Bill Text: IL HB3407 | 2017-2018 | 100th General Assembly | Engrossed


Bill Title: Amends the State Finance Act, General Obligation Bond Act, Bond Authorization Act, and the Local Government Credit Enhancement Act. Removes provisions concerning interest payable on variable rate bonds. Removes provisions allowing certain governmental units to enter into agreements to engage in "swap" agreements with respect to all or part of any currently outstanding or proposed bonds. Removes provisions authorizing variable interest rates and certain credit or liquidity enhancement arrangements, including interest rate protection or exchange agreements and guarantees with respect to the issuance of general obligation bonds. Removes provisions concerning the net payments required of the State for such arrangements certified by the Director of the Bureau of the Budget and treated as interest. Makes related changes. Reinstates definitions. Effective immediately.

Spectrum: Slight Partisan Bill (Republican 2-1)

Status: (Engrossed) 2017-05-02 - Placed on Calendar Order of First Reading May 3, 2017 [HB3407 Detail]

Download: Illinois-2017-HB3407-Engrossed.html



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1 AN ACT concerning finance.
2 Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4 Section 5. The State Finance Act is amended by changing
5Section 6z-45 as follows:
6 (30 ILCS 105/6z-45)
7 Sec. 6z-45. The School Infrastructure Fund.
8 (a) The School Infrastructure Fund is created as a special
9fund in the State Treasury.
10 In addition to any other deposits authorized by law,
11beginning January 1, 2000, on the first day of each month, or
12as soon thereafter as may be practical, the State Treasurer and
13State Comptroller shall transfer the sum of $5,000,000 from the
14General Revenue Fund to the School Infrastructure Fund, except
15that, notwithstanding any other provision of law, and in
16addition to any other transfers that may be provided for by
17law, before June 30, 2012, the Comptroller and the Treasurer
18shall transfer $45,000,000 from the General Revenue Fund into
19the School Infrastructure Fund, and, for fiscal year 2013 only,
20the Treasurer and the Comptroller shall transfer $1,250,000
21from the General Revenue Fund to the School Infrastructure Fund
22on the first day of each month; provided, however, that no such
23transfers shall be made from July 1, 2001 through June 30,

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12003.
2 (b) Subject to the transfer provisions set forth below,
3money in the School Infrastructure Fund shall, if and when the
4State of Illinois incurs any bonded indebtedness for the
5construction of school improvements under the School
6Construction Law, be set aside and used for the purpose of
7paying and discharging annually the principal and interest on
8that bonded indebtedness then due and payable, and for no other
9purpose.
10 In addition to other transfers to the General Obligation
11Bond Retirement and Interest Fund made pursuant to Section 15
12of the General Obligation Bond Act, upon each delivery of bonds
13issued for construction of school improvements under the School
14Construction Law, the State Comptroller shall compute and
15certify to the State Treasurer the total amount of principal
16of, interest on, and premium, if any, on such bonds during the
17then current and each succeeding fiscal year. With respect to
18the interest payable on variable rate bonds, such
19certifications shall be calculated at the maximum rate of
20interest that may be payable during the fiscal year, after
21taking into account any credits permitted in the related
22indenture or other instrument against the amount of such
23interest required to be appropriated for that period.
24 On or before the last day of each month, the State
25Treasurer and State Comptroller shall transfer from the School
26Infrastructure Fund to the General Obligation Bond Retirement

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1and Interest Fund an amount sufficient to pay the aggregate of
2the principal of, interest on, and premium, if any, on the
3bonds payable on their next payment date, divided by the number
4of monthly transfers occurring between the last previous
5payment date (or the delivery date if no payment date has yet
6occurred) and the next succeeding payment date. Interest
7payable on variable rate bonds shall be calculated at the
8maximum rate of interest that may be payable for the relevant
9period, after taking into account any credits permitted in the
10related indenture or other instrument against the amount of
11such interest required to be appropriated for that period.
12Interest for which moneys have already been deposited into the
13capitalized interest account within the General Obligation
14Bond Retirement and Interest Fund shall not be included in the
15calculation of the amounts to be transferred under this
16subsection.
17 (b-5) The money deposited into the School Infrastructure
18Fund from transfers pursuant to subsections (c-30) and (c-35)
19of Section 13 of the Riverboat Gambling Act shall be applied,
20without further direction, as provided in subsection (b-3) of
21Section 5-35 of the School Construction Law.
22 (c) The surplus, if any, in the School Infrastructure Fund
23after payments made pursuant to subsections (b) and (b-5) of
24this Section shall, subject to appropriation, be used as
25follows:
26 First - to make 3 payments to the School Technology

