093_HB3007

                                     LRB093 06968 SJM 07114 b

 1        AN ACT concerning economic development.

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

 4        Section  5.  The Illinois Farm Development Act is amended
 5    by changing Section 12.2 as follows:

 6        (20 ILCS 3605/12.2) (from Ch. 5, par. 1212.2)
 7        Sec. 12.2.  State Guarantees for  loans  to  farmers  and
 8    agribusiness; eligibility.
 9        (a)  The   Authority   is   authorized   to  issue  State
10    Guarantees to lenders  for  loans  to  eligible  farmers  and
11    agribusinesses  for  purposes  set forth in this Section. For
12    purposes of this Section,  an  eligible  farmer  shall  be  a
13    resident  of Illinois (i) who is principal operator of a farm
14    or land, at least 50% of whose annual gross income is derived
15    from farming, (ii) whose annual total sales  of  agricultural
16    products,  commodities,  or  livestock  exceeds  $20,000, and
17    (iii) whose net worth does not exceed $500,000.  An  eligible
18    agribusiness  shall  be  that as defined in Section 2 of this
19    Act.
20        The Authority may approve  applications  by  farmers  and
21    agribusinesses  that  promote  diversification  of  the  farm
22    economy  of  this State through the growth and development of
23    new crops or livestock not customarily grown or  produced  in
24    this  State or that emphasize a vertical integration of grain
25    or livestock produced or raised in this State into a finished
26    agricultural product for consumption or use.  "New  crops  or
27    livestock  not  customarily  grown or produced in this State"
28    shall not include corn, soybeans, wheat, swine,  or  beef  or
29    dairy  cattle.  "Vertical  integration  of grain or livestock
30    produced or raised in this State" shall include  any  new  or
31    existing grain or livestock grown or produced in this State.
 
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 1        Lenders  shall  apply  for  the State Guarantees on forms
 2    provided by the Authority, certify that the  application  and
 3    any  other  documents submitted are true and correct, and pay
 4    an administrative fee as determined by  the  Authority.   The
 5    applicant shall be responsible for paying any fees or charges
 6    involved   in   recording   mortgages,   releases,  financing
 7    statements, insurance for secondary  market  issues  and  any
 8    other  similar  fees or charges as the Authority may require.
 9    The application shall at a minimum contain  the  farmer's  or
10    agribusiness'  name,  address,  present  credit and financial
11    information,  including  cash  flow   statements,   financial
12    statements,   balance   sheets,  and  any  other  information
13    pertinent to the application, and the collateral to  be  used
14    to  secure the State Guarantee.  In addition, the lender must
15    agree to charge an interest rate, which may vary, on the loan
16    that the Authority determines to be below the market rate  of
17    interest  generally  available  to  the borrower. If both the
18    lender and applicant agree, the interest rate  on  the  State
19    Guarantee  Loan  can be converted to a fixed interest rate at
20    any time during the term of the loan.
21        Any State Guarantees  provided  under  this  Section  (i)
22    shall  not exceed $1,000,000 $500,000 per farmer or an amount
23    as determined by the Authority on a case-by-case basis for an
24    agribusiness, (ii) shall not exceed a term of 15  years,  and
25    (iii) shall be subject to an annual review and renewal by the
26    lender  and  the Authority; provided that only one such State
27    Guarantee shall be made per farmer  or  agribusiness,  except
28    that  additional State Guarantees may be made for purposes of
29    expansion of projects financed in part by a previously issued
30    State Guarantee.  No State Guarantee shall be revoked by  the
31    Authority  without  a  90  day  notice,  in  writing,  to all
32    parties.  The lender shall not call  due  any  loan  for  any
33    reason   except   for   lack   of  performance,  insufficient
34    collateral, or maturity.  A lender may review and withdraw or
 
