Bill Text: IL HB4634 | 2013-2014 | 98th General Assembly | Introduced

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Bill Title: Amends the Illinois Finance Authority Act. Provides that the Illinois Finance Authority (instead of the State Treasurer) shall be custodian of the Illinois Agricultural Loan Guarantee Fund and the Illinois Farmer and Agribusiness Loan Guarantee Fund. Provides that all moneys in those Funds shall be paid by the State Treasurer to the Illinois Finance Authority no later than June 30, 2014, and, on and after that date, all future moneys deposited into the Illinois Agricultural Loan Guarantee Fund shall be paid by the State Treasurer to the Illinois Finance Authority as a continuing appropriation. Effective immediately.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Failed) 2014-12-03 - Session Sine Die [HB4634 Detail]

Download: Illinois-2013-HB4634-Introduced.html

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98TH GENERAL ASSEMBLY State of Illinois 2013 and 2014 HB4634 Introduced , by Rep. Brandon W. Phelps SYNOPSIS AS INTRODUCED:
20 ILCS 3501/830-30
20 ILCS 3501/830-35
Amends the Illinois Finance Authority Act. Provides that the Illinois Finance Authority (instead of the State Treasurer) shall be custodian of the Illinois Agricultural Loan Guarantee Fund and the Illinois Farmer and Agribusiness Loan Guarantee Fund. Provides that all moneys in those Funds shall be paid by the State Treasurer to the Illinois Finance Authority no later than June 30, 2014, and, on and after that date, all future moneys deposited into the Illinois Agricultural Loan Guarantee Fund shall be paid by the State Treasurer to the Illinois Finance Authority as a continuing appropriation. Effective immediately.
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FISCAL NOTE ACT MAY APPLY
A BILL FOR
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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 Finance Authority Act is amended by
changing Sections 830-30 and 830-35 as follows:
(20 ILCS 3501/830-30)
Sec. 830-30. State Guarantees for existing debt.
(a) The Authority is authorized to issue State Guarantees
for farmers' existing debts held by a lender. For the purposes
of this Section, a farmer shall be a resident of Illinois, who
is a principal operator of a farm or land, at least 50% of
whose annual gross income is derived from farming and whose
debt to asset ratio shall not be less than 40%, except in those
cases where the applicant has previously used the guarantee
program there shall be no debt to asset ratio or income
restriction. For the purposes of this Section, debt to asset
ratio shall mean the current outstanding liabilities of the
farmer divided by the current outstanding assets of the farmer.
The Authority shall establish the maximum permissible debt to
asset ratio based on criteria established by the Authority.
Lenders shall apply for the State Guarantees on forms provided
by the Authority and certify that the application and any other
documents submitted are true and correct. The lender or

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borrower, or both in combination, shall pay an administrative
fee as determined by the Authority. The applicant shall be
responsible for paying any fees or charges involved in
recording mortgages, releases, financing statements, insurance
for secondary market issues and any other similar fees or
charges as the Authority may require. The application shall at
a minimum contain the farmer's name, address, present credit
and financial information, including cash flow statements,
financial statements, balance sheets, and any other
information pertinent to the application, and the collateral to
be used to secure the State Guarantee. In addition, the lender
must agree to bring the farmer's debt to a current status at
the time the State Guarantee is provided and must also agree to
charge a fixed or adjustable interest rate which the Authority
determines to be below the market rate of interest generally
available to the borrower. If both the lender and applicant
agree, the interest rate on the State Guarantee Loan can be
converted to a fixed interest rate at any time during the term
of the loan. Any State Guarantees provided under this Section
(i) shall not exceed $500,000 per farmer, (ii) shall be set up
on a payment schedule not to exceed 30 years, and shall be no
longer than 30 years in duration, and (iii) shall be subject to
an annual review and renewal by the lender and the Authority;
provided that only one such State Guarantee shall be
outstanding per farmer at any one time. No State Guarantee
shall be revoked by the Authority without a 90-day notice, in

