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91_HB4404
LRB9113130JMdvA
1 AN ACT to amend the Illinois Farm Development Act.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 5. The Illinois Farm Development Act is amended
5 by changing Sections 7.2, 12.1, and 12.2 and adding Section
6 12.6 as follows:
7 (20 ILCS 3605/7.2)
8 Sec. 7.2. Interest-buy-back program.
9 (a) The Authority shall establish an interest-buy-back
10 program to subsidize the interest cost on certain loans to
11 Illinois farmers.
12 (b) To be eligible an applicant must (i) be a resident
13 of Illinois; (ii) be a principal operator of a farm or land;
14 (iii) derive at least 50% of annual gross income from
15 farming; and (iv) have a net worth of at least $10,000. The
16 Authority shall establish minimum and maximum financial
17 requirements, maximum payment amounts, starting and ending
18 dates for the program, and other criteria.
19 (c) Lenders may apply on behalf of eligible applicants
20 on forms provided by the Authority. Lenders may submit
21 requests for payment on forms provided by the Authority.
22 Lenders and applicants shall be responsible for any fees or
23 charges the Authority may require.
24 (d) The Interest Buy-Back Fund is created as a special
25 fund outside the State treasury. The State Treasurer shall
26 be custodian of the Fund. Unexpended appropriations to the
27 Authority for the purpose of this Section shall be deposited
28 into the Interest Buy-Back Fund. Amounts in the Fund not
29 currently needed to meet the obligations of the Fund shall be
30 invested as provided by law, and all interest earned from
31 those investments shall be deposited into the Fund. The
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1 Authority shall make payments to lenders under this Section
2 from the Interest Buy-Back Fund and from available
3 appropriations from the General Revenue Fund.
4 (Source: P.A. 91-281, eff. 7-23-99.)
5 (20 ILCS 3605/12.1) (from Ch. 5, par. 1212.1)
6 Sec. 12.1. State Guarantees for existing debt.
7 (a) The Authority is authorized to issue State
8 Guarantees for farmers' existing debts held by a lender. For
9 the purposes of this Section, a farmer shall be a resident of
10 Illinois, who is a principal operator of a farm or land, at
11 least 50% of whose annual gross income is derived from
12 farming and whose debt to asset ratio shall not be less than
13 40%, except in those cases where the applicant has previously
14 used the guarantee program there shall be no debt to asset
15 ratio or income restriction. For the purposes of this
16 Section, debt to asset ratio shall mean the current
17 outstanding liabilities of the farmer divided by the current
18 outstanding assets of the farmer. The Authority shall
19 establish the maximum permissible debt to asset ratio based
20 on criteria established by the Authority.
21 Lenders shall apply for the State Guarantees on forms
22 provided by the Authority and certify that the application
23 and any other documents submitted are true and correct. The
24 lender or borrower, or both in combination, shall pay an
25 administrative fee as determined by the Authority. The
26 applicant shall be responsible for paying any fees or charges
27 involved in recording mortgages, releases, financing
28 statements, insurance for secondary market issues and any
29 other similar fees or charges as the Authority may require.
30 The application shall at a minimum contain the farmer's name,
31 address, present credit and financial information, including
32 cash flow statements, financial statements, balance sheets,
33 and any other information pertinent to the application, and
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1 the collateral to be used to secure the State Guarantee. In
2 addition, the lender must agree to bring the farmer's debt to
3 a current status at the time the State Guarantee is provided
4 and must also agree to charge a fixed or adjustable interest
5 rate which the Authority determines to be below the market
6 rate of interest generally available to the borrower. If
7 both the lender and applicant agree, the interest rate on the
8 State Guarantee Loan can be converted to a fixed interest
9 rate at any time during the term of the loan.
10 Any State Guarantees provided under this Section (i)
11 shall not exceed $500,000 per farmer, (ii) shall be set up on
12 a payment schedule not to exceed 30 years, and shall be no
13 longer than 30 years in duration, and (iii) shall be subject
14 to an annual review and renewal by the lender and the
15 Authority; provided that only one such State Guarantee shall
16 be outstanding per farmer at any one time. No State
17 Guarantee shall be revoked by the Authority without a 90 day
18 notice, in writing, to all parties. In those cases were the
19 borrower has not previously used the guarantee program, the
20 lender shall not call due any loan during the first 3 years
21 for any reason except for lack of performance or insufficient
22 collateral. The lender can review and withdraw or continue
23 with the State Guarantee on an annual basis after the first 3
24 years of the loan, provided a 90 day notice, in writing, to
25 all parties has been given.
