HB4862 102ND GENERAL ASSEMBLY

LRB102 21956 HLH 31079 b

102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
HB4862

Introduced 1/27/2022, by Rep. Deanne M. Mazzochi

SYNOPSIS AS INTRODUCED:

New Act

Creates the Better Opportunities for Learning and Development (BOLD) Act. Provides that a governmental unit may establish a property assessed individualized learning opportunity program and create a BOLD area or BOLD areas under the program. Provides that, under the program, the governmental unit may enter into an assessment contract with the record owner of property within a BOLD area to finance or refinance one or more individualized learning opportunity for a resident who owns the property or a child or ward of the resident owner. Sets forth required provisions for the contract with the resident owner. Contains other provisions. Effective immediately.

A BILL FOR

AN ACT concerning finance.

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 Better Opportunities for Learning and Development (BOLD) Act.

Section 5. Definitions. As used in this Act:

"Assessment" means a special assessment imposed by a governmental unit pursuant to an assessment contract.

"Assessment contract" means a voluntary written contract between the applicable governmental unit (or a permitted assignee) and record owner governing the terms and conditions of financing and assessment under a program.

"Authority" means the Illinois Finance Authority.

"BOLD area" means an area designated by a governmental unit under Section 10.

"Capital provider" means any credit union, federally insured depository institution, insurance company, trust company, or other entity approved by a governmental unit or its program administrator or program administrators that finances or refinances an individualized learning opportunity by purchasing BOLD bonds issued by the governmental unit or the Authority for that purpose. "Capital provider" also means any special purpose vehicle that is directly or indirectly wholly owned by one or more of the entities listed in this definition or any bond underwriter.

"Educational instructor" shall mean any instructor or provider of curriculum content for an individualized learning opportunity.

"Governmental unit" means a county or municipality located in the State.

"Individualized learning opportunity" means any educational program of study directed toward students aged 5 through 18, as well as job training opportunities for those students.

Section 10. Property assessed individualized learning opportunity program; creation.

(a) Pursuant to the procedures provided in Section 15, a governmental unit may establish a property assessed individualized learning opportunity program and, from time to time, create a BOLD area or BOLD areas under the program.

(b) Under a program, the governmental unit may enter into an assessment contract with the record owner of property within a BOLD area to finance or refinance one or more individualized learning opportunity for a resident who owns the property or a child or ward of the resident owner. The assessment contract shall provide for the repayment of all or a portion of the cost of an individualized learning opportunity program through assessments upon the property benefited. The amount of the financing or refinancing may include any and all of the following: the cost of books and instruction; the cost of labor to provide the instruction; if online instruction is provided, the cost of a router and computer; application and administrative fees; financing fees; reserves; capitalized interest; costs of billing the assessment; and all other fees, costs, and expenses that may be incurred by the record owner pursuant to the provisions of the individualized learning opportunity; provided, however, that this amount in total may not exceed the lesser of $7,500 per year or 90% of the existing property tax levy by a local unit of government that provides educational services at the level of instruction in the prior year for the property, less expenses levied by the school district unit for pension payments and capital expenditures.

(c) A governmental unit may sell or assign, for consideration, any and all assessment contracts; the permitted assignee of the assessment contract shall have and possess the same delegable powers and rights at law or in equity as the applicable governmental unit would have if the assessment contract had not been assigned with regard to (i) the precedence and priority of liens evidenced by the assessment contract, (ii) the accrual of interest, and (iii) the fees and expenses of collection. The permitted assignee shall have the right to enforce such liens pursuant to subsection (a) of Section 30. No costs or attorney's fees incurred shall be assigned to the recipient of the permitted assignee as a result of any foreclosure action or other legal proceeding brought pursuant to this Act for each record owner subject to the proceedings. Because a current market value for the assessment contracts is presently unknown, a governmental unit or the Authority may sell or assign assessment contracts without competitive bidding or the solicitation of requests for proposals or requests for qualifications through December 31, 2030; however, on and after January 1, 2031, competitive bidding or the solicitation of requests for proposals or requests for qualifications shall be required thereafter.

(d) A program shall be administered by either one or more than one program administrators or the governmental unit, as determined by the governing body.

(e) If expenses are incurred for elementary or secondary education for a child or ward of a property owner for a period of at least 5 years, or for a period of at least 3 years for multiple students, a governing body may further allow for the creation of an amortization schedule where the assessment may be amortized on a schedule where payoff amounts are to be completed by the time the property owner reaches the age of 65, and where the assessment payoff shall be accelerated in the event of a sale or transfer of property.