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1Revolving Loan Fund as follows:
2 Transfer of $30,000,000 in fiscal year 1999;
3 Transfer of $20,000,000 in fiscal year 2000; and
4 Transfer of $10,000,000 in fiscal year 2001.
5 Second - to pay the expenses of the State Board of
6Education and the Capital Development Board in administering
7programs under the School Construction Law, the total expenses
8not to exceed $1,200,000 in any fiscal year.
9 Third - to pay any amounts due for grants for school
10construction projects and debt service under the School
11Construction Law.
12 Fourth - to pay any amounts due for grants for school
13maintenance projects under the School Construction Law.
14(Source: P.A. 97-732, eff. 6-30-12; 98-18, eff. 6-7-13.)
15 Section 10. The Bond Authorization Act is amended by
16changing Section 7 as follows:
17 (30 ILCS 305/7) (from Ch. 17, par. 6607)
18 Sec. 7. Interest rate swaps. For purposes of this Section,
19terms are as defined in the Local Government Debt Reform Act.
20With respect to all or part of any currently outstanding or
21proposed issue of its bonds, a public corporation governmental
22unit whose aggregate principal amount of bonds outstanding or
23proposed exceeds $10,000,000 may, without prior appropriation,
24enter into agreements or contracts with any necessary or

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1appropriate person (the counter party) that will have the
2benefit of providing to the public corporation governmental
3unit: (i) an interest rate basis, cash flow basis, or other
4basis different from that provided in the bonds for the payment
5of interest or (ii) with respect to a future delivery of bonds,
6one or more of a guaranteed interest rate, interest rate basis,
7cash flow basis, or purchase price. Such agreements or
8contracts include without limitation agreements or contracts
9commonly known as "interest rate swap, collar, cap, or
10derivative agreements", "forward payment conversion
11agreements", interest rate locks, forward bond purchase
12agreements, bond warrant agreements, or bond purchase option
13agreements and also include agreements or contracts providing
14for payments based on levels of or changes in interest rates,
15including a change in an interest rate index, to exchange cash
16flows or a series of payments, or to hedge payment, rate
17spread, or similar exposure. (such agreements or contracts,
18collectively, being "swaps"). Without limiting other permitted
19terms which may be included in swaps, the following provisions
20may or, if hereinafter so required, shall apply:
21 (a) Payments made pursuant to a swap (the swap payments)
22which are to be made by the governmental unit may be paid by
23such governmental unit, without limitation, from proceeds of
24the bonds, including bonds for future delivery, identified to
25such swaps, or from bonds issued to refund such bonds, or from
26whatever enterprise revenues or revenue source, including

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1taxes pledged or to be pledged to the payment of such bonds,
2which enterprise revenues or revenue source may be increased to
3make such swap payments, and swap payments to be received by
4the governmental unit, which may be periodic, up-front, or on
5termination, shall be used solely for and limited to any lawful
6corporate purpose of the governmental unit.
7 Net (b) Up-front or periodic net swap payments to be paid
8by the governmental unit under such agreements or contracts the
9swaps (the standard swap payments) shall be treated as interest
10for the purpose of calculating any interest rate limit
11applicable to the bonds, provided, however, that for purposes
12of making such standard swap payments only (and not with
13respect to the bonds so issued or to be issued), the bonds
14shall be deemed not exempt from income taxation under the
15Internal Revenue Code for purposes of State law, as contained
16in this Bond Authorization Act, relating to the permissible
17rate of interest to be borne thereon, and, provided further,
18that if payments of any standard swap payments are to be made
19by the governmental unit and the counterparty on different
20dates, the net effect of such payments for purposes of such
21interest rate limitation shall be determined using a true
22interest cost (yield) calculation.
23 (c) Any such agreement or contract and the swap payments to
24be made thereunder shall not be taken into account with respect
25to any debt limit applicable to the public corporation
26governmental unit.

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1 (d) Swap payments upon the termination of any swap may be
2paid to a counterparty upon any terms customary for swaps,
3including, without limitation, provisions using market
4quotations available for giving the net benefit of the swap at
5the time of termination to the persons entitled thereto (viz.,
6the governmental unit or the counterparty) or reasonable fair
7market value determinations of the value at termination made in
8good faith by either such persons.
9 (e) The term of the swap shall not exceed the term of any
10currently outstanding bonds identified to such swap or, for
11bonds to be delivered, not greater than 5 years plus the term
12of years proposed for such bonds to be delivered, but in no
13event longer than 40 years, plus, in each case, any time period
14necessary to cure any defaults under such swap.
15 (f) The choice of law for enforcement of swaps as to any
16counterparty may be made for any state of these United States,
17but the law which shall apply to the obligations of the
18governmental unit shall be the law of the State of Illinois,
19and jurisdiction to enforce the swaps as against the
20governmental units shall be exclusively in the courts of the
21State of Illinois or in the applicable federal court having
22jurisdiction and located within the State of Illinois.
23 (g) Governmental units, in entering into swaps, may not
24waive any sovereign immunities from time to time available
25under the laws of the State of Illinois as to jurisdiction,
26procedures, and remedies, but such swaps shall otherwise be

