2023 Illinois Compiled Statutes › Chapter 20 - EXECUTIVE BRANCH › 20 ILCS 3501/ - Illinois Finance Authority Act. › Article 820 - Local Government

(20 ILCS 3501/Art. 820 heading)
ARTICLE 820
LOCAL GOVERNMENT
(20 ILCS 3501/820-5)
Sec. 820-5. Findings and Declaration of Policy. It is hereby found and
declared that there exists an urgent need to upgrade and expand the capital
facilities, infrastructure and public purpose projects of units of local
government and to promote other public purposes to be carried out by units of
local government; that federal funding reductions combined with shifting
economic conditions have impeded efforts by units of local government to
provide the necessary improvements to their capital facilities, infrastructure
systems and public purpose projects and to accomplish other public purposes in
recent years; that adequate and well-maintained capital facilities,
infrastructure systems and public purpose projects throughout this State and
the
performance of other public purposes by units of local government throughout
this State can offer significant economic benefits and an improved quality of
life for all citizens of this State; that the exercise by the Authority of the
powers granted in
this Article will promote economic development
by enhancing the capital stock of units of local government and will
facilitate
the accomplishment of other public purposes by units of local government; that
authorizing the Authority to borrow money in the public and private capital
markets in order to provide money to purchase or otherwise acquire obligations
of units of local government will assist such units of local government in
borrowing money to finance and refinance the public purpose projects, capital
facilities and infrastructure of the units and to finance other public purposes
of such units of local government, in providing access to adequate capital
markets and facilities for borrowing money by such units of local government,
in
encouraging continued investor interest in the obligations of such units of
local government, in providing for the orderly marketing of the obligations of
such units of local government, and in achieving lower overall borrowing cost
and more favorable terms for such borrowing; and that the provisions of
this Article are hereby declared to be in the public interest
and for the public benefit.
(Source: P.A. 97-333, eff. 8-12-11.)
(20 ILCS 3501/820-10)
Sec. 820-10. Definitions. The following words or terms, whenever used or
referred to in
this Article, shall have the following
meanings ascribed to them, except where the context clearly requires otherwise:
(a) "Department" means the Illinois Department of Commerce and Economic
Opportunity.
(b) "Unit of local government" means any unit of local government, as
defined
in Article VII, Section 1 of the 1970 State Constitution and any local public
entity as that term is defined by the Local Governmental and Governmental
Employees Tort Immunity Act and also includes the State and any
instrumentality,
office, officer, department, division, bureau, commission, college or
university
thereof.
(c) "Energy conservation project" means any improvement, repair, alteration
or
betterment of any building or facility or any equipment, including but not limited to an Energy Efficiency Project, as defined in item (iii) of subsection (b) of  Section 825-65, in connection with any school district or community college district project, and any fixture or furnishing
including its energy using mechanical devices to be added to or used in any
building or facility that the Director of the Department has certified to the
Authority will be a cost-effective energy-related project that will lower
energy
or utility costs in connection with the operation or maintenance of such
building or facility, and will achieve energy cost savings sufficient to cover
bond debt service and other project costs within 10 years from the date of
project installation.
(Source: P.A. 97-760, eff. 7-6-12.)
(20 ILCS 3501/820-15)
Sec. 820-15. 
		Creation of Reserve Funds. 
		The Authority may establish and
maintain one or more reserve funds in which there may be one or more accounts
in which there may be deposited:
(a) Any proceeds of bonds issued by the Authority required to be deposited
therein by the terms of any contract between the Authority and its bondholders
or any resolution of the Authority;
(b) Any other moneys or funds of the Authority which it may determine to
deposit therein from any other source; and
(c) Any other moneys or funds made available to the Authority, including
without limitation any proceeds of any local government security or any taxes
or
revenues, rates, charges, assessments, grants, or other funds pledged or
assigned to pay, repay or secure any local government security.
Subject to the terms of any pledge to the owners of any bond, moneys in any
reserve fund may be held and applied to the payment of the interest, premium,
if any, or principal of bonds or local government securities or for any other
purpose authorized by the Authority.
(Source: P.A. 93-205, eff. 1-1-04.)
(20 ILCS 3501/820-20)
Sec. 820-20. 