Section 15. Program established.

(a) To establish a property assessed individualized learning opportunity, the governing body shall adopt a resolution or ordinance that includes all of the following:

(1) a finding that one or more property owners within the BOLD district is subject to a local school district or community college district levy, and that educational attainment, job training, or preferred curriculum choices are not currently provided within existing school districts;

(2) a statement of intent to facilitate access to educational funding (which may be from one or more program administrators or as otherwise permitted by this Act) to provide funds for individualized learning opportunities, which will be repaid by assessments on the property benefited with the agreement of the record owners subject to the limitations provided in subsection (b) of Section 10 above;

(3) a description of the proposed arrangements for financing the program through the issuance of BOLD bonds under or in accordance with Section 35; those BOLD bonds may be purchased by one or more capital providers;

(4) the types of individualized learning opportunities that may be financed or refinanced;

(5) a description of the territory within the BOLD area;

(6) a transcript of public comments if any discretionary public hearing on the proposed program was previously held by the governmental unit prior to the consideration of the resolution or ordinance establishing the program; and

(7) the report on the proposed program as described in Section 20; for this purpose, the resolution or ordinance may incorporate the report or an amended version thereof by reference and shall be available for public inspection.

(b) A property assessed individualized learning opportunity may be amended in accordance with the resolution or ordinance establishing the program.

Section 20. Program report. The report on the proposed program required under Section 15 shall include all of the following:

(1) a form of assessment contract between the governmental unit and record owner governing the terms and conditions of financing and assessment under the program;

(2) identification of one or more officials authorized to enter into an assessment contract on behalf of the governmental unit;

(3) after the first 2 years of operation, identification of the 5 most prevalent courses of study selected for the individualized learning opportunities, and the 5 most common ages or age ranges of those selecting the program in prior years;

(4) an application process and eligibility requirements for financing or refinancing individualized learning opportunities under the program;

(5) a method for determining interest rates on amounts financed or refinanced under assessment contracts, repayment periods, and the maximum amount of an assessment, if any;

(6) an explanation of the process for billing and collecting assessments;

(7) a plan to finance the program pursuant to the issuance of BOLD bonds under or in accordance with Section 35;

(8) information regarding all of the following, to the extent known, or procedures to determine the following in the future:

(A) any revenue source or reserve fund or funds to be used as security for BOLD bonds described in paragraph (7); and

(B) any application, administration, or other program fees to be charged to record owners participating in the program that will be used to finance and reimburse all or a portion of costs incurred by the governmental unit as a result of its program, but which may not exceed as to the property owner $250 or 5% of the amounts assessed, whichever is less;

(9) a requirement that the term of an assessment not exceed the period of one year; and that the assessment may not exceed 5% of the value of the property per year; provided that an assessment contract financing or refinancing multiple children's individualized learning opportunities may have a term that may be amortized over a period of five years, as calculated in accordance with the principles established by the program report;

(10) If the 5% limit is to be modified, a requirement for an appropriate ratio of the amount of the assessment to the greater of any of the following:

(A) the value of the property as determined by the office of the county assessor; or

(B) the value of the property as determined by an appraisal conducted by a licensed appraiser;

(11) a requirement that the record owner of property subject to a mortgage obtain written consent from the mortgage holder before participating in the program;

(12) provisions for marketing and participant education;

(13) provisions to avoid predatory lending practices; and

(14) quality assurance and antifraud measures.

Section 25. Assessment contracts with record owners of property.

(a) A record owner of property within the BOLD area may apply to the governmental unit or its program administrator or program administrators to finance or refinance an individualized learning opportunity under the governmental unit's program.

(b) A governmental unit may impose an assessment under a property assessed individualized learning opportunity only pursuant to the terms of a recorded assessment contract with the record owner of the property to be assessed.

(c) Before entering into an assessment contract with a record owner under a program, the governmental unit or its program administrator or program administrators shall verify that the applicable property is entirely within the BOLD area and receive evidence of all of the following:

(1) a description of the curriculum for the proposed individualized learning opportunity;

(2) that there are no delinquent taxes, special assessments, or water or sewer charges on the property;

(3) that there are no delinquent assessments on the program;

(4) whether there are any involuntary liens on the property, including, but not limited to, construction or mechanics liens, lis pendens or judgments against the record owner, environmental proceedings, or eminent domain proceedings;

(5) that no notices of default or other evidence of property-based debt delinquency have been recorded and not cured;

