093_SB0521eng SB521 Engrossed LRB093 09326 BDD 09559 b 1 AN ACT concerning health and human services providers. 2 Be it enacted by the People of the State of Illinois, 3 represented in the General Assembly: 4 Section 5. The Illinois Health Facilities Authority Act 5 is amended by changing Sections 2.06, 4.06, and 11 and by 6 adding Sections 17.1, 17.2, 17.3, 17.4, 17.5, 17.6, 17.7, 7 17.8, 17.9, and 17.10 as follows: 8 (20 ILCS 3705/2.06) (from Ch. 111 1/2, par. 1102.06) 9 Sec. 2.06. Bonds. "Bonds" means bonds, notes and bond 10 anticipation notes and any other evidences of indebtedness of 11 the Authority issued under this Act, including refunding 12 bonds and bonds issued under Section 17.3. 13 (Source: P.A. 85-1173.) 14 (20 ILCS 3705/4.06) (from Ch. 111 1/2, par. 1104.06) 15 Sec. 4.06. Issuance of bonds. To issue bonds of the 16 Authority for any of its corporate purposes and in such 17 amounts as it deems necessary and to fund or refund the same 18 all as provided in this Act, and with respect to bonds issued 19 under Section 17.3, subject to the requirements of Sections 20 17.1 through 17.10. 21 (Source: P.A. 77-2635.) 22 (20 ILCS 3705/11) (from Ch. 111 1/2, par. 1111) 23 Sec. 11. Bonds; liability of State and political 24 subdivisions. 25 (a) Bonds issued under the provisions of this Act shall 26 not be deemed to constitute a debt or liability of the State 27 or of any political subdivision thereof other than the 28 Authority or a pledge of the faith and credit of the State or 29 of any such political subdivision other than the Authority, SB521 Engrossed -2- LRB093 09326 BDD 09559 b 1 but shall be payable solely from the funds herein provided 2 therefor. The issuance of bonds under the provisions of this 3 Act shall not, directly or indirectly or contingently, 4 obligate the State or any political subdivision thereof to 5 levy any form of taxation therefor or to make any 6 appropriation for their payment. Nothing in this Section 7 contained shall prevent or be construed to prevent the 8 Authority from pledging its full faith and credit or the full 9 faith and credit of a health institution to the payment of 10 bonds authorized pursuant to this Act. Nothing in this Act 11 shall be construed to authorize the Authority to create a 12 debt of the State within the meaning of the Constitution or 13 Statutes of Illinois and all bonds issued by the Authority 14 pursuant to the provisions of this Act are payable and shall 15 state that they are payable solely from the funds pledged for 16 their payment in accordance with the resolution authorizing 17 their issuance or in any trust indenture or mortgage or deed 18 of trust executed as security therefor. The State shall not 19 in any event be liable for the payment of the principal of or 20 interest on any bonds of the Authority or for the performance 21 of any pledge, mortgage, obligation or agreement of any kind 22 whatsoever which may be undertaken by the Authority. No 23 breach of any such pledge, mortgage, obligation or agreement 24 may impose any pecuniary liability upon the State or any 25 charge upon its general credit or against its taxing power. 26 (b) The provisions of subsection (a) do not apply to 27 bonds issued under Section 17.3, the nature of which are as 28 described in Section 17.6. 29 (Source: P.A. 77-2635.) 30 (20 ILCS 3705/17.1 new) 31 Sec. 17.1. Financially distressed provider refunding bond 32 program; findings and declaration of policy. The General 33 Assembly finds and declares that health care and human SB521 Engrossed -3- LRB093 09326 BDD 09559 b 1 services providers in the State of Illinois are currently 2 experiencing serious and sustained financial problems. These 3 financial problems are most severe for a group of health and 4 human services providers who receive significant amounts of 5 funding from the State of Illinois and for a group of health 6 care providers who serve a predominantly indigent patient 7 population in areas of critical need throughout the State of 8 Illinois. The financial difficulties being experienced by 9 this group of health and human services providers has been 10 significantly worsened as a result of failure by the State of 11 Illinois to provide adequate funding to support essential 12 programs and services and by the State's