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91_HB2034eng HB2034 Engrossed LRB9105498PTpk 1 AN ACT to amend the Illinois Farm Development Act by 2 changing Sections 8, 12.1, 12.2, 12.4, and 12.5. 3 Be it enacted by the People of the State of Illinois, 4 represented in the General Assembly: 5 Section 5. The Illinois Farm Development Act is amended 6 by changing Sections 8, 12.1, 12.2, 12.4, and 12.5 as 7 follows: 8 (20 ILCS 3605/8) (from Ch. 5, par. 1208) 9 Sec. 8. Bonds of the Authority. 10 (1) Source of Payment. All Bonds issued by the Authority 11 shall be payable solely out of the revenues and other 12 receipts of the Authority as may be designated in the 13 proceedings of the Board under which the Bonds shall be 14 authorized to be issued. 15 (2) Pledge of Revenues and Other Security. The 16 principal of and interest on any Bonds issued by the 17 Authority shall be secured by a pledge of the revenues and 18 other receipts out of which the same may be payable and may 19 be secured by a trust indenture evidencing such pledge or by 20 a foreclosable mortgage and deed of trust conveying as 21 security for such Bonds all or any part of the property of 22 the Authority from which the revenues so pledged may be 23 derived. The resolution under which the Bonds are authorized 24 to be issued or any such trust indenture or mortgage may 25 contain any agreements and provisions respecting the 26 maintenance and insurance of the property covered by such 27 trust indenture or mortgage, the use of the revenues subject 28 to such trust indenture or mortgage, the creation and 29 maintenance of special funds from such revenues, the rights, 30 duties and remedies of the parties to any such instrument and 31 the parties for the benefit of whom such instrument is made HB2034 Engrossed -2- LRB9105498PTpk 1 and the rights and remedies available in the event of default 2 as the Board shall deem advisable and which are not in 3 conflict with the provisions of this Act. 4 (3) Execution. All Bonds issued by the Authority shall 5 be signed by its chairman or vice chairman and attested by 6 its secretary, and the seal of the Authority shall be affixed 7 thereto, and any interest coupons applicable to the Bonds of 8 the Authority shall be signed by its chairman or vice 9 chairman; provided, that a facsimile of the signature of said 10 officers may be printed or otherwise reproduced on any such 11 Bonds in lieu of his manually signing the same as long as 12 such Bond is manually authenticated by a trustee or agent of 13 the Authority, a facsimile of the seal of the Authority may 14 be printed or otherwise reproduced on any such Bonds in lieu 15 of being manually affixed thereto, and a facsimile of the 16 signature of its chairman or vice chairman may be printed or 17 otherwise reproduced on any such interest coupons in lieu of 18 his manually signing the same. 19 (4) General Provisions Respecting Form, Interest Rate, 20 Maturities, Sale and Negotiability of Bonds. Any such Bonds 21 may be executed and delivered by the Authority at any time 22 and from time to time, shall be in such form and 23 denominations and of such tenor and maturities, shall contain 24 such provisions permitting or restricting redemption of such 25 Bonds prior to their maturities, shall contain such 26 provisions not inconsistent with the provisions of this Act, 27 and shall bear such rate or rates of interest, payable and 28 evidenced in such manner, as may be provided by resolution of 29 its Board. Bonds of the Authority may be sold at public or 30 private sale, at such price or prices and at such time as 31 determined by the Board of Directors to be advantageous. 32 The Authority may pay all expenses, premiums and 33 commissions in connection with any financing done by it. 34 (5) Nature of Obligation and Source of Payment. Except HB2034 Engrossed -3- LRB9105498PTpk 1 as specified in Sections 12.1,and12.2, 12.4, and 12.5 of 2 this Act with respect to State Guarantees, all obligations 3 created and all Bonds issued by the Authority shall be solely 4 and exclusively an obligation of the Authority and shall not 5 create an obligation or debt of the State or a charge on its 6 credit or taxing powers. Any Bonds issued by the Authority 7 shall be limited or special obligations of the Authority 8 payable solely out of the revenues and other receipts of the 9 Authority specified in the proceedings authorizing those 10 Bonds. Nothing in this paragraph shall be deemed to prohibit 11 the granting of "State Guarantees" as defined in subsection 12 (k) of Section 2 and authorized by SectionsSection12.1,and13Section12.2, 12.4, and 12.5 of this Act. 14 (6) Resolution Authorizing Bonds. The Authority may not 15 pass a resolution authorizing the issuance of any notes or 16 bonds in excess of $250,000 for any one real estate borrower. 