Bill Text: IL HB0308 | 2019-2020 | 101st General Assembly | Introduced

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Bill Title: Amends the Local Government Debt Reform Act. Provides that no alternate bonds shall be issued if the issuance of such bonds would create or continue the accumulation of stacked alternate-bonded debt. Provides that provisions concerning stacked alternate-bonded debt do not apply to any transactions or agreements concerning debt that may be in place before the effective date of this amendatory Act. Defines "stacked alternate-bonded debt". Effective immediately.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2019-03-29 - Rule 19(a) / Re-referred to Rules Committee [HB0308 Detail]

Download: Illinois-2019-HB0308-Introduced.html

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101ST GENERAL ASSEMBLY State of Illinois 2019 and 2020 HB0308 Introduced , by Rep. David McSweeney SYNOPSIS AS INTRODUCED:
30 ILCS 350/3 from Ch. 17, par. 6903
30 ILCS 350/15 from Ch. 17, par. 6915
Amends the Local Government Debt Reform Act. Provides that no alternate bonds shall be issued if the issuance of such bonds would create or continue the accumulation of stacked alternate-bonded debt. Provides that provisions concerning stacked alternate-bonded debt do not apply to any transactions or agreements concerning debt that may be in place before the effective date of this amendatory Act. Defines "stacked alternate-bonded debt". Effective immediately.
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FISCAL NOTE ACT MAY APPLY
A BILL FOR
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AN ACT concerning finance.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Local Government Debt Reform Act is amended
by changing Sections 3 and 15 as follows:
(30 ILCS 350/3) (from Ch. 17, par. 6903)
Sec. 3. Definitions. In this Act words or terms shall have
the following meanings unless the context or usage clearly
indicates that another meaning is intended.
(a) "Alternate bonds" means bonds issued in lieu of revenue
bonds or payable from a revenue source as provided in Section
15.
(b) "Applicable law" means any provision of law, including
this Act, authorizing governmental units to issue bonds.
(c) "Backdoor referendum" means the submission of a public
question to the voters of a governmental unit, initiated by a
petition of voters, residents or property owners of such
governmental unit, to determine whether an action by the
governing body of such governmental unit shall be effective,
adopted or rejected.
(d) "Bond" means any instrument evidencing the obligation
to pay money authorized or issued by or on behalf of a
governmental unit under applicable law, including without

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limitation, bonds, notes, installment or financing contracts,
leases, certificates, tax anticipation warrants or notes,
vouchers, and any other evidences of indebtedness.
(e) "Debt service" on bonds means the amount of principal,
interest and premium, if any, when due either at stated
maturity or upon mandatory redemption.
(f) "Enterprise revenues" means the revenues of a utility
or revenue producing enterprise from which revenue bonds may be
payable.
(g) "General obligation bonds" means bonds of a
governmental unit for the payment of which the governmental
unit is empowered to levy ad valorem property taxes upon all
taxable property in a governmental unit without limitation as
to rate or amount.
(h) "Governing body" means the legislative body, council,
board, commission, trustees, or any other body, by whatever
name it is known, having charge of the corporate affairs of a
governmental unit.
(h-5) "Governmental revenue source" means a revenue source
that is either (1) federal or State funds that the governmental
unit has received in some amount during each of the 3 fiscal
years preceding the issuance of alternate bonds or (2) revenues
to be received from another governmental unit under an
intergovernmental cooperation agreement.
(i) "Governmental unit" means a county, township,
municipality, municipal corporation, unit of local government,

