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91_HB1117eng HB1117 Engrossed LRB9103156MWpc 1 AN ACT to amend the Local Government Debt Reform Act by 2 changing Sections 15, 16, and 17 and by adding Section 17.5. 3 Be it enacted by the People of the State of Illinois, 4 represented in the General Assembly: 5 Section 5. The Local Government Debt Reform Act is 6 amended by changing Sections 15, 16, and 17 and by adding 7 Section 17.5 as follows: 8 (30 ILCS 350/15) (from Ch. 17, par. 6915) 9 Sec. 15. Double-barrelled bonds. Whenever revenue bonds 10 have been authorized to be issued pursuant to applicable law 11 or whenever there exists for a governmental unit a revenue 12 source, the procedures set forth in this Section may be used 13 by a governing body. General obligation bonds may be issued 14 in lieu of such revenue bonds as authorized, and general 15 obligation bonds may be issued payable from any revenue 16 source. Such general obligation bonds may be referred to as 17 "alternate bonds". Alternate bonds may be issued without any 18 referendum or backdoor referendum except as provided in this 19 Section, upon the terms provided in Section 10 of this Act 20 without reference to other provisions of law, but only upon 21 the conditions provided in this Section. Alternate bonds 22 shall not be regarded as or included in any computation of 23 indebtedness for the purpose of any statutory provision or 24 limitation except as expressly provided in this Section. 25 Such conditions are: 26 (a) Alternate bonds shall be issued for a lawful 27 corporate purpose. If issued in lieu of revenue bonds, 28 alternate bonds shall be issued for the purposes for which 29 such revenue bonds shall have been authorized. If issued 30 payable from a revenue source in the manner hereinafter 31 provided, which revenue source is limited in its purposes or HB1117 Engrossed -2- LRB9103156MWpc 1 applications, then the alternate bonds shall be issued only 2 for such limited purposes or applications. Alternate bonds 3 may be issued payable from either enterprise revenues or 4 revenue sources, or both. 5 (b) Alternate bonds shall be subject to backdoor 6 referendum. The provisions of Section 5 of this Act shall 7 apply to such backdoor referendum, together with the 8 provisions hereof. The authorizing ordinance shall be 9 published in a newspaper of general circulation in the 10 governmental unit. Along with or as part of the authorizing 11 ordinance, there shall be published a notice of (1) the 12 specific number of voters required to sign a petition 13 requesting that the issuance of the alternate bonds be 14 submitted to referendum, (2) the time when such petition must 15 be filed, (3) the date of the prospective referendum, and 16 (4), with respect to authorizing ordinances adopted on or 17 after January 1, 1991, a statement that identifies any 18 revenue source that will be used to pay the principal of and 19 interest on the alternate bonds. The clerk or secretary of 20 the governmental unit shall make a petition form available to 21 anyone requesting one. If no petition is filed with the 22 clerk or secretary within 30 days of publication of the 23 authorizing ordinance and notice, the alternate bonds shall 24 be authorized to be issued. But if within this 30 days 25 period, a petition is filed with such clerk or secretary 26 signed by electors numbering the greater of (i) 7.5% of the 27 registered voters in the governmental unit or (ii) 200 of 28 those registered voters or 15% of those registered voters, 29 whichever is less, asking that the issuance of such alternate 30 bonds be submitted to referendum, the clerk or secretary 31 shall certify such question for submission at an election 32 held in accordance with the general election law. The 33 question on the ballot shall include a statement of any 34 revenue source that will be used to pay the principal of and HB1117 Engrossed -3- LRB9103156MWpc 1 interest on the alternate bonds. The alternate bonds shall be 2 authorized to be issued if a majority of the votes cast on 3 the question at such election are in favor thereof provided 4 that notice of the bond referendum, if heretofore or 5 hereafter held, has been or shall be given in accordance with 6 the provisions of Section 12-5 of the Election Code, at least 7 10 and not more than 45 days before the date of the election, 8 notwithstanding the time for publication otherwise imposed by 9 Section 12-5. Backdoor referendum proceedings for bonds and 10 alternate bonds to be issued in lieu of such bonds may be 11 conducted at the same time. 12 (c) To the extent payable from enterprise revenues, such 13 revenues shall have been determined by the governing body to 14 be sufficient to provide for or pay in each year to final 15 maturity of such alternate bonds all of the following: (1) 16 costs of operation and maintenance of the utility or 17 enterprise, but not including depreciation, (2) debt service 18 on all outstanding revenue bonds payable from such enterprise 19 revenues, (3) all amounts required to meet any fund or 20 account requirements with respect to such outstanding revenue 21 bonds, (4) other contractual or tort liability obligations, 22 if any, payable from such enterprise revenues, and (5) in 23 each year, an amount not less than 1.25 times debt service of 24 all (i) alternate bonds payable from such enterprise revenues 25 previously issued and outstanding and (ii) alternate bonds 26 proposed to be issued. To the extent payable from one or 27 more revenue sources, such sources shall have been determined 28 by the governing body to provide in each year, an amount not 29 less than 1.25 times debt service of all alternate bonds 30 payable from such revenue sources previously issued and 31 outstanding and alternate bonds proposed to be issued. The 32 conditions enumerated in this subsection (c) need not be met 33 for that amount of debt service provided for by the setting 34 aside of proceeds of bonds or other moneys at the time of the HB1117 Engrossed -4- LRB9103156MWpc 1 delivery of such bonds. 