17 No proceeds from any bonds issued by the Authority shall be 18 loaned to any natural person who has a net worth in excess of 19 $500,000 for the purchase of new depreciable agricultural 20 property or to any agribusiness that, including all 21 affiliates and subsidiaries, has more than 100 employees and 22 a gross income exceeding $2,000,000 for the preceding 23 calendar year; provided, however, that the employee size and 24 gross income limitations shall not apply to any loans to 25 agribusinesses for research and development purposes, and 26 provided further that the Authority shall retain the power to 27 waive such limitations for any agribusiness that, at the time 28 of application, does not operate a facility within this 29 State. Resolutions of the Authority authorizing the issuance 30 of any notes or bonds or any issue thereof under this Act may 31 provide for: 32 (a) Pledging all or any part of the fees and charges 33 made or received by the Authority, and all or any part of the 34 moneys received in payment of any loans, notes, bonds, or HB2034 Engrossed -4- LRB9105498PTpk 1 other evidences of indebtedness and other moneys received or 2 to be received by the Authority, to secure the payment of the 3 notes or bonds or of any issue thereof, and subject to such 4 agreements with bondholders or noteholders as may then exist; 5 (b) Pledging all or any part of the revenue of the 6 Authority, including payments or income from any loans, 7 notes, bonds, or other evidences of indebtedness owned or 8 held by the Authority, to secure the payment of the notes or 9 bonds issued under this Act or of any issue of such notes or 10 bonds, subject to such agreements with noteholders or 11 bondholders as may then exist; 12 (c) Pledging of any loan, grant, or contribution from 13 the federal, State, or local government, if authorized by the 14 terms of such loan, grant, or contribution; 15 (d) The use and disposition of the gross income from 16 mortgage loans owned by the Authority and payment of the 17 principal of mortgage loans owned by the Authority; 18 (e) The setting aside of reserves or sinking funds and 19 the regulation and disposition thereof; 20 (f) Limitations on the purpose to which the proceeds of 21 sale of notes or bonds may be applied and pledging such 22 proceeds to secure the payment of the notes or bonds or of 23 any issue thereof; 24 (g) Limitations on the issuance of additional notes or 25 bonds; the terms upon which additional notes or bonds may be 26 issued and secured; and the refunding of outstanding or other 27 notes or bonds; 28 (h) The procedure, if any, by which the terms of any 29 contract with noteholders or bondholders may be amended or 30 abrogated, the amount of notes or bonds the holders of which 31 must consent thereto, and the manner in which such consent 32 may be given; 33 (i) Vesting in a trustee or trustees such property, 34 rights, power and duties in trust as the Authority may HB2034 Engrossed -5- LRB9105498PTpk 1 determine, which may include any or all of the rights, powers 2 and duties of the trustee appointed by the bondholders 3 pursuant to this Act and limiting or abrogating the right of 4 the bondholders to appoint a trustee or limiting the rights, 5 powers and duties of such trustee; 6 (j) Any other matter, of like or different character, 7 which in any way affect the security or protection of the 8 notes or bonds issued by the Authority. 9 (7) Refunding Bonds. Any bonds issued by the Authority 10 may from time to time be refunded by the issuance, by sale or 11 exchange, of refunding Bonds payable from the same or 12 different sources for the purpose of paying all or any part 13 of the principal of the Bonds to be refunded, any redemption 14 premium required to be paid as a condition to the redemption 15 prior to maturity of any such Bonds that are to be so 16 redeemed in connection with such refunding, any accrued and 17 unpaid interest on the Bonds to be refunded, any interest to 18 accrue on each Bond to be refunded to the date on which it is 19 to be paid, whether at maturity or by redemption prior to 20 maturity, and the expense incurred in connection with such 21 refunding; provided, that unless duly called for redemption 22 pursuant to provisions contained therein, the holders of any 23 such bonds then outstanding and proposed to be refunded shall 24 not be compelled without their consent to surrender their 25 outstanding Bonds for such refunding. Any refunding Bonds 26 may be sold by the Authority at public or private sale at 27 such price or prices as may be exchanged for the Bonds or 28 other obligations to be refunded. Any refunding Bonds issued 29 by an Authority shall be issued and may be secured in 30 accordance with the provisions of Section 6 of this Act. 31 (Source: P.A. 85-916; 85-952.) 