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writing, to all parties. In those cases where the borrower has
not previously used the guarantee program, the lender shall not
call due any loan during the first 3 years for any reason
except for lack of performance or insufficient collateral. The
lender can review and withdraw or continue with the State
Guarantee on an annual basis after the first 3 years of the
loan, provided a 90-day notice, in writing, to all parties has
been given.
(b) The Authority shall provide or renew a State Guarantee
to a lender if:
(i) A fee equal to 25 basis points on the loan is paid
to the Authority on an annual basis by the lender.
(ii) The application provides collateral acceptable to
the Authority that is at least equal to the State's portion
of the Guarantee to be provided.
(iii) The lender assumes all responsibility and costs
for pursuing legal action on collecting any loan that is
delinquent or in default.
(iv) The lender is responsible for the first 15% of the
outstanding principal of the note for which the State
Guarantee has been applied.
(c) There is hereby created outside of the State treasury a
special fund to be known as the Illinois Agricultural Loan
Guarantee Fund. The Authority State Treasurer shall be
custodian of this Fund. No later than June 30, 2014, all moneys
in the Illinois Agricultural Loan Guarantee Fund shall be paid

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by the State Treasurer to the Authority, and, on and after that
date, all future moneys deposited into the Illinois
Agricultural Loan Guarantee Fund shall be paid by the State
Treasurer to the Authority under the continuing appropriation
provision of this Section. Any amounts in the Illinois
Agricultural Loan Guarantee Fund not currently needed to meet
the obligations of the Fund shall be invested as provided by
law, and all interest earned from these investments shall be
deposited into the Fund until the Fund reaches the maximum
amount authorized in this Act; thereafter, interest earned
shall be deposited into the General Revenue Fund. After
September 1, 1989, annual investment earnings equal to 1.5% of
the Fund shall remain in the Fund to be used for the purposes
established in Section 830-40 of this Act. The Authority is
authorized to transfer to the Fund such amounts as are
necessary to satisfy claims during the duration of the State
Guarantee program to secure State Guarantees issued under this
Section. If for any reason the General Assembly fails to make
an appropriation sufficient to meet these obligations, this Act
shall constitute an irrevocable and continuing appropriation
of an amount necessary to secure guarantees as defaults occur
and the irrevocable and continuing authority for, and direction
to, the State Treasurer and the Comptroller to make the
necessary transfers to the Illinois Agricultural Loan
Guarantee Fund, as directed by the Governor, out of the General
Revenue Fund. Within 30 days after November 15, 1985, the

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Authority may transfer up to $7,000,000 from available
appropriations into the Illinois Agricultural Loan Guarantee
Fund for the purposes of this Act. Thereafter, the Authority
may transfer additional amounts into the Illinois Agricultural
Loan Guarantee Fund to secure guarantees for defaults as
defaults occur. In the event of default by the farmer, the
lender shall be entitled to, and the Authority shall direct
payment on, the State Guarantee after 90 days of delinquency.
All payments by the Authority shall be made from the Illinois
Agricultural Loan Guarantee Fund to satisfy claims against the
State Guarantee. The Illinois Agricultural Loan Guarantee Fund
shall guarantee receipt of payment of the 85% of the principal
and interest owed on the State Guarantee Loan by the farmer to
the guarantee holder. It shall be the responsibility of the
lender to proceed with the collecting and disposing of
collateral on the State Guarantee within 14 months of the time
the State Guarantee is declared delinquent; provided, however,
that the lender shall not collect or dispose of collateral on
the State Guarantee without the express written prior approval
of the Authority. If the lender does not dispose of the
collateral within 14 months, the lender shall be liable to
repay to the State interest on the State Guarantee equal to the
same rate which the lender charges on the State Guarantee;
provided, however, that the Authority may extend the 14-month
period for a lender in the case of bankruptcy or extenuating
circumstances. The Fund shall be reimbursed for any amounts

