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90_HB1627
New Act
35 ILCS 5/211 new
Creates the Business Use Incentives for Large-Scale
Development Act. Provides that an eligible industry that
invests a minimum of $15,000,000, or $10,000,000 for an
office industry, and creates at least 100 new jobs, or at
least 500 jobs for an office industry, in the State may apply
for incentives, including tax credits in an amount not to
exceed 5% of the gross wages paid to the new employees of the
industry, as part of an economic development project through
the Department of Commerce and Community Affairs. Authorizes
the Department to enter into financing agreements with
eligible industries it selects to receive the incentives.
Provides that the Department shall select eligible industries
and award credits based on the positive economic benefits
they will bring to the communities in which they will be
located and the State. Authorizes the Illinois Development
Finance Authority, in cooperation with the Department, to
issue up to $35,000,000 in bonds to finance the economic
development projects. Authorizes the Department to work with
the Department of Revenue in determining the credit received
by the eligible industry. Requires an annual evaluation of
the economic development project. Amends the Illinois Income
Tax Act to create the Business Use Incentives for Large-Scale
Development tax credit. Exempts the credit from the sunset
provisions.
LRB9003972KDks
LRB9003972KDks
1 AN ACT in relation to economic development.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 1. Short title. This Act may be cited as the
5 Business Use Incentives for Large-Scale Development Act.
6 Section 5. Definitions. For purposes of this Act:
7 "Assessment" means an amount of up to 5% of the gross
8 wages paid in one year by an eligible industry to all
9 eligible employees in new jobs.
10 "Authority" means the Illinois Development Finance
11 Authority.
12 "Certificates" means the revenue bonds or notes
13 authorized to be issued by the Authority, in cooperation with
14 the Department, under Section 60 of this Act.
15 "Credit" means the amount agreed to between the
16 Department and an eligible industry, but not to exceed the
17 assessment attributable to the eligible industry's project.
18 "Department" means the Illinois Department of Commerce
19 and Community Affairs.
20 "Director" means the Director of the Illinois Department
21 of Commerce and Community Affairs.
22 "Economic development project" means:
23 (1) The acquisition of any real property by the
24 Department, the eligible industry, or its affiliate; or
25 (2) The fee ownership of real property by the
26 eligible industry or its affiliate; and
27 (3) For both paragraphs (1) and (2) of this
28 definition, "economic development project" shall also
29 include the development of the real property including
30 construction, installation, or equipping of a project,
31 including fixtures and equipment, and facilities
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1 necessary or desirable for improvement of the real
2 property, including surveys; site tests and inspections;
3 subsurface site work; excavation; removal of structures,
4 roadways, cemeteries, and other surface obstructions;
5 filling, grading, and provision of drainage; storm water
6 retention; installation of utilities such as water,
7 sewer, sewage treatment, gas, electricity,
8 communications, and similar facilities; off-site
9 construction of utility extensions to the boundaries of
10 the real property; and the acquisition, installation, or
11 equipping of facilities on the real property, for use and
12 occupancy by the eligible industry or its affiliates.
13 "Eligible employee" means a person employed on a
14 full-time basis in a new job at the economic development
15 project averaging at least 35 hours per week who was not
16 employed by the eligible industry or a related taxpayer in
17 this State at any time during the 12-month period immediately
18 prior to being employed at the economic development project.
19 "Eligible industry" means a business located within the
20 State of Illinois that is engaged in interstate or intrastate
21 commerce for the purpose of manufacturing, processing, or
22 assembling products, conducting research and development,
23 providing tourism services, or providing services in
24 interstate commerce, office industries, or agricultural
25 processing, but excluding retail, retail food, health, or
26 professional services. "Eligible industry" does not include a
27 business that closes or substantially reduces its operation
28 at one location in the State and relocates substantially the
29 same operation to another location in the State. This does
30 not prohibit a business from expanding its operations at
31 another location in the State provided that existing
32 operations of a similar nature located within the State are
33 not closed or substantially reduced. This also does not
34 prohibit a business from moving its operations from one
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1 location in the State to another location in the State for
2 the purpose of expanding the operation provided that the
3 Department determines that expansion cannot reasonably be
4 accommodated within the municipality in which the business is
5 located, or in the case of a business located in an
6 incorporated area of the county, within the county in which
7 the business is located, after conferring with the chief
8 elected official of the municipality or county and taking
9 into consideration any evidence offered by the municipality
10 or county regarding the ability to accommodate expansion
11 within the municipality or county. An eligible industry must:
12 (1) invest a minimum of $15,000,000, or $10,000,000
13 for an office industry, in an economic development
14 project; and
15 (2) create a minimum of 100 new jobs for eligible
16 employees at the economic development project or a
17 minimum of 500 jobs if the economic development project
18 is an office industry.
