or "Noteholder" or any similar term when used with reference to a bond or note of the Authority means any person who is the bearer of any outstanding bond or note of the Authority registered to bearer or not registered, or the registered owner of any outstanding bond of the Authority which at the time is registered other than to bearer.

 

"Bonds" means and shall include bonds, notes, certificates, bond grant or revenue anticipation notes or any other evidence of indebtedness representing an obligation to pay money. (Section 801-10 of the Act)

 

"Borrower" means any governmental unit which submits an application and is accepted to issue bonds through the Authority.

 

"Chairman" means the Chairman of the Authority Board.

 

"Final Resolution" means a resolution adopted by the Authority approving the final terms of a financing by the Authority.

 

"Fiscal Year" means the fiscal year of the Authority, beginning on July 1 and ending on June 30.

 

"Fully Marketable Form" means a local governmental security duly executed and accompanied by an approving legal opinion of bond counsel.  The local governmental security so executed need not be printed or lithographed, nor be in more than one denomination.

 

"Governmental Unit" means a unit of local government as defined in Section 820-10(b) of the Act.

 

            "Local Governmental Security" means a bond or note or evidence of debt issued by a governmental unit and payable from taxes or from rates, charges or assessments.

 

"Notes" means any notes of the Authority issued under the Act.

 

"Person" means, unless limited to a natural person by the context in which it is used, a person, corporation, association, trust, partnership or cooperative. (Section 801-10 of the Act)

 

"Reserve Fund" means the Reserve Fund established as provided in Section 820-15 of the Act.

 

"Revenues" means all fees, charges, moneys, profits, payments of principal of or interest on local governmental securities and other investments, gifts, grants, contributions, appropriations and all other income derived or to be derived by the Authority under the Act.

 

"Volume Cap" means the aggregate principal amount of private activity bonds which can be issued in any given calendar year by the State and its political subdivisions (including the Authority) as obligations the interest on which is exempt from federal income taxation.  Volume cap is determined under Section 147 of the Tax Code, or its successor section in any subsequent United States Internal Revenue Code; and by the Private Activity Bond Allocation Act [30 ILCS 345].

 

 (Source:  Recodified from 8 Ill. Adm. Code 1400.10, 14 Ill. Adm. Code 1220.110 and 47 Ill. Adm. Code 400.102 at 31 Ill. Reg. 12104)

 

Section 1100.100  Composition, Appointment and Terms of Office

 

a)         The Board of the Authority shall be composed of 15 members as specified in Section 801-15 of the Act.

 

b)         Members shall be appointed and confirmed in the manner provided in Section 801-15 of the Act, and for such terms as provided in Section 801-15 of the Act and shall serve until their successors are appointed and have qualified.

 

c)         The Board may declare a vacancy for a member when it shall determine that a member has resigned, no longer resides within the State of Illinois, or has become incapacitated and rendered incapable of serving or performing duties as a member.

 

(Source:  Recodified from 8 Ill. Adm. Code 1400.20 at 31 Ill. Reg. 12104)

 

Section 1100.105  Board Chairman

 

a)         Pursuant to Section 801-15 of the Act, the Governor shall appoint a Chairman of the Board for a 2 year term.

 

b)         The Chairman shall preside at all meetings of the Authority and perform such other duties as are set forth in this Part. 

 

            c)         The Board Chairman may establish such standing, ad hoc or other special committees as he deems necessary.  The composition, Chairmen, and duties of such committees shall be specified by the Board Chairman.

 

(Source:  Recodified from 8 Ill. Adm. Code 1400.30 at 31 Ill. Reg. 12104)

 

Section 1100.110  Executive Director

 

a)         Employment of Executive Director.  The Executive Director shall be employed by the Authority in accordance with the provisions of Section 801-15 of the Act.

 

b)         Qualifications.  The Executive Director shall be a person who, by reason of education and experience, shall have demonstrated professional ability and knowledge in public administration, supervision of staff, policy formulation, agriculture and finance.

 

c)         Chief Operating Officer.  The Executive Director shall be the chief operating officer of the Authority, responsible to the Board for the execution of its policies and procedures.

 

d)         Duties

 

1)         The Executive Director shall develop the duties of the staff, direct its activities from its principal office and perform such other duties and functions as may be required by the Authority and as are expressed in the operating rules and procedures adopted and as amended from time to time by the Authority.

 

2)         The Executive Director shall also have chief responsibility for primary external liaison to all other units or branches of government and businesses in Illinois, particularly as such activity relates directly to the implementation of the Act and the policies of the Authority.

 

3)         The Executive Director is responsible for all administrative matters within the Authority:  personnel, budgeting and fiscal planning, financial statements, purchasing, fee collection, annual financial reports, annual goals and objectives statements, and compliance with all State government operational requirements.

 

4)         In particular, the Executive Director shall, on behalf of the Authority, have responsibility and commensurate authority to perform duties, including but not limited to, the following:

 

A)        provide staff and administrative services, either directly or through the use of outside contractors, for the Authority; provided, however, that the Board must approve all contracts and the appointment of candidates for all staff positions.  Responsibility for dismissal of Authority staff is that of the Executive Director;

 

B)        prepare annual operating budgets for Board approval;

 

C)        report periodically to the Board, both at and between meetings, on all aspects of the operation of the Authority, including the following:

 

i)          Key matters relating to relations with outside consulting firms and the status of legislative and State agency relations;

 

ii)         Updating Board members on progress toward its major objectives and staff progress/evaluation;

 

iii)        Providing regular briefings of Board members on agenda items prior to scheduled public meetings.

 

D)        recommend to the Board those policy and procedural options necessary to implement the provisions of the Act;

 

E)        plan, with the Chairman, all meetings of the Authority;

 

F)         maintain all records, files and reports required by the Authority;

 

G)        prepare and submit for review by the Board the reports required of the Authority, including the annual report to the Governor and members of the General Assembly;

 

H)        prepare and, as needed, revise and amend, with approval of the Board, such forms as necessary for administration of Authority programs.  The number and type of forms shall be sufficient to safeguard the interests of the Authority;

 

I)         represent the Authority whenever necessary; and

 

J)         perform other duties and exercise other authorities as directed by the Board.

 

e)         Delegation.  In order to carry out the duties and functions vested in him under the Act and the Rules of the Authority, the Executive Director may delegate to and vest in the staff of the Authority the authority to perform such duties and functions as he may deem necessary or appropriate.

 

(Source:  Recodified from 8 Ill. Adm. Code 1400.40 at 31 Ill. Reg. 12104)

 

Section 1100.115  Meetings

 

a)         Open Meetings Act.  It is the public policy of the Authority that it exists to aid in the conduct of the business of the people of the State.  It is the Authority's intent that its actions shall be taken and its deliberations be conducted openly.  The Authority shall conduct all its meetings in conformity with the provisions of the Open Meetings Act [5 ILCS 120.

 

b)         Closed Sessions.  The Authority may hold closed sessions only for the purposes permitted by the Open Meetings Act, including sessions where:

 

1)         the Board is negotiating matters with its employees or representatives;

 

2)         the Board is considering the acquisition of real property or a court proceeding against or on behalf of the Authority, but no other portion of such meetings may be closed to the public;

 

3)         the Board is considering information regarding appointment, employment or dismissal or an employee or officer or hearing testimony on a complaint lodged against an employee or officer to determine its validity, but no final action shall be taken at closed session;

 

4)         where federal regulation requires closed sessions;

 

5)         an advisory committee appointed to provide the Board with professional consultation on matters germane to its field of competence considers matters of professional ethics or performance;

 

6)         the Board meets to establish reserves or to settle claims as provided in the Local Governmental and Governmental Employees Tort Immunity Act [745 ILCS 10] if otherwise the disposition of a claim or potential claim might be prejudiced.

 

c)         Notice to Members.  Notice of the time and place of every meeting shall be given to each member at least 24 hours before such meeting.

 

d)         Meeting Schedule.  At the beginning of each fiscal year, the Authority shall prepare, make available and give public notice of a schedule of all regular meetings for such fiscal year, listing the regular dates, times and places of such meetings.  Public notice of any special meetings, or of any rescheduled or reconvened regular or special meeting, shall be given at least 24 hours before such meeting.  Public notice of reconvened meetings need not be given where the meeting is to be reconvened within 24 hours nor where announcement of the time and place of the reconvened meeting was made at the original meeting and there is no change in the agenda.

 

e)         Public Notice.  Public notice shall be given by posting a copy of the notice at the principal office of the Authority.  The Authority shall supply copies of the notice of its regular meetings, and give notice of any special, reconvened or rescheduled meeting, to any local newspaper of general circulation or any local radio or television station that has filed an annual request for such notice.  Any such news media shall also be given the same notice of all special, rescheduled or reconvened meetings in the same manner such notice is given to members of the Board.  If a change is made in the schedule of regular meeting dates, at least 10 days' notice of such change shall be given by publication in a local newspaper of general circulation.  Notice of such change shall also be posted at the principal office of the Authority, and shall be given to those news media which have filed an annual request for notice as set forth in this section.

 

f)         Agenda.  The Executive Director shall provide the agenda for each meeting to all members at least 24 hours before such meeting.  Such agenda shall include all matters to be considered at the meeting, except that any matter may be placed on the agenda with less notice with the unanimous consent of all voting members.

 

g)         Recording of Meetings.  Meetings, required to be open under the Open Meetings Act, may be recorded by tape, film, or other means by any representative of any news medium as defined in the Code of Civil Procedure [735 ILCS 5/8-701]. Installation of recording equipment must be done at such time and in such manner so as not to delay or obstruct the meeting.  Recording equipment must be operated in such manner so as not to interfere with the overall decorum and proceeding of the meeting.  If any witness refuses to testify at such meeting on the grounds that he may not be compelled under applicable law to testify if any portion of his testimony is to be broadcast or televised or if motion pictures are to be taken of him while he is testifying, no recording may be made during such witness' testimony.  Each witness shall be informed of this right prior to his testimony and shall be asked whether he intends to exercise this right.

 

h)         Quorum.  Four members of the Board shall constitute a quorum.  The affirmative vote of four of the members of the Board shall be necessary for any action requiring a vote to be taken by the Board.  A vacancy in the membership of the Board shall not impair the right of a quorum to exercise all the rights and perform all the duties of the Board as provided for in the Act.

 

i)          Reimbursement of Board Members and Staff

 

1)         Members of the Board and approved staff, upon condition of making application, shall be reimbursed for travel and subsistence expenses incurred in the performance of their duties as provided by law or by this Part. Such reimbursement shall be in accordance with the official travel regulations approved by the Governor's Travel Control Board.

 

2)         All claims for reimbursement of travel and subsistence expenses shall be submitted on State of Illinois Travel Vouchers (Form C-10).  Submissions of Travel Vouchers may be made subsequent to each meeting of the Board or may be held for submission at the conclusion of each month.  The Executive Director shall be the recipient of such vouchers for administrative processing and approval.

 

3)         For the purpose of travel expense reimbursement, expenses incurred by the Authority members participating singly, or as a unit of the whole, or as a total Authority, shall be considered to be official business of the State and of the Authority when such expenses are incurred in the following activities:

 

A)        Regular and special Authority meetings called by the Chairman through the Executive Director.

 

B)        Participation in investigations, hearings, judicial proceedings, or the like, in connection with any matter properly before the Authority.

 

C)        Participation in standing, ad hoc or other special committees prescribed by the Chairman of the Board.

 

D)        Attendance, as a representative of the Authority, at meetings conducted by agencies of the State and federal governments, and by national, State and local organizations, concerning loan programs of a similar nature except the attendance at meetings held outside the State shall have the prior approval of the Chairman and of the Executive Director.

 

j)          Rules of Order.  Meetings of the Board, and actions considered, shall be according to generally-accepted principles of parliamentary procedure.  In the event of question, Robert's Rules of Order shall govern.

 

(Source:  Recodified from 8 Ill. Adm. Code 1400.50, 60, 70 and 80 at 31 Ill. Reg. 12104)

 

Section 1100.120  Records and Reports

 

The Authority shall maintain files available to the public containing all information declared public in the Act, the regulations issued under the Act, and in the Open Meetings Act [5 ILCS 120].  All such files shall be open to reasonable public inspection and copying at the principal office of the Authority.

 

(Source:  Recodified from 8 Ill. Adm. Code 1400.90 at 31 Ill. Reg. 12104)

 

Section 1100.125  Public Participation

 

a)         Public Participation at Open Meetings.  Members of the public who wish to present their views at a Board meeting shall contact the Executive Director in writing.  Requests shall outline the subject to be addressed at the meeting.  A presentation shall be placed on the agenda of a Board meeting if the request is received by the Executive Director at least one week prior to that meeting.  Requests received by the Executive Director less than one week prior to a Board meeting shall be deferred to the following meeting.  At the Board meeting, ten minutes shall generally be scheduled for each presentation.  At the discretion of the Board, more time may be allowed.  Additional time will be allowed if the complexity of the background data so requires, or if the proposed use of the proceeds of an Authority loan must be closely scrutinized to determine that it meets the programmatic guidelines that have been set out in the applicable rules and regulations.  The Executive Director, or a designee, shall notify the requesting party of the exact time and place for the presentation before the Board.  This notification shall be by phone call, and followed up by a confirming letter.  On the date of the Board presentation, each person scheduled to make a presentation, or each member of a delegation, shall sign a registration sheet located at the reception desk.

 

b)         Petition to Promulgate, Amend, or Repeal a Rule

 

1)         An interested person or legal entity may petition the Authority requesting promulgation, amendment or repeal of a rule.  The petition shall be in writing, signed by or on the behalf of the petitioner and shall contain a statement of:

 

A)        The rule sought to be promulgated, amended or repealed.  A rule proposed to be amended shall be stated in full with proposed deletion enclosed in brackets, and proposed additions underlined.

 

B)        Factual rationale for the proposed action.

 

C)        Any propositions of law to be asserted.

 

D)        Factual account of impact on petitioner, of proposed action.

 

E)        Name and address of petitioner and any other person or entity known to be interested in the rule sought to be adopted, amended, or repealed.

 

2)         The petition should be typed or printed, and captioned BEFORE THE ILLINOIS FINANCE AUTHORITY, and shall be deemed filed when received by the Executive Director.  Upon receipt of the petition, the Executive Director shall:

 

A)        Within ten days, mail a copy of the petition to any parties named therein.  The petition shall be deemed served on the date of mailing to the last known address of the party being served.

 

B)        Submit the petition to the Board at the next regularly scheduled meeting, with recommended action.

 

3)         Within sixty days of the date on which the petition was submitted to the Board by the Executive Director, the Board shall either deny the petition or initiate rulemaking procedures pursuant to Section 1100.130 of this Part.  If the petition is denied, the Board shall issue an order setting forth the reasons in detail for denial of the petition.  The order shall be mailed to the petitioner and all other persons upon whom a copy of the petition was served.

 

c)         Declaratory Rulings.  The Board shall provide declaratory rulings as to applicability of any statutory provision, rule or other written statement of law or policy, decision or order when petitioned to do so by the public where, in the judgment of the Board, it is necessary or helpful for them to conduct their affairs in accordance with the law.  Requests for declaratory rulings shall be made to the Executive Director in writing. Within thirty to sixty days after submission of a request for declaratory ruling, the Board shall issue a ruling on the rule, statute or policy in question.  Such ruling shall be in writing, shall be filed in the public records of the Authority, and shall be maintained in the Authority's office for public inspection and copying.  The Board may decline to rule when, in the judgment of the Board, the ruling would be beyond the statutory jurisdiction of the Board, when no clear answer is determinable, or when the issue presented is pending resolution by a court of Illinois or by the attorney general.

 

(Source:  Amended at 8 Ill. Reg. 8489, effective May 31, 1984; recodified from 8 Ill. Adm. Code 1400.100 at 31 Ill. Reg. 12104)

 

Section 1100.130  Rulemaking Procedures

 

The Authority has authority to adopt and promulgate rules pursuant to the Illinois Finance Authority Act [20 ILCS 3501] and the Illinois Administrative Procedure Act [5 ILCS 100].  The Authority shall follow the following procedure in the adoption of rules:

 

a)         The Authority may at any time and in any manner direct the Executive Director to recommend a proposed rule to the Board for its review.  Such directive may specify the policy to be implemented by such proposed rule or may allow the Executive Director to recommend a policy to be implemented by such proposed rule.

 

b)         At the meeting specified by the Board or the Chairman, the Executive Director shall submit the recommended proposed rule to the Board.  Upon consideration of such submission, the Board may, upon a vote in accordance with this Part, either direct the Executive Director to revise such recommended proposed rule or approve the proposed rule as submitted or as modified by the Authority.

 

1)         Upon such approval of a rule as a proposed rule, the Authority shall:

 

A)        give at least 45 days' notice to the general public of its intent to adopt a final rule.  This period (hereinafter the "First Notice Period") shall commence on the first day the notice appears in the Illinois Register. The notice shall be in the form prescribed by the Secretary of State and shall be submitted for publication in the Illinois Register in accordance with the rules promulgated by the Secretary of State.  The notice shall include a text of the proposed rule, or the old and new materials of a proposed amendment, or the text of the provision to be repealed; the specific statutory citation upon which the proposed rule or proposed amendment or proposed repealer is based and is authorized; a complete description of the subjects and issues involved; and the time, place and manner in which interested persons may present their views and comments concerning the intended action (see 5 ILCS 100/ 5-40(b)).

 

B)        afford all interested persons reasonable opportunity to submit data, views, arguments or comments, which may, in the discretion of the Authority, be submitted either orally or in writing or both.  The notice published in the Illinois Register shall indicate the manner selected by the Authority for such submissions. The Authority shall consider fully all submissions respecting the proposed rule (see 5 ILCS 100/5-40(b)).

 

2)         The Executive Director may, within five days of the commencement of the First Notice Period, request in writing that the Joint Committee on Administrative Rules conduct a preliminary review of the proposed rulemaking.  The Executive Director shall thereafter cooperate with the Joint Committee on Administrative Rules in its review of the proposed rulemaking during the First Notice Period. (See 1 Ill. Adm. Code 220, Review of Proposed Rulemaking, and the Illinois Administrative Procedure Act [5 ILCS 100].)

 

3)         Upon fulfilling the requirements specified in Section 1100.130(b)(1), the Authority may modify the proposed rule in light of the submitted comments.

 

4)         The Authority shall, after taking the action prescribed in Section 1100.130(b)(3), provide up to 45 days additional notice (hereinafter the "Second Notice Period") of its intended action to the Joint Committee on Administrative Rules.  The Second Notice Period shall commence on the day written notice is received by the Joint Committee on Administrative Rules, and shall expire 45 days thereafter unless prior to that time the Authority shall have received a statement of objection from the Joint Committee on Administrative Rules or notification from the Joint Committee on Administrative Rules that no objection will be issued. The written notice to the Joint Committee on Administrative Rules shall include the text and location of any changes made to the proposed rule during the First Notice Period, and, if written request has been made by the Joint Committee on Administrative Rules within 30 days after initial notice appears in the Illinois Register, shall include an analysis of the economic and budgetary effects of the proposed rule.  The Executive Director shall thereafter cooperate with the Joint Committee on Administrative Rules in its review of the proposed rule.  After commencement of the Second Notice Period, no substantive change may be made to a proposed rule unless it is made in response to an objection or suggestion of the Joint Committee on Administrative Rules. (See 5 ILCS 100/5-40(c).)

 

5)         Response to JCAR Objection

 

A)        If the Joint Committee on Administrative Rules objects to the proposed rulemaking, the Executive Director shall promptly notify the Board of such objection.  The Executive Director shall also recommend that the Board respond to the objection by:

 

i)          modifying the proposed rulemaking to meet all specific objections of the Joint Committee on Administrative Rules;

 

ii)         withdrawing the proposed rulemaking; or

 

iii)        refusing to modify or withdraw the proposed rulemaking. 

 

B)        After considering the objection of the Joint Committee on Administrative Rules and the Executive Director's recommended response, the Board shall determine what response it will make with respect to the objection of the Joint Committee on Administrative Rules.  The Executive Director shall promptly, and no later in any event than ninety days after the Board's receipt of the statement of objection by the Joint Committee on Administrative Rules, notify the Joint Committee on Administrative Rules of the Authority's response and rationale for such response.  (See 1 Ill. Adm. Code 220, Review of Proposed Rulemaking.)

 

c)         After the expiration of the forty-five day Second Notice Period, after notification from the Joint Committee on Administrative Rules that no objection will be issued, or after response to a statement of objections issued by the Joint Committee on Administrative Rules, whichever is applicable, the Authority shall file in its principal office and in the Office of the Secretary of State a certified copy of each rule and modification or repeal of any rule adopted by it; such filing and certification shall be accomplished in the manner specified by the Secretary of State.  Each rule hereafter adopted is effective upon such filing, unless a later effective date is required by statute or is specified in the rule.  At the same time as such filing, the Authority shall submit to the Secretary of State, in the manner prescribed by the Secretary of State, for publication in the next available issue of the Illinois Register, a notice of rulemaking which presents:

 

1)         if the material is a new rule, the full text of the new rule; or

 

2)         if the material is an amendment to a rule or rules, the full text of the rule or rules as amended; or

 

3)         if the material is a repealer, such notice or repeal shall be published (see 5 ILCS 100/5-40(d) and 5-65) .

 

d)         The following exceptions exist with respect to the foregoing provisions:

 

1)         The provisions of this Section do not apply to any action of the Authority which does not constitute the adoption, amendment, or repeal or a statement of general applicability that implements, applies, interprets, or prescribes law or policy; statements concerning only the internal management of an agency and not affecting private rights or procedures available to persons or entities outside the agency; informal advisory rulings; intra-agency memoranda; and the prescription of standardized forms (see 5 ILCS 100/1-70).

 

2)         The notice and publication requirements of this Section do not apply to a matter relating solely to agency management, personnel practices, or to public property.  In such instances, the Authority may proceed without prior notice or hearing or upon any abbreviated notice and hearing that it finds practicable to adopt a rule at a meeting and upon a vote in conformance with this Part.  (See 5 ILCS 100/5-40(d).)

 

3)         Emergency Rules

 

A)        For purposes of this subsection (d)(3), "emergency" means the existence of any situation which the Authority finds reasonably constitutes a threat to the public interest, safety or welfare.  Where the Authority finds that an emergency exists which requires adoption of a rule upon fewer days than is required herein, and states in writing its reasons for that finding, the Authority may adopt an emergency rule without prior notice or hearing, upon filing the required notice of emergency rulemaking with the Secretary of State.  Such notice shall include the text of the emergency rule and shall be published in the Illinois Register.  Subject to applicable constitutional or statutory provisions, an emergency rule becomes effective immediately upon filing, or at a stated date less than 10 days thereafter.  The Authority's finding and a statement of the specific reasons therefor shall be filed with the rule.  The Authority shall take reasonable and appropriate measures to make emergency rules known to the persons who may be affected by them.  Emergency rulemaking shall not be effective for a period of more than 150 days, and no emergency rule shall be adopted more than once in a 24 month period.  (See 5 ILCS 100/5-45.)

 

B)        The Executive Director shall cooperate with the Joint Committee on Administrative Rules in its review of the Authority's emergency rule.  If the Joint Committee objects to the emergency rulemaking, the Executive Director shall promptly notify the Authority of such objection and the Executive Director shall also recommend that the Authority respond to the objection by modifying the emergency rulemaking to meet all specific objections of the Joint Committee on Administrative Rules, withdrawing the emergency rulemaking, or refusing to modify or withdraw the emergency rulemaking.  After considering the objection of the Joint Committee on Administrative Rules and the Executive Director's recommended response, the Authority shall determine what response it will make with respect to the objection of the Joint Committee on Administrative Rules.  The Executive Director shall promptly, and in no event later than ninety days after the Authority's receipt of the statement of objection by the Joint Committee on Administrative Rules, notify the Joint Committee on Administrative Rules of the Authority's Response and rationale for such response.  (See 1 Ill. Adm. Code 230, Review of Emergency Rules.)

 

4)         Peremptory Rulemaking

 

A)        For purposes of this subsection (d)(4), "peremptory rulemaking" means any rulemaking which is required as a result of federal law, federal rules and regulations, or an order of a court, under conditions which preclude compliance with general rulemaking requirements imposed herein and which preclude the exercise of discretion by the agency as to the content of the rule it is required to adopt.  Where the Authority finds that peremptory rulemaking is necessary and states in writing its reasons for that finding, the Authority may adopt peremptory rulemaking upon filing the required notice of rulemaking with the Secretary of State.  Such notice shall be published in the Illinois Register.  A rule adopted under the peremptory rulemaking provisions of this Section becomes effective immediately upon filing with the Secretary of State and in the Authority's principal office, or at a date required or authorized by the relevant federal law, federal rules and regulations, or court order, as stated in the notice of rulemaking.  Notice of rulemaking under this Section shall be published in the Illinois Register, and shall specifically refer to the appropriate State or federal court order or federal law, rules and regulations, and shall be in such form as the Secretary of State may reasonably prescribed by rule.  The Authority shall file the notice of peremptory rulemaking within 30 days after a change in rules is required. (See 5 ILCS 5/5-50.)

 

B)        On the same day the notice of peremptory rulemaking is filed with the Secretary of State, the Executive Director shall submit to the Joint Committee on Administrative Rules a copy of the court order or specific citation of federal law requiring the peremptory rulemaking.  The Executive Director shall thereafter cooperate with the Joint Committee on Administrative Rules in its review of the Authority's peremptory rulemaking.  If the Joint Committee on Administrative Rules objects to the peremptory rulemaking, the Executive Director shall promptly notify the Authority of such objection and the Executive Director shall also recommend that the Authority respond to the objection by modifying the peremptory rulemaking to meet all specific objections of the Joint Committee on Administrative Rules, withdrawing the peremptory rulemaking, or refusing to modify or withdraw the peremptory rulemaking. After considering the objection of the Joint Committee on Administrative Rules and the Executive Director's recommended response, the Authority shall determine what response it will make with respect to the objection of the Joint Committee on Administrative Rules.  The Executive Director shall promptly, and in no event later than ninety days after the Authority's receipt of the statement of objection by the Joint Committee on Administrative Rules, notify the Joint Committee on Administrative Rules of the Authority's response and rationale for such response. (See 1 Ill. Adm. Code 240, Review of Peremptory Rulemaking.)

 

(Source:  Recodified from 8 Ill. Adm. Code 1400.110 at 31 Ill. Reg. 12104)

 

Section 1100.135  Purchasing Rules and Regulations

 

a)         Policy.  Recognizing the necessity for economy in governmental expenditure, the Authority is committed to the practices of competitive bidding and centralized purchasing.

 

b)         Centralized Purchasing.  Certain agencies have been charged with the responsibility for the central procurement of specified goods and services. Accordingly, the Authority will obtain such goods and services as prescribed by law through such agencies, including the Department of Central Management Services and such agencies as may be designated by law.  Such goods and services shall include but not be limited to the following:  paper, stationery, envelopes, insurance, vehicle maintenance and repairs, telecommunications equipment and services, electronic data processing equipment and services and construction materials and services.

 

c)         Acquisition of Services not elsewhere provided for in this Section.  The Authority will enter into service agreements in accordance with the Illinois Procurement Code [30 ILCS 500].

 

d)         Procurement Rules.  The procurement rules of the Department of Central Management Services shall govern all procurements by the Authority.

 

e)         Governing Provision.  This Section is subject to the provisions of the Illinois Procurement Code and all other applicable laws of the State of Illinois.

 

(Source:  Recodified from 8 Ill. Adm. Code 1400.120 at 31 Ill. Reg. 12104)

 

Section 1100.140  Seal

 

The Executive Director is empowered to adopt an official seal for the Authority.

 

(Source:  Recodified from 8 Ill. Adm. Code 1400.150 at 31 Ill. Reg. 12104)

 

Section 1100.145  Principal Office

 

The principal office of the Authority shall be:  233 S. Wacker Dr., Suite 4000, Chicago IL 60606.

 

(Source:  Amended at 12 Ill. Reg. 11219, effective June 20, 1988; recodified from 8 Ill. Adm. Code 1400.160 at 31 Ill. Reg. 12104)

 

Section 1100.150  Revision

 

This Part may be amended by the affirmative vote of four or more members of the Board, such amendment to be effectuated as provided by law.

 

(Source:  Recodified from 8 Ill. Adm. Code 1400.170 at 31 Ill. Reg. 12104)

 

Section 1100.155  Construction; Waiver; Severability

 

a)         Action Consistent with Act.  Nothing in this Part or any other rule of the Authority shall be construed as prohibiting the Authority from taking any action consistent with the Act.

 

b)         Cases Not Covered by Rules.  In any case not explicitly provided for by any rule of the Authority, the Authority may take such action as it deems necessary or appropriate to carry out the purposes of the Act.

