Full Text of HB2426 94th General Assembly
HB2426 94TH GENERAL ASSEMBLY
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94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006 HB2426
Introduced 2/17/2005, by Rep. Dan Reitz SYNOPSIS AS INTRODUCED: |
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30 ILCS 350/3 |
from Ch. 17, par. 6903 |
30 ILCS 350/9 |
from Ch. 17, par. 6909 |
30 ILCS 350/10 |
from Ch. 17, par. 6910 |
30 ILCS 350/11 |
from Ch. 17, par. 6911 |
30 ILCS 350/16.5 |
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30 ILCS 350/17 |
from Ch. 17, par. 6917 |
30 ILCS 350/17.5 |
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Amends the Local Government Debt Reform Act. In a Section concerning definitions, provides that public corporations are included within the definition of "governmental unit", and deletes provisions that a bureau,
board, commission, university, or similar agency of the State is a "governmental unit". Provides that the proceeds of bonds may be used
to provide for the payment of interest upon such bonds for a period not to
exceed the greater of 3 years (now, 2 years) or a period ending 6 months after the
estimated date of completion of the acquisition and construction of the
project or accomplishment of the purpose for which such bonds are issued. Provides that bonds must become due within 30 years (now, 40 years unless limited by law). Provides that a refunding bond issue may authorize the use of the proceeds to pay interest on the refunding bond issue during the period of time from delivery of the issue to the redemption date of the bonds being refunded. Provides that bonds that have been wholly refunded or provided for with qualifying securities shall not be included as debt for the purposes of any calculation or limitation. In a Section concerning referenda for bonds, provides that no action may be brought by any person in any court or other tribunal seeking in any way to challenge or contest the validity of an election outcome based upon the wording set forth in any election notice or the ballot after a period of 30 days after the canvass of such election. In a Section concerning lease and installment contracts, provides that certificates evidencing the indebtedness incurred under a lease or agreement may be refunded under certain provisions of the Act. In a Section concerning bond authorization by referendum, provides that bond approval subject to a backdoor referendum expires after 5 years (now, 3 years). Effective immediately.
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A BILL FOR
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HB2426 |
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| AN ACT concerning finance.
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| Be it enacted by the People of the State of Illinois,
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| represented in the General Assembly:
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| Section 5. The Local Government Debt Reform Act is amended | 5 |
| by changing Sections 3, 9, 10, 11, 16.5, 17, and 17.5 as | 6 |
| follows:
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| (30 ILCS 350/3) (from Ch. 17, par. 6903)
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| Sec. 3. Definitions. In this Act words or terms shall have | 9 |
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following meanings unless the context or usage clearly | 10 |
| indicates that
another meaning is intended.
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| (a) "Alternate bonds" means bonds issued in lieu of revenue | 12 |
| bonds or
payable from a revenue source as provided in Section | 13 |
| 15.
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| (b) "Applicable law" means any provision of law, including | 15 |
| this Act,
authorizing governmental units to issue bonds or | 16 |
| relating to any procedure, including any notice, hearing, | 17 |
| meeting, referendum, or backdoor referendum, to be taken in the | 18 |
| course of actions to issue bonds .
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| (c) "Backdoor referendum" means the submission of a public | 20 |
| question to
the voters of a governmental unit, initiated by a | 21 |
| petition of voters,
residents or property owners of such | 22 |
| governmental unit, to determine
whether an action by the | 23 |
| governing body of such governmental unit shall be
effective, | 24 |
| adopted or rejected.
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| (d) "Bond" means any instrument evidencing the obligation | 26 |
| to pay money
authorized or issued by or on behalf of a | 27 |
| governmental unit under
applicable law, including without | 28 |
| limitation, bonds, notes, installment or
financing contracts, | 29 |
| leases, certificates, tax anticipation warrants or
notes, | 30 |
| vouchers, and any other evidences of indebtedness.
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| (e) "Debt service" on bonds means the amount of principal, | 32 |
| interest and
premium, if any, when due either at stated |
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| maturity or upon mandatory
redemption.
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| (f) "Enterprise revenues" means the revenues of a utility | 3 |
| or revenue
producing enterprise from which revenue bonds may be | 4 |
| payable.
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| (g) "General obligation bonds" means bonds of a | 6 |
| governmental unit for
the payment of which the governmental | 7 |
| unit is empowered to levy ad valorem
property taxes upon all | 8 |
| taxable property in a governmental unit without
limitation as | 9 |
| to rate or amount.