19 "New job" means a job in a new or expanding eligible
20 industry not including jobs of recalled workers, replacement
21 jobs, or jobs that formerly existed in the eligible industry
22 in the State.
23 "Office industry" means a regional, national, or
24 international headquarters, a telecommunications operation, a
25 computer operation, an insurance company, or a credit card
26 billing and processing center.
27 "Program costs" means all necessary and incidental costs
28 of providing program services including payment of the
29 principal of premium, if any, and interest on certificates,
30 including capitalized interest, issued to finance a project,
31 and funding and maintenance of a debt service reserve fund to
32 secure the certificates. Program costs shall include the
33 following:
34 (1) Obligations incurred for labor and obligations
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1 incurred to contractors, subcontractors, builders, and
2 materialmen in connection with the acquisition,
3 construction, installation, or equipping of an economic
4 development project.
5 (2) The cost of acquiring land or rights in land
6 and any cost incidental thereto, including recording
7 fees.
8 (3) The cost of contract bonds and of insurance of
9 all kinds that may be required or necessary during the
10 course of acquisition, construction, installation, or
11 equipping of an economic development project that is not
12 paid by the contractor or contractors or otherwise
13 provided for.
14 (4) All costs of architectural and engineering
15 services, including test borings, surveys, estimates,
16 plans and specifications, preliminary investigations, and
17 supervision of construction, as well as the costs for the
18 performance of all the duties required by or consequent
19 upon the acquisition, construction, installation, or
20 equipping of an economic development project.
21 (5) All costs that are required to be paid under
22 the terms of any contract or contracts for the
23 acquisition, construction, installation, or equipping of
24 an economic development project.
25 (6) All other costs of a nature comparable to those
26 described in this definition.
27 "Program services" means administrative expenses of the
28 Department and the Authority, including contracted
29 professional services, and the cost of issuance of
30 certificates.
31 Section 10. Powers of the Department.
32 (a) The Department shall have, in addition to its other
33 powers, all the powers necessary to carry out and effectuate
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1 the purposes and provisions of this Act, including, but not
2 limited to, the power to:
3 (1) Provide and finance, in cooperation with the
4 Authority, economic development projects, under the
5 provisions of this Act, and cooperate with eligible
6 industries in order to promote, foster, and support
7 economic development within the State.
8 (2) Conduct hearings and inquiries, in the manner
9 and by the methods as it deems desirable, for the purpose
10 of gathering information with respect to eligible
11 industries and economic development projects, and for the
12 purpose of making any determinations necessary or
13 desirable in the furtherance of this Act.
14 (3) Negotiate the terms of, including the amount of
15 project costs, and enter into financing agreements with
16 eligible industries, and in connection therewith to
17 acquire, convey, sell, mortgage, finance, or otherwise
18 dispose of any property, real or personal, loan bond
19 proceeds, and permit the use of assessments, in
20 connection with an economic development project, and to
21 pay, or cause to be paid, in accordance with the
22 provisions of a financing agreement, the program costs of
23 an economic development project from any funds available
24 therefor.
25 (b) Certificates issued by the Authority, in cooperation
26 with the Department, under the provisions of this Act shall
27 not constitute an indebtedness or liability of the State
28 within the meaning of any State constitutional provision or
29 statutory limitation, shall not constitute a pledge of the
30 faith and credit of the State, shall not be guaranteed by the
31 credit of the State, and unless approved by a concurrent Act
32 of the General Assembly, no certificate in default shall be
33 paid by the State.