		
		Powers and Duties; Illinois Local Government Financing
Assistance Program. The Authority has the power:
(a) To purchase from time to time pursuant to negotiated sale or to
otherwise
acquire from time to time any local government securities issued by one or more
units of local government upon such terms and conditions as the Authority may
prescribe;
(b) To issue bonds in one or more series pursuant to one or more resolutions
of
the Authority for any purpose authorized under
this Article,
including without limitation purchasing or acquiring local government
securities, providing for the payment of any interest deemed necessary on such
bonds, paying for the cost of issuance of such bonds, providing for the payment
of the cost of any guarantees, letters of credit, insurance contracts or other
similar credit support or liquidity instruments, or providing for the funding
of
any reserves deemed necessary in connection with such bonds and refunding or
advance refunding of any such bonds and the interest and any premium thereon,
pursuant to this Act;
(c) To provide for the funding of any reserves or other funds or accounts
deemed necessary by the Authority in connection with any bonds issued by the
Authority or local government securities purchased or otherwise acquired by the
Authority;
(d) To pledge any local government security, including any payments thereon,
and any other funds of the Authority or funds made available to the Authority
which may be applied to such purpose, as security for any bonds or any
guarantees, letters of credit, insurance contracts or similar credit support or
liquidity instruments securing the bonds;
(e) To enter into agreements or contracts with third parties, whether public
or
private, including without limitation the United States of America, the State,
or any department or agency thereof to obtain any appropriations, grants, loans
or guarantees which are deemed necessary or desirable by the Authority. Any
such guarantee, agreement or contract may contain terms and provisions
necessary
or desirable in connection with the program, subject to the requirements
established by
this Article;
(f) To charge reasonable fees to defray the cost of obtaining letters of
credit, insurance contracts or other similar documents, and to charge such
other
reasonable fees to defray the cost of trustees, depositories, paying agents,
bond registrars, escrow agents and other administrative expenses. Any such fees
shall be payable by units of local government whose local government securities
are purchased or otherwise acquired by the Authority pursuant to
this Article, in such amounts and at such times as the Authority
shall determine, and the amount of the fees need not be uniform among the
various units of local government whose local government securities are
purchased or otherwise acquired by the Authority pursuant to
this Article;
(g) To obtain and maintain guarantees, letters of credit, insurance
contracts
or similar credit support or liquidity instruments which are deemed necessary
or
desirable in connection with any bonds or other obligations of the Authority or
any local government securities;
(h) To establish application fees and other service fees and prescribe
application, notification, contract, agreement, security and insurance forms
and
rules and regulations it deems necessary or appropriate;
(i) To provide technical assistance, at the request of any unit of local
government, with respect to the financing or refinancing for any public
purpose.
In fulfillment of this purpose, the Authority may request assistance from the
Department as necessary; any unit of local government that is experiencing
either a financial emergency as defined in the Local Government Financial
Planning and Supervision Act or a condition of fiscal crisis evidenced by an
impaired ability to obtain financing for its public purpose projects from
traditional financial channels or impaired ability to fully fund its
obligations
to fire, police and municipal employee pension funds, or to bond payments or
reserves, may request technical assistance from the Authority in the form of a
diagnostic evaluation of its financial condition;
(j) To purchase any obligations of the Authority issued pursuant to
this Article;
(k) To sell, transfer or otherwise dispose of local government securities
purchased or otherwise acquired by the Authority pursuant to
this Article,
including without limitation, the sale, transfer or
other disposition of undivided fractionalized interests in the right to receive
payments of principal and premium, if any, or the right to receive payments of
interest or the right to receive payments of principal of and premium, if any,
and interest on pools of such local government securities;
(l) To acquire, purchase, lease, sell, transfer and otherwise dispose of
real
and personal property, or any interest therein, and to issue its bonds and
enter
into leases, contracts and other agreements with units of local government in
connection with such acquisitions, purchases, leases, sales and other
dispositions of such real and personal property;
(m) To make loans to banks, savings and loans and other financial
institutions
for the purpose of purchasing or otherwise acquiring local government
securities, and to issue its bonds, and enter into agreements and contracts in
connection with such loans;
(n) To enter into agreements or contracts with any person necessary or
appropriate to place the payment obligations of the Authority under any of its
bonds in whole or in part on any interest rate basis, cash flow basis, or other
basis desired by the Authority, including without limitation agreements or
contracts commonly known as "interest rate swap agreements", "forward payment
conversion agreements", and "futures", or agreements or contracts to exchange
cash flows or a series of payments, or agreements or contracts, including
without limitation agreements or contracts commonly known as "options", "puts"
or "calls", to hedge payment, rate spread, or similar exposure; provided, that
any such agreement or contract shall not constitute an obligation for borrowed
money, and shall not be taken into account under
Section 845-5 of this Act or any
other debt limit of the Authority or the State of Illinois;
(o) To make and enter into all other agreements and contracts and execute
all
instruments necessary or incidental to performance of its duties and the
execution of its powers under
this Article;
(p) To contract for and finance the costs of energy audits, project-specific
engineering and design specifications, and any other related analyses
preliminary to an energy conservation project; and, to contract for and finance
the cost of project monitoring and data collection to verify post-installation
energy consumption and energy-related operating costs. Any such contract shall
be executed only after it has been jointly negotiated by the Authority and the
Department; and
(q) To exercise such other powers as are necessary or incidental to the
foregoing.