failure to make 13 timely payment of amounts appropriated for payment to these 14 providers. These institutions provide essential human 15 services for the people of the State of Illinois. The ability 16 of these entities effectively to carry out their mission and 17 to provide these essential services, however, is being 18 significantly hampered by these financial problems. It is 19 therefore essential that the State of Illinois provide a 20 financing mechanism to permit this group of providers to 21 refinance, at a significantly reduced rate of interest, 22 outstanding indebtedness previously issued for the purpose of 23 financing or refinancing costs of acquiring, constructing, 24 enlarging, remodeling, renovating, improving, furnishing, or 25 equipping a health facility. Use of such a financing 26 mechanism will permit these providers to realize significant 27 debt service savings, which can be applied to providing 28 expanded and improved health and human services to the 29 neediest residents of the State of Illinois. Establishing a 30 program is therefore declared to be in the public interest 31 and for the public benefit. 32 (20 ILCS 3705/17.2 new) 33 Sec. 17.2. Definitions. The following words or terms, SB521 Engrossed -4- LRB093 09326 BDD 09559 b 1 whenever used or referred to in Sections 17.1 through 17.9, 2 have the following meanings ascribed to them, except where 3 the context clearly requires otherwise: 4 (a) "Costs of issuance" means all reasonable costs 5 incurred in connection with the issuance of the bonds 6 including, but not limited to, legal and accounting fees and 7 expenses, printing expenses, financial consultants' fees, 8 financing charges (including underwriting and placement fees 9 and discounts), printing costs, costs incurred in connection 10 with public approvals, fees and expenses associated with 11 obtaining a rating on the bonds, costs for the preparation of 12 any disclosure document and other documents necessary for the 13 issuance of the bonds, and fees of trustees, paying agents, 14 and other fiduciaries. 15 (b) "Director" means Director of the Bureau of the 16 Budget. 17 (c) "Financially Distressed Provider Credit Enhancement 18 Fund" means the special fund created in the State treasury 19 under the State Finance Act. 20 (d) "Minimum required debt service savings" means net 21 present value savings, after payment of costs of issuance, 22 paid by, on behalf of, or with respect to any qualifying 23 provider of at least 3%. The amount of the costs of issuance 24 properly allocated as paid by, on behalf of, or with respect 25 to any qualifying provider shall be determined by the 26 Authority, with the written concurrence of the Director. 27 (e) "Qualifying provider" means a participating health 28 institution that is either: (i) certified as a provider under 29 the Critical Access Hospital program or (ii) demonstrates, to 30 the reasonable written satisfaction of the Director, that, 31 for its last 3 fiscal years for which audited financial 32 statements have been prepared, State funding accounted for an 33 annual average of at least 40% of its operating revenues. 34 (f) "Refinance" or "refinancing" means refunding of any SB521 Engrossed -5- LRB093 09326 BDD 09559 b 1 outstanding bonds, notes, or other indebtedness of a 2 qualifying provider, whether or not that indebtedness has 3 previously been issued to the Authority, whether or not 4 interest on that indebtedness is exempt from federal income 5 taxation, and regardless of the remaining term to maturity of 6 that indebtedness. 7 (g) "State agency" means the Department of Public Aid, 8 the Department of Public Health, the Department of Children 9 and Family Services, the Department of Human Services, and 10 any other department or agency of State government that 11 enters into contracts with health institutions under which 12 the institution is paid or reimbursed by the State for 13 providing health or human services to persons in Illinois. 14 (h) "State funding" means funds received from any State 15 agency. 16 (20 ILCS 3705/17.3 new) 17 Sec. 17.3. Issuance of bonds. On application of a 18 qualifying provider, the Authority may issue its bonds solely 19 for the purpose of enabling that qualifying provider to 20 refinance all or a portion of its outstanding indebtedness. 