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1fully enforceable as valid and binding contracts as and to the
2extent provided herein and by other applicable law.
3(Source: P.A. 93-9, eff. 6-3-03.)
4 Section 15. The General Obligation Bond Act is amended by
5changing Sections 9, 14, and 15 as follows:
6 (30 ILCS 330/9) (from Ch. 127, par. 659)
7 Sec. 9. Conditions for Issuance and Sale of Bonds -
8Requirements for Bonds.
9 (a) Except as otherwise provided in this subsection, Bonds
10shall be issued and sold from time to time, in one or more
11series, in such amounts and at such prices as may be directed
12by the Governor, upon recommendation by the Director of the
13Governor's Office of Management and Budget. Bonds shall be in
14such form (either coupon, registered or book entry), in such
15denominations, payable within 25 years from their date, subject
16to such terms of redemption with or without premium, bear
17interest payable at such times and at such fixed or variable
18rate or rates, and be dated as shall be fixed and determined by
19the Director of the Governor's Office of Management and Budget
20in the order authorizing the issuance and sale of any series of
21Bonds, which order shall be approved by the Governor and is
22herein called a "Bond Sale Order"; provided however, that
23interest payable at fixed or variable rates shall not exceed
24that permitted in the Bond Authorization Act, as now or

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1hereafter amended. Bonds shall be payable at such place or
2places, within or without the State of Illinois, and may be
3made registrable as to either principal or as to both principal
4and interest, as shall be specified in the Bond Sale Order.
5Bonds may be callable or subject to purchase and retirement or
6tender and remarketing as fixed and determined in the Bond Sale
7Order. Bonds, other than Bonds issued under Section 3 of this
8Act for the costs associated with the purchase and
9implementation of information technology, (i) except for
10refunding Bonds satisfying the requirements of Section 16 of
11this Act and sold during fiscal year 2009, 2010, 2011, or 2017
12must be issued with principal or mandatory redemption amounts
13in equal amounts, with the first maturity issued occurring
14within the fiscal year in which the Bonds are issued or within
15the next succeeding fiscal year and (ii) must mature or be
16subject to mandatory redemption each fiscal year thereafter up
17to 25 years, except for refunding Bonds satisfying the
18requirements of Section 16 of this Act and sold during fiscal
19year 2009, 2010, or 2011 which must mature or be subject to
20mandatory redemption each fiscal year thereafter up to 16
21years. Bonds issued under Section 3 of this Act for the costs
22associated with the purchase and implementation of information
23technology must be issued with principal or mandatory
24redemption amounts in equal amounts, with the first maturity
25issued occurring with the fiscal year in which the respective
26bonds are issued or with the next succeeding fiscal year, with

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1the respective bonds issued maturing or subject to mandatory
2redemption each fiscal year thereafter up to 10 years.
3Notwithstanding any provision of this Act to the contrary, the
4Bonds authorized by Public Act 96-43 shall be payable within 5
5years from their date and must be issued with principal or
6mandatory redemption amounts in equal amounts, with payment of
7principal or mandatory redemption beginning in the first fiscal
8year following the fiscal year in which the Bonds are issued.
9 Notwithstanding any provision of this Act to the contrary,
10the Bonds authorized by Public Act 96-1497 shall be payable
11within 8 years from their date and shall be issued with payment
12of maturing principal or scheduled mandatory redemptions in
13accordance with the following schedule, except the following
14amounts shall be prorated if less than the total additional
15amount of Bonds authorized by Public Act 96-1497 are issued:
16 Fiscal Year After Issuance Amount
17 1-2 $0
18 3 $110,712,120
19 4 $332,136,360
20 5 $664,272,720
21 6-8 $996,409,080
22 In the case of any series of Bonds bearing interest at a
23variable interest rate ("Variable Rate Bonds"), in lieu of
24determining the rate or rates at which such series of Variable
25Rate Bonds shall bear interest and the price or prices at which
26such Variable Rate Bonds shall be initially sold or remarketed

