Public Act 93-0552
HB0235 Enrolled LRB093 02644 ACG 02654 b
AN ACT concerning corporations.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 1. Short title. This Act may be cited as the
Corporate Accountability for Tax Expenditures Act.
Section 5. Definitions. As used in this Act:
"Base years" means the first 2 complete calendar years
following the effective date of a recipient receiving
development assistance.
"Date of assistance" means the commencement date of the
assistance agreement, which date triggers the period during
which the recipient is obligated to create or retain jobs and
continue operations at the specific project site.
"Default" means that a recipient has not achieved its job
creation, job retention, or wage or benefit goals, as
applicable, during the prescribed period therefor.
"Department" means, unless otherwise noted, the
Department of Commerce and Community Affairs or any successor
agency.
"Development assistance" means (1) tax credits and tax
exemptions (other than given under tax increment financing)
given as an incentive to a recipient business organization
pursuant to an initial certification or an initial
designation made by the Department under the Economic
Development for a Growing Economy Tax Credit Act and the
Illinois Enterprise Zone Act, including the High Impact
Business program, (2) grants or loans given to a recipient as
an incentive to a business organization pursuant to the Large
Business Development Program, the Business Development Public
Infrastructure Program, or the Industrial Training Program,
(3) the State Treasurer's Economic Program Loans, (4) the
Illinois Department of Transportation Economic Development
Program, and (5) all successor and subsequent programs and
tax credits designed to promote large business relocations
and expansions. "Development assistance" does not include tax
increment financing, assistance provided under the Illinois
Enterprise Zone Act pursuant to local ordinance,
participation loans, or financial transactions through
statutorily authorized financial intermediaries in support of
small business loans and investments or given in connection
with the development of affordable housing.
"Development assistance agreement" means any agreement
executed by the State granting body and the recipient setting
forth the terms and conditions of development assistance to
be provided to the recipient consistent with the final
application for development assistance, including but not
limited to the date of assistance, submitted to and approved
by the State granting body.
"Full-time, permanent job" means either: (1) the
definition therefor in the legislation authorizing the
programs described in the definition of development
assistance in the Act or (2) if there is no such definition,
then as defined in administrative rules implementing such
legislation, provided the administrative rules were in place
prior to the effective date of this Act. On and after the
effective date of this Act, if there is no definition of
"full-time, permanent job" in either the legislation
authorizing a program that constitutes economic development
assistance under this Act or in any administrative rule
implementing such legislation that was in place prior to the
effective date of this Act, then "full-time, permanent job"
means a job in which the new employee works for the recipient
at a rate of at least 35 hours per week.
"New employee" means either: (1) the definition therefor
in the legislation authorizing the programs described in the
definition of development assistance in the Act or (2) if
there is no such definition, then as defined in
administrative rules implementing such legislation, provided
the administrative rules were in place prior to the effective
date of this Act. On and after the effective date of this
Act, if there is no definition of "new employee" in either
the legislation authorizing a program that constitutes
economic development assistance under this Act nor in any
administrative rule implementing such legislation that was in
place prior to the effective date of this Act, then "new
employee" means a full-time, permanent employee who
represents a net increase in the number of the recipient's
employees statewide. "New employee" includes an employee who
previously filled a new employee position with the recipient
who was rehired or called back from a layoff that occurs
during or following the base years.
The term "New Employee" does not include any of the
following:
(1) An employee of the recipient who performs a job
that was previously performed by another employee in this
State, if that job existed in this State for at least 6
months before hiring the employee.
(2) A child, grandchild, parent, or spouse, other
than a spouse who is legally separated from the
individual, of any individual who has a direct or
indirect ownership interest of at least 5% in the
profits, capital, or value of any member of the
recipient.
"Part-time job" means either: (1) the definition therefor
in the legislation authorizing the programs described in the
definition of development assistance in the Act or (2) if
there is no such definition, then as defined in
administrative rules implementing such legislation, provided
the administrative rules were in place prior to the effective
date of this Act. On and after the effective date of this
Act, if there is no definition of "part-time job" in either
the legislation authorizing a program that constitutes
economic development assistance under this Act or in any
administrative rule implementing such legislation that was in
place prior to the effective date of this Act, then
"part-time job" means a job in which the new employee works
for the recipient at a rate of less than 35 hours per week.