21 Bonds shall be issued by the Authority under this Section 22 only in accordance with the following requirements: 23 (1) Bonds shall be issued only for the purpose of 24 refinancing outstanding indebtedness of a qualifying provider 25 that was previously issued to finance or refinance the cost 26 of a health facility (but not including working capital, 27 accounts receivable, and operating expenses). 28 (2) Bonds shall be issued only if the Director, in 29 consultation with the Authority, determines that as a result 30 of the refinancing: (i) the qualifying provider will realize 31 minimum required debt service savings or (ii) the qualifying 32 provider will realize significant economic or financial 33 advantages that will enable it to more effectively provide SB521 Engrossed -6- LRB093 09326 BDD 09559 b 1 health care or other human services to the people of the 2 State of Illinois. 3 (3) The Authority may issue bonds for any individual 4 qualified provider or may issue a single bond issue for a 5 group of qualified providers. The Authority shall make that 6 determination only with the written concurrence of the 7 Director. The Authority and the Director are encouraged to 8 consider issuance of a single bond issue for a group of 9 qualified providers as a means of reducing costs of issuance 10 and providing greater net financial and economic benefits to 11 qualifying providers. Any single bond issue for a group of 12 qualified providers is subject to all requirements for bond 13 issues as established by this Act. 14 (20 ILCS 3705/17.4 new) 15 Sec. 17.4. Limitation on authorization. 16 (a) The Authority may issue bonds under Section 17.3 in 17 an aggregate principal amount not to exceed $300,000,000. 18 (b) Bonds may be issued under Section 17.3 on or before 19 June 30, 2004. No bonds may be issued under Section 17.3 on 20 or after July 1, 2004. The final maturity date of bonds 21 issued under Section 17.3 may be no later than January 1, 22 2025. 23 (c) Bonds may be issued by the Authority under Section 24 17.3 only after consultation with and upon receipt of the 25 written concurrence of the Director. 26 (d) The maximum amount of proceeds of bonds under 27 Section 17.3 to be loaned to, or otherwise made available for 28 the benefit of, any individual qualifying provider may not 29 exceed $50,000,000. For purposes of this subsection, proceeds 30 of bonds used to pay costs of issuance paid by, on behalf of, 31 or with respect to any qualifying provider shall not be 32 included. The amount of costs of issuance properly allocated 33 as paid by, on behalf of, or with respect to any qualifying SB521 Engrossed -7- LRB093 09326 BDD 09559 b 1 provider shall be determined by the Authority, with the 2 written concurrence of the Director. 3 (e) Unless specifically approved in writing by the 4 Director, costs of issuance for each issue of bonds may not 5 exceed one and one-half percent of the principal amount of 6 the proceeds of sale of each issue of bonds. 7 (f) If any bonds are to be sold by negotiated sale, the 8 Authority, in consultation with the Director, must comply 9 with the competitive request for proposal process set forth 10 in the Illinois Procurement Code and all other applicable 11 requirements of that Code. 12 (g) Before the issuance of bonds for the benefit of a 13 qualified provider, that qualified provider must enter into 14 an agreement with the Authority, the Director, and any 15 applicable State agency pursuant to which the qualified 16 provider agrees, among other matters, that if amounts are 17 withdrawn from the debt service reserve fund established 18 under Section 17.5 as a result of the failure of that 19 qualified provider to make timely repayment to the Authority 20 of bond proceeds loaned to, or otherwise made available for 21 the benefit of, that qualified provider, the State agency 22 shall be permitted to direct the payment of any money that is 23 otherwise due and payable to the qualified provider, up to 24 the maximum amount of that withdrawal from the debt service 25 reserve fund, into the Financially Distressed Provider Credit 26 Enhancement Fund. 27 (20 ILCS 3705/17.5 new) 28 Sec. 17.5. Debt service reserve funds. 