Illinois General Assembly - Full Text of HB3034
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Full Text of HB3034  93rd General Assembly

HB3034 93rd General Assembly


                                     LRB093 06960 SJM 07106 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 12.1 as follows:

 6        (20 ILCS 3605/12.1) (from Ch. 5, par. 1212.1)
 7        Sec. 12.1.  State Guarantees for existing debt.
 8        (a)  The  Authority  is   authorized   to   issue   State
 9    Guarantees  for farmers' existing debts held by a lender. For
10    the purposes of this Section, a farmer shall be a resident of
11    Illinois, who is a principal operator of a farm or  land,  at
12    least  50%  of  whose  annual  gross  income  is derived from
13    farming and whose debt to asset ratio shall not be less  than
14    40%, except in those cases where the applicant has previously
15    used  the  guarantee  program there shall be no debt to asset
16    ratio or  income  restriction.   For  the  purposes  of  this
17    Section,   debt   to  asset  ratio  shall  mean  the  current
18    outstanding liabilities of the farmer divided by the  current
19    outstanding  assets  of  the  farmer.   The  Authority  shall
20    establish  the  maximum permissible debt to asset ratio based
21    on criteria established by the Authority.
22        Lenders shall apply for the  State  Guarantees  on  forms
23    provided  by  the  Authority and certify that the application
24    and any other documents submitted are true and correct.   The
25    lender  or  borrower,  or  both  in combination, shall pay an
26    administrative fee  as  determined  by  the  Authority.   The
27    applicant shall be responsible for paying any fees or charges
28    involved   in   recording   mortgages,   releases,  financing
29    statements, insurance for secondary  market  issues  and  any
30    other  similar  fees or charges as the Authority may require.
31    The application shall at a minimum contain the farmer's name,
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 1    address, present credit and financial information,  including
 2    cash  flow  statements, financial statements, balance sheets,
 3    and any other information pertinent to the  application,  and
 4    the  collateral to be used to secure the State Guarantee.  In
 5    addition, the lender must agree to bring the farmer's debt to
 6    a current status at the time the State Guarantee is  provided
 7    and  must also agree to charge a fixed or adjustable interest
 8    rate which the Authority determines to be  below  the  market
 9    rate  of  interest  generally  available to the borrower.  If
10    both the lender and applicant agree, the interest rate on the
11    State Guarantee Loan can be converted  to  a  fixed  interest
12    rate at any time during the term of the loan.
13        Any  State  Guarantees  provided  under  this Section (i)
14    shall not exceed $1,000,000 $500,000 per farmer,  (ii)  shall
15    be  set  up on a payment schedule not to exceed 30 years, and
16    shall be no longer than 30 years in duration, and (iii) shall
17    be subject to an annual review and renewal by the lender  and
18    the  Authority;  provided  that only one such State Guarantee
19    shall be outstanding per farmer at any one  time.   No  State
20    Guarantee  shall be revoked by the Authority without a 90 day
21    notice, in writing, to all parties.  In those cases were  the
22    borrower  has  not previously used the guarantee program, the
23    lender shall not call due any loan during the first  3  years
24    for any reason except for lack of performance or insufficient
25    collateral.  The  lender  can review and withdraw or continue
26    with the State Guarantee on an annual basis after the first 3
27    years of the loan, provided a 90 day notice, in  writing,  to
28    all parties has been given.
29        (b)  The   Authority  shall  provide  or  renew  a  State
30    Guarantee to a lender if:
31             (i)  A fee equal to 25 basis points on the  loan  is
32        paid to the Authority on an annual basis by the lender.
33             (ii)  The application provides collateral acceptable
34        to  the  Authority  that is at least equal to the State's
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 1        portion of the Guarantee to be provided.
 2             (iii)  The lender  assumes  all  responsibility  and
 3        costs  for  pursuing  legal action on collecting any loan
 4        that is delinquent or in default.
 5             (iv)  The lender is responsible for the first 15% of
 6        the outstanding principal of the note for which the State
 7        Guarantee has been applied.
 8        (c)  There  is  hereby  created  outside  of  the   State
 9    Treasury   a  special  fund  to  be  known  as  the  Illinois