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1(in the event of purchase and subsequent resale), the Bond Sale
2Order may provide that such interest rates and prices may vary
3from time to time depending on criteria established in such
4Bond Sale Order, which criteria may include, without
5limitation, references to indices or variations in interest
6rates as may, in the judgment of a remarketing agent, be
7necessary to cause Variable Rate Bonds of such series to be
8remarketable from time to time at a price equal to their
9principal amount, and may provide for appointment of a bank,
10trust company, investment bank, or other financial institution
11to serve as remarketing agent in that connection. The Bond Sale
12Order may provide that alternative interest rates or provisions
13for establishing alternative interest rates, different
14security or claim priorities, or different call or amortization
15provisions will apply during such times as Variable Rate Bonds
16of any series are held by a person providing credit or
17liquidity enhancement arrangements for such Bonds as
18authorized in subsection (b) of this Section. The Bond Sale
19Order may also provide for such variable interest rates to be
20established pursuant to a process generally known as an auction
21rate process and may provide for appointment of one or more
22financial institutions to serve as auction agents and
23broker-dealers in connection with the establishment of such
24interest rates and the sale and remarketing of such Bonds.
25 (b) (Blank). In connection with the issuance of any series
26of Bonds, the State may enter into arrangements to provide

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1additional security and liquidity for such Bonds, including,
2without limitation, bond or interest rate insurance or letters
3of credit, lines of credit, bond purchase contracts, or other
4arrangements whereby funds are made available to retire or
5purchase Bonds, thereby assuring the ability of owners of the
6Bonds to sell or redeem their Bonds. The State may enter into
7contracts and may agree to pay fees to persons providing such
8arrangements, but only under circumstances where the Director
9of the Governor's Office of Management and Budget certifies
10that he or she reasonably expects the total interest paid or to
11be paid on the Bonds, together with the fees for the
12arrangements (being treated as if interest), would not, taken
13together, cause the Bonds to bear interest, calculated to their
14stated maturity, at a rate in excess of the rate that the Bonds
15would bear in the absence of such arrangements.
16 The State may, with respect to Bonds issued or anticipated
17to be issued, participate in and enter into arrangements with
18respect to interest rate protection or exchange agreements,
19guarantees, or financial futures contracts for the purpose of
20limiting, reducing, or managing interest rate exposure. The
21authority granted under this paragraph, however, shall not
22increase the principal amount of Bonds authorized to be issued
23by law. The arrangements may be executed and delivered by the
24Director of the Governor's Office of Management and Budget on
25behalf of the State. Net payments for such arrangements shall
26constitute interest on the Bonds and shall be paid from the

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1General Obligation Bond Retirement and Interest Fund. The
2Director of the Governor's Office of Management and Budget
3shall at least annually certify to the Governor and the State
4Comptroller his or her estimate of the amounts of such net
5payments to be included in the calculation of interest required
6to be paid by the State.
7 (c) (Blank). Prior to the issuance of any Variable Rate
8Bonds pursuant to subsection (a), the Director of the
9Governor's Office of Management and Budget shall adopt an
10interest rate risk management policy providing that the amount
11of the State's variable rate exposure with respect to Bonds
12shall not exceed 20%. This policy shall remain in effect while
13any Bonds are outstanding and the issuance of Bonds shall be
14subject to the terms of such policy. The terms of this policy
15may be amended from time to time by the Director of the
16Governor's Office of Management and Budget but in no event
17shall any amendment cause the permitted level of the State's
18variable rate exposure with respect to Bonds to exceed 20%.
19 (d) "Build America Bonds" in this Section means Bonds
20authorized by Section 54AA of the Internal Revenue Code of
211986, as amended ("Internal Revenue Code"), and bonds issued
22from time to time to refund or continue to refund "Build
23America Bonds".
24 (e) Notwithstanding any other provision of this Section,
25Qualified School Construction Bonds shall be issued and sold
26from time to time, in one or more series, in such amounts and

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1at such prices as may be directed by the Governor, upon
2recommendation by the Director of the Governor's Office of
3Management and Budget. Qualified School Construction Bonds
4shall be in such form (either coupon, registered or book
5entry), in such denominations, payable within 25 years from
6their date, subject to such terms of redemption with or without
7premium, and if the Qualified School Construction Bonds are
8issued with a supplemental coupon, bear interest payable at
9such times and at such fixed or variable rate or rates, and be
10dated as shall be fixed and determined by the Director of the
11Governor's Office of Management and Budget in the order
12authorizing the issuance and sale of any series of Qualified
13School Construction Bonds, which order shall be approved by the
14Governor and is herein called a "Bond Sale Order"; except that
15interest payable at fixed or variable rates, if any, shall not
16exceed that permitted in the Bond Authorization Act, as now or
17hereafter amended. Qualified School Construction Bonds shall
18be payable at such place or places, within or without the State
19of Illinois, and may be made registrable as to either principal
20or as to both principal and interest, as shall be specified in
21the Bond Sale Order. Qualified School Construction Bonds may be
22callable or subject to purchase and retirement or tender and
23remarketing as fixed and determined in the Bond Sale Order.
24Qualified School Construction Bonds must be issued with
25principal or mandatory redemption amounts or sinking fund
26payments into the General Obligation Bond Retirement and

