Bill Text: IL HB2830 | 2013-2014 | 98th General Assembly | Engrossed

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Amends the Illinois Housing Development Act. Removes from the definition of the term "limited-profit entity" limited-profit entities having articles of incorporation which provide that if the limited-profit entity receives a loan from the Illinois Housing Development Authority, the Chairman of the Authority shall have the power, if he determines that any such loan is in jeopardy of not being repaid, or that the proposed development for which such loan was made is in jeopardy of not being constructed, or the limited-profit entity is otherwise in violation of rules and regulations promulgated by the Authority, to appoint to the board of directors or other comparable controlling body of such limited-profit entity a number of new directors or persons, which number shall be sufficient to constitute a voting majority of such board or controlling body. Removes provisions prohibiting a limited-profit entity which receives loans from the Authority from making distributions in any one year with respect to a development financed by the Authority in excess of 6% of its equity in such development. Adds language providing that the equity in a development shall consist of the difference between the amount of the mortgage loan and the total cost of the development. Provides that the Authority shall approve a tenant selection plan submitted by the applicant for the loan prior to disbursing any funds in connection with the acquisition, rehabilitation, or construction of a development (rather than providing that prior to making a loan commitment for a development, the Authority shall approve a tenant selection plan submitted by the applicant for the loan). Effective immediately.

Spectrum: Partisan Bill (Democrat 4-0)

Status: (Passed) 2013-08-09 - Public Act . . . . . . . . . 98-0260 [HB2830 Detail]

Download: Illinois-2013-HB2830-Engrossed.html

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AN ACT concerning State government.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Housing Development Act is amended
by changing Sections 2, 8, and 10 as follows:
(20 ILCS 3805/2) (from Ch. 67 1/2, par. 302)
Sec. 2. As used in this Act:
(a) "Authority" means the Illinois Housing Development
Authority created in this Act.
(b) "Development costs" means the costs approved by the
Authority as appropriate expenditures which may be incurred
prior to commitment and initial closing of assisted mortgage
financing or of housing related commercial facilities,
including but not limited to: (1) payments for options to
purchase properties for the proposed development or
facilities, deposits on contracts of purchase, or, with the
prior approval of the Authority, payments for the purchases of
such properties; (2) legal, organizational and consultants'
expenses; (3) payment of fees for preliminary feasibility
studies and engineering and architectural work; (4) necessary
application and other fees to federal, State and local
government agencies; and (5) such other expenses as the
Authority may deem appropriate to effectuate the purposes of

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this Act.
(c) "Assisted mortgage financing" means a below market
interest rate mortgage insured or purchased, or a loan made, by
the Secretary of the United States Department of Housing and
Urban Development or by any other federal agency or
governmental corporation or by any political subdivision of the
State of Illinois or by any Illinois public corporation; a
market interest rate mortgage insured or purchased, or a loan
made in combination with, or as augmented by, a program of rent
supplements, interest subsidies, leasing, contributions or
grants, or other programs as are now or hereafter authorized by
federal law to serve low or moderate income persons; a mortgage
or loan made pursuant to this Act; or a mortgage or loan from
any private or public source with an interest rate and terms
satisfactory to the Authority and which will meet the
requirements and purposes of this Act.
(d) "Lending institution" means any bank, trust company,
savings bank, savings and loan association, credit union,
national banking association, mortgage banking association,
federal savings and loan association or federal credit unit
maintaining an office in the State, any insurance company or
any other entity or organization which makes or acquires loans
secured by real property.
(e) "Residential mortgage" means a loan owed to a lending
institution, to the Authority or to a trustee for holders of
bonds or notes of the Authority or to a trustee for owners of

