HB2789 104TH GENERAL ASSEMBLY

LRB104 06189 HLH 16224 b

104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
HB2789

Introduced 2/6/2025, by Rep. Mary Beth Canty

SYNOPSIS AS INTRODUCED:

35 ILCS 200/Art. 10 Div. 22 heading new
35 ILCS 200/10-900 new
35 ILCS 200/10-905 new
35 ILCS 200/10-910 new
35 ILCS 200/10-915 new
35 ILCS 200/10-920 new
35 ILCS 200/10-925 new
35 ILCS 200/10-930 new
35 ILCS 200/10-935 new
35 ILCS 200/10-940 new
35 ILCS 200/10-945 new
35 ILCS 200/10-950 new
35 ILCS 200/10-955 new
35 ILCS 200/10-960 new
35 ILCS 200/10-965 new
35 ILCS 200/10-970 new
35 ILCS 200/10-980 new
35 ILCS 200/10-990 new

Amends the Property Tax Code. Provides that property certified by the Department of Revenue as mega project property is eligible for an assessment freeze. Provides that, if property is certified as mega project property, then, during the incentive period, the value added to the property by the project shall not be considered for assessment purposes, and the total valuation of the property during the incentive period shall be limited to the base year valuation. Provides that "mega project" means a project that satisfies certain minimum investment, investment period, and other requirements. Contains provisions concerning incentive agreements between a company that plans to undertake a mega project and a local municipality obligating the company to make special payments in addition to property taxes. Effective June 1, 2025.

A BILL FOR

AN ACT concerning revenue.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Property Tax Code is amended by adding Division 22 of Article 10 as follows:

(35 ILCS 200/Art. 10 Div. 22 heading new)

Division 22. Mega project property

(35 ILCS 200/10-900 new)

Sec. 10-900. Findings. The State's economy is highly vulnerable to other states that have major financial incentive programs and competitive tax incentives. Certain businesses and commercial operations that generate significant economic activity bear a disproportionately high property tax burden compared to their impact on government services and compared to their positive economic benefits to the State and the local economy and their derivative benefits to taxing districts. To incentivize the significant capital investment and economic activity of certain large-scale businesses and industrial and commercial operations, the State finds that a valuation procedure for real property taxes on special properties, known as mega projects, will reduce barriers to investment and promote economic activity in Illinois. The General Assembly finds that it is in the best interest of the State to establish a new category of valuation for mega projects that recognizes their complexity and encourages local development at underutilized properties.

(35 ILCS 200/10-905 new)

Sec. 10-905. Mega Project Assessment Freeze and Payment Law; definitions. This Division 22 may be cited as the Mega Project Assessment Freeze and Payment Law. As used in this Division:

"Assessment officer" means the chief county assessment officer of the county in which the mega project is located.

"Base year" means the base year identified in the incentive agreement and approved by the local review board pursuant to subsection (b) of Section 10-915.

"Base year valuation" means the assessed value, in the base year, of the property comprising the mega project.

"Company" means one or more entities whose aggregate investment in the mega project meets the minimum investment required under this Division. The term company shall include a company affiliate unless the context clearly indicates otherwise.

"Company affiliate" means an entity that joins with or is an affiliate of a company and that participates in the investment in, or financing of, a mega project.

"Department" means the Department of Revenue.

"Eligible costs" means all costs incurred by or on behalf of, or allocated to, a company prior to the Department's issuance of the mega project certificate or during the investment period to create or construct a mega project. "Eligible costs" include costs incurred up to 5 years prior to the date of adoption of the ordinance approving the incentive agreement.

"Eligible costs" include, without limitation:

(1) the purchase, site preparation, renovation, rehabilitation and construction of land, buildings, structures, equipment and furnishings used for or in the mega project;

(2) any goods or services for the mega project that are purchased and capitalized under generally accepted accounting principles, including any organizational costs and research and development costs incurred in Illinois;

(3) capitalized lease costs for land, buildings, structures, and equipment valued at their present value using the interest rate at which the company borrows funds prevailing at the time the company entered into the lease;

(4) infrastructure development costs;

(5) debt service and project financing costs;

(6) non-capitalized research and development costs;

(7) job training and education costs;

(8) lease and relocation costs; and

(9) amounts expended by a company or company affiliate as a non-responsible party pursuant to a voluntary program of site remediation, including amounts expended to obtain a certification of completion, if completion of remediation is required to be certified by the Environmental Protection Agency.

"Entity" means a sole proprietorship, partnership, firm, corporation, limited liability company, association, or other business enterprise.

"Incentive agreement" means an agreement between a company and a local municipality obligating the company to make the special payment under this Division, in addition to paying property taxes, during the incentive period for a mega project.

"Incentive period" means the period beginning on the first day of the calendar year after the calendar year in which the mega project is placed in service and each calendar year thereafter until the earlier of (i) the expiration or termination of the incentive agreement or (ii) the revocation of the mega project certificate.

"Investment period" means the period ending 7 years after the date on which the Department issues the mega project certificate, or such other longer period of time as the local municipality and the company may agree to, not to exceed an initial period of 10 years, and subject to extension as provided in Section 10-910 of this Division.

