(50 ILCS 410/1) (from Ch. 85, par. 4301)
Sec. 1. This Article may be cited as the Local Government Credit Enhancement Act.
(Source: P.A. 86-1475.)
(50 ILCS 410/2) (from Ch. 85, par. 4302)
Sec. 2. For the purposes of this Act, terms are as defined in the Local Government Debt Reform Act.
(Source: P.A. 93-9, eff. 6-3-03.)
(50 ILCS 410/3) (from Ch. 85, par. 4303)
Sec. 3. In connection with the issuance of its bonds, a governmental unit may enter into agreements (credit agreements) to provide additional security or liquidity, or both, for the bonds. These may include, without limitation, municipal bond insurance, letters of credit, lines of credit, standby bond purchase agreements, surety bonds, and the like, by which the governmental unit may borrow funds to pay or redeem or purchase and hold its bonds and a governmental unit may enter into agreements for the purchase or remarketing of bonds (remarketing agreements) for providing a mechanism for remarketing bonds tendered for purchase in accordance with their terms. The term of such credit agreements or remarketing agreements shall not exceed the term of the bonds, plus any time period necessary to cure any defaults under such agreements.
Without limiting the terms which may be included in any such credit agreements or remarketing agreements, the ordinance may or, if hereinafter so required, shall provide as follows:
(a) Interest rates on the bonds may vary from time to time depending upon criteria established by the governing body, which may include, without limitation: (i) a variation in interest rates as may be necessary to cause bonds to be remarketed from time to time at a price equal to their principal amount plus any accrued interest; (ii) rates set by auctions; or (iii) rates set by formula.
(b) A national banking association, bank, trust company, investment banker or other financial institution may be appointed to serve as a remarketing agent in that connection, and such remarketing agent may be delegated authority by the governing body to determine interest rates in accordance with criteria established by the governing body.
(c) Alternative interest rates or provisions may apply during such times as the bonds are held by the person or persons (financial providers) providing a credit agreement or remarketing agreement for those bonds and during such times, the interest on the bonds may be deemed not exempt from income taxation under the Internal Revenue Code for purposes of State law, as contained in the Bond Authorization Act, relating to the permissible rate of interest to be borne thereon.
(d) Fees may be paid to the financial providers, including all reasonably related costs, including therein costs of enforcement and litigation (all such fees and costs being financial provider payments) and financial provider payments may be paid, without limitation, from proceeds of the bonds being the subject of such agreements, or from bonds issued to refund such bonds, or from whatever enterprise revenues or revenue source, including taxes, pledged to the payment of such bonds, which enterprise revenues or revenue source may be increased to make such financial provider payments, and such financial provider payments shall be made subordinate to the payments on the bonds.
(e) The bonds need not be held in physical form by the financial providers when providing funds to purchase or carry the bonds from others but may be represented in uncertificated form in the credit agreements or remarketing agreements.
(f) The debt or obligation of the governmental unit represented by a bond tendered for purchase to or otherwise made available to the governmental unit and thereupon acquired by either such governmental unit or a financial provider shall not be deemed to be extinguished for purposes of State law until cancelled by the governmental unit or its agent.
(g) The choice of law for the obligations of a financial provider may be made for any state of these United States, but the law which shall apply to the obligations of the governmental unit shall be the law of the State of Illinois, and jurisdiction to enforce such credit agreement or remarketing agreement as against the governmental unit shall be exclusively in the courts of the State of Illinois or in the applicable federal court having jurisdiction and located within the State of Illinois.
(h) The governmental unit may not waive any sovereign immunities from time to time available under the laws of the State of Illinois as to jurisdiction, procedures, and remedies, but any such credit agreement and remarketing agreement shall otherwise by fully enforceable as valid and binding contracts as and to the extent provided by applicable law.
(i) Such credit agreement or remarketing agreement may provide for acceleration of the principal amounts due on the bonds, provided, however, that such acceleration shall be deferred for not less than 18 months from the time any such bond is acquired pursuant to any such agreement.
(Source: P.A. 93-9, eff. 6-3-03.)