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1Interest Fund (or subaccount therefor) in equal amounts, with
2the first maturity issued, mandatory redemption payment or
3sinking fund payment occurring within the fiscal year in which
4the Qualified School Construction Bonds are issued or within
5the next succeeding fiscal year, with Qualified School
6Construction Bonds issued maturing or subject to mandatory
7redemption or with sinking fund payments thereof deposited each
8fiscal year thereafter up to 25 years. Sinking fund payments
9set forth in this subsection shall be permitted only to the
10extent authorized in Section 54F of the Internal Revenue Code
11or as otherwise determined by the Director of the Governor's
12Office of Management and Budget. "Qualified School
13Construction Bonds" in this subsection means Bonds authorized
14by Section 54F of the Internal Revenue Code and for bonds
15issued from time to time to refund or continue to refund such
16"Qualified School Construction Bonds".
17 (f) Beginning with the next issuance by the Governor's
18Office of Management and Budget to the Procurement Policy Board
19of a request for quotation for the purpose of formulating a new
20pool of qualified underwriting banks list, all entities
21responding to such a request for quotation for inclusion on
22that list shall provide a written report to the Governor's
23Office of Management and Budget and the Illinois Comptroller.
24The written report submitted to the Comptroller shall (i) be
25published on the Comptroller's Internet website and (ii) be
26used by the Governor's Office of Management and Budget for the

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1purposes of scoring such a request for quotation. The written
2report, at a minimum, shall:
3 (1) disclose whether, within the past 3 months,
4 pursuant to its credit default swap market-making
5 activities, the firm has entered into any State of Illinois
6 credit default swaps ("CDS");
7 (2) include, in the event of State of Illinois CDS
8 activity, disclosure of the firm's cumulative notional
9 volume of State of Illinois CDS trades and the firm's
10 outstanding gross and net notional amount of State of
11 Illinois CDS, as of the end of the current 3-month period;
12 (3) indicate, pursuant to the firm's proprietary
13 trading activities, disclosure of whether the firm, within
14 the past 3 months, has entered into any proprietary trades
15 for its own account in State of Illinois CDS;
16 (4) include, in the event of State of Illinois
17 proprietary trades, disclosure of the firm's outstanding
18 gross and net notional amount of proprietary State of
19 Illinois CDS and whether the net position is short or long
20 credit protection, as of the end of the current 3-month
21 period;
22 (5) list all time periods during the past 3 months
23 during which the firm held net long or net short State of
24 Illinois CDS proprietary credit protection positions, the
25 amount of such positions, and whether those positions were
26 net long or net short credit protection positions; and

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1 (6) indicate whether, within the previous 3 months, the
2 firm released any publicly available research or marketing
3 reports that reference State of Illinois CDS and include
4 those research or marketing reports as attachments.
5 (g) All entities included on a Governor's Office of
6Management and Budget's pool of qualified underwriting banks
7list shall, as soon as possible after March 18, 2011 (the
8effective date of Public Act 96-1554), but not later than
9January 21, 2011, and on a quarterly fiscal basis thereafter,
10provide a written report to the Governor's Office of Management
11and Budget and the Illinois Comptroller. The written reports
12submitted to the Comptroller shall be published on the
13Comptroller's Internet website. The written reports, at a
14minimum, shall:
15 (1) disclose whether, within the past 3 months,
16 pursuant to its credit default swap market-making
17 activities, the firm has entered into any State of Illinois
18 credit default swaps ("CDS");
19 (2) include, in the event of State of Illinois CDS
20 activity, disclosure of the firm's cumulative notional
21 volume of State of Illinois CDS trades and the firm's
22 outstanding gross and net notional amount of State of
23 Illinois CDS, as of the end of the current 3-month period;
24 (3) indicate, pursuant to the firm's proprietary
25 trading activities, disclosure of whether the firm, within
26 the past 3 months, has entered into any proprietary trades

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1 for its own account in State of Illinois CDS;
2 (4) include, in the event of State of Illinois
3 proprietary trades, disclosure of the firm's outstanding
4 gross and net notional amount of proprietary State of
5 Illinois CDS and whether the net position is short or long
6 credit protection, as of the end of the current 3-month
7 period;
8 (5) list all time periods during the past 3 months
9 during which the firm held net long or net short State of
10 Illinois CDS proprietary credit protection positions, the
11 amount of such positions, and whether those positions were
12 net long or net short credit protection positions; and
13 (6) indicate whether, within the previous 3 months, the
14 firm released any publicly available research or marketing
15 reports that reference State of Illinois CDS and include
16 those research or marketing reports as attachments.
17(Source: P.A. 99-523, eff. 6-30-16.)
18 (30 ILCS 330/14) (from Ch. 127, par. 664)
19 Sec. 14. Repayment.
20 (a) To provide for the manner of repayment of Bonds, the
21Governor shall include an appropriation in each annual State
22Budget of monies in such amount as shall be necessary and
23sufficient, for the period covered by such budget, to pay the
24interest, as it shall accrue, on all Bonds issued under this
25Act, to pay and discharge the principal of such Bonds as shall,