"Local municipality" means the city, village, or incorporated town in which the mega project is located or, if the mega project is located in an unincorporated area, the county in which the mega project is located.

"Mega project" means a project that satisfies the minimum investment, investment period, and other requirements of this Division.

"Mega project certificate" means a certificate issued by the Department that authorizes an assessment freeze as provided in this Division.

"Minimum investment" means an investment in the mega project of at least $500,000,000 in eligible costs within the investment period.

"Minority person" means a person who is a citizen or lawful permanent resident of the United States and who is any of the following:

(1) American Indian or Alaska Native (a person having origins in any of the original peoples of North and South America, including Central America, and who maintains tribal affiliation or community attachment).

(2) Asian (a person having origins in any of the original peoples of the Far East, Southeast Asia, or the Indian subcontinent, including, but not limited to, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan, the Philippine Islands, Thailand, and Vietnam).

(3) Black or African American (a person having origins in any of the black racial groups of Africa).

(4) Hispanic or Latino (a person of Cuban, Mexican, Puerto Rican, South or Central American, or other Spanish culture or origin, regardless of race).

(5) Native Hawaiian or Other Pacific Islander (a person having origins in any of the original peoples of Hawaii, Guam, Samoa, or other Pacific Islands).

"Minority-owned business" means a business that is at least 51% owned by one or more minority persons, or in the case of a corporation, at least 51% of the stock of which is owned by one or more minority persons; and the management and daily business operations of which are controlled by one or more of the minority individuals who own it.

"Placed in service" means that construction of the mega project is substantially complete, which may be evidenced by issuance of a certificate of occupancy for the mega project by the local municipality or any other governmental body having jurisdiction over construction of the mega project or, if no certificate of occupancy is required as to the mega project, commencement of operations at the mega project site.

"Project" means land, buildings, and other improvements on the land, including water, sewage treatment and disposal facilities, air pollution control facilities, and all other machinery, apparatus, equipment, office facilities, related infrastructure, and furnishings which are considered necessary, suitable, or useful by a company and comprise the mega project, including all such property subject to assessment under the Property Tax Code.

"Special payment" means the annual amount paid in addition to property taxes paid during the incentive period as provided in the incentive agreement.

"Taxing district" has the meaning set forth in Section 1-150.

(35 ILCS 200/10-910 new)

Sec. 10-910. Valuation during incentive period; eligibility. Property certified by the Department as mega project property pursuant to this Division is eligible for an assessment freeze, as provided in this Division, eliminating from consideration, for assessment purposes during the incentive period, the value added to the property by the project and limiting the total valuation of the property during the incentive period to the base year valuation. If the company does not anticipate completing the project within the investment period, then the local municipality may approve one or more extensions of time to complete the project. However, the local municipality may not extend the investment period for more than 5 years after the last day of the initial term of the investment period. If the extension is not approved as part of the original incentive agreement, the corporate authorities may approve an extension under this Section by resolution, a copy of which must be delivered to the Department within 30 days after the date the resolution is adopted.

(35 ILCS 200/10-915 new)

Sec. 10-915. Incentive agreement procedure.

(a) To obtain the assessment freeze provided in this Division, the company must enter into an incentive agreement with the local municipality, in the form and manner required by the local municipality. The incentive agreement must be approved by an ordinance adopted by the corporate authorities of the local municipality and must contain all of the provisions required by Section 10-920.

(b) The local municipality may not enter into an incentive agreement under this Division unless and until all of the following are considered and approved by a majority of the members of a local review board:

(1) the base year;

(2) the base year valuation;

(3) the amount of the special payment under Section 10-920, including the manner in which the payment will adjust over time; and

(4) the manner in which sufficient revenues will be generated and provided, either by the mega project or by alternative sources, to address extraordinary capital needs of the local school districts that will be incurred to meet the demands of students who reside on the subject property and attend a school under the jurisdiction of a local school district.

The local review board shall consist of one representative of each of the following: (i) the local municipality; (ii) each local school district in which the property is located; (iii) each local park district in which the property is located; and (iv) each other taxing district that levy property taxes over any portion of the subject property. The vote of the local review board shall be weighted in proportion to each voting member's district's share of property taxes levied on the portion of the property in question, and each taxing district's vote shall be weighted on a 100-point scale to reflect its proportionate share of the applicable property taxes.

(35 ILCS 200/10-920 new)

Sec. 10-920. Contents of incentive agreement.

(a) The incentive agreement must require the company to pay, or be responsible for the payment of, an annual special payment to the local municipality, beginning with the first tax year for which the assessment freeze under this Division is applied to the mega project. The amount of the special payment shall be established by the local municipality in the incentive agreement and may be a fixed amount for the duration of the incentive period or may be subject to adjustment (downward or upward) based on factors memorialized in the incentive agreement.

(b) The incentive agreement shall obligate the company to operate the mega project at the designated project location for a minimum of 20 years.

(c) The incentive agreement may not be effective for a term of less than 23 years nor more than 40 years.

(d) The incentive agreement may contain such other terms and conditions as are mutually agreeable to the local municipality and the company and are consistent with the requirements of this Division, including, without limitation, operational and job creation requirements.