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| (h) "Governing body" means the legislative body, council, | 11 |
| board,
commission, trustees, or any other body, by whatever | 12 |
| name it is known, having
charge of the corporate affairs of a | 13 |
| governmental unit.
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| (h-5) "Governmental revenue source" means a revenue source | 15 |
| that is either
(1) federal or State funds that the governmental | 16 |
| unit has received in some
amount during each of the 3 fiscal | 17 |
| years preceding the issuance of alternate
bonds or (2) revenues | 18 |
| to be received from another governmental unit under an
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| intergovernmental cooperation agreement.
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| (i) "Governmental unit" means a county, township, | 21 |
| municipality,
municipal corporation, unit of local government, | 22 |
| school district, special
district, public corporation, body | 23 |
| corporate and
politic, forest preserve
district, fire | 24 |
| protection district, conservation district, park district,
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| sanitary district, public corporations, as defined in the Bond | 26 |
| Authorization Act, and all
other local governmental agencies, | 27 |
| including any entity created by
intergovernmental agreement | 28 |
| among any of the foregoing governmental units,
but does not | 29 |
| include any office, officer, department or , division , bureau,
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| board, commission, university, or similar agency of the State.
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| (j) "Ordinance" means an ordinance duly adopted by a | 32 |
| governing body or,
if appropriate under applicable law, a | 33 |
| resolution so adopted.
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| (k) "Revenue bonds" means any bonds of a governmental unit | 35 |
| other than
general obligation bonds, but "revenue bonds" does | 36 |
| include any debt
authorized under Section 11-29.3-1 of the |
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| Illinois Municipal Code.
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| (l) "Revenue source" means a source of funds, other than | 3 |
| enterprise
revenues, received or available to be received by a | 4 |
| governmental unit and
available for any one or more of its | 5 |
| corporate purposes.
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| (m) "Limited bonds" means bonds, excluding leases, notes, | 7 |
| installment or
financing contracts, certificates, tax | 8 |
| anticipation warrants or notes,
vouchers, and any other | 9 |
| evidences of indebtedness, issued under Section
15.01 of this | 10 |
| Act.
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| (Source: P.A. 92-879, eff. 1-13-03.)
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| (30 ILCS 350/9) (from Ch. 17, par. 6909)
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| Sec. 9. Provisions for interest.
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| (a) The proceeds of bonds may be used
to provide for the | 15 |
| payment of interest upon such bonds for a period not to
exceed | 16 |
| the greater of 3
2 years or a period ending 6 months after the
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| estimated date of completion of the acquisition and | 18 |
| construction of the
project or accomplishment of the purpose | 19 |
| for which such bonds are issued.
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| (b) In addition it shall be lawful for the governing body | 21 |
| of any
governmental unit issuing bonds to appropriate money for | 22 |
| the purpose of
paying interest on such bonds during the period | 23 |
| stated in subsection (a) of
this Section. Such appropriation | 24 |
| may be made in the ordinance authorizing
such bonds and shall | 25 |
| be fully effective upon the effective date of such
ordinance | 26 |
| without any further notice, publication or approval | 27 |
| whatsoever.
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| (c) The governing body of any governmental unit may | 29 |
| authorize the transfer
of interest earned on any of the moneys | 30 |
| of the governmental unit, including
moneys set aside to pay | 31 |
| debt service, into the fund of the governmental unit
that is | 32 |
| most in need of the interest. This subsection does not apply to | 33 |
| any
interest earned that has been earmarked or restricted by | 34 |
| the governing body for
a designated purpose. This subsection | 35 |
| does not apply to any interest earned on
any funds for the |
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| purpose of municipal retirement under the Illinois Pension
Code | 2 |
| and tort immunity under the Local Governmental and Governmental | 3 |
| Employees
Tort Immunity Act. Interest earned on those funds may | 4 |
| be used only for the
purposes authorized for the respective | 5 |
| funds from which the interest earnings
were derived.
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| (Source: P.A. 92-879, eff. 1-13-03.)