"Recipient" means any business that receives economic
development assistance. A business is any corporation,
limited liability company, partnership, joint venture,
association, sole proprietorship, or other legally recognized
entity.
"Retained employee" means either: (1) the definition
therefor in the legislation authorizing the programs
described in the definition of development assistance in the
Act or (2) if there is no such definition, then as defined in
administrative rules implementing such legislation, provided
the administrative rules were in place prior to the effective
date of this Act. On and after the effective date of this
Act, if there is no definition of "retained employee" in
either the legislation authorizing a program that constitutes
economic development assistance under this Act or in any
administrative rule implementing such legislation that was in
place prior to the effective date of this Act, then "retained
employee" means any employee defined as having a full-time or
full-time equivalent job preserved at a specific facility or
site, the continuance of which is threatened by a specific
and demonstrable threat, which shall be specified in the
application for development assistance.
"Specific project site" means that distinct operational
unit to which any development assistance is applied.
"State granting body" means the Department, any State
department or State agency that provides development
assistance that has reporting requirements under this Act,
and any successor agencies to any of the preceding.
"Temporary job" means either: (1) the definition therefor
in the legislation authorizing the programs described in the
definition of development assistance in the Act or (2) if
there is no such definition, then as defined in
administrative rules implementing such legislation, provided
the administrative rules were in place prior to the effective
date of this Act. On and after the effective date of this
Act, if there is no definition of "temporary job" in either
the legislation authorizing a program that constitutes
economic development assistance under this Act or in any
administrative rule implementing such legislation that was in
place prior to the effective date of this Act, then
"temporary job" means a job in which the new employee is
hired for a specific duration of time or season.
"Value of assistance" means the face value of any form of
development assistance.
Section 10. Unified Economic Development Budget.
(a) For each State fiscal year ending on or after June
30, 2005, the Department of Revenue shall submit an annual
Unified Economic Development Budget to the General Assembly.
The Unified Economic Development Budget shall be due within 3
months after the end of the fiscal year, and shall present
all types of development assistance granted during the prior
fiscal year, including:
(1) The aggregate amount of uncollected or diverted
State tax revenues resulting from each type of
development assistance provided in the tax statutes, as
reported to the Department of Revenue on tax returns
filed during the fiscal year.
(2) All State development assistance.
(b) All data contained in the Unified Economic
Development Budget presented to the General Assembly shall be
fully subject to the Freedom of Information Act.
(c) The Department of Revenue shall submit a report of
the amounts in subdivision (a)(1) of this Section to the
Department, which may append such report to the Unified
Economic Development Budget rather than separately reporting
such amounts.
Section 15. Standardized applications for State
development assistance.
(a) All final applications submitted to the Department or
any other State granting body requesting development
assistance shall contain, at a minimum:
(1) An application tracking number that is specific
to both the State granting agency and to each
application.
(2) The office mailing addresses, office telephone
number, and chief officer of the granting body.
(3) The office mailing address, telephone number,
4-digit SIC number or successor number, and the name of
the chief officer of the applicant or authorized designee
for the specific project site for which development
assistance is requested.
(4) The applicant's total number of employees at the
specific project site on the date that the application is
submitted to the State granting body, including the
number of full-time, permanent jobs, the number of
part-time jobs, and the number of temporary jobs.
(5) The type of development assistance and value of
assistance being requested.
(6) The number of jobs to be created and retained or
both created and retained by the applicant as a result of
the development assistance, including the number of
full-time, permanent jobs, the number of part-time jobs,
and the number of temporary jobs.
(7) A detailed list of the occupation or job
classifications and number of new employees or retained
employees to be hired in full-time, permanent jobs, a
schedule of anticipated starting dates of the new hires
and the anticipated average wage by occupation or job
classification and total payroll to be created as a
result of the development assistance.
(8) A list of all other forms of development
assistance that the applicant is requesting for the
specific project site and the name of each State granting
body from which that development assistance is being
requested.
(9) A narrative, if necessary, describing why the
development assistance is needed and how the applicant's
use of the development assistance may reduce employment
at any site in Illinois.
