Bill Text: IL HB2936 | 2023-2024 | 103rd General Assembly | Introduced
Bill Title: Amends the Local Government Debt Reform Act. Provides that alternate bonds may not be secured by the proceeds of general obligation bonds issued without referendum approval. Effective immediately.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Introduced) 2024-03-07 - Tabled Pursuant to Rule [HB2936 Detail]
Download: Illinois-2023-HB2936-Introduced.html
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1 | AN ACT concerning revenue.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Local Government Debt Reform Act is amended | |||||||||||||||||||
5 | by changing Section 15 as follows:
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6 | (30 ILCS 350/15) (from Ch. 17, par. 6915)
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7 | Sec. 15. Double-barrelled bonds. Whenever revenue bonds | |||||||||||||||||||
8 | have been
authorized to be issued pursuant to applicable law | |||||||||||||||||||
9 | or whenever there exists
for a governmental unit a revenue | |||||||||||||||||||
10 | source, the procedures set forth in this
Section may be used by | |||||||||||||||||||
11 | a governing body. General obligation bonds may be
issued in | |||||||||||||||||||
12 | lieu of such revenue bonds as authorized, and general | |||||||||||||||||||
13 | obligation
bonds may be issued payable from any revenue | |||||||||||||||||||
14 | source. Such general
obligation bonds may be referred to as | |||||||||||||||||||
15 | "alternate bonds". Alternate bonds
may be issued without any | |||||||||||||||||||
16 | referendum or backdoor referendum except as
provided in this | |||||||||||||||||||
17 | Section, upon the terms provided in Section 10 of this Act
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18 | without reference to other provisions of law, but only upon | |||||||||||||||||||
19 | the conditions
provided in this Section. Alternate bonds shall | |||||||||||||||||||
20 | not be regarded as or
included in any computation of | |||||||||||||||||||
21 | indebtedness for the purpose of any
statutory provision or | |||||||||||||||||||
22 | limitation except as expressly provided in this Section.
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23 | Such conditions are:
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1 | (a) Alternate bonds shall be issued for a lawful
corporate | ||||||
2 | purpose. If issued in lieu of revenue bonds, alternate bonds
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3 | shall be issued for the purposes for which such revenue bonds | ||||||
4 | shall have
been authorized. If issued payable from a revenue | ||||||
5 | source in the manner
hereinafter provided, which revenue | ||||||
6 | source is limited in its purposes or
applications, then the | ||||||
7 | alternate bonds shall be issued only for such
limited purposes | ||||||
8 | or applications. Alternate bonds may be issued payable
from | ||||||
9 | either enterprise revenues or revenue sources, or both. | ||||||
10 | Alternate bonds may not be secured by the proceeds of general | ||||||
11 | obligation bonds issued without referendum approval.
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12 | (b) Alternate bonds shall be subject to backdoor | ||||||
13 | referendum. The
provisions of Section 5 of this Act shall | ||||||
14 | apply to such backdoor
referendum, together with the | ||||||
15 | provisions hereof. The authorizing ordinance
shall be | ||||||
16 | published in a newspaper of general circulation in the
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17 | governmental unit. Along with or as part of the authorizing | ||||||
18 | ordinance,
there shall be published a notice of (1) the | ||||||
19 | specific number of voters
required to sign a petition | ||||||
20 | requesting that the issuance of the alternate
bonds be | ||||||
21 | submitted to referendum, (2) the time when such petition must
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22 | be filed, (3) the date of the prospective referendum, and
(4), | ||||||
23 | with respect to authorizing ordinances adopted on or after | ||||||
24 | January 1,
1991, a statement that identifies any revenue | ||||||
25 | source that will be used to
pay debt service on the alternate | ||||||
26 | bonds.
