Illinois General Assembly - Full Text of HB3267
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Full Text of HB3267  98th General Assembly




State of Illinois
2013 and 2014


Introduced , by Rep. William Davis


20 ILCS 2705/2705-610 new
30 ILCS 105/5.826 new
30 ILCS 105/8r new

    Amends the Department of Transportation Law of the Civil Administrative Code of Illinois. Provides that the Department of Transportation may make low-interest loans from the Working Capital Revolving Loan Fund to disadvantaged business enterprises. Establishes a loan selection committee to review applications and select eligible businesses. Provides that the Department may set eligibility requirements for loans by administrative rule. Provides that loans shall not be used for (1) refinancing or payment of existing long-term debt; (2) payment of non-current taxes; (3) payments, advances, or loans to stockholders, officers, directors, partners, or member owners of limited liability companies; or (4) the purchase or lease of non-construction motor vehicles or equipment. Provides that loans may be made with interest. Limits the number of loans a business may receive under this Section. Provides that the Department shall give annual reports to the Governor and the General Assembly on this program. The Department's authority to issue loans under this Section expires on June 1, 2018. Amends the State Finance Act. Establishes the Working Capital Revolving Loan Fund. Provides for transfers not to exceed $3,000,000 a year, for a period of 5 years, from the Road Fund to the Working Capital Revolving Loan Fund as requested by the Secretary of Transportation. Provides that no transfer will occur if the available balance in the Working Capital Revolving Loan Fund is equal to or greater than $6,000,000. Effective July 1, 2013.

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HB3267LRB098 11170 MLW 41876 b

1    AN ACT concerning State government.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Department of Transportation Law of the
5Civil Administrative Code of Illinois is amended by adding
6Section 2705-610 as follows:
7    (20 ILCS 2705/2705-610 new)
8    Sec. 2705-610. Disadvantaged business revolving loan and
9grant program.
10    Purpose. The purpose of this Section is to provide for
11assistance to small, disadvantaged business enterprises with
12project financing and start-up costs to level the playing field
13for these firms that want to participate on Department
14construction contracts. The Department's disparity study
15recommends and supports a financing program to address this
16barrier faced by disadvantaged business enterprises.
17    (a) For the purposes of this Section:
18    "Construction" means building, altering, repairing,
19improving, or demolishing any public structure or building, or
20making improvements of any kind to public real property.
21Construction does not include the routine operation, routine
22repair, or routine maintenance of existing structures,
23buildings, or real property.



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1    "Construction-related services" means those services
2including construction design, layout, inspection, support,
3feasibility or location study, research, development,
4planning, or other investigative study undertaken by a
5construction agency concerning construction or potential
7    "Contractor" means one who participates, through a
8contract or subcontract at any tier, in a United States
9Department of Transportation-assisted or Illinois Department
10of Transportation-assisted highway, rail, transit, or airport
12    "Escrow account" means a fiduciary account established
13with (1) a banking corporation which is both organized under
14the Illinois Banking Act and authorized to accept and
15administer trusts in this State; or (2) a national banking
16association which has its principal place of business in this
17State and which is authorized to accept and administer trusts
18in this State.
19    "Fund Control Agent" means a person who provides managerial
20and technical assistance to disadvantage business enterprises
21and holds the authority to manage a loan under this Section.
22The Fund Control Agent will be procured by the Department under
23a request for proposal process governed by the Illinois
24Procurement Code and rules adopted under that Code.
25    "Loan" or "loan assistance funds" means a low-interest line
26of credit made available to a selected disadvantaged business



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1enterprise under this program for the purposes set forth in
2subparagraph (e) below.
3    (b) The Department has the power to enter into agreements
4to make low-interest loans to disadvantaged business
5enterprises certified by the Department for participation on
6Department-procured construction and construction-related
7contracts. For purposes of this Section, the term
8"disadvantaged business enterprise" has the meaning ascribed
9to it by 49 CFR Part 26.
10    The Department shall establish a loan selection committee
11to review applications and select eligible disadvantaged
12business enterprises for low-interest loans under this
13program. A selection committee will be comprised of at least
14three members appointed by the Secretary of the Department and
15will include at least one public member from the construction
16or financing industry. The public member may not be employed or
17associated with any disadvantaged business enterprise holding
18a contract with the Department nor may the public member's firm
19be considered for a contract with the Department while he or
20she is serving as a public member of the committee. Terms of
21service for public members shall not exceed five years. No
22public member of the loan selection committee shall hold
23consecutive terms.
24    The Department shall establish through administrative
25rules the requirements for eligibility and criteria for loan
26applications, approved use of funds, amount of loans, interest