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school district, special district, public corporation, body
corporate and politic, forest preserve district, fire
protection district, conservation district, park district,
sanitary district, and all other local governmental agencies,
including any entity created by intergovernmental agreement
among any of the foregoing governmental units, but does not
include any office, officer, department, division, bureau,
board, commission, university, or similar agency of the State.
(j) "Ordinance" means an ordinance duly adopted by a
governing body or, if appropriate under applicable law, a
resolution so adopted.
(k) "Revenue bonds" means any bonds of a governmental unit
other than general obligation bonds, but "revenue bonds" does
include any debt authorized under Section 11-29.3-1 of the
Illinois Municipal Code.
(l) "Revenue source" means a source of funds, other than
enterprise revenues, received or available to be received by a
governmental unit and available for any one or more of its
corporate purposes.
(m) "Limited bonds" means bonds, excluding leases, notes,
installment or financing contracts, certificates, tax
anticipation warrants or notes, vouchers, and any other
evidences of indebtedness, issued under Section 15.01 of this
Act.
(n) "Stacked alternate-bonded debt" means any debt: (1)
that contains 2 or more layers, one of which finances another

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layer; and (2) in which at least one of the 2 or more layers is
financed with alternate revenue.
(Source: P.A. 92-879, eff. 1-13-03.)
(30 ILCS 350/15) (from Ch. 17, par. 6915)
Sec. 15. Double-barrelled bonds. Whenever revenue bonds
have been authorized to be issued pursuant to applicable law or
whenever there exists for a governmental unit a revenue source,
the procedures set forth in this Section may be used by a
governing body. General obligation bonds may be issued in lieu
of such revenue bonds as authorized, and general obligation
bonds may be issued payable from any revenue source. Such
general obligation bonds may be referred to as "alternate
bonds". Alternate bonds may be issued without any referendum or
backdoor referendum except as provided in this Section, upon
the terms provided in Section 10 of this Act without reference
to other provisions of law, but only upon the conditions
provided in this Section. Alternate bonds shall not be regarded
as or included in any computation of indebtedness for the
purpose of any statutory provision or limitation except as
expressly provided in this Section.
Such conditions are:
(a) Alternate bonds shall be issued for a lawful corporate
purpose. If issued in lieu of revenue bonds, alternate bonds
shall be issued for the purposes for which such revenue bonds
shall have been authorized. If issued payable from a revenue

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source in the manner hereinafter provided, which revenue source
is limited in its purposes or applications, then the alternate
bonds shall be issued only for such limited purposes or
applications. Alternate bonds may be issued payable from either
enterprise revenues or revenue sources, or both.
(b) Alternate bonds shall be subject to backdoor
referendum. The provisions of Section 5 of this Act shall apply
to such backdoor referendum, together with the provisions
hereof. The authorizing ordinance shall be published in a
newspaper of general circulation in the governmental unit.
Along with or as part of the authorizing ordinance, there shall
be published a notice of (1) the specific number of voters
required to sign a petition requesting that the issuance of the
alternate bonds be submitted to referendum, (2) the time when
such petition must be filed, (3) the date of the prospective
referendum, and (4), with respect to authorizing ordinances
adopted on or after January 1, 1991, a statement that
identifies any revenue source that will be used to pay debt
service on the alternate bonds. The clerk or secretary of the
governmental unit shall make a petition form available to
anyone requesting one.
Except as provided in the following paragraph, if no
petition is filed with the clerk or secretary within 30 days of
publication of the authorizing ordinance and notice, the
alternate bonds shall be authorized to be issued. But if within
this 30 days period, a petition is filed with such clerk or

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secretary signed by electors numbering the greater of (i) 7.5%
of the registered voters in the governmental unit or (ii) 200
of those registered voters or 15% of those registered voters,
whichever is less, asking that the issuance of such alternate
bonds be submitted to referendum, the clerk or secretary shall
certify such question for submission at an election held in
accordance with the general election law.
Notwithstanding the previous paragraph, in governmental
units with fewer than 500,000 inhabitants that propose to issue
alternate bonds payable solely from enterprise revenues as
defined under Section 3 of this Act, except for such alternate
bonds that finance or refinance projects concerning public
utilities, public streets and roads or public safety
facilities, and related infrastructure and equipment, if no
petition is filed with the clerk or secretary within 45 days of
publication of the authorizing ordinance and notice, the
alternate bonds shall be authorized to be issued. But if,
within this 45-day period, a petition is filed with such clerk
or secretary signed by the necessary number of electors, asking
that the issuance of such alternate bonds be submitted to
referendum, the clerk or secretary shall certify such question
for submission at an election held in accordance with the
general election law. For purposes of this paragraph, the
necessary number of electors for a governmental unit with more
than 4,000 registered voters is the lesser of (i) 5% of the
registered voters or (ii) 5,000 registered voters; and the

