HBAI
Member - NAHB - National Home Builders Association
House 1

HB3751 Public Construction Bonds

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Home Builders Oppose Reversal of Authority for Public Construction Bonds

Oppose HB3751 – Moylan

Opponents to HB3751:    Illinois Bankers Association
                              American Institute of Architects, Illinois
  Associated General Contractors of Illinois
Illinois Construction Industry Committee
Illinois Association of Aggregate Producers
Underground Contractors Association of Illinois
Illinois Asphalt Pavement Association
Associated Builders & Contractors
Illinois Ready Mixed Concrete Association
Great Lakes Cement Promotion Council
Independent Insurance Agents of Illinois

State law allows cities & counties to require developers to post a cash bond to insure that the public improvements on new developments are completed. Developers choose to post a cash bond, letter of credit, or surety bond to guarantee that there are funds available to complete the project improvements. Local official sets the rating of the bonds to financially protect their unit of government.

  • Prior to 1996, local government units in Illinois repeatedly misused their authority by intentionally refusing to deem a project complete for the sole purpose of using the cash bonds for purposes other than for the assurance of completing the public improvement projects. Their intentional actions and misuse of power tied the hands of developers and builders who needed those funds for home construction and commercial construction projects.
  • Even though legislation passed in 1996 allowing developers to choose between a cash bond and a letter of credit for the assurance of project completion, local governments continued to require cash bonds; ignoring state statute and the intent of the Illinois General Assembly,
  • The General Assembly expanded the options in 1997 to allow developers the option of using a surety bond deemed good or sufficient by the county or municipality and the law was also placed in the Municipal Code, Counties Code, and the Public Construction Bond Act, Still, developers were told to use cash bonds only, and the bonds were still being held far beyond completion dates.
  • In 2001, the G.A. addressed the issue for the third time in six years. strongly clarifies and further reinforces the three forms of assurance that the developers may use. “A builder or developer HAS THE OPTION to utilize a cash bond, irrevocable letter of credit, surety bond or letter of commitment.” The bill also stated that cities and counties “DO NOT HAVE THE OPTION.”
  • Not until the passage of some of the most restrictive language ever considered by the Illinois General Assembly to supersede local government authority (including home rule), did the practice of requiring private funds, misusing those funds, and ignoring state statute; curtail in Illinois.
  • The passage of HB3751 would reverse the actions of these three Public Acts; would usher back in this misuse of local government power; and, break the backs of the few developers who dare operate in the state of Illinois.

For these reasons, HBAI vehemently opposes any reversal of authority in the Public Construction Bond Act, such as that contained in HB3751. For these reasons, we respectfully request a NO Vote on its consideration.