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1by their terms, fall due during such period, to pay a premium,
2if any, on Bonds to be redeemed prior to the maturity date, and
3to pay sinking fund payments in connection with Qualified
4School Construction Bonds authorized by subsection (e) of
5Section 9. Amounts included in such appropriations for the
6payment of interest on variable rate bonds shall be the maximum
7amounts of interest that may be payable for the period covered
8by the budget, after taking into account any credits permitted
9in the related indenture or other instrument against the amount
10of such interest required to be appropriated for such period.
11Amounts included in such appropriations for the payment of
12interest shall include the amounts certified by the Director of
13the Governor's Office of Management and Budget under subsection
14(b) of Section 9 of this Act.
15 (b) A separate fund in the State Treasury called the
16"General Obligation Bond Retirement and Interest Fund" is
17hereby created.
18 (c) The General Assembly shall annually make
19appropriations to pay the principal of, interest on, and
20premium, if any, on Bonds sold under this Act from the General
21Obligation Bond Retirement and Interest Fund. Amounts included
22in such appropriations for the payment of interest on variable
23rate bonds shall be the maximum amounts of interest that may be
24payable during the fiscal year, after taking into account any
25credits permitted in the related indenture or other instrument
26against the amount of such interest required to be appropriated

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1for such period. Amounts included in such appropriations for
2the payment of interest shall include the amounts certified by
3the Director of the Governor's Office of Management and Budget
4under subsection (b) of Section 9 of this Act.
5 If for any reason there are insufficient funds in either
6the General Revenue Fund or the Road Fund to make transfers to
7the General Obligation Bond Retirement and Interest Fund as
8required by Section 15 of this Act, or if for any reason the
9General Assembly fails to make appropriations sufficient to pay
10the principal of, interest on, and premium, if any, on the
11Bonds, as the same by their terms shall become due, this Act
12shall constitute an irrevocable and continuing appropriation
13of all amounts necessary for that purpose, and the irrevocable
14and continuing authority for and direction to the State
15Treasurer and the Comptroller to make the necessary transfers,
16as directed by the Governor, out of and disbursements from the
17revenues and funds of the State.
18 (d) If, because of insufficient funds in either the General
19Revenue Fund or the Road Fund, monies have been transferred to
20the General Obligation Bond Retirement and Interest Fund, as
21required by subsection (c) of this Section, this Act shall
22constitute the irrevocable and continuing authority for and
23direction to the State Treasurer and Comptroller to reimburse
24these funds of the State from the General Revenue Fund or the
25Road Fund, as appropriate, by transferring, at such times and
26in such amounts, as directed by the Governor, an amount to

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1these funds equal to that transferred from them.
2(Source: P.A. 96-828, eff. 12-2-09.)
3 (30 ILCS 330/15) (from Ch. 127, par. 665)
4 Sec. 15. Computation of Principal and Interest; transfers.
5 (a) Upon each delivery of Bonds authorized to be issued
6under this Act, the Comptroller shall compute and certify to
7the Treasurer the total amount of principal of, interest on,
8and premium, if any, on Bonds issued that will be payable in
9order to retire such Bonds, the amount of principal of,
10interest on and premium, if any, on such Bonds that will be
11payable on each payment date according to the tenor of such
12Bonds during the then current and each succeeding fiscal year,
13and the amount of sinking fund payments needed to be deposited
14in connection with Qualified School Construction Bonds
15authorized by subsection (e) of Section 9. With respect to the
16interest payable on variable rate bonds, such certifications
17shall be calculated at the maximum rate of interest that may be
18payable during the fiscal year, after taking into account any
19credits permitted in the related indenture or other instrument
20against the amount of such interest required to be appropriated
21for such period pursuant to subsection (c) of Section 14 of
22this Act. With respect to the interest payable, such
23certifications shall include the amounts certified by the
24Director of the Governor's Office of Management and Budget
25under subsection (b) of Section 9 of this Act.