32 (20 ILCS 3605/12.1) (from Ch. 5, par. 1212.1) 33 Sec. 12.1. State Guarantees for existing debt. HB2034 Engrossed -6- LRB9105498PTpk 1 (a) The Authority is authorized to issue State 2 Guarantees for farmers' existing debts held by a lender. For 3 the purposes of this Section, a farmer shall be a resident of 4 Illinois, who is a principal operator of a farm or land, at 5 least 50% of whose annual gross income is derived from 6 farming and whose debt to asset ratio shall not be less than 7 40%, except in those cases where the applicant has previously 8 used the guarantee program there shall be no debt to asset 9 ratio or income restriction. For the purposes of this 10 Section, debt to asset ratio shall mean the current 11 outstanding liabilities of the farmer divided by the current 12 outstanding assets of the farmer. The Authority shall 13 establish the maximum permissible debt to asset ratio based 14 on criteria established by the Authority. 15 Lenders shall apply for the State Guarantees on forms 16 provided by the Authority and certify that the application 17 and any other documents submitted are true and correct. The 18 lender or borrower, or both in combination, shall pay an 19 administrative fee as determined by the Authority. The 20 applicant shall be responsible for paying any fees or charges 21 involved in recording mortgages, releases, financing 22 statements, insurance for secondary market issues and any 23 other similar fees or charges as the Authority may require. 24 The application shall at a minimum contain the farmer's name, 25 address, present credit and financial information, including 26 cash flow statements, financial statements, balance sheets, 27 and any other information pertinent to the application, and 28 the collateral to be used to secure the State Guarantee. In 29 addition, the lender must agree to bring the farmer's debt to 30 a current status at the time the State Guarantee is provided 31 and must also agree to charge a fixed or adjustable interest 32 rate which the Authority determines to be below the market 33 rate of interest generally available to the borrower. If 34 both the lender and applicant agree, the interest rate on the HB2034 Engrossed -7- LRB9105498PTpk 1 State Guarantee Loan can be converted to a fixed interest 2 rate at any time during the term of the loan. 3 Any State Guarantees provided under this Section (i) 4 shall not exceed $500,000 per farmer, (ii) shall be set up on 5 a payment schedule not to exceed 30 years, and shall be no 6 longer than 30 years in duration, and (iii) shall be subject 7 to an annual review and renewal by the lender and the 8 Authority; provided that only one such State Guarantee shall 9 be outstanding per farmer at any one time. No State 10 Guarantee shall be revoked by the Authority without a 90 day 11 notice, in writing, to all parties. In those cases were the 12 borrower has not previously used the guarantee program, the 13 lender shall not call due any loan during the first 3 years 14 for any reason except for lack of performance or insufficient 15 collateral. The lender can review and withdraw or continue 16 with the State Guarantee on an annual basis after the first 3 17 years of the loan, provided a 90 day notice, in writing, to 18 all parties has been given. 19 (b) The Authority shall provide or renew a State 20 Guarantee to a lender if: 21 (i) A fee equal to 25 basis points on the loan is 22 paid to the Authority on an annual basis by the lender. 23 (ii) The application provides collateral acceptable 24 to the Authority that is at least equal to the State's 25 portion of the Guarantee to be provided. 26 (iii) The lender assumes all responsibility and 27 costs for pursuing legal action on collecting any loan 28 that is delinquent or in default. 29 (iv) The lender is responsible for the first 15% of 30 the outstanding principal of the note for which the State 31 Guarantee has been applied. 