State of Illinois
90th General Assembly
Legislation

   [ Search ]   [ Legislation ]   [ Bill Summary ]
[ Home ]   [ Back ]   [ Bottom ]


[ Introduced ][ Enrolled ]

90_HB1880eng

      20 ILCS 3605/11           from Ch. 5, par. 1211
      20 ILCS 3605/12.1         from Ch. 5, par. 1212.1
      20 ILCS 3605/12.2         from Ch. 5, par. 1212.2
      20 ILCS 3605/12.4         from Ch. 5, par. 1212.4
          Amends the Illinois Farm Development Act.  Provides  that
      the  Illinois  Farm  Development  Authority  shall  not  have
      outstanding State Guarantees in an aggregate principal amount
      exceeding $50,000,000 (now $35,000,000).  Provides that there
      shall  be  no  income  restriction  for  applicants  who have
      previously  used  the  guarantee  program.    Provides   that
      guarantees  shall  not  exceed  $500,000  (now  $300,000) per
      farmer. Provides that in those cases where the  borrower  has
      not  previously  used the guarantee program, the lender shall
      not call the loan due during the first 3 years for any reason
      except  lack  of  performance  or  insufficient   collateral.
      Provides  that interest earned from amounts invested from the
      Illinois Agricultural Loan Guarantee Fund  and  the  Illinois
      Farmer   and   Agribusiness  Loan  Guarantee  Fund  shall  be
      deposited into  those  funds  until  the  Funds  reach  their
      maximum  amounts.   Provides that after the Funds reach their
      maximum amounts the interest  shall  be  deposited  into  the
      General  Revenue  Fund.   Provides  that  the  Authority  may
      transfer  $15,000,000  (now  $10,000,000) from appropriations
      and the Farm Emergency Assistance Fund as of June 30 of  each
      year  to  the Illinois Farmer and Agribusiness Loan Guarantee
      Fund. Makes other changes.  Effective immediately.
                                                    LRB9003959MWksA
HB1880 Engrossed                              LRB9003959MWksA
 1        AN ACT to amend the  Illinois  Farm  Development  Act  by
 2    changing Sections 11, 12.1, 12.2, and 12.4.
 3        Be  it  enacted  by  the People of the State of Illinois,
 4    represented in the General Assembly:
 5        Section 5.  The Illinois Farm Development Act is  amended
 6    by changing Sections 11, 12.1, 12.2, and 12.4 as follows:
 7        (20 ILCS 3605/11) (from Ch. 5, par. 1211)
 8        Sec.  11.  Bonded indebtedness limitation.  The Authority
 9    shall not have outstanding at any one time  bonds  and  notes
10    for  any  of its corporate purposes in an aggregate principal
11    amount exceeding $300,000,000, $50,000,000 of which shall  be
12    used  for  research and development purposes, excluding bonds
13    and notes issued to refund outstanding bonds  and  notes  and
14    excluding  the  State  Guarantees  under Sections 12.1, 12.2,
15    12.4, and 12.5.  The Authority shall not  have outstanding at
16    any one time  State  Guarantees  under  Section  12.1  in  an
17    aggregate   principal   amount  exceeding  $160,000,000.  The
18    Authority shall not have outstanding at any  one  time  State
19    Guarantees   under  Sections  12.2,  12.4,  and  12.5  in  an
20    aggregate principal amount exceeding $50,000,000 $35,000,000.
21    (Source: P.A. 89-527, eff. 7-19-96.)
22        (20 ILCS 3605/12.1) (from Ch. 5, par. 1212.1)
23        Sec. 12.1.  State Guarantees for existing debt.
24        (a)  The  Authority  is   authorized   to   issue   State
25    Guarantees  for farmers' existing debts held by a lender. For
26    the purposes of this Section, a farmer shall be a resident of
27    Illinois, who is a principal operator of a farm or  land,  at
28    least  50%  of  whose  annual  gross  income  is derived from
29    farming and whose debt to asset ratio shall not be less  than
30    40%, except in those cases where the applicant has previously
HB1880 Engrossed            -2-               LRB9003959MWksA
 1    used  the  guarantee  program there shall be no debt to asset
 2    ratio or  income  restriction.   For  the  purposes  of  this
 3    Section,   debt   to  asset  ratio  shall  mean  the  current
 4    outstanding liabilities of the farmer divided by the  current
 5    outstanding  assets  of  the  farmer.   The  Authority  shall
 6    establish  the  maximum permissible debt to asset ratio based
 7    on criteria established by the Authority.