26 (b) The Authority shall provide or renew a State
27 Guarantee to a lender if:
28 (i) A fee equal to 25 basis points on the loan is
29 paid to the Authority on an annual basis by the lender.
30 (ii) The application provides collateral acceptable
31 to the Authority that is at least equal to the State's
32 portion of the Guarantee to be provided.
33 (iii) The lender assumes all responsibility and
34 costs for pursuing legal action on collecting any loan
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1 that is delinquent or in default.
2 (iv) The lender is responsible for the first 15% of
3 the outstanding principal of the note for which the State
4 Guarantee has been applied.
5 (c) There is hereby created outside of the State
6 Treasury a special fund to be known as the Illinois
7 Agricultural Loan Guarantee Fund. The State Treasurer shall
8 be custodian of this Fund. Any amounts in the Illinois
9 Agricultural Loan Guarantee Fund not currently needed to meet
10 the obligations of the Fund shall be invested as provided by
11 law, and all interest earned from these investments shall be
12 deposited into the Fund until the Fund reaches the maximum
13 amount authorized in this Act; thereafter, interest earned
14 shall be deposited into the General Revenue Fund. After
15 September 1, 1989, annual investment earnings equal to 1.5%
16 of the Fund shall remain in the Fund to be used for the
17 purposes established in Section 12.3 of this Act.
18 The Authority is authorized to transfer to the Fund such
19 amounts as are necessary to satisfy claims during the
20 duration of the State Guarantee program to secure State
21 Guarantees issued under this Section. If for any reason the
22 General Assembly fails to make an appropriation sufficient to
23 meet these obligations, this Act shall constitute an
24 irrevocable and continuing appropriation of an amount
25 necessary to secure guarantees as defaults occur and the
26 irrevocable and continuing authority for, and direction to,
27 the State Treasurer and the Comptroller to make the necessary
28 transfers to the Illinois Agricultural Loan Guarantee Fund,
29 as directed by the Governor, out of the General Revenue Fund.
30 Within 30 days after November 15, 1985, the Authority may
31 transfer up to $7,000,000 from available appropriations into
32 the Illinois Agricultural Loan Guarantee Fund for the
33 purposes of this Act. Thereafter, the Authority may transfer
34 additional amounts into the Illinois Agricultural Loan
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1 Guarantee Fund to secure guarantees for defaults as defaults
2 occur.
3 In the event of default by the farmer, the lender shall
4 be entitled to, and the Authority shall direct payment on,
5 the State Guarantee after 90 days of delinquency. All
6 payments by the Authority shall be made from the Illinois
7 Agricultural Loan Guarantee Fund to satisfy claims against
8 the State Guarantee. The Illinois Agricultural Loan
9 Guarantee Fund shall guarantee receipt of payment of the 85%
10 of the principal and interest owed on the State Guarantee
11 Loan by the farmer to the guarantee holder.
12 It shall be the responsibility of the lender to proceed
13 with the collecting and disposing of collateral on the State
14 Guarantee within 14 months of the time the State Guarantee is
15 declared delinquent; provided, however, that the lender shall
16 not collect or dispose of collateral on the State Guarantee
17 without the express written prior approval of the Authority.
18 If the lender does not dispose of the collateral within 14
19 months, the lender shall be liable to repay to the State
20 interest on the State Guarantee equal to the same rate which
21 the lender charges on the State Guarantee; provided, however,
22 that the Authority may extend the 14 month period for a
23 lender in the case of bankruptcy or extenuating
24 circumstances. The Fund shall be reimbursed for any amounts
25 paid under this Section upon liquidation of the collateral.