32 (c) There is hereby created outside of the State 33 Treasury a special fund to be known as the Illinois 34 Agricultural Loan Guarantee Fund. The State Treasurer shall HB2034 Engrossed -8- LRB9105498PTpk 1 be custodian of this Fund. Any amounts in the Illinois 2 Agricultural Loan Guarantee Fund not currently needed to meet 3 the obligations of the Fund shall be invested as provided by 4 law, and all interest earned from these investments shall be 5 deposited into the Fund until the Fund reaches the maximum 6 amount authorizedestablishedin this ActSection; 7 thereafter, interest earned shall be deposited into the 8 General Revenue Fund. After September 1, 1989, annual 9 investment earnings equal to 1.5% of the Fund shall remain in 10 the Fund to be used for the purposes established in Section 11 12.3 of this Act. 12 The Authority is authorized to transferno more than13$45,000,000to the Fund such amounts as are necessary to 14 satisfy claims during the duration of the State Guarantee 15 program to secure State Guarantees issued under this Section 16and the State shall not be liable for more than $45,000,00017to secure State Guarantees issued under this Section. If for 18 any reason the General Assembly fails to make an 19 appropriation sufficient to meet these obligations, this Act 20 shall constitute an irrevocable and continuing appropriation 21 of an amount necessary to secure guarantees as defaults occur 22up to an amount equal to the difference between the23$45,000,000 obligation and all amounts previously transferred24to the Illinois Agricultural Loan Guarantee Fundand the 25 irrevocable and continuing authority for, and direction to, 26 the State Treasurer and the Comptroller to make the necessary 27 transfers to the Illinois Agricultural Loan Guarantee Fund, 28 as directed by the Governor, out of the General Revenue Fund. 29Any amounts transferred from the Illinois Agricultural Loan30Guarantee Fund to the General Revenue Fund, under powers31granted to the Governor by Public Act 87-14, shall not be32considered in determining if the maximum of $45,000,000 has33been transferred into the Illinois Agricultural Loan34Guarantee Fund.HB2034 Engrossed -9- LRB9105498PTpk 1 Within 30 days after November 15, 1985, the Authority may 2 transfer up to $7,000,000 from available appropriations into 3 the Illinois Agricultural Loan Guarantee Fund for the 4 purposes of this Act. Thereafter, the Authority may transfer 5 additional amounts into the Illinois Agricultural Loan 6 Guarantee Fund to secure guarantees for defaults as defaults 7 occur. 8 In the event of default by the farmer, the lender shall 9 be entitled to, and the Authority shall direct payment on, 10 the State Guarantee after 90 days of delinquency. All 11 payments by the Authority shall be made from the Illinois 12 Agricultural Loan Guarantee Fund to satisfy claims against 13 the State Guarantee. The Illinois Agricultural Loan 14 Guarantee Fund shall guarantee receipt of payment of the 85% 15 of the principal and interest owed on the State Guarantee 16 Loan by the farmer to the guarantee holder. 17 It shall be the responsibility of the lender to proceed 18 with the collecting and disposing of collateral on the State 19 Guarantee within 14 months of the time the State Guarantee is 20 declared delinquent; provided, however, that the lender shall 21 not collect or dispose of collateral on the State Guarantee 22 without the express written prior approval of the Authority. 23 If the lender does not dispose of the collateral within 14 24 months, the lender shall be liable to repay to the State 25 interest on the State Guarantee equal to the same rate which 26 the lender charges on the State Guarantee; provided, however, 27 that the Authority may extend the 14 month period for a 28 lender in the case of bankruptcy or extenuating 29 circumstances. The Fund shall be reimbursed for any amounts 30 paid under this Section upon liquidation of the collateral. 31 The Authority, by resolution of the Board, may borrow sums 32 from the Fund and provide for repayment as soon as may be 33 practical upon receipt of payments of principal and interest 34 by a farmer. Money may be borrowed from the Fund by the HB2034 Engrossed -10- LRB9105498PTpk 1 Authority for the sole purpose of paying certain interest 2 costs for farmers associated with selling a loan subject to a 3 State Guarantee in a secondary market as may be deemed 4 reasonable and necessary by the Authority. 