 8        Lenders shall apply for the  State  Guarantees  on  forms
 9    provided  by  the  Authority and certify that the application
10    and any other documents submitted are true and correct.   The
11    lender  or  borrower,  or  both  in combination, shall pay an
12    administrative fee  as  determined  by  the  Authority.   The
13    applicant shall be responsible for paying any fees or charges
14    involved   in   recording   mortgages,   releases,  financing
15    statements, insurance for secondary  market  issues  and  any
16    other  similar  fees or charges as the Authority may require.
17    The application shall at a minimum contain the farmer's name,
18    address, present credit and financial information,  including
19    cash  flow  statements, financial statements, balance sheets,
20    and any other information pertinent to the  application,  and
21    the  collateral to be used to secure the State Guarantee.  In
22    addition, the lender must agree to bring the farmer's debt to
23    a current status at the time the State Guarantee is  provided
24    and  must also agree to charge a fixed or adjustable interest
25    rate which the Authority determines to be  below  the  market
26    rate  of  interest  generally  available to the borrower.  If
27    both the lender and applicant agree, the interest rate on the
28    State Guarantee Loan can be converted  to  a  fixed  interest
29    rate at any time during the term of the loan.
30        Any  State  Guarantees  provided  under  this Section (i)
31    shall not exceed $500,000 $300,000 per farmer, (ii) shall  be
32    set  up on a payment schedule not to exceed 30 years, and but
33    shall be no longer than 30 10 years in  duration,  and  (iii)
34    shall  be  subject  to  an  annual  review and renewal by the
HB1880 Engrossed            -3-               LRB9003959MWksA
 1    lender and the Authority; provided that only one  such  State
 2    Guarantee  shall  be  outstanding per farmer at any one time.
 3    No State Guarantee shall be revoked by the Authority  without
 4    a  90 day notice, in writing, to all parties.  In those cases
 5    were the borrower  has  not  previously  used  the  guarantee
 6    program,  the  lender  shall not call due any loan during the
 7    first 3 years for any reason except for lack  of  performance
 8    or   insufficient  collateral.  The  lender  can  review  and
 9    withdraw or continue with the State Guarantee  on  an  annual
10    basis  after the first 3 years of the loan, provided a 90 day
11    notice, in writing, to all parties has been given.
12        (b)  The  Authority  shall  provide  or  renew  a   State
13    Guarantee to a lender if:
14             (i)  A  fee  equal to 25 basis points on the loan is
15        paid to the Authority on an annual basis by the lender.
16             (ii)  The application provides collateral acceptable
17        to the Authority that is at least equal  to  the  State's
18        portion of the Guarantee to be provided.
19             (iii)  The  lender  assumes  all  responsibility and
20        costs for pursuing legal action on  collecting  any  loan
21        that is delinquent or in default.
22             (iv)  The lender is responsible for the first 15% of
23        the outstanding principal of the note for which the State
24        Guarantee has been applied.
25        (c)  There   is  hereby  created  outside  of  the  State
26    Treasury  a  special  fund  to  be  known  as  the   Illinois
27    Agricultural  Loan Guarantee Fund.  The State Treasurer shall
28    be custodian of this  Fund.   Any  amounts  in  the  Illinois
29    Agricultural Loan Guarantee Fund not currently needed to meet
30    the  obligations of the Fund shall be invested as provided by
31    law, and all interest earned from these investments shall  be
32    deposited  into  the  General  Revenue  Fund  until  the Fund
33    reaches the  maximum  amount  established  in  this  Section;
