96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
HB1076


 
Introduced 2/11/2009, by Rep. Timothy L. Schmitz
 
SYNOPSIS AS INTRODUCED:
 		








  



30 ILCS 550/3









    Amends the Public Construction Bond Act. Provides that refund of a cash bond is subject to satisfaction of the requirements of the bond. Provides that bonds, irrevocable letters of credit, surety bonds, and letters of commitment are deemed to contain undertakings set forth in the Act and persons furnishing material or performing labor have a right to sue thereon.
















LRB096 10449 RCE 20621 b

















 


 


A BILL FOR









 











HB1076

LRB096 10449 RCE 20621 b






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    AN ACT concerning finance.

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


 
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    Section 5. The Public Construction Bond Act is amended  by 
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changing Section 3 as follows:
 



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    (30 ILCS 550/3)



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    Sec. 3. Builder or developer cash bond or other surety. 

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    (a) A county or municipality may not require a cash bond, 
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irrevocable
letter of credit, surety bond, or letter of 
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commitment issued by a bank,
savings and loan association, 
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surety, or insurance company from a builder or
developer to

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guarantee completion of a project improvement when the builder 
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or developer
has filed with the county or municipal clerk a

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current, irrevocable letter of credit, surety bond, or letter 
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of commitment
issued by a bank, savings and loan association, 
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surety, or insurance company,
deemed good and sufficient by the 
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county or
municipality accepting such security, in an amount 
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equal
to or greater than 110% of the amount of the bid on each 
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project improvement.
A builder or developer has the option to 
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utilize a
cash bond, irrevocable letter of credit,
surety bond, 
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or letter of commitment, issued by a bank, savings and loan

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association, surety, or insurance company, deemed good and

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sufficient
by the county or municipality, to
satisfy any cash 
 


 






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bond requirement established by a county or municipality.

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Except for a municipality or county with a population of 
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1,000,000 or more,
the county or municipality must approve and 
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deem a surety or
insurance company good and sufficient for the 
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purposes set forth in this
Section if the surety or insurance 
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company is authorized by the
Illinois Department of Insurance 
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to sell and issue sureties in the State of
Illinois.

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    (b) If a county or municipality receives a cash bond, 
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irrevocable letter
of credit, or surety bond from a builder or

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developer to
guarantee completion of a project improvement, the 
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county or municipality shall
(i) register
the bond under
the 
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address of the project and the construction permit number and 
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(ii) give the
builder or developer a receipt for the bond.  The 
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county or municipality shall
establish and
maintain a separate 
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account for all cash bonds received from builders and

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developers to guarantee completion of a project improvement.

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    (c) The county or municipality shall refund a cash bond to 
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a builder or
developer, or release the irrevocable letter of 
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credit or surety bond,
within
60 days after the builder or 
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developer notifies the county or municipality in
writing of the

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completion of the project improvement for which the bond
was 
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required, subject to satisfaction of the requirements of the 
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bond.
For these purposes, "completion" means that the county or 
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municipality has
determined
that the project improvement for 
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which the bond was required is complete or a
licensed engineer 
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or licensed architect has certified to the builder or
developer 
 


 






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and the county or municipality that the project improvement has 
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been
completed to the
applicable codes and ordinances.
The 
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county or municipality shall pay interest to the builder or 
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developer,
beginning 60 days
after the builder or developer 
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notifies the county or municipality in writing
of the 
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completion
of the
project improvement, on any bond not refunded 
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to a builder or developer, at
the rate of 1%
per month.

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    (c-5) Each such cash bond, irrevocable letter of credit, 
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surety bond, or letter of commitment is deemed to contain the 
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provisions set forth in Section 1 of this Act for bonds 
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required by that Section whether those provisions are inserted 
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in the instrument or not. Further, every person furnishing 
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material or performing labor, either as an individual or as a 
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subcontractor for any contractor that is required to furnish 
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such an instrument under this Section, shall have the same 
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right to sue thereon, and in the same manner, as is provided 
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for actions brought pursuant to Section 2 of this Act. 
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    (d) A home rule county or municipality may not require or 
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maintain cash
bonds, irrevocable
letters of credit, surety 
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bonds, or letters of commitment issued by a bank,
savings and 
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loan association, surety, or insurance company
from builders
or 
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developers in a manner inconsistent with this Section.  This 
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Section
supercedes and controls over other provisions of the 
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Counties Code or
Illinois Municipal Code as they apply to and 
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guarantee completion of a project
improvement that is required 
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by the county or municipality, regardless of
whether the 
 


 






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project improvement is a condition of annexation agreements.

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This Section is a
denial and limitation under subsection (i) of 
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Section
6 of Article VII of the Illinois Constitution on the 
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concurrent exercise by a
home rule
county or municipality of 
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powers and functions exercised by the State.

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(Source: P.A. 92-479, eff. 1-1-02.)