5 (d) Notwithstanding the provisions of this Section 12.1 6 with respect to the farmers and lenders who may obtain State 7 Guarantees, the Authority may promulgate rules establishing 8 the eligibility of farmers and lenders to participate in the 9 State guarantee program and the terms, standards, and 10 procedures that will apply, when the Authority finds that 11 emergency conditions in Illinois agriculture have created the 12 need for State Guarantees pursuant to terms, standards, and 13 procedures other than those specified in this Section. 14 (Source: P.A. 89-154, eff. 7-19-95; 90-325, eff. 8-8-97.) 15 (20 ILCS 3605/12.2) (from Ch. 5, par. 1212.2) 16 Sec. 12.2. State Guarantees for loans to farmers and 17 agribusiness; eligibility. 18 (a) The Authority is authorized to issue State 19 Guarantees to lenders for loans to eligible farmers and 20 agribusinesses for purposes set forth in this Section. For 21 purposes of this Section, an eligible farmer shall be a 22 resident of Illinois (i) who is principal operator of a farm 23 or land, at least 50% of whose annual gross income is derived 24 from farming, (ii) whose annual total sales of agricultural 25 products, commodities, or livestock exceeds $20,000, and 26 (iii) whose net worth does not exceed $500,000. An eligible 27 agribusiness shall be that as defined in Section 2 of this 28 Act. 29 The Authority may approve applications by farmers and 30 agribusinesses that promote diversification of the farm 31 economy of this State through the growth and development of 32 new crops or livestock not customarily grown or produced in 33 this State or that emphasize a vertical integration of grain HB2034 Engrossed -11- LRB9105498PTpk 1 or livestock produced or raised in this State into a finished 2 agricultural product for consumption or use. "New crops or 3 livestock not customarily grown or produced in this State" 4 shall not include corn, soybeans, wheat, swine, or beef or 5 dairy cattle. "Vertical integration of grain or livestock 6 produced or raised in this State" shall include any new or 7 existing grain or livestock grown or produced in this State. 8 Lenders shall apply for the State Guarantees on forms 9 provided by the Authority, certify that the application and 10 any other documents submitted are true and correct, and pay 11 an administrative fee as determined by the Authority. The 12 applicant shall be responsible for paying any fees or charges 13 involved in recording mortgages, releases, financing 14 statements, insurance for secondary market issues and any 15 other similar fees or charges as the Authority may require. 16 The application shall at a minimum contain the farmer's or 17 agribusiness' name, address, present credit and financial 18 information, including cash flow statements, financial 19 statements, balance sheets, and any other information 20 pertinent to the application, and the collateral to be used 21 to secure the State Guarantee. In addition, the lender must 22 agree to charge an interest rate, which may vary, on the loan 23 that the Authority determines to be below the market rate of 24 interest generally available to the borrower. If both the 25 lender and applicant agree, the interest rate on the State 26 Guarantee Loan can be converted to a fixed interest rate at 27 any time during the term of the loan. 28 Any State Guarantees provided under this Section (i) 29 shall not exceed $500,000 per farmer or an amount as 30 determined by the Authority on a case-by-case basis for an 31 agribusiness, (ii) shall not exceed a term of 15 years, and 32 (iii) shall be subject to an annual review and renewal by the 33 lender and the Authority; provided that only one such State 34 Guarantee shall be made per farmer or agribusiness, except HB2034 Engrossed -12- LRB9105498PTpk 1 that additional State Guarantees may be made for purposes of 2 expansion of projects financed in part by a previously issued 3 State Guarantee. No State Guarantee shall be revoked by the 4 Authority without a 90 day notice, in writing, to all 5 parties. The lender shall not call due any loan for any 6 reason except for lack of performance, insufficient 7 collateral, or maturity. A lender may review and withdraw or 8 continue with a State Guarantee on an annual basis after the 9 first 5 years following closing of the loan application if 10 the loan contract provides for an interest rate that shall 11 not vary. A lender shall not withdraw a State Guarantee if 12 the loan contract provides for an interest rate that may 13 vary, except for reasons set forth herein. 