34    thereafter,  interest  earned  shall  be  deposited  into the
HB1880 Engrossed            -4-               LRB9003959MWksA
 1    General Revenue Fund., except that After September  1,  1989,
 2    annual  investment  earnings  equal to 1.5% of the Fund shall
 3    remain in the Fund to be used for the purposes established in
 4    Section 12.3 of this Act.
 5        The Authority is authorized  to  transfer  no  more  than
 6    $45,000,000  to  the  Fund  during  the duration of the State
 7    Guarantee program to secure  State  Guarantees  issued  under
 8    this  Section and the State shall not be liable for more than
 9    $45,000,000 to secure  State  Guarantees  issued  under  this
10    Section. If for any reason the General Assembly fails to make
11    an  appropriation  sufficient to meet these obligations, this
12    Act  shall   constitute   an   irrevocable   and   continuing
13    appropriation  of an amount necessary to secure guarantees as
14    defaults occur up  to  an  amount  equal  to  the  difference
15    between the $45,000,000 obligation and all amounts previously
16    transferred to the Illinois Agricultural Loan Guarantee  Fund
17    and   the  irrevocable  and  continuing  authority  for,  and
18    direction to, the State Treasurer and the Comptroller to make
19    the necessary transfers to  the  Illinois  Agricultural  Loan
20    Guarantee  Fund,  as  directed  by  the  Governor, out of the
21    General  Revenue  Fund.  Any  amounts  transferred  from  the
22    Illinois Agricultural Loan  Guarantee  Fund  to  the  General
23    Revenue  Fund, under powers granted to the Governor by Public
24    Act 87-14, shall not be  considered  in  determining  if  the
25    maximum of $45,000,000 has been transferred into the Illinois
26    Agricultural Loan Guarantee Fund.
27        Within 30 days after November 15, 1985, the Authority may
28    transfer  up to $7,000,000 from available appropriations into
29    the  Illinois  Agricultural  Loan  Guarantee  Fund  for   the
30    purposes of this Act.  Thereafter, the Authority may transfer
31    additional   amounts  into  the  Illinois  Agricultural  Loan
32    Guarantee Fund to secure guarantees for defaults as  defaults
33    occur.
34        In  the  event of default by the farmer, the lender shall
HB1880 Engrossed            -5-               LRB9003959MWksA
 1    be entitled to, and the Authority shall  direct  payment  on,
 2    the  State  Guarantee  after  90  days  of  delinquency.  All
 3    payments by the Authority shall be  made  from  the  Illinois
 4    Agricultural  Loan  Guarantee  Fund to satisfy claims against
 5    the  State  Guarantee.   The   Illinois   Agricultural   Loan
 6    Guarantee  Fund shall guarantee receipt of payment of the 85%
 7    of the principal and interest owed  on  the  State  Guarantee
 8    Loan by the farmer to the guarantee holder.
 9        It  shall  be the responsibility of the lender to proceed
10    with the collecting and disposing of collateral on the  State
11    Guarantee within 14 months of the time the State Guarantee is
12    declared delinquent; provided, however, that the lender shall
13    not  collect  or dispose of collateral on the State Guarantee
14    without the express written prior approval of the  Authority.
15    If  the  lender  does not dispose of the collateral within 14
16    months, the lender shall be liable  to  repay  to  the  State
17    interest  on the State Guarantee equal to the same rate which
18    the lender charges on the State Guarantee; provided, however,
19    that the Authority may extend  the  14  month  period  for  a
20    lender   in   the   case   of   bankruptcy   or   extenuating
21    circumstances.  The  Fund shall be reimbursed for any amounts
22    paid under this Section upon liquidation of  the  collateral.
23    The  Authority,  by  resolution of the Board, may borrow sums
24    from the Fund and provide for repayment as  soon  as  may  be
25    practical  upon receipt of payments of principal and interest
26    by a farmer. Money may be  borrowed  from  the  Fund  by  the
27    Authority  for  the  sole  purpose of paying certain interest
28    costs for farmers associated with selling a loan subject to a
29    State Guarantee in  a  secondary  market  as  may  be  deemed
30    reasonable and necessary by the Authority.
31    (Source: P.A. 88-571, eff. 8-11-94; 89-154, eff. 7-19-95.)
32        (20 ILCS 3605/12.2) (from Ch. 5, par. 1212.2)
33        Sec.  12.2.  State  Guarantees  for  loans to farmers and
HB1880 Engrossed            -6-               LRB9003959MWksA
 1    agribusiness; eligibility.