(6) that the record owner is current on all mortgage debt on the property, the record owner has not filed for bankruptcy in the last 2 years, and the property is not an asset in a current bankruptcy proceeding;

(7) that the individualized learning opportunity shall be performed under the supervision of an accredited program, certified educator in the State of Illinois or another State, and for job training opportunities that are supervised by a professional in the industry or a vocational educator in which the job training is being taught or other individual licensed under the Department of Financial and Professional Regulation, or who has been certified by a national professional organization, who has agreed to adhere to a set of terms and conditions through a process established by the governmental unit or its program administrator or program administrators;

(8) that the educational instructor or instructors providing the individualized learning opportunity has or have signed a written acknowledgment that the governmental unit or its program administrator or program administrators will not authorize final payment to the educational instructor or instructors until the governmental unit has received written confirmation from the record owner that the individualized learning opportunity was properly completed; and if any certification standard was agreed upon, that the student has achieved the applicable certification; provided, however, that the educational instructor or instructors retain all legal rights and remedies in the event there is a disagreement with the record owner;

(9) that the aggregate amount financed or refinanced under one or more assessment contracts beyond the tax levies that the property would already incur in connection with a local school district does not exceed 25% in relation to the greater of any of the following:

(A) the value of the property as determined by the office of the county assessor; or

(B) the value of the property as determined by an appraisal conducted by a licensed appraiser; and

(10) that there is a process for evaluation of the value and quality of the individualized learning opportunity.

(d) Before entering into an assessment contract with the governmental unit, the record owner shall provide to the mortgage holders of any existing mortgages encumbering or otherwise secured by the property a notice of the record owner's intent to enter into an assessment contract with the governmental unit, together with the maximum principal amount to be financed or refinanced and the maximum annual assessment necessary to repay that amount, along with an additional request that the mortgage holders of any existing mortgages consent to the record owner subjecting the property to the program. The governmental unit shall be provided with a copy or other proof of those notices and the written consent of the mortgage holder for the record owner to enter into the assessment contract which acknowledges that (i) the existing mortgage or mortgages for which the consent was received will be subordinate to the assessment contract and the lien created thereby and (ii) the governmental unit or its permitted assignee can foreclose the property if the assessments are not paid.

(e) The first recourse for securing funds to repay assessments associated with an individualized learning opportunity program under this Act are the existing property tax levies imposed each year by the local school district taxing body for that property owner, provided that neither the property owner, nor the property owner's children or wards, are currently attending the unit of local government for which a levy is being imposed.

(f) If the record owner has signed a certification that the governmental unit has complied with the provisions of this Section, then this shall be conclusive evidence as to compliance with these provisions, but shall not relieve any educational instructor or the governmental unit from any potential liability.

(g) If assessments cannot be paid by the property owner, best efforts shall be made to amortize the outstanding assessed amounts over the life of the owner up to the age of 65, with interest to accrue at a rate not to exceed 5% per year.

(h) The imposition of any assessment pursuant to this Act shall be exempt from any other statutory procedures or requirements that condition the imposition of special assessments or taxes against property, except as specifically set forth in this Act.

Section 30. Assessments constitute a lien; billing and collecting.

(a) An assessment contract shall be recorded with the county in which the BOLD area is located. An assessment imposed under a property assessed individualized learning opportunity pursuant to an assessment contract, including any interest on the assessment and any penalty, shall, upon recording of the assessment contract in the county in which the BOLD area is located, constitute a lien against the property on which the assessment is imposed until the assessment, including any interest or penalty, is paid in full. The lien of the assessment contract shall run with the property until the assessment is paid in full and a satisfaction or release for the same has been recorded by the governmental unit or its program administrator or program administrators and shall have the same lien priority and status as other property tax and special assessment liens as provided in the Property Tax Code. The governmental unit (or any permitted assignee) shall have all rights and remedies in the case of default or delinquency in the payment of an assessment as it does with respect to delinquent property taxes and other delinquent special assessments as set forth in Article 9 of the Illinois Municipal Code, including the lien, sale, and foreclosure remedies described in that Article, provided that, if the individualized learning opportunity involves students under the age of 18, no foreclosure action may occur until the student reaches the age of majority; or five years from the date on which the student has completed the individualized learning opportunity that generated the assessment, whichever is later. When the assessment, including any interest and penalty, is paid in full, the lien shall be removed and released from the property.

(b) The assessment shall be imposed by the governmental unit against each lot, block, tract, and parcel of land set forth in the assessment contract.