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1 Section 15. Selection of eligible industries.
2 (a) The Department shall establish the procedures and
3 standards for the determination and approval of eligible
4 industries and their economic development projects by the
5 promulgation of rules in accordance with this Act, the
6 Illinois Administrative Procedure Act, and the Civil
7 Administrative Code of Illinois. These rules shall mandate
8 the evaluation of the credit worthiness of eligible
9 industries, the number of new jobs to be provided by an
10 economic development project to residents of the State, and
11 the likelihood of the economic success of the economic
12 development project. No economic development project that
13 will result in the replacement of facilities existing in the
14 State shall be approved by the Department.
15 (b) With respect to each eligible industry making an
16 application to the Department for incentives, and with
17 respect to the economic development project described in the
18 application, the Department shall request relevant
19 information, documentation, and other materials and make
20 inquiries of the applicant as necessary or appropriate. After
21 a diligent review of relevant materials and completion of its
22 inquiries, the Department may by resolution designate an
23 economic development project.
24 Section 20. Financing agreement.
25 (a) The Department may enter into with any eligible
26 industry, a financing agreement with respect to its economic
27 development project. Subject to the inclusion of the
28 mandatory provisions set forth in this Act, the terms and
29 provisions of each financing agreement shall be determined by
30 negotiations between the Department and the eligible
31 industry.
32 (b) The financing agreement shall provide in substance
33 that:
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1 (1) It may be assigned by the eligible industry
2 only upon the prior written consent of the Department
3 following the adoption of a resolution by the Department
4 to that effect; and
5 (2) Upon default by the eligible industry in any
6 obligations under the financing agreement or other
7 documents evidencing, securing, or related to the
8 eligible industry's obligations, the Department shall
9 have the right, at its option, to:
10 (A) Declare the financing agreement or other
11 documents in default.
12 (B) Accelerate and declare the total of all
13 payments due by the eligible industry and sell the
14 economic development project at public, private, or
15 judicial sale.
16 (C) Pursue any remedy provided under the
17 financing agreement or other documents.
18 (D) Be entitled to the appointment of a
19 receiver by the circuit court of the county where
20 any part of the economic development project is
21 located.
22 (E) Pursue any other applicable legal remedy.
23 Section 25. Requirements for credit. After receipt of
24 an application, the Department may enter into an agreement
25 with an eligible industry for a credit under this Act if the
26 Department determines that all of the following conditions
27 exist:
28 (1) The applicant's project will create new jobs
29 that were not jobs previously performed by employees of
30 the applicant in Illinois.
31 (2) The applicant's project is economically sound
32 and will benefit the people of Illinois by increasing
33 opportunities for employment and strengthening the
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1 economy of Illinois.
2 (3) The political subdivisions affected by the
3 project have committed significant local incentives with
4 respect to the project.
5 (4) Receiving the credit is a major factor in the
6 applicant's decision to go forward with the project and
7 not receiving the credit will result in the applicant not
8 creating new jobs in Illinois.
9 (5) Awarding the credit will result in an overall
10 positive fiscal impact to the State.
11 (6) There is at least one other state that the
12 applicant verifies is being considered for the project.
13 (7) A significant disparity is identified, using
14 best available data in the projected costs for the
15 applicant's project compared to the costs in the
16 competing state, including the impact of the competing
17 state's incentive programs. The competing state's
18 incentive program shall include state, local, private,
19 and federal funds.
20 Section 30. Determining the amount of credit. In
21 determining the credit that should be awarded, the Department
22 shall take into consideration the following factors:
23 (1) The economy of the county where the projected
24 investment is to occur.
25 (2) The potential impact on the economy of
26 Illinois.
27 (3) The payroll attributable to the project.
28 (4) The capital investment attributable to the
29 project.
30 (5) The amount the average wage paid by the
31 applicant exceeds the average wage paid within the county
32 in which the project will be located.
33 (6) The costs to Illinois and the affected
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1 political subdivisions with respect to the project.
2 (7) The financial assistance that is otherwise
3 provided by Illinois and the affected political
4 subdivisions.