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| (30 ILCS 350/10) (from Ch. 17, par. 6910)
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| Sec. 10. General provisions. Bonds authorized by | 9 |
| applicable law may
be issued in one or more series, bear such | 10 |
| date or dates, become due at
such time or times within 30 | 11 |
| years, notwithstanding any other limit in
40 years, except as | 12 |
| expressly limited by
applicable law, bear interest payable at | 13 |
| such intervals and at such rate or
rates as authorized under | 14 |
| applicable law, which rates may be fixed or
variable, be in | 15 |
| such denominations, be in such form, either coupon,
registered | 16 |
| or book-entry, carry such conversion, registration, and | 17 |
| exchange
privileges, be subject to defeasance upon such terms, | 18 |
| have such rank or
priority, be executed in such manner, be | 19 |
| payable in such medium of payment
at such place or places | 20 |
| within or without the State of Illinois, make
provision for a | 21 |
| corporate trustee within or without the State with respect
to | 22 |
| such bonds, prescribe the rights, powers and duties thereof to | 23 |
| be
exercised for the benefit of the governmental unit and the | 24 |
| protection of
the bondholders, provide for the holding in | 25 |
| trust, investment and use of
moneys, funds and accounts held | 26 |
| under an ordinance, provide for assignment
of and direct | 27 |
| payment of the moneys to pay such bonds or to be deposited
into | 28 |
| such funds or accounts directly to such trustee, be subject to | 29 |
| such
terms of redemption with or without premium, and be sold | 30 |
| in such manner at
private or public sale and at such price, all | 31 |
| as the governing body shall
determine. Whenever such bonds are | 32 |
| sold at price less than par, they
shall be sold at such price | 33 |
| and bear interest at such rate or rates such
that either the | 34 |
| true interest cost (yield) or the net interest rate, as may
be | 35 |
| selected by the governing body, received upon the sale of such |
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| bonds
does not exceed the maximum rate otherwise authorized by | 2 |
| applicable law.
Except for an ordinance required to be | 3 |
| published by applicable law in
connection with a backdoor | 4 |
| referendum, any bond ordinance adopted by a
governing body | 5 |
| under applicable law shall, in all instances, become effective
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| immediately without publication or posting or any further act | 7 |
| or requirement.
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| (Source: P.A. 90-306, eff. 8-1-97.)
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| (30 ILCS 350/11) (from Ch. 17, par. 6911)
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| Sec. 11. Refundings and redemption premiums. Bonds may be | 11 |
| refunded
or advance refunded upon such terms as the governing | 12 |
| body may set in accordance
with this Act, for such term of | 13 |
| years, not in excess of the maximum term of
years permitted by | 14 |
| applicable law for the bonds to be refunded, and in such
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| principal amount, all as may be deemed necessary by the | 16 |
| governing body.
A refunding bond issue may authorize the use of | 17 |
| proceeds of such issue to pay interest on the refunding bond | 18 |
| issue during the period of time from delivery of such issue to | 19 |
| the redemption date of the bonds being refunded. Revenue bonds | 20 |
| may be issued to refund general
obligation bonds or alternate
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| bonds issued under this Act. General obligation bonds shall not | 22 |
| be issued to
refund revenue bonds or alternate bonds except as | 23 |
| expressly permitted by
applicable law. Any redemption premium | 24 |
| payable upon the redemption of
bonds may be payable from the | 25 |
| proceeds of refunding bonds which may be
issued for the purpose | 26 |
| of refunding such bonds, from any other lawfully
available | 27 |
| source or from both proceeds and such other sources. Bonds that | 28 |
| have been wholly refunded or provided for with qualifying | 29 |
| securities shall not be included as debt for the purposes of | 30 |
| any calculation or limitation under applicable law. | 31 |
| "Qualifying securities" means securities or investments that | 32 |
| are lawful for a governmental unit under State law and that | 33 |
| have, at the time of purchase, a rating in the highest general | 34 |
| classification established by a rating service of nationally | 35 |
| recognized expertise in rating securities. "Wholly refunded" |
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| or "provided for" means that the interest on and principal of | 2 |
| the qualifying securities, when due, which are set aside to pay | 3 |
| debt service on the bonds, shall be sufficiently timely to pay | 4 |
| the debt service on such bonds.
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| (Source: P.A. 90-306, eff. 8-1-97.)
