20 ILCS 3501/820-50
2021 Illinois Compiled Statutes|Chapter 20 - EXECUTIVE BRANCH|20 ILCS 3501/ - Illinois Finance Authority Act.|Article 820 - Local Government

Sec. 820-50.     Pledge of Funds by Units of Local Government.(a) Pledge of Funds. Any unit of local government which receives funds from  the Department of Revenue, including without limitation funds received pursuant  to  Sections 8-11-1, 8-11-1.4, 8-11-5 or 8-11-6 of the Illinois Municipal Code,  the Home Rule County Retailers' Occupation Tax Act, the Home Rule County  Service  Occupation Tax Act,  Sections 25.05-2, 25.05-3 or 25.05-10 of "An Act to revise  the law in relation to counties",  Section 5.01 of the Local Mass Transit  District Act,  Section 4.03 of the Regional Transportation Authority Act,  Sections 2 or 12 of the State Revenue Sharing  Act,  or from the Department of Transportation pursuant to  Section 8 of the Motor Fuel Tax Law, or from the State Superintendent of  Education (directly or indirectly through regional superintendents of schools)  pursuant to Article 18 of the School Code, or any unit of government which  receives other funds which are at any time in the custody of the State  Treasurer, the State Comptroller, the Department of Revenue, the Department of  Transportation or the State Superintendent of Education may by appropriate  proceedings, pledge to the Authority or any entity acting on behalf of the  Authority (including, without limitation, any trustee), any or all of such  receipts to the extent that such receipts are necessary to provide revenues to  pay the principal of, premium, if any, and interest on, and other fees related  to, or to secure, any of the local government securities of such unit of local  government which have been sold or delivered to the Authority or its designee  or to pay lease rental payments to be made by such unit of local government to  the  extent that such lease rental payments secure the payment of the principal of,  premium, if any, and interest on, and other fees related to, any local  government securities which have been sold or delivered to the Authority or its  designee. Any pledge of such receipts (or any portion thereof) shall constitute  a first and prior lien thereon and shall be binding from the time the pledge is  made.(b) Direct Payment of Pledged Receipts. Any such unit of local government  may, by such proceedings, direct that all or any of such pledged receipts  payable to  such unit of local government be paid directly to the Authority or such other  entity (including, without limitation, any trustee) for the purpose of paying  the  principal of, premium, if any, and interest on, and fees relating to, such  local  government securities or for the purpose of paying such lease rental payments  to  the extent necessary to pay the principal of, premium, if any, and interest on,  and other fees related to, such local government securities secured by such  lease rental payments. Upon receipt of a certified copy of such proceedings by  the State Treasurer, the State Comptroller, the Department of Revenue, the  Department of Transportation or the State Superintendent of Education, as the  case may be, such Department or State Superintendent shall direct the State  Comptroller and State Treasurer to pay to, or on behalf of, the Authority or  such other entity (including, without limitation, any trustee) all or such  portion of the pledged receipts from the Department of Revenue, or the  Department of Transportation or the State Superintendent of Education (directly  or indirectly through regional superintendents of schools), as the case may be,  sufficient to pay the principal of and premium, if any, and interest on, and  other fees related to, the local governmental securities for which the pledge  was made or to pay such lease rental payments securing such local government  securities for which the pledge was made. The proceedings shall constitute  authorization for such a directive to the State Comptroller to cause orders to  be drawn and to the State Treasurer to pay in accordance with such directive.  To the extent that the Authority or its designee notifies the Department of  Revenue, the Department of Transportation or the State Superintendent of  Education, as the case may be, that the unit of local government has previously  paid to the Authority or its designee the amount of any principal, premium,  interest and fees payable from such pledged receipts, the State Comptroller  shall cause orders to be drawn and the State Treasurer shall pay such pledged  receipts to the unit of local government as if they were not pledged receipts.  To the extent that such receipts are pledged and paid to the Authority or such  other entity, any taxes which have been levied or fees or charges assessed  pursuant to law on account of the issuance of such local government securities  shall be paid to the unit of local government and may be used for the purposes  for which the pledged receipts would have been used.(c) Payment of Pledged Receipts upon Default. Any such unit of local  government may, by such proceedings, direct that such pledged receipts payable  to such unit of local government be paid to the Authority or such other entity  (including, without limitation, any trustee) upon a default in the payment of  any  principal of, premium, if any, or interest on, or fees relating to, any of the  local government securities of such unit of local government which have been  sold or delivered to the Authority or its designee or any of the local  government securities which have been sold or delivered to the Authority or its  designee and which are secured by such lease rental payments. If such local  governmental security is in default as to the payment of principal thereof,  premium, if any, or interest thereon, or fees relating thereto, to the extent  that the State Treasurer, the State Comptroller, the Department of Revenue, the  Department of Transportation or the State Superintendent of Education (directly  or indirectly through regional superintendents of schools) shall be the  custodian at any time of any other available funds or  moneys pledged to the  payment of such local government securities or such lease rental payments  securing such local government securities pursuant to this  Section and due or  payable to such a unit of local government at any time subsequent to written  notice  to the State Comptroller and State Treasurer from the Authority or any  entity acting on behalf of the Authority (including, without limitation, any  trustee) to the effect that such unit of local government has not paid or is in  default as to payment of the principal of, premium, if any, or interest on, or  fees relating to, any local government security sold or delivered to the  Authority or any such entity (including, without limitation, any trustee) or  has  not paid or is in default as to the payment of such lease rental payments  securing the payment of the principal of, premium, if any, or interest on, or  other fees relating to, any local government security sold or delivered to the  Authority or such other entity (including, without limitation, any trustee):(i) The State Comptroller and the State Treasurer     shall withhold the payment of such funds or moneys from such unit of local government until the amount of such principal, premium, if any, interest or fees then due and unpaid has been paid to the Authority or any such entity (including, without limitation, any trustee), or the State Comptroller and the State Treasurer have been advised that arrangements, satisfactory to the Authority or such entity, have been made for the payment of such principal, premium, if any, interest and fees; and(ii) Within 10 days after a demand for payment by the     Authority or such entity given to such unit of local government, the State Treasurer and the State Comptroller, the State Treasurer shall pay such funds or moneys as are legally available therefor to the Authority or such entity for the payment of principal of, premium, if any, or interest on, or fees relating to, such local government securities. The Authority or any such entity may carry out this Section and exercise all the rights, remedies and provisions provided or referred to in this Section.(d) Remedies. Upon the sale or delivery of any local government securities  of  the Authority or its designee, the local government which issued such local  government securities shall be deemed to have agreed that upon its failure to  pay interest or premium, if any, on, or principal of, or fees relating to, the  local government securities sold or delivered to the Authority or any entity  acting on behalf of the Authority (including, without limitation, any trustee)  when payable, all statutory defenses to nonpayment are thereby waived. Upon a  default in payment of principal of or interest on any local government  securities issued by a unit of local government and sold or delivered to the  Authority or its designee, and upon demand on the unit of local government for  payment, if the local government securities are payable from property taxes and  funds are not legally available in the treasury of the unit of local government  to make payment, an action in mandamus for the levy of a tax by the unit of  local government to pay the principal of or interest on the local government  securities shall lie, and the Authority or such entity shall be constituted a  holder or owner of the local government securities as being in default. Upon  the occurrence of any failure or default with respect to any local government  securities issued by a unit of local government, the Authority or such entity  may thereupon avail itself of all remedies, rights and provisions of law  applicable in the circumstances, and the failure to exercise or exert any  rights or remedies within a time or period provided by law may not be raised as  a defense by the unit of local government.    (Source: P.A. 93-205, eff. 1-1-04.)