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91_HB1117enr
HB1117 Enrolled LRB9103156MWpc
1 AN ACT concerning local government debt, amending named
2 Acts.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Local Government Debt Reform Act is
6 amended by changing Sections 15, 16, and 17 and by adding
7 Section 17.5 as follows:
8 (30 ILCS 350/15) (from Ch. 17, par. 6915)
9 Sec. 15. Double-barrelled bonds. Whenever revenue bonds
10 have been authorized to be issued pursuant to applicable law
11 or whenever there exists for a governmental unit a revenue
12 source, the procedures set forth in this Section may be used
13 by a governing body. General obligation bonds may be issued
14 in lieu of such revenue bonds as authorized, and general
15 obligation bonds may be issued payable from any revenue
16 source. Such general obligation bonds may be referred to as
17 "alternate bonds". Alternate bonds may be issued without any
18 referendum or backdoor referendum except as provided in this
19 Section, upon the terms provided in Section 10 of this Act
20 without reference to other provisions of law, but only upon
21 the conditions provided in this Section. Alternate bonds
22 shall not be regarded as or included in any computation of
23 indebtedness for the purpose of any statutory provision or
24 limitation except as expressly provided in this Section.
25 Such conditions are:
26 (a) Alternate bonds shall be issued for a lawful
27 corporate purpose. If issued in lieu of revenue bonds,
28 alternate bonds shall be issued for the purposes for which
29 such revenue bonds shall have been authorized. If issued
30 payable from a revenue source in the manner hereinafter
31 provided, which revenue source is limited in its purposes or
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1 applications, then the alternate bonds shall be issued only
2 for such limited purposes or applications. Alternate bonds
3 may be issued payable from either enterprise revenues or
4 revenue sources, or both.
5 (b) Alternate bonds shall be subject to backdoor
6 referendum. The provisions of Section 5 of this Act shall
7 apply to such backdoor referendum, together with the
8 provisions hereof. The authorizing ordinance shall be
9 published in a newspaper of general circulation in the
10 governmental unit. Along with or as part of the authorizing
11 ordinance, there shall be published a notice of (1) the
12 specific number of voters required to sign a petition
13 requesting that the issuance of the alternate bonds be
14 submitted to referendum, (2) the time when such petition must
15 be filed, (3) the date of the prospective referendum, and
16 (4), with respect to authorizing ordinances adopted on or
17 after January 1, 1991, a statement that identifies any
18 revenue source that will be used to pay the principal of and
19 interest on the alternate bonds. The clerk or secretary of
20 the governmental unit shall make a petition form available to
21 anyone requesting one. If no petition is filed with the
22 clerk or secretary within 30 days of publication of the
23 authorizing ordinance and notice, the alternate bonds shall
24 be authorized to be issued. But if within this 30 days
25 period, a petition is filed with such clerk or secretary
26 signed by electors numbering the greater of (i) 7.5% of the
27 registered voters in the governmental unit or (ii) 200 of
28 those registered voters or 15% of those registered voters,
29 whichever is less, asking that the issuance of such alternate
30 bonds be submitted to referendum, the clerk or secretary
31 shall certify such question for submission at an election
32 held in accordance with the general election law. The
33 question on the ballot shall include a statement of any
34 revenue source that will be used to pay the principal of and
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1 interest on the alternate bonds. The alternate bonds shall be
2 authorized to be issued if a majority of the votes cast on
3 the question at such election are in favor thereof provided
4 that notice of the bond referendum, if heretofore or
5 hereafter held, has been or shall be given in accordance with
6 the provisions of Section 12-5 of the Election Code, at least
7 10 and not more than 45 days before the date of the election,
8 notwithstanding the time for publication otherwise imposed by
9 Section 12-5. Backdoor referendum proceedings for bonds and
10 alternate bonds to be issued in lieu of such bonds may be
11 conducted at the same time.
