HB5924 95TH GENERAL ASSEMBLY

LRB095 17691 JAM 43766 b

95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
HB5924

Introduced , by Rep. Brent Hassert - Roger L. Eddy - Rosemary Mulligan - Sidney H. Mathias - Dennis M. Reboletti

SYNOPSIS AS INTRODUCED:

New Act

Creates the Economic Stabilization Trust Act. Establishes the Economic Stabilization Trust, governed by a board of trustees consisting of the Director of Commerce and Economic Opportunity and gubernatorial appointees, to consider and approve or deny applications for financial assistance to businesses that cannot obtain sufficient financial assistance from financial institutions and public development agencies.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning State government.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Economic Stabilization Trust Act.

Section 5. Definitions. As used in this Act:

"Board" means the board of trustees of the Economic Stabilization Trust.

"Trust" means the Economic Stabilization Trust.

Section 10. Establishment. The Economic Stabilization Trust is established within State government.

Section 15. Board of Trustees; officers; duties; liabilities; public records.

(a) The Trust shall be governed by and its powers exercised by a board of trustees that shall consist of the Director of Commerce and Economic Opportunity and 4 persons appointed by the Governor, who shall together be experienced in the financial analysis of businesses, turnarounds of troubled businesses, the management of businesses, and the organization and operation of employee-owned businesses; provided that each trustee shall be experienced and knowledgeable in at least one of those areas. Each trustee appointed by the Governor shall serve for 4 years, except that in making the initial appointments the Governor shall appoint one trustee to serve for 2 years, one trustee to serve for 3 years, and 2 trustees to serve for 4 years. Any person appointed to fill a vacancy in the office of trustee shall serve for only the unexpired term of that trustee. A trustee may be reappointed. A trustee may be removed from his appointment by the Governor for cause. The Governor shall from time to time designate one trustee as chairperson of the board of trustees.

(b) Three of the trustees of the Trust constitute a quorum, and the affirmative vote of 3 trustees is necessary for any action to be taken by the Trust.

(c) Trustees shall receive no compensation, but each is entitled to reimbursement for his or her actual and necessary expenses incurred in the performance of his or her official duties.

(d) The Trust may invest in, purchase from, sell to, borrow from, loan to, contract with, or otherwise deal with any person or entity in which any trustee is in any way interested or involved; provided that the interest or involvement is disclosed in advance to the members of the board and recorded in the minutes of the board; and provided further that no trustee having such an interest or involvement may participate in any decision of the board relating to that person or entity.

(e) The trustees shall elect a secretary and treasurer and may elect or appoint other officers as they may deem necessary, none of whom shall be required to be members of the board. The secretary shall keep a record of the proceedings of the board and shall be custodian of all books, documents, and papers filed by the trustees and of its minute book and seal. The secretary shall cause copies to be made of all minutes and other records and documents of the Trust and shall certify that those copies are true copies, and all persons dealing with the Trust may rely upon the certification. The treasurer shall be the chief financial and accounting officer of the Trust and shall be in charge of its moneys, books of account, and accounting records.

(f) All officers and employees of the Trust having access to its cash and negotiable securities shall give bond to the Trust at its expense in such amounts and with such surety as the board may prescribe. The persons required to give bond may be included in one or more blanket or scheduled bonds.

(g) Trustees shall not be liable to the State or to any other person as a result of their activities, whether ministerial or discretionary, as trustees, except for willful dishonesty or intentional violations of the law. The Trust may purchase liability insurance for trustees, officers, and employees and may indemnify those persons against claims of others.

(h) Any documentary materials, data, or conversations whatsoever made or received by any trustee or employee of the Trust and consisting of, or to the extent that the materials, data, or conversations consist of, trade secrets or commercial or financial information regarding the operation of any business conducted by an applicant for assistance that the Trust is empowered to render or regarding the competitive position of the applicant in a particular field of endeavor, shall not be deemed public records of the Trust and specifically are exempt from the Freedom of Information Act. Any discussion or consideration of an applicant's trade secrets or commercial or financial information may be held by the trustees in a closed meeting, but the purpose of any such closed meeting shall be set forth in the official minutes of the Trust and no business that is directly related to such purpose shall be transacted nor shall any vote be taken during the closed meeting.

Section 20. Trust employees. The board shall employ an executive director to serve as the chief executive, administrative, and operational officer of the Trust. The executive director shall attend meetings of the Trust, and shall direct the resources and staff of the Trust to achieve the purposes of this Act.

Section 25. Trust purposes; loan loss standards.

(a) The purposes of the Trust are:

(1) To provide flexible high risk financing necessary to implement a change of ownership, a corporate restructuring, or a turnaround plan for an economically viable but troubled business that faces the likelihood of a large employment loss, plant closure, or failure without a change of ownership, corporate restructuring, or turnaround plan. The Trust may also provide assistance to firms in specific mature industries for the purpose of technological investment or upgrading of management operations in order for the business to maintain future economic stability. The financial participation of the Trust is aimed at supplementing private financial institutions and public economic development agencies when those institutions and agencies are not able to provide all the financing or bear all of the risk necessary to transfer ownership, restructure, or turnaround a business in a situation where the business might otherwise fail or greatly reduce its employment.