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1rates, collateral, and terms. The Department is authorized to
2adopt rules to implement this Section.
3    (c) Loan funds shall be disbursed to the escrow account,
4subject to appropriation, from the Working Capital Revolving
5Loan Fund established as a special fund in the State treasury.
6Loaned funds that are repaid to the Department shall be
7deposited into the Working Capital Revolving Loan Fund. Other
8appropriations, grants, awards, and donations to the
9Department for the purpose of the revolving loan program
10established by this Section shall be deposited into the Working
11Capital Revolving Loan Fund.
12    (d) A funds control process will be established to serve as
13an intermediary between the Department and the contractor to
14verify payments and to ensure paperwork is properly filed. The
15Fund Control Agent and contractor shall enter into an agreement
16regarding the control and disbursement of all payments to be
17made by the Fund Control Agent under the contract. The
18Department will authorize and direct the Fund Control Agent to
19review all disbursement requests and supporting documents
20received from the contractor. The Fund Control Agent will
21direct the escrow account to disburse escrow funds to the
22subcontractor, material supplier, and other appropriate
23entities by written request for the disbursement. The
24disadvantaged business enterprise will maintain control over
25its business operations by directing the payments of the loan
26funds through its relationship with the Funds Control Agent.



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1    (e) Loan assistance funds shall be allowed for current
2liabilities or working capital expenses associated with
3participation in the performance of contracts procured by the
4Department for transportation construction and
5construction-related purposes. Loan funds shall not be used
7        (1) refinancing or payment of existing long-term debt;
8        (2) payment of non-current taxes;
9        (3) payments, advances, or loans to stockholders,
10    officers, directors, partners, or member owners of limited
11    liability companies; or
12        (4) the purchase or lease of non-construction motor
13    vehicles or equipment.
14    The loan agreement shall provide for the terms and
15conditions of repayment which shall not extend repayment longer
16than one year after completion and acceptance of the work
17authorized for loan assistance under the program. The funds may
18be loaned with interest.
19    (f) The number of loans one disadvantaged business
20enterprise may receive under this program is limited to five.
21Loans shall not be granted simultaneously. An applicant will
22not be permitted to obtain a loan under this program for a
23different and additional project until payment in full of any
24outstanding loans granted under this program have been received
25by the Department.
26    (g) The rate of interest for any loan shall not exceed the



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1prime rate.
2    (h) The loan amount to any successful applicant shall not
3exceed 75% percent of the contract or subcontract supporting
4the loan.
5    (i) Nothing in this Section shall impair the contractual
6rights of the Department and the prime contractor or the
7contractual rights between a prime contractor and
9    (j) Nothing in this Section is intended nor shall be
10construed to vest applicants denied funds by the Department in
11accordance with this Section a right to challenge, protest, or
12contest the awarding of funds by the Department to successful
13applicants or any loan or agreement executed in connection with
15    (k) The debt delinquency prohibition will apply to all
16future contracts or subcontracts in the event of a loan default
17(30 ILCS 500/50-11).
18    (l) Investment income which is attributable to the
19investment of moneys in the Working Capital Revolving Loan Fund
20shall be retained in the Working Capital Revolving Loan Fund.
21    (m) By January 1, 2014 and January 1 of each succeeding
22year, the Department shall report to the Governor and the
23General Assembly on the utilization and status of the revolving
24loan program. The report shall, at a minimum, include the
25amount transferred from the Road Fund to the Working Capital
26Revolving Loan Fund, the number and size of approved loans, the



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1amounts disbursed to and from the escrow account, the amounts,
2if any, repaid to the Working Capital Revolving Loan Fund, the
3interest and fees paid by loan recipients, and the interest
4earned on balances in the Working Capital Revolving Loan Fund.
5    (n) The Department's authority to execute additional loans
6or request transfers to the Working Capital Revolving Loan Fund
7expires on June 1, 2018. The Comptroller shall order
8transferred and the Treasurer shall transfer any available
9balance remaining in the Working Capital Revolving Loan Fund to
10the Road Fund on January 1, 2019, or as soon thereafter as may
11be practical. Any loan repayments, interest, or fees that are
12by the terms of a loan agreement payable to the Working Capital
13Revolving Loan Fund after June 20, 2018 shall instead be paid
14into the Road Fund as the successor fund to the Working Capital
15Revolving Loan Fund.
16    Section 10. The State Finance Act is amended by adding
17Sections 5.826 and 8r as follows:
18    (30 ILCS 105/5.826 new)
19    Sec. 5.826. The Working Capital Revolving Loan Fund.
20    (30 ILCS 105/8r new)
21    Sec. 8r. Transfer to the Working Capital Revolving Loan
23    (a) Except as provided in subsection (b), upon the written



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1request of the Secretary of Transportation, the State
2Comptroller shall order and the State Treasurer shall transfer
3amounts not to exceed $3,000,000 in aggregate during a fiscal
4year, for a period of 5 years, from the Road Fund to the
5Working Capital Revolving Loan Fund as requested by the
6Secretary of Transportation or as soon thereafter as may be
8    (b) No transfer may be requested or ordered if the
9available balance in the Working Capital Revolving Loan Fund is
10equal to or greater than $6,000,000.
11    Section 99. Effective date. This Act takes effect July 1,