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| (30 ILCS 350/16.5)
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| Sec. 16.5. Proposition for bonds. For all elections held | 8 |
| after July 1,
2000, the form of a proposition to authorize the | 9 |
| issuance of bonds pursuant to
either a referendum or backdoor | 10 |
| referendum may be as set forth in this Section
as an | 11 |
| alternative to the form of proposition as otherwise set forth | 12 |
| by
applicable law. The proposition authorized by this Section | 13 |
| shall be in
substantially the following form:
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| Shall (name of governmental unit) (state purpose for | 15 |
| the bond issue) and
issue its bonds to the amount of $ | 16 |
| (state amount) for the purpose of paying the
costs thereof?
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| If a school district expects to receive a school | 18 |
| construction grant from
the State of Illinois pursuant to the | 19 |
| School Construction Law for a school
construction project to be | 20 |
| financed in part with proceeds of a bond authorized
by | 21 |
| referendum, then the form of proposition may at the option of | 22 |
| the school
district additionally contain substantially the | 23 |
| following language:
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| (Name of school district) expects to receive a school | 25 |
| construction grant
from the State of Illinois in the amount
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| of
$ (state amount) pursuant to the
School Construction Law | 27 |
| for the school construction project to be financed in
part | 28 |
| with proceeds of the bonds, based on (i) a grant | 29 |
| entitlement from the
State Board of Education and (ii) | 30 |
| current recognized project costs determined
by the Capital | 31 |
| Development Board.
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| No action may be brought by any person in any Court or | 33 |
| other tribunal seeking in any way to challenge or contest the | 34 |
| validity of an election outcome based upon the wording set | 35 |
| forth in any election notice or the ballot after a period of 30 |
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| days after the canvass of such election.
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| (Source: P.A. 91-868, eff. 6-22-00; 92-879, eff. 1-13-03.)
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| (30 ILCS 350/17) (from Ch. 17, par. 6917)
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| Sec. 17. Leases and installment contracts.
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| (a) Interest not debt; debt on leases and installment | 6 |
| contracts.
Interest on bonds shall not be included in any | 7 |
| computation of indebtedness
of a governmental unit for the | 8 |
| purpose of any statutory provision or
limitation. For bonds | 9 |
| consisting of leases and installment or financing
contracts, | 10 |
| (1) that portion of payments made by a governmental unit under
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| the terms of a bond designated as interest in the bond or the | 12 |
| ordinance
authorizing such bond shall be treated as interest | 13 |
| for purposes of this
Section (2) where portions of payments due | 14 |
| under the terms of a bond have
not been designated as interest | 15 |
| in the bond or the ordinance authorizing
such bond, and all or | 16 |
| a portion of such payments is to be used for the
payment of | 17 |
| principal of and interest on other bonds of the governmental
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| unit or bonds issued by another unit of local government, such | 19 |
| as a public
building commission, the payments equal to interest | 20 |
| due on such
corresponding bonds shall be treated as interest | 21 |
| for purposes of this
Section and (3) where portions of payments | 22 |
| due under the terms of a bond
have not been designated as | 23 |
| interest in the bond or ordinance authorizing
such bond and no | 24 |
| portion of any such payment is to be used for the payment of
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| principal of and interest on other bonds of the governmental | 26 |
| unit or
another unit of local government, a portion of each | 27 |
| payment due under the
terms of such bond shall be treated as | 28 |
| interest for purposes of this
Section; such portion shall be | 29 |
| equal in amount to the interest that would
have been paid on a | 30 |
| notional obligation of the governmental unit (bearing
interest | 31 |
| at the highest rate permitted by law for bonds of the | 32 |
| governmental
unit at the time the bond was issued or, if no | 33 |
| such limit existed, 12%) on
which the payments of principal and | 34 |
| interest were due at the same times and
in the same amounts as | 35 |
| payments are due under the terms of the bonds. The
rule set |
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| forth in this Section shall be applicable to all interest no
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| matter when earned or accrued or at what interval paid, and | 3 |
| whether or not
a bond bears interest which compounds at certain | 4 |
| intervals. For purposes
of bonds sold at amounts less than 95% | 5 |
| of their stated value at maturity,
interest for purposes of | 6 |
| this Section includes the difference between the
amount set | 7 |
| forth on the face of the bond as the original principal amount | 8 |
| and
the bond's stated value at
maturity.
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| This subsection may be made applicable to bonds issued | 10 |
| prior
to the
effective date of this Act by passage of an | 11 |
| ordinance to such effect by the
governing body of a | 12 |
| governmental unit.