29 (a) In connection with the issuance of each series of 30 bonds, the Authority must create and establish a debt service 31 reserve fund to be maintained by a trustee, separate and 32 segregated from all other funds and accounts of the 33 Authority. The Authority may, however, in consultation with SB521 Engrossed -8- LRB093 09326 BDD 09559 b 1 the Director, establish one debt service reserve fund for the 2 benefit of 2 or more series of bonds. The amounts required to 3 be on deposit in a debt service reserve fund shall be 4 determined by the Authority, in consultation with and upon 5 the written concurrence of the Director, and shall be 6 specified in the resolution or indenture securing the bonds. 7 Any reserve fund established under this Section shall be 8 initially funded from bond proceeds and other moneys lawfully 9 available to the Authority. 10 (b) If moneys are withdrawn from any debt service 11 reserve fund established under subsection (a), the trustee 12 shall immediately notify the Chairman of the Authority, who 13 shall in turn immediately notify the Director, the State 14 Comptroller, and the State Treasurer of the amount of that 15 withdrawal. Upon receipt of the notification, the State 16 Comptroller and the State Treasurer shall immediately 17 transfer from the Financially Distressed Provider Credit 18 Enhancement Fund to, or at the direction of, the Authority 19 for deposit into the debt service reserve fund the amount 20 required to restore that debt service reserve fund to the 21 level of the debt service reserve requirement specified in 22 the resolution or indenture securing the bonds. 23 (c) This Section constitutes an irrevocable and 24 continuing appropriation from the Financially Distressed 25 Provider Credit Enhancement Fund to any debt service reserve 26 fund established under subsection (a) of all amounts 27 necessary for that purpose and the irrevocable and continuing 28 authority for and direction to the State Treasurer and the 29 State Comptroller to make those transfers and deposits. 30 (20 ILCS 3705/17.6 new) 31 Sec. 17.6. Nature of bonds. All bonds issued under 32 Section 17.3 shall be limited obligations of the State of 33 Illinois payable from: (i) amounts transferred from the SB521 Engrossed -9- LRB093 09326 BDD 09559 b 1 Financially Distressed Provider Credit Enhancement Fund to 2 the debt service reserve fund established under Section 17.5 3 and (ii) amounts in any fund or account maintained pursuant 4 to any indenture or resolution securing those bonds to the 5 extent provided in the indenture or resolution. The bonds are 6 not general obligations of the State of Illinois and are not 7 secured by the full faith and credit of the State of 8 Illinois, and the holders of the bonds may not require the 9 levy or imposition of any taxes or the application of State 10 revenues, other than amounts transferred from the Financially 11 Distressed Provider Credit Enhancement Fund to the debt 12 service reserve fund established under Section 17.5, to the 13 payment of the bonds. Each bond shall describe the limited 14 nature of the State's obligation on the face of the bond. 15 (20 ILCS 3705/17.7 new) 16 Sec. 17.7. Actions to compel payment. If the State fails 17 to transfer required amounts from the Financially Distressed 18 Provider Credit Enhancement Fund to a debt service reserve 19 fund, as provided in Section 17.5, or from the Tobacco 20 Settlement Recovery Fund to the Financially Distressed 21 Provider Credit Enhancement Fund, as provided in Section 22 6z-43 of the State Finance Act, a civil action to compel that 23 transfer may be instituted in the Circuit Court of Sangamon 24 County by the holder or holders of the bonds issued under 25 Section 17.3. Delivery of a summons and a copy of the 26 complaint to the Attorney General constitutes sufficient 27 service to give the Circuit Court of Sangamon County 28 jurisdiction of the subject matter of such a suit and 29 jurisdiction over the State and its officers named as 30 defendants for the purpose of compelling the transfer. 