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pools of mortgages, and secured by a lien on real property
located in the State and improved by a residential structure or
a mixed residential and commercial structure, or unimproved if
the proceeds of such loan shall be used for the erection of a
residential structure or a mixed residential and commercial
structure thereon, whether or not such loan is insured or
guaranteed by the United States of America or any agency or
corporation thereof.
(f) "Development" means a specific work or improvement
undertaken to provide dwelling accommodations, including the
acquisition, construction or rehabilitation of lands,
buildings and community facilities and in connection therewith
to provide nonhousing facilities which are a part of a planned
large-scale project or new community.
(g) "Persons and families of low and moderate income" and
"Low income or moderate income persons" means families and
persons who cannot afford to pay the amounts at which private
enterprise, without assisted mortgage financing, is providing
a substantial supply of decent, safe and sanitary housing. The
income limits for the admission of such families and persons to
developments shall be those established pursuant to the rules
applicable to the assisted mortgage financing program under
which such developments are financed.
(h) "Moderate rentals" means rent charges less than those
rents generally charged for new dwelling units of comparable
size and location built by the unassisted efforts of private

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enterprise and financed at then current market interest rates.
(i) "Low rentals" means rent charges at least 10% lower
than moderate rentals.
(j) "Rents" or "Rentals" shall mean fees or charges paid
for use of a development under this Act, whether the
development is operated on a landlord-tenant basis or as a
condominium or cooperative.
(k) "Limited-profit entity" means any individual, joint
venture, partnership, limited partnership, trust or
corporation organized or existing under the laws of the State
of Illinois or authorized to do business in this State and
having articles of incorporation or comparable documents of
organization or a written agreement with the Authority which,
in addition to other requirements of law, provide that if the
limited-profit entity receives any loan from the Authority as
provided for in this Act, it shall be authorized to enter into
an agreement with the Authority providing for regulations with
respect to rents, profits, dividends and disposition of
property or franchises. :
(1) that if the limited-profit entity receives any loan
from the Authority as provided for in this Act, it shall be
authorized to enter into an agreement with the Authority
providing for regulations with respect to rents, profits,
dividends and disposition of property or franchises; and
(2) that if the limited-profit entity receives a loan,
as provided for in this Act, the Chairman of the Authority,

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acting with the prior approval of the Authority, shall have
the power, if he determines that any such loan is in
jeopardy of not being repaid, or that the proposed
development for which such loan was made is in jeopardy of
not being constructed, or the limited-profit entity is
otherwise in violation of rules and regulations
promulgated by the Authority, to appoint to the board of
directors or other comparable controlling body of such
limited-profit entity a number of new directors or persons,
which number shall be sufficient to constitute a voting
majority of such board or controlling body,
notwithstanding any other provisions of the limited-profit
entity's articles of incorporation or other documents of
organization, or of any other provisions of law, provided
that this requirement set forth in this paragraph (2) is
not mandatory in the case of loans made solely with monies
from the Authority's administrative fund.
(l) "Land development" means the process of clearing and
grading land, making, installing, or constructing waterlines
and water supply installations, sewerlines and sewage disposal
installations, steam, gas, and electric lines and
installations, roads, streets, curbs, gutters, sidewalks,
storm drainage facilities, and other installations or work,
whether on or off the site, necessary or desirable to prepare
land for residential, commercial, industrial, or other uses, or
to provide facilities for public or common use.

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(m) "Nonprofit corporation" means a nonprofit corporation
incorporated pursuant to the provisions of the Illinois General
Not For Profit Corporation Act or the State Housing Act of 1933
and having articles of incorporation which, in addition to
other requirements of law, provide:
(1) that the corporation has been organized to provide
housing facilities for persons of low and moderate income;
(2) that all income and earnings of the corporation
shall be used exclusively for corporation purposes and that
no part of the net income or net earnings of the
corporation shall inure to the benefit or profit of any
private individual, firm, corporation, partnership, or
association;
(3) that the corporation is in no manner controlled or
under the direction or acting in the substantial interest
of private individuals, firms, corporations, partnerships,
or associations seeking to derive profit or gain therefrom
or seeking to eliminate or minimize losses in any dealings
or transactions therewith;
(4) that if the corporation receives any loan or
advance from the Authority as provided for in this Act, it
shall be authorized to enter into an agreement with the
Authority providing for regulation with respect to rents,
profits, dividends, and disposition of property or
franchises;
(5) that if the corporation receives a loan or advance,