(Source: P.A. 93-205, eff. 1-1-04.)
(20 ILCS 3501/820-25)
Sec. 820-25. 
		Unit of Local Government Participation. 
		Any unit of local
government is authorized to voluntarily participate in this program. Any unit
of local government which is authorized to issue, sell and deliver its local
government securities under any provision of the Constitution or laws of the
State may issue, sell and deliver such local government securities to the
Authority under
this Article; provided that and notwithstanding
any other provision of law to the contrary, any such unit of local government
may issue and sell any such local government security at any interest rate or
rates, which rate or rates may be established by an index or formula which may
be implemented by persons appointed or retained therefor, payable at such time
or times, and at such price or prices to which the unit of local government and
the Authority may agree. Any unit of local government may pay any amount
charged by the Authority pursuant to
this Article.
Any unit of local government participating in this program may pay out of the
proceeds of its local government securities or out of any other moneys or funds
available to it for such purposes any costs, fees, interest deemed necessary,
premium or reserves incurred or required for financing or refinancing this
program, including without limitation any fees charged by the Authority
pursuant
to
this Article and its share, as determined by the
Authority, of any costs, fees, interest deemed necessary, premium or reserves
incurred or required pursuant to
Section 820-20 of this Act. All local
government securities purchased or otherwise acquired by the Authority pursuant
to this Act shall upon delivery to the Authority be accompanied by an approving
opinion of bond counsel as to the validity of such securities. The Authority
shall have discretion to purchase or otherwise acquire those local government
securities, as it shall deem to be in the best interest of its financing
program
for all units of local government taken as a whole.
(Source: P.A. 93-205, eff. 1-1-04.)
(20 ILCS 3501/820-30)
Sec. 820-30. 
		Criteria for Participation in the Program. 
		If the Authority
requires an application for participation in the Program, upon submission of
any
such application, the Authority or any entity on behalf of the Authority shall
review such application for its completeness and may, at its discretion, accept
or reject such application or request such additional information as it deems
necessary or advisable to aid its review.
In the course of its review, the Authority may consider but shall not be
limited
to the following factors:
(a) Whether the public purpose for which the local government security is to
be
issued will have a significant impact on the economy, environment, health or
safety of the unit of local government;
(b) The extent to which the public purpose for which the local government
security is to be issued will provide reinforcement for other community and
economic development related investments by such units of local government;
(c) The creditworthiness of the unit of local government and the local
government security, including, without limitation, the ability of the unit of
local government to comply with the credit requirements of the provider of any
guarantees, letters of credit, insurance contracts or other similar credit
support or liquidity instruments; and
(d) Such other factors as deemed necessary by the Authority which are
consistent with the intent of this Act.
(Source: P.A. 93-205, eff. 1-1-04.)
(20 ILCS 3501/820-35)
Sec. 820-35. 
The Authority may assist the Department to establish and
implement a program to assist units of local government to identify and arrange
financing for energy conservation projects in buildings and facilities owned or
leased by units of local government.
Such bonds shall not constitute an indebtedness or obligation of the State of
Illinois and it shall be plainly stated on the face of each bond that it does
not constitute such an indebtedness or obligation but is payable solely from
the
revenues, income or other assets of the Authority pledged therefor.