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| (b) Purchase or lease of property. The governing body of | 14 |
| each governmental
unit may purchase or lease either real or | 15 |
| personal property, including
investments, investment | 16 |
| agreements, or investment services, through
agreements
that
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| provide that the consideration for the purchase or lease may be | 18 |
| paid through
installments
made at stated intervals for a period | 19 |
| of no more than 20 years or another
period of time
authorized | 20 |
| by law, whichever is greater; provided, however, that | 21 |
| investments,
investment agreements, or investment services | 22 |
| purchased in connection with a
bond issue may be paid through | 23 |
| installments made at stated intervals for a
period of time
not | 24 |
| in excess of the maximum term of such bond issue. Each | 25 |
| governmental
unit may issue
certificates
evidencing the | 26 |
| indebtedness incurred under the
lease or agreement. The | 27 |
| governing body may provide for the treasurer,
comptroller, | 28 |
| finance officer, or other officer of the governing body charged
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| with financial administration to act as counter-party to any | 30 |
| such lease or
agreement, as nominee lessor or seller. When the | 31 |
| lease or agreement is
executed by the officer of the | 32 |
| governmental unit authorized by the governing
body to bind the | 33 |
| governmental unit thereon by the execution thereof and is
filed | 34 |
| with and executed by the nominee lessor or seller, the lease or | 35 |
| agreement
shall be sufficiently executed so as to permit the | 36 |
| governmental unit to issue
certificates evidencing the |
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| indebtedness incurred under the lease or agreement.
The | 2 |
| certificates
shall be valid
whether or not an appropriation | 3 |
| with respect thereto is included in any annual
or
supplemental | 4 |
| budget adopted by the governmental unit.
From time to time, as | 5 |
| the governing body executes contracts for the purpose
of | 6 |
| acquiring and constructing the services or real or personal | 7 |
| property that is
a part of the subject of the lease or | 8 |
| agreement, including financial, legal,
architectural, and | 9 |
| engineering services related to the lease or agreement, the
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| governing body shall order the contracts filed with its nominee | 11 |
| officer, and
that officer shall identify the contracts to the | 12 |
| lease or agreement; that
identification shall permit the | 13 |
| payment of or reimbursement to another fund of previous | 14 |
| payments made on the contract from the proceeds of
the | 15 |
| certificates; and the nominee officer shall duly apply or cause | 16 |
| to be
applied proceeds of the certificates to the payment of | 17 |
| the contracts.
Certificates evidencing the indebtedness | 18 |
| incurred under any such lease or agreement may be refunded | 19 |
| under Section 11 of this Act, which certificates may be | 20 |
| designated "refunding debt certificates" and need not evidence | 21 |
| participation in the original lease or agreement, may be issued | 22 |
| on any terms set forth in Section 10 of this Act, and shall be | 23 |
| payable from the same sources of funds as the certificates | 24 |
| refunded. The governing body of
each
governmental unit may | 25 |
| sell, lease, convey, and reacquire either real or
personal
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| property, or any interest in real or personal property,
upon | 27 |
| any terms and conditions and in any manner, as the governing | 28 |
| body shall
determine,
if the governmental unit will lease, | 29 |
| acquire by purchase agreement, or
otherwise reacquire the | 30 |
| property, as authorized by this
subsection or any
other | 31 |
| applicable law.
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| All indebtedness incurred under this subsection, when | 33 |
| aggregated with the
existing indebtedness of the governmental | 34 |
| unit, may not exceed the debt limits
provided
by applicable | 35 |
| law.
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| (Source: P.A. 91-493, eff. 8-13-99; 91-868, eff. 6-22-00; |
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| 92-879, eff. 1-13-03.)
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| (30 ILCS 350/17.5)
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| Sec. 17.5. Bond authorization by referendum. Whenever | 4 |
| applicable law
provides
that the authorization of or the | 5 |
| issuance of bonds is subject to either a
referendum or backdoor | 6 |
| referendum, the approval, once obtained, remains
(i) for 5 | 7 |
| years
after the date
of the referendum or (ii) for 3 years | 8 |
| after the end of the petition
period for a
backdoor referendum. | 9 |
| This Section applies only to a referendum or a backdoor
| 10 |
| referendum held
after
August 13, 1999
the effective date of | 11 |
| this amendatory Act of the 91st General Assembly .
| 12 |
| (Source: P.A. 91-493, eff. 8-13-99.)
| 13 |
| Section 99. Effective date. This Act takes effect upon | 14 |
| becoming law.
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