5 (8) The magnitude of the cost differential between
6 Illinois and the competing state.
7 Section 35. Project determinations.
8 (a) The Department shall determine the amount and
9 duration of a project and its associated assessments,
10 credits, and refunds. The credit amount may not exceed the
11 estimated assessment. Assessments made for any project may
12 not exceed a period of 15 years.
13 (b) An agreement between the Department and an eligible
14 industry shall include all of the following:
15 (1) A detailed description of the project that is
16 the subject of the agreement.
17 (2) A specific method for determining the number of
18 new employees employed during a taxable year who are
19 performing jobs not previously performed by an employee
20 of the eligible industry.
21 (3) A requirement that the taxpayer shall annually
22 report to the Department the number of new employees who
23 are performing jobs not previously performed by an
24 employee, the total amount of salaries and wages paid to
25 eligible employees in new jobs, and any other information
26 the Department needs to perform its duties under this
27 Act.
28 (4) A requirement that the taxpayer shall provide
29 written notification to the Director and the Department
30 not more than 30 days after the taxpayer makes or
31 receives a proposal that would transfer the taxpayer's
32 State tax liability obligations to a successor taxpayer.
33 (5) Any other performance conditions that the
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1 Department and the Director determine are appropriate.
2 (6) A requirement that the taxpayer shall maintain
3 operations at the project location for at least a period
4 of time equal to the number of years for which credits
5 are authorized in the financing agreement with the
6 Department.
7 Section 40. Non-compliance by eligible industry. If the
8 Department determines that an eligible industry, which has
9 received a credit under this Act, is not complying with the
10 requirements of the credit agreement or all of the provisions
11 of this Act, the Department shall, after giving the industry
12 an opportunity to explain the noncompliance, notify the
13 Department of Revenue of the noncompliance and request a
14 penalty. The Department shall state the amount of the
15 penalty, which may not exceed the sum of any previously
16 allowed assessments under this Act.
17 Section 45. Annual evaluation. On an annual basis, the
18 Director shall provide for an evaluation of the program. The
19 evaluation shall include a review of the effectiveness of the
20 program in creating new jobs in Illinois and of the revenue
21 impact of the program. The Director shall submit a report on
22 the evaluation to the Governor, the President of the Senate,
23 and the Speaker of the House of Representatives.
24 Section 50. Program costs. An agreement between the
25 Department and an eligible industry shall provide that all or
26 part of program costs are to be met by receipt of
27 assessments. Assessments shall be based upon wages paid to
28 eligible employees. If business or employment conditions
29 cause the amount of the assessment to be less than the amount
30 projected in the agreement for any time period, then the
31 employer shall pay to the Department the amount of the
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1 difference, then a portion of withholding tax paid by the
2 employer under Article 7 of the Illinois Income Tax Act, may
3 be credited to the Department by the amount of the
4 difference. The employer shall remit the amount of the
5 assessment to the Department. When all program costs,
6 including the principal of, premium, if any, and interest on
7 the certificates have been paid, the employer credits shall
8 cease.
9 Section 55. Establishment of funds.
10 (a) The Department shall establish a special fund for
11 and in the name of each project. All funds received by the
12 Department in respect of the project and required by the
13 agreement to be used to pay program costs for the project
14 shall be deposited into the special fund. Amounts held in the
15 special fund may be used and disbursed by the Department only
16 to pay program costs for the project.
17 (b) Any disbursement in respect of a project under the
18 provisions of this Act, and the special fund into which it is
19 paid, may be irrevocably pledged by the Department for the
20 payment of the principal of, premium, if any, and interest on
21 the certificate issued by the Department, in cooperation with
22 the Authority, to finance or refinance, in whole or in part,
23 the project.
24 (c) The employer shall certify to the Department of
25 Revenue that the assessment is in accordance with the
26 financing agreement and shall provide other information the
27 Department may require.
28 (d) If the financing agreement provides that all or part
29 of program costs are to be met by receipt of assessments, the
30 provisions of this Section shall also apply to any successor
31 to the original employer until such time as the principal and
32 interest on the certificates have been paid.
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1 Section 60. Sale of certificates.