 

c)         Extension of Time.  The Authority or the Executive Director, may, upon a showing of good cause and if time permits, extend the time allowed for the performance of any function or duty required by the provisions of any rule of the Authority.  In making any determination with respect to good cause, the Authority and the Executive Director shall give due regard to all relevant facts and circumstances, including such considerations as the complexity of the issues or the existence of extraordinary circumstances or unforeseen events which have led to the request for an extension of time.

 

d)         Severability.  If any Section or provision of this Part or any other rule of the Authority is declared unconstitutional or void by a court of competent jurisdiction, or its applicability to any person or circumstances is held invalid, the constitutionality or validity of the remainder of this Part or any other rule of the Authority and the applicability to other persons and circumstances shall not be affected, and to this end, the Sections and provisions of this Part are declared to be severable.

 

(Source:  Recodified from 8 Ill. Adm. Code 1400.180 at 31 Ill. Reg. 12104)

SUBPART B: FINANCING PROGRAMS

 

Section 1100.200  Summary and Purpose

 

The Authority operates several loan programs utilizing revenue bonds and available program capital.  Some or all of these programs are available to businesses, local government, and not-for-profit institutions.  The purpose of the Authority is to utilize its statutory powers to increase jobs, retain existing jobs, assist local government in accessing affordable financing, facilitate capital financing of businesses and other eligible organizations and generally to strengthen the economy and infastructure of the State.  This Subpart describes the policies of the Authority governing access to its programs. 

 

(Source:  Recodified from 14 Ill. Adm. Code 1220.100 at 31 Ill. Reg. 12104)

 

Section 1100.202  Definitions

 

Words defined in the Illinois Finance Authority Act and in Section 1100.50 have the same meaning when used in this Subpart unless a more specific definition is prescribed in this Section. This Section establishes additional definitions for use in this Subpart only.

 

"Application" means an application for revenue bond or loan financing in the form provided by the Authority.  The form of application may be amended from time to time.

 

"Bond purchase commitment" means a letter, bond purchase agreement or other document from a bond purchaser, underwriter or placement agent indicating that the terms of a financing have been finalized and that the parties are prepared to execute the documents pertaining to the financing in their present form.  A bond purchase commitment will not be regarded as complete unless it specifies the aggregate principal amount of the bond issue, the maximum interest rate or interest rate formula, the term of the issue, the maximum and minimum prices at which the bonds will be purchased, and an amortization schedule.

 

"Borrower" means the obligor on a loan made by the Authority, whether from the proceeds of a revenue bond issue or program capital.

 

"Enterprise Zone" means an enterprise zone as defined in the Illinois Enterprise Zone Act [20 ILCS 655].

 

"Environmental Act" means the Illinois Environmental Facilities Financing Act [20 ILCS 3515].

 

"Environmental Project" means any project which constitutes an environmental facility or facilities, as those terms are used in the Environmental Act.

 

"Inducement Resolution" or "Loan Commitment Resolution" means a resolution adopted by the Authority with respect to a project indicating the Authority's willingness to provide financing for the project, subject to the conditions specified in the resolution.

 

"Tax Code" means the Internal Revenue Code, as amended, codified in Title 26, United States Code.

 

"Tax Increment Financing (TIF) District" means an area designated for redevelopment through tax increment allocation financing as provided in the Tax Increment Allocation Redevelopment Act [65 ILCS 5/11-74.4-1].

 

(Source:  Recodified from 14 Ill. Adm. Code 1220.110 at 31 Ill. Reg. 12104)

 

Section 1100.204  Application Forms

 

a)         Persons seeking financing assistance for their project through one of the Authority's financing programs must submit information to enable the members to determine the nature of the project, the likelihood of repayment of a loan, the security structure needed for a loan, and the extent to which a project meets the applicable statutory requirements and purposes.

 

b)         Each application for industrial, business, local government, not-for-profit organization or environmental projects must include to the extent applicable to the entity submitting the application and the particular facts of the project itself:

 

1)         The legal name and address of the borrower;

 

2)         The name(s) and address(es) of the principal occupant(s) or user(s), if different from the borrower;

 

3)         A statement of the type of project (i.e., whether industrial, business, local government, not-for-profit organization or environmental);

 

4)         A description of the type of business of the borrower;

 

5)         The standard industrial classification code and category for the borrower's business;

 

6)         The borrower's federal tax identification number or social security number;

 

7)         The form of organization of the borrower;

 

8)         A description of other businesses, if any, which have ownership interests in the borrower;

 

9)         The names and addresses of shareholders holding more than 10% of stock in the borrower and/or all general partners if the borrower is a partnership; or, if the owner or any property financed would be a land trust, an identification of the trust and all beneficiaries of the trust including the percentage of beneficial interest of each beneficiary of the trust;

 

10)         A listing of the names, positions, percent ownership and employment starting date, if any, of persons responsible for the management of the company;

 

11)         A description of the history and background of the business of the borrower;

 

12)         A complete description of the project including its proposed location, street address, legal description, elements of the proposed project (such as land acquisition, building construction, renovation, equipment purchases and installation, estimated project commencement and completion dates and information on tenants, if any, to whom any portion or portions of the project may be leased; and a copy of any real estate sales contract and/or any lease agreement pertaining to the project;

 

13)         A description of the products to be produced at the proposed facility;

 

14)         A description of the machinery and equipment to be acquired with proceeds of the bond issue, including acquisition lead time, the cost of the equipment and whether it is new or used;

 

15)         A statement of whether the project is located in an enterprise zone;

 

16)         Information relating to the project site, its size, access roads, railroad access and utilities;

 

17)         Site improvements existing on the land (e.g., parking lots, driveways, landscaping);

 

18)         A statement of the United States Congressional, Illinois House of Representatives, and Illinois Senate Districts in which the project is located;

 

19)         A description of the buildings existing and to be built and their intended uses;

 

20)         The amount of the proposed financing;

 

21)         A summary of project costs including:  

 

A)          a breakdown of project expenditures, the total costs of project elements, and the sources of funds for payment of such costs including sources other than bond proceeds; and

 

B)          evidence of construction and/or renovation cost estimates provided by an architect, contractor or engineer, which may be in the form of a letter from the estimator;

 

22)         A description of sources and amounts of working capital available to the borrower, including lines of credit;

 

23)         An identification of the proposed bond purchaser or purchasers, the interest rate and term of the bonds, and a copy of the letter of intent or commitment letter from such purchaser, which letter must be addressed to the borrower;

 

24)         A statement of whether the bonds will be publicly sold or privately placed;

 

25)         A statement of whether guarantees or other forms of credit enhancement, such as letters of credit, fund escrows or debt reserve with respect to payment of the bonds, will be part of the transaction;

 

26)         For commercial projects, a statement of whether the project is located in a tax increment financing district, slum or blighted area as defined in Section 3(i) of the Urban Renewal Consolidation Act of 1961 [315 ILCS 30/3(i)], commercial district or targeted redevelopment area (an area designated by local authorities and to which local authorities or other persons have committed funds to redevelop that area, to include, but not be limited to, enterprise zones, TIF districts and slum and blighted areas);

 

27)         For environmental projects, copies of orders, complaints, decrees and other official action to which the project is a response;

 

28)         Information on current or projected employment for the two years subsequent to completion of the project, and, for commercial projects, a listing of the proposed tenants, lease type, rental amounts, areas rented and the term of the leases;

 

29)         An estimate of the number of construction jobs to be created as a result of the project;

 

30)         A statement as to the effect of the project on the community, including such examples as increased traffic, generation of retail sales and real estate taxes, environmental effect, employment opportunities and quality of life;

 

31)         A statement as to the economic feasibility or marketing analysis for the project;

 

32)         The names, addresses and telephone numbers of the borrower's general counsel, bond counsel, accountant, and consultant, if any;

 

33)         The name and address of the municipality or other unit of government that exercises planning and subdivision control over the project site.  See Section 1100.206.

 

34)         A certification by the borrower that the site for the project is not located in a special flood hazard area as designated by the Illinois Department of Natural Resources, Division of Waterways, and that the borrower has made an investigation which determined that it is not in such an area.  The borrower must also certify that all information in the application is true to the best knowledge and belief of the borrower.

 

c)         Each application for a project for which the borrower is not an existing company or any project which is to be financed on a non-recourse, mortgage basis, and each application for a commercial project must include:

 

1)         A projected cash flow analysis for the project.

 

2)         An operating pro forma financial statement covering the construction period and the succeeding ten-year period giving the base year's revenues, maintenance and operating costs. Explanatory footnotes shall be written describing the assumptions used in forecasting income and expenses.  Debt service expenses should be separated by lending source, and method of depreciation must be noted.

 

d)         Unless the project is to be financed in a non-recourse, mortgage basis, each borrower for a project must:

 

1)         If the application is for an existing company, submit financial statements for the previous three (3) years of operation, plus an interim financial statement not more than 90 days old at the time the application is submitted. Audited statements are preferred if available.

 

2)         Submit a comparative summary balance sheet and a summary profit and loss statement for the previous three (3) years.

 

3)         Provide sales and earnings projections for a three (3) year period.

 

4)         If the borrower is not the operating company, but an individual, provide a personal history of the borrower and personal financial statements. Partnership borrowers must include personal statements for each partner, if the principals are to guarantee the bonds, and must indicate the party with legal authority to sign documents.

 

(Source:  Recodified from 14 Ill. Adm. Code 1220.120 at 31 Ill. Reg. 12104)

 

Section 1100.206  Notice to Municipalities

 

a)         The Authority shall not issue any bonds relating to the financing of an industrial project located within the planning and subdivision control jurisdiction of any municipality unless:

 

1)         Notice of the proposed project, including a description of the proposed financing, is submitted to the corporate authorities of such municipality; and

 

2)         Such corporate authorities, within 45 days after mailing of the notice, have failed to notify the Authority that the municipality has adopted a resolution disapproving the project, or have notified the Authority that the municipality has adopted a resolution approving the project. [20 ILCS 3505/6.1]

 

b)         The Authority will submit notice to the municipalities designated by the borrower after adoption of the inducement resolution.  It is the responsibility of each borrower and its counsel to properly identify to the Authority at the time of application any municipality having planning and subdivision control jurisdiction over any portion of the project.  The Authority will incorporate into the notice the project description and approximate financing amount provided by the borrower in the application.

 

c)         During the months of November and December, and during the two months preceding the effective date of any tax legislation changes affecting bonds, the Authority will forward the required 45-day notice to municipalities prior to adoption of an inducement resolution, if requested by the borrower.

 

d)         Changes in the project, the legal entity who will become the borrower in the financing, or the financing amount or structure shall require additional or corrected notices to be sent.  Notice to the Authority of such changes are the responsibility of the borrower.  The Authority assumes no responsibility for any delays in completing the financing arising out of a need to comply with this Section.

 

(Source:  Recodified from 14 Ill. Adm. Code 1220.130 at 31 Ill. Reg. 12104)

 

Section 1100.208  Changes in Information and Additional Information

 

a)         Borrowers are responsible for notifying the Authority in writing within 30 days of any subsequent material changes in the nature or description of the project, the financial condition of the proposed borrower, and the proposed structure or participation in the financing.

 

b)         Prior to the Board meeting at which project financing will be considered, the borrower must submit a disclosure statement which will disclose the ownership of any trust, estate, corporate and partnership entities who will be in the role of borrower or guarantor in the financing.  A form for this purpose may be provided by the Authority.

 

(Source:  Recodified from 14 Ill. Adm. Code 1220.140 at 31 Ill. Reg. 12104)

 

Section 1100.210  Meetings of the Authority

 

Regular meetings of the Authority are held in accordance with a schedule adopted by the Authority at its annual meeting in July.  The schedule of meetings for the current fiscal year of the Authority is available on request. The schedule of meetings is subject to change.  The Authority may schedule special meetings in a manner consistent with the by-laws of the Authority. Notice of the time and place of all regular and special meetings will be published in accordance with the Illinois Open Meetings Act [5 ILCS 120].

 

(Source:  Recodified from 14 Ill. Adm. Code 1220.150 at 31 Ill. Reg. 12104)

 

Section 1100.212  Eligible Projects

 

a)         Projects, other than environmental or public purpose projects, must be located in an area of Critical Labor Surplus.

 

b)         All projects to be financed on a federal tax-exempt basis must meet eligibility requirements imposed under the Tax Code.

 

c)         Borrowers may seek financing for capital projects, which include but are not limited to, the acquisition, construction, refurbishment, creation, development or redevelopment of any facility, equipment, machinery, real property, or personal property for use by an entity whether public or private, for profit or not for profit.  Project costs also include the associated expenses of a capital project, such as expenses relating to engineering and legal services, plans, specifications, surveys, estimates of costs, and determining the feasibility or practicability of the project.  Projects which are structured to receive the benefits of tax exempt status under Sections 103 and 141-147 of the Tax Code shall adhere to the expenditure regulations regarding the use of the exempt proceeds.

 

(Source:  Recodified from 14 Ill. Adm. Code 1220.160 at 31 Ill. Reg. 12104)

 

Section 1100.215  Scheduling of Project Consideration

 

a)         The Authority shall consider the adoption of an inducement resolution or a loan commitment resolution for a project at the next regularly scheduled meeting of the Authority following the receipt of a completed application, provided that the application is received not later than four weeks preceding such meeting.  If the application is received less than four weeks prior to the meeting date, the Authority may, at its option, consider the resolution at either that meeting or the next regularly scheduled meeting.  Borrowers will be notified by letter of the project number assigned to their transaction and of the time and place of the meeting at which their application will be considered.  The Authority recommends that borrowers attend such meeting in order to answer any questions posed by the Board.

 

b)         In case of a loan commitment resolution, the Authority resolution shall continue as a valid commitment for a period of time not later than the end of the sixth month following the date of the resolution.  The Authority may extend the resolution for an additional six months by motion adopted by the Board if requested by the Authority staff or borrower because of a need for additional time to conclude the project.

 

c)         Any material change in the financing structure or the financial condition of the borrower between the date of adoption of a resolution and closing of the transaction shall require reconsideration by the Board.

 

(Source:  Recodified from 14 Ill. Adm. Code 1220.200 at 31 Ill. Reg. 12104)

 

Section 1100.220  Staff Review

 

The staff of the Authority will review each complete application and place it on the agenda for consideration by the Board. The staff will make a recommendation for Board action with respect to each project based upon the criteria set forth in Sections 1100.230 and 1100.235.  The recommendations of the staff are not binding on the Board.

 

(Source:  Recodified from 14 Ill. Adm. Code 1220.210 at 31 Ill. Reg. 12104)

 

Section 1100.225  Authority Action

 

a)         The Board, using the criteria set forth in Sections 1100.230 and 1100.235 will review each application for issuance of its revenue bonds to finance a project and take any one of the following actions:

 

1)         Adopt an inducement or loan commitment resolution.

 

2)         Decline to adopt an inducement or loan commitment resolution with respect to the project.

 

3)         Table consideration of the project to allow further time for consideration by the Board or for submission of additional information by the borrower.

 

b)         The Authority may reconsider applications which have not received inducement resolutions if requested by the borrower and if a motion to so reconsider is made by a member of the Authority who was either absent or voted "no" at the time the application was originally considered.

 

(Source:  Recodified from 14 Ill. Adm. Code 1220.220 at 31 Ill. Reg. 12104)

 

Section 1100.230  General Criteria for Approval

 

In determining whether to recommend an application for financing under Section 1100.225, the Authority staff shall take into account the following criteria:

 

a)         The financial responsibility of the borrower and user of the project, including:

 

1)         The readiness of the project to proceed;

 

2)         In the case of a revenue bond of the Authority, the nature of the commitment of the proposed purchaser, the nature of the bond security, and the likelihood that the bond purchaser will be repaid based on an evaluation of the borrower's credit worthiness as evidenced in the application;

 

3)         The likelihood that the project would not proceed without the benefit of Authority financing;

 

4)         Whether the project is one of several projects to be financed through a pooled bond issue; and

 

5)         In the case of a loan or other use of Authority's funds, the ability of the borrower to repay the Authority and the sufficiency of available collateral based on an evaluation of the borrower's credit worthiness as evidenced in the application.

 

b)         The relationship between the amount of funds to be provided by the Authority and each of the following representations made by the borrower in the application:

 

1)         The number and type of jobs produced or retained by the project, including jobs in the construction industry;

 

2)         The contribution the project will make to the economic development of the area in which it is located and the need for such development;

 

3)         The need or demand for the goods and services to be provided by the project;

 

4)         Whether the project will result in the retention of businesses and jobs in the State which would otherwise be lost to the State; and

 

5)         In the case of an environmental project, the environmental benefits of the project.

 

c)         Such other evidence which the borrower makes available to demonstrate that the project advances the objectives of the Act or the Environmental Act, as the case may be.

 

(Source:  Recodified from 14 Ill. Adm. Code 1220.230 at 31 Ill. Reg. 12104)

 

Section 1100.235  Additional Criteria for Commercial Projects

 

In addition to the criteria established in Section 1100.230, in the case of commercial projects the Authority shall consider whether and to what extent any of the following conditions exists:

 

a)         The project will be occupied in whole or in substantial part by the owner of the project who is expanding his or her business and increasing employment, or whether all or a substantial part of the project has been leased to a tenant or tenants who are expanding their businesses and increasing employment.

 

b)         The project has special features which are designed to attract start-up companies, and the owner can demonstrate the likelihood of success for the project; for example, incubator facilities and projects which provide shared or low-cost services to small businesses.

 

c)         The project demonstrates a likelihood of occupancy and is located in:

 

1)         an enterprises zone;

 

2)         a Tax Increment Financing District;

 

3)         an officially designated slum or blighted area under State law; or

 

4)         any other district specifically designated for economic development by the municipality in which the project is located.

 

d)         The owner can demonstrate a reasonable expectation of increased employment from the project based upon his or her past experience in developing and leasing similar projects or upon the market for similar projects in the area.

 

(Source:  Recodified from 14 Ill. Adm. Code 1220.240 at 31 Ill. Reg. 12104)

 

Section 1100.240  Submission of Documents

 

In order for a bond financing to be considered for final resolution at the monthly meeting of the Authority, a bond purchase commitment and copies of all major financing documents, including any official statement or offering memorandum in substantially final form must be submitted to the Authority not less than 12 calendar days in advance of the applicable meeting date. Documents will be regarded as in substantially final form when submitted with a bond purchase commitment and a letter from bond counsel which states that fact. In addition, any public hearings required under the Tax Code must be held prior to the adoption of a final resolution.  Bond counsel should notify the Authority at least 7 calendar days prior to the date of the meeting if the amount of the bonds to be issued has changed from the amount set forth in the inducement resolution.  During December, and within the calendar month preceding the effective date of any tax legislation passed by either house of the United States Congress, the Authority may shorten the foregoing deadlines for projects pending at such time.

 

(Source:  Recodified from 14 Ill. Adm. Code 1220.250 at 31 Ill. Reg. 12104)

 

Section 1100.245  Public Hearing Procedures and Responsibilities

 

In the case of a project which is to be financed as a private activity bond, as that term is used in the Tax Code, bond counsel and borrowers are responsible for ensuring compliance with the public notice and hearing requirements of the Tax Code.  The Authority has established the following procedures in this Subpart to assist in meeting these requirements.

 

a)         Public hearings will be held on Monday immediately preceding each regular meeting of the Authority.  If that Monday is a public holiday, however, the public hearing will be held on the next day.  Bond counsel for the project must request the Authority to hold a public hearing for a project prior to the meeting of the Authority at which the final resolution for such project will be adopted.  Public hearings will be held by a designated officer or employee of the Authority commencing on the hearing date at the offices of the Illinois Finance Authority, or such other location designated by the Authority from time to time. Bond counsel should select a proposed date for the public hearing and notify the Authority and Authority counsel of it in writing at least three weeks prior to the date selected.  Bond counsel should include with this notification a copy of the proposed notice of public hearing.

 

b)         During the two months preceding the effective date of any tax legislation passed by either house of the United States Congress, the Authority may revise its schedule of public hearings to increase the number of public hearings to be held.  Bond counsel should consult with Authority staff to assure that the needs of the project are able to be accommodated.

 

c)         The borrower and its bond counsel are responsible for publication of public notice of any hearing required under Section 147 of the Tax Code not less than two weeks prior to the date selected for such hearing.  Public notice must be published in the State Journal-Register in Springfield, Illinois and in a newspaper of general circulation available to residents of the locality of the facility to be financed.

 

d)         Bond counsel should arrange for affidavits of publication evidencing the required publication of public notice of any hearing required under Section 147 of the Tax Code to be sent to and received by the Authority at least two business days before the public hearing.

 

(Source:  Recodified from 14 Ill. Adm. Code 1220.300 at 31 Ill. Reg. 12104)

 

Section 1100.250  Final Public Approval

 

The Governor of the State serves as the applicable elected representative for purposes of the public approval requirement of the Tax Code.  The Authority will not submit requests for approval to the Governor until the public hearing has been held and the Authority has adopted a final resolution authorizing the issuance and sale of the bonds.

 

(Source:  Recodified from 14 Ill. Adm. Code 1220.310 at 31 Ill. Reg. 12104)

 

Section 1100.255  Requests for Allocation

 

a)         The Authority will not allocate volume cap or request an allocation of volume cap from the Governor's office until all basic documents for the transaction have been submitted to the Authority in substantially final form, a public hearing with request to the financing has been duly held and the Authority has adopted a final resolution authorizing the issuance and confirming the sale of bonds.  However, during the two months preceding the effective date of any tax legislation passed by either house of the United States Congress, the Authority may waive the requirements that a final resolution be passed prior to submission by the Authority of a request for allocation for all projects pending at the time of such waiver.

 

b)         During the calendar year, the Authority may receive cessions of bonding volume.  Such ceded bonding volume may be restricted or unrestricted, depending on the resolution of the municipality pursuant to which it is ceded.  If restricted, the Authority will use such amount of ceded bonding volume in conformity with such restrictions.

 

(Source:  Recodified from 14 Ill. Adm. Code 1220.320 at 31 Ill. Reg. 12104)

 

Section 1100.260  Amendatory Resolutions

 

If material changes are made to a project or the terms of the financing, an amendatory resolution shall be required.  Borrowers are required to notify the Authority in writing and consult bond counsel and counsel to the Authority if material changes are to be made to the project or the terms of the financing which would require the adoption of such an amendatory resolution.  Such an amendatory resolution will be considered at the next regular meeting of the Authority occurring not sooner than two weeks following receipt by the Authority of such written notice.

 

(Source:  Recodified from 14 Ill. Adm. Code 1220.330 at 31 Ill. Reg. 12104)

 

Section 1100.265  Bond Counsel on Pooled Bond Issues

 

The Authority will select bond counsel to be used on all pooled financings. Such bond counsel may be paid from bond proceeds.  Each borrower in a pooled financing must be represented by its own general counsel.

 

(Source:  Recodified from 14 Ill. Adm. Code 1220.400 at 31 Ill. Reg. 12104)

 

Section 1100.270  Program Requirements; Standardized Documents

 

The Authority will prescribe program requirements for each pooled financing on an issue by issue basis.  Such program requirements will relate primarily to the individual deal structure and may relate to such matters as minimum and maximum loan sizes, and requirements to maintain the tax-exempt status of a pooled financing.  In addition, on all pooled financings borrowers and participating banks may be required to use standardized forms of certain documents prepared by bond counsel or counsel to the Authority.

 

(Source:  Recodified from 14 Ill. Adm. Code 1220.410 at 31 Ill. Reg. 12104)

 

Section 1100.275  Transcripts

 

a)         The Authority must receive after the bond closing one unbound set or originally executed counterparts of all closing documents and one bound volume containing copies of all closing documents, the cost of which shall be borne by the borrower.  Both the unbound transcript and the bound volume should include an index of closing documents or closing memorandum incorporating such index. The Authority should receive the unbound transcript within one month of the closing and the bound volume within three months after the closing.

 

b)         Each document in the unbound transcript should be filed in a separate pocket, envelope or folder.

 

c)         The bound volume must be permanently bound with library binding, with a dark blue or black cover in buckram (or its equivalent) and gold lettering.

 

d)         The spine of the bound volume should contain the following information:

 

1)         The name of the project;

 

2)         The amount of the bond issue;

 

3)         The type of bond issue (i.e., IRB or Pollution Control);

 

4)         The name "Illinois Finance Authority";

 

5)         The final maturity date of the bonds; and

 

6)         The series designation, if any (i.e., Series 198X).

 

e)         The cover of the bound volume should contain the following information:

 

1)         The name of the project;

 

2)         The amount of the bond issue;

 

3)         The type of bond issue; and

 

4)         The name "Illinois Finance Authority."

 

f)         If the documents are bound in more than one volume, each volume should specify which documents are contained in that volume (i.e., Vol. I − closing documents 1-7; Vol. II − closing documents 8-45).

 

g)         If the unbound transcript or bound volume does not meet these specifications, it will be returned and another bound volume or unbound transcript meeting these specifications will be required.

 

(Source:  Recodified from 14 Ill. Adm. Code 1220.500 at 31 Ill. Reg. 12104)

 

Section 1100.280  Authority Fees

 

a)         Authority is statutorily required to support itself through charging fees to borrowers, interest on its loans and making investments.

 

b)         The Authority shall establish appropriate fees from time to time, and shall publish such fees applicable to each of its program.  The Authority will provide borrowers with detailed information concerning the fees applicable to the particular project.

 

c)         Borrowers are advised that the Authority fees do not include any other party involved in the financing unless specifically stated.  Borrowers should consult their counsel or financial advisor as to the fees of other parties.

 

(Source:  Recodified from 14 Ill. Adm. Code 1220.510 at 31 Ill. Reg. 12104)

 

Section 1100.285  Noncompliance and Waiver

 

Noncompliance by the Authority with any provisions of this Subpart will not invalidate any action taken by the Authority pursuant to a duly adopted resolution of the Authority within the powers delegated to the Authority under the Act.  The Authority may, by a vote of ten (10) members, waive any technical, non-substantive provision of this Subpart.  In any resolution of the Authority waiving a provision of this Subpart, the Authority will make findings of fact inducing it to waive the provision in question.

 

(Source:  Recodified from 14 Ill. Adm. Code 1220.520 at 31 Ill. Reg. 12104)

SUBPART C: VETERANS ASSISTANCE

 

Section 1100.300  Purposes and Objectives; Compliance with Federal Law; Forms for Program

 

a)         This Subpart is established to accomplish the general purposes of Article 820 of the Act and in particular the purchasing of governmental units bonds in accordance with the program to achieve the following objectives:

 

1)         To foster and promote by all reasonable means the provision of adequate capital markets and facilities for borrowing money by rural units of local government, and for the financing of their respective public improvements and other governmental purposes within the State from proceeds of bonds or notes issued by those governmental units;

 

2)         To assist rural governmental units in fulfilling their needs for those purposes by use of creation of indebtedness;

 

3)         To the extent possible, to reduce the costs of indebtedness to taxpayers and residents of this State and to encourage continued investor interest in the purchase of bonds or notes of rural governmental units as sound and preferred securities for investment; and

 

4)         To encourage rural governmental units to continue their independent undertakings of public improvements and other governmental purposes and the financing thereof, and to assist them in those activities by making funds available at reduced interest costs for orderly financing of those purposes, especially during periods of restricted credit or money supply, and particularly for those rural governmental units not otherwise able to borrow for those purposes.

 

b)         This Subpart shall be construed in conformity and compliance with applicable federal law, including without limits Section 103A of the Internal Revenue Code (26 USC 103).

 

c)         The Executive Director shall prepare, use, supplement and amend such forms, agreements and other documents as may be necessary to implement the program.

 

(Source:  Recodified from 47 Ill. Adm. Code 400.103, 400.104 and 400.105 at 31 Ill. Reg. 12104)

 

Section 1100.305  Applicant Eligibility

 

Any "governmental unit," meaning any rural county; or any municipality or township having a population less than 25,000, school district, community college district, special district, or other unit designated as a rural unit of local government by the Governor's Executive Order No. 1986-6, effective October 17, 1986, creating the Rural Fair Share Initiative located in a rural county who wishes to sell bonds, may apply to participate in selling bonds to the Illinois Finance Authority.

 

(Source:  Recodified from 47 Ill. Adm. Code 410.102 at 31 Ill. Reg. 12104)

 

Section 1100.310  Pre-Filing Stage

 

Prior to the preparation or submission of any application for assistance, each governmental unit is requested to contact the Authority's Executive Director.  The Executive Director will arrange for a meeting or meetings, with the unit and the Authority's Executive Director and financial advisor.  The purpose of the meeting or meetings is to provide information to the unit of local government in order to assist in the application process under the Act and this Part.