26 The Authority, by resolution of the Board, may borrow sums
27 from the Fund and provide for repayment as soon as may be
28 practical upon receipt of payments of principal and interest
29 by a farmer. Money may be borrowed from the Fund by the
30 Authority for the sole purpose of paying certain interest
31 costs for farmers associated with selling a loan subject to a
32 State Guarantee in a secondary market as may be deemed
33 reasonable and necessary by the Authority. Money may be
34 borrowed from the Fund by the Authority in accordance with
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1 subsection (d) of Section 12.6.
2 (d) Notwithstanding the provisions of this Section 12.1
3 with respect to the farmers and lenders who may obtain State
4 Guarantees, the Authority may promulgate rules establishing
5 the eligibility of farmers and lenders to participate in the
6 State guarantee program and the terms, standards, and
7 procedures that will apply, when the Authority finds that
8 emergency conditions in Illinois agriculture have created the
9 need for State Guarantees pursuant to terms, standards, and
10 procedures other than those specified in this Section.
11 (Source: P.A. 90-325, eff. 8-8-97; 91-386, eff. 1-1-00.)
12 (20 ILCS 3605/12.2) (from Ch. 5, par. 1212.2)
13 Sec. 12.2. State Guarantees for loans to farmers and
14 agribusiness; eligibility.
15 (a) The Authority is authorized to issue State
16 Guarantees to lenders for loans to eligible farmers and
17 agribusinesses for purposes set forth in this Section. For
18 purposes of this Section, an eligible farmer shall be a
19 resident of Illinois (i) who is principal operator of a farm
20 or land, at least 50% of whose annual gross income is derived
21 from farming, (ii) whose annual total sales of agricultural
22 products, commodities, or livestock exceeds $20,000, and
23 (iii) whose net worth does not exceed $500,000. An eligible
24 agribusiness shall be that as defined in Section 2 of this
25 Act.
26 The Authority may approve applications by farmers and
27 agribusinesses that promote diversification of the farm
28 economy of this State through the growth and development of
29 new crops or livestock not customarily grown or produced in
30 this State or that emphasize a vertical integration of grain
31 or livestock produced or raised in this State into a finished
32 agricultural product for consumption or use. "New crops or
33 livestock not customarily grown or produced in this State"
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1 shall not include corn, soybeans, wheat, swine, or beef or
2 dairy cattle. "Vertical integration of grain or livestock
3 produced or raised in this State" shall include any new or
4 existing grain or livestock grown or produced in this State.
5 Lenders shall apply for the State Guarantees on forms
6 provided by the Authority, certify that the application and
7 any other documents submitted are true and correct, and pay
8 an administrative fee as determined by the Authority. The
9 applicant shall be responsible for paying any fees or charges
10 involved in recording mortgages, releases, financing
11 statements, insurance for secondary market issues and any
12 other similar fees or charges as the Authority may require.
13 The application shall at a minimum contain the farmer's or
14 agribusiness' name, address, present credit and financial
15 information, including cash flow statements, financial
16 statements, balance sheets, and any other information
17 pertinent to the application, and the collateral to be used
18 to secure the State Guarantee. In addition, the lender must
19 agree to charge an interest rate, which may vary, on the loan
20 that the Authority determines to be below the market rate of
21 interest generally available to the borrower. If both the
22 lender and applicant agree, the interest rate on the State
23 Guarantee Loan can be converted to a fixed interest rate at
24 any time during the term of the loan.
25 Any State Guarantees provided under this Section (i)
26 shall not exceed $500,000 per farmer or an amount as
27 determined by the Authority on a case-by-case basis for an
28 agribusiness, (ii) shall not exceed a term of 15 years, and
29 (iii) shall be subject to an annual review and renewal by the
30 lender and the Authority; provided that only one such State
31 Guarantee shall be made per farmer or agribusiness, except
32 that additional State Guarantees may be made for purposes of
33 expansion of projects financed in part by a previously issued
34 State Guarantee. No State Guarantee shall be revoked by the
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1 Authority without a 90 day notice, in writing, to all
2 parties. The lender shall not call due any loan for any
3 reason except for lack of performance, insufficient
4 collateral, or maturity. A lender may review and withdraw or
5 continue with a State Guarantee on an annual basis after the
6 first 5 years following closing of the loan application if
7 the loan contract provides for an interest rate that shall
8 not vary. A lender shall not withdraw a State Guarantee if
9 the loan contract provides for an interest rate that may
10 vary, except for reasons set forth herein.
