Facing opposition from lobbyists and members of his own party, state Rep. David McSweeney filed an amendment that tempers his bill aimed at ending alternate revenue bond abuses.
A revised HB983, co-sponsored by McSweeney, R-Barrington Hills, and Jack Franks, D-Marengo, still tightens regulations in the debt reform act, specifically for double-barrel bonds, but the bill’s original parameters have been watered down.
“I want to get something done that meets my objectives,” McSweeney said. “I stand by the original legislation, but it’s clear it wasn’t going to pass.”
Alternate revenue bonds typically are issued by taxing districts to pay for projects with the understanding that the loan is backed by an identified revenue stream tied to the project. The problem with this financing mechanism is that if revenue projections fall short, it could mean an increase on district property-tax bills.
The legislation still makes it easier to initiate what some call a “backdoor referendum” and requires that feasibility studies – which are needed to issue these bonds – aren’t done by someone who could benefit from the outcome of the study.
The amendment sent the bill back to the Rules Committee, where it remained as of Tuesday afternoon. It removes a provision from the reform bill that created a state procurement officer through which all these bond issuances first must pass. Some feared that would create a bottleneck in Springfield, so instead the bill requires an independent accountant, nationally recognized feasibility analyst or someone who is not otherwise involved in the project.
McSweeney, a freshman Republican, has said he wrote the bill with McHenry County College in mind. The college has considered alternate revenue bonds as one way to pay for an expansion of its health and wellness programs. It also has considered debt certificates and public-private partnerships. Critics of MCC’s plan say the college’s feasibility study is flawed and presents a clear conflict of interest, despite the college’s claims otherwise.
“My major two issues are I want to make it easier to do a referendum and avoid conflicts like that at McHenry County College,” McSweeney said.
The number of signatures required to initiate a backdoor referendum also was changed after some resistance from larger municipalities. If approved, it would take 5,000 signatures to get an alternate revenue bond question on a ballot. In McHenry County, that number currently hovers somewhere around 15,000 signatures. The McSweeney-Franks bill initially called for 500 signatures.
The amendment also would raise the number of days residents have to gather those signatures from 30 to 45 days. HB983 initially proposed 90 days.
The bill also would no longer apply to municipalities with populations of 500,000 residents or more.
There could be more changes to the bill as it moves its way through the House of Representatives.