The clerk or
secretary of the governmental unit shall |
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1 | make a petition form available to
anyone requesting one. | ||||||
2 | Except as provided in the following paragraph, if no | ||||||
3 | petition is filed with the clerk or secretary
within 30 days of | ||||||
4 | publication of the authorizing ordinance and notice, the
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5 | alternate bonds shall be authorized to be issued. But if | ||||||
6 | within this 30
days period, a petition is filed with such clerk | ||||||
7 | or secretary signed by
electors numbering the greater of (i) | ||||||
8 | 7.5% of the registered
voters in the governmental unit or (ii) | ||||||
9 | 200 of those registered voters or
15% of those registered | ||||||
10 | voters, whichever is less,
asking that the issuance of such | ||||||
11 | alternate bonds be submitted to
referendum, the clerk or | ||||||
12 | secretary shall certify such question for
submission at an | ||||||
13 | election held in accordance with the general election law.
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14 | Notwithstanding the previous paragraph, in governmental | ||||||
15 | units with fewer than 500,000 inhabitants that propose to | ||||||
16 | issue alternate bonds payable solely from enterprise revenues | ||||||
17 | as defined under Section 3 of this Act, except for such | ||||||
18 | alternate bonds that finance or refinance projects concerning | ||||||
19 | public utilities, public streets and roads or public safety | ||||||
20 | facilities, and related infrastructure and equipment, if no | ||||||
21 | petition is filed with the clerk or secretary
within 45 days of | ||||||
22 | publication of the authorizing ordinance and notice, the
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23 | alternate bonds shall be authorized to be issued. But if, | ||||||
24 | within this 45-day period, a petition is filed with such clerk | ||||||
25 | or secretary signed by the necessary number of electors, | ||||||
26 | asking that the issuance of such alternate bonds be submitted |
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1 | to
referendum, the clerk or secretary shall certify such | ||||||
2 | question for
submission at an election held in accordance with | ||||||
3 | the general election law. For purposes of this paragraph, the | ||||||
4 | necessary number of electors for a governmental unit with more | ||||||
5 | than 4,000 registered voters is the lesser of (i) 5% of the | ||||||
6 | registered voters or (ii) 5,000 registered voters; and the | ||||||
7 | necessary number of electors for a governmental unit with | ||||||
8 | 4,000 or fewer registered voters is the lesser of (i) 15% of | ||||||
9 | the registered voters or (ii) 200 registered voters. | ||||||
10 | The question on the ballot shall include a statement of | ||||||
11 | any
revenue source that will be used to pay debt service on
the | ||||||
12 | alternate bonds. The alternate bonds shall be authorized to be | ||||||
13 | issued
if a majority of the votes cast on the question at such | ||||||
14 | election are in
favor thereof
provided that notice of the bond | ||||||
15 | referendum, if held before July 1, 1999,
has been given in | ||||||
16 | accordance with the provisions of Section
12-5
of the Election | ||||||
17 | Code
in effect at the time of the bond referendum, at least 10 | ||||||
18 | and not more than
45 days before the date of
the election, | ||||||
19 | notwithstanding the time for publication otherwise imposed by
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20 | Section 12-5.
Notices required in connection with the | ||||||
21 | submission of public questions
on or after July 1, 1999 shall | ||||||
22 | be as set forth in Section 12-5 of the Election
Code.
Backdoor | ||||||
23 | referendum proceedings for bonds and alternate
bonds to be | ||||||
24 | issued in lieu of such bonds may be conducted at the same time.
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25 | (c) To the extent payable from enterprise revenues, such | ||||||
26 | revenues shall
have been determined by the governing body to |
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1 | be sufficient to provide for
or pay in each year to final | ||||||
2 | maturity of such alternate bonds all of the
following: (1) | ||||||
3 | costs of operation and maintenance of the utility or
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4 | enterprise, but not including depreciation, (2) debt service | ||||||
5 | on all
outstanding revenue bonds payable from such enterprise | ||||||
6 | revenues, (3) all
amounts required to meet any fund or account | ||||||
7 | requirements with respect to
such outstanding revenue bonds, | ||||||
8 | (4) other contractual or tort liability
obligations, if any, | ||||||
9 | payable from such enterprise revenues, and (5) in each
year, | ||||||
10 | an amount not less than 1.25 times debt service of all (i) | ||||||
11 | alternate
bonds payable from such enterprise revenues | ||||||
12 | previously issued and
outstanding and (ii) alternate bonds | ||||||
13 | proposed to be issued.