 

(Source:  Recodified from 47 Ill. Adm. Code 410.103 at 31 Ill. Reg. 12104)

 

Section 1100.315  Filing of Application

 

a)         When a loan application is submitted to the Authority, the Executive Director shall review the loan application to determine whether it is complete (all information is fully filled out), and whether the criteria established by the Act and this Part have been satisfied.  If the Executive Director determines that the loan application is incomplete, he shall, within five days of such determination, inform the applicant and shall detail the information or material which is necessary to complete the application.  For the purpose of this Part, no application shall be deemed complete until the applicant has provided additional information or material as requested by the Executive Director.

 

b)         Once the application is completed, the application shall be filed with the Authority.  (The applicant unit is to submit its application fee with the application).

 

c)         The Authority's Executive Director shall submit this filed application to the Authority for its consideration at its next meeting once the financial advisor's initial financial review is completed.

 

d)         At the next meeting, the Authority will determine if it shall accept the submitted application.  In reaching this conclusion, the Authority will consider:

 

1)         The application itself;

 

2)         Comments and presentations by representatives of the applicant unit; and

 

3)         The financial advisor's initial review.

 

e)         If the Authority accepts the application, it shall authorize the following tasks:

 

1)         Bond counsel shall be directed to undertake a preliminary investigation of legal feasibility of the project; and

 

2)         The Board of the Illinois Finance Authority, in order to accomplish the purposes of the Act, in concert with the financial advisor, establishes the credit policy of the Authority.  Applications of local governmental units are analyzed to determine their ability to repay such loans without diminishing or diluting the credit quality and obligations of the State of Illinois. The following criteria are taken into account in the financial review process:

 

A)        The economic base and financial status of the local government.

 

B)        Population trends.

 

C)        Employer, income level and unemployment statistics.

 

D)        Debt of the governmental unit and maturity structure.

 

E)        Security of contemplated debt.

 

F)         Trends in debt retirement, budgetary sufficiency and historical debt coverage.

 

G)        Revenue and tax collection data and trends.

 

H)        Major employers.

 

I)         Tax rate limitations.

 

J)         Debt per acre.

 

K)        Assessed valuation trend.

 

L)        Pension liabilities.

 

M)       Major users/revenue contribution.

 

N)        General Financial condition.

 

f)         Upon acceptance of the application by the Authority, the application fee shall be deemed non-refundable and shall be deposited by the Authority.

 

(Source:  Recodified from 47 Ill. Adm. Code 410.104 at 31 Ill. Reg. 12104)

 

Section 1100.320  Approval of Application

 

a)         The Authority shall decide whether or not to approve an accepted application, based upon the criteria stated in Section 1100.310(d) and (e), once the financial advisor and bond counsel have completed their reviews of the project.

 

b)         If the accepted application is approved, the financial advisor, Executive Director and bond counsel will be authorized and directed to prepare all necessary financial and legal documentation incident to a bond or note offering, e.g., a certified financial statement of the unit of local government.

 

c)         "Approval" of an application by the Authority is not, nor should be, construed as any form of a commitment or guarantee, on the part of the Authority to the applicant unit that the proposed financing will be successfully completed and sold.  Rather, approval of an application indicates the Authority's desire to work with the applicant in the attempt to bring its issue to sale.

 

d)         In the event that the applicant's issue is sold, the applicant shall reimburse the financial advisor and bond counsel for their services rendered.  Such costs may be funded out of bond proceeds. Further, in the event that the applicant's issue is sold, the applicant shall be obligated to pay the Authority the Administrative Charge and Annual Fee.

 

(Source:  Recodified from 47 Ill. Adm. Code 410.105 at 31 Ill. Reg. 12104)

 

Section 1100.325  Denial of Application

 

If the application is denied and service is made upon the applicant about the grounds for the denial, then within 21 days of denial, the applicant may file with the Authority a Request for Reconsideration, stating reasons why the Authority should withdraw its denial of the application and approve the loan.  The Request for Reconsideration may be accompanied by supporting documents and information not previously considered by the Authority.  The Authority shall review the Request for Reconsideration.  A denial of a Request for Reconsideration shall be final.  While a Request for Reconsideration is pending, the application that is the subject of the Request for Reconsideration shall be deemed complete for the purposes of this Subpart.  An application which has been denied by the Authority might be reconsidered under the following circumstances:

 

a)         The governmental unit exhibits an improving financial condition as evidenced by empirical data and ratio analysis.

 

b)         The creditworthiness of the project is enhanced by collateral and/or more attractive terms and conditions proffered by the applicant.

 

c)         Additional information is supplied which will significantly and positively impact the economic viability of the local government unit (i.e., new plant(s) opening(s), expansion of existent businesses, significant commercial and residential regentrification, etc.)."

 

(Source:  Recodified from 47 Ill. Adm. Code 410.106 at 31 Ill. Reg. 12104)

 

Section 1100.330  Priority of Application

 

Applications shall be processed by the Authority on a first-come, first-served basis, based upon the receipt of all completed documents by the Authority.  The Authority may deviate from the first-come, first-served rule.

 

(Source:  Recodified from 47 Ill. Adm. Code 410.107 at 31 Ill. Reg. 12104)

 

Section 1100.335  Source of Payment and Nature of Obligation

 

The principal and interest on the bond is a limited obligation payable solely out of the revenues derived from the governmental unit and the underlying collateral or other security furnished by or on behalf of the governmental unit.

 

(Source:  Recodified from 47 Ill. Adm. Code 410.108 at 31 Ill. Reg. 12104)

 

Section 1100.340  Fees

 

a)         The Authority shall, by resolution, establish the schedule of fees and charges of the Authority.

 

b)         Fees of the Authority are designed to cover the operating expenses of the Authority.

 

c)         The total amount to be charged for Costs of Issuance and Annual Fee for a bond issue shall not exceed the limits established by the Authority.  Cost of Issuance − the total amount to be charged a local government for Cost of Issuance for a bond issue shall not exceed 3% of the local government debt.

 

(Source:  Amended at 16 Ill. Reg. 19206, effective November 25, 1992; recodified from 47 Ill. Adm. Code 410.109 at 31 Ill. Reg. 12104)

 

Section 1100.345  Purchase of Governmental Unit Bonds

 

If its application is accepted, a governmental unit may contract to pay interest on, or an interest cost per year for, money borrowed from the Authority and evidenced by its securities purchased by the Authority. Every governmental unit may contract with the Authority concerning the terms and conditions of the loan or purchase, without limitation as to denomination. As provided in the ordinance of the governing body of the governmental unit under which the bonds and notes are authorized to be issued, those bonds and notes may:

 

a)         Be fully registered, registerable as to principal only, or in bearer form;

 

b)         Bear interest in compliance with Section 820-40 of the Act [20 ILCS 3501/820-40];

 

c)         Be evidenced in any manner by the governing instrument determining the debt;

 

d)         Contain other provisions not inconsistent with this Section; and

 

e)         Be sold to the Authority without advertisement at any price or prices.

 

(Source:  Recodified from 47 Ill. Adm. Code 420.101 at 31 Ill. Reg. 12104)

SUBPART D: ILLINOIS DEVELOPMENT ACTION GRANT PROGRAM

 

Section 1100.400  Purpose; Definitions; Incorporation by Reference

 

a)         The Illinois Development Action Grant Program provides financial assistance to municipalities experiencing severe economic distress in order to stimulate economic development activities needed to aid in economic recovery.  Under this program, grants are made to municipalities to support housing, commercial, and industrial projects which have as their primary objective the development of viable urban communities.  Private investment in proposed projects is required. The creation or retention of employment and other economic opportunities for low and moderate income persons and the revitalization of distressed areas are principal goals of the program.

 

b)         Definitions

Words defined in the Illinois Finance Authority Act and in Section 1100.50 have the same meaning when used in this Subpart unless a more specific definition is prescribed in this Section. This Section establishes additional definitions for use in this Subpart only.

 

"Application" means the application for the use of program funds for a particular project.

 

 

"Corporate Authorities" means the city council or similar body when the reference is to cities, the board of trustees or similar body when the reference is to villages or incorporated towns, and the council when the reference is to municipalities under the commission form of municipal government.

 

"Grant" means a grant awarded to a municipality under this program.

 

"Leveraging Ratio" means the number resulting from the division of the total amount of private sector commitments or other non-program commitments generated by the project by the amount of the grant requested for the project.  Funds to be counted toward the private sector commitment include all types of capital investment to be expended as a direct result of the grant, including private investment (equity participation, internally generated funds, conventional financing, Small Business Administration guaranteed loans, tax exempt revenue bonds, etc.) and loans or grants made by units or agencies of municipal, state, or federal government, other than the Authority.  Examples of commitments include written commitments of a financial institution or other entity to make a loan or grant for a particular project, or executed loan contracts or grant agreements.

 

"Low Income" means income of persons whose annual income does not exceed 50% of the median income for the metropolitan statistical area in which the project is located, with adjustments for larger and smaller families, as specified in Table A of this Part.

 

"Metropolitan Statistical Area" means a metropolitan statistical area as determined by the United States Office of Management and Budget as of June 30, 1985, and published in the 1986 Statistical Abstract of the United States, United States Department of Commerce, Bureau of the Census.

 

"Moderate Income" means income of persons whose annual income does not exceed 80% of the median income for the metropolitan statistical area in which the project is located, with adjustments for larger and smaller families, as specified in Table A of this Part.

 

"Municipality" means a city, village or incorporated town in the State of Illinois.

 

"Primary Developer" means the non-governmental project participant who has primary responsibility for the planning, organization, development and completion of the project.

 

"Program" means the Illinois Development Action Grant Program.

 

"Project" means the group of integrally related activities which are to be carried out by all public and private participating parties, as listed in the agreement relating to the project.

 

c)         Incorporation by Reference

All materials incorporation by reference in this Subpart are incorporated as of the date specified and include no later amendments or editions.

 

(Source:  Recodified from 14 Ill. Adm. Code 1200.100, 110 and 120 at 31 Ill. Reg. 12104)

 

Section 1100.405  Eligible Applicants; Eligible Projects

 

a)         Only municipalities are eligible to apply for and receive grants from the Authority under the program.  Subject to appropriation of funds for such purpose by the General Assembly, all municipalities in Illinois are eligible for grants under the program.  The project site must be within the corporate limits of the municipality applying for the grant.

 

b)         All projects, the primary objectives of which are the development of viable urban communities and expansion of economic opportunity, principally for persons of low and moderate incomes, are eligible for funding.  The Authority will consider grants to municipalities for broad range of housing, industrial, and commercial projects.  The Authority will select from among eligible projects on the basis of the criteria for selection set forth in Section 1100.435.

 

(Source:  Recodified from 14 Ill. Adm. Code 1200.200 and 210 at 31 Ill. Reg. 12104)

 

Section 1100.410  Municipal Approval

 

No application for program funds shall be reviewed by the member of the Authority until the corporate authorities of the municipality have by resolution approved the project.  No such resolution shall be adopted until a public hearing has been held on the proposed project at a location convenient to the project site.  Notice of the public hearing shall be published once at least 14 calendar days prior to the date of the hearing in at least one newspaper of general circulation in the municipality.

 

(Source:  Recodified from 14 Ill. Adm. Code 1200.220 at 31 Ill. Reg. 12104)

 

Section 1100.415  Application Requirements

 

Each application must be submitted on forms provided by the Authority. All applications submitted to the Authority must be accompanied by a cover letter signed by the chief executive officer of the municipality indicating the names of the projects for which applications are being submitted.  The completed application must designate the primary developer and include a copy of the public notice together with an affidavit of publication of such notice, a certified copy of the municipality's resolution approving the project, and evidence with respect to the program objectives described in Sections 1100.430 through 1100.450.  Applications must also include disclosure of the names and functions of participants in the project in addition to the primary developer, including entities providing financing, contractors, architects, engineers, attorneys, accountants and other professional advisors, to the extent that the various participants are known at the time of application. Full disclosure of the various participants is required prior to the disbursement of any grant funds.  Applications shall also include where appropriate:

 

a)         A description of the project to be undertaken, and of the controlling interests in the property (e.g. fee title, lease, option to purchase, beneficial interest).  The applicant must substantiate the market and economic feasibility of the proposed project, must analyze the economic benefits which the activities are expected to produce, and must show how the proposed activities will take advantage of opportunities to attract private investment.  Economic feasibility may be substantiated by a variety of means calculated to demonstrate that the revenues expected to be generated by a project will be sufficient to pay the cost of capital and operating expenses of the project.  Market feasibility may be substantiated by a variety of means calculated to demonstrate that the projected revenues and expenses of the project are realistic in light of market factors.  The applicant must identify the public and private participating parties in the proposed project, the respective activities to be performed by each and the amount of program funds to be allocated to each activity.  Information provided shall include projected costs and methods of financing.

 

b)         A clear description of the use of program funds and a justification of the amount, which amount must be the least amount necessary to make the project feasible. Also, the application must demonstrate that without program funds, the project would not be undertaken.  The applicant may demonstrate the need for the grant by a variety of means calculated to show that the funding applied for fills a gap in the financing for the project for which other funds are not available.  Examples of the means to demonstrate such matters include a table of sources and uses of funds for the particular project, sets of pro forma financial statements for the project prepared both with and without the use of grant funds or a certificate of the owner or the developer that the project would not go forward without program funds.

 

c)         Documentation of private and public commitments which are necessary for completing the project. This document shall be in the form of agreement to complete or to provide financing for the project.  Examples of private commitments include an executed contract or a letter of intent furnished by a financial institution.  No application will be considered unless there is evidence of at least a private commitment and, if necessary, a public commitment.  Public commitments relate to activities necessary to the completion of the project which must be performed by a governmental body or agency.  Examples of such public commitments include furnishing of infrastructure items to a particular project site or rezoning.

 

d)         A statement analyzing the impact of the project on the surrounding area, including the impact on low and moderate income persons.

 

e)         A summary of all proposed expenditures to be undertaken to complete the project and a breakdown of the individual public and private expenditures.

 

f)         A detailed schedule for accomplishing each part of the proposed project.

 

g)         A survey of the project site and maps, aerial photos, site plans or other graphic descriptions of the project showing the availability of transportation and utility service, and surrounding land uses.

 

h)         A summary of the new tax revenues to be generated by the project.

 

i)          Data specifying the number and types of jobs to be created by the project, the skill levels or experience required to fill such jobs and estimates of salaries to be paid for such jobs.

 

(Source:  Amended at 11 Ill. Reg. 10895, effective May 27, 1987; recodified from 14 Ill. Adm. Code 1200.230 at 31 Ill. Reg. 12104)

 

Section 1100.420  Technical Assistance

 

If requested in the application, the Authority will arrange for technical assistance to applicants during the project review process.  For example, the Authority might assist applicants in accurately estimating the number of jobs a particular project will create, or determining whether a particular item is an eligible cost under the program.  In all cases, however, the responsibility for completing an application rests with the applicant.

 

(Source:  Recodified from 14 Ill. Adm. Code 1200.240 at 31 Ill. Reg. 12104)

 

Section 1100.425  On-Site Inspection

 

During the period in which the application is being reviewed, project participants shall provide full and free access to the project site to the officers, agents and employees of the Authority.

 

(Source:  Recodified from 14 Ill. Adm. Code 1200.250 at 31 Ill. Reg. 12104)

 

Section 1100.430  Selection Criteria

 

a)         The Authority will review those projects for which completed applications have been submitted within the deadlines established under this Subpart.  By vote of its members, subject to the availability of funds, the Authority will select for grants those projects which advance the objectives of the Act.  In making its selection under this Subpart, the Authority shall take into account the following selection criteria, giving greatest weight to subsections (a)(1), (a)(2), (a)(3) and (a)(5):  

 

1)         The level of economic distress within the municipality or the project area.  The level of distress of an area may be evidenced by a number of factors, including:

 

A)        Age and condition of buildings, structures, and public infrastructure in the area;

 

B)        Population growth or decline;

 

C)        Level of unemployment in the area; and

 

D)        Percentage of community residents with low or moderate income;

 

2)         Extent of economic or social benefits of the project on adjacent areas and persons residing therein, including benefits to persons of low and moderate income;

 

3)         Number of construction jobs and permanent full-time job equivalents created; jobs will be weighted more heavily if those jobs are to be filled by persons eligible for assistance under the federal Workforce Investment Act of 1998 (29 USC 2801);

 

4)         The number and type of housing units provided for persons of low and moderate income;

 

5)         The relative size of the leveraging ratio, including the sources of non-program funds used to leverage the project;

 

6)         The projected impact of the project on the tax revenues (income, property, sales, utility) of the State, the applicant municipality, and other units of government;

 

7)         The nature of the commitment from the participants;

 

8)         The readiness of the project to proceed;

 

9)         Evidence of the project's economic and financial feasibility;

 

10)         The physical design of the project (e.g. functional suitability, aesthetic design, energy efficiency); and,

 

11)         Evidence of the municipality's and private participants' capacity to undertake the project (e.g. credit history, past performance in similar projects).

 

b)         Upon the request of the municipality, the Authority may determine that certain criteria are not relevant to the nature of the project proposed for funding.

 

(Source:  Recodified from 14 Ill. Adm. Code 1200.300 at 31 Ill. Reg. 12104)

 

Section 1100.435  Deadlines

 

a)         At the beginning of each fiscal year, the Authority will adopt a schedule or schedules by which applications must be received and grant awards will be made.  In adopting such schedule or schedules the Authority will take into account the amount of funds appropriated and available for expenditure for the program, the number and size of municipalities eligible to receive grants under law and the need for efficient decision making.

 

b)         The application must state the funding round for which it is submitted. Grants, if any, will be made before the next deadline for applications.

 

c)         For fiscal year 1986 only, round 1 applications shall be received on or before February 1, 1986 to be eligible for an award before April 1, 1986.  Round 2 applications shall be received on or before April 1, 1986 to be eligible for an award before July 1, 1986.

 

(Source:  Recodified from 14 Ill. Adm. Code 1200.310 at 31 Ill. Reg. 12104)

 

Section 1100.440  Funding Restrictions and Eligible Costs

 

a)         No more than $1,000,000 in program funds may be awarded in any fiscal year to a single project.

 

b)         No more than $2,000,000 in aggregated program funds may be awarded in any fiscal year to projects developed or initiated by any single private sector developer.

 

c)         No program grant may be less than $30,000 in amount.

 

d)         Program funds shall be used only to pay for eligible project costs. Eligible project costs will be defined in the grant agreement.

 

(Source:  Recodified from 14 Ill. Adm. Code 1200.320 at 31 Ill. Reg. 12104)

 

Section 1100.445  Grant Agreement

 

Upon approval of the application the Authority and the municipality shall enter into a grant agreement containing terms and provisions relating to the project.  The Authority shall provide the form of the grant agreement.

 

(Source:  Recodified from 14 Ill. Adm. Code 1200.330 at 31 Ill. Reg. 12104)

 

Section 1100.450  Disbursement of Grants

 

Funds shall be disbursed by the Authority after a grant has been awarded and a grant agreement has been executed, pursuant to a disbursement schedule agreed to by the parties.  In determining a grant disbursement schedule under this section, the Authority will be guided by the availability of grant funds for disbursement, the timing of receipt of private sources of funding for a project and the expenditure schedule proposed by the primary developer for the project.

 

(Source:  Recodified from 14 Ill. Adm. Code 1200.340 at 31 Ill. Reg. 12104)

 

Section 1100.455  Recordkeeping and Access to Information

 

Any municipality which receives program funds and its project participants shall:

 

a)         maintain separate, accurate accounts, records, and books with respect to the project in accordance with generally accepted principles of accounting consistently applied, such as the Codification of Governmental Accounting and Financial Reporting Standards (Governmental Accounting Standards Board, November 1, 1984);

 

b)         grant to the employees of the State or representatives of the Authority at all times during normal business hours and as often as the Authority may require, full and free access to the project and to its accounts, records, and books;

 

c)         permit the Authority or any accountants or auditors approved by the Authority to make periodic audits, excerpts or transcripts of the project accounts, statements and documents; and

 

d)         at the request of the Authority, furnish copies of documents or instruments related to the project in the possession of the municipality or the primary developer as the Authority may from time to time require.

 

(Source:  Amended at 11 Ill. Reg. 10895, effective May 27, 1987; recodified from 14 Ill. Adm. Code 1200.400 at 31 Ill. Reg. 12104)

 

Section 1100.460  Progress Reports

 

Recipient municipalities shall submit progress reports during the term of the grant agreement to the Authority.  Such reports shall include, but need not be limited to a statement indicating expenditures and disbursements of program funds during the previous six month period and cumulatively and a statement on the progress and status of activities performed in relation to the project schedule and program objectives.

 

(Source:  Recodified from 14 Ill. Adm. Code 1200.410 at 31 Ill. Reg. 12104)

 

Section 1100.465  Audit Requirements

 

Recipient municipalities shall cause to be prepared an audit of the uses of grant funds.  The audit shall be conducted in accordance with generally accepted standards of auditing for State and local government programs, such as the Standards for Audit of Government Organizations, Programs, Activities, and Functions (Comptroller General of the United States, 1981 Revision). The audit shall be undertaken and completed within 150 days from the completion of the project, and within 15 days following the date such audit is completed, the municipality shall transmit a copy of the audit to the Authority.

 

(Source:  Amended at 11 Ill. Reg. 10895, effective May 27, 1987; recodified from 14 Ill. Adm. Code 1200.420 at 31 Ill. Reg. 12104)

 

Section 1100.470  Grant Monitoring and Recovery

 

The Authority retains the right to rescind program grants and require the repayment of grants already disbursed if it finds that the municipality or other project participant is misusing program funds or is not complying with the terms of these regulations, the grant agreement, or applicable law all as provided in the grant agreement.  Grant recoveries shall be conducted in accordance with the Illinois Grant Funds Recovery Act.

 

(Source:  Recodified from 14 Ill. Adm. Code 1200.430 at 31 Ill. Reg. 12104)

 

Section 1100.475  Project Completion Notice

 

Each municipality shall notify the Authority within sixty (60) days after completion of the project that all portions of the project have been fully completed in accordance with the plans and specifications for the project. Within 180 days each municipality shall also be required to certify that all portions of the project have been fully paid for and that no claim or claims exist against the project out of which a lien based on the furnishing of labor or material exists or might ripen.

 

(Source:  Recodified from 14 Ill. Adm. Code 1200.440 at 31 Ill. Reg. 12104)

SUBPART E: ILLINOIS HOUSING PARTNERSHIP PROGRAM

 

Section 1100.500  Purpose; Definitions; Incorporation by Reference

 

a)         The purpose of the Illinois Housing Partnership Program is to assist the financing of projects for the rehabilitation of affordable multi-family housing for low and moderate income residents.  Under this program, the Illinois Finance Authority may provide zero-interest loans to municipalities to facilitate housing rehabilitation.

 

b)         Definitions

Words defined in the Illinois Finance Authority Act and in Section 1100.50 have the same meaning when used in this Subpart unless a more specific definition is prescribed in this Section. This Section establishes additional definitions for use in this Subpart only.

 

"Application" means the application for the use of program funds for a particular project.

 

"Corporate authorities" means the city council or similar body when the reference is to cities, the board of trustees or similar body when the reference is to villages or incorporated towns, and the council when the reference is to municipalities under the commission form of municipal government.

 

"Loan" means a loan from the Authority under this program.

 

"Low Income" means income of persons whose annual income does not exceed 50% of the median income for the metropolitan statistical area in which the project is located, with adjustments for larger and smaller families, as specified in Table A of this Part.

 

"Moderate Income" means income of persons whose annual income does not exceed 80% of the median income for the metropolitan statistical area in which the project is located, with adjustments for larger and smaller families, as specified in Table A of this Part.

 

"Multi-family Housing" means buildings with at least four (4) separate residential units, with each unit containing separate and complete facilities for living, sleeping, eating, cooking and sanitation, and containing at least three (3) rooms.  Studio units are not considered units under this definition.

 

"Municipality" means a city, village or incorporated town in the State of Illinois.

 

"Primary Developer" means the non-governmental project participant who has primary responsibility for the planning, organization, development and completion of the project.

 

"Program" means the Illinois Housing Partnership Program.

 

"Project" means the group of integrally related activities which are to be carried out by all public and private participating parties, as listed in the agreement relating to the project.

 

c)         Incorporation by Reference

All materials incorporation by reference in this Subpart are incorporated as of the date specified and include no later amendments or editions.

 

(Source:  Recodified from 14 Ill. Adm. Code 1210.100, 110 and 120 at 31 Ill. Reg. 12104)

 

Section 1100.505  Eligible Applicants; Eligible Projects

 

a)         Eligible Applicants

Only municipalities are eligible to apply for and receive loans from the Authority under the program.  Subject to appropriation of funds for such purpose by the General Assembly, all municipalities in Illinois are eligible for loans under the program.  The project site must be within the corporate limits of the municipality applying for the loan.

 

b)         Eligible Projects

 

1)         All projects, the objectives of which are the rehabilitation of affordable, multi-family housing, principally for persons of low and moderate incomes, are eligible for funding.  The Authority will select from among eligible projects on the basis of the criteria for selection set forth in Section 1100.525.

 

2)         In order to be eligible for selection on the basis of the criteria set forth in Section 1100.525, a project must provide multi-family housing, at least 51% of the units being available at affordable rents for persons of low and moderate income, and involve rehabilitation of an existing structure or structures.  "Affordable rents" means a rental charge which is not greater than one-third (⅓) of the gross income of the low or moderate income persons as defined in Section 1100.500.

 

3)         Upon the request of the applicant, the Authority will consider for selection under Section 1100.525, a project in which less than 51% of the units are intended to be available at affordable rents to persons of low and moderate income, provided that the project is located in a census tract in which the median income is no greater than the 80% of the median income for the metropolitan statistical area.

 

(Source:  Recodified from 14 Ill. Adm. Code 1210.200 and 210 at 31 Ill. Reg. 12104)

 

Section 1100.510  Municipal Approval

 

No application for program funds shall be reviewed by the members of the Authority until the corporate authorities of the municipality have by resolution approved the project.  No such resolution shall be adopted until a public hearing on the proposed project has been held at a location convenient to the project site.  Notice of the public hearing shall be published once at least 14 calendar days prior to the date of the hearing in at least one newspaper of general circulation in the municipality.

 

(Source:  Recodified from 14 Ill. Adm. Code 1210.220 at 31 Ill. Reg. 12104)

 

Section 1100.515  Application Requirements

 

Each application must be submitted on forms provided by the Authority.  The completed application must designate the primary developer and include a copy of the public notice together with an affidavit of publication of such notice, a certified copy of the municipality's resolution approving the project, and evidence with respect to the program objectives described in Sections 1100.525-550.  Applications shall also include where appropriate:  

 

a)         A description of the project to be undertaken, and the controlling interests in the property (e.g. fee title, lease, option to purchase, beneficial interest).  The applicant must substantiate the market and economic feasibility of the proposed project, and must analyze the economic benefits which the activities are expected to produce.  Economic feasibility may be substantiated by a variety of means calculated to demonstrate that expected revenues of the project will be sufficient to pay the costs of capital and operating expenses of the project.  Market feasibility may be demonstrated by a variety of means calculated to demonstrate that the projected revenues and expenses of the project are realistic in light of market factors.  The applicant must identify the public and private participating parties in the proposed project, the respective activities to be performed by each, and the amount of program funds to be allocated to each activity.  Information provided shall include projected costs and methods of financing.

 

b)         A clear description of the use of program funds and a justification of the amount of program funds requested.  The amount of program funds must be the least amount necessary to make the project feasible.  Also, the application must demonstrate that without program funds, the project would not be undertaken.   The applicant may demonstrate the need for the loan by a variety of means calculated to show that the funding applied for fills a gap in the financing for the project for which other funds are not available.  Examples of the means to demonstrate such matters include a table of sources and uses of funds for the particular project or a certificate of the owner or developer that the project would not go forward without program funds.

 

c)         Documentation of private and public commitments which are necessary for completing the project.  This documentation shall be in the form of agreements by the project participants to complete or to provide financing for the project.  Public commitments relate to activities necessary to the completion of the project which must be performed by a governmental body or agency.  Examples of such public commitments include the furnishing of infrastructure items to a particular project site or rezoning.  No application will be considered unless there is evidence of at least a private commitment and, if necessary, a firm public commitment.

 

d)         A summary of all proposed expenditures to be undertaken to complete the project and a breakdown of the individual public and private expenditures.

 

e)         A detailed schedule for accomplishing each part of the proposed project.

 

f)         A survey of the project site, site plans and maps or other graphic descriptions showing the project and surrounding land uses.

 

g)         A summary of the new tax revenues to be generated by the project.

 

h)         The number and type of housing units to be provided for low and moderate income persons and families.

 

i)          The estimated rent schedule for all units in the project.