11 (b) The Authority shall provide or renew a State
12 Guarantee to a lender if:
13 i. A fee equal to 25 basis points on the loan is
14 paid to the Authority on an annual basis by the lender.
15 ii. The application provides collateral acceptable
16 to the Authority that is at least equal to the State's
17 portion of the Guarantee to be provided.
18 iii. The lender assumes all responsibility and
19 costs for pursuing legal action on collecting any loan
20 that is delinquent or in default.
21 iv. The lender is responsible for the first 15% of
22 the outstanding principal of the note for which the State
23 Guarantee has been applied.
24 (c) There is hereby created outside of the State
25 Treasury a special fund to be known as the Illinois Farmer
26 and Agribusiness Loan Guarantee Fund. The State Treasurer
27 shall be custodian of this Fund. Any amounts in the Fund not
28 currently needed to meet the obligations of the Fund shall be
29 invested as provided by law, and all interest earned from
30 these investments shall be deposited into the Fund until the
31 Fund reaches the maximum amounts authorized in this Act;
32 thereafter, interest earned shall be deposited into the
33 General Revenue Fund. After September 1, 1989, annual
34 investment earnings equal to 1.5% of the Fund shall remain in
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1 the Fund to be used for the purposes established in Section
2 12.3 of this Act.
3 The Authority is authorized to transfer such amounts as
4 are necessary to satisfy claims from available appropriations
5 and from fund balances of the Farm Emergency Assistance Fund
6 as of June 30 of each year to the Illinois Farmer and
7 Agribusiness Loan Guarantee Fund to secure State Guarantees
8 issued under this Section and Sections 12.4 and 12.5. If for
9 any reason the General Assembly fails to make an
10 appropriation sufficient to meet these obligations, this Act
11 shall constitute an irrevocable and continuing appropriation
12 of an amount necessary to secure guarantees as defaults occur
13 and the irrevocable and continuing authority for, and
14 direction to, the State Treasurer and the Comptroller to make
15 the necessary transfers to the Illinois Farmer and
16 Agribusiness Loan Guarantee Fund, as directed by the
17 Governor, out of the General Revenue Fund.
18 In the event of default by the borrower on State
19 Guarantee Loans under this Section, Section 12.4, or Section
20 12.5, the lender shall be entitled to, and the Authority
21 shall direct payment on, the State Guarantee after 90 days of
22 delinquency. All payments by the Authority shall be made
23 from the Illinois Farmer and Agribusiness Loan Guarantee Fund
24 to satisfy claims against the State Guarantee.
25 It shall be the responsibility of the lender to proceed
26 with the collecting and disposing of collateral on the State
27 Guarantee under this Section, Section 12.4, or Section 12.5
28 within 14 months of the time the State Guarantee is declared
29 delinquent. If the lender does not dispose of the collateral
30 within 14 months, the lender shall be liable to repay to the
31 State interest on the State Guarantee equal to the same rate
32 that the lender charges on the State Guarantee, provided that
33 the Authority shall have the authority to extend the 14 month
34 period for a lender in the case of bankruptcy or extenuating
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1 circumstances. The Fund shall be reimbursed for any amounts
2 paid under this Section, Section 12.4, or Section 12.5 upon
3 liquidation of the collateral.
4 The Authority, by resolution of the Board, may borrow
5 sums from the Fund and provide for repayment as soon as may
6 be practical upon receipt of payments of principal and
7 interest by a borrower on State Guarantee Loans under this
8 Section, Section 12.4, or Section 12.5. Money may be borrowed
9 from the Fund by the Authority for the sole purpose of paying
10 certain interest costs for borrowers associated with selling
11 a loan subject to a State Guarantee under this Section,
12 Section 12.4, or Section 12.5 in a secondary market as may be
13 deemed reasonable and necessary by the Authority. Money may
14 be borrowed from the Fund by the Authority in accordance with
15 subsection (d) of Section 12.6.