12 (c) To the extent payable from enterprise revenues, such
13 revenues shall have been determined by the governing body to
14 be sufficient to provide for or pay in each year to final
15 maturity of such alternate bonds all of the following: (1)
16 costs of operation and maintenance of the utility or
17 enterprise, but not including depreciation, (2) debt service
18 on all outstanding revenue bonds payable from such enterprise
19 revenues, (3) all amounts required to meet any fund or
20 account requirements with respect to such outstanding revenue
21 bonds, (4) other contractual or tort liability obligations,
22 if any, payable from such enterprise revenues, and (5) in
23 each year, an amount not less than 1.25 times debt service of
24 all (i) alternate bonds payable from such enterprise revenues
25 previously issued and outstanding and (ii) alternate bonds
26 proposed to be issued. To the extent payable from one or
27 more revenue sources, such sources shall have been determined
28 by the governing body to provide in each year, an amount not
29 less than 1.25 times debt service of all alternate bonds
30 payable from such revenue sources previously issued and
31 outstanding and alternate bonds proposed to be issued. The
32 conditions enumerated in this subsection (c) need not be met
33 for that amount of debt service provided for by the setting
34 aside of proceeds of bonds or other moneys at the time of the
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1 delivery of such bonds.
2 (d) The determination of the sufficiency of enterprise
3 revenues or a revenue source, as applicable, shall be
4 supported by reference to the most recent audit of the
5 governmental unit, which shall be for a fiscal year ending
6 not earlier than 18 months previous to the time of issuance
7 of the alternate bonds. If such audit does not adequately
8 show such enterprise revenues or revenue source, as
9 applicable, or if such enterprise revenues or revenue source,
10 as applicable, are shown to be insufficient, then the
11 determination of sufficiency shall be supported by the report
12 of an independent accountant or feasibility analyst, the
13 latter having a national reputation for expertise in such
14 matters, demonstrating the sufficiency of such revenues and
15 explaining, if appropriate, by what means the revenues will
16 be greater than as shown in the audit. Whenever such
17 sufficiency is demonstrated by reference to a schedule of
18 higher rates or charges for enterprise revenues or a higher
19 tax imposition for a revenue source, such higher rates,
20 charges or taxes shall have been properly imposed by an
21 ordinance adopted prior to the time of delivery of alternate
22 bonds. The reference to and acceptance of an audit or
23 report, as the case may be, and the determination of the
24 governing body as to sufficiency of enterprise revenues or a
25 revenue source shall be conclusive evidence that the
26 conditions of this Section have been met and that the
27 alternate bonds are valid.
28 (e) The enterprise revenues or revenue source, as
29 applicable, shall be in fact pledged to the payment of the
30 alternate bonds; and the governing body shall covenant, to
31 the extent it is empowered to do so, to provide for, collect
32 and apply such enterprise revenues or revenue source, as
33 applicable, to the payment of the alternate bonds and the
34 provision of not less than an additional .25 times debt
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1 service. The pledge and establishment of rates or charges
2 for enterprise revenues, or the imposition of taxes in a
3 given rate or amount, as provided in this Section for
4 alternate bonds, shall constitute a continuing obligation of
5 the governmental unit with respect to such establishment or
6 imposition and a continuing appropriation of the amounts
7 received. All covenants relating to alternate bonds and the
8 conditions and obligations imposed by this Section are
9 enforceable by any bondholder of alternate bonds affected,
10 any taxpayer of the governmental unit, and the People of the
11 State of Illinois acting through the Attorney General or any
12 designee, and in the event that any such action results in an
13 order finding that the governmental unit has not properly set
14 rates or charges or imposed taxes to the extent it is
15 empowered to do so or collected and applied enterprise
16 revenues or any revenue source, as applicable, as required by
17 this Act, the plaintiff in any such action shall be awarded
18 reasonable attorney's fees. The intent is that such
19 enterprise revenues or revenue source, as applicable, shall
20 be sufficient and shall be applied to the payment of debt
21 service on such alternate bonds so that taxes need not be
22 levied, or if levied need not be extended, for such payment.