To the extent
payable from one or more | ||||||
14 | revenue sources, such sources shall have been
determined by | ||||||
15 | the governing body to provide in each year, an amount not
less | ||||||
16 | than 1.25 times debt service of all alternate bonds payable | ||||||
17 | from such
revenue sources previously issued and outstanding | ||||||
18 | and alternate bonds
proposed to be issued.
The 1.25 figure in | ||||||
19 | the preceding sentence shall be reduced to 1.10 if the
revenue | ||||||
20 | source is a governmental revenue source.
The conditions | ||||||
21 | enumerated in this subsection (c)
need not be met for that | ||||||
22 | amount of debt service provided for by the setting
aside of | ||||||
23 | proceeds of bonds or other moneys at the time of the delivery | ||||||
24 | of
such bonds.
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25 | (c-1) In the case of alternate bonds issued as variable | ||||||
26 | rate bonds
(including
refunding bonds), debt service shall be |
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1 | projected based on the rate for the
most recent
date shown in | ||||||
2 | the 20 G.O. Bond Index of average municipal bond yields as
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3 | published in
the most recent edition of The Bond Buyer | ||||||
4 | published in New York, New York (or
any
successor publication | ||||||
5 | or index, or if such publication or index is no longer
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6 | published,
then any index of long-term municipal tax-exempt | ||||||
7 | bond yields selected by the
governmental unit), as of the date | ||||||
8 | of determination referred to in subsection (c) of this
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9 | Section. Any interest or fees that may be payable to the | ||||||
10 | provider of a letter of credit, line
of credit, surety bond, | ||||||
11 | bond insurance, or other credit enhancement relating to such
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12 | alternate bonds and any fees that may be payable to any | ||||||
13 | remarketing agent need not be
taken into account for purposes | ||||||
14 | of such projection. If the governmental unit enters into
an | ||||||
15 | agreement in connection with such alternate bonds at the time | ||||||
16 | of issuance
thereof
pursuant to which the governmental unit | ||||||
17 | agrees for a specified period of time
to pay an
amount | ||||||
18 | calculated at an agreed-upon rate or index based on a notional | ||||||
19 | amount
and the other party agrees to pay the governmental unit | ||||||
20 | an amount calculated at
an agreed-upon rate or index based on | ||||||
21 | such notional amount, interest
shall be projected for such | ||||||
22 | specified period of time on the basis of the
agreed-upon rate
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23 | payable by the governmental unit.
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24 | (d) The determination of the sufficiency of enterprise | ||||||
25 | revenues or a
revenue source, as applicable, shall be | ||||||
26 | supported by reference to the most
recent audit of the |
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1 | governmental unit, which shall be for a fiscal year
ending not | ||||||
2 | earlier than 18 months previous to the time of issuance of the
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3 | alternate bonds. If such audit does not adequately show such | ||||||
4 | enterprise
revenues or revenue source, as applicable, or if | ||||||
5 | such enterprise revenues
or revenue source, as applicable, are | ||||||
6 | shown to be insufficient, then the
determination of | ||||||
7 | sufficiency shall be supported by the report of an
independent | ||||||
8 | accountant or feasibility analyst, the latter having a | ||||||
9 | national
reputation
for expertise in such matters, who is not | ||||||
10 | otherwise involved in the project being financed or refinanced | ||||||
11 | with the proceeds of the alternate bonds, demonstrating the | ||||||
12 | sufficiency of such
revenues and explaining, if appropriate, | ||||||
13 | by what means the revenues will be
greater than as shown in the | ||||||
14 | audit. Whenever such sufficiency is
demonstrated by reference | ||||||
15 | to a schedule of higher rates or charges for
enterprise | ||||||
16 | revenues or a higher tax imposition for a revenue source, such
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17 | higher rates, charges or taxes shall have been properly | ||||||
18 | imposed by an
ordinance adopted prior to the time of delivery | ||||||
19 | of alternate bonds. The
reference to and acceptance of an | ||||||
20 | audit or report, as the case may be, and
the determination of | ||||||
21 | the governing body as to sufficiency of enterprise
revenues or | ||||||
22 | a revenue source shall be conclusive evidence that the
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23 | conditions of this Section have been met and that the | ||||||
24 | alternate bonds
are valid.