14 (b) The Authority shall provide or renew a State 15 Guarantee to a lender if: 16 i. A fee equal to 25 basis points on the loan is 17 paid to the Authority on an annual basis by the lender. 18 ii. The application provides collateral acceptable 19 to the Authority that is at least equal to the State's 20 portion of the Guarantee to be provided. 21 iii. The lender assumes all responsibility and 22 costs for pursuing legal action on collecting any loan 23 that is delinquent or in default. 24 iv. The lender is responsible for the first 15% of 25 the outstanding principal of the note for which the State 26 Guarantee has been applied. 27 (c) There is hereby created outside of the State 28 Treasury a special fund to be known as the Illinois Farmer 29 and Agribusiness Loan Guarantee Fund. The State Treasurer 30 shall be custodian of this Fund. Any amounts in the Fund not 31 currently needed to meet the obligations of the Fund shall be 32 invested as provided by law, and all interest earned from 33 these investments shall be deposited into the Fund until the 34 Fund reaches the maximum amounts authorizedestablishedin HB2034 Engrossed -13- LRB9105498PTpk 1 this ActSection; thereafter, interest earned shall be 2 deposited into the General Revenue Fund. After September 1, 3 1989, annual investment earnings equal to 1.5% of the Fund 4 shall remain in the Fund to be used for the purposes 5 established in Section 12.3 of this Act. 6 The Authority is authorized to transfer such amounts as 7 are necessary to satisfy claimsan amount not to exceed8$15,000,000from available appropriations and from fund 9 balances of the Farm Emergency Assistance Fund as of June 30 10 of each year to the Illinois Farmer and Agribusiness Loan 11 Guarantee Fund to secure State Guarantees issued under this 12 Section and SectionsSection12.4 and 12.5and the State13shall not be liable for more than $15,000,000 to secure State14Guarantees issued under this Section and Section 12.4. If for 15 any reason the General Assembly fails to make an 16 appropriation sufficient to meet these obligations, this Act 17 shall constitute an irrevocable and continuing appropriation 18 of an amount necessary to secure guarantees as defaults occur 19up to an amount equal to the difference between the20$15,000,000 obligation and all amounts previously transferred21to the Illinois Farmer and Agribusiness Loan Guarantee Fund22 and the irrevocable and continuing authority for, and 23 direction to, the State Treasurer and the Comptroller to make 24 the necessary transfers to the Illinois Farmer and 25 Agribusiness Loan Guarantee Fund, as directed by the 26 Governor, out of the General Revenue Fund. 27 In the event of default by the borrowerfarmer or28agribusinesson State Guarantee Loans under this Section,or29 Section 12.4, or Section 12.5, the lender shall be entitled 30 to, and the Authority shall direct payment on, the State 31 Guarantee after 90 days of delinquency. All payments by the 32 Authority shall be made from the Illinois Farmer and 33 Agribusiness Loan Guarantee Fund to satisfy claims against 34 the State Guarantee. HB2034 Engrossed -14- LRB9105498PTpk 1 It shall be the responsibility of the lender to proceed 2 with the collecting and disposing of collateral on the State 3 Guarantee under this Section,orSection 12.4, or Section 4 12.5 within 14 months of the time the State Guarantee is 5 declared delinquent. If the lender does not dispose of the 6 collateral within 14 months, the lender shall be liable to 7 repay to the State interest on the State Guarantee equal to 8 the same rate that the lender charges on the State Guarantee, 9 provided that the Authority shall have the authority to 10 extend the 14 month period for a lender in the case of 11 bankruptcy or extenuating circumstances. The Fund shall be 12 reimbursed for any amounts paid under this Section, Section 13 12.4, or Section 12.5 upon liquidation of the collateral. 14 The Authority, by resolution of the Board, may borrow 15 sums from the Fund and provide for repayment as soon as may 16 be practical upon receipt of payments of principal and 17 interest by a borrowerfarmer or agribusinesson State 18 Guarantee Loans under this Section,orSection 12.4, or 19 Section 12.5. Money may be borrowed from the Fund by the 20 Authority for the sole purpose of paying certain interest 21 costs for borrowersfarmers or agribusinessesassociated with 22 selling a loan subject to a State Guarantee under this 23 Section,orSection 12.4, or Section 12.5 in a secondary 24 market as may be deemed reasonable and necessary by the 25 Authority. 