Full Text of HR0234 97th General Assembly
HR0234 97TH GENERAL ASSEMBLY |
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| 1 | | HOUSE RESOLUTION
| 2 | | WHEREAS, Small business growth is at the heart of any | 3 | | economic recovery as most new jobs are created by small | 4 | | businesses; and
| 5 | | WHEREAS, Minority-owned and women-owned small businesses | 6 | | (M/WBEs) are particularly important drivers of job growth for | 7 | | African-Americans and Latinos who experience | 8 | | disproportionately high unemployment rates; and
| 9 | | WHEREAS, It has long been a strategic objective of the | 10 | | State of Illinois to support the development of minority-owned | 11 | | and women-owned businesses through the M/WBE programs for State | 12 | | procurement, particularly in construction; and
| 13 | | WHEREAS, During the recent credit crunch, one of the single | 14 | | largest barriers to growth for women-owned and minority-owned | 15 | | construction businesses has been bonding requirements and the | 16 | | very stringent financial terms imposed upon M/WBE businesses by | 17 | | the bonding companies; and
| 18 | | WHEREAS, It is not uncommon for a bonding company to | 19 | | require a construction company to deposit half the amount of | 20 | | the total value of a construction contract in an escrow account | 21 | | in order for the bonding company to sell to the construction |
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| 1 | | company a performance bond for the project; and
| 2 | | WHEREAS, As M/WBE construction firms tend not to be heavily | 3 | | capitalized, the rates charged to the M/WBE firms by the | 4 | | bonding companies tend to be far higher than the rates charged | 5 | | to large legacy firms; and | 6 | | WHEREAS, The purpose of a bond requirement is to | 7 | | financially reimburse the State in the event of default by the | 8 | | construction company, not to suppress competition or enrich | 9 | | bond companies; and | 10 | | WHEREAS, There may be more efficient alternative methods to | 11 | | protect the State from any financial loss in the event of lack | 12 | | of performance by M/WBE firms on a construction project; and | 13 | | WHEREAS, The members of the Federation of Women Contractors | 14 | | believe that the current state of the bond market and the bond | 15 | | requirements are among very significant impediments to growth; | 16 | | therefore, be it
| 17 | | RESOLVED, BY THE HOUSE OF REPRESENTATIVES OF THE | 18 | | NINETY-SEVENTH GENERAL ASSEMBLY OF THE STATE OF ILLINOIS, that | 19 | | the Department of Commerce and Economic Opportunity consider | 20 | | whether a surety program successfully administered years ago be | 21 | | resurrected in order to provide a financial guarantee to |
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| 1 | | bonding companies for projects conducted by M/WBE firms in | 2 | | order to lower the costs to M/WBE firms and increase their | 3 | | access to capital; and be it further
| 4 | | RESOLVED, That the Department of Insurance, which | 5 | | regulates bond issuing companies, consider how it can help | 6 | | identify and encourage bond companies to participate in a | 7 | | program for M/WBE construction firms; and be it further | 8 | | RESOLVED, That the Department of Transportation and the | 9 | | Capital Development Board review their bonding requirements | 10 | | for M/WBE participants in light of the actual number of | 11 | | defaults by M/WBE companies over the last 5 years to determine | 12 | | whether the bonding requirements are more stringent than | 13 | | necessary to protect against risk; and be it further | 14 | | RESOLVED, That the Department of Commerce and Economic | 15 | | Opportunity, the Department of Insurance, the Department of | 16 | | Transportation, and the Capital Development Board report to the | 17 | | General Assembly with recommendations to reform bonding | 18 | | requirements for M/WBE firms in public construction projects by | 19 | | January 15, 2012.
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