(c) Assessments created under this Act may be billed and collected as follows:

(1) A county which has established a program may include assessments in the regular property tax bills of the county. The county collector of the county in which a BOLD area is located may bill and collect assessments with the regular property tax bills of the county if requested by a municipality within its jurisdiction; no municipality is required to make such a request of its county collector. If the county collector agrees to bill and collect assessments with the regular property tax bills of the county, then the applicable assessment contract shall be filed with the county collector and the annual amount due as set forth in an assessment contract shall become due in installments at the times property taxes shall become due in accordance with each regular property tax bill payable during the year in which such assessment comes due;

(2) If the county collector does not agree to bill and collect assessments with the regular property tax bills of the county or the governmental unit in which the BOLD area is located declines to request the county collector to do so, then the governmental unit shall bill and collect the assessments, either directly or as permitted in paragraph (3) of this subsection, and the annual amount due as set forth in an assessment contract shall become due in installments on or about the times property taxes would otherwise become due in accordance with each regular property tax bill payable during the year in which such assessment comes due; or

(3) If a governmental unit is billing and collecting assessments pursuant to paragraph (2) of this subsection, assessment installments may be billed and collected by the governmental unit's program administrator or program administrators or another third party.

The assessment installments for assessments billed as provided for under any paragraph of this subsection shall be payable at the times and in the manner as set forth in the applicable bill.

(d) If a governmental unit, a program administrator, or another third party is billing and collecting assessments pursuant to subsection (b), and the applicable assessment becomes delinquent during any year, the applicable collector shall, on or before the date in such year required by the county in which the BOLD area is located, make a report in writing to the general office of the county in which the applicable property subject to the assessment is situated and authorized by the general revenue laws of this State to apply for judgment and sell lands for taxes due the county and the State, of the assessments or installments thereof the applicable collector has billed for and not received as required under the applicable bill, including any interest or penalties that may be due as set forth in the applicable assessment contract, unless otherwise limited in this Act. This report shall be certified by the applicable collector and shall include statements that (i) the report contains true and correct list of delinquent assessments that the collector has not received as required by the applicable bill and (ii) an itemization of the amount of the delinquent assessment, including interest and penalties, if applicable. The report of the applicable collector, when so made, shall be prima facie evidence that all requirements of the law in relation to making the report have been complied with and that the assessments or the matured installments thereof, and the interest thereon, and the interest accrued on installments not yet matured, mentioned in the report, are due and unpaid. Upon proper filing of such report, at the direction of the governmental unit or its permitted assignee, the county collector shall enforce the collection of the assessments in the manner provided by law.

(e) Payment received by mail and postmarked on or before the required due date is not delinquent. From and after the due date of any installment of an assessment, an additional rate of interest of 1/2% per month above the prime rate established by the Federal Reserve may be imposed with respect to the delinquent amount of such installment, which shall be payable to the applicable governmental unit or other permitted assignee as set forth in the applicable bill, unless otherwise limited by this Act.

Section 35. Issuance of BOLD bonds.

(a) Except as provided for in subsection (k), a governmental unit shall issue BOLD bonds under this Act, or the Authority shall issue BOLD bonds in accordance with this Act and pursuant to subsection (d) of Section 825-65 of the Illinois Finance Authority Act, in either case to finance or refinance energy projects under a property assessed individualized learning opportunity program.

(b) BOLD bonds issued under this Act or in accordance with this Act and pursuant to subsection (d) of Section 825-65 of the Illinois Finance Authority Act:

(1) shall not be general obligations of the governmental unit or the Authority, as applicable, but shall be secured by the following:

(A) payments under one or more assessment contracts on benefited property or properties within the BOLD area or BOLD areas specified;

(B) if applicable, municipal bond insurance, letters of credit, or public or private guarantees or sureties;

(C) if applicable, revenue sources or reserves established by the governmental unit or the Authority from bond proceeds or other lawfully available funds; and

(D) the property owner's share of a property tax levy that has been imposed or would be imposed by a local school district.