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necessary number of electors for a governmental unit with 4,000
or fewer registered voters is the lesser of (i) 15% of the
registered voters or (ii) 200 registered voters.
The question on the ballot shall include a statement of any
revenue source that will be used to pay debt service on the
alternate bonds. The alternate bonds shall be authorized to be
issued if a majority of the votes cast on the question at such
election are in favor thereof provided that notice of the bond
referendum, if held before July 1, 1999, has been given in
accordance with the provisions of Section 12-5 of the Election
Code in effect at the time of the bond referendum, at least 10
and not more than 45 days before the date of the election,
notwithstanding the time for publication otherwise imposed by
Section 12-5. Notices required in connection with the
submission of public questions on or after July 1, 1999 shall
be as set forth in Section 12-5 of the Election Code. Backdoor
referendum proceedings for bonds and alternate bonds to be
issued in lieu of such bonds may be conducted at the same time.
(c) To the extent payable from enterprise revenues, such
revenues shall have been determined by the governing body to be
sufficient to provide for or pay in each year to final maturity
of such alternate bonds all of the following: (1) costs of
operation and maintenance of the utility or enterprise, but not
including depreciation, (2) debt service on all outstanding
revenue bonds payable from such enterprise revenues, (3) all
amounts required to meet any fund or account requirements with

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respect to such outstanding revenue bonds, (4) other
contractual or tort liability obligations, if any, payable from
such enterprise revenues, and (5) in each year, an amount not
less than 1.25 times debt service of all (i) alternate bonds
payable from such enterprise revenues previously issued and
outstanding and (ii) alternate bonds proposed to be issued. To
the extent payable from one or more revenue sources, such
sources shall have been determined by the governing body to
provide in each year, an amount not less than 1.25 times debt
service of all alternate bonds payable from such revenue
sources previously issued and outstanding and alternate bonds
proposed to be issued. The 1.25 figure in the preceding
sentence shall be reduced to 1.10 if the revenue source is a
governmental revenue source. The conditions enumerated in this
subsection (c) need not be met for that amount of debt service
provided for by the setting aside of proceeds of bonds or other
moneys at the time of the delivery of such bonds.
(c-1) In the case of alternate bonds issued as variable
rate bonds (including refunding bonds), debt service shall be
projected based on the rate for the most recent date shown in
the 20 G.O. Bond Index of average municipal bond yields as
published in the most recent edition of The Bond Buyer
published in New York, New York (or any successor publication
or index, or if such publication or index is no longer
published, then any index of long-term municipal tax-exempt
bond yields selected by the governmental unit), as of the date

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of determination referred to in subsection (c) of this Section.
Any interest or fees that may be payable to the provider of a
letter of credit, line of credit, surety bond, bond insurance,
or other credit enhancement relating to such alternate bonds
and any fees that may be payable to any remarketing agent need
not be taken into account for purposes of such projection. If
the governmental unit enters into an agreement in connection
with such alternate bonds at the time of issuance thereof
pursuant to which the governmental unit agrees for a specified
period of time to pay an amount calculated at an agreed-upon
rate or index based on a notional amount and the other party
agrees to pay the governmental unit an amount calculated at an
agreed-upon rate or index based on such notional amount,
interest shall be projected for such specified period of time
on the basis of the agreed-upon rate payable by the
governmental unit.
(d) The determination of the sufficiency of enterprise
revenues or a revenue source, as applicable, shall be supported
by reference to the most recent audit of the governmental unit,
which shall be for a fiscal year ending not earlier than 18
months previous to the time of issuance of the alternate bonds.
If such audit does not adequately show such enterprise revenues
or revenue source, as applicable, or if such enterprise
revenues or revenue source, as applicable, are shown to be
insufficient, then the determination of sufficiency shall be
supported by the report of an independent accountant or