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 1    continue with a State Guarantee on an annual basis after  the
 2    first  5  years  following closing of the loan application if
 3    the loan contract provides for an interest  rate  that  shall
 4    not  vary.   A lender shall not withdraw a State Guarantee if
 5    the loan contract provides for  an  interest  rate  that  may
 6    vary, except for reasons set forth herein.
 7        (b)  The   Authority  shall  provide  or  renew  a  State
 8    Guarantee to a lender if:
 9             i.  A fee equal to 25 basis points on  the  loan  is
10        paid to the Authority on an annual basis by the lender.
11             ii.  The  application provides collateral acceptable
12        to the Authority that is at least equal  to  the  State's
13        portion of the Guarantee to be provided.
14             iii.  The  lender  assumes  all  responsibility  and
15        costs  for  pursuing  legal action on collecting any loan
16        that is delinquent or in default.
17             iv.  The lender is responsible for the first 15%  of
18        the outstanding principal of the note for which the State
19        Guarantee has been applied.
20        (c)  There   is  hereby  created  outside  of  the  State
21    Treasury a special fund to be known as  the  Illinois  Farmer
22    and  Agribusiness  Loan  Guarantee Fund.  The State Treasurer
23    shall be custodian of this Fund.  Any amounts in the Fund not
24    currently needed to meet the obligations of the Fund shall be
25    invested as provided by law, and  all  interest  earned  from
26    these  investments shall be deposited into the Fund until the
27    Fund reaches the maximum  amounts  authorized  in  this  Act;
28    thereafter,  interest  earned  shall  be  deposited  into the
29    General  Revenue  Fund.  After  September  1,  1989,   annual
30    investment earnings equal to 1.5% of the Fund shall remain in
31    the  Fund  to be used for the purposes established in Section
32    12.3 of this Act.
33        The Authority is authorized to transfer such  amounts  as
34    are necessary to satisfy claims from available appropriations
 
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 1    and  from fund balances of the Farm Emergency Assistance Fund
 2    as of June 30  of  each  year  to  the  Illinois  Farmer  and
 3    Agribusiness  Loan  Guarantee Fund to secure State Guarantees
 4    issued under this Section and Sections 12.4 and 12.5. If  for
 5    any   reason   the   General   Assembly   fails  to  make  an
 6    appropriation sufficient to meet these obligations, this  Act
 7    shall  constitute an irrevocable and continuing appropriation
 8    of an amount necessary to secure guarantees as defaults occur
 9    and  the  irrevocable  and  continuing  authority  for,   and
10    direction to, the State Treasurer and the Comptroller to make
11    the   necessary   transfers   to   the  Illinois  Farmer  and
12    Agribusiness  Loan  Guarantee  Fund,  as  directed   by   the
13    Governor, out of the General Revenue Fund.
14        In  the  event  of  default  by  the  borrower  on  State
15    Guarantee  Loans under this Section, Section 12.4, or Section
16    12.5, the lender shall be  entitled  to,  and  the  Authority
17    shall direct payment on, the State Guarantee after 90 days of
18    delinquency.   All  payments  by  the Authority shall be made
19    from the Illinois Farmer and Agribusiness Loan Guarantee Fund
20    to satisfy claims against the State Guarantee.
21        It shall be the responsibility of the lender  to  proceed
22    with  the collecting and disposing of collateral on the State
23    Guarantee under this Section, Section 12.4, or  Section  12.5
24    within  14 months of the time the State Guarantee is declared
25    delinquent.  If the lender does not dispose of the collateral
26    within 14 months, the lender shall be liable to repay to  the
27    State  interest on the State Guarantee equal to the same rate
28    that the lender charges on the State Guarantee, provided that
29    the Authority shall have the authority to extend the 14 month
30    period for a lender in the case of bankruptcy or  extenuating
31    circumstances.  The  Fund shall be reimbursed for any amounts
32    paid under this Section, Section 12.4, or Section  12.5  upon
33    liquidation of the collateral.
34        The  Authority,  by  resolution  of the Board, may borrow
 
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 1    sums from the Fund and provide for repayment as soon  as  may
 2    be  practical  upon  receipt  of  payments  of  principal and
 3    interest by a borrower on State Guarantee  Loans  under  this
 4    Section, Section 12.4, or Section 12.5. Money may be borrowed
 5    from the Fund by the Authority for the sole purpose of paying
 6    certain  interest costs for borrowers associated with selling
 7    a loan subject to  a  State  Guarantee  under  this  Section,
 8    Section 12.4, or Section 12.5 in a secondary market as may be
 9    deemed reasonable and necessary by the Authority.
10        (d)  Notwithstanding  the provisions of this Section 12.2
11    with respect to the farmers, agribusinesses, and lenders  who
12    may  obtain  State  Guarantees,  the Authority may promulgate
13    rules    establishing    the    eligibility    of    farmers,
14    agribusinesses, and  lenders  to  participate  in  the  State
15    Guarantee  program  and  the terms, standards, and procedures
16    that will apply, when  the  Authority  finds  that  emergency
17    conditions  in Illinois agriculture have created the need for
18    State Guarantees pursuant to terms, standards, and procedures
19    other than those specified in this Section.
20    (Source: P.A. 90-325, eff. 8-8-97; 91-386, eff. 1-1-00.)

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