23 Nothing in this Section shall inhibit or restrict the
24 authority of a governing body to determine the lien priority
25 of any bonds, including alternate bonds, which may be issued
26 with respect to any enterprise revenues or revenue source.
27 In the event that alternate bonds shall have been issued
28 and taxes, other than a designated revenue source, shall have
29 been extended pursuant to the general obligation, full faith
30 and credit promise supporting such alternate bonds, then the
31 amount of such alternate bonds then outstanding shall be
32 included in the computation of indebtedness of the
33 governmental unit for purposes of all statutory provisions or
34 limitations until such time as an audit of the governmental
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1 unit shall show that the alternate bonds have been paid from
2 the enterprise revenues or revenue source, as applicable,
3 pledged thereto for a complete fiscal year.
4 Alternate bonds may be issued to refund or advance refund
5 alternate bonds without meeting any of the conditions set
6 forth in this Section, except that the term of the refunding
7 bonds shall not be longer than the term of the refunded bonds
8 and that the debt service payable in any year on the
9 refunding bonds shall not exceed the debt service payable in
10 such year on the refunded bonds.
11 Once issued, alternate bonds shall be and forever remain
12 until paid or defeased the general obligation of the
13 governmental unit, for the payment of which its full faith
14 and credit are pledged, and shall be payable from the levy of
15 taxes as is provided in this Act for general obligation
16 bonds.
17 The changes made by this amendatory Act of 1990 do not
18 affect the validity of bonds authorized before September 1,
19 1990.
20 (Source: P.A. 90-812, eff. 1-26-99.)
21 (30 ILCS 350/16) (from Ch. 17, par. 6916)
22 Sec. 16. Levy for bonds. A governmental unit may levy a
23 tax for the payment of principal of and interest on general
24 obligation bonds or limited bonds at any time prior to March
25 1 of the calendar year during which the tax will be
26 collected. The county clerk shall accept the filing of the
27 ordinance levying such tax notwithstanding that such time is
28 subsequent to the end of the calendar year next preceding the
29 calendar year during which such tax will be collected. In
30 extending taxes for general obligation bonds, the county
31 clerk shall add to the levy for debt service on such bonds an
32 amount sufficient, in view of all losses and delinquencies in
33 tax collection, to produce tax receipts adequate for the
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1 prompt payment of such debt service.
2 (Source: P.A. 88-676, eff. 12-14-94.)
3 (30 ILCS 350/17) (from Ch. 17, par. 6917)
4 Sec. 17. Interest not debt; debt on Leases and
5 installment contracts.
6 (a) Interest not debt; debt on leases and installment
7 contracts. Interest on bonds shall not be included in any
8 computation of indebtedness of a governmental unit for the
9 purpose of any statutory provision or limitation. For bonds
10 consisting of leases and installment or financing contracts,
11 (1) that portion of payments made by a governmental unit
12 under the terms of a bond designated as interest in the bond
13 or the ordinance authorizing such bond shall be treated as
14 interest for purposes of this Section (2) where portions of
15 payments due under the terms of a bond have not been
16 designated as interest in the bond or the ordinance
17 authorizing such bond, and all or a portion of such payments
18 is to be used for the payment of principal of and interest on
19 other bonds of the governmental unit or bonds issued by
20 another unit of local government, such as a public building
21 commission, the payments equal to interest due on such
22 corresponding bonds shall be treated as interest for purposes
23 of this Section and (3) where portions of payments due under
24 the terms of a bond have not been designated as interest in
25 the bond or ordinance authorizing such bond and no portion of
26 any such payment is to be used for the payment of principal
27 of and interest on other bonds of the governmental unit or
28 another unit of local government, a portion of each payment
29 due under the terms of such bond shall be treated as interest
30 for purposes of this Section; such portion shall be equal in
31 amount to the interest that would have been paid on a
32 notional obligation of the governmental unit (bearing
33 interest at the highest rate permitted by law for bonds of
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1 the governmental unit at the time the bond was issued or, if
2 no such limit existed, 12%) on which the payments of
3 principal and interest were due at the same times and in the
4 same amounts as payments are due under the terms of the
5 bonds. The rule set forth in this Section shall be
6 applicable to all interest no matter when earned or accrued
7 or at what interval paid, and whether or not a bond bears
8 interest which compounds at certain intervals. For purposes
9 of bonds sold at amounts less than 95% of their stated value
10 at maturity, interest for purposes of this Section includes
11 the difference between the amount set forth on the face of
12 the bond as the original principal amount and the bond's
13 received for the sale of the bonds and their stated value at
14 maturity.