2 (d) The determination of the sufficiency of enterprise 3 revenues or a revenue source, as applicable, shall be 4 supported by reference to the most recent audit of the 5 governmental unit, which shall be for a fiscal year ending 6 not earlier than 18 months previous to the time of issuance 7 of the alternate bonds. If such audit does not adequately 8 show such enterprise revenues or revenue source, as 9 applicable, or if such enterprise revenues or revenue source, 10 as applicable, are shown to be insufficient, then the 11 determination of sufficiency shall be supported by the report 12 of an independent accountant or feasibility analyst, the 13 latter having a national reputation for expertise in such 14 matters, demonstrating the sufficiency of such revenues and 15 explaining, if appropriate, by what means the revenues will 16 be greater than as shown in the audit. Whenever such 17 sufficiency is demonstrated by reference to a schedule of 18 higher rates or charges for enterprise revenues or a higher 19 tax imposition for a revenue source, such higher rates, 20 charges or taxes shall have been properly imposed by an 21 ordinance adopted prior to the time of delivery of alternate 22 bonds. The reference to and acceptance of an audit or 23 report, as the case may be, and the determination of the 24 governing body as to sufficiency of enterprise revenues or a 25 revenue source shall be conclusive evidence that the 26 conditions of this Section have been met and that the 27 alternate bonds are valid. 28 (e) The enterprise revenues or revenue source, as 29 applicable, shall be in fact pledged to the payment of the 30 alternate bonds; and the governing body shall covenant, to 31 the extent it is empowered to do so, to provide for, collect 32 and apply such enterprise revenues or revenue source, as 33 applicable, to the payment of the alternate bonds and the 34 provision of not less than an additional .25 times debt HB1117 Engrossed -5- LRB9103156MWpc 1 service. The pledge and establishment of rates or charges 2 for enterprise revenues, or the imposition of taxes in a 3 given rate or amount, as provided in this Section for 4 alternate bonds, shall constitute a continuing obligation of 5 the governmental unit with respect to such establishment or 6 imposition and a continuing appropriation of the amounts 7 received. All covenants relating to alternate bonds and the 8 conditions and obligations imposed by this Section are 9 enforceable by any bondholder of alternate bonds affected, 10 any taxpayer of the governmental unit, and the People of the 11 State of Illinois acting through the Attorney General or any 12 designee, and in the event that any such action results in an 13 order finding that the governmental unit has not properly set 14 rates or charges or imposed taxes to the extent it is 15 empowered to do so or collected and applied enterprise 16 revenues or any revenue source, as applicable, as required by 17 this Act, the plaintiff in any such action shall be awarded 18 reasonable attorney's fees. The intent is that such 19 enterprise revenues or revenue source, as applicable, shall 20 be sufficient and shall be applied to the payment of debt 21 service on such alternate bonds so that taxes need not be 22 levied, or if levied need not be extended, for such payment. 23 Nothing in this Section shall inhibit or restrict the 24 authority of a governing body to determine the lien priority 25 of any bonds, including alternate bonds, which may be issued 26 with respect to any enterprise revenues or revenue source. 27 In the event that alternate bonds shall have been issued 28 and taxes, other than a designated revenue source, shall have 29 been extended pursuant to the general obligation, full faith 30 and credit promise supporting such alternate bonds, then the 31 amount of such alternate bonds then outstanding shall be 32 included in the computation of indebtedness of the 33 governmental unit for purposes of all statutory provisions or 34 limitations until such time as an audit of the governmental HB1117 Engrossed -6- LRB9103156MWpc 1 unit shall show that the alternate bonds have been paid from 2 the enterprise revenues or revenue source, as applicable, 3 pledged thereto for a complete fiscal year. 4 Alternate bonds may be issued to refund or advance refund 5 alternate bonds without meeting any of the conditions set 6 forth in this Section, except that the term of the refunding 7 bonds shall not be longer than the term of the refunded bonds 8 and that the debt service payable in any year on the 9 refunding bonds shall not exceed the debt service payable in 10 such year on the refunded bonds. 11 Once issued, alternate bonds shall be and forever remain 12 until paid or defeased the general obligation of the 13 governmental unit, for the payment of which its full faith 14 and credit are pledged, and shall be payable from the levy of 15 taxes as is provided in this Act for general obligation 16 bonds. 17 The changes made by this amendatory Act of 1990 do not 18 affect the validity of bonds authorized before September 1, 19 1990. 