 

(Source:  Recodified from 14 Ill. Adm. Code 1210.230 at 31 Ill. Reg. 12104)

 

Section 1100.520  On-Site Inspection

 

During the period in which the application is being reviewed, project participants shall provide full and free access to the project site to the officers, agents and employees of the Authority.

 

(Source:  Recodified from 14 Ill. Adm. Code 1210.240 at 31 Ill. Reg. 12104)

 

Section 1100.525  Selection Criteria

 

The Authority will review those projects for which completed applications have been submitted within the deadlines established under this Subpart.  By vote of its members, subject to the availability of funds, the Authority will select for loans those projects which advance the objectives of the Act.  In making its selection under this Subpart, the Authority shall take into account the following selection criteria, giving greatest weight to subsections (a)(1), (a)(2) and (a)(3):  

 

a)         The level of economic distress within the municipality or the project area.  The level of distress of an area may be evidenced by a number of factors, including:  

 

1)         Age and condition of buildings in the area;

 

2)         Population growth or decline;

 

3)         Level of unemployment in the area; and

 

4)         Percentage of community residents with low or moderate income;

 

b)         Extent of economic or social benefits of the project on persons residing in the area, including benefits to persons of low and moderate income.  Examples of economic or social benefits of a project may include the attraction of new residents to an area that has suffered a population decline or the retention of long term residents in the project area;

 

c)         Number and type of housing units to be provided to low and moderate income persons and families;

 

d)         The projected impact of the project on the tax revenues (income, property, sales, utility) of the State, the applicant municipality, and other units of government;

 

e)         The nature of the commitment from the participants;

 

f)         The readiness of the project to proceed;

 

g)         Evidence of the project's economic and financial feasibility;

 

h)         The physical design of the project (e.g. functional suitability, aesthetic design, energy efficiency); and

 

i)          Evidence of the municipality's and private participants' capacity to undertake the project (e.g., credit history, past performance in similar projects).

 

(Source:  Recodified from 14 Ill. Adm. Code 1210.300 at 31 Ill. Reg. 12104)

 

Section 1100.530 Deadlines

 

a)         At the beginning of each fiscal year, the Authority will adopt a schedule or schedules by which applications must be received and awards will be made.  In adopting such schedule or schedules the Authority will take into account the amount of funds appropriated and available for expenditure for the program, the number and size of municipalities eligible to receive loans under law and the need for efficient decisionmaking.

 

b)         The application must state the funding round for which it is submitted.  Loans, if any, will be made before the next deadline for applications.

 

c)         For fiscal year 1986 only, round 1 applications shall be received on or before February 1, 1986 to be eligible for an award before April 1, 1986.  Round 2 applications shall be received on or before April 1, 1986 to be eligible for an award before July 1, 1986.

 

(Source:  Recodified from 14 Ill. Adm. Code 1210.310 at 31 Ill. Reg. 12104)

 

Section 1100.535  Funding Restrictions and Eligible Costs

 

a)         No more than 3 dollars of program funds may be provided for every 7 dollars obtained by the municipality from private sources.

 

b)         No more than $1,000,000 in program funds may be awarded in any fiscal year to a single project.

 

c)         No more than $2,000,000 in aggregate program funds may be awarded in any fiscal year to projects developed or initiated by any single private sector developer.

 

d)         No program loan may be less than $30,000 in amount.

 

e)         Program funds shall be used only for rehabilitation of existing housing.  Program funds shall be used only to pay for eligible project costs.  Eligible project costs will be defined in the loan agreement.

 

(Source:  Recodified from 14 Ill. Adm. Code 1210.320 at 31 Ill. Reg. 12104)

 

Section 1100.540  Loan Agreement

 

Upon approval of the application, the Authority and the municipality shall enter into a loan agreement containing terms and provisions relating to the loan.  The Authority shall provide the form of the loan agreement.

 

(Source:  Recodified from 14 Ill. Adm. Code 1210.330 at 31 Ill. Reg. 12104)

 

Section 1100.545  Disbursement and Repayment of Loans

 

Funds shall be disbursed after commencement of the project pursuant to a disbursement schedule contained in the loan agreement.  Repayment of the loan principal shall be made according to the loan agreement.  The interest rate on all loans shall be zero (0) percent.

 

(Source:  Recodified from 14 Ill. Adm. Code 1210.340 at 31 Ill. Reg. 12104)

 

Section 1100.550  Loan Terms

 

The loan may mature at such time or times, may be in such form, may be payable under such terms, may be secured by such security, and may contain such terms and covenants, all as may be provided by the Authority in the loan agreement, provided the principal of a loan made with respect to a project shall be repaid upon sale by the owner to a non-participating party or upon final payment of any funds provided to a project from private sources and secured by a first mortgage.  All loans made by the Authority under this program shall be repaid upon the sale or transfer of the property rehabilitated.

 

(Source:  Recodified from 14 Ill. Adm. Code 1210.350 at 31 Ill. Reg. 12104)

 

Section 1100.555  Recordkeeping and Access to Information

 

Any municipality which receives program funds and its project participants shall:  

 

a)         maintain separate, accurate accounts, records, and books relative to the project in such manner and detail as the Authority may prescribe in the loan agreement;

 

b)         grant to the employees of the State or representatives of the Authority at all times during normal business hours and as often as the Authority may require, full and free access to the project and to its accounts, records, and books;

 

c)         permit the Authority or any accountants or auditors approved by the Authority to make periodic audits, excerpts or transcripts of the project accounts, statements and documents; and

 

d)         at the request of the Authority, furnish copies of documents or instruments related to the project in the possession of the municipality or the primary developer as the Authority may from time to time require.

 

(Source:  Recodified from 14 Ill. Adm. Code 1210.400 at 31 Ill. Reg. 12104)

 

Section 1100.560  Progress Reports

 

Recipient municipalities shall submit semi-annual progress reports to the Authority.  Such reports shall include, but need not be limited to a statement indicating expenditures and disbursements of program funds during the previous six month period and cumulatively and a statement on the progress and status of activities performed in relation to the project schedule and program objectives.

 

(Source:  Recodified from 14 Ill. Adm. Code 1210.410 at 31 Ill. Reg. 12104)

 

Section 1100.565  Audit Requirements

 

Recipient municipalities shall cause to be prepared an audit of the uses of loan funds.  The audit shall be conducted in accordance with generally accepted standards of accounting for State and local governments, such as the Codification of Governmental Accounting and Financial Reporting Standards (Governmental Accounting Standards Board, November 1, 1984). The audit shall be undertaken and completed within 150 days from the completion of the project, and within 15 days following the date such audit is completed, the corporate authorities of the municipality shall transmit a copy of the audit to the Authority.

 

(Source:  Recodified from 14 Ill. Adm. Code 1210.420 at 31 Ill. Reg. 12104)

 

Section 1100.570  Loan Monitoring and Recovery

 

The Authority retains the right to rescind program loans and require the immediate repayment of loans already disbursed if it finds that the municipality or other project participant is misusing program funds or is not complying with the terms of these regulations, the loan agreement, or applicable law, all as provided in the loan agreement.

 

(Source:  Recodified from 14 Ill. Adm. Code 1210.430 at 31 Ill. Reg. 12104)

 

Section 1100.575  Project Completion Notice

 

Each municipality shall notify the Authority within sixty (60) days after completion of the project that all portions of the project have been fully completed in accordance with the plans and specifications for the project. Within 180 days, each municipality shall also be required to certify that all portions of the project have been fully paid for and that no claim or claims exist against the project out of which a lien based on the furnishing of labor or material exists or might ripen.

 

(Source:  Recodified from 14 Ill. Adm. Code 1210.440 at 31 Ill. Reg. 12104)

SUBPART F: LOAN PARTICIPATION PROGRAM

 

Section 1100.600  Introduction

 

a)         The Illinois Finance Authority is a State agency which engages in the financing of educational facilities for private colleges, universities, and academic institutions in Illinois, and the financing of cultural facilities for private cultural institutions in Illinois, by issuing tax-exempt revenue bonds.  The tax-exempt status of the Authority's bonds results in considerable savings in interest costs to the participating institutions.

 

b)         The Illinois Finance Authority Act [20 ILCS 3501] (the "Act"), under which the Authority operates, was recently amended to make it possible for the Authority to engage in a broader range of financing than was previously the case.  The Authority has accordingly prepared these Guidelines for the purpose of advising Illinois colleges, universities, academic institutions and cultural institutions as to what now can be financed under the Act.  The Authority encourages interested institutions to apply for financing, but must, of course, reserve the right to accept or reject any application.

 

(Source:  Amended at 11 Ill. Reg. 9106, effective April 28, 1987; recodified from 23 Ill. Adm. Code 2310.5 at 31 Ill. Reg. 12104)

 

Section 1100.610  Who May Apply for Financing

 

a)         The Act provides that any private institution of higher education may apply to the Authority for the financing of an educational facility. A private institution of higher education is defined to mean any not-for-profit educational institution which is not owned by the State or any political subdivision, agency, instrumentality, district, or municipality thereof, which is authorized by law to provide a program of education beyond the high school level, and which:

 

1)         admits as regular students only individuals having a certificate of graduation from a high school, or the recognized equivalent of such a certificate;

 

2)         provides an educational program for which it awards a bachelor's degree, or provides an educational program, admission into which is conditioned upon the prior attainment of a bachelor's degree or its equivalent, for which it awards a post-graduate degree, or provides not less than a two year program in engineering, mathematics, or the physical or biological sciences which is designed to prepare the student to work as a technician and at a semi-professional level in engineering, scientific, or other technological fields which require the understanding and application of basic engineering, scientific, or mathematical principles or knowledge;

 

3)         is an institution that:

 

A)        is accredited by a nationally recognized accrediting agency or association or, if not so accredited, be an institution whose credits are accepted, on transfer, by not less than three institutions which are so accredited, for credit on the same basis as if transferred from an institution so accredited, and holds an unrevoked certificate or approval from the Board of Higher Education under the Private College Act [110 ILCS 1005/121], or

 

B)        is qualified and approved as a "degree granting institution" under the Academic Degree Act [110 ILCS 1010]; and

 

4)         does not discriminate in the admission of students on the basis of race, color or creed. 

 

b)         Subject to the foregoing, the fact that a not-for-profit educational institution is affiliated with or controlled by a religious order or denomination – unless it is a divinity school – does not necessarily prevent it from being eligible for Authority financing.

 

c)         In addition to the foregoing, an academic institution is now deemed to be a private institution of higher education within the meaning of the Act and may also apply to the Authority for financing of an educational facility.  An academic institution is defined to be any not-for-profit institution which is not owned by the State or any political subdivision, agency, instrumentality, district, or municipality thereof, which institution engages in, or facilitates academic, scientific, educational or professional research or learning in a field or fields of study taught at a private institution of higher education. Academic institutions include without limitation, libraries, archives, academic, scientific, educational or professional societies, institutions, associations or foundations.  Such institutions do not include any school or institution primarily engaged in religious or sectarian activities. 

 

d)         The Act was recently amended to provide that any cultural institution may apply to the Authority for the financing of a cultural facility.  A cultural institution is defined to mean any not-for-profit institution which is not owned by the State or any political subdivision, agency, instrumentality, district or municipality thereof, which institution engages in the cultural, intellectual, scientific, educational or artistic enrichment of the people of the State. Cultural institutions include, without limitation, aquaria, botanical societies, historical societies, libraries, museums, performing arts associations or societies, scientific societies and zoological societies.  Cultural institution does not include any institution primarily engaged in religious or sectarian activities.

 

e)         Secular Projects

 

1)         Pursuant to decisions by the Illinois Supreme Court and the United States Supreme Court, the Authority may finance a secular project under the Act for a religiously affiliated or controlled private institution of higher education or cultural institution unless that institution is so pervasively religious that a substantial portion of its functions are subsumed in the religious mission.  Determination of whether an institution is so pervasively religious as to be disqualified from Authority financing involves a detailed examination of the character and method of operation of the institution.  Factors considered by the Authority in making such a determination with respect to a private institution of higher education include, but are not limited to, the following:  

 

A)        Whether the institution imposes religious restrictions on the admission of students;

 

B)        Whether the institution requires attendance of students at religious activities;

 

C)        Whether the institution requires obedience by students to the doctrines and dogmas of a particular faith;

 

D)        Whether the institution requires students to attend instruction in the theology or doctrine of a particular faith;

 

E)        Whether the institution is an integral part of the religious mission of the church sponsoring it;

 

F)         Whether the institution has as a substantial purpose the inculcation of religious values;

 

G)        Whether the institution imposes religious restrictions on faculty appointments; and

 

H)        Whether the institution imposes religious restrictions on what or how the faculty may teach.

 

2)         It is not necessary for an institution to exhibit all, or even a majority, of these characteristics to be considered pervasively religious and, accordingly, to be disqualified from Authority financing.  Analogous factors will be considered by the Authority for cultural institutions. Future Illinois or United States Supreme Court cases may require the Authority to modify or refine the above factors or to add additional factors for consideration.

 

(Source:  Amended at 11 Ill. Reg. 9106, effective April 28, 1987; recodified from 23 Ill. Adm. Code 2310.10 at 31 Ill. Reg. 12104)

 

Section 1100.620  Types of Educational and Cultural Facilities that Can Be Financed

 

a)         The Act broadly defines an educational facility as any property within the State, constructed or acquired before or after the effective date of this Act, which is suitable for the instruction, feeding, recreation or housing of students, the conducting of research or other work of a private institution of higher education, the use by a private institution of higher education in connection with any educational, research or related or incidental activities then being or to be conducted by it, or any combination of the foregoing.

 

b)         The Act also provides specific examples of the types of educational facilities that may be financed, which are as follows:  an academic facility, administrative facility, agricultural facility, assembly hall, athletic facility, auditorium, boating facility, campus, communication facility, computer facility, continuing education facility, classroom, dining hall, dormitory, exhibition hall, fire fighting facility, fire prevention facility, food service and preparation facility, gymnasium, greenhouse, health care facility, hospital, housing, instructional facility, laboratory, library, maintenance facility, medical facility, museum, offices, parking area, physical education facility, recreational facility, research facility, stadium, storage facility, student union, study facility, theatre or utility.  

 

c)         All of these specific examples must, however, fulfill one of the general educational functions quoted above.  For example, a hospital which was not primarily a teaching hospital could not be financed under the Act.  In addition, it should be noted that divinity school facilities, chapels or other facilities used for sectarian instruction, worship or devotional activities cannot be financed under the Act.

 

d)         The Act broadly defines a cultural facility as any property located within the State constructed or acquired before or after the effective date of this Act which is suitable for the particular purposes of a cultural institution. 

 

e)         The Act also provides specific examples of the types of cultural facilities that may be financed, which are as follows:. any such property suitable for use as or in connection with any one or more of the following:  an administrative facility, aquarium, assembly hall, auditorium, botanical garden, exhibition hall, gallery, greenhouse, library, museum, scientific laboratory, theater or zoological facility, and shall also include, without limitation, books, works of art or music, animal, plant or aquatic life or other items for display, exhibition or performance and buildings on the National Register of Historic Places which are owned or operated by non-profit entities.  

 

f)         A cultural facility does not include any property used or to be used for sectarian instruction or study or as a place for devotional activities or religious worship nor any property which is used or to be used primarily in connection with any part of the program of a school or department of divinity for any religious denomination. 

 

(Source:  Amended at 11 Ill. Reg. 9106, effective April 28, 1987; recodified from 23 Ill. Adm. Code 2310.20 at 31 Ill. Reg. 12104)

 

Section 1100.630  Types of Costs that Can Be Financed:  Outstanding Debt

 

Generally speaking, all costs connected with the acquisition or construction of an educational or cultural facility can be financed through an Authority bond issue, including the costs of refunding or refinancing debt previously incurred by a private institution of higher education or a cultural institution to finance an educational or cultural facility and the costs of remodeling or adding to an existing facility.  Equipment to be used in an educational or cultural facility may also be financed.

 

(Source:  Amended at 11 Ill. Reg. 9106, effective April 28, 1987; recodified from 23 Ill. Adm. Code 2310.30 at 31 Ill. Reg. 12104) 

 

Section 1100.640  Application Guidelines

 

a)         Introduction. Each applicant institution is encouraged to review the following procedures incident to the preparation of any application for assistance.

 

b)         Pre-filing Stage.  Prior to the preparation or submission of any application for assistance, each institution is requested to contact the Authority's Executive Director.  The Executive Director will arrange for a meeting, or meetings, with the institution and the Authority's Executive Director, financial advisor, and bond counsel.  The purpose of these meetings is two-fold:

 

1)         A preliminary evaluation of the proposed project by the institution and the Authority's staff in order to determine, in the first instance, whether or not an application should be submitted to the Authority for its consideration.  (In the event that it is the opinion of the Authority's staff that an application should not be prepared and submitted, this recommendation will be rendered to the Authority for its consideration prior to any further work with respect to the proposed project); and

 

2)         Where prior Authority authorization is not deemed necessary, the Authority staff shall at once assist the institution in the development of its application for the Authority's information and review.  Additionally, the financial advisor will prepare an initial financial advisory review for the Authority's consideration.  (This initial review consists of a description of the proposed project and a description of the economic background of the applicant institution.)

 

c)         Filing and Acceptance of Application

 

1)         Once the application is completed the application will be filed with the Authority.  (The applicant institution is to submit its application fee with the application.)

 

2)         The Authority's Executive Director will submit this filed application to the Authority for its consideration at its next meeting once the financial advisor's initial financial review is completed.

 

3)         At the meeting referred to above, the Authority will determine if it will accept the submitted application.  In reaching this conclusion, the Authority will consider:

 

A)        the application itself;

 

B)        comments and presentations by representatives of the applicant institution;

 

C)        the financial advisor's initial review; and

 

D)        additional observations by the Authority's Executive Director and bond counsel.

 

4)         If the Authority accepts the application, it will authorize the following tasks:

 

A)        Bond counsel will be directed to undertake a preliminary investigation of legal feasibility of the project.  (This investigation will not consist, however, in the preparation or drafting of documents incident to the proposed issue itself; rather, this study will address itself to an appraisal of the appropriations and needs of the issue itself); and

 

B)        Financial advisor will be directed to prepare a detailed financial study of the proposed application.  Upon completion of this study, the financial advisor will submit to the Authority its specific recommendation or recommendations.

 

5)         Upon acceptance of the application by the Authority, the application fee shall be deemed non-refundable and shall be deposited by the Authority.

 

6)         Neither the work of the bond counsel or financial advisor, with respect to a given project, is paid by the Authority.  In the event that the proposed project does not come to issue, the applicant institution shall pay both the financial advisor and bond counsel their reasonable fees incurred for all work so performed on behalf of the institution subsequent to the Authority's acceptance of the application.  It shall be the duty of the institution and the financial advisor and bond counsel, respectively, to determine and agree upon the reasonableness of fees involved.

 

d)         Approval of Application

 

1)         The Authority will decide whether or not to approve an accepted application once the financial advisor and bond counsel have completed their reviews of the project.

 

2)         If the accepted application is approved, the financial advisor, Executive Director, and bond counsel will be authorized and directed to prepare all documents and showings necessary and incident to issuance of bonds for the applicant institution.

 

3)         "Approval" of an application by the Authority is not, nor should be, construed as any form of a commitment or guarantee, on the part of the Authority to the applicant institution that the proposed financing will be successfully completed and sold.  Rather, approval of an application indicates the Authority's desire to work with the applicant in the attempt to bring its issue to sale.

 

4)         In the event that the applicant institution's issue is sold, the applicant institution shall reimburse the financial advisor and bond counsel for their services rendered in accordance with compensation schedules approved by the Authority.  Such costs may be funded out of bond proceeds.  Such schedules are available upon request from the Executive Director.  Further, in the event that the applicant institution's issue is sold, the applicant institution shall be obligated to pay the Authority the Administrative Charge and Annual Fee referred to on page 2 of the Application Form.

 

(Source:  Recodified from 23 Ill. Adm. Code 2320.5, 2320.10, 2320.20 and 2320.30 at 31 Ill. Reg. 12104)

 

Section 1100.650  Interest Rate on the Authority's Bonds

 

There is no legal limit on the interest rate for the Authority's Bonds under this Subpart.  As a matter of policy, however, the Authority may decide in certain cases to limit the rate for a particular Bond issue, after consulting with its financial advisor and the institution which is applying for financing.

 

(Source:  Amended at 11 Ill. Reg. 9106, effective April 28, 1987; recodified from 23 Ill. Adm. Code 2310.40 at 31 Ill. Reg. 12104)

 

Section 1100.660  Method of Financing

 

Three methods of financing are now available:

 

a)         Lease Method.  Under this method the Authority acquires title to the educational or cultural facility to be financed, issues bonds to finance its cost and leases the facility to the participating institution under a lease with a term equal to the final maturity of the Authority's bonds and with rental equal to principal and interest on the bonds.  At the end of the lease term, the Authority is required to reconvey title to the facility to the participating institution.

 

b)         Ground Lease Method.  This method, which the Authority does not encourage, is a variant on the Lease Method.  Here the participating institution retains title to the facility and leases it to the Authority for a nominal rental with a Sublease back to the participation institution for a term equal to the maturity of the bonds and at rentals equal to principal and interest.  A mortgage of the facility by the Authority is possible under both these Methods (subject, of course, to the rights of the participating institution under the Lease or Sublease) and may be recommended in some instances to reduce interest costs.  Both of these Methods also contemplate that the participating institution will guaranty the bonds.

 

c)         Secured Note Pass Through Method.  Under this Method the participating institution issues a secured note to the Authority, secured by a first mortgage lien on the facility to be financed or by a first mortgage lien on or security interest in other real or personal property acceptable to the Authority. The determination of what real or personal property is acceptable to the Authority for security purposes in each instance is based on a variety of factors that include, but are not limited to, the following:  the credit worthiness of the participating institution; the requirements of the particular market in which the related bonds are proposed to be offered for sale; the preferences of the participating institution, including the availability to it of various types of real and personal property for use as collateral; the requirements or suggestions of any rating agency that is providing a rating of the related bonds; and the legality of the proposed collateral structure, particularly insofar as it relates to the federal tax-exempt status of interest on the related bonds.  In reviewing the foregoing factors and determining the acceptability of a proposed security arrangement, the Authority relies to a significant extent upon advice provided by its financial advisor, insofar as financial matters are concerned, and its bond counsel, insofar as legal matters are concerned. The Authority, in turn, issues its own bonds to purchase the participating institution's note and pledges it as security for those bonds.  Here, again, title to the facility never leaves the participating institution unless, of course, the participating institution defaults in payment.

 

(Source:  Amended at 11 Ill. Reg. 9106, effective April 28, 1987; recodified from 23 Ill. Adm. Code 2310.50 at 31 Ill. Reg. 12104)

 

Section 1100.670  Length of Bond Issue

 

The Act limits the life of an Authority bond issue under this Subpart to 40 years.  The Authority will, in consultation with its fiscal advisor and the applying institution, determine the length of any given issue.

 

(Source:  Amended at 11 Ill. Reg. 9106, effective April 28, 1987; recodified from 23 Ill. Adm. Code 2310.60 at 31 Ill. Reg. 12104)

 

Section 1100.680  Type of Bond Issue

 

The Act permits bonds under this Subpart to be sold at a private or public sale and the method to be followed will be determined on a case by case basis.

 

(Source:  Amended at 11 Ill. Reg. 9106, effective April 28, 1987; recodified from 23 Ill. Adm. Code 2310.70 at 31 Ill. Reg. 12104)

 

Section 1100.690  Fees

 

a)         The Authority charges the following fees to participating institutions for the services it provides:

 

1)         Application Fee – for processing an Application for Assistance. – An "Application Fee", based upon the following schedule, is payable upon submission of an application and is not refundable:

 

A)        $250 on issues up to but not including $1,000,000 principal amount;

 

B)        $500 on issues of $1,000,000 up to but not including $5,000,000 principal amount; and

 

C)        $1,000 on issues of $5,000,000 principal amount and over.

 

AGENCY NOTE:  This fee will be credited to the Administrative Charge upon completion of the related bond financing.

 

2)         Administrative Charge – for completing a bond financing. – An "Administrative Charge" equal to ¼ of 1% of the principal amount of bonds issued or $10,000, whichever is less minus the Application Fee paid, will be assessed at the closing of a financing.

 

AGENCY NOTE:  The Administrative Charge includes the Annual Fee for the fiscal year in which the bonds are issued.

 

3)         Annual Fee – for servicing a bond financing during a fiscal year. – An "Annual Fee" will be assessed for each bond issue outstanding on July 1 of each year. For Annual Fees coming due on or after July 1, 1999, the Annual Fee shall be 1/100 of 1% of the original amount of the financing or $7,500, whichever is less.  The Annual Fee is payable in advance and is not refundable.  (The Annual Fee coming due on July 1, 2003 shall be abated based on the Authority's projection of having sufficient reserves to meet its operating expenses for Fiscal Year 2003-2004.)

 

b)         These fees are designed to cover the operating expenses of the Authority. In addition, the participating institutions will be expected to bear all other costs of the financing, including trustee's fees, printing expenses, the financial advisor's fee, and the fee and disbursements of bond counsel.  These fees may be financed with bond proceeds.

 

(Source:  Amended at 27 Ill. Reg. 10224, effective June 27, 2003; recodified from 23 Ill. Adm. Code 2310.80 at 31 Ill. Reg. 12104)

SUBPART G: FARM DEVELOPMENT PROGRAM

 

Section 1100.700  Definitions

 

Words defined in the Illinois Finance Authority Act and in Section 1100.50 have the same meaning when used in this Subpart unless a more specific definition is prescribed in this Section. This Section establishes additional definitions for use in this Subpart only.

 

"Affiliate" means, with respect to any lender, any person, firm or corporation controlled by, or under common control with, such lender, and any person, firm or corporation controlling such lender.  (Section 801-10 of the Act)

 

"Agribusiness" means any sole proprietorship, limited partnership, co-partnership, joint venture, corporation or cooperative which operates or will operate a facility located within the State of Illinois that is related to the processing of agricultural commodities (including without limitation, the products of aquaculture, hydroponics and silviculture) or the manufacturing, production or construction of agricultural building, structure, equipment, implements, and supplies or any other facilities or processes used in agricultural production.  Agribusiness includes but is not limited to the following:  

 

grain handling and processing, including grain storage, drying, treatment, conditioning, milling and packaging;

 

seed and feed grain development and processing;

 

fruit and vegetable processing, including preparation, canning and packaging;

 

processing of livestock and livestock products, dairy products, poultry and poultry products, fish or apiarian products, including slaughter, shearing, collecting, preparation, canning and packaging;

 

fertilizer and agricultural chemical manufacturing, processing, application and supplying;

 

farm machinery, equipment and implement manufacturing and supplying;

 

manufacturing and supplying of agricultural commodity processing machinery and equipment, including machinery and equipment used in slaughter, treatment, handling, collecting, preparation, canning or packaging of agricultural commodities;

 

farm building and farm structure manufacturing, construction and supplying;

 

construction, manufacturing, implementation, supplying or servicing of irrigation, drainage and soil and water conservation devices or equipment;

 

fuel processing and development facilities that produce fuel from agricultural commodities or by-products;

 

facilities and equipment for processing and packaging agricultural commodities specifically for export;

 

facilities and equipment for forestry product processing and supplying, including sawmilling operations, wood chip operations, timber harvesting operations, and manufacturing of prefabricated buildings, paper, furniture or other goods from forestry products;

 

facilities and equipment for research and development of products, processes and equipment for the production, processing, preparation or packaging of agricultural commodities and by-products. (Section 801-10 of the Act)

 

"Agricultural Facility" means land, any building or other improvement thereon or thereto, and any personal properties deemed necessary or suitable for use, whether or not now in existence, in farming, ranching, the production of agricultural commodities (including, without limitation, the products of aquaculture, hydroponics and silviculture) or the treating, processing or storing of such agricultural commodities when such activities are customarily engaged in by farmers as a part of farming. (Section 801-10 of the Act)

 

"Agricultural Improvements" means any improvements, buildings, structures or fixtures suitable for use in farming which are located on agricultural land.

 

"Agricultural Land" means land suitable for use in farming and which is or will be operated as a farm.

 

"Depreciable Agricultural Property" means personal property suitable for use in farming for which an income tax deduction for depreciation is allowable in computing federal income tax under the Internal Revenue Code (26 USC 1-9042).  Examples include but are not limited to the following:  breeding livestock and poultry, farm machinery, trucks, etc.  Feeder livestock, seed, feed, and fertilizer do not qualify as depreciable agricultural property.