31 (20 ILCS 3705/17.8 new) 32 Sec. 17.8. Covenants with bondholders. The State of SB521 Engrossed -10- LRB093 09326 BDD 09559 b 1 Illinois irrevocably covenants and agrees with the holders of 2 bonds issued under Section 17.3 that the State will not alter 3 or limit: (i) the basis on which transfers are required to be 4 made from the Tobacco Settlement Recovery Fund to the 5 Distressed Provider Credit Enhancement Fund, pursuant to 6 Section 6z-43 of the State Finance Act; (ii) the basis on 7 which transfers are required to be made from the Distressed 8 Provider Credit Enhancement Fund to either the debt service 9 reserve fund established under Section 17.5 or to the Tobacco 10 Settlement Recovery Fund; or (iii) the provisions of this Act 11 or the State Finance Act so as to impair, in any of the 12 foregoing respects, the obligations of contract incurred in 13 favor of the holders of bonds issued under Section 17.3. The 14 covenant and agreement set forth in this Section may be 15 included in a trust indenture, resolution, or bond issued 16 under Section 17.3. 17 (20 ILCS 3705/17.9 new) 18 Sec. 17.9. Tax exemption. The exercise of the powers 19 granted in Sections 17.1 through 17.10 are in all respects 20 for the benefit of the people of Illinois. In consideration 21 of that benefit, the bonds issued under Section 17.3 and the 22 income from those bonds are free from all taxation by the 23 State or its political subdivisions, except for estate, 24 transfer, and inheritance taxes. For purposes of Section 250 25 of the Illinois Income Tax Act, the exemption of the income 26 from bonds issued under those Sections terminates after all 27 of the bonds have been fully paid. The amount of that income 28 to be added to and then subtracted from federal adjusted 29 gross income or federal taxable income on the Illinois income 30 tax return of a taxpayer, as provided in Section 203 of the 31 Illinois Income Tax Act, in computing Illinois base income 32 shall be the interest net of any bond premium amortization. SB521 Engrossed -11- LRB093 09326 BDD 09559 b 1 (20 ILCS 3705/17.10 new) 2 Sec. 17.10. Generally applicable provisions. Except as 3 specifically provided for in Sections 17.1 through 17.9, all 4 bonds issued under Section 17.3 are subject to this Act in 5 the same manner and to the same extent as other bonds issued 6 under this Act. 7 Section 4. The State Finance Act is amended by changing 8 Section 6z-43 and by adding Sections 5.595 and 8.45 as 9 follows: 10 (30 ILCS 105/5.595 new) 11 Sec. 5.595. The Financially Distressed Provider Credit 12 Enhancement Fund. 13 (30 ILCS 105/6z-43) 14 Sec. 6z-43. Tobacco Settlement Recovery Fund. 15 (a) There is created in the State Treasury a special 16 fund to be known as the Tobacco Settlement Recovery Fund, 17 into which shall be deposited all monies paid to the State 18 pursuant to (1) the Master Settlement Agreement entered in 19 the case of People of the State of Illinois v. Philip Morris, 20 et al. (Circuit Court of Cook County, No. 96-L13146) and (2) 21 any settlement with or judgment against any tobacco product 22 manufacturer other than one participating in the Master 23 Settlement Agreement in satisfaction of any released claim as 24 defined in the Master Settlement Agreement, as well as any 25 other monies as provided by law. All earnings on Fund 26 investments shall be deposited into the Fund. Upon the 27 creation of the Fund, the State Comptroller shall order the 28 State Treasurer to transfer into the Fund any monies paid to 29 the State as described in item (1) or (2) of this Section 30 before the creation of the Fund plus any interest earned on 31 the investment of those monies. The Treasurer may invest the SB521 Engrossed -12- LRB093 09326 BDD 09559 b 1 moneys in the Fund in the same manner, in the same types of 2 investments, and subject to the same limitations provided in 3 the Illinois Pension Code for the investment of pension funds 4 other than those established under Article 3 or 4 of the 5 Code. 6 (b) As soon as may be practical after June 30, 2001, 7 upon notification from and at the direction of the Governor, 8 the State Comptroller shall direct and the State Treasurer 9 shall transfer the unencumbered balance in the Tobacco 10 Settlement Recovery Fund as of June 30, 2001, as determined 11 by the Governor, into the Budget Stabilization Fund. The 12 Treasurer may invest the moneys in the Budget Stabilization 13 Fund in the same manner, in the same types of investments, 14 and subject to the same limitations provided in the Illinois 15 Pension