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feasibility analyst, the latter having a national reputation
for expertise in such matters, who is not otherwise involved in
the project being financed or refinanced with the proceeds of
the alternate bonds, demonstrating the sufficiency of such
revenues and explaining, if appropriate, by what means the
revenues will be greater than as shown in the audit. Whenever
such sufficiency is demonstrated by reference to a schedule of
higher rates or charges for enterprise revenues or a higher tax
imposition for a revenue source, such higher rates, charges or
taxes shall have been properly imposed by an ordinance adopted
prior to the time of delivery of alternate bonds. The reference
to and acceptance of an audit or report, as the case may be,
and the determination of the governing body as to sufficiency
of enterprise revenues or a revenue source shall be conclusive
evidence that the conditions of this Section have been met and
that the alternate bonds are valid.
(e) The enterprise revenues or revenue source, as
applicable, shall be in fact pledged to the payment of the
alternate bonds; and the governing body shall covenant, to the
extent it is empowered to do so, to provide for, collect and
apply such enterprise revenues or revenue source, as
applicable, to the payment of the alternate bonds and the
provision of not less than an additional .25 (or .10 for
governmental revenue sources) times debt service. The pledge
and establishment of rates or charges for enterprise revenues,
or the imposition of taxes in a given rate or amount, as

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provided in this Section for alternate bonds, shall constitute
a continuing obligation of the governmental unit with respect
to such establishment or imposition and a continuing
appropriation of the amounts received. All covenants relating
to alternate bonds and the conditions and obligations imposed
by this Section are enforceable by any bondholder of alternate
bonds affected, any taxpayer of the governmental unit, and the
People of the State of Illinois acting through the Attorney
General or any designee, and in the event that any such action
results in an order finding that the governmental unit has not
properly set rates or charges or imposed taxes to the extent it
is empowered to do so or collected and applied enterprise
revenues or any revenue source, as applicable, as required by
this Act, the plaintiff in any such action shall be awarded
reasonable attorney's fees. The intent is that such enterprise
revenues or revenue source, as applicable, shall be sufficient
and shall be applied to the payment of debt service on such
alternate bonds so that taxes need not be levied, or if levied
need not be extended, for such payment. Nothing in this Section
shall inhibit or restrict the authority of a governing body to
determine the lien priority of any bonds, including alternate
bonds, which may be issued with respect to any enterprise
revenues or revenue source.
In the event that alternate bonds shall have been issued
and taxes, other than a designated revenue source, shall have
been extended pursuant to the general obligation, full faith

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and credit promise supporting such alternate bonds, then the
amount of such alternate bonds then outstanding shall be
included in the computation of indebtedness of the governmental
unit for purposes of all statutory provisions or limitations
until such time as an audit of the governmental unit shall show
that the alternate bonds have been paid from the enterprise
revenues or revenue source, as applicable, pledged thereto for
a complete fiscal year.
Alternate bonds may be issued to refund or advance refund
alternate bonds without meeting any of the conditions set forth
in this Section, except that the term of the refunding bonds
shall not be longer than the term of the refunded bonds and
that the debt service payable in any year on the refunding
bonds shall not exceed the debt service payable in such year on
the refunded bonds.
Once issued, alternate bonds shall be and forever remain
until paid or defeased the general obligation of the
governmental unit, for the payment of which its full faith and
credit are pledged, and shall be payable from the levy of taxes
as is provided in this Act for general obligation bonds.
The changes made by this amendatory Act of 1990 do not
affect the validity of bonds authorized before September 1,
1990.
(f) Notwithstanding any provision of law to the contrary,
no alternate bonds shall be issued if the issuance of such
bonds would create or continue the accumulation of stacked

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alternate-bonded debt as defined under Section 3. The
provisions of this subsection (f) do not apply to any
transactions or agreements concerning debt that may be in place
before the effective date of this amendatory Act of the 101st
General Assembly.
(Source: P.A. 97-542, eff. 8-23-11; 98-203, eff. 1-1-14.)
Section 99. Effective date. This Act takes effect upon
becoming law.