 

"Lender" means any federal or State chartered bank, Federal Land Bank, Production Credit Association, Bank for Cooperatives, federal or State chartered savings and loan association or building and loan association, Small Business Investment Company or any other institution qualified within this State to originate and service loans, including, but without limitation to, insurance companies, credit unions and mortgage loan companies.  "Lender" also means a wholly owned subsidiary of a manufacturer, seller or distributor of goods or services that makes loans to businesses or individuals, commonly known as a "captive finance company". (Section 801-10 of the Act)

 

"Soil or Water Conservation District" means a public body corporate and politic, organized in accordance with the Soil and Water Conservation Districts Act. [70 ILCS 405/3.01]

 

(Source:  Amended at 13 Ill. Reg. 14376, effective August 30, 1989; recodified from 8 Ill. Adm. Code 1400.10 at 31 Ill. Reg. 12104)

 

Section 1100.705  Rules and Guidelines Applicable to Bond Programs under this Subpart

 

a)         General Description of Programs.  The bond programs are intended to allow farmers to obtain lower interest rate loans for qualified purposes by obtaining loan funds from the proceeds of a tax-free bond issued by the Authority.  The Authority shall establish, from time to time, particular bond programs to implement the policies and purposes of the Act.  The Authority may modify or discontinue any such program, in a manner consistent with this Part, if it determines that the public interest would be served by so doing.

 

b)         Applicant Eligibility

 

1)         Unless otherwise provided in this Part, the eligible applicant must be a permanent resident of Illinois at the time the bond is issued.

 

2)         The land and improvements or depreciable farm property the applicant proposes to purchase will be located within Illinois.

 

3)         The applicant must be at least 18 years of age at the time of application.

 

4)         The applicant may be required to document to the satisfaction of the lender and the Authority, sufficient education, training or experience in the type of project for which the loan is sought.

 

5)         If the loan is sought for the acquisition of land, the applicant may be required to document, to the satisfaction of the lender, that he will have access to adequate working capital, farm equipment, machinery or livestock.  If the loan is sought for acquisition of depreciable agricultural property, the applicant should document access to adequate working capital or agricultural land.

 

6)         The Authority may, from time to time, and through formal rulemaking procedures, establish rules requiring that a determination be made that the applicant is unable to secure financing from nongovernmental sources upon terms and conditions which the applicant reasonably could be expected to fulfill.

 

7)         The land and improvements which are financed by the loan made by the Authority must be used by the applicant.  Any improvements or depreciable property which is to become a fixture or an integral part of real estate may be financed by the Authority only if the applicant owns or leases the real estate on which it is to be located.

 

8)         The applicant must state the particular program for which he or she is applying and must satisfy all the eligibility requirements of that program.

 

c)         Qualified Purposes

 

1)         Eligible loan activities under all programs consist of financing purchases of depreciable property or real estate, and powers granted in Article 830 of the Act.

 

2)         Ineligible loan activities under all programs consist of the following:

 

A)        Refinancing an existing debt incurred by the applicant.

 

B)        Financing working capital to purchase feed, seed, fertilizer, fuel, feeder cattle, pigs, lambs, etc.

 

C)        Financing the previously commenced acquisition or construction of any part of the project for which the loan is sought if such commencement by the applicant or any related person occurred more than 60 days prior to the Authority's action on the application and sale of bond to finance the loan.  This prohibition includes, but is not limited to, entering into a contract or purchase agreement, installment or otherwise, in connection with the construction of the project or any part thereof, or off-site fabrication or acquisition of any portion of the project.  This prohibition does not apply, however, if such contract or purchase order, for example, states that the purchase is subject to the approval of the Authority, the risk of loss remains with the seller and the Authority's approval is obtained prior to the applicant taking possession of the property.

 

d)         Participating Lenders.  Any bank, trust company, mortgage company, national banking association, savings and loan association, life insurance company, any State or federal governmental agency or instrumentality, or any other financial institution or entity authorized to make mortgage loans or secured loans in this State may be a participating lender.  A financial institution may become a participating lender at any time.

 

e)         Application Procedures and Review

 

1)         The farmer may apply (on forms approved by the Authority) for an Authority loan with any participating lender.  Any loan approved will be assigned to that Participating lender.  Authority loan eligibility is determined by the requirements of the Act and this Part. If a farmer meets the loan eligibility requirements, the decision on whether to enter into the loan agreement is between the farmer and the participating lender.  They must agree on terms of the loan such as interest rates, length of loan, down payment, service fees, origination charges, and repayment schedule, which may not be any more onerous than that charged to similar customers for similar loans, but taking into account the tax exempt nature of interest on the loan.

 

2)         Following completion of the loan application by the farmer and approval by the participating lender, the loan application must be submitted to the Authority for its review and approval.  The Authority's review will include, but not be limited to whether the loan applicant is an eligible farmer, the loan proceeds will be used for a qualified purpose under the Act and this Part and the Internal Revenue Code and IRS regulations relating to industrial development revenue bonds, and the terms of the loan comply with this Part.

 

3)         When a loan application is submitted to the Authority, the Executive Director shall review the loan application to determine whether it is complete, and whether the criteria established by the Act and this Part have been satisfied.

 

A)        If the Executive Director determines that the loan application is incomplete, he shall, within five days after such determination, inform the applicant and the participating lender of such determination, and shall detail the information or material which is necessary to complete the application.  For the purposes of subsection (g) of this Section, no application shall be deemed complete until the applicant or participating lender has provided additional information or material as requested by the Executive Director.

 

B)        When the Executive Director has completed his review of the loan application, he shall present the loan application, with a statement of recommended action, to the Board at its next regularly scheduled meeting.

 

4)         The Board shall review each loan application presented by the Executive Director in accordance with the provisions of the Act and this Part, and the Board shall:

 

A)        approve the loan and issue the bond, pursuant to the Act and this Part; or

 

B)        deny the application and serve upon the applicant and participating lender a written statement of the grounds for the denial.

 

5)         Within 21 days after of a denial, the applicant and the participating lender may file with the Authority a Request for Reconsideration, stating reasons why the Board should withdraw its denial of the application and approve the loan.  The Request for Reconsideration may be accompanied by supporting documents and information not previously considered by the Board.  The Board shall review the Request for Reconsideration within 45 days after receiving it, and shall either approve the loan and issue the bond, or deny the Request for Reconsideration.  A denial of a Request for Reconsideration shall be final. While a Request for Reconsideration is pending, the application that is the subject of the Request for Reconsideration shall be deemed complete for the purposes of subsection (g) of this Section.

 

f)         Source of Payment and Nature of Obligation.  The principal and interest on the bond is a limited obligation payable solely out of the revenues derived from the loan to the farmer and the underlying collateral or other security furnished by or on behalf of the farmer.  The participating lender shall have no other recourse against the Authority. The principal and interest on the bond does not constitute an indebtedness of the Authority or a charge against its general credit or general fund.

 

g)         Priority of Applications.  Applications shall be processed by the Authority on a first-come, first-served basis, based upon the receipt of all completed documents by the Authority.  The Authority may deviate from the first-come, first-served rule to the extent necessary to comply with federal income tax laws and regulations, to fully utilize the proceeds of any series of bonds or allocations of bond proceeds to participating lenders, or to meet emergency needs of farmers as determined from time to time by appropriate resolution of the Authority.

 

h)         Post Issuance Certification.  No bond proceeds may be used for a nonqualified purpose or by a noneligible user.  Following disbursement of the bond proceeds, the participating lender and farmer shall certify to the Authority that the proceeds were used by an eligible farmer for a qualified purpose.

 

i)          Assumption of Loans, Substitution of Collateral and Transfer of Property.  Loans may not be assumed without the prior approval of the Authority, and then only if the purchaser of the property is an eligible applicant for an Authority loan.  Equipment and other depreciable property may be exchanged or traded in for similar property, and other property such as breeding livestock may be added or substituted as collateral at the discretion of the lender without the prior approval of the Authority.  The benefits of the loan made at the tax-free rate from the proceeds of an Authority bond must remain with the qualified farmer, and no person to whom property is traded or otherwise transferred may obtain the benefits of the Authority loan.

 

j)          Right to Audit.  The Authority shall have at any time the right to audit the records of the participating lender and the farmer relating to this loan and bond and ensure that bond proceeds were used for qualified purpose by a qualified user.

 

(Source:  Amended at 24 Ill. Reg. 16656, effective October 24, 2000; recodified from 8 Ill. Adm. Code 1400.130 at 31 Ill. Reg. 12104)

 

Section 1100.710  Bond Programs and Rules Applicable to Each

 

a)         Beginning Farmer Bond and Contract Bond Programs

 

1)         Purpose.  The purpose of the Beginning Farmer Bond and Contract Bond Programs is to provide affordable financing to new, low net worth farmers for financing capital purchases.  IFA works with the applicant's local lender or contract seller to provide this financing.  IFA issues a tax-exempt bond for the amount and with the terms of the loan.  Because the interest income to the lender or contract seller is exempt from federal income tax, the lender or contract seller is able to charge a lower rate to the applicant.  The loan and the bond are secured solely by the collateral required by the lender or contract seller and are not obligations of IFA or of the State of Illinois. Because the lender or contract seller assumes all credit risk, the lender or contract seller makes all credit decisions.

 

2)         Eligible Applicants

 

A)        The applicant must have net worth of not more than $250,000 at the time of application.  Net worth means total assets less total liabilities of the individual and the individual's spouse and minor children, if any.

 

i)          Total assets shall include, but not be limited to, the following: cash crops or feed on hand; livestock held for sale; breeding stock; marketable bonds and securities; securities (not readily marketable); accounts receivable; notes receivable; cash invested in growing crops; net cash value of life insurance; machinery and equipment; cars and trucks; farm and other real estate including life estates and personal residence; value of beneficial interests in trusts; government payments or grants; and all other assets.  [20 ILCS 3501/801-10]  Total assets shall not include items used for personal, family or household purposes by the applicant, but in no event shall such property be excluded to the extent that a deduction for depreciation is allowable for federal income tax purposes.  All assets shall be valued at fair market value by the participating lender.  Such value shall be what a willing buyer would pay a willing seller in the locality.  A deduction of ten percent may be made from fair market value of farm and other real estate.

 

ii)         Total liabilities shall include, but not be limited to, the following:  accounts payable; notes or other indebtedness owed to any source; taxes; rent; amounts owed on real estate contracts or real estate mortgages; judgments; accrued interest payable; and all other liabilities. [20 ILCS 3501/801-10]

 

B)        The applicant must be an individual, not a corporation, partnership, trust, or any other legal entity.

 

C)        The applicant must be the sole owner and principal user of the project.

 

D)        The applicant must not have had any prior direct or indirect ownership interest in a substantial amount of land.  A substantial amount of land is a parcel that exceeds 30% of the median farm size in the county in which the land is located, or which had at any time during ownership a fair market value in excess of $125,000. An individual with prior ownership of land may still be eligible if the individual did not participate in the operation of the farm. Ownership or material participation by an individual's spouse or minor child shall be treated as ownership or material participation by an individual.

 

3)         Loan Amount.  The maximum loan amount is $250,000 per person.

 

4)         Eligible Purchases.  Loan proceeds may be used for the following capital purchases only:

 

A)        Land located in the State of Illinois that is suitable for use in farming and that is or will be operated as a farm.

 

B)        Agricultural Improvements.  Any improvements, buildings, structures or fixtures suitable for use in farming that are located on agricultural land. IFA will finance the purchase of new improvements on agricultural land.  IFA can finance used agricultural improvements only in situations in which:

 

i)          the improvements are purchased in conjunction with agricultural land and used in the operation of a farm to be operated on the agricultural land being purchased; or

 

ii)         a sufficient amount of qualified rehabilitation expenditures are incurred by the borrower with respect to the agricultural improvements within two years from the date of the issue of the bond.

 

C)        Depreciable Agricultural Property.  Personal property suitable for use in farming for which an income tax deduction for depreciation is allowable in computing federal income tax under the Internal Revenue Code.  Examples include, but are not limited to, farm machinery and trucks. Feeder livestock, seed, feed, fertilizer, and other types of inventory or supplies do not qualify as depreciable agricultural property.  IFA will finance the purchase of any new depreciable agricultural property.  IFA can also finance used depreciable agricultural property if it is purchased in conjunction with agricultural land and used in the operation of a farm to be operated on the agricultural land being purchased.  The total loan proceeds allocated to the purchase price of used equipment may not exceed $62,500.

 

D)        No portion of the loan proceeds may be used for the purchase of a residence.  If the project includes a residence, the applicant must make a down payment or obtain conventional financing for the value of the residence.

 

5)         Purchase from Related Persons.  The IRS states that the following, among others, are deemed to be "related persons" of any individual: grandfather, grandmother, father, mother, brother, sister (whether whole or half blood), child grandchild, or spouse.  In addition, a partnership and each of its partners (and their spouses and minor children) are related persons, as are an S corporation and each of its shareholders (and their spouses and minor children).  Related persons also include certain related corporations and partnerships.  It should be pointed out that the foregoing list is not all-inclusive.  There are certain other entities and individuals that could also be considered related persons.  It should also be noted that certain individuals are not related persons.  For example, an uncle, aunt, nephew, niece, brother-in-law or sister-in-law would not be treated as a related person. IFA loan proceeds may be used to purchase property from a related person in some circumstances:

 

A)        The Beginning Farmer Bond Program may be used to purchase eligible property from a related person if the following conditions are met:

 

i)          The applicant must certify and provide supporting documentation that the purchase price of the project is equal to the market value of the project.

 

ii)         The applicant must certify that the seller will have no continuing financial interest in the project and will not be a principal user of the project, and will have no other direct or indirect ownership or use of the project.

 

B)        The Beginning Farmer Contract Bond Program may never be used to purchase property from a related person.

 

6)         Security for the Loan.  To facilitate the making of the loan, the Lender Loan Agreement or Contract Seller Agreement provides that the lender or contract seller will act as agent and fiduciary for IFA in connection with the loan.  The principal and interest of the bond are payable solely out of the revenue derived from the Borrower's Promissory Note, which is secured by collateral furnished by the borrower.  Please note that cash and cash equivalents may not be used as collateral.  The bond that is issued by IFA and purchased by the lender or contract seller is a non-recourse obligation.  The principal and interest on the bond do not constitute an indebtedness of IFA or a charge against its general credit or general fund.

 

7)         Fees.  The Authority charges a non-refundable application fee of $100 that must be submitted with the application.  There is also a closing fee of one and one-half percent of the loan amount, less the $100 application fee, due when the loan is closed.  The lender under the Beginning Farmer Bond Program may charge a closing fee of up to one-half of one percent of the loan amount. No other fees may be charged.  However, the lender may pass on to the borrower any recording or filing fees associated with the loan.  The contract seller under the Beginning Farmer Contract Bond Program may charge no fees.  However, the contract seller may pass on to the borrower any recording or filing fees associated with the loan.

 

8)         This program takes effect upon adoption pursuant to this Part.

 

b)         Agricultural Manufacturing Bond Program

 

1)         Purpose.  This program is designed to encourage the development and expansion of agribusiness manufacturing operations in Illinois.  The intention of this program is to enhance economic growth in Illinois by creating and saving jobs in the rural areas of the State.

 

2)         Eligibility Requirements Particular to the Agricultural Manufacturing Bond Program.

 

A)        The applicant must be an agribusiness as defined in the Act and in Section 1100.700 of this Part.  The applicant must also be a "manufacturing facility" as defined in section 144(a)(12)(C) of the Internal Revenue Code of 1986.  This means any facility which is used in the manufacturing or production of tangible personal property (including the processing resulting in a change in the condition of such property).

 

B)        The applicant, including all affiliates and subsidiaries, must have no more than 100 employees at the time of application or have had gross income of no more than $2 million for the calendar year preceding the date of application.  "Gross income" for this purpose means the amount of gross income properly reportable for federal income tax purposes for the taxable year under the provisions of the Internal Revenue Code.

 

C)        The IFA shall waive the requirements of subsection (b)(2)(B) for any Agricultural Manufacturing Facility which at the time of application does not operate a facility within the State of Illinois.

 

3)         The amount of a loan authorized herein to any agricultural manufacturing facility shall be limited by section 144(a)(4)(A) of the Internal Revenue Code with respect to the issuance of small issue industrial development bonds.  In no event shall any loan to any one agricultural manufacturing facility exceed $10 million.

 

4)         Issuance of Bond.  Following approval of the loan, the Authority shall issue a bond, in the amount of and fitting the terms of the loan, to be purchased by the participating lender.

 

5)         This program takes effect upon adoption pursuant to this Part.

 

6)         The applicant must pay a $100 fee at the time of application.

 

(Source:  Amended at 26 Ill. Reg. 7084, effective May 10, 2002; recodified from 8 Ill. Adm. Code 1400.140 at 31 Ill. Reg. 12104)

 

Section 1100.715  Rules and Guidelines Applicable to the Interest Buy Down Program

 

a)         General Description of Program

 

1)         The Interest Buy Down Program (IBD), which is used in conjunction with the State Guarantee Program for Restructuring Agricultural Debt (SGP), is designed to subsidize the interest cost on loans made to pork producers.

 

2)         The State shall pay a portion of the interest on qualifying loans under the SGP:

 

A)        The maximum principal amount on which the State will pay interest is $100,000.

 

B)        The State will pay the interest calculated at a rate of 2.0% up to the maximum principal amount.

 

C)        Payments will be made to the Lender annually.

 

b)         Definitions

Words defined in the Illinois Finance Authority Act and in Section 1100.50 have the same meaning when used in this Subpart unless a more specific definition is prescribed in this Section. This Section establishes additional definitions for use in this Subpart only.

 

"Applicant" means a hog farmer whose application for an Interest Buy Down in conjunction with a State Guarantee for Restructuring Agricultural Debt has been submitted to the Authority by a lender.

 

"Fund" means the General Revenue Fund, which will be used for Interest Buy Down payments.

 

"IBD" is a payment from the State of Illinois to the lender of a portion of the borrower's interest on a loan.

 

"Loan" is a loan made under the State Guarantee Program for Restructuring Agricultural Debt for which the State of Illinois is providing an Interest Buy Down.

 

c)         Eligible Farmers.  To qualify for participation in the IBD, the applicant must:

 

1)         be a resident of Illinois;

 

2)         be a principal operator of a farm that produces hogs;

 

3)         derive at least 50% of annual gross income from farming;

 

4)         have a net worth of at least $10,000;

 

5)         meet all other requirements of the State Guarantee Program  for Restructuring Agricultural Debt as defined in Section 1100.725 of this Part.

 

d)         Eligible Lenders.  To qualify for participation in the IBD, the Lender must:

 

1)         agree to fix the interest rate on the loan for at least five years;

 

2)         agree not to penalize Borrower on account of receipt of an IBD from the State after the applicable anniversary date of the loan.

 

e)         Limitations

 

1)         The IBD shall last for five years.  However, depending on the collateral, the loan may have a maturity of more than five years.

 

2)         The IBD shall be allowed on a maximum of $100,000 of the loan balance.

 

3)         The IBD shall be available until the earlier of June 30, 1999 or when $50 million of loans have been approved.

 

f)         Application Procedures and Review

 

1)         Lenders shall apply for the Interest Buy Down in conjunction with an application for the State Guarantee for Restructuring Agricultural Debt on forms provided by the Authority and shall certify that the application and any other documents submitted are true and correct.  Applications shall be processed by the Authority on a first-come, first-served basis, based upon the receipt of all completed application documents by the Authority.

 

2)         Review of applications and the approval process shall be in accordance with Section 1100.725 of this Part.

 

3)         Upon approval of an application and receipt of the documentation necessary to prepare closing documents for the loan, a closing documents package, which includes the document to execute for the IBD, shall be prepared by the Authority and sent to the lender.  Upon completion of all such forms and documents by the applicant, lender and Authority and after satisfaction of all closing requirements for the loan, the Interest Buy Down will be in effect.

 

g)         Payment of Interest Buy Down to Lender.  After the Borrower makes his anniversary payment, the Lender shall notify the Authority of the amount due on the IBD. The Authority shall direct payment to the Lender from the Fund.

 

(Source:  Added at 23 Ill. Reg. 11703, effective September 3, 1999; recodified from 8 Ill. Adm. Code 1400.145 at 31 Ill. Reg. 12104)

 

Section 1100.720  Rules and Guidelines Applicable to the Young Farmer Guarantee Program

 

a)         General Description of Program.  The Young Farmer Guarantee Program (YFG) is designed to enhance credit availability to younger farmers who are purchasing capital assets.  Loan funds may be used for new purchases of capital assets such as land, buildings, machinery, equipment, breeding livestock, soil and water conservation projects, etc.  In some cases, loan proceeds may be used to refinance existing debt as needed to improve lien positions or improve financial structure.  The provisions of this Section are applicable only to the YFG.

 

b)         Definitions

Words defined in the Illinois Finance Authority Act and in Section 1100.50 have the same meaning when used in this Subpart unless a more specific definition is prescribed in this Section. This Section establishes additional definitions for use in this Subpart only.

 

"Applicant" means a farmer whose application for a Young Farmer Guarantee has been submitted to the Authority by a lender.

 

"Asset" includes, but is not limited to, the following:  crops or feed on hand; livestock held for sale; breeding stock; cash; marketable bonds and securities; securities not readily marketable; accounts receivable; notes receivable; cash invested in growing crops; net cash value of life insurance; machinery and equipment; cars and trucks; farm and other real estate including life estates and personal residence; value of beneficial interest in trusts; government payments or grants; capitalized leases; retirement accounts and all other assets. [20 ILCS 3501/801-10(aa)]

 

"Debt to Asset Ratio" means total outstanding liabilities, including any debt to be financed or refinanced under this Section, divided by total outstanding assets. [20 ILCS 3501/830-45(a)]

 

"Fund" means the Illinois Farmer and Agribusiness Loan Guarantee Fund (see 20 ILCS 3501/830-35(c)), which is the State's fund to cover losses resulting from defaults on young farmer guarantee loans.

 

"Gross Annual Income" means income as defined in Section 61 of the Internal Revenue Code (26 USC 61).

 

"Liability" includes, but is not limited to, the following:  accounts payable; notes or other indebtedness owed to any source; taxes; rent; amounts owed on real estate contracts or real estate mortgages; judgments; accrued interest payable; indebtedness under capitalized leases; and all any other liabilities. [20 ILCS 3501/801-10(bb)]

 

"YFG Loan" means an installment note for which the State of Illinois shall be liable for 85% of the total principal and interest as determined by the Authority.

 

"Young Farmer" means a resident of Illinois who is at least 18 years of age, who is a principal operator of a farm or land, who derives or will derive at least 50% of gross annual income from farming, who has a net worth of not less than $10,000 and whose debt to asset ratio is not less than 40%. [20 ILCS 3501/830-45(a)]

 

c)         Eligible Farmers. To qualify for participation in the YFG, each farmer must:

 

1)         be at least 18 years of age and maintain his principal residence in the State [20 ILCS 3501/830-45(a)];

 

2)         be the principal operator of a farm who derives or will derive at least 50% of annual gross income from farming [20 ILCS 3501/830-45(a)];

 

3)         have a debt to asset ratio of not less than 40% and not greater than 70% after purchase of the capital item and have a net worth of not less than $10,000 [20 ILCS 3501/830-45(a)];

 

4)         demonstrate the ability to adequately service the proposed debt.  If this ability is not adequately demonstrated, he can have a guarantor sign the note with him and/or pledge additional collateral for the loan;

 

5)         provide sufficient collateral to secure the YFG loan and agree to keep it adequately collateralized in the future.  All real estate and depreciable property which is to be used as collateral on a YFG loan must be evaluated by IFA staff or appraised by a qualified appraiser.  All real estate appraisals must meet federal regulatory requirements and meet the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation.  Auctioneers and machinery and equipment dealers are qualified to appraise depreciable property.  The applicant is liable for all appraisal fees connected with the YFG Loan;

 

6)         certify that all of his debts will be current at the time the YFG loan is closed. (See 20 ILCS 3501/830-45.) 

 

d)         Limitations

 

1)         YFG loans shall not exceed $500,000 per young farmer. A young farmer may use this program more than once provided the aggregated principal amount of YFG loans to that young farmer does not exceed $500,000. [20 ILCS 3501/830-45(a)]

 

2)         Each YFG loan shall be set up on a payment schedule not to exceed 30 years, but shall be no longer than 15 years in duration. [20 ILCS 3501/830-45(a)]  The payment schedule for the loan will be tailored to the applicant's collateral and cash flow.  Real estate loans may be amortized up to 25 years with a 15 year balloon.  Loans with depreciable property as collateral will be amortized over a shorter period.

 

3)         The YFG loan can be fully or partially paid at any time while the loan is outstanding as long as the loan is held in the lender's portfolio and not sold into a secondary market.  YFG loans may not be assumed.

 

e)         Application Procedures and Review

 

1)         Lenders shall apply for the YFG loans on forms provided by the Authority.  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. [20 ILCS 3501/830-45(a)]  Applications shall be processed by the Authority on a first-come, first-served basis, based upon the receipt of all completed documents by the Authority.

 

2)         Lenders shall certify that the application and any other documents submitted are true and correct. [20 ILCS 3501/830-45]

 

3)         Each applicant shall pay a $300 application fee which will be submitted to the Authority at the time of the application.  At the time the loan is closed, the applicant will be required to pay a closing fee of 1% of the YFG loan amount less the $300 application fee.  Of this 1% closing fee, the Authority shall receive ¾% and the lender shall receive ¼% to cover administrative expenses in completing the application packet and closing documents.  The 1% closing fee may be included in the State Guarantee loan amount.  The lender shall charge no fees or points in addition to those outlined herein. 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. [20 ILCS 3501/830-45(a)]

 

4)         When a State Guarantee application is submitted to the Authority, the Authority shall review the application to determine whether it is complete and whether it meets the criteria established by the Act and this Section. When the Authority has completed the review of the Guarantee application, the application shall be presented, along with a statement of recommended action, to the Board for review at its next regularly scheduled meeting.  The review shall include whether the applicant and lender are in compliance with the requirements of the program.  The review shall also include an evaluation of collateral, percentage of loan, debt to asset ratio, cash flow, etc.

 

5)         The Board shall approve the application and provide the Guarantee, pursuant to the Act and this Section; or, deny the application and serve upon the lender and applicant a written statement of the grounds for the denial.

 

6)         If the application is denied, the applicant and the lender may request reconsideration stating reasons why the Board should withdraw its denial of the application and approve the State Guarantee.  The request should be accompanied by supporting documents and/or information not previously considered by the Board.  The Board shall review the request at its next scheduled meeting, and shall either approve or deny the application.  A denial of a request for reconsideration shall be final.

 

7)         Upon approval of an application and receipt of the documentation necessary to prepare loan closing documents, a YFG Loan Closing Documents package, which contains all the appropriate forms and documents to execute, shall be prepared by the Authority and sent to the lender.  Upon completion of all such forms and documents by the applicant, lender and Authority and after satisfaction of all loan closing requirements, the YFG loan guarantee will be considered in force.

 

f)         Provision or Renewal of State Guarantees.  The Authority shall provide or renew a State Guarantee to any lender if, in addition to meeting the other criteria described in the Act and this Section, the lender:

 

1)         charges 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 YFG loan can be converted to a fixed interest rate at any time during the term of the loan [20 ILCS 3501/830-45];

 

2)         pays a fee equal to 25 basis points on the loan to the Authority on annual basis [20 ILCS 3501/830-45(a)];

 

3)         agrees to complete and certify that, to the best of the lender's knowledge, all information is true and correct on the application, balance sheets, security analysis, cash flow projection  and any other documents that the Authority may request [20 ILCS 3501/830-45(a)];

 

4)         identifies collateral acceptable to the Authority in accordance with subsection (h) that is at least equal to the State Guarantee loan request [20 ILCS 3501/830-45(a)];

 

5)         assumes all responsibility and costs for pursuing legal action on collecting any loan that is delinquent or in default subject to consulting the Authority [20 ILCS 3501/830-45(b)(iii)];

 

6)         is at risk for the first 15% of the outstanding principal of the note for which the State Guarantee is provided [20 ILCS 3501/830-45(b)(iv)];

 

7)         assumes responsibility for the timely collection and disposition of collateral on a YFG loan that is in default; provided, however, that the lender shall not collect or dispose of collateral on the YFG loan without the express written prior approval of the Authority.  Approval shall be granted if the collateral is disposed of in a commercial manner, which nets an amount closely approximating the value of the collateral;

 

8)         agrees that the Authority has final approval on the sale of all collateral for the YFG loan.  After the sale of collateral, the State shall be reimbursed its 85% guaranteed portion of the principal balance at default.  If funds from the sale of collateral remain after this payment, the lender shall be reimbursed its 15% of the principal balance at default.  If excess funds remain after paying the principal to the State and lender, then the State and lender shall be repaid interest on a prorated basis; 85% of such excess funds shall be allocated to the State's portion and 15% shall be allocated to the lender's portion.