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paid under this Section upon liquidation of the collateral. The
Authority, by resolution of the Board, may borrow sums from the
Fund and provide for repayment as soon as may be practical upon
receipt of payments of principal and interest by a farmer.
Money may be borrowed from the Fund by the Authority for the
sole purpose of paying certain interest costs for farmers
associated with selling a loan subject to a State Guarantee in
a secondary market as may be deemed reasonable and necessary by
the Authority.
(d) Notwithstanding the provisions of this Section 830-30
with respect to the farmers and lenders who may obtain State
Guarantees, the Authority may promulgate rules establishing
the eligibility of farmers and lenders to participate in the
State guarantee program and the terms, standards, and
procedures that will apply, when the Authority finds that
emergency conditions in Illinois agriculture have created the
need for State Guarantees pursuant to terms, standards, and
procedures other than those specified in this Section.
(Source: P.A. 93-205, eff. 1-1-04.)
(20 ILCS 3501/830-35)
Sec. 830-35. State Guarantees for loans to farmers and
agribusiness; eligibility.
(a) The Authority is authorized to issue State Guarantees
to lenders for loans to eligible farmers and agribusinesses for
purposes set forth in this Section. For purposes of this

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Section, an eligible farmer shall be a resident of Illinois (i)
who is principal operator of a farm or land, at least 50% of
whose annual gross income is derived from farming, (ii) whose
annual total sales of agricultural products, commodities, or
livestock exceeds $20,000, and (iii) whose net worth does not
exceed $500,000. An eligible agribusiness shall be that as
defined in Section 801-10 of this Act. The Authority may
approve applications by farmers and agribusinesses that
promote diversification of the farm economy of this State
through the growth and development of new crops or livestock
not customarily grown or produced in this State or that
emphasize a vertical integration of grain or livestock produced
or raised in this State into a finished agricultural product
for consumption or use. "New crops or livestock not customarily
grown or produced in this State" shall not include corn,
soybeans, wheat, swine, or beef or dairy cattle. "Vertical
integration of grain or livestock produced or raised in this
State" shall include any new or existing grain or livestock
grown or produced in this State. Lenders shall apply for the
State Guarantees on forms provided by the Authority, certify
that the application and any other documents submitted are true
and correct, and pay an administrative fee as determined by the
Authority. The applicant shall be responsible for paying any
fees or charges involved in recording mortgages, releases,
financing statements, insurance for secondary market issues
and any other similar fees or charges as the Authority may

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require. The application shall at a minimum contain the
farmer's or agribusiness' name, address, present credit and
financial information, including cash flow statements,
financial statements, balance sheets, and any other
information pertinent to the application, and the collateral to
be used to secure the State Guarantee. In addition, the lender
must agree to charge an interest rate, which may vary, on the
loan that the Authority determines to be below the market rate
of interest generally available to the borrower. If both the
lender and applicant agree, the interest rate on the State
Guarantee Loan can be converted to a fixed interest rate at any
time during the term of the loan. Any State Guarantees provided
under this Section (i) shall not exceed $500,000 per farmer or
an amount as determined by the Authority on a case-by-case
basis for an agribusiness, (ii) shall not exceed a term of 15
years, and (iii) shall be subject to an annual review and
renewal by the lender and the Authority; provided that only one
such State Guarantee shall be made per farmer or agribusiness,
except that additional State Guarantees may be made for
purposes of expansion of projects financed in part by a
previously issued State Guarantee. No State Guarantee shall be
revoked by the Authority without a 90-day notice, in writing,
to all parties. The lender shall not call due any loan for any
reason except for lack of performance, insufficient
collateral, or maturity. A lender may review and withdraw or
continue with a State Guarantee on an annual basis after the

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first 5 years following closing of the loan application if the
loan contract provides for an interest rate that shall not
vary. A lender shall not withdraw a State Guarantee if the loan
contract provides for an interest rate that may vary, except
for reasons set forth herein.
(b) The Authority shall provide or renew a State Guarantee
to a lender if:
(i) A fee equal to 25 basis points on the loan is paid
to the Authority on an annual basis by the lender.
(ii) The application provides collateral acceptable to
the Authority that is at least equal to the State's portion
of the Guarantee to be provided.
(iii) The lender assumes all responsibility and costs
for pursuing legal action on collecting any loan that is
delinquent or in default.
(iv) The lender is responsible for the first 15% of the
outstanding principal of the note for which the State
Guarantee has been applied.
(c) There is hereby created outside of the State treasury a
special fund to be known as the Illinois Farmer and
Agribusiness Loan Guarantee Fund. The Authority State
Treasurer shall be custodian of this Fund. No later than June
30, 2014, all moneys in the Illinois Farmer and Agribusiness
Loan Guarantee Fund shall be paid by the State Treasurer to the
Authority, and, on and after that date, all future moneys
deposited into the Illinois Farmer and Agribusiness Loan