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as provided for in this Act, the chairman of the Authority,
acting with the prior approval of the majority of the
members of the Authority, shall have the power if he
determines that any such loan or advance is in jeopardy of
not being repaid, or that the proposed development for
which such loan or advance was made is in jeopardy of not
being constructed, or that some part of the net income or
net earnings of the corporation is inuring to the benefit
of any private individual, firm, corporation, partnership,
or association, or that the corporation is in some manner
controlled or under the direction of or acting in the
substantial interest of any private individual, firm,
corporation, partnership, or association seeking to derive
benefit or gain therefrom or seeking to eliminate or
minimize losses in any dealings or transactions therewith,
or is in violation of rules and regulations promulgated by
the Authority to appoint to the board of directors of such
corporation a number of new directors, which number shall
be sufficient to constitute a majority of such board,
notwithstanding any other provisions of such articles of
incorporation or of any other provisions of law; and
(6) that each development of such corporation shall be
operated exclusively for the benefit of the persons who are
housed in such development which shall include families or
persons of low or moderate income as required by this Act,
and that such development shall reserve for families or

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persons of low or moderate income the number and types of
dwelling units required by applicable federal or State law.
The requirements contained in paragraphs (2), (3), (5) and
(6) are not mandatory in the case of loans made solely from the
Authority's administrative fund.
(n) "State" means the State of Illinois.
(o) "Community facilities" means the land, buildings,
improvements and equipment for land development, for health,
welfare, recreational, social, educational and commercial
activities, and for public, common or municipal services.
(p) "Sinking fund payment" means the amount of money
specified in the resolution or resolutions authorizing term
bonds as payable into a sinking fund during a particular period
for the retirement of term bonds at maturity after such period,
but shall not include any amount payable by reason only of the
maturity of a bond.
(q) "Housing related commercial facilities" means
commercial facilities which are or are to be related to a
development. Commercial facilities are related to a
development if they are, in the sole judgment of the Authority,
located in the same area as the development and (i) necessary
or desirable in order to provide services for residents of that
area in which the development is located; or (ii) a portion of
the revenues of the commercial facilities are to be used to
provide funds for paying costs of construction, acquisition,
rehabilitation, operation, maintenance of or payment of debt

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service on the development or (iii) necessary or desirable in
order to make the development successful, such as, without
limitation, eliminating or preventing slum or blighted
conditions, preserving historic structures or ensuring that
facilities are not inconsistent with the development. For
purposes of this Section, "commercial facilities" includes
land, buildings, improvements, equipment and all ancillary
facilities for use for offices, stores, retirement homes,
hotels, financial institutions, service health care,
education, recreation or research establishments or any other
commercial purpose.
(r) "Rate protection contract" means interest rate
exchange agreements; currency exchange agreements; forward
payment conversion agreements; contracts providing for payment
or receipt of funds based on levels of, or changes in, interest
rates, currency exchange rates, stock or other indices;
contracts to exchange cash flows or a series of payments;
contracts, including without limitation, interest rate caps;
interest rate floors; interest rate locks; interest rate
collars; rate of return guarantees or assurances, to manage
payment, currency, rate, spread or similar exposure; the
obligation, right, or option to issue, put, lend, sell, grant a
security interest in, buy, borrow or otherwise acquire, a bond,
note or other security or interest therein as an investment, as
collateral, as a hedge, or otherwise as a source or assurance
of payment to or by the Authority or as a reduction of the

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Authority's or an obligor's risk exposure; repurchase
agreements; securities lending agreements; and other
agreements or arrangements similar to the foregoing.
(s) "Affordable Housing Program Trust Fund Bonds or Notes"
means bonds or notes issued by the Authority pursuant to the
provisions of this Act for the purposes of providing affordable
housing to low and very low income persons as provided in the
Illinois Affordable Housing Act through the use or pledge, in
whole or in part, of Trust Fund Moneys dedicated or otherwise
made available to the Authority.
(t) "Trust Fund Moneys" has the meaning given to that term
in Section 3 of the Illinois Affordable Housing Act.
(Source: P.A. 87-250; 88-93.)
(20 ILCS 3805/8) (from Ch. 67 1/2, par. 308)
Sec. 8. The Authority may, pursuant to its rules or
regulations, or pursuant to agreements with persons to whom it
makes mortgage or other loans, provide for methods of limiting
profits or cash flow or other distributions available to
limited-profit entities to whom it has made or will make such
loans. A limited-profit entity which receives loans from the
Authority may not make distributions in any one year with
respect to a development financed by the Authority in excess of
6% of its equity in such development, except that the right to
such distribution shall be cumulative. This distribution
limitation may not be increased above 6% during the life of the