 

g)         The YFG loan shall be subject to an annual review and renewal by the lender and the Authority [20 ILCS 3501/830-45(a)] for adequacy of collateral and performance by the applicant.  The applicant is required to provide the lender with a current financial statement annually.

 

1)         If it is determined that there is not sufficient collateral to adequately secure the YFG loan, additional collateral may be required.  If the applicant is unwilling or unable to pledge additional collateral, the YFG loan may be called due and payable.

 

2)         If a YFG loan is going to be called for any reason, written notice which specifies the reasons for said action must be served to all parties (IFA, lender, and borrower) not less than 90 days prior to call of the loan.

 

3)         Failure of the applicant to make any payment on or before its due date shall render the loan delinquent.  Notice of this delinquency shall immediately be sent to all parties.  If the loan remains delinquent for a period of 90 days, the total outstanding principal and interest shall become due and payable immediately on the entire YFG loan.  The YFG loan cannot be reinstated after the 90-day delinquency period.

 

h)         In the event of default that is not cured within 90 days or in the event a loan is called for any reason, the Authority shall make payment of the guaranteed portion of the YFG loan to the holder of the guarantee.  This payment shall be equal to the sum of:

 

1)         85% of the principal balance as of the date of default or date of call less any proceeds received from sales of collateral;

 

2)         85% of the interest balance as of the date of default or call; and

 

3)         85% of the interest accrued from the date of default or call until the date payment is made up to a maximum of 120 days.

 

i)          The Illinois Farmer and Agribusiness Loan Guarantee Fund shall be used to secure State Guarantee on YFG loans. [20 ILCS 3501/830-45(c)]

 

1)         The Authority shall guarantee up to $50,000,000 in loans through the State Livestock Guarantee Program (SLP), YFG and State Guarantee Program for Agri-Industries (SGPAI).  The Illinois Farmer and Agribusiness Loan Guarantee Fund shall be funded with $15,000,000 to cover any losses under these programs.

 

2)         The Authority shall direct payments from this fund to guarantee holders as described in subsection (h).

 

3)         Monies returned to the State on the disposition of collateral as described in subsection (f) shall be deposited to this fund.

 

(Source:  Amended at 26 Ill. Reg. 7084, effective May 10, 2002; recodified from 8 Ill. Adm. Code 1400.146 at 31 Ill. Reg. 12104)

 

Section 1100.725  Rules and Guidelines Applicable to the State Guarantee Program for Restructuring Agricultural Debt

 

a)         General Description of Program.  The State Guarantee Program (SGP) is intended to provide farmers who are experiencing financial difficulties caused by high interest rates and low commodity prices with a debt restructuring schedule to consolidate and spread out existing debt over a longer term at a reduced interest rate so that farmers will be able to continue existing farming operations.  The provisions of this Section are applicable only to the SGP, and the provisions of Sections 1100.705 and 1100.710 of this Part are inapplicable to the SGP and procedures provided for pursuant to this Section.

 

b)         Definitions

Words defined in the Illinois Finance Authority Act and in Section 1100.50 have the same meaning when used in this Subpart unless a more specific definition is prescribed in this Section. This Section establishes additional definitions for use in this Subpart only.

 

"Applicant" means a farmer whose application for a State Guarantee has been submitted to the Authority by a lender.

 

"Asset" includes, but is not limited to, the following:  crops or feed on hand; livestock held for sale; breeding stock; cash; marketable bonds and securities; securities not readily marketable; accounts receivable; notes receivable; cash invested in growing crops; net cash value of life insurance; machinery and equipment; cars and trucks; farm and other real estate including life estates, personal residence, and value of beneficial interests in trusts; government payments or grants; capitalized leases; retirement accounts; and all other property and assets.

 

"Current Outstanding" means on the date of the application for any State Guarantee.

 

"Current Status" means the absence of any arrearages in any previously incurred debt for which a State Guarantee is sought.

 

"Debt to Asset Ratio" means the current outstanding liabilities of the farmer divided by the current outstanding assets of the farmer. [20 ILCS 3501/830-30]

 

"Farmer" means a resident of Illinois, who is a principal operator of a farm or land, at least 50% of whose gross annual 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. [20 ILCS 3501/830-30]

 

"Fund" means the Illinois Agricultural Loan Guarantee Fund, which is the State's fund to cover losses resulting from defaults on State Guarantee loans. [20 ILCS 3501/830-30]

 

"Gross Annual Income" means income as defined in Section 61 of the Internal Revenue Code (26 USC 61).

 

"Liability" includes, but is not limited to, the following:  accounts payable; notes or other indebtedness owed to any source; taxes; rent; amounts owed on real estate contracts or real estate mortgages; judgments; accrued interest payable; indebtedness under capitalized leases; and all other liabilities. [20 ILCS 3501/801-10]

 

"State Guarantee" means a note for which the State of Illinois shall be liable for 85% of the total principal and interest of the note as determined by the Authority.

 

c)         Eligible Farmers.  To qualify for participation in the SGP, each farmer must:

 

1)         maintain his principal residence in the State;

 

2)         be at least 18 years of age at the time of application;

 

3)         be the principal operator of the farming business for which the funds guaranteed by the SGP are contemplated to be used;

 

4)         be able to show, based upon his/her most recent Federal Income Tax Return and current data, that at least 50% of his/her annual gross income is derived from farming, unless the loan is a renewal of an existing guarantee;

 

5)         have a debt to asset ratio of not less than 40% and not greater than 65%, unless the loan is a renewal of an existing guarantee;

 

6)         provide sufficient collateral to secure the State Guarantee and agree to keep the State Guarantee adequately collateralized in the future;

 

7)         certify and agree that he/she will only use the State Guarantee to consolidate and restructure existing farming debts.

 

d)         Limitations

 

1)         No State Guarantee shall exceed $500,000 per farmer or farming operation. [20 ILCS 3501/830-30]

 

2)         Each State Guarantee shall be set up on a payment schedule not to exceed 30 years, and shall be no longer than 30 years in duration. [20 ILCS 3501/830-30]

 

3)         Only one State Guarantee shall be outstanding per farmer at any one time. [20 ILCS 3501/830-30]

 

4)         Only one State Guarantee shall be outstanding at any one time for any one farming operation.  If applicants file separate Schedule Fs for their Federal Income Tax Returns, then they will be considered to operate separate farming operations.

 

e)         Application Procedures and Review

 

1)         Lenders interested in the SGP must complete a Letter of Interest and return it to the Authority's office.  After the Letter of Interest has been received by the Authority, the lender will be placed on the mailing list for the SGP.

 

2)         The lenders shall apply for State Guarantees on forms approved and provided by the Authority.  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 State Guarantee. [20 ILCS 3501/830-30]

 

3)         After approval of the application and receipt of the documentation necessary prior to closing the loan, the Authority shall send a State Guarantee Closing Documents package to the lender containing all the appropriate forms and documents to execute.  Upon completion of all such forms and documents by the applicant, lender and Authority, the State Guarantee loan will be considered closed.

 

4)         The lender shall certify that all the information contained on the application and other submitted documents is correct, and shall be liable to the Authority for any damages suffered by any incorrect or untrue statement contained in any certified application.

 

5)         The application period for the SGP shall commence July 15, 1982 and end when the Authority has issued State Guarantees equal to $160,000,000 or at any later time as may be set from time to time by legislative extension.

 

6)         Following submission of the Guarantee application by the lender, the Authority shall review the application.  The Authority's review shall include, but will not be limited to, whether the applicant is an eligible farmer and whether the lender has complied with the requirements of subsection (f) of this Section.  The Authority will base its evaluation on collateral, percentage of loan, debt to asset ratio, cash flow, etc.

 

7)         When a State Guarantee application is submitted to the Authority, the Executive Director shall review the application to determine whether it is complete and whether it meets the criteria established by the Act and this Part:

 

A)        If the Executive Director determines that the loan application is incomplete, he or she shall, within 14 days of such determination, inform the lender and the applicant of such determination, and detail the information or material that is necessary to complete the application.  For the purposes of subsection (j) of this Section, no application shall be deemed complete until the lender or applicant has provided the additional information or material requested by the Executive Director.

 

B)        When the Executive Director has completed his or her review of the Guarantee application, he or she shall present the application, with a statement of recommended action to the Authority at its next regularly scheduled meeting.  The Executive Director will base the review on collateral, percentage of loan, debt to asset ratio, cash flow, etc.

 

8)         The Authority shall review each loan application presented by the Executive Director in accordance with the provision of the Act and this Part, and the Authority shall:

 

A)        approve the application and provide the Guarantee, pursuant to the Act and this Part; or

 

B)        deny the application and serve upon the lender and applicant a written statement of the grounds of the denial.

 

9)         Each applicant shall pay a $300 application fee which will be submitted to the lender at the time of the application.  At the time the loan is made, the applicant may be required to pay a closing fee not greater than ¾ of 1% of the State Guarantee which may be used to pay for administrative expenses incurred by the lender and the Authority.  Of this ¾ of 1% closing fee, the Authority shall receive ½% to cover administrative and legal expenses and the lender shall receive ¼% to cover administrative expenses in completing the application packet and closing documents.  The ¾ of 1% closing fee may be included in the State Guarantee Loan amount.  The Authority shall credit the $300 application fee against the closing fee.  The lender shall charge no fees or points in addition to those outlined herein.  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 similar fees necessary for closing and maintaining the State Guarantee or selling into the secondary market. [20 ILCS 3501/830-30]

 

10)         If the application is denied, the applicant and the lender may file a Request for Reconsideration stating reasons why the Authority should withdraw its denial of the application and approve the State Guarantee.  This Request for Reconsideration must be filed with the Authority not later than 21 days after such denial.  The Request for Reconsideration should be accompanied by supporting documents and/or information not previously considered by the Authority.  The Authority shall review the Request for Reconsideration at its next scheduled meeting, and shall either approve the application or deny the Request for Reconsideration.  The applicant will have the opportunity to present new relevant facts on his previous denial to the Authority, and if such facts will establish eligibility, the Request will be granted.  A denial of a Request for Reconsideration shall be final. While a Request for Reconsideration is pending, the application shall be deemed complete for the purposes of subsection (j) of this Section.

 

f)         Provision or Renewal of State Guarantees.  The Authority shall provide or renew a State Guarantee to any lender if, in addition to meeting the other criteria described in the Act and this Part, the lender:

 

1)         agrees to bring the farmer's debt to a current status at the time the State Guarantee is provided; [20 ILCS 3501/830-30]

 

2)         charges a fixed or adjustable interest rate which is below the market rate of interest generally available to the borrower.  The market rate of interest is that rate which would be charged by the same lender for the same project without the State Guarantee. If both the lender and the 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; [20 ILCS 3501/830-30]

 

3)         agrees to pay to the Authority an annual fee equal to 25 basis points on the loan and any other necessary and ordinary administrative expenses in excess of the 25 basis points as determined from time to time pursuant to the Act and this Part;

 

4)         agrees to complete and certify that, to the best of the lender's knowledge, all information is true and correct on the application, balance sheets, security analysis, cash flow projection and any other documents that the Authority may request; [20 ILCS 3501/830-30]

 

5)         identifies collateral acceptable to the Authority in accordance with subsection (h) that is at least equal to the State Guarantee loan request; [20 ILCS 3501/830-30]

 

6)         assumes all responsibility and costs for pursuing legal action on collecting any loan that is delinquent or in default subject to consulting the Authority; [20 ILCS 3501/830-30]

 

7)         is at risk for the first 15% of the outstanding principal of the note for which the State Guarantee is provided; [20 ILCS 3501/830-30]

 

8)         assumes responsibility for proceeding with the collecting and disposing of collateral on the State Guarantee within 14 months of the date that the loan 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.  [20 ILCS 3501/830-30] Approval shall be granted if the collateral is disposed of in a reasonably commercial manner, based on the manner, time and place of the sale, the purchase price and the purchaser.  In the event that the lender fails to dispose of the collateral within 14 months, the lender shall repay to the State interest on the State Guarantee equal to the same rate which the lender charges on the loan; provided, however, that the Authority shall extend the 14-month period for a lender in the case of bankruptcy or extenuating circumstances which prevent the lender from liquidating the collateral. The lender shall repay this interest to the State until the collateral for the State Guarantee has been liquidated and the State has been reimbursed.  [20 ILCS 3501/830-30] If the lender fails to repay the State the interest as outlined in this subsection (f), the Authority shall turn the matter over to the Attorney General's office for appropriate legal action;

 

9)         agrees that the Authority has final approval on the sale of all collateral for the State Guarantee.  After the sale of collateral, the State shall be reimbursed 85% of the remaining principal amount of the State Guarantee loan. If the funds from the sale of collateral remain after this payment, the lender shall be reimbursed 15% of the remaining principal amount of the loan.  If excess funds remain after paying the remaining principal to the State and lender, then the State and lender shall be repaid interest on a prorated basis; 85% of such excess funds shall be allocated to the State's portion and 15% shall be allocated to the lender's portion.  If excess funds exist after repaying both the State and the lender, they shall be paid back to the farmer.  [20 ILCS 3501/830-45]

 

g)         Annual Review

 

1)         The lender and the Authority shall each, on an annual basis, review State Guarantees for any purpose including, but not limited to, present collateral value; timeliness of payments made by the farmer or any other purposes reasonably calculated to aid in determining the farmer's present and projected repayment capacity.  If the Authority determines that the existing collateral is insufficient to cover the State's liability, additional collateral may be required.  If the applicant fails to pledge such additional collateral, the State Guarantee loan may be called.

 

2)         In those cases where the borrower has not previously used the guarantee program, no State Guarantee shall be called by the lender or Authority during the first 3 years of the date on which the application is closed for any reason except defaults on payments or insufficient collateral. [20 ILCS 3501/830-30]

 

3)         Except as otherwise provided in the Act or this Subpart, a State Guarantee may be called by the lender or Authority upon a 90-day written notice to all parties specifying the reasons for such call (e.g., submission of false documentation, changing loan documents, and change of state residency).

 

4)         The lender can review and withdraw or continue with the State Guarantee on an annual basis after the first three years of the loan provided a 90 day notice, in writing, to all parties has been given. [20 ILCS 3501/830-30] Such notification must be provided on or before the date on which payment is due.

 

5)         The applicant must make all payments on the State Guarantee within 90 days of the stated payment date.  Failure to make payments on or before their due date shall render the loan delinquent.  Notice of this delinquency shall immediately be sent to all parties.  If the loan remains delinquent for a period of 90 days, the total outstanding principal and interest shall become due and payable immediately on the entire State Guarantee Loan.  The State Guarantee cannot be reinstated after the 90-day delinquency period.

 

h)         Valuation of Collateral.  All collateral shall be evaluated by IFA staff or appraised by a qualified appraiser.  A qualified appraiser is one who is qualified by virtue of membership in the Illinois Society of Farm Managers and Appraisers, or one whose qualifications have been reviewed by the Authority.  The Authority shall have final authority to determine whether the collateral is sufficient to cover the State's liability and may appoint an independent appraiser to aid in its determination on the sufficiency of collateral.  The Authority will view real estate as the primary collateral on SGP loans, with machinery and equipment and breeding livestock to be used as secondary collateral, except where no real estate is available.  Collateral value may be reviewed each year by the lender or an independent appraiser appointed by the Authority. The Authority may, among other things, take a mortgage or lien on land or other assets to cover the State's liability.  Collateral may be transferred only upon written approval by the Authority and the lender.

 

i)          Fund. To implement and carry out the objectives of the SGPAI, the Fund has been created as a special Fund outside of the State Treasury.

 

1)         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 pursuant to this Section.  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. [20 ILCS 3501/830-30]

 

2)         The State shall not be liable for more than $45,000,000 to secure State Guarantees issued pursuant to this Section. [20 ILCS 3501/830-30]

 

3)         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. [20 ILCS 3501/830-30]  In no event shall the interest amount guaranteed by the Authority include interest accruing beyond 120 days from the date of default.

 

4)         The Fund shall be reimbursed for any amount paid under this subsection (i) upon liquidation of collateral which the lender shall seize and convert to cash in a reasonably commercial manner. [20 ILCS 3501/830-30]

 

j)          Priority of Applications.  Applications shall be processed by the Authority on a first-come, first-served basis, based upon the receipt of all completed documents by the Authority.

 

k)         Guarantors and Additional Collateral.  An applicant for a State Guarantee Loan may have a guarantor co-sign the note and/or pledge additional collateral for the State Guarantee Loan if the lender and Authority determine that the applicant alone cannot provide sufficient collateral for the State Guarantee.

 

l)          The State Guarantee.  In the event of default, the Authority shall make payment on the State Guarantee of 85% of the outstanding principal and interest owed on the State Guarantee Loan to the holder of the State Guarantee.  The payment shall be made by the Authority to the holder of the State Guarantee within 30 days after an appropriate request by a lender certifying that the 90-day delinquency period has elapsed.  The payment shall include 85% of past due interest and 85% of the remaining principal.

 

m)        Prepayment of Loans.  Each loan shall be paid at least on an annual basis with one payment due each year on the date on which the loan was closed for a period of ten years or until the loan is repaid, whichever occurs first. The State Guarantee Loan may be prepaid in full or in part at any time the loan is outstanding without penalty.

 

n)         Assumption of Loans.  No State Guarantee loan may be assumed by any entity unless specifically authorized by the Authority.  Such authorization will be granted only in extraordinary cases (e.g., death or serious illness of the applicant with assumption by an immediate family member).

 

o)         Total Obligations through the SGP.  The Authority shall have outstanding guarantees in an aggregate principal amount up to $160,000,000 through the SGP.  The Illinois Agriculture Loan Guarantee Fund shall be funded with $45,000,000 to cover any losses.

 

(Source:  Amended at 26 Ill. Reg. 7084, effective May 10, 2002; recodified from 8 Ill. Adm. Code 1400.147 at 31 Ill. Reg. 12104)

 

Section 1100.730  Rules and Guidelines Applicable to the Specialized Livestock Guarantee Program

 

a)         General Description of Program.  The Specialized Livestock Guarantee Program (SLP) is designed to enhance opportunities for many Illinois farmers who want to position themselves for success in the changing livestock industry. This program targets specialized, family sized livestock operations, including swine and dairy and beef cattle operations.  Loan funds may be used primarily for construction, purchase, and/or remodeling of facilities, and also for purchases of equipment, breeding livestock or other capital assets.  In some cases, loan proceeds may be used to refinance existing debt as needed to improve lien positions or improve financial structure. The provisions of this Section are applicable only to the SLP.

 

b)         Definitions

Words defined in the Illinois Finance Authority Act and in Section 1100.50 have the same meaning when used in this Subpart unless a more specific definition is prescribed in this Section. This Section establishes additional definitions for use in this Subpart only.

 

"Applicant" means a farmer whose application for a Specialized Livestock Guarantee has been submitted to the Authority by a lender.

 

"Asset" includes, but is not limited to, the following:  crops or feed on hand; livestock held for sale; breeding stock; cash; marketable bonds and securities; securities not readily marketable; accounts receivable; notes receivable; cash invested in growing crops; net cash value of life insurance; machinery and equipment; cars and trucks; farm and other real estate including life estates and personal residence; value of beneficial interest in trusts; government payments or grants; capitalized leases; retirement accounts; and any other assets.

 

"Debt to Asset Ratio" means total outstanding liabilities, including any debt to be financed or refinanced under this Section, divided by total assets.

 

"Fund" means the Illinois Farmer and Agribusiness Loan Guarantee Fund, which is the State's fund to cover losses resulting from defaults on Specialized Livestock Guarantee loans.

 

"Liability" includes, but is not limited to, the following:  accounts payable; notes or other indebtedness owed to any source; taxes; rent; amounts owed on real estate contracts or real estate mortgages; judgments accrued; interest payable; indebtedness under capitalized leases; and any other liability.

 

"SLP Loan" means an installment note for which the State of Illinois shall be liable for 85% of the total principal and interest as determined by the Authority.

 

c)         Eligible Farmers.  To qualify for participation in the SLP, the applicant must:

 

1)         be a resident of the State of Illinois.  In the case of entities other than sole proprietorships, the owners of such entity must be Illinois residents.

 

2)         be the principal operator and/or materially involved in the operation.

 

3)         have adequate cash flow and collateral.

 

4)         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. [20 ILCS 3501/830-50]

 

d)         Limitations

 

1)         SLP loans shall not exceed $1,000,000 per applicant.  An applicant may use this program more than once, provided the aggregated principal of SLP loans to that applicant does not exceed $1,000,000. [20 ILCS 3501/830-50]

 

2)         Each SLP loan shall be no longer than 15 years in duration. [20 ILCS 3501/830-50]  The payment schedule for the loan will be tailored to the applicant's collateral and cash flow.

 

3)         The SLP Loan can be fully or partially paid at any time while the loan is outstanding as long as the loan is held in the lender's portfolio and not sold into a secondary market.  SLP Loans may not be assumed.

 

e)         Application Procedures and Review

 

1)         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 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. [20 ILCS 3501/830-50]  Applications shall be processed by the Authority on a first-come, first-served basis, based upon the receipt of all completed documents by the Authority.

 

2)         Each applicant shall pay a $300 application fee which will be submitted to the Authority at the time of the application.  At the time the loan is closed, the applicant will be required to pay a closing fee of 1% of the SLP Loan amount less the $300 application fee.  Of this 1% closing fee, the Authority shall receive ¾% and the lender shall receive ¼% to cover administrative expenses in completing the application packet and closing documents.  The 1% closing fee may be included in the State Guarantee Loan amount.  The lender shall charge no fees or points in addition to those outlined herein.  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. [20 ILCS 3501/830-50]

 

3)         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. [20 ILCS 3501/830-50]

 

4)         When a State Guarantee application is submitted to the Authority, the Authority shall review the application to determine whether it is complete and whether it meets the criteria established by the Act and this Section.  When the Authority has completed the review of the Guarantee application, the application shall be presented, along with a statement of recommended action, to the Board for review at its next regularly scheduled meeting.  The review shall include whether the applicant and lender are in compliance with the requirements of the program.  The review shall also include an evaluation of collateral, percentage of loan, debt to asset ratio, cash flow, etc.

 

5)         The Board shall approve the application and provide the Guarantee, pursuant to the Act and this Section; or, deny the application and serve upon the lender and applicant a written statement of the grounds for the denial.

 

6)         If the application is denied, the applicant and the lender may request reconsideration stating reasons why the Board should withdraw its denial of the application and approve the State Guarantee.  The request should be accompanied by supporting documents and/or information not previously considered by the Board.  The Board shall review the request at its next scheduled meeting, and shall either approve or deny the application.  A denial of a request for reconsideration shall be final.

 

7)         Upon approval of an application and receipt of the documentation necessary to prepare loan closing documents, an SLP Loan Closing Documents package, which contains all the appropriate forms and documents to execute, shall be prepared by the Authority and sent to the lender.  Upon completion of all such forms and documents by the applicant, lender and Authority and after satisfaction of all loan closing requirements, the SLP Loan guarantee will be considered in force.

 

f)         Provision of Renewal of State Guarantees.  The Authority shall provide or renew a State Guarantee to any lender if:

 

1)         the lender pays a fee equal to 25 basis points on the loan to the Authority on an annual basis [20 ILCS 3501/830-50];

 

2)         the applicant provides collateral acceptable to the Authority that is at least equal to the State Guarantee [20 ILCS 3501/830-50];

 

3)         the lender certifies that, to the best of the lender's knowledge, all information is true and correct on the application, balance sheets, security analysis, cash flow projection and any other documents submitted;

 

4)         the lender assumes all responsibility and costs for pursuing legal action on collecting any loan that is delinquent or in default [20 ILCS 3501/830-50];

 

5)         the lender is at risk for the first 15% of the outstanding principal of the note for which the State Guarantee is provided [20 ILCS 3501/830-50];

 

6)         the lender assumes responsibility for the timely collection and disposition of collateral on an SLP Loan that is in default; provided, however, that the lender shall not collect or dispose of collateral on the SLP loan without the express written prior approval of the Authority.  Approval shall be granted if the collateral is disposed of in a commercial manner, which nets an amount closely approximating the value of the collateral;

 

7)         the lender agrees that the Authority has final approval on the sale of all collateral for the SLP loan.  After the sale of collateral, the State shall be reimbursed its 85% guaranteed portion of the principal balance at default. If funds from the sale of collateral remain after this payment, the lender shall be reimbursed its 15% of the principal balance at default.  If excess funds remain after paying the principal to the State and lender, then the State and lender shall be repaid interest on a prorated basis; 85% of such excess funds shall be allocated to the State's portion and 15% shall be allocated to the lender's portion.

 

g)         The SLP Loan shall be reviewed annually by the lender and IFA for adequacy of collateral and performance by the applicant.  The applicant is required to provide the lender with a current financial statement annually.

 

1)         If it is determined that there is not sufficient collateral to adequately secure the SLP Loan, additional collateral may be required.  If the applicant is unwilling or unable to pledge additional collateral, the SLP Loan may be called due and payable.

 

2)         If an SLP Loan is going to be called for any reason, written notice which specifies the reasons for said action must be served to all parties (IFA, lender, and borrower) not less than 90 days prior to call of the loan.

 

3)         Failure of the applicant to make any payment on or before its due date shall render the loan delinquent.  Notice of this delinquency shall immediately be sent to all parties.  If the loan remains delinquent for a period of 90 days, the total outstanding principal and interest shall become due and payable immediately on the entire SLP Loan.  The SLP Loan cannot be reinstated after the 90-day delinquency period.

 

h)         In the event of default that is not cured within 90 days or in the event a loan is called for any reason, the Authority shall make payment of the guaranteed portion of the SLP Loan to the holder of the guarantee.  This payment shall be equal to the sum of:

 

1)         85% of the principal balance as of the date of default or date of call less any proceeds received from sales of collateral;

 

2)         85% of the interest balance as of the date of default or call; and

 

3)         85% of the interest accrued from the date of default or call until the date payment is made, up to a maximum of 120 days.

 

i)          The Illinois Farmer and Agribusiness Loan Guarantee Fund shall be used to secure State Guarantees on SLP Loans. [20 ILCS 3501/830-50]

 

1)         The Authority shall guarantee up to $50,000,000 in loans through the SLP, YFG and SGPAI.  The Illinois Farmer and Agribusiness Loan Guarantee Fund shall be funded with $15,000,000 to cover any losses under these programs.

 

2)         The Authority shall direct payments from this fund to guarantee holders as described in subsection (h).

 

3)         Monies returned to the State on the disposition of collateral as described in subsection (f) shall be deposited to this fund.

 

(Source:  Amended at 25 Ill. Reg. 6886, effective May 30, 2001; recodified from 8 Ill. Adm. Code 1400.148 at 31 Ill. Reg. 12104)

 

Section 1100.735  Rules and Guidelines Applicable to the State Guarantee Program for Agri-Industries

 

a)         General Description of Program.  The State Guarantee Program for Agri-Industries (SGPAI) was created to encourage diversification and vertical integration of Illinois agriculture. The provisions of this Section are applicable only to the SGPAI, and the provisions of Sections 1100.705, 1100.710, 1100.725 and 1100.730 of this Part are inapplicable to the SGPAI and procedures provided for pursuant to this Section.

 

b)         Definitions

Words defined in the Illinois Finance Authority Act and in Section 1100.50 have the same meaning when used in this Subpart unless a more specific definition is prescribed in this Section. This Section establishes additional definitions for use in this Subpart only.

 

"Agribusiness" means any sole proprietorship, limited partnership, co-partnership, joint venture, corporation or cooperative which operates or will operate a facility located within the State of Illinois that is related to the processing of agricultural commodities (including, without limitation, the products of agriculture, hydroponics and silviculture) or the manufacturing, production or construction of agricultural buildings, structures, equipment, implements, and supplies, or any other facilities or processes used in agricultural production. [20 ILCS 3501/801-10(z)]

 

"Applicant" means a farmer/agribusiness whose application for a State Guarantee has been submitted to the Authority by a lender.

 

"Farmer" means a resident of Illinois who is a principal operator of farm or land, at least 50% of whose annual gross income is derived from farming, whose annual total sales of agricultural products, commodities or livestock exceeds $20,000 and whose net worth does not exceed $500,000. [20 ILCS 3501/830-35]

 

"Fund" means the Illinois Farmer and Agribusiness Loan Guarantee Fund, which is the State's fund to cover losses resulting from defaults on SGPAI loans.

 

"Gross Annual Income" means income as defined in Section 61 of the Internal Revenue Code (26 USC 61).

 

"State Guarantee" means a note for which the State of Illinois shall be liable for 85% of the total principal and interest of the note as described by the Authority.