Code for the investment of pension funds other than 16 those established under Article 3 or 4 of the Code. 17 (c) As soon as practical in fiscal year 2004, there 18 shall be transferred from the Tobacco Settlement Recovery 19 Fund to the Financially Distressed Provider Credit 20 Enhancement Fund an amount to be certified by the Director of 21 the Bureau of the Budget to the State Treasurer and the State 22 Comptroller to be equal to: (x) the amount projected by the 23 Director to be the debt service reserve requirement to be 24 established in connection with the issuance of the maximum 25 amount of bonds authorized by Section 17.3 of the Illinois 26 Health Facilities Authority Act times (y) 1.25 (the product 27 of (x) times (y) being referred to as the "estimated 28 amount"). On June 30, 2004, the Director shall certify to the 29 State Treasurer and the State Comptroller: (i) the debt 30 service reserve requirement actually established in 31 connection with all bonds issued under Section 17.3 of the 32 Illinois Health Facilities Authority Act (referred to as the 33 "reserve requirement"); (ii) 125% of the reserve requirement; 34 and (iii) the difference between the estimated amount and the SB521 Engrossed -13- LRB093 09326 BDD 09559 b 1 amount certified under item (ii). The State Comptroller shall 2 direct and the State Treasurer shall transfer the amount 3 certified under item (iii) from the Financially Distressed 4 Provider Credit Enhancement Fund to the Tobacco Settlement 5 Recovery Fund. 6 (d) In each fiscal year, beginning with fiscal year 7 2004, there shall be transferred from the Tobacco Settlement 8 Recovery Fund for deposit into the Financially Distressed 9 Provider Credit Enhancement Fund an amount equal to the 10 reserve requirement. This transfer shall be made in each 11 fiscal year prior to any other use, transfer, or application 12 of moneys in the Tobacco Settlement Recovery Fund. This 13 Section constitutes an irrevocable and continuing 14 appropriation from the Tobacco Settlement Recovery Fund of 15 all amounts necessary for that purpose and the irrevocable 16 and continuing authority for and direction to the State 17 Treasurer and the State Comptroller to make those transfers 18 and deposits. 19 (Source: P.A. 91-646, eff. 11-19-99; 91-704, eff. 7-1-00; 20 91-797, eff. 6-9-00; 92-11, eff. 6-11-01; 92-16, eff. 21 6-28-01.) 22 (30 ILCS 105/8.45 new) 23 Sec. 8.45. Financially Distressed Provider Credit 24 Enhancement Fund. 25 (a) The State Comptroller and the State Treasurer shall 26 transfer into the Financially Distressed Provider Credit 27 Enhancement Fund from the Tobacco Settlement Recovery Fund 28 all amounts required to be transferred under subsections (c) 29 and (d) of Section 6z-43. In addition, there shall be 30 deposited into the Financially Distressed Provider Credit 31 Enhancement Fund all amounts directed to be deposited into 32 that Fund under an agreement executed in accordance with the 33 provisions of subsection (g) of Section 17.4 of the Illinois SB521 Engrossed -14- LRB093 09326 BDD 09559 b 1 Health Facilities Authority Act. 2 (b) On June 30, 2005, and on each June 30 thereafter, 3 all amounts in the Financially Distressed Provider Credit 4 Enhancement Fund that are in excess of 125% of the reserve 5 requirement shall be transferred by the State Treasurer for 6 deposit into the Tobacco Settlement Recovery Fund. This 7 Section constitutes an irrevocable and continuing 8 appropriation from the Financially Distressed Provider Credit 9 Enhancement Fund of all amounts necessary for that purpose 10 and the irrevocable and continuing authority for and 11 direction to the State Treasurer and the State Comptroller to 12 make those transfers and deposits. SB521 Engrossed -15- LRB093 09326 BDD 09559 b 1 INDEX 2 Statutes amended in order of appearance 3 20 ILCS 3705/2.06 from Ch. 111 1/2, par. 1102.06 4 20 ILCS 3705/4.06 from Ch. 111 1/2, par. 1104.06 5 20 ILCS 3705/11 from Ch. 111 1/2, par. 1111 6 20 ILCS 3705/17.1 new 7 20 ILCS 3705/17.2 new 8 20 ILCS 3705/17.3 new 9 20 ILCS 3705/17.4 new 10 20 ILCS 3705/17.5 new 11 20 ILCS 3705/17.6 new 12 20 ILCS 3705/17.7 new 13 20 ILCS 3705/17.8 new 14 20 ILCS 3705/17.9 new 15 20 ILCS 3705/17.10 new 16 30 ILCS 105/5.595 new 17 30 ILCS 105/6z-43 18 30 ILCS 105/8.45 new