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1 On or before the last day of each month the State Treasurer
2and Comptroller shall transfer from (1) the Road Fund with
3respect to Bonds issued under paragraph (a) of Section 4 of
4this Act or Bonds issued for the purpose of refunding such
5bonds, and from (2) the General Revenue Fund, with respect to
6all other Bonds issued under this Act, to the General
7Obligation Bond Retirement and Interest Fund an amount
8sufficient to pay the aggregate of the principal of, interest
9on, and premium, if any, on Bonds payable, by their terms on
10the next payment date divided by the number of full calendar
11months between the date of such Bonds and the first such
12payment date, and thereafter, divided by the number of months
13between each succeeding payment date after the first. Such
14computations and transfers shall be made for each series of
15Bonds issued and delivered. Interest payable on variable rate
16bonds shall be calculated at the maximum rate of interest that
17may be payable for the relevant period, after taking into
18account any credits permitted in the related indenture or other
19instrument against the amount of such interest required to be
20appropriated for such period pursuant to subsection (c) of
21Section 14 of this Act. Computations of interest shall include
22the amounts certified by the Director of the Governor's Office
23of Management and Budget under subsection (b) of Section 9 of
24this Act. Interest for which moneys have already been deposited
25into the capitalized interest account within the General
26Obligation Bond Retirement and Interest Fund shall not be

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1included in the calculation of the amounts to be transferred
2under this subsection. Notwithstanding any other provision in
3this Section, the transfer provisions provided in this
4paragraph shall not apply to transfers made in fiscal year 2010
5or fiscal year 2011 with respect to Bonds issued in fiscal year
62010 or fiscal year 2011 pursuant to Section 7.2 of this Act.
7In the case of transfers made in fiscal year 2010 or fiscal
8year 2011 with respect to the Bonds issued in fiscal year 2010
9or fiscal year 2011 pursuant to Section 7.2 of this Act, on or
10before the 15th day of the month prior to the required debt
11service payment, the State Treasurer and Comptroller shall
12transfer from the General Revenue Fund to the General
13Obligation Bond Retirement and Interest Fund an amount
14sufficient to pay the aggregate of the principal of, interest
15on, and premium, if any, on the Bonds payable in that next
16month.
17 The transfer of monies herein and above directed is not
18required if monies in the General Obligation Bond Retirement
19and Interest Fund are more than the amount otherwise to be
20transferred as herein above provided, and if the Governor or
21his authorized representative notifies the State Treasurer and
22Comptroller of such fact in writing.
23 (b) After the effective date of this Act, the balance of,
24and monies directed to be included in the Capital Development
25Bond Retirement and Interest Fund, Anti-Pollution Bond
26Retirement and Interest Fund, Transportation Bond, Series A

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1Retirement and Interest Fund, Transportation Bond, Series B
2Retirement and Interest Fund, and Coal Development Bond
3Retirement and Interest Fund shall be transferred to and
4deposited in the General Obligation Bond Retirement and
5Interest Fund. This Fund shall be used to make debt service
6payments on the State's general obligation Bonds heretofore
7issued which are now outstanding and payable from the Funds
8herein listed as well as on Bonds issued under this Act.
9 (c) The unused portion of federal funds received for a
10capital facilities project, as authorized by Section 3 of this
11Act, for which monies from the Capital Development Fund have
12been expended shall remain in the Capital Development Board
13Contributory Trust Fund and shall be used for capital projects
14and for no other purpose, subject to appropriation and as
15directed by the Capital Development Board. Any federal funds
16received as reimbursement for the completed construction of a
17capital facilities project, as authorized by Section 3 of this
18Act, for which monies from the Capital Development Fund have
19been expended shall be deposited in the General Obligation Bond
20Retirement and Interest Fund.
21(Source: P.A. 98-245, eff. 1-1-14.)
22 Section 20. The Local Government Credit Enhancement Act is
23amended by changing Sections 2 and 3 as follows:
24 (50 ILCS 410/2) (from Ch. 85, par. 4302)

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1 Sec. 2. For the purposes of this Act, the following terms
2are defined, unless the context requires otherwise: terms are
3as defined in the Local Government Debt Reform Act
4 (a) "Unit of local government" shall have the meaning
5ascribed to it in Article VII, Section 1 of the Illinois
6Constitution.
7 (b) "School district" means any public school district
8organized under the School Code or prior law and includes any
9dual or unit school district, high school district, special
10charter district and non-high school district. "School
11district" also means any community college district organized
12under the Public Community College Act or prior law.
13 (c) "Governing board" means the corporate authorities of
14the municipality, county board, board of trustees, board of
15education, board of school directors, or other governing body
16of the unit of local government or school district.
17(Source: P.A. 93-9, eff. 6-3-03.)
18 (50 ILCS 410/3) (from Ch. 85, par. 4303)
19 Sec. 3. In connection with the issuance of its bonds and
20notes, a governmental unit of local government or school
21district may enter into arrangements agreements (credit
22agreements) to provide additional security and or liquidity, or
23both, for the bonds and notes. These may include, without
24limitation, municipal bond insurance, letters of credit, lines
25of credit, standby bond purchase agreements, surety bonds, and