(2) To provide flexible high risk financing in connection with the start-up of employee-owned businesses or the implementation of employee-ownership projects. The financial participation of the Trust is aimed at supplementing private financial institutions and public economic development agencies when those institutions and agencies are not able to provide all the financing or bear all of the risk necessary to start-up an employee-owned business or implement an employee-ownership project. Not less than 10% of the financing provided pursuant to this Act shall be targeted to businesses that are employee-owned businesses; provided that any portion of that 10% that is not expended for the purposes of employee-owned business may be expended for other purposes authorized in this Act.

(b) In the performance of its purposes, the Trust shall be deemed to be investing not on the basis of a direct financial return on its investment but in order to reduce the social costs of a large employment loss, plant closure or business failure and to obtain the financial benefits the State receives from maintaining the operations and employment of viable businesses. The Trust shall not be held to the loan loss standards of private commercial lenders.

Section 30. Trust powers. The Trust shall have the power to:

(1) Make, amend, and repeal rules for the management of its affairs.

(2) Adopt an official seal.

(3) Sue and be sued, in its own name.

(4) Make contracts and execute all instruments necessary or convenient for the carrying out of its business.

(5) Enter into agreements or other transactions with any federal, State, or local government agency.

(6) Acquire real property, or an interest therein, by purchase or foreclosure when acquisition is necessary or appropriate to protect or secure any investment or loan in which the Trust has an interest; to sell, transfer, and convey any real property to a buyer, and, in the event a sale, transfer, or conveyance cannot be effected with reasonable promptness or at a reasonable price, to lease the property to a tenant.

(7) Invest funds not required for immediate disbursement in investments as may be lawful for fiduciaries in the State.

(8) Appoint officers, employees, consultants, agents, and advisors and prescribe their duties and fix their compensation within the limitations provided by law.

(9) Appear in its own behalf before boards, commissions, departments, or other agencies of local, State, or federal government.

(10) Consent, whenever it deems it necessary or desirable in the fulfillment of the purposes of this Act, to the modification with respect to rate of interest, time of payment of any installment of principal or interest, or any other terms of any contract or agreement of any kind to which the Trust is a party.

(11) Apply for and accept grants, donations, and bequests of money, property, labor, or other things of value to be held, used, and applied for the purposes of this Act; receipt of donations and grants shall be detailed in the annual report of the Trust, including the identity of the donor, the nature of the transaction, and any conditions attached thereto.

(12) Make loans to or otherwise finance or invest in any business or person seeking to purchase a business to further the purposes of this Act; provided that loans or investments comply with the provisions of this Act.

(13) Establish and collect fees, charges, and interest rates the Trust determines reasonable.

(14) Require, by contract in any financing agreement or otherwise, specific operational activities, financial actions, or management changes as conditions for the receipt of any loan, financing, or investment from the Trust.

(15) Do any and all things necessary or convenient to carry out its purposes and exercise the powers expressly granted under this Act.

Section 35. Application for financing from Trust; review; approval or denial. Any business or person seeking financing from the Trust shall submit to the executive director a complete application for financing and any other information the board shall request. The board shall review the application for financing and, based upon the information submitted and any additional investigation the trustees may deem necessary, approve or deny the application subject to the following requirements:

(1) Before approving an application for assistance in connection with the purchase of a troubled business, the board shall determine and incorporate in its minutes that:

(A) the business is likely to experience a large loss of employment, plant closure, or failure without the loan financing or investment by the Trust;

(B) the business within a specific mature industry requires assistance for the purpose of technological investment or upgrading of management operations in order for the business to maintain future economic stability;

(C) the business or person seeking to purchase the business has taken or will take actions the board deems necessary to insure the business has a reasonable chance to continue as a successful business, including, but not limited to, changes in its operations, financing, or management, and that those actions are included as a condition for financing by the Trust in the financing agreement; and

(D) the business or person seeking to purchase the business has made diligent efforts to obtain the financing necessary to continue its operations or transfer ownership of the business from private financial institutions and public economic development agencies, and such financing is unavailable or has been offered on terms that would prevent the successful continuation or change in ownership of the business.

(2) Before approving an application for assistance in connection with an employee-owned business or an employee-ownership project, the board shall consult with the executive director and after receiving the recommendation of the executive director, shall determine and incorporate in its minutes that:

(A) the business or person seeking assistance has taken or will take actions the board and the executive director deem necessary to insure that the employee-ownership project has a reasonable chance to succeed; and

(B) except with respect to assistance for pre-feasibility and feasibility studies, that the business or person has made diligent efforts to obtain the financing necessary to institute or implement the employee-ownership project from private financial institutions and public economic development agencies, and that financing is unavailable or has been offered on terms that would prevent the successful institution or implementation of the project.

Section 40. Annual report; audit.

(a) The Trust shall annually submit a complete and detailed report of the Trust's activities within 90 days after the end of each fiscal year to the Governor, to the Clerk of the House of Representatives, and to the Secretary of the Senate. The report shall include (i) all the businesses or persons that received financing from the Trust, (ii) the number of direct jobs created, saved, or maintained, (iii) the indirect employment created, saved, or maintained, (iv) the location and wage level of direct jobs created, saved, or maintained, and (v) the fiscal benefits to the State in the form of tax revenues generated and social welfare expenditure avoided as a result of the business and employment maintained by the Trust.

(b) The Trust is subject to a biennial audit by the Auditor General.