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25 | (e) The enterprise revenues or revenue source, as | ||||||
26 | applicable, shall be
in fact pledged to the payment of the |
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1 | alternate bonds; and the governing
body shall covenant, to the | ||||||
2 | extent it is empowered to do so, to provide
for, collect and | ||||||
3 | apply such enterprise revenues or revenue source, as
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4 | applicable, to the payment of the alternate bonds and the | ||||||
5 | provision of
not less than an additional .25 (or .10 for | ||||||
6 | governmental revenue sources)
times debt service. The pledge | ||||||
7 | and
establishment of rates or charges for enterprise revenues, | ||||||
8 | or the
imposition of taxes in a given rate or amount, as | ||||||
9 | provided in this Section
for alternate bonds, shall constitute | ||||||
10 | a continuing obligation of the
governmental unit with respect | ||||||
11 | to such establishment or imposition and a
continuing | ||||||
12 | appropriation of the amounts received. All covenants relating
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13 | to alternate bonds and the conditions and obligations imposed | ||||||
14 | by this
Section are enforceable by any bondholder of alternate | ||||||
15 | bonds affected, any
taxpayer of the governmental unit, and the | ||||||
16 | People of the State of Illinois
acting through the Attorney | ||||||
17 | General or any designee, and in the event that
any such action | ||||||
18 | results in an order finding that the governmental unit has
not | ||||||
19 | properly set rates or charges or imposed taxes to the extent it | ||||||
20 | is
empowered to do so or collected and applied enterprise | ||||||
21 | revenues or any
revenue source, as applicable, as required by | ||||||
22 | this Act, the plaintiff in
any such action shall be awarded | ||||||
23 | reasonable attorney's fees. The intent is
that such enterprise | ||||||
24 | revenues or revenue source, as applicable, shall be
sufficient | ||||||
25 | and shall be applied to the payment of debt service on such
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26 | alternate bonds so that taxes need not be levied, or if levied |
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1 | need not be
extended, for such payment. Nothing in this | ||||||
2 | Section shall inhibit or
restrict the authority of a governing | ||||||
3 | body to determine the lien priority
of any bonds, including | ||||||
4 | alternate bonds, which may be issued with respect
to any | ||||||
5 | enterprise revenues or revenue source.
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6 | In the event that alternate bonds shall have been issued | ||||||
7 | and taxes, other
than a designated revenue source, shall have | ||||||
8 | been extended pursuant to the
general obligation, full faith | ||||||
9 | and credit promise supporting such alternate
bonds, then the | ||||||
10 | amount of such alternate bonds then outstanding shall be
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11 | included in the computation of indebtedness of the | ||||||
12 | governmental unit for
purposes of all statutory provisions or | ||||||
13 | limitations until such time as an
audit of the governmental | ||||||
14 | unit shall show that the alternate bonds have
been paid from | ||||||
15 | the enterprise revenues or revenue source, as applicable,
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16 | pledged thereto for a complete fiscal year.
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17 | Alternate bonds may be issued to refund or advance refund | ||||||
18 | alternate bonds
without meeting any of the conditions set | ||||||
19 | forth in this Section, except
that the term of the refunding | ||||||
20 | bonds shall not be longer than the term of
the refunded bonds | ||||||
21 | and that the debt service payable in any year on the
refunding | ||||||
22 | bonds shall not exceed the debt service payable in such year on
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23 | the refunded bonds.
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24 | Once issued, alternate bonds shall be and forever remain | ||||||
25 | until paid or
defeased the general obligation of the | ||||||
26 | governmental unit, for the payment
of which its full faith and |
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1 | credit are pledged, and shall be payable from
the levy of taxes | ||||||
2 | as is provided in this Act for general obligation bonds.
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3 | The changes made by this amendatory Act of 1990 do not | ||||||
4 | affect the
validity of bonds authorized before September 1, | ||||||
5 | 1990.
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6 | (Source: P.A. 97-542, eff. 8-23-11; 98-203, eff. 1-1-14.)
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7 | Section 99. Effective date. This Act takes effect upon | ||||||
8 | becoming law.
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