 

c)         Applicant Eligibility Requirements

 

1)         Farmer.  To qualify for participation each farmer must:  

 

A)        be a resident of Illinois [20 ILCS 3501/830-35];

 

B)        be at least 18 years of age at the time of application;

 

C)        be the principal operator of a farm or land for which the funds guaranteed by the State Guarantee are to be used [20 ILCS 3501/830-35];

 

D)        be able to show, based upon his/her most recent federal income tax return and/or current data, that at least 50% of his/her gross income is derived from farming [20 ILCS 3501/830-35];

 

E)        be able to show, based upon his/her most recent federal income tax return and/or current data, that his/her total sales of agricultural products, commodities, or livestock exceeds $20,000 [20 ILCS 3501/830-35];

 

F)         be able to show that his/her net worth does not exceed $500,000 [20 ILCS 3501/830-35].

 

2)         Agribusiness.  To qualify for participation each agribusiness must:  

 

A)        be located in Illinois;

 

B)        use agricultural products which are now grown or raised in Illinois, or which will be grown or raised in Illinois.

 

3)         Joint Requirements.  To qualify for participation each applicant must:  

 

A)        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; [20 ILCS 3501/830-35];

 

B)        provide sufficient collateral to secure the entire loan at the time of application and agree to keep the loan collateralized in the future;

 

C)        agree to make all payments on the State Guarantee within 90 days of the stated payment date.  If any payment is not made within said 90 day period, then the total outstanding principal and interest on the entire State Guarantee loan are due and payable immediately.  The State Guarantee loan cannot be reinstated after the 90 day delinquency period.

 

d)         Any State Guarantees provided under this Section:

 

1)         shall not exceed $500,000 per farmer or an amount as determined by the Authority on a case-by-case basis for an agribusiness;

 

2)         shall not exceed a term of 15 years;

 

3)         shall be subject to an annual review and renewal by the lender and the Authority. [20 ILCS 3501/830-35]

 

e)         Application Procedures and Review

 

1)         Lenders shall apply for the State Guarantees on forms provided by the Authority, certify that the application and any other documents submitted, such as balance sheets, security analyses, cash flow projections and feasibility studies are true and correct, and shall be liable to the Authority for any damages suffered because of an incorrect or untrue statement contained in any certified application.  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, such as feasibility studies, purchase contracts or sales contracts.  [20 ILCS 3501/830-35]

 

2)         After approval of the application and receipt of the documentation necessary prior to closing the loan, the Authority shall send a State Guarantee Closing Documents package to the lender containing all the appropriate forms and documents to execute; upon completion of all such forms and documents by the applicant, lender and Authority, the State Guarantee loan will be considered closed.

 

3)         The application period for the SGPAI shall commence immediately upon the determination that these Rules are properly filed with the Office of the Secretary of State and end when the Authority has issued State Guarantees equal to $50,000,000 through this SGPAI program and the YFG and SLP programs, or at any later time as may be set from time to time by legislative extension.

 

4)         Following submission of the Guarantee application by the lender, the Authority shall review the application.  The Authority's review will include whether the applicant is an eligible farmer or agribusiness and whether the lender has complied with the requirements of subsection (f) of this Section.  The Authority's review will also include evaluation of such factors as collateral, percentage of loan, debt to asset ratio, cash flow, and other information submitted by the applicant.

 

5)         When a State Guarantee application is submitted to the Authority, the Executive Director shall review the application to determine whether it is complete pursuant to subsection (e)(1), and whether it meets the criteria established by the Act and this Subpart:  

 

A)        If the Executive Director determines that the loan application is incomplete, he/she shall within 14 days of such determination inform the lender and the applicant of such determination and detail the information or material that is necessary to complete the application.  For the purpose of subsection (j) of this Section no application shall be deemed complete until the lender or applicants have provided the additional information or material requested by the Executive Director.

 

B)        When the Executive Director has completed his/her review of the Guarantee application, he/she shall present the application with a statement of recommended action to the Board at its next regularly scheduled meeting.  The Executive Director will base the review on such factors as collateral, percentage of loan, debt to asset ratio, cash flow and other information submitted by the applicant.

 

8)         The Board shall review each loan application presented by the Executive Director using the criteria in subsection (e)(6), and the Board shall:  

 

A)        approve the application and provide the Guarantee pursuant to the Act and this Part; or

 

B)        deny the application and serve upon the lender and applicant a written statement of the grounds of the denial.

 

9)         Each applicant shall pay a $300 application fee which will be submitted to the Authority at the time of the application.   At the time the loan is made, the applicant may be required to pay a closing fee not greater than ¾ of 1% of the State Guarantee loan amount.  Of this ¾ of 1% closing fee, the Authority shall receive ½% to cover administrative and legal expenses and the lender shall receive ¼% to cover administrative expenses incurred in completing the application packet and closing documents.  The ¾ of 1% closing fee may be included in the State Guarantee loan amount. The Authority shall credit the $300 application fee against the closing fee.  The lender shall charge no fees or points in addition to those outlined herein.  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 necessary for closing and maintaining the State Guarantee or selling it into the secondary market. [20 ILCS 3501/830-35]

 

10)         If the application is denied, the applicant and the lender may file a Request for Reconsideration stating reasons why the Board should withdraw its denial of the application.  This Request for Reconsideration must be filed with the Authority not later than 21 days after denial and should be accompanied by supporting documents and/or information not previously considered by the Board.  The Board shall review the Request at its next scheduled meeting.  The review will be based on the criteria established in subsection (e)(4).  Based on the review, the Board shall approve or deny the Request for Reconsideration.  A denial of a Request for Reconsideration shall be final.  While a Request for Reconsideration is pending, the application that is the subject of the Request shall be deemed complete for the purposes of the subsection (j) of this Section.

 

f)         Provision or Renewal of State Guarantees.  The Authority shall provide or renew a State Guarantee to a lender if, in addition to meeting the other criteria described in the Act and this Section:  

 

1)         a fee equal to 25 basis points on the loan is paid to the Authority on an annual basis by the lender, along with any other necessary expenses for maintaining the State Guarantee [20 ILCS 3501/830-35];

 

2)         the application provides collateral acceptable to the Authority that is at least equal to the State's portion of the Guarantee to be provided [20 ILCS 3501/830-35];

 

3)         the lender assumes all responsibility and costs for pursuing legal action on collecting any loan that is delinquent or in default subject to consulting with the Authority [20 ILCS 3501/830-35];

 

4)         the lender agrees that it is responsible for the first 15% of the outstanding principal of the note for which the State Guarantee has been applied [20 ILCS 3501/830-35];

 

5)         the lender assumes responsibility for proceeding with the collecting and disposing of collateral on the State Guarantee within 14 months of the date 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.  Approval will be granted if the collateral is disposed of in a reasonably commercial manner based on the manner, time and place of the sale, the purchase price and the purchaser.  In the event 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 that prevent the lender from liquidating the collateral.  [20 ILCS 3501/830-35]  The lender shall repay this interest to the State until the collateral for the State Guarantee has been liquidated and the State has been reimbursed.  If the lender fails to repay the State the interest as outlined herein, the Authority shall turn the matter over to the Attorney General's office for appropriate legal action;

 

6)         agrees that after the sale of collateral, the State shall be reimbursed 85% of the remaining principal amount of the State Guarantee loan.  If funds from the sale of the collateral remain after this payment, the lender shall be reimbursed 15% of the remaining principal amount of the loan.  If excess funds remain after paying the remaining principal to the State and lender, then the State and lender shall be repaid interest on a pro-rated basis; 85% of such excess funds shall be allocated to the State's portion and 15% to the lender's portion. If excess funds exist after repaying both the State and the lender, these funds shall be paid to the borrower.

 

g)         Review and Revocation

 

1)         The SGPAI loan shall be reviewed annually by the lender and the Authority for review of collateral value and performance by the borrower. If the Authority determines that the existing collateral is insufficient to cover the State's liability, additional collateral will be requested.  If the borrower fails to pledge such additional collateral, the State Guarantee may be revoked.  The determination of whether to revoke the State Guarantee will be based on the borrower's ability to service the debt.  If the Authority calls the State Guarantee, the holder of the Guarantee will be paid 85% of the outstanding principal and interest balance and the borrower will be liable to reimburse the State.

 

2)         A State Guarantee may be revoked by the lender or the Authority upon a 90-day written notice to all parties specifying the reasons for such revocation (e.g., submission of false documents, changing loan documents or change of State residency).

 

3)         If an interest rate is variable, a lender may not withdraw from a SGPAI loan for any reason except for lack of performance on the borrower's part, insufficient collateral, or maturity. [20 ILCS 3501/830-35]

 

4)         A lender may review and withdraw or continue with a State Guarantee on an annual basis after the first five years following closing of the loan application if the loan contract provides for an interest rate that shall not vary.  [20 ILCS 3501/830-35]  If a lender undertakes such a review, it must provide written notification of its decision whether to withdraw or continue.  Such notification must be provided on or before the date on which payment is due.

 

5)         The applicant must make all payments within 90 days after the stated payment date.  Failure to make any payments on or before its due date shall render the loan delinquent.  Notice of this delinquency shall immediately be sent to all parties.  If the loan remains delinquent for a period of 90 days, the total outstanding principal and interest balances on the SGPAI loan shall become due and payable.  The State Guarantee cannot be reinstated after the 90-day delinquency period.

 

h)         Valuation of Collateral.  All collateral shall be evaluated by IFA staff or appraised by a qualified appraiser.  A qualified appraiser is one who is qualified by virtue of membership in the Illinois Society of Farm Managers and Appraisers or one whose qualifications have been reviewed by the Authority.  The Authority will consider an appraiser qualified who has at least three years experience appraising farmland.  The Authority shall have final authority to determine whether the collateral is sufficient to cover the State Guarantee loan and may appoint an independent appraiser to aid in its determination.  The Authority will view real estate as the primary collateral on SGPAI loans.  Machinery and equipment and breeding livestock will be used only as secondary collateral except where no real estate is available.  Collateral value may be reviewed each year by the lender or an independent appraiser appointed by the Authority.  The applicant shall be liable to pay for all appraisal fees which are incurred when the value of the collateral is established.

 

i)          Fund.  To implement and carry out the objectives of the SGPAI, there is created outside of the State's Treasury a special fund to be known as the Illinois Farmer and Agribusiness Loan Guarantee Fund. [20 ILCS 3501/830-35]

 

1)         The Authority is authorized to transfer an amount not to exceed $15,000,000 to the fund during the SGPAI, Young Farmer Guarantee, and Specialized Livestock Guarantee.

 

2)         The State will not be liable for more than $15,000,000 to secure State Guarantees issued under this Section, Young Farmer Guarantees under Section 1100.720, and Specialized Livestock Guarantees under Section 1100.730.

 

3)         In the event of default by the farmer or agribusiness on State Guarantee Loans, the lender shall be entitled to, and the Authority shall direct payment on, the State Guarantee after 90 days of delinquency.  [20 ILCS 3501/830-35]  The Authority shall direct a single payment equal to 85% of the outstanding principal plus interest accrued since the date payment was due.

 

4)         The fund shall be reimbursed for any amount paid under this subsection (i) upon liquidation of the collateral. [20 ILCS 3501/830-35]

 

j)          Priority of Applications.  Applications shall be processed by the Authority on a first-come, first-served basis, based upon the receipt of all completed documents.

 

k)         Guarantors and Additional Collateral.  An applicant for a State Guarantee loan may have a guarantor co-sign the note and/or pledge additional collateral for the State Guarantee loan if the lender and the Authority determine that the applicant alone cannot provide sufficient collateral.

 

l)          The State Guarantee.  In the event of default, the Authority shall make payment on the State Guarantee of 85% of the outstanding principal and interest owned on the State Guarantee to the holder of the State Guarantee within 30 days after receiving an appropriate request from the lender certifying that the 90-day delinquency period has elapsed.

 

m)        Prepayment of Loan.  The frequency of payments due on a SGPAI loan shall be determined on a case by case basis.  Payment schedules will be tailored to match the operation's income. The loan may be prepaid in full or in part without penalty at any time during the term of the loan.

 

n)         Assumption of Loans.  State Guarantee loans may not be assumed except with the approval of the Board.  Approval will be granted only in unusual circumstances such as death of the borrower with assumption by a family member.

 

o)         Total Obligations Through the SGPAI.  The Authority shall guarantee up to $50,000,000 in loans through the SGPAI, the Young Farmer Guarantee, and the Specialized Livestock Guarantee.  The Illinois Farmer and Agribusiness Loan Guarantee Fund shall be funded with $15,000,000 to cover any losses.

 

(Source:  Amended at 26 Ill. Reg. 7084, effective May 10, 2002; recodified from 8 Ill. Adm. Code 1400.149 at 31 Ill. Reg. 12104)

SUBPART H: FIRE TRUCK REVOLVING LOAN PROGRAM

 

Section 1100.800  Definitions

 

The following definitions apply in this Subpart:

 

"Applicant" means a unit of local government, including any municipality, township, township fire department, or special district such as a fire protection district that operates a fire department or provides fire suppression services itself without contracting those services from another entity.

 

"Authority" means the Illinois Finance Authority created by the Illinois Finance Authority Act [20 ILCS 3501] or its successor agency.

 

"Board" means the governing body of the entity receiving the loan.

 

"Brush Truck" means a pickup chassis with or equipped with a flatbed or a pickup box.  The brush truck must be rated by the manufacturer as between three-fourths of a ton and one ton and outfitted with a fire or rescue apparatus.

 

"Fire Department" means a fire department, fire protection district, or township fire department that is a unit of local government (as defined in Article VII, Section 1 of the Illinois Constitution of 1970 and in 5 ILCS 70/1.28) in Illinois that provides fire suppression within a geographical area.  For purposes of this Part, "Fire Department" is defined to include volunteer fire departments and volunteer fire protection districts (that are units of local government).

 

"Fire Truck" means an emergency vehicle identified as a pumper, ladder, truck, elevating platform, rescue truck, tanker, or squad truck.

 

"Fund" means the Fire Truck Revolving Loan Fund.

 

"Funding Date" means the date on which a zero-interest loan or low-interest loan is closed and funded.

 

"Low-Interest Loan" means a loan with a fixed rate of interest lower than commercially available.

 

"OSFM" means the Office of the State Fire Marshal.

 

"Program" means the Illinois Fire Truck Revolving Loan Program.

 

"Recipient" means an applicant that has successfully applied for and received all required approvals from OSFM and the Authority, agreed to and executed loan documentation prepared by the Authority, and closed and funded its fire truck or brush truck loan.

 

"Zero-Interest Loan" means a loan bearing a zero percent rate of interest for the duration of the loan.

 

(Source:  Amended at 39 Ill. Reg. 4924, effective March 19, 2015)

 

Section 1100.803  Severability

 

If any Section, subsection, sentence or clause of this Subpart shall be held by a court of competent jurisdiction to be invalid, that holding shall not affect the remaining portions of this Subpart.

 

(Source:  Added at 39 Ill. Reg. 4924, effective March 19, 2015)

 

Section 1100.805  Purpose

 

a)         OSFM and the Authority may jointly administer a Program to provide zero‑interest loans or low-interest loans to eligible applicants to finance or reimburse all or a portion of the cost of purchasing fire trucks or brush trucks, subject to availability of funds.

 

b)         For-profit entities, nonprofit entities, associations and/or not-for-profit corporations are not eligible to apply for a loan under this program.  Units of local government that do not operate fire departments are similarly not eligible (e.g., a municipality that contracts for fire suppression from another municipality or fire protection district would be ineligible).

 

(Source:  Amended at 39 Ill. Reg. 4924, effective March 19, 2015)

 

Section 1100.810  Eligible Expenditures

 

a)         Subject to the availability of funds, loans are available to be made under the Program for zero-interest loans or low-interest loans to applicants for the purchase of fire trucks or brush trucks as deemed eligible under OSFM's administrative rules at 41 Ill. Adm. Code 290.20 and 290.30.

 

b)         Loan proceeds may be used to pay off a loan that was obtained no more than one year prior to the receipt of a loan under this Program if the loan being paid off was obtained to purchase the fire truck or brush truck that is the subject of the application that was approved under this Program.

 

(Source:  Amended at 39 Ill. Reg. 4924, effective March 19, 2015)

 

Section 1100.815  Loan Application Review

 

a)         Applications for loans to be made pursuant to the Program shall be submitted to OSFM on forms provided by, and following the procedures established by, OSFM and the Authority. Each application shall be reviewed by OSFM.  OSFM will determine, based on equipment needs, financial need, and how recently the applicant has received a previous loan under this Program, which eligible applicant or applicants shall be recommended to the Authority for further consideration to receive a loan under this Program to finance the purchase of a fire truck or brush truck.

 

b)         Applications approved by OSFM will be forwarded to the Authority.  The Authority will review the loan application and any supplemental information provided in connection with each loan application, including, without limitation, financial statements and certifications and assurances provided by officers of the applicant, and any related Board-approved ordinances, resolutions, tax levies, budgets or other pertinent documents necessary to evaluate legal authorization and determine creditworthiness of the applicant.

 

c)         The Authority, after completion of its review, will notify OSFM of which loan applications have been approved.  OSFM will notify each applicant of the approval or disapproval of its application.  Applicants who are not approved may request reconsideration of the determination of OSFM or the Authority by following the Request for Reconsideration procedures established by OSFM (see 41 Ill. Adm. Code 290.60).

 

(Source:  Amended at 39 Ill. Reg. 4924, effective March 19, 2015)

 

Section 1100.817  Funding Criteria and Credit Review Process

 

In addition to the loan application review criteria developed by OSFM (see 41 Ill. Adm. Code 290.55), the credit review process and funding criteria approved by the Authority for this Program are as follows:

 

a)         The Authority's Chief Financial Officer, or his or her designee, will serve as an ex officio, non-voting member of OSFM's Loan Application Review Committee for the purpose of reviewing submitted loan documentation to ensure that all documents necessary for the Authority to initiate its credit and due diligence review are present (see 41 Ill. Adm. Code 290.40).

 

b)         If an applicant is delinquent on a previous loan funded by the Authority, the applicant shall be automatically disqualified from funding under this Program until any loan repayment delinquency has been cured.

 

c)         The applicant must demonstrate its ability to meet at least one of the following minimum debt service coverage requirements:

 

1)         General fund revenues or specified revenue stream:  1.25x; or

 

2)         State intercept revenues:  1.25x; or

 

3)         Direct property levy for the loan:  1.00x.

 

d)         The applicant must submit supporting documentation for the source of repayment as follows:

 

1)         For general fund or specified revenues, submit a current board- approved budget that reflects the identified revenue source and amount; or

 

2)         For direct property tax levy (i.e., general obligation), submit a copy of the levy and the ordinance authorizing the levy prior to the funding date.

 

e)         If the applicant's repayment source is property tax receipts, the applicant's actual property tax collections over the past three fiscal years must exceed 95% of the total possible tax collection.

 

f)         The applicant must provide a resolution or ordinance approved by the applicant's Board that includes the following approvals:

 

1)         Loan Application;

 

2)         Loan Agreement;

 

3)         Sources and amounts of repayment;

 

4)         State intercept agreement; and

 

5)         Lien on the fire truck or brush truck purchased, if required by the Authority.

 

g)         Each loan must be secured by the applicant's:

 

1)         General funds or, if available, a direct property tax levy or State revenue intercept; and

 

2)         Possession of the title to the property or an Authority lien on the equipment purchased, if the Authority, in its sole discretion, decides to accept such a lien.

 

(Source:  Amended at 39 Ill. Reg. 4924, effective March 19, 2015)

 

Section 1100.820  Loan Documents and Servicing

 

a)         Loan applications approved by OSFM and the Authority will be submitted to the Authority to prepare loan documentation and funding.  Subject to the availability of funds, the Authority will prepare the loan documentation, including, without limitation, a Loan Agreement to evidence the loan.

 

b)         The loan documentation will be provided to the applicant for execution.  Upon execution of the loan documentation, subject to the availability of funds, the Authority will execute the loan documentation and cause the loan to be funded.

 

c)         The Authority will retain the executed loan documents and will service funded loans.

 

d)         The Authority reserves the right to charge an origination/processing fee of up to $500 per applicant that receives an approved loan.  The amounts attributable to this origination/processing fee shall be deducted from the loan proceeds released upon closing and funding of the loan.

 

(Source:  Amended at 39 Ill. Reg. 4924, effective March 19, 2015)

 

Section 1100.825  Repayment Procedures

 

a)         Loans shall be repaid within 20 years, except that loans to finance acquisition of brush trucks shall be repaid within 10 years.

 

b)         For the purchase of brush trucks by a fire department, the Program shall provide loans at a 2% rate of simple interest per year if both the brush truck chassis and the apparatus are built outside of Illinois; a 1% rate of simple interest per year if either the brush truck chassis or the apparatus is built in Illinois; or a 0% rate if both the brush truck chassis and the apparatus are built in Illinois.  The applicable interest rate shall be fixed and remain in effect for the term of the loan.

 

c)         The rate of interest on loans under the Program, except for brush trucks, will be a 0% fixed interest rate (and remain in effect until the final maturity date of the loan) unless the applicant has one or more investment grade credit ratings (i.e., at or above "Baa3" or "BBB-" or the equivalent) from any nationally recognized municipal credit rating agency.  The applicable interest rate shall be fixed and remain in effect until the final maturity date of the loan.

 

d)         For applicants that do not qualify for 0% loans pursuant to subsection (c), the interest rate shall be determined as follows:

 

1)         The interest rate will be set each January 1 for loans that are documented and funded during that calendar year;

 

2)         The interest rate will be equivalent to 50% of the mean of the Bond Buyer's 20-Bond General Obligation Index for the 12 month period that ended September 30 of the prior calendar year (and will represent the interest rates in effect as of October 1 of each year under the Illinois Environmental Protection Agency's State Revolving Fund/Clean Water Initiative Programs); and

 

3)         The loans will bear interest on a simple interest basis.  The applicable interest rate shall be fixed and remain in effect until the final maturity date of the loan.

 

e)         Payments on the loan (principal and accrued interest, if any) shall be made on an annual basis in equal installments as provided in the Loan Agreement with the Authority.  The Authority shall deposit the payments received into the Fire Truck Revolving Loan Fund in accordance with the Act, if required by law.

 

1)         Loan payments shall be due on November 1 of each year, with the initial payment due based on the loan funding date, as follows:

 

A)        If the time period between loan funding date and the immediately following November 1 is 180 days or more, the first payment shall be due on November 1 immediately following the loan funding date; or

 

B)        If the time period between the loan funding date and the immediately following November 1 is less than 180 days, the first payment shall be due on the second November 1.

 

2)         After the first payment is made, succeeding payments shall be due on each November 1 until repaid in full.

 

3)         Payments shall be made payable to the "Illinois Finance Authority – Fire Truck Revolving Loan Fund", with payments submitted by wire transfer, by electronic funds transfer (automated clearing house), or by check pursuant to instructions provided in the annual invoice on each loan.

 

4)         Payments not received within 15 calendar days after the due date shall be assessed a penalty of 5% of the payment amount due.  Nevertheless, this late payment penalty shall be waived whenever the postmark date on an envelope used to submit a payment by check is dated a minimum of five days or more before the end of the 15 calendar day grace period.  Payments remitted via wire transfer shall not be assessed late payment penalty if the wire transfer payment is received before the end of the 15-day grace period.

 

5)         A recipient may prepay all or a portion of the balance due on the loan, without penalty, on any date, provided that the recipient initiates contact with the Authority to obtain the total amount of the principal and accrued interest, if any, due on the repayment date.

 

(Source:  Amended at 39 Ill. Reg. 4924, effective March 19, 2015)

 

Section 1100.830  Terms and Conditions of Loan Agreement

 

A loan application approved by OSFM and the Authority is subject to the following terms:

 

a)         Loan proceeds under this Program shall be used exclusively for the eligible expenditures listed in Section 1100.810 and shall be expended in accordance with the approved application and the recipient's policies and procedures related to those expenditures.  In the event that the loan proceeds are not expended in the manner approved, the recipient, upon written notification from the Authority, shall be required to submit, by the next payment due date, payment of the outstanding principal and accrued interest, if any, of the loan.

 

b)         Loan proceeds shall be obligated no later than six months following the loan funding date.

 

c)         Proof of use of loan proceeds for the funded zero-interest loan or low-interest loan shall be provided to the Authority and OSFM in writing pursuant to terms specified in the Loan Agreement.

 

d)         Loan proceeds shall be included in the recipient's budget.

 

e)         If a payment delinquency or default is not cured within 90 calendar days by payment of the amount owed to the Authority, the Authority shall notify the Office of the Comptroller to deduct the amount owed from any payments by the State to the recipient.  OSFM and/or the Authority may avail themselves of all remedies, rights and provisions of law applicable in these circumstances.  Failure to exercise any rights or remedies provided by law may not be used as a defense by the recipient in any proceeding brought against it by OSFM or the Authority.

 

(Source:  Amended at 39 Ill. Reg. 4924, effective March 19, 2015)

SUBPART I: AMBULANCE REVOLVING LOAN PROGRAM

 

Section 1100.900  Definitions

 

The following definitions apply in this Subpart:

 

"Ambulance" means an on-road vehicle that is specifically designed, constructed or modified and equipped and is intended to be used for and is maintained or operated for the emergency transportation of persons who are sick, injured, wounded or otherwise incapacitated or helpless.

 

"Applicant" means a unit of local government, including any municipality (i.e., city, village or town), township, township fire department, or special district (including but not limited to those described in 55 ILCS 100/1001 and 60 ILCS 1/195-5 and 200-13) such as a fire protection district or special ambulance service district that operates a fire department or provides fire suppression services itself without contracting those services from another entity, or an entity that provides ambulance services or emergency medical services that does not earn and distribute taxable business earnings to shareholders or principals of the business and is in good standing as a not-for-profit business with the Illinois Secretary of State.

 

"Authority" means the Illinois Finance Authority created by the Illinois Finance Authority Act [20 ILCS 3501] or its successor agency.

 

"Board" means the governing body of the entity receiving the loan.

 

"Fire Department" means a fire department, fire protection district, or township fire department that is a unit of local government (as defined in Article VII, Section 1 of the Illinois Constitution of 1970 and in 5 ILCS 70/1.28) in Illinois that provides fire suppression within a geographical area.  For purposes of this Part, "Fire Department" is defined to include volunteer fire departments and volunteer fire protection districts (that are units of local government).

 

"Fund" means the Ambulance Revolving Loan Fund.

 

"Funding Date" means the date on which a zero-interest loan or low-interest loan is closed and funded.

 

"Low-Interest Loan" means a loan with a fixed rate of interest lower than commercially available.

 

"OSFM" means the Office of the State Fire Marshal.

 

"Program" means the Illinois Ambulance Revolving Loan Program.

 

"Recipient" means an applicant that has successfully applied for and received all required approvals from OSFM and the Authority, agreed to and executed loan documentation prepared by the Authority, and closed and funded its ambulance loan.

 

"Zero-Interest Loan" means a loan bearing a zero percent rate of interest for the duration of the loan.

 

(Source:  Amended at 39 Ill. Reg. 4924, effective March 19, 2015)

 

Section 1100.903  Severability

 

If any Section, subsection, sentence or clause of this Subpart shall be held by a court of competent jurisdiction to be invalid, that holding shall not affect the remaining portions of this Subpart.

 

(Source:  Added at 39 Ill. Reg. 4924, effective March 19, 2015)

 

Section 1100.905  Purpose

 

a)         OSFM and the Authority may jointly administer a Program to provide zero‑interest loans or low-interest loans to eligible applicants to finance or reimburse all or a portion of the cost of purchasing ambulances subject to availability of funds.

 

b)         For-profit entities are not eligible to apply for a loan under this Program. Units of local government that do not operate fire departments are similarly not eligible (e.g., a municipality that contracts for ambulance services from another municipality or fire protection district is ineligible).

 

(Source:  Amended at 39 Ill. Reg. 4924, effective March 19, 2015)

 

Section 1100.910  Eligible Expenditures

 

a)         Subject to the availability of funds, loans are available to be made under the Program for zero-interest loans and low-interest loans to applicants for the purchase of ambulances as deemed eligible under OSFM's administrative rules at 41 Ill. Adm. Code 292.20 and 292.30.

 

b)         Loan proceeds may be used to pay off a loan that was obtained no more than one year prior to the receipt of a loan under this Program if the loan being paid off was obtained to purchase the ambulance that is the subject of the application that was approved under this Program.

 

(Source:  Amended at 39 Ill. Reg. 4924, effective March 19, 2015)

 

Section 1100.915  Loan Application Review

 

a)         Applications for loans to be made pursuant to the Program shall be submitted to OSFM on forms provided by, and following the procedures established by, OSFM and the Authority. Each application shall be reviewed by OSFM.  OSFM will determine, based on equipment needs, financial need, and how recently the applicant has received a previous loan under this Program, which eligible applicant or applicants shall be recommended to the Authority to receive a loan under this Program for the purchase of an ambulance.