 2        (a)  The  Authority  is   authorized   to   issue   State
 3    Guarantees  to  lenders  for  loans  to  eligible farmers and
 4    agribusinesses for purposes set forth in  this  Section.  For
 5    purposes  of  this  Section,  an  eligible  farmer shall be a
 6    resident of Illinois (i) who is principal operator of a  farm
 7    or land, at least 50% of whose annual gross income is derived
 8    from  farming,  (ii) whose annual total sales of agricultural
 9    products, commodities,  or  livestock  exceeds  $20,000,  and
10    (iii)  whose  net worth does not exceed $500,000. An eligible
11    agribusiness shall be that as defined in Section  2  of  this
12    Act.
13        The  Authority  may  approve  applications by farmers and
14    agribusinesses  that  promote  diversification  of  the  farm
15    economy of this State through the growth and  development  of
16    new  crops  or livestock not customarily grown or produced in
17    this State or that emphasize a vertical integration of  grain
18    or livestock produced or raised in this State into a finished
19    agricultural  product  for consumption or use.  "New crops or
20    livestock not customarily grown or produced  in  this  State"
21    shall  not  include  corn, soybeans, wheat, swine, or beef or
22    dairy cattle. "Vertical integration  of  grain  or  livestock
23    produced  or  raised  in this State" shall include any new or
24    existing grain or livestock grown or produced in this State.
25        Lenders shall apply for the  State  Guarantees  on  forms
26    provided  by  the Authority, certify that the application and
27    any other documents submitted are true and correct,  and  pay
28    an  administrative  fee  as determined by the Authority.  The
29    applicant shall be responsible for paying any fees or charges
30    involved  in   recording   mortgages,   releases,   financing
31    statements,  insurance  for  secondary  market issues and any
32    other similar fees or charges as the Authority  may  require.
33    The  application  shall  at a minimum contain the farmer's or
34    agribusiness' name, address,  present  credit  and  financial
HB1880 Engrossed            -7-               LRB9003959MWksA
 1    information,   including   cash  flow  statements,  financial
 2    statements,  balance  sheets,  and  any   other   information
 3    pertinent  to  the application, and the collateral to be used
 4    to secure the State Guarantee.  In addition, the lender  must
 5    agree to charge an interest rate, which may vary, on the loan
 6    that  the Authority determines to be below the market rate of
 7    interest generally available to the  borrower.  If  both  the
 8    lender  and  applicant  agree, the interest rate on the State
 9    Guarantee Loan can be converted to a fixed interest  rate  at
10    any time during the term of the loan.
11        Any  State  Guarantees  provided  under  this Section (i)
12    shall not exceed $500,000 $300,000 per farmer or an amount as
13    determined by the Authority on a case-by-case  basis  for  an
14    agribusiness,  (ii)  shall not exceed a term of 15 years, and
15    (iii) shall be subject to an annual review and renewal by the
16    lender and the Authority; provided that only one  such  State
17    Guarantee  shall  be  made per farmer or agribusiness, except
18    that additional State Guarantees may be made for purposes  of
19    expansion of projects financed in part by a previously issued
20    State  Guarantee.  No State Guarantee shall be revoked by the
21    Authority without  a  90  day  notice,  in  writing,  to  all
22    parties.   The  lender  shall  not  call due any loan for any
23    reason  except  for   lack   of   performance,   insufficient
24    collateral, or maturity.  A lender may review and withdraw or
25    continue  with a State Guarantee on an annual basis after the
26    first 5 years following closing of the  loan  application  if
27    the  loan  contract  provides for an interest rate that shall
28    not vary.  A lender shall not withdraw a State  Guarantee  if
29    the  loan  contract  provides  for  an interest rate that may
30    vary, except for reasons set forth herein.
31        (b)  The  Authority  shall  provide  or  renew  a   State
32    Guarantee to a lender if:
33             i.  A  fee  equal  to 25 basis points on the loan is
34        paid to the Authority on an annual basis by the lender.
HB1880 Engrossed            -8-               LRB9003959MWksA
 1             ii.  The application provides collateral  acceptable
 2        to  the  Authority  that is at least equal to the State's
 3        portion of the Guarantee to be provided.
 4             iii.  The  lender  assumes  all  responsibility  and
 5        costs for pursuing legal action on  collecting  any  loan
 6        that is delinquent or in default.
