HB 562 — PENCD-ECON OPPORTUNITY INVEST

*LRB09507952AMC28114b* HB0562 95THEngrossed GENERALLRB095 ASSEMBLY07952 StateAMC of28114 Illinoisb andAN 2008ACT HB0562concerning Introducedpublic 2/5/2007,employee bybenefits. Rep.

John E.

Bradley SYNOPSIS AS INTRODUCED:

ILCS 5/1A-108.5 new ILCS 5/15-167 from Ch.

108 1/2, par.

15-167 Amends the Illinois Pension Code.

Provides that it is the public policy of the State of Illinois to encourage the pension funds, and any State agency investing funds on behalf of pension funds, to promote the economy of Illinois through the use of economic opportunity investments while managing their assets to the greatest extent feasible within the bounds of financial and fiduciary prudence.

Provides that each pension fund, except pension funds created under the Downstate Police and Firefighters Articles of the Code, shall submit a report to the Governor and the General Assembly by September 1 of each year that identifies the economic opportunity investments made by the fund, the primary location of the business or project, the percentage of the fund’s assets in economic opportunity investments, and the actions that the fund has undertaken to increase the use of economic opportunity investments, including encouraging other investment managers to make economic opportunity investments through subcontractors.

Requires certain pension funds, and any State agency investing funds on behalf of those pension funds, to make all reasonable efforts to invest a minimum of 5% of pension fund assets in economic opportunity investments.

Effective immediately.

LRB095 07952 AMC 28114 b FISCAL NOTE ACT PENSION IMPACT STATE MANDATES MAY APPLY NOTE ACT MAY ACT MAY REQUIRE APPLY REIMBURSEMENT A BILL FOR HB0562 LRB095 07952 AMC 28114 b AN ACT concerning public employee benefits.

"Economic opportunity investment" means a qualified investment, managed passively or actively by the pension fund, that promotes economic development within the State of Illinois throughby investmentsproviding infinancially companies,prudent individuals,investment partnerships,opportunities projects,in andor financiallythrough prudentthe investmentuse opportunitiesof in(a) Illinois businesses or (b) Illinois-based projects that promote the economy of the State or a region of the State, including without limitation promotion of venture capital programs, coal and other natural resource development, tourism development, infrastructure development, real estate development, and job development within the State of Illinois, while producing a competitive rate of return commensurate with the risk of investment.

"Illinois business" means a businessbusiness, thatincluding meetsan anyinvestment ofadviser, thethat followingis criteria:headquartered in Illinois.

"Illinois-based project" means an individual project of a HB0562 Engrossed - 2 - LRB095 07952 AMC 28114 b (1)business, Conductsincluding 25%the provision of products and investment and other services to the pension fund, that will result in the conduct of business within the State, the employment of individuals within the State, or morethe acquisition of itsreal businessproperty located within the State.

(2)(b) FiftyIt percentis orthe morepublic policy of itsthe employeesState areof employedIllinois into Illinois.encourage the pension funds, and any State entity investing funds on behalf of pension funds, to promote the economy of Illinois through the use of economic opportunity investments to the greatest extent feasible within the bounds of financial and fiduciary prudence.

(3)(c) Twenty-fiveEach percentpension fund, except pension funds created under Articles 3 and 4 of this Code, shall submit a report to the realGovernor propertyand ownedthe General Assembly by September 1 of each year, beginning in 2009, that identifies the economic opportunity investments made by the fund, the primary location of the business isor locatedproject, withinthe percentage of the State.fund’s assets in economic opportunity investments, the actions that the fund has undertaken to increase the use of economic opportunity investments.

"Illinois-based(d) project"Pension meansfunds ancreated individualunder projectArticles of2, a14, business15, that16, willand result18 inof thethis conductAct, ofand businessany withinState theagency State,investing thefunds employmenton behalf of individualsthose withinpension thefunds, State,must ormake thereasonable acquisitionefforts ofto realinvest propertyin locatedeconomic withinopportunity theinvestments. State.

(b)(e) ItIn ismaking theeconomic publicopportunity policyinvestments, oftrustees theand Statefiduciaries ofmust Illinoiscomply towith encourage the pensionrelevant funds,requirements and anyHB0562 StateEngrossed agency- investing3 funds- onLRB095 behalf07952 ofAMC pension28114 funds,b torestrictions promoteset theforth economyin ofSections Illinois1-109, through1-109.1, the1-109.2, use1-110, ofand economic1-111 opportunity investments while managing their assets to the greatest extent feasible within the bounds of financialthis andCode. fiduciary prudence.

(c)Economic Eachopportunity pensioninvestments fund,that exceptotherwise pensioncomply fundswith created under Articles 3 and 4 of this Code,Code shall submitnot abe reportdeemed toimprudent thesolely Governorbecause andthey theare General Assembly by September 1 of each year that identifies the economic opportunity investments madein byan theIllinois fund, the primary location of the business or project,Illinois-based theproject. percentage of the fund’s assets in economic opportunity investments, and the actions that the fund has undertaken to increase the use of economic opportunity investments, including encouraging other investment managers to make economic opportunity investments through subcontractors.

HB0562 - 3 - LRB095 07952 AMC 28114 b (d) Pension funds created under Articles 2, 14, 15, 16, and 18 of this Act, and any State agency investing funds on behalf of those pension funds, must make all reasonable efforts to invest a minimum of 5% of pension fund assets in economic opportunity investments.

If a pension fund invests less than 5% of pension fund assets in economic opportunity investments, then the pension fund must include the reason it could not meet this minimum in the report required under subsection (c).

(e) In making economic opportunity investments, trustees and fiduciaries must comply with the relevant requirements and restrictions set forth in Sections 1-109, 1-109.1, 1-109.2, 1-110, and 1-111 of this Code.

Economic opportunity investments that otherwise comply with this Code shall not be deemed imprudent solely because it is an investment in an Illinois business or Illinois-based project.

The board may lease surplus space in any of the buildings and use rental HB0562 - 4 - LRB095 07952 AMC 28114 b proceeds for operation, maintenance, improving, expanding and furnishing of the buildings or for any other lawful system purpose.

The limitations set forth in such Section 6 shall be applicable only at the time of investment and shall not require HB0562 Engrossed - 4 - LRB095 07952 AMC 28114 b the liquidation of any investment at any time.

All additions to assets from income, interest, and dividends from investments shall be used to pay benefits, HB0562 - 5 - LRB095 07952 AMC 28114 b operating and administrative expenses of the system, debt service, including any redemption premium, on any bonds issued by the board, expenses incurred or deposits required in connection with such bonds, and such other costs as may be provided in accordance with this Article.