(Source: P.A. 97-760, eff. 7-6-12.)
(20 ILCS 3501/820-40)
Sec. 820-40. 
		Investment of moneys. 
		Any moneys at any time held by the
Authority pursuant to
this Article shall be held
outside the State treasury in the custody of either the Treasurer of the
Authority or a trustee or depository appointed by the Authority. Such moneys
may be invested in (a) investments authorized by the Public Funds Investment
Act,
(b) obligations issued by any State, unit of local government or
school
district, which obligations are rated at the time of purchase by a national
rating service within the 2 highest rating classifications without regard to
any
rating refinement or gradation by numerical or other modifier, (c) equity
securities of an investment company registered under the Investment Company Act
of 1940 whose sole assets, other than cash and other temporary investments, are
obligations which are eligible investments for the Authority, or (d) investment
contracts under which securities are to be purchased and sold at a
predetermined
price on a future date, or pursuant to which moneys are deposited with a bank
or
other financial institution and the deposits are to bear interest at an agreed
upon rate, provided that such investment contracts are with a bank or other
financial institution whose obligations are rated at the time of purchase by a
national rating service within the 2 highest rating classifications without
regard to any rating refinement or gradation by numerical or other modifier.
The interest, dividends or other earnings from such investments may be used to
pay administrative costs of the Authority incurred in administering the program
or trustee or depository fees incurred in connection with such program.
(Source: P.A. 93-205, eff. 1-1-04.)
(20 ILCS 3501/820-45)
Sec. 820-45. 
		Pledge of Revenues by the Authority. 
		Any pledge of revenues
or
other moneys made by the Authority shall be binding from the time the pledge is
made. Revenues and other moneys so pledged shall be held outside of the State
treasury and in the custody of either the Treasurer of the Authority or a
trustee or a depository appointed by the Authority. Revenues or other moneys so
pledged and thereafter received by the Authority or such trustee or depository
shall immediately be subject to the lien of the pledge without any physical
delivery thereof or further act, and the lien of any pledge shall be binding
against all parties having claims of any kind of tort, contract or otherwise
against the Authority, irrespective of whether the parties have notice thereof.
Neither the resolution nor any other instrument by which a pledge is created
need be filed or recorded except in the records of the Authority.
The State does pledge to and agree with the holders of bonds, and the
beneficial
owners of the local government securities, that the State will not limit or
restrict the rights hereby vested in the Authority to purchase, acquire, hold,
sell or dispose of local government securities or other investments or to
establish and collect such fees or other charges as may be convenient or
necessary to produce sufficient revenues to meet the expenses of operation of
the Authority, and to fulfill the terms of any agreement made with the holders
of the bonds or the beneficial owners of the local government securities or in
any way impair the rights or remedies of the holders of those bonds or the
beneficial owners of the local government securities until such bonds or local
government securities are fully paid and discharged or provision for their
payment has been made.
(Source: P.A. 93-205, eff. 1-1-04.)
(20 ILCS 3501/820-50)
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.)
(20 ILCS 3501/820-55)
Sec. 820-55. 
		Eligible Investments. 
		Bonds, issued by the Authority pursuant
to the provisions of
this Article, shall be
permissible investments within the provisions of
Section 805-40 of this Act.
(Source: P.A. 93-205, eff. 1-1-04.)
(20 ILCS 3501/820-60)
Sec. 820-60. 
		Tax Exemption. 
		The exercise of powers granted in
this Article
is in all respects for the benefit of the people of
Illinois and in consideration thereof the bonds issued pursuant to the
aforementioned
Sections and the income therefrom shall be free from all taxation
by the State or its political subdivisions, except for estate, transfer and
inheritance taxes. For purposes of
Section 250 of the Illinois Income Tax Act,
the exemption of the income from bonds issued under the aforementioned
Sections
shall terminate after all of the bonds have been paid. The amount of such
income that shall be added and then subtracted on the Illinois income tax
return
of a taxpayer, pursuant to
Section 203 of the Illinois Income Tax Act, from
federal adjusted gross income or federal taxable income in computing Illinois
base income shall be the interest net of any bond premium amortization.
(Source: P.A. 93-205, eff. 1-1-04.)