20 (Source: P.A. 90-812, eff. 1-26-99.) 21 (30 ILCS 350/16) (from Ch. 17, par. 6916) 22 Sec. 16. Levy for bonds. A governmental unit may levy a 23 tax for the payment of principal of and interest on general 24 obligation bonds or limited bonds at any time prior to March 25 1 of the calendar year during which the tax will be 26 collected. The county clerk shall accept the filing of the 27 ordinance levying such tax notwithstanding that such time is 28 subsequent to the end of the calendar year next preceding the 29 calendar year during which such tax will be collected. In 30 extending taxes for general obligation bonds, the county 31 clerk shall add to the levy for debt service on such bonds an 32 amount sufficient, in view of all losses and delinquencies in 33 tax collection, to produce tax receipts adequate for the HB1117 Engrossed -7- LRB9103156MWpc 1 prompt payment of such debt service. 2 (Source: P.A. 88-676, eff. 12-14-94.) 3 (30 ILCS 350/17) (from Ch. 17, par. 6917) 4 Sec. 17.Interest not debt; debt onLeases and 5 installment contracts. 6 (a) Interest not debt; debt on leases and installment 7 contracts. Interest on bonds shall not be included in any 8 computation of indebtedness of a governmental unit for the 9 purpose of any statutory provision or limitation. For bonds 10 consisting of leases and installment or financing contracts, 11 (1) that portion of payments made by a governmental unit 12 under the terms of a bond designated as interest in the bond 13 or the ordinance authorizing such bond shall be treated as 14 interest for purposes of this Section (2) where portions of 15 payments due under the terms of a bond have not been 16 designated as interest in the bond or the ordinance 17 authorizing such bond, and all or a portion of such payments 18 is to be used for the payment of principal of and interest on 19 other bonds of the governmental unit or bonds issued by 20 another unit of local government, such as a public building 21 commission, the payments equal to interest due on such 22 corresponding bonds shall be treated as interest for purposes 23 of this Section and (3) where portions of payments due under 24 the terms of a bond have not been designated as interest in 25 the bond or ordinance authorizing such bond and no portion of 26 any such payment is to be used for the payment of principal 27 of and interest on other bonds of the governmental unit or 28 another unit of local government, a portion of each payment 29 due under the terms of such bond shall be treated as interest 30 for purposes of this Section; such portion shall be equal in 31 amount to the interest that would have been paid on a 32 notional obligation of the governmental unit (bearing 33 interest at the highest rate permitted by law for bonds of HB1117 Engrossed -8- LRB9103156MWpc 1 the governmental unit at the time the bond was issued or, if 2 no such limit existed, 12%) on which the payments of 3 principal and interest were due at the same times and in the 4 same amounts as payments are due under the terms of the 5 bonds. The rule set forth in this Section shall be 6 applicable to all interest no matter when earned or accrued 7 or at what interval paid, and whether or not a bond bears 8 interest which compounds at certain intervals. For purposes 9 of bonds sold at amounts less than 95% of their stated value 10 at maturity, interest for purposes of this Section includes 11 the difference between the amount set forth on the face of 12 the bond as the original principal amount and the bond's 13received for the sale of the bonds and theirstated value at 14 maturity. 15 This subsectionSectionmay be made applicable to bonds 16 issued prior to the effective date of this Act by passage of 17 an ordinance to such effect by the governing body of a 18 governmental unit. 19 (b) Purchase or lease of property. The governing body of 20 each governmental unit may purchase or lease either real or 21 personal property through agreements that provide that the 22 consideration for the purchase or lease may be paid through 23 installments made at stated intervals for a period of no more 24 than 20 years or another period of time authorized by law, 25 whichever is greater. Each governmental unit may issue 26 certificates evidencing the indebtedness incurred under the 27 agreements. The certificate shall be valid whether or not an 28 appropriation with respect thereto is included in any annual 29 or supplemental budget adopted by the governmental unit. The 30 governing body of each governmental unit may sell, convey, 31 and reacquire either real or personal property, upon any 32 terms and conditions and in any manner, as the governing body 33 shall determine, if the governmental unit will lease the 34 property, as authorized by this subsection or any other HB1117 Engrossed -9- LRB9103156MWpc 1 applicable law. 2 All indebtedness incurred under this subsection, when 3 aggregated with the existing indebtedness of the governmental 4 unit, may not exceed the debt limits provided by applicable 5 law. 6 (Source: P.A. 85-1419.) 7 (30 ILCS 350/17.5 new) 8 Sec. 17.5. Bond authorization by referendum. Whenever 9 applicable law provides that the authorization of or the 10 issuance of bonds is subject to either a front-door or 11 backdoor referendum, the approval, once obtained, remains 12 valid (i) for 10 years after the date of the front-door 13 referendum or (ii) for 3 years after the end of the petition 14 period for a backdoor referendum. 15 Section 99. Effective date. This Act takes effect upon 16 becoming law.