10    Agricultural Loan Guarantee Fund.  The State Treasurer  shall
11    be  custodian  of  this  Fund.   Any  amounts in the Illinois
12    Agricultural Loan Guarantee Fund not currently needed to meet
13    the obligations of the Fund shall be invested as provided  by
14    law,  and all interest earned from these investments shall be
15    deposited into the Fund until the Fund  reaches  the  maximum
16    amount  authorized  in  this Act; thereafter, interest earned
17    shall be deposited  into  the  General  Revenue  Fund.  After
18    September  1,  1989, annual investment earnings equal to 1.5%
19    of the Fund shall remain in the  Fund  to  be  used  for  the
20    purposes established in Section 12.3 of this Act.
21        The  Authority is authorized to transfer to the Fund such
22    amounts  as  are  necessary  to  satisfy  claims  during  the
23    duration of the  State  Guarantee  program  to  secure  State
24    Guarantees  issued  under this Section. If for any reason the
25    General Assembly fails to make an appropriation sufficient to
26    meet  these  obligations,  this  Act  shall   constitute   an
27    irrevocable   and   continuing  appropriation  of  an  amount
28    necessary to secure guarantees  as  defaults  occur  and  the
29    irrevocable  and  continuing authority for, and direction to,
30    the State Treasurer and the Comptroller to make the necessary
31    transfers to the Illinois Agricultural Loan  Guarantee  Fund,
32    as directed by the Governor, out of the General Revenue Fund.
33        Within 30 days after November 15, 1985, the Authority may
34    transfer  up to $7,000,000 from available appropriations into
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 1    the  Illinois  Agricultural  Loan  Guarantee  Fund  for   the
 2    purposes of this Act.  Thereafter, the Authority may transfer
 3    additional   amounts  into  the  Illinois  Agricultural  Loan
 4    Guarantee Fund to secure guarantees for defaults as  defaults
 5    occur.
 6        In  the  event of default by the farmer, the lender shall
 7    be entitled to, and the Authority shall  direct  payment  on,
 8    the  State  Guarantee  after  90  days  of  delinquency.  All
 9    payments by the Authority shall be  made  from  the  Illinois
10    Agricultural  Loan  Guarantee  Fund to satisfy claims against
11    the  State  Guarantee.   The   Illinois   Agricultural   Loan
12    Guarantee  Fund shall guarantee receipt of payment of the 85%
13    of the principal and interest owed  on  the  State  Guarantee
14    Loan by the farmer to the guarantee holder.
15        It  shall  be the responsibility of the lender to proceed
16    with the collecting and disposing of collateral on the  State
17    Guarantee within 14 months of the time the State Guarantee is
18    declared delinquent; provided, however, that the lender shall
19    not  collect  or dispose of collateral on the State Guarantee
20    without the express written prior approval of the  Authority.
21    If  the  lender  does not dispose of the collateral within 14
22    months, the lender shall be liable  to  repay  to  the  State
23    interest  on the State Guarantee equal to the same rate which
24    the lender charges on the State Guarantee; provided, however,
25    that the Authority may extend  the  14  month  period  for  a
26    lender   in   the   case   of   bankruptcy   or   extenuating
27    circumstances.  The  Fund shall be reimbursed for any amounts
28    paid under this Section upon liquidation of  the  collateral.
29    The  Authority,  by  resolution of the Board, may borrow sums
30    from the Fund and provide for repayment as  soon  as  may  be
31    practical  upon receipt of payments of principal and interest
32    by a farmer. Money may be  borrowed  from  the  Fund  by  the
33    Authority  for  the  sole  purpose of paying certain interest
34    costs for farmers associated with selling a loan subject to a
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 1    State Guarantee in  a  secondary  market  as  may  be  deemed
 2    reasonable and necessary by the Authority.
 3        (d)  Notwithstanding  the provisions of this Section 12.1
 4    with respect to the farmers and lenders who may obtain  State
 5    Guarantees,  the  Authority may promulgate rules establishing
 6    the eligibility of farmers and lenders to participate in  the
 7    State   guarantee  program  and  the  terms,  standards,  and
 8    procedures that will apply, when  the  Authority  finds  that
 9    emergency conditions in Illinois agriculture have created the
10    need  for  State Guarantees pursuant to terms, standards, and
11    procedures other than those specified in this Section.
12    (Source: P.A. 90-325, eff. 8-8-97; 91-386, eff. 1-1-00.)

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