 7             iv.  The  lender is responsible for the first 15% of
 8        the outstanding principal of the note for which the State
 9        Guarantee has been applied.
10        (c)  There  is  hereby  created  outside  of  the   State
11    Treasury  a  special  fund to be known as the Illinois Farmer
12    and Agribusiness Loan Guarantee Fund.   The  State  Treasurer
13    shall be custodian of this Fund.  Any amounts in the Fund not
14    currently needed to meet the obligations of the Fund shall be
15    invested  as  provided  by  law, and all interest earned from
16    these investments shall be deposited into the General Revenue
17    Fund until the Fund reaches the maximum  amounts  established
18    in   this  Section;  thereafter,  interest  earned  shall  be
19    deposited into the General Revenue Fund., except  that  After
20    September  1,  1989, annual investment earnings equal to 1.5%
21    of the Fund shall remain in the  Fund  to  be  used  for  the
22    purposes established in Section 12.3 of this Act.
23        The  Authority is authorized to transfer an amount not to
24    exceed $15,000,000 $10,000,000 from available  appropriations
25    and  from fund balances of the Farm Emergency Assistance Fund
26    as of June 30  of  each  year  to  the  Illinois  Farmer  and
27    Agribusiness  Loan  Guarantee Fund to secure State Guarantees
28    issued under this Section and  Section  12.4  and  the  State
29    shall  not be liable for more than $15,000,000 $10,000,000 to
30    secure State Guarantees issued under this Section and Section
31    12.4. If for any reason the General Assembly fails to make an
32    appropriation sufficient to meet these obligations, this  Act
33    shall  constitute an irrevocable and continuing appropriation
34    of an amount necessary to secure guarantees as defaults occur
HB1880 Engrossed            -9-               LRB9003959MWksA
 1    up  to  an  amount  equal  to  the  difference  between   the
 2    $15,000,000 $10,000,000 obligation and all amounts previously
 3    transferred  to  the  Illinois  Farmer  and Agribusiness Loan
 4    Guarantee Fund and the irrevocable and  continuing  authority
 5    for,   and   direction   to,  the  State  Treasurer  and  the
 6    Comptroller to make the necessary transfers to  the  Illinois
 7    Farmer  and  Agribusiness Loan Guarantee Fund, as directed by
 8    the Governor, out of the General Revenue Fund.
 9        In the event of default by the farmer or agribusiness  on
10    State Guarantee Loans under this Section or Section 12.4, the
11    lender  shall  be entitled to, and the Authority shall direct
12    payment on, the State Guarantee after 90 days of delinquency.
13    All payments by the Authority shall be made from the Illinois
14    Farmer and Agribusiness Loan Guarantee Fund to satisfy claims
15    against the State Guarantee.
16        It shall be the responsibility of the lender  to  proceed
17    with  the collecting and disposing of collateral on the State
18    Guarantee under this Section or Section 12.4 within 14 months
19    of the time the State Guarantee is declared  delinquent.   If
20    the  lender  does  not  dispose  of  the collateral within 14
21    months, the lender shall be liable  to  repay  to  the  State
22    interest  on  the State Guarantee equal to the same rate that
23    the lender charges on the State Guarantee, provided that  the
24    Authority  shall  have  the  authority to extend the 14 month
25    period for a lender in the case of bankruptcy or  extenuating
26    circumstances.  The  Fund shall be reimbursed for any amounts
27    paid under this Section upon liquidation of the collateral.
28        The Authority, by resolution of  the  Board,  may  borrow
29    sums  from  the Fund and provide for repayment as soon as may
30    be practical  upon  receipt  of  payments  of  principal  and
31    interest by a farmer or agribusiness on State Guarantee Loans
32    under  this  Section  or  Section 12.4. Money may be borrowed
33    from the Fund by the Authority for the sole purpose of paying
34    certain  interest  costs  for   farmers   or   agribusinesses
HB1880 Engrossed            -10-              LRB9003959MWksA
 1    associated  with  selling a loan subject to a State Guarantee
 2    under this Section or Section 12.4 in a secondary  market  as
 3    may be deemed reasonable and necessary by the Authority.