2 (a) To provide funds for the present payment of the
3 costs of economic development projects, the Department, in
4 cooperation with the Authority, may borrow money and issue
5 and sell certificates payable from a sufficient portion of
6 the future receipts of payments authorized by the agreement.
7 The total amount of outstanding certificates sold by the
8 Authority for the Department shall not exceed $35,000,000.
9 The receipts shall be pledged to the payment of principal of
10 and interest on the certificates. Certificates may be sold at
11 public sale or at private sale at par, premium, or discount
12 of not less than 95% of the par value thereof, at the
13 discretion of the Authority, in cooperation with the
14 Department, and may bear interest at such rate or rates as
15 the Authority shall determine in accordance with Section 7 of
16 the Illinois Development Finance Authority Act. Certificates
17 may be issued with respect to a single project or multiple
18 projects and may contain terms or conditions as the
19 Authority, in cooperation with the Department, may provide by
20 resolution authorizing the issuance of the certificates.
21 (b) Certificates issued to refund other certificates may
22 be sold at public sale or at private sale as provided in this
23 Section with the proceeds from the sale to be used for the
24 payment of the certificates being refunded. The refunding
25 certificates may be exchanged in payment and discharge of the
26 certificates being refunded, in installments at different
27 times or an entire issue or series at one time. Refunding
28 certificates may be sold or exchanged at any time on, before,
29 or after the maturity of the outstanding certificates to be
30 refunded. They may be issued for the purpose of refunding a
31 like, greater, or lesser principal amount of certificates and
32 may bear a higher, lower, or equivalent rate of interest than
33 the certificates being renewed or refunded.
34 (c) The Department, in cooperation with the Authority,
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1 shall determine if revenues provided in the agreement are
2 sufficient to secure the faithful performance of obligations
3 in the agreement.
4 (d) Certificates issued under this Section shall not be
5 deemed to be an indebtedness of the State, the Department,
6 the Authority, or of any political subdivision of the State.
7 Section 65. Job development assessment fee; tax credit.
8 (a) The approved company shall remit to the Department a
9 job development assessment fee, not to exceed 5% of the gross
10 wages of each eligible employee whose job was created as a
11 result of the economic development project, for the purpose
12 of retiring bonds that fund the economic development project.
13 (b) Any approved company remitting an assessment as
14 provided in subsection (a) of this Section shall make its
15 payroll books and records available to the Department at such
16 reasonable times as the Department shall request and shall
17 file with the Department documentation respecting the
18 assessment as the Department may require.
19 (c) Any assessment remitted under subsection (a) of this
20 Section shall cease on the date the bonds are retired.
21 (d) Any approved company that has paid an assessment for
22 debt reduction shall be allowed a tax credit equal to the
23 amount of the assessment. The tax credit may be claimed
24 against taxes otherwise imposed by the Illinois Income Tax
25 Act, except withholding taxes imposed under the provisions of
26 Article 7 of the Illinois Income Tax Act, which were incurred
27 during the tax period in which the assessment was made.
28 (e) The Director of the Department of Revenue shall
29 issue a refund to the approved company to the extent that the
30 amount of credits allowed in subsection (d) of this Section
31 exceed the amount of the approved company's income tax.
32 Section 90. The Illinois Income Tax Act is amended by
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1 adding Section 211 as follows:
2 (35 ILCS 5/211 new)
3 Sec. 211. Business Use Incentives for Large-Scale
4 Development Tax Credit. For tax years beginning on or after
5 January 1, 1997, a taxpayer participating in an economic
6 development project under the Business Use Incentives for
7 Large-Scale Development Act is entitled to a tax credit
8 against the taxes imposed under this Act in an amount to be
9 determined in the financing agreement required under the
10 Business Use Incentives for Large-Scale Development Act, but
11 in no case to exceed 5% of the gross wages paid in the tax
12 year by the taxpayer to all eligible employees in new jobs.
13 The Department, in cooperation with the Department of
14 Commerce and Community Affairs, shall prescribe rules to
15 enforce and administer the provisions of this Section. In no
16 event shall a credit under this Section reduce the taxpayer's
17 liability to below zero. This Section is exempt from the
18 provisions of Section 250 of this Act.