26 (d) Notwithstanding the provisions of this Section 12.2 27 with respect to the farmers, agribusinesses, and lenders who 28 may obtain State Guarantees, the Authority may promulgate 29 rules establishing the eligibility of farmers, 30 agribusinesses, and lenders to participate in the State 31 Guarantee program and the terms, standards, and procedures 32 that will apply, when the Authority finds that emergency 33 conditions in Illinois agriculture have created the need for 34 State Guarantees pursuant to terms, standards, and procedures HB2034 Engrossed -15- LRB9105498PTpk 1 other than those specified in this Section. 2 (Source: P.A. 90-325, eff. 8-8-97.) 3 (20 ILCS 3605/12.4) (from Ch. 5, par. 1212.4) 4 Sec. 12.4. Young Farmer Loan Guarantee Program. 5 (a) The Authority is authorized to issue State 6 Guarantees to lenders for loans to finance or refinance debts 7 of young farmers. For the purposes of this Section, a young 8 farmer is a resident of Illinois who is at least 18 years of 9 age and who is a principal operator of a farm or land, who 10 derives at least 50% of annual gross income from farming, 11 whose net worth is not less than $10,000 and whose debt to 12 asset ratio is not less than 40%. For the purposes of this 13 Section, debt to asset ratio means current outstanding 14 liabilities, including any debt to be financed or refinanced 15 under this Section, divided by current outstanding assets. 16 The Authority shall establish the maximum permissible debt to 17 asset ratio based on criteria established by the Authority. 18 Lenders shall apply for the State Guarantees on forms 19 provided by the Authority and certify that the application 20 and any other documents submitted are true and correct. The 21 lender or borrower, or both in combination, shall pay an 22 administrative fee as determined by the Authority. The 23 applicant shall be responsible for paying any fee or charge 24 involved in recording mortgages, releases, financing 25 statements, insurance for secondary market issues, and any 26 other similar fee or charge that the Authority may require. 27 The application shall at a minimum contain the young farmer's 28 name, address, present credit and financial information, 29 including cash flow statements, financial statements, balance 30 sheets, and any other information pertinent to the 31 application, and the collateral to be used to secure the 32 State Guarantee. In addition, the borrower must certify to 33 the Authority that, at the time the State Guarantee is HB2034 Engrossed -16- LRB9105498PTpk 1 provided, the borrower will not be delinquent in the 2 repayment of any debt. The lender must agree to charge a 3 fixed or adjustable interest rate that the Authority 4 determines to be below the market rate of interest generally 5 available to the borrower. If both the lender and applicant 6 agree, the interest rate on the State guaranteed loan can be 7 converted to a fixed interest rate at any time during the 8 term of the loan. 9 State Guarantees provided under this Section (i) shall 10 not exceed $500,000 per young farmer, (ii) shall be set up on 11 a payment schedule not to exceed 30 years, but shall be no 12 longer than 15 years in duration, and (iii) shall be subject 13 to an annual review and renewal by the lender and the 14 Authority. A young farmer may use this program more than once 15 provided the aggregate principal amount of State Guarantees 16 under this Section to that young farmer does not exceed 17 $500,000. No State Guarantee shall be revoked by the 18 Authority without a 90 day notice, in writing, to all 19 parties. 20 (b) The Authority shall provide or renew a State 21 Guarantee to a lender if: 22 (i) The lender pays a fee equal to 25 basis points 23 on the loan to the Authority on an annual basis. 24 (ii) The application provides collateral acceptable 25 to the Authority that is at least equal to the State 26 Guarantee. 27 (iii) The lender assumes all responsibility and 28 costs for pursuing legal action on collecting any loan 29 that is delinquent or in default. 30 (iv) The lender is at risk for the first 15% of the 31 outstanding principal of the note for which the State 32 Guarantee is provided. 33 (c) The Illinois Farmer and Agribusiness Loan Guarantee 34 Fund may be used to secure State Guarantees issued under this HB2034 Engrossed -17- LRB9105498PTpk 1 Section as provided in Section 12.2. 