(2) may be secured on a parity basis with BOLD bonds of another series or subseries issued by the governmental unit or the Authority pursuant to the terms of a master indenture entered into as authorized by an ordinance or resolution adopted by the governing body or the Authority, as applicable;

(3) may bear interest at any rate or rates not to exceed such rate or rates as the governing body or the Authority shall determine by ordinance or resolution, unless otherwise limited by this Act;

(4) may pay interest upon the date or dates described in such BOLD bonds;

(5) shall have a maturity no more than 20 years from the date of issuance;

(6) may be subject to redemption with or without premium upon such terms and provisions as may be provided under the terms of a master indenture entered into as authorized by an ordinance or resolution adopted by the governing body or the Authority, as applicable, including, without limitation, terms as to the order of redemption (numerical, pro rata, by series, subseries, or otherwise) and as to the timing thereof;

(7) shall be negotiable instruments under Illinois law and be subject to the Registered Bond Act; and

(8) may be payable either serially or at term, or any combination thereof, in such order of preference, priority, lien position, or rank (including, without limitation, numerical, pro rata, by series, subseries, or otherwise) as the governing body or Authority may provide.

(c) A pledge of assessments, funds, or contractual rights made by a governmental unit or the Authority in connection with the issuance of BOLD bonds under this Act or in accordance with this Act and pursuant to Section 825-65 of the Illinois Finance Authority Act constitutes a statutory lien on the assessments, funds, or contractual rights so pledged in favor of the person or persons to whom the pledge is given, without further action taken by a governmental unit or the Authority, as applicable. The statutory lien is valid and binding against all other persons, with or without notice.

(d) The State pledges to and agrees with the holders of any BOLD bonds issued under this Act or in accordance with the Act and pursuant to Section 825-65 of the Illinois Finance Authority Act that the State will not limit or alter the rights and powers vested in governmental units by this Act or in the Authority in accordance with this Act and pursuant to Section 825-65 of the Illinois Finance Authority Act so as to impair the terms of any contract made by a governmental unit or by the Authority with those bondholders or in any way to impair the rights or remedies of those bondholders until the BOLD bonds, together with the interest thereon, and all costs and expenses in connection with any actions or proceedings by or on behalf of those bondholders are fully met and discharged.

(e) BOLD bonds issued under this Act or in accordance with this Act and pursuant to Section 825-65 of the Illinois Finance Authority Act further essential public and governmental purposes, including, but not limited to, expanding opportunity for educational development; workforce development; educational opportunity; improving access to gifted students to challenging curriculum; assisting special needs students whose current curriculum options are not adequately serving their needs; and attempting to more equitably distribute educational benefits, particularly to lower income homeowners whose children would otherwise be obligated to attend failing schools, and increased employment.

(g) A capital provider can assign its rights to purchase BOLD bonds issued by the governmental unit or the Authority to a designated transferee.

(h) A law firm shall be retained to give a written bond opinion in connection with any BOLD bond issued under this Act or in accordance with this Act and pursuant to Section 825-65 of the Illinois Finance Authority Act in form and substance as requested by the issuer of the BOLD bonds or the capital provider.

(i) BOLD bonds issued by the Authority in accordance with this Act and pursuant to subsection (d) of Section 825-65 of the Illinois Finance Authority Act shall not be entitled to the benefits of Section 825-75 of the Illinois Finance Authority Act.

(j) BOLD bonds issued by a governmental unit may otherwise have any attributes permitted to bonds under the Local Government Debt Reform Act, as the governing body may provide.

(k) Interim financing prior to the issuance of BOLD bonds authorized by this Section may be provided only by a warehouse fund, except that warehouse funds established by capital providers shall only interim finance energy projects secured by one or more assessment contracts for 36 months or less from the date of recording of the applicable assessment contract.

Section 40. Supplemental powers.

(a) The provisions of this Act are intended to be supplemental and in addition to all other powers or authorities granted to any governmental unit, shall be construed liberally, and shall not be construed as a limitation of any power or authority otherwise granted.

(b) A governmental unit may use the provisions of this Act by referencing this Act in the resolution or ordinance described in Section 15.

Section 45. Recital. BOLD bonds that are issued under this Act or in accordance with this Act and pursuant to Section 825-65 of the Illinois Finance Authority Act may contain a recital to that effect and any such recital shall be conclusive as against the issuer thereof and any other person as to the validity of the BOLD bonds and as to their compliance with the provisions of this Act and, as applicable, the provisions of Section 825-65 of the Illinois Finance Authority Act.

Section 50. Validation. All actions taken by the Authority or any governmental unit under this Act prior to the effective date of this Act, including, without limitation, creation of a property assessed individualized learning opportunity program under Section 10 and Section 15, preparation and approval of a report on the proposed program under Section 20, entering into assessment contracts under Section 25, and issuance of bonds, notes, and other evidences of indebtedness under Section 35 shall be unaffected by the enactment of an amendatory Act of a subsequent General Assembly and shall continue to be legal, valid, and in full force and effect.

Section 99. Effective date. This Act takes effect upon becoming law.