 4    (Source: P.A. 87-835; 87-1268; 88-571, eff. 8-11-94.)
 5        (20 ILCS 3605/12.4) (from Ch. 5, par. 1212.4)
 6        Sec. 12.4.  Young Farmer Loan Guarantee Program.
 7        (a)  The   Authority   is   authorized   to  issue  State
 8    Guarantees to lenders for loans to finance or refinance debts
 9    of young farmers.  For the purposes of this Section, a  young
10    farmer  is a resident of Illinois who is at least 18 years of
11    age and who is a principal operator of a farm  or  land,  who
12    derives  at  least  50%  of annual gross income from farming,
13    whose net worth is not less than $10,000 and  whose  debt  to
14    asset  ratio  is  not less than 40%. For the purposes of this
15    Section,  debt  to  asset  ratio  means  current  outstanding
16    liabilities, including any debt to be financed or  refinanced
17    under  this  Section,  divided by current outstanding assets.
18    The Authority shall establish the maximum permissible debt to
19    asset ratio based on criteria established by the Authority.
20        Lenders shall apply for the  State  Guarantees  on  forms
21    provided  by  the  Authority and certify that the application
22    and any other documents submitted are true and correct.   The
23    lender  or  borrower,  or  both  in combination, shall pay an
24    administrative fee  as  determined  by  the  Authority.   The
25    applicant  shall  be responsible for paying any fee or charge
26    involved  in   recording   mortgages,   releases,   financing
27    statements,  insurance  for  secondary market issues, and any
28    other similar fee or charge that the Authority  may  require.
29    The application shall at a minimum contain the young farmer's
30    name,  address,  present  credit  and  financial information,
31    including cash flow statements, financial statements, balance
32    sheets,  and  any  other   information   pertinent   to   the
33    application,  and  the  collateral  to  be used to secure the
HB1880 Engrossed            -11-              LRB9003959MWksA
 1    State Guarantee.  In addition, the borrower must  certify  to
 2    the  Authority  that,  at  the  time  the  State Guarantee is
 3    provided,  the  borrower  will  not  be  delinquent  in   the
 4    repayment  of  any  debt.   The lender must agree to charge a
 5    fixed  or  adjustable  interest  rate  that   the   Authority
 6    determines  to be below the market rate of interest generally
 7    available to the borrower.  If both the lender and  applicant
 8    agree,  the interest rate on the State guaranteed loan can be
 9    converted to a fixed interest rate at  any  time  during  the
10    term of the loan.
11        State  Guarantees  provided  under this Section (i) shall
12    not exceed $500,000 $300,000 per young farmer, (ii) shall  be
13    set  up  on  a  payment  schedule not to exceed 30 years, but
14    shall be no longer than 15 years in duration, and (iii) shall
15    be subject to an annual review and renewal by the lender  and
16    the  Authority. A young farmer may use this program more than
17    once  provided  the  aggregate  principal  amount  of   State
18    Guarantees  under  this Section to that young farmer does not
19    exceed  $500,000  $300,000.   No  State  Guarantee  shall  be
20    revoked by the Authority without a 90 day notice, in writing,
21    to all parties.
22        (b)  The  Authority  shall  provide  or  renew  a   State
23    Guarantee to a lender if:
24             (i)  The  lender pays a fee equal to 25 basis points
25        on the loan to the Authority on an annual basis.
26             (ii)  The application provides collateral acceptable
27        to the Authority that is at  least  equal  to  the  State
28        Guarantee.
29             (iii)  The  lender  assumes  all  responsibility and
30        costs for pursuing legal action on  collecting  any  loan
31        that is delinquent or in default.
32             (iv)  The lender is at risk for the first 15% of the
33        outstanding  principal  of  the  note for which the State
34        Guarantee is provided.
HB1880 Engrossed            -12-              LRB9003959MWksA
 1        (c)  The Illinois Farmer and Agribusiness Loan  Guarantee
 2    Fund may be used to secure State Guarantees issued under this
 3    Section as provided in Section 12.2.
 4    (Source: P.A. 88-571, eff. 8-11-94; 89-154, eff. 7-19-95.)
 5        Section  99.  Effective date.  This Act takes effect upon
 6    becoming law.

[ Top ]