(10) A certification by the chief officer of the
applicant or his or her authorized designee that the
information contained in the application submitted to the
granting body contains no knowing misrepresentation of
material facts upon which eligibility for development
assistance is based.
(b) Every State granting body either shall complete, or
shall require the applicant to complete, an application form
that meets the minimum requirements as prescribed in this
Section each time an applicant applies for development
assistance covered by this Act.
(c) The Department shall have the discretion to modify
any standardized application for State development assistance
required under subsection (a) for any grants under the
Industrial Training Program that are not given as an
incentive to a recipient business organization.
Section 20. State development assistance disclosure.
(a) Beginning February 1, 2005 and each year thereafter,
every State granting body shall submit to the Department
copies of all development assistance agreements that it
approved in the prior calendar year.
(b) For each development assistance agreement for which
the date of assistance has occurred in the prior calendar
year, each recipient shall submit to the Department a
progress report that shall include, but not be limited to,
the following:
(1) The application tracking number.
(2) The office mailing address, telephone number,
and the name of the chief officer of the granting body.
(3) The office mailing address, telephone number,
4-digit SIC number or successor number, and the name of
the chief officer of the applicant or authorized designee
for the specific project site for which the development
assistance was approved by the State granting body.
(4) The type of development assistance program and
value of assistance that was approved by the State
granting body.
(5) The applicant's total number of employees at the
specific project site on the date that the application
was submitted to the State granting body and the
applicant's total number of employees at the specific
project site on the date of the report, including the
number of full-time, permanent jobs, the number of
part-time jobs, and the number of temporary jobs, and a
computation of the gain or loss of jobs in each category.
(6) The number of new employees and retained
employees the applicant stated in its development
assistance agreement, if any, if not, then in its
application, would be created by the development
assistance broken down by full-time, permanent,
part-time, and temporary.
(7) A declaration of whether the recipient is in
compliance with the development assistance agreement.
(8) A detailed list of the occupation or job
classifications and number of new employees or retained
employees to be hired in full-time, permanent jobs, a
schedule of anticipated starting dates of the new hires
and the actual average wage by occupation or job
classification and total payroll to be created as a
result of the development assistance.
(9) A narrative, if necessary, describing how the
recipient's use of the development assistance during the
reporting year has reduced employment at any site in
Illinois.
(10) A certification by the chief officer of the
applicant or his or her authorized designee that the
information in the progress report contains no knowing
misrepresentation of material facts upon which
eligibility for development assistance is based.
(c) The State granting body, or a successor agency, shall
have full authority to verify information contained in the
recipient's progress report, including the authority to
inspect the specific project site and inspect the records of
the recipient that are subject to the development assistance
agreement.
(d) By June 1, 2005 and by June 1 of each year
thereafter, the Department shall compile and publish all data
in all of the progress reports in both written and electronic
form.
(e) If a recipient of development assistance fails to
comply with subsection (b) of this Section, the Department
shall, within 20 working days after the reporting submittal
deadlines set forth in (i) the legislation authorizing, (ii)
the administrative rules implementing, or (iii) specific
provisions in development assistance agreements pertaining to
the development assistance programs, suspend within 33
working days any current development assistance to the
recipient under its control, and shall be prohibited from
completing any current or providing any future development
assistance until it receives proof that the recipient has
come into compliance with the requirements of subsection (b)
of this Section.
(f) The Department shall have the discretion to modify
the information required in the progress report required
under subsection (b) consistent with the disclosure purpose
of this Section for any grants under the Industrial Training
Program that are not given as an incentive to a recipient
business organization.
Section 25. Recapture.
(a) All development assistance agreements shall contain,
at a minimum, the following recapture provisions:
(1) The recipient must (i) make the level of capital
investment in the economic development project specified
in the development assistance agreement; (ii) create or
retain, or both, the requisite number of jobs, paying not
less than specified wages for the created and retained
jobs, within and for the duration of the time period
specified in the legislation authorizing, or the
administrative rules implementing, the development
assistance programs and the development assistance
agreement.
(2) If the recipient fails to create or retain the
requisite number of jobs within and for the time period
specified, in the legislation authorizing, or the
administrative rules implementing, the development
assistance programs and the development assistance
agreement, the recipient shall be deemed to no longer
qualify for the State economic assistance and the
applicable recapture provisions shall take effect.