2 (d) Notwithstanding the provisions of this Section 12.4 3 with respect to the young farmers and lenders who may obtain 4 State Guarantees, the Authority may promulgate rules 5 establishing the eligibility of young farmers and lenders to 6 participate in the State Guarantee program and the terms, 7 standards, and procedures that will apply, when the Authority 8 finds that emergency conditions in Illinois agriculture have 9 created the need for State Guarantees pursuant to terms, 10 standards, and procedures other than those specified in this 11 Section. 12 (Source: P.A. 89-154, eff. 7-19-95; 90-325, eff. 8-8-97.) 13 (20 ILCS 3605/12.5) 14 Sec. 12.5. Specialized Livestock Guarantee Program. 15 (a) The Authority is authorized to issue State 16 Guarantees to lenders for loans to finance or refinance debts 17 for specialized livestock operations that are or will be 18 located in Illinois. For purposes of this Section, a 19 "specialized livestock operation" includes, but is not 20 limited to, dairy, beef, and swine enterprises. 21 (b) Lenders shall apply for the State Guarantees on 22 forms provided by the Authority and certify that the 23 application and any other documents submitted are true and 24 correct. The lender or borrower, or both in combination, 25 shall pay an administrative fee as determined by the 26 Authority. The applicant shall be responsible for paying any 27 fee or charge involved in recording mortgages, releases, 28 financing statements, insurance for secondary market issues, 29 and any other similar fee or charge that the Authority may 30 require. The application shall, at a minimum, contain the 31 farmer's name, address, present credit and financial 32 information, including cash flow statements, financial 33 statements, balance sheets, and any other information HB2034 Engrossed -18- LRB9105498PTpk 1 pertinent to the application, and the collateral to be used 2 to secure the State Guarantee. In addition, the borrower 3 must certify to the Authority that, at the time the State 4 Guarantee is provided, the borrower will not be delinquent in 5 the repayment of any debt. The lender must agree to charge a 6 fixed or adjustable interest rate that the Authority 7 determines to be below the market rate of interest generally 8 available to the borrower. If both the lender and applicant 9 agree, the interest rate on the State guaranteed loan can be 10 converted to a fixed interest rate at any time during the 11 term of the loan. 12 (c) State Guarantees provided under this Section (i) 13 shall not exceed $1,000,000 per applicant, (ii) shall be no 14 longer than 15 years in duration, and (iii) shall be subject 15 to an annual review and renewal by the lender and the 16 Authority. An applicant may use this program more than once, 17 provided that the aggregate principal amount of State 18 Guarantees under this Section to that applicant does not 19 exceed $1,000,000. A State Guarantee shall not be revoked by 20 the Authority without a 90-day notice, in writing, to all 21 parties. 22 (d) The Authority shall provide or renew a State 23 Guarantee to a lender if: 24 (i) The lender pays a fee equal to 25 basis points 25 on the loan to the Authority on an annual basis. 26 (ii) The application provides collateral acceptable 27 to the Authority that is at least equal to the State 28 Guarantee. 29 (iii) The lender assumes all responsibility and 30 costs for pursuing legal action on collecting any loan 31 that is delinquent or in default. 32 (iv) The lender is at risk for the first 15% of the 33 outstanding principal of the note for which the State 34 Guarantee is provided. HB2034 Engrossed -19- LRB9105498PTpk 1 (e) The Illinois Farmer and Agribusiness Loan Guarantee 2 Fund may be used to secure State Guarantees issued under this 3 Section as provided in Section 12.2. 4 (f) Notwithstanding the provisions of this Section 12.5 5 with respect to the specialized livestock operations and 6 lenders who may obtain State Guarantees, the Authority may 7 promulgate rules establishing the eligibility of specialized 8 livestock operations and lenders to participate in the State 9 Guarantee program and the terms, standards, and procedures 10 that will apply, when the Authority finds that emergency 11 conditions in Illinois agriculture have created the need for 12 State Guarantees pursuant to terms, standards, and procedures 13 other than those specified in this Section. 14 (Source: P.A. 89-527, eff. 7-19-96.)