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Authority's loan, whether the loan is outstanding on or is made
after the effective date of this amendatory Act of 1991,
unless, by resolution of the members, the Authority determines
that an increase is necessary to preserve the development as
affordable to low and moderate income persons and families or
that an increase provides for the creation of additional units
of housing affordable to low or moderate income persons and
families in the development or otherwise in this State. The
equity in a development shall consist of the difference between
the amount of the mortgage loan and the total cost of the
development. The total cost of the development shall include
construction or rehabilitation costs including job overhead
and a builder's and sponsor's profit and risk fee,
architectural, engineering, legal and accounting costs,
organizational expenses, land value, interest and financing
charges paid during construction, the cost of landscaping and
off-site improvements, whether or not such costs have been paid
in cash or in a form other than cash. With respect to every
development the Authority shall, by resolution, establish the
entity's equity at the time of making of the final mortgage
advance and, for purposes of this paragraph, that figure shall
remain constant during the life of the Authority's loan with
respect to such development, unless adjusted pursuant to a
resolution of the members based on criteria set forth in the
Authority's rules or regulations. The Authority may, pursuant
to its rules or regulations, or pursuant to agreements with

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persons to whom it makes mortgage or other loans, provide for
methods of limiting profits or cash flow or other distributions
available to the person. Such alternative methods may include,
without limitation, a limitation which may vary from period to
period based on changes in the costs of borrowing money and may
be changed from time to time. Such alternative methods may be
in lieu of the 6% limitation as provided in this Section. With
respect to mortgage loans to limited profit entities, the
alternative method shall be such as shall, in the sole judgment
of the Authority, result in the lowest rents consistent with
attracting private enterprise to acquire, construct,
rehabilitate, operate and maintain the development. The equity
in a development shall consist of the difference between the
amount of the mortgage loan and the total cost of the
development. The total cost of the development shall include
construction or rehabilitation costs including job overhead
and a builder's and sponsor's profit and risk fee,
architectural, engineering, legal, and accounting costs,
organizational expenses, land value, interest and financing
charges paid during construction, and the cost of landscaping
and off-site improvements, whether or not such costs have been
paid in cash or in a form other than cash.
(Source: P.A. 87-250.)
(20 ILCS 3805/10) (from Ch. 67 1/2, par. 310)
Sec. 10. The Prior to making a loan commitment for a

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development under this Act, the Authority shall approve a
tenant selection plan submitted by the applicant for the loan
prior to disbursing any funds in connection with the
acquisition, rehabilitation, or construction of a development.
The Authority shall formulate regulations from time to time
setting forth the criteria for tenant selection plans. These
criteria shall include income limits, which may vary with the
size and circumstances of the family unit of tenants. The
income limits shall be sufficiently flexible to avoid undue
economic homogeneity among the tenants of a development. The
Authority may formulate regulations from time to time for the
alteration of occupancies of tenants who exceed established
income limits. The tenant selection plan shall specify how many
units in the development shall be held available for rentals to
persons of low or moderate income, as defined in this Act.
In determining the number of units which shall be so held
available for rental to persons of low or moderate income, the
Authority shall require that the number of dwelling units so
held reserved for them in each development shall not be less
than the number required by applicable federal and State law.
In connection with any mortgage loan for a development, the
Authority may enter into an agreement with the owner of the
development as a part of the loan providing that as long as the
loan remains outstanding or such longer period as is set forth
in the agreement, the development shall be held available for
such rentals. Any such agreement shall, upon being recorded in

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the manner provided for recording of deeds or registered in the
manner specified for registration of titles, be binding upon
any subsequent owners of the development as provided by its
terms.
(Source: P.A. 87-250.)
Section 99. Effective date. This Act takes effect upon
becoming law.