(3) If the recipient receives State economic
assistance in the form of a High Impact Business
designation pursuant to Section 5.5 of the Illinois
Enterprise Zone Act and the business receives the benefit
of the exemption authorized under Section 5l of the
Retailers' Occupation Tax Act (for the sale of building
materials incorporated into a High Impact Business
location) and the recipient fails to create or retain the
requisite number of jobs, as determined by the
legislation authorizing the development assistance
programs or the administrative rules implementing such
legislation, or both, within the requisite period of
time, the recipient shall be required to pay to the State
the full amount of the State tax exemption that it
received as a result of the High Impact Business
designation.
(4) If the recipient receives a grant or loan
pursuant to the Large Business Development Program, the
Business Development Public Infrastructure Program, or
the Industrial Training Program and the recipient fails
to create or retain the requisite number of jobs for the
requisite time period, as provided in the legislation
authorizing the development assistance programs or the
administrative rules implementing such legislation, or
both, or in the development assistance agreement, the
recipient shall be required to repay to the State a pro
rata amount of the grant; that amount shall reflect the
percentage of the deficiency between the requisite number
of jobs to be created or retained by the recipient and
the actual number of such jobs in existence as of the
date the Department determines the recipient is in breach
of the job creation or retention covenants contained in
the development assistance agreement. If the recipient of
development assistance under the Large Business
Development Program, the Business Development Public
Infrastructure Program, or the Industrial Training
Program ceases operations at the specific project site,
during the 5-year period commencing on the date of
assistance, the recipient shall be required to repay the
entire amount of the grant or to accelerate repayment of
the loan back to the State.
(5) If the recipient receives a tax credit under the
Economic Development for a Growing Economy tax credit
program, the development assistance agreement must
provide that (i) if the number of new or retained
employees falls below the requisite number set forth in
the development assistance agreement, the allowance of
the credit shall be automatically suspended until the
number of new and retained employees equals or exceeds
the requisite number in the development assistance
agreement; (ii) if the recipient discontinues operations
at the specific project site during the first 5 years of
the 10-year term of the development assistance agreement,
the recipient shall forfeit all credits taken by the
recipient during such 5-year period; and (iii) in the
event of a revocation or suspension of the credit, the
Department shall contact the Director of Revenue to
initiate proceedings against the recipient to recover
wrongfully exempted Illinois State income taxes and the
recipient shall promptly repay to the Department of
Revenue any wrongfully exempted Illinois State income
taxes. The forfeited amount of credits shall be deemed
assessed on the date the Department contacts the
Department of Revenue and the recipient shall promptly
repay to the Department of Revenue any wrongfully
exempted Illinois State income taxes.
(b) The Director may elect to waive enforcement of any
contractual provision arising out of the development
assistance agreement required by this Act based on a finding
that the waiver is necessary to avert an imminent and
demonstrable hardship to the recipient that may result in
such recipient's insolvency or discharge of workers. If a
waiver is granted, the recipient must agree to a contractual
modification, including recapture provisions, to the
development assistance agreement. The existence of any waiver
granted pursuant to this subsection (c), the date of the
granting of such waiver, and a brief summary of the reasons
supporting the granting of such waiver shall be disclosed
consistent with the provisions of Section 25 of this Act.
(c) Beginning June 1, 2004, the Department shall
annually compile a report on the outcomes and effectiveness
of recapture provisions by program, including but not limited
to: (i) the total number of companies that receive
development assistance as defined in this Act; (ii) the total
number of recipients in violation of development agreements
with the Department; (iii) the total number of completed
recapture efforts; (iv) the total number of recapture efforts
initiated; and (v) the number of waivers granted. This report
shall be disclosed consistent with the provisions of Section
20 of this Act.
(d) For the purposes of this Act, recapture provisions do
not include the Illinois Department of Transportation
Economic Development Program, any grants under the Industrial
Training Program that are not given as an incentive to a
recipient business organization, or any successor programs as
described in the term "development assistance" in Section 5
of this Act.
Section 99. Effective date. This Act takes effect upon
becoming law.