 

b)         Applications approved by OSFM will be forwarded to the Authority.  The Authority will review the loan application and any information provided in connection with the loan application, including, without limitation, financial statements and certifications and assurances provided by officers of the applicant, and any related Board-approved ordinances, resolutions, tax levies, budgets or other pertinent documents necessary to evaluate legal authorization and creditworthiness of the applicant.

 

c)         The Authority, after completion of its review, will notify OSFM of which loan applications have been approved.  OSFM will notify each applicant of the approval or disapproval of its application.  Applicants who are not approved may request reconsideration of the determination of OSFM or the Authority by following the Request for Reconsideration procedure established by OSFM (see 41 Ill. Adm. Code 292.70).

 

(Source:  Amended at 39 Ill. Reg. 4924, effective March 19, 2015)

 

Section 1100.917  Funding Criteria and Credit Review Process

 

In addition to the Criteria for Review of Loan Applications developed by OSFM (see 41 Ill. Adm. Code 292.60), the credit review process and funding criteria approved by the Authority for this Program are as follows:

 

a)         The Authority's Chief Financial Officer, or his or her designee, will serve as an ex officio, non-voting member of OSFM's Loan Application Review Committee for the purpose of reviewing submitted loan documentation to ensure that all documents necessary for the Authority to initiate its credit and due diligence review are present (see 41 Ill. Adm. Code 292.40).

 

b)         If an applicant is delinquent on a previous loan funded by the Authority, the applicant shall be automatically disqualified from funding under this Program until any loan repayment delinquency has been cured.

 

c)         The applicant must demonstrate its ability to meet at least one of the following minimum debt service coverage requirements:

 

1)         General fund revenues or specified revenue stream:  1.25x; or

 

2)         State intercept revenues:  1.25x; or

 

3)         Direct property levy for the loan:  1.00x.

 

d)         The applicant must submit supporting documentation for the source of repayment as follows:

 

1)         For general fund or specified revenues, submit a current Board‑approved budget that reflects the identified revenue sources and amounts; or

 

2)         For direct property tax levy (i.e., general obligation), submit a copy of the levy and the ordinance authorizing the levy prior to the funding date.

 

e)         If the applicant's repayment source is property tax receipts, the applicant's actual property tax collections over the past three fiscal years must exceed 95% of the total possible tax collection.

 

f)         The applicant must provide a resolution or ordinance approved by the applicant's Board that includes the following approvals:

 

1)         Loan Application;

 

2)         Loan Agreement;

 

3)         Sources and amounts of repayment;

 

4)         State intercept agreement; and

 

5)         Lien on the ambulance purchased, if required by the Authority.

 

g)         Each loan must be secured by the applicant's:

 

1)         General funds or, if available, a direct property tax levy or State revenue intercept; and

 

2)         Possession of the title to the property or an Authority lien on the equipment purchased, if the Authority, in its sole discretion, decides to accept such a lien.

 

(Source:  Amended at 39 Ill. Reg. 4924, effective March 19, 2015)

 

Section 1100.920  Loan Documents and Servicing

 

a)         Loan applications approved by OSFM and the Authority will be submitted to the Authority to prepare loan documentation and funding.  Subject to the availability of funds, the Authority will prepare the loan documentation, including, without limitation, the Loan Agreement to evidence the loan.

 

b)         The loan documentation will be provided to the applicant for execution.  Upon execution of the loan documentation, subject to the availability of funds, the Authority will execute the loan documentation and cause the loan to be funded.

 

c)         The Authority will retain the executed loan documents and will service funded loans.

 

d)         The Authority reserves the right to charge an origination/processing fee of up to $500 per applicant that receives an approved loan. The amounts attributable to this origination/processing fee shall be deducted from the loan proceeds released upon closing and funding of the loan.

 

(Source:  Amended at 39 Ill. Reg. 4924, effective March 19, 2015)

 

Section 1100.925  Repayment Procedures

 

a)         Loans shall be repaid within 10 years.

 

b)         The rate of interest on loans under the Program will be a 0% fixed interest rate (and remain in effect for the duration of the loan) unless the applicant has one or more investment grade credit ratings (i.e., at or above "Baa3" or "BBB-" or the equivalent) from any nationally recognized municipal credit rating agency.

 

c)         For applicants that do not qualify for zero-percent loans pursuant to subsection (b), the interest rate shall be determined as follows:

 

1)         The interest rate will be set each January 1 for loans that are documented and funded during that calendar year;

 

2)         The interest rate rate will be equivalent to 50% of the mean of the Bond Buyer's 20-Bond General Obligation Index for the 12 month period that ended September 30 of the prior calendar year (and will represent the interest rates in effect as of October 1 of each year under the Illinois Environmental Protection Agency's State Revolving Fund/Clean Water Initiative Program);

 

3)         The loans will bear a fixed interest rate on a simple interest basis.  The applicable interest rate shall be in effect for the duration of the loan.

 

d)         Payments on the loan (principal and accrued interest, if any) shall be made on an annual basis in equal installments as provided in the Loan Agreement with the Authority. The Authority shall deposit the payments received into the Ambulance Revolving Loan Fund in accordance with the Act, if required by law.

 

1)         Loan payments shall be due on November 1 of each year with the initial payment due based on the loan funding date as follows:

 

A)        If the time period between the the loan funding date and the immediately following November 1 is 180 days or more, the first payment shall be due on November 1 immediately following the loan funding date; or

 

B)        If the time period between the loan funding date and the immediately following November 1 is less than 180 days, the first payment shall be due on the second November 1 immediately following the loan funding date.

 

2)         After the first payment is made, succeeding payments shall be due on each November 1 until repaid in full.

 

3)         Payments shall be made payable to the "Illinois Finance Authority − Ambulance Revolving Loan Fund" with payments submitted by wire transfer, by electronic funds transfer (automated clearing house), or by check pursuant to instructions provided in the annual invoice on each loan.

 

4)         Payments not received within 15 calendar days after the due date shall be assessed a penalty of 5% of the payment amount due. Nevertheless, this late payment penalty shall be waived whenever the postmark date on the envelope used to submit the payment is dated five days or more before the end of the 15-day grace period.  Payments remitted via wire transfer shall not be assessed late payment penalty if the wire transfer payment is received before the end of the 15-day grace period.

 

5)         Recipient may prepay all or a portion of the balance due on the loan, without penalty, on any date, provided that the recipient first contacts the Authority to obtain the total amount of the principal and accrued interest, if any, due on the repayment date.

 

(Source:  Amended at 39 Ill. Reg. 4924, effective March 19, 2015)

 

Section 1100.930  Terms and Conditions of Loan Agreement

 

A loan application approved by OSFM and the Authority is subject to the following terms:

 

a)         Loan proceeds under this Program shall be used exclusively for the purposes listed in Section 1100.910 and shall be expended in accordance with the approved application and the recipient's policies and procedures related to those expenditures.  In the event that the loan proceeds are not expended in the manner approved, the recipient, upon written notification from the Authority, shall be required to submit, by the next payment due date, payment of the outstanding principal and accrued interest, if any, of the loan.

 

b)         Loan proceeds shall be obligated no later than six months following the loan funding date.

 

c)         Proof of use of loan proceeds for the funded zero-interest or low-interest loan shall be provided to the Authority and OSFM in writing pursuant to terms specified in the Loan Agreement.

 

d)         Loan proceeds shall be included in the recipient's budget.

 

e)         If a payment delinquency or default is not cured within 90 calendar days by payment of the amount owed to the Authority, the Authority shall notify the Office of the Comptroller to deduct the amount owed from any payments by the State to the recipient.  OSFM and/or the Authority may avail themselves of all remedies, rights and provisions of law applicable in these circumstances.  Failure to exercise any rights or remedies provided by law may not be used as a defense by the recipient in any proceeding brought against it by OSFM or the Authority.

 

(Source:  Amended at 39 Ill. Reg. 4924, effective March 19, 2015)

SUBPART J: FIRE SPRINKLER DORMITORY REVOLVING LOAN PROGRAM

 

Section 1100.1000  Definitions

 

The following definitions apply in this Subpart:

 

"Act" means the Fire Sprinkler Dormitory Act [110 ILCS 47].

 

"Applicant" means a post-secondary educational institution applying to OSFM and the Authority for a low interest loan under the Program.

 

"Authority" means the Illinois Finance Authority created by the Illinois Finance Authority Act [20 ILCS 3501] or its successor agency.

 

"Fire Sprinkler System" means a fire sprinkler system located in an existing or newly constructed dormitory or residence hall of a post-secondary educational institution that has received the permits, certifications and inspections required by federal, State and local law, rule, guideline or ordinance.

 

"Fund" means the Fire Sprinkler Dormitory Revolving Loan Fund.

 

"Low Interest Loan" means a loan with a rate of interest to be charged under the Program as determined by the Board of the Authority at the time of the loan approval, at a rate lower than current market rates.

 

"OSFM" means the Office of the State Fire Marshal.

 

"Post-Secondary Educational Institution" means an Illinois public or private college or university offering degrees and instruction above the high school level.  This term does not include:

 

any public or private college or university that does not provide on-campus housing for its students in dormitories or equivalent facilities that are owned, operated or maintained by the public or private college or university;

 

any public or private junior college or community college; or

 

any institution offering degrees and instruction that uses correspondence as its primary mode of student instruction.

 

"Program" means the Illinois Fire Sprinkler Dormitory Revolving Loan Program authorized by the Act and outlined in this Subpart.

 

(Source:  Added at 34 Ill. Reg. 3272, effective February 23, 2010)

 

Section 1100.1005  Purpose

 

OSFM and the Authority will jointly administer a Program to provide low interest loans to post-secondary educational institutions, the proceeds of which shall be used to pay all or any portion of the costs associated with planning, purchasing, installing, upgrading, altering, modifying, fixing or repairing a fire sprinkler system.  OSFM will determine loan awards based on system needs, financial need and how recently the applicant has received a previous loan under this Program, supplemented by recommendations from the Authority based on creditworthiness.  Low interest loans for the purchase of fire sprinkler systems shall not exceed $1,000,000 in any single fiscal year to any post-secondary educational institution.

 

(Source:  Added at 34 Ill. Reg. 3272, effective February 23, 2010)

 

Section 1100.1010  Eligible Expenditures

 

Subject to the availability of monies in the Fund, low interest loans to post-secondary educational institutions will be available for the purpose of paying all or a portion of the costs associated with planning, purchasing, installing, upgrading, altering, modifying, fixing or repairing a fire sprinkler system.

 

(Source:  Added at 34 Ill. Reg. 3272, effective February 23, 2010)

 

Section 1100.1015  Loan Application Review

 

a)         Applications by post-secondary educational institutions for low interest loans to be made pursuant to the Program shall be submitted to OSFM on forms provided by, and following the procedures established by, OSFM. Each application shall be reviewed by OSFM.  OSFM will determine, based on system needs, financial need and how recently the applicant has received a previous loan under this Program, which eligible post-secondary educational institution will be recommended to the Authority to receive a low interest loan under this Program.

 

b)         Applications approved by OSFM will be forwarded to the Authority.  The Authority will review the low interest loan application and any information provided in connection with the application, including, without limitation, financial statements, certifications and assurances provided by officers of the post-secondary educational institution to determine the creditworthiness of the institution.  

 

c)         The Authority, after completion of its review of the applicant's creditworthiness, will notify OSFM of which loan applications have been approved.  OSFM will notify each applicant of the approval or disapproval of its application.  Applicants who are not approved may appeal the determination of OSFM by following the appeal process established by OSFM.

 

d)         In the event that applications for low interest loans exceed available funds, OSFM and the Authority will jointly determine criteria for the award based on the financial need of the applicant and other criteria that may be deemed appropriate by OSFM and the Authority.

 

(Source:  Added at 34 Ill. Reg. 3272, effective February 23, 2010)

 

Section 1100.1017  Funding Criteria and Credit Review Process

 

In addition to the criteria developed by OSFM, the credit review process and funding criteria approved by the Authority for this Program are as follows:

 

a)         If an applicant is delinquent on a previous loan under the Program, the applicant is automatically disqualified for an additional low interest loan from the Program until it is current on its loan repayment.

 

b)         Applicants are eligible for only one loan under the Program within any fiscal year.

 

c)         The applicant must demonstrate its ability to meet at least one of the following minimum debt service coverage requirements:

 

1)         General fund revenues or specified revenue stream:  1.25x; or

 

2)         State intercept revenues:  1.25x.

 

d)         Prior to funding, the applicant must submit supporting documentation for the source of repayment of the low interest loan as follows:

 

1)         For general fund or specified revenues, submit a current board-approved budget that reflects the identified revenue source and amount; or

 

2)         For direct property tax levy, submit a copy of the levy and the ordinance or resolution authorizing the levy.

 

e)         If the applicant's repayment source is property tax receipts, the applicant's actual property tax collections over the past three fiscal years must exceed 95% of the total possible tax collection.

 

f)         The applicant must provide a resolution or ordinance approved by the applicant's Board that includes the following approvals:

 

1)         Loan application, approved by OSFM and the Authority in the fiscal year in which the low interest loan is to be awarded;

 

2)         Loan Agreement;

 

3)         Source and amount of repayment; and

 

4)         State intercept agreement.

 

g)         Each loan must be secured by the applicant's:

 

1)         General funds or, if available, a direct property tax levy; and/or

 

2)         State revenue intercept agreement; and/or

 

3)         A mortgage on the real property on which the fire sprinkler system is located.

 

h)         The Authority Board will approve loans made under the Program by resolution.

 

(Source:  Added at 34 Ill. Reg. 3272, effective February 23, 2010)

 

Section 1100.1020  Loan Documents and Servicing

 

a)         Approved loan applications will be submitted to the Authority for documentation and funding.  Subject to the availability of monies in the Fund, the Authority will prepare a loan agreement, evidencing the loan to the post-secondary educational institution. 

 

b)         The loan documents will be provided to the post-secondary educational institution for execution.  Upon execution of the loan documents, subject to the availability of monies in the Fund, the Authority will execute the loan documents and cause the loan to be funded.

 

c)         The Authority will retain the executed loan documents, as well as evidence of security supporting the loan, and will service funded loans under the Program.

 

d)         The Authority reserves the right to charge an origination/processing fee of up to $5,000 per applicant that receives an approved loan.

 

(Source:  Added at 34 Ill. Reg. 3272, effective February 23, 2010)

 

Section 1100.1025  Repayment Procedures

 

a)         The maturity date of the loans shall be determined by OSFM and the Authority, but shall not exceed 20 years.

 

b)         Payments of principal and interest on the loan shall be made according to the schedule determined by OSFM and the Authority.  The Authority will provide invoices to loan recipients for those payments.  Payments shall be made to the Illinois Finance Authority. Payments not received within 15 calendar days after the due date shall be assessed a penalty of 5 percent of the payment due; however, the late payment penalty will be waived when the postmark date on the envelope used to submit the payment is five days or more before the end of the 15-day grace period.

 

c)         A post-secondary educational institution may prepay the balance due on the loan in its entirety, or a portion of the balance, on any scheduled payment date, provided that the post-secondary educational institution first contacts the Authority to obtain the total amount of the principal due at that time.

 

(Source:  Added at 34 Ill. Reg. 3272, effective February 23, 2010)

 

Section 1100.1030  Terms and Conditions of Loan Agreement

 

An approved loan is subject to the following terms:

 

a)         Loan proceeds under this Program shall be used exclusively for the purposes listed in Section 1100.1005 and shall be expended in accordance with the approved application and the applicant's policies and procedures related to the expenditures.  In the event the loan proceeds are not expended in the manner approved, then the post-secondary educational institution, upon written notification from OSFM, shall, within 90 calendar days after the date of the notification, submit payment of the outstanding principal of the loan.

 

b)         Loan proceeds shall be spent no later than six months following the receipt of the loan.

 

c)         Use of loan proceeds shall be accounted for in accordance with standard accounting practices.  Loan recipients shall submit to OSFM a report detailing how the loan proceeds were used.  This expenditure report, to be submitted on a form supplied by OSFM, shall be due not later than nine months following receipt of the loan.

 

d)         In the event of default that is not cured within 90 calendar days, OSFM shall notify the Office of the Comptroller to deduct the amount owed from any payments from other State agencies, if any, and the post-secondary educational institution shall be ineligible for additional loans until good standing has been restored.  In addition, OSFM and/or the Authority may 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 provided by law may not be raised as defense by the post-secondary educational institution in default.

 

(Source:  Added at 34 Ill. Reg. 3272, effective February 23, 2010)

SUBPART K: FIRE STATION REVOLVING LOAN PROGRAM

 

Section 1100.1100  Definitions

 

The following definitions apply in this Subpart:

 

"Applicant" means a unit of local government, including any municipality, township, township fire department, or special district such as a fire protection district that operates a fire department or provides fire suppression services itself without contracting those services from another entity.

 

"Authority" means the Illinois Finance Authority created by the Illinois Finance Authority Act [20 ILCS 3501] or its successor agency.

 

"Board" means the governing body of the entity receiving the loan.

 

"Fire Department" means a fire department, fire protection district, or township fire department that is a unit of local government (as defined in Article VII, Section 1 of the Illinois Constitution of 1970 and in Section 1.28 of the Statute on Statutes [5 ILCS 70/1.28] in Illinois that provides fire suppression within a geographical area.  For purposes of this Part, "Fire Department" is defined to include volunteer fire departments and volunteer fire protection districts (that are units of local government.

 

"Fire Station" means a building or structure set aside for storage of firefighting apparatus, personal protective equipment, fire hose, and other fire extinguishing equipment.  It may also include dormitory living facilities and work areas such as offices, meeting rooms, workshops, kitchens or laundry facilities.  The term includes additions to existing buildings as well as new construction.

 

"Fund" means the Fire Station Revolving Loan Fund.

 

"Funding Date" means the date on which a zero-interest or low-interest loan is closed and funded.

 

"Low Interest Loan" means a loan with a fixed rate of interest lower than commercially available.

 

"OSFM" means the Office of the State Fire Marshal.

 

"Program" means the Illinois Fire Station Revolving Loan Program.

 

"Recipient" means an applicant that has successfully applied for and received all required approvals from OSFM and the Authority, agreed to and executed loan documentation prepared by the Authority, and closed and funded its fire station loan.

 

"Zero-Interest Loan" means a loan bearing a zero percent rate of interest for the duration of the loan.

 

(Source:  Added at 39 Ill. Reg. 4924, effective March 19, 2015)

 

Section 1100.1103  Severability

 

If any Section, subsection, sentence or clause this Subpart shall be held by a court of competent jurisdiction to be invalid, that holding shall not affect the remaining portions of this Subpart.

 

(Source:  Added at 39 Ill. Reg. 4924, effective March 19, 2015)

 

Section 1100.1105  Purpose

 

a)         OSFM and the Authority may jointly administer a program to provide zero‑interest or low-interest loans to eligible applicants to finance or reimburse all or a portion of the costs associated with the construction, rehabilitation, remodeling or expansion of a fire station or acquisition of land for the construction or expansion of a fire station, subject to the availability of funds.  Loans for the purpose of a fire station shall not exceed $2,000,000 per fire department.

 

b)         For-profit entities, nonprofit entities, associations and/or not-for-profit corporations are not eligible to apply for a loan under this Program.  Units of local government that do not operate fire departments are similarly not eligible (e.g., a municipality that contracts for fire suppression from another municipality or fire protection district).

 

(Source:  Added at 39 Ill. Reg. 4924, effective March 19, 2015)

 

Section 1100.1110  Eligible Expenditures

 

Subject to availability of funds, loans are available to be made under the Program for zero‑interest or low-interest loans to applicants for the construction, rehabilitation, remodeling or expansion of a fire station or acquisition of land for the construction or expansion of a fire station.

 

(Source:  Added at 39 Ill. Reg. 4924, effective March 19, 2015)

 

Section 1100.1115  Loan Application Review

 

a)         Applications for loans to be made pursuant to the Program shall be submitted to OSFM on forms provided by, and following the procedures established by, OSFM and the Authority. Each application shall be reviewed by OSFM.  OSFM will determine, based on equipment needs, financial need, and how recently the applicant has received a previous loan under this Program, which eligible applicant or applicants shall be recommended to the Authority for further consideration to receive a loan under this Program to finance the construction, rehabilitation, remodeling or expansion of a fire station or acquisition of land for the construction or expansion of a fire station.

 

b)         Applications approved by OSFM will be forwarded to the Authority.  The Authority will review the loan application and any supplemental information provided in connection with the loan application, including, without limitation, financial statements and certifications and assurances provided by officers of the applicant, and any related Board-approved ordinances, resolutions, tax levies, budgets, or other pertinent documents to evaluate legal authorization and creditworthiness of the applicant.

 

c)         The Authority, after completion of its review, will notify OSFM of which loan applications have been approved.  OSFM will notify each applicant of the approval or disapproval of its application.  Applicants who are not approved may request reconsideration of the determination of OSFM or the Authority by following the request for reconsideration process established by OSFM (see 41 Ill. Adm. Code 294.170).

 

(Source:  Added at 39 Ill. Reg. 4924, effective March 19, 2015)

 

Section 1100.1117  Funding Criteria and Credit Review Process

 

In addition to the loan application review criteria developed by OSFM (see 41 Ill. Adm. Code 294.160), the credit review process and funding criteria approved by the Authority for this Program are as follows:

 

a)         The Authority's Chief Financial Officer, or his or her designee, will serve as an ex officio, non-voting member of the OSFM's Loan Application Review Committee for the purpose of reviewing submitted loan documentation to ensure that all documents necessary for the Authority to initiate its credit and due diligence review are present (see 41 Ill. Adm. Code 294.140).

 

b)         If an applicant is delinquent on a previous loan funded by the Authority, the applicant shall be automatically disqualified from funding under this Program until any loan repayment delinquency has been cured.

 

c)         The applicant must demonstrate its ability to meet at least one of the following minimum debt service coverage requirements:

 

1)         General fund revenues or specified revenue stream:  1.25x; or

 

2)         State tax intercept revenues:  1.25x; or

 

3)         Direct property levy for the loan:  1.00x.

 

d)         The applicant must submit supporting documentation for the sources of repayment as follows:

 

1)         For general fund or specified revenues, submit a current Board-approved budget that reflects the identified revenue sources and amounts; or

 

2)         For direct property tax levy (i.e., general obligation), submit a copy of the levy and the ordinance authorizing the levy prior to the funding date.

 

e)         If the applicant's repayment source is property tax receipts, the applicant's average actual property tax collections over the past three fiscal years must exceed 95% of the total possible tax collection.

 

f)         The applicant must provide a resolution or ordinance approved by the applicant's Board that includes the following approvals:

 

1)         Loan Application;

 

2)         Loan Agreement;

 

3)         Sources and amounts of repayment;

 

4)         State tax revenue intercept agreement; and

 

5)         Mortgage on the fire station constructed, rehabilitated, remodeled or expanded, or mortgage on the land acquired for the construction or expansion of a fire station, if required by the Authority.

 

g)         Each loan must be secured by the applicant's:

 

1)         General funds or, if available, a direct property tax levy or State tax revenue intercept; and

 

2)         Possession of a mortgage to the subject real estate, if the Authority, in its sole discretion, decides to accept such a mortgage.

 

(Source:  Added at 39 Ill. Reg. 4924, effective March 19, 2015)

 

Section 1100.1120  Loan Documents and Servicing

 

a)         Loan applications approved by OSFM and the Authority will be submitted to the Authority to prepare loan documentation and funding.  Subject to the availability of funds, the Authority will prepare the loan documentation, including, without limitation, a Loan Agreement to evidence the loan.

 

b)         The loan documentation will be provided to the applicant for execution.  Upon execution of the loan documentation, subject to the availability of funds, the Authority will execute the loan documentation and cause the loan to be funded.

 

c)         The Authority will retain the executed loan documents and will service funded loans.

 

d)         The Authority reserves the right to charge an origination/processing fee of up to $500 per applicant that receives an approved loan.  The amounts shall be deducted from the loan proceeds released upon closing and funding of the loan.

 

(Source:  Added at 39 Ill. Reg. 4924, effective March 19, 2015)

 

Section 1100.1125  Repayment Procedures

 

a)         Loans shall be repaid within 25 years.

 

b)         The rate of interest on loans under the Program will be 0% unless the applicant has one or more investment grade credit ratings (i.e., at or above "Baa3" or "BBB‑" or the equivalent)  from any nationally recognized municipal credit rating agency.

 

c)         For applicants that do not qualify for a 0% fixed interest rate loan pursuant to subsection (b), the interest rate shall be determined as follows:

 

1)         The interest rate will be set each January 1 for loans that are documented and funded during that calendar year;

 

2)         The interest rate will be equivalent to 50% of the mean of the Bond Buyer's 20-Bond General Obligation Index for the 12 month period that ended September 30 of the prior calendar year (and will represent the interest rates in effect as of October 1 of each year under the Illinois Environmental Protection Agency's State Revolving Fund/Clean Water Initiative Programs);

 

3)         The loans will bear interest on a simple interest basis.  The applicable interest rate shall be fixed and remain in effect for the duration of the loan.

 

d)         Payments on the loan (principal and accrued interest, if any) shall be made on an annual basis in equal installments as provided in the Loan Agreement with the Authority.  The Authority will provide invoices to loan recipients on an annual basis.  The Authority shall deposit the payments received into the Fire Station Revolving Loan Fund in accordance with the Act, if required by law.

 

e)         Loan payments shall be due on November 1 of each year.

 

1)         The first payment shall be due as follows:

 

A)        If the time period between the loan funding date and the immediately following November 1 is 180 days or more, the first payment shall be due on November 1 immediately following the loan funding date; or

 

B)        If the time period between the loan funding date and the immediately following November 1 is less than 180 days, the first payment shall be due on the second November 1 immediately following the loan funding date.

 

2)         After the first payment is made, succeeding payments shall be due on each November 1 until repaid in full.

 

f)         Payments shall be made payable to the "Illinois Finance Authority − Fire Station Revolving Loan Fund" with payments submitted either by wire transfer, by electronic funds transfer (automated clearing house), or by check pursuant to instructions provided in the annual invoice on each loan.

 

g)         Payments not received within 15 calendar days after the due date shall be assessed a penalty of 5% of the payment due.  Nevertheless, the late payment penalty shall be waived whenever the postmark date on an envelope used to submit a payment by check is dated five days or more before the end of the 15 calendar day grace period.  Payments remitted via wire transfer shall not be assessed late payment penalty if the wire transfer payment is received before the end of the 15-day grace period.

 

h)         A recipient may prepay all or a portion of the balance due on the loan, without penalty, on any date, provided that the recipient initiates contact with the Authority to obtain the total amount of the principal and accrued interest, if any, due on the repayment date.

 

(Source:  Added at 39 Ill. Reg. 4924, effective March 19, 2015)

 

Section 1100.1130  Terms and Conditions of Loan Agreement

 

A loan application approved by OSFM and the Authority is subject to the following terms:

 

a)         Loan proceeds under this Program shall be used exclusively for the purposes listed in Section 1100.1110 and shall be expended in accordance with the approved application and the recipient's policies and procedures related to those expenditures.  In the event that the loan proceeds are not expended in the manner approved, the recipient, upon written notification from the Authority, shall be required to submit, by the next payment due date, payment of the outstanding principal and accrued interest, if any, of the loan.

 

b)         Loan proceeds shall be obligated no later than 12 months following the loan funding date.

 

c)         Proof of use of loan proceeds for the funded zero-interest or low-interest loan shall be provided to the Authority and OSFM in writing pursuant to terms specified in the Loan Agreement.

 

d)         Loan proceeds shall be reflected in the recipient's budget.

 

e)         If a loan payment delinquency or default is not cured within 90 calendar days by payment of the amount owed to the Authority, the Authority shall notify the Office of the Comptroller to deduct the amount owed from any payments by the State to the recipient.  OSFM and/or the Authority may avail themselves of all remedies, rights and provisions of law applicable in these circumstances.  Failure to exercise any rights or remedies provided by law may not be used as a defense by the recipient in any proceeding brought against it by OSFM or the Authority.

 

(Source:  Added at 39 Ill. Reg. 4924, effective March 19, 2015)







Section 1100.TABLE A   Income Limits

 

Table of low and moderate income with adjustments for larger and smaller families.

 

Income Limits Per Family Size
	-------------------------------------			INCOME LIMITS		-------------------------------------
	1 PERSON	2 PERSON	3 PERSON	4 PERSON	5 PERSON	6 PERSON	7 PERSON	8 PERSON
MODERATE	19250	22000	24750	27500	29200	30950	32650	34400
LOW	12100	13850	15550	17300	18700	20050	21450	22850

 

(Source:  Recodified from 14 Ill. Adm. Code 1200.Table A at 31 Ill. Reg. 12104)