16 (d) Notwithstanding the provisions of this Section 12.2
17 with respect to the farmers, agribusinesses, and lenders who
18 may obtain State Guarantees, the Authority may promulgate
19 rules establishing the eligibility of farmers,
20 agribusinesses, and lenders to participate in the State
21 Guarantee program and the terms, standards, and procedures
22 that will apply, when the Authority finds that emergency
23 conditions in Illinois agriculture have created the need for
24 State Guarantees pursuant to terms, standards, and procedures
25 other than those specified in this Section.
26 (Source: P.A. 90-325, eff. 8-8-97; 91-386, eff. 1-1-00.)
27 (20 ILCS 3605/12.6 new)
28 Sec. 12.6. Value-added virtual equity program.
29 (a) The Authority shall develop and administer a
30 value-added virtual equity program for the purpose of
31 promoting the value-added processing of Illinois farm
32 products and by-products through loans to current and
33 potential processors. Qualifying processing facilities must
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1 be located in Illinois and must process, package, or
2 otherwise enhance the value of farm products or by-products
3 produced in Illinois. Loans may be used for the costs of
4 establishing and operating a value-added processing facility,
5 including, but not limited to, (i) purchasing land, (ii)
6 purchasing, constructing, or refurbishing buildings, (iii)
7 purchasing or refurbishing machinery or equipment, (iv)
8 installation, (v) repairs, (vi) labor, and (vii) working
9 capital.
10 (b) The recipient of a loan under this Section must
11 provide a minimum percentage, as determined by the Authority,
12 of the total cost of the processing project, with the balance
13 of the project's total cost available from other sources.
14 Other sources include, but are not limited to, commercial and
15 private lenders, leasing companies, and grants. The
16 recipient's match may be in cash, cash-equivalent
17 investments, or both. A loan under this Section may not
18 exceed 50% of the recipient's match or 17% of the processing
19 project's total cost, whichever is less. No loan under this
20 Section may exceed $1,700,000. A loan under this Section
21 must be secured in accordance with Authority rule, may be
22 disbursed only after funds from the project's other sources
23 have been disbursed, and may be subordinate to that of any
24 primary lender. Interest on a loan during the first 7 years
25 shall accrue and compound at a rate determined by the
26 Authority to be below market. Any portion of a loan,
27 including principal and accrued and compounded interest,
28 unpaid after 7 years may accrue and compound at the
29 then-current market rate of interest.
30 (c) Loan applications must be made on forms provided by
31 and in accordance with procedures established by the
32 Authority. At a minimum, an applicant must be an Illinois
33 resident, as defined by Authority rule, and shall be required
34 to provide the names, addresses, and occupations of all
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1 project owners, the project address, and any relevant credit
2 and financial information.
3 The Authority may charge an application fee, an annual
4 administrative fee, or both in connection with a loan, for
5 which the recipient or the recipient's primary lender shall
6 be responsible. Any fees or charges involved in recording
7 mortgages, releasing financing statements, or other
8 loan-related activity, as the Authority may determine, shall
9 be the responsibility of the loan recipient.
10 (d) The Virtual Equity Fund is created as a special fund
11 outside the State treasury for which the State Treasurer
12 shall serve as custodian.
13 The Fund may accept appropriations and moneys from any
14 public or private sources. Amounts in the Fund not currently
15 needed to meet the obligations of the Fund shall be invested
16 as permitted by law. All interest earned from those
17 investments shall be deposited into the Fund, except that 1%
18 of annual investment earnings may be used by the Authority
19 for expenses. The Fund shall be used to make loans under this
20 Section. Repayments of loans made under this Section shall
21 be deposited into the Fund.
22 The Authority may periodically borrow money from the
23 Illinois Agricultural Loan Guarantee Fund, the Illinois
24 Farmer and Agribusiness Loan Guarantee Fund, or both funds
25 for the purpose of this Section pending the deposit of
26 appropriations into the Virtual Equity Fund. Money borrowed
27 from those funds must be repaid as expeditiously as possible.
28 (e) The Authority shall adopt rules necessary for the
29 implementation of this Section.
30 Section 99. Effective date. This Act takes effect upon
31 becoming law.