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Guarantee Fund shall be paid by the State Treasurer to the
Authority under the continuing appropriation provision of this
Section. Any amounts in the Fund not currently needed to meet
the obligations of the Fund shall be invested as provided by
law, and all interest earned from these investments shall be
deposited into the Fund until the Fund reaches the maximum
amounts authorized in this Act; thereafter, interest earned
shall be deposited into the General Revenue Fund. After
September 1, 1989, annual investment earnings equal to 1.5% of
the Fund shall remain in the Fund to be used for the purposes
established in Section 830-40 of this Act. The Authority is
authorized to transfer such amounts as are necessary to satisfy
claims from available appropriations and from fund balances of
the Farm Emergency Assistance Fund as of June 30 of each year
to the Illinois Farmer and Agribusiness Loan Guarantee Fund to
secure State Guarantees issued under this Section and Sections
830-45, 830-50, and 830-55. If for any reason the General
Assembly fails to make an appropriation sufficient to meet
these obligations, this Act shall constitute an irrevocable and
continuing appropriation of an amount necessary to secure
guarantees as defaults occur and the irrevocable and continuing
authority for, and direction to, the State Treasurer and the
Comptroller to make the necessary transfers to the Illinois
Farmer and Agribusiness Loan Guarantee Fund, as directed by the
Governor, out of the General Revenue Fund. In the event of
default by the borrower on State Guarantee Loans under this

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Section, Section 830-45, Section 830-50, or Section 830-55, the
lender shall be entitled to, and the Authority shall direct
payment on, the State Guarantee after 90 days of delinquency.
All payments by the Authority shall be made from the Illinois
Farmer and Agribusiness Loan Guarantee Fund to satisfy claims
against the State Guarantee. It shall be the responsibility of
the lender to proceed with the collecting and disposing of
collateral on the State Guarantee under this Section, Section
830-45, Section 830-50, or Section 830-55 within 14 months of
the time the State Guarantee is declared delinquent. If the
lender does not dispose of the collateral within 14 months, the
lender shall be liable to repay to the State interest on the
State Guarantee equal to the same rate that the lender charges
on the State Guarantee, provided that the Authority shall have
the authority to extend the 14-month period for a lender in the
case of bankruptcy or extenuating circumstances. The Fund shall
be reimbursed for any amounts paid under this Section, Section
830-45, Section 830-50, or Section 830-55 upon liquidation of
the collateral. The Authority, by resolution of the Board, may
borrow sums from the Fund and provide for repayment as soon as
may be practical upon receipt of payments of principal and
interest by a borrower on State Guarantee Loans under this
Section, Section 830-45, Section 830-50, or Section 830-55.
Money may be borrowed from the Fund by the Authority for the
sole purpose of paying certain interest costs for borrowers
associated with selling a loan subject to a State Guarantee

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under this Section, Section 830-45, Section 830-50, or Section
830-55 in a secondary market as may be deemed reasonable and
necessary by the Authority.
(d) Notwithstanding the provisions of this Section 830-35
with respect to the farmers, agribusinesses, and lenders who
may obtain State Guarantees, the Authority may promulgate rules
establishing the eligibility of farmers, agribusinesses, and
lenders to participate in the State Guarantee program and the
terms, standards, and procedures that will apply, when the
Authority finds that emergency conditions in Illinois
agriculture have created the need for State Guarantees pursuant
to terms, standards, and procedures other than those specified
in this Section.
(Source: P.A. 96-897, eff. 5-24-10.)
Section 99. Effective date. This Act takes effect upon
becoming law.