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1the like, by which the governmental unit of local government or
2school district may borrow funds to pay or redeem or purchase
3and hold its bonds and a governmental unit may enter into
4agreements for the purchase or remarketing arrangements of
5bonds (remarketing agreements) for assuring the ability of
6owners of the issuing local government's or school district's
7bonds to sell or to have redeemed their bonds. The unit of
8local government or school district may enter into contracts
9and may agree to pay fees to persons providing such
10arrangements, including from bond proceeds providing a
11mechanism for remarketing bonds tendered for purchase in
12accordance with their terms. The term of such credit agreements
13or remarketing agreements shall not exceed the term of the
14bonds, plus any time period necessary to cure any defaults
15under such agreements.
16 The resolution of the governing board authorizing the
17issuance of the bonds may provide that interest rates may vary
18from time to time depending upon criteria established by the
19governing board, which may include, without limitation, a
20variation in interest rates as may be necessary to cause bonds
21to be remarketable from time to time at a price equal to their
22principal amount, and may provide for appointment of a national
23banking association, bank, trust company, investment banker,
24or other financial institution to serve as a remarketing agent
25in that connection. The resolution of the governing board
26authorizing the issuance of the bonds may provide that

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1alternative interest rates or provisions will apply during such
2times as the bonds are held by a person providing a letter of
3credit or other credit enhancement arrangement for those bonds.
4Without limiting the terms which may be included in any such
5credit agreements or remarketing agreements, the ordinance may
6or, if hereinafter so required, shall provide as follows:
7 (a) Interest rates on the bonds may vary from time to time
8depending upon criteria established by the governing body,
9which may include, without limitation: (i) a variation in
10interest rates as may be necessary to cause bonds to be
11remarketed from time to time at a price equal to their
12principal amount plus any accrued interest; (ii) rates set by
13auctions; or (iii) rates set by formula.
14 (b) A national banking association, bank, trust company,
15investment banker or other financial institution may be
16appointed to serve as a remarketing agent in that connection,
17and such remarketing agent may be delegated authority by the
18governing body to determine interest rates in accordance with
19criteria established by the governing body.
20 (c) Alternative interest rates or provisions may apply
21during such times as the bonds are held by the person or
22persons (financial providers) providing a credit agreement or
23remarketing agreement for those bonds and during such times,
24the interest on the bonds may be deemed not exempt from income
25taxation under the Internal Revenue Code for purposes of State
26law, as contained in the Bond Authorization Act, relating to

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1the permissible rate of interest to be borne thereon.
2 (d) Fees may be paid to the financial providers, including
3all reasonably related costs, including therein costs of
4enforcement and litigation (all such fees and costs being
5financial provider payments) and financial provider payments
6may be paid, without limitation, from proceeds of the bonds
7being the subject of such agreements, or from bonds issued to
8refund such bonds, or from whatever enterprise revenues or
9revenue source, including taxes, pledged to the payment of such
10bonds, which enterprise revenues or revenue source may be
11increased to make such financial provider payments, and such
12financial provider payments shall be made subordinate to the
13payments on the bonds.
14 (e) The bonds need not be held in physical form by the
15financial providers when providing funds to purchase or carry
16the bonds from others but may be represented in uncertificated
17form in the credit agreements or remarketing agreements.
18 (f) The debt or obligation of the governmental unit
19represented by a bond tendered for purchase to or otherwise
20made available to the governmental unit and thereupon acquired
21by either such governmental unit or a financial provider shall
22not be deemed to be extinguished for purposes of State law
23until cancelled by the governmental unit or its agent.
24 (g) The choice of law for the obligations of a financial
25provider may be made for any state of these United States, but
26the law which shall apply to the obligations of the

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1governmental unit shall be the law of the State of Illinois,
2and jurisdiction to enforce such credit agreement or
3remarketing agreement as against the governmental unit shall be
4exclusively in the courts of the State of Illinois or in the
5applicable federal court having jurisdiction and located
6within the State of Illinois.
7 (h) The governmental unit may not waive any sovereign
8immunities from time to time available under the laws of the
9State of Illinois as to jurisdiction, procedures, and remedies,
10but any such credit agreement and remarketing agreement shall
11otherwise by fully enforceable as valid and binding contracts
12as and to the extent provided by applicable law.
13 (i) Such credit agreement or remarketing agreement may
14provide for acceleration of the principal amounts due on the
15bonds, provided, however, that such acceleration shall be
16deferred for not less than 18 months from the time any such
17bond is acquired pursuant to any such agreement.
18(Source: P.A. 93-9, eff. 6-3-03.)
19 Section 99. Effective date. This Act takes effect upon
20becoming law.
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