15 This subsection Section may be made applicable to bonds
16 issued prior to the effective date of this Act by passage of
17 an ordinance to such effect by the governing body of a
18 governmental unit.
19 (b) Purchase or lease of property. The governing body of
20 each governmental unit may purchase or lease either real or
21 personal property through agreements that provide that the
22 consideration for the purchase or lease may be paid through
23 installments made at stated intervals for a period of no more
24 than 20 years or another period of time authorized by law,
25 whichever is greater. Each governmental unit may issue
26 certificates evidencing the indebtedness incurred under the
27 agreements. The certificate shall be valid whether or not an
28 appropriation with respect thereto is included in any annual
29 or supplemental budget adopted by the governmental unit. The
30 governing body of each governmental unit may sell, convey,
31 and reacquire either real or personal property, upon any
32 terms and conditions and in any manner, as the governing body
33 shall determine, if the governmental unit will lease the
34 property, as authorized by this subsection or any other
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1 applicable law.
2 All indebtedness incurred under this subsection, when
3 aggregated with the existing indebtedness of the governmental
4 unit, may not exceed the debt limits provided by applicable
5 law.
6 (Source: P.A. 85-1419.)
7 (30 ILCS 350/17.5 new)
8 Sec. 17.5. Bond authorization by referendum. Whenever
9 applicable law provides that the authorization of or the
10 issuance of bonds is subject to either a referendum or
11 backdoor referendum, the approval, once obtained, remains (i)
12 for 5 years after the date of the referendum or (ii) for 3
13 years after the end of the petition period for a backdoor
14 referendum. This Section applies only to a referendum or a
15 backdoor referendum held after the effective date of this
16 amendatory Act of the 91st General Assembly.
17 Section 10. The Illinois Municipal Code is amended by
18 changing Section 11-61-3 as follows:
19 (65 ILCS 5/11-61-3) (from Ch. 24, par. 11-61-3)
20 Sec. 11-61-3. The corporate authorities of each
21 municipality having a population of less than 1,000,000
22 inhabitants shall have the express power to purchase or lease
23 either real estate or personal property for public purposes
24 through contracts which provide for the consideration for
25 such purchase or lease to be paid through installments to be
26 made at stated intervals during a certain period of time,
27 but, in no case, shall such contracts provide for the
28 consideration to be paid during a period of time in excess of
29 20 10 years nor shall such contracts provide for the payment
30 of interest at a rate of more than that permitted in "An Act
31 to authorize public corporations to issue bonds, other
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1 evidences of indebtedness and tax anticipation warrants
2 subject to interest rate limitations set forth therein",
3 approved May 26, 1970, as amended. The indebtedness incurred
4 under this Section when aggregated with existing indebtedness
5 may not exceed the debt limits provided in Division 5 of
6 Article 8 of this Code.
7 The amendatory Acts of 1972 and 1973 are not a limit upon
8 any municipality which is a home rule unit.
9 (Source: P.A. 84-283.)
10 Section 99. Effective date. This Act takes effect upon
11 becoming law.
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