(e) In addition, all incentive agreements must include, as the first portion of the document, a recapitulation of the remaining contents of the document, including, but not limited to, the following:

(1) the legal name of each party to the agreement;

(2) the street address of the project and the property subject to the agreement;

(3) the agreed minimum investment;

(4) the term of the agreement; and

(5) a schedule showing the amount of the special payment and its calculation for each year of the agreement.

(35 ILCS 200/10-925 new)

Sec. 10-925. Installment bills; distribution of special payments.

(a) The local municipality shall prepare a bill for each installment of the special payment according to the schedule set forth in paragraph (5) of subsection (e) of Section 10-920, and that payment must be distributed to each of the affected taxing districts in an amount equal to the taxing district's proportionate share of property taxes due and payable for the property, as evidenced by the most recent property tax bill issued for the subject property.

(b) Distribution to taxing districts of the special payments associated with a mega project must be made within 60 days after receipt by the local municipality of the special payment amounts.

(c) Misallocations of the distribution of the special payments may be corrected by adjusting later distributions, but these adjustments must be made in the next succeeding year following identification and resolution of the misallocation. To the extent that distributions have been made improperly in previous years, claims for adjustment must be made within one year of the distribution.

(35 ILCS 200/10-930 new)

Sec. 10-930. Use of revenues. A taxing district that receives and retains revenues from a special payment under this Division may, in its discretion and in accordance with applicable law, use all or a portion of the revenues for the purposes of financing the issuance of revenue bonds.

(35 ILCS 200/10-935 new)

Sec. 10-935. Termination of incentive agreement; automatic termination; minimum level of investment required to remain qualified for assessment freeze.

(a) The local municipality and the company may mutually agree to terminate the incentive agreement at any time. From the date of termination, the mega project is subject to assessment on the basis of the then-current fair cash value.

(b) An incentive agreement shall be terminated if the company fails to satisfy the minimum investment level provided in this Division. If the incentive agreement is terminated under this subsection, the mega project is subject to assessment on the basis of the then-current fair cash value beginning in the tax year during which the termination occurs.

(c) An incentive agreement shall terminate if, at any time, the company no longer has the minimum level of investment as provided in this Division, without regard to depreciation.

(35 ILCS 200/10-940 new)

Sec. 10-940. Mega project applications; certification as a mega project and revocation of certification.

(a) The Department shall receive applications for mega project certificates under this Division in a form and manner provided by the Department by rule. The Department shall promptly notify the assessment officer when the Department receives an application under this Section. The Department's rules shall provide that an applicant may request preliminary approval of the mega project before the project begins, before the applicant has entered into a fully executed incentive agreement with the local municipality, or before the project has been placed in service.

(b) The Department shall approve an application for a mega project certificate if the Department finds that the project meets the requirements of this Division and upon receipt of each of the following:

(1) evidence (to be construed broadly) that the company has invested, or will invest, not less than the minimum investment in the mega project during the investment period;

(2) an executed incentive agreement with the local municipality for the mega project, as described in this Section 10-920 of this Division;

(3) an executed project labor agreement between the company and the applicable local building trades council for construction of the mega project; and

(4) evidence that the company has established the goal of awarding, and has awarded or will award, 20% of the total dollar amount of contracts that are related to the project during each calendar year to minority-owned businesses.

(c) Upon approval of the application, the Department shall issue a mega project certificate to the applicant and transmit a copy to the assessment officer. The certificate shall identify the property on which the mega project is located.

(d) For each calendar year following issuance of the mega project certificate, until the minimum investment requirements have been met and the mega project has been placed in service, the company shall deliver a report to the Department on the status of construction or creation of the mega project and the amount of minimum investment made in the mega project during the preceding calendar year. If the Department determines, in accordance with the Administrative Review Law and the Illinois Administrative Procedure Act, that a project for which a certificate has been issued has not met the minimum investment requirements of this Division within the investment period, the Department shall revoke the certificate by written notice to the taxpayer of record and transmit a copy of the revocation to the assessment officer.

(e) If the local municipality notifies the Department that the incentive agreement between the company and the local municipality has been terminated, the Department shall revoke the certificate by written notice to the taxpayer of record and transmit a copy of the revocation to the assessment officer.

(35 ILCS 200/10-945 new)

Sec. 10-945. Computation of valuation.

(a) Upon receipt of the mega project certificate from the Department, the assessment officer shall determine the base year valuation and shall make a notation on each statement of assessment during the incentive period that the valuation of the project is based upon the issuance of a mega project certificate.

(b) Upon revocation of a mega project certificate, the assessment officer shall compute the assessed valuation of the project on the basis of the then-current fair cash value of the property.

(35 ILCS 200/10-950 new)

Sec. 10-950. Transfers of interest in a mega project; sale-leaseback arrangement; requirements.

(a) Subject to the terms of the incentive agreement between the company and the local municipality, ownership of or any interest in the mega project and any and all related project property, including, without limitation, transfers of indirect beneficial interests and equity interests in a company owning a mega project, shall not affect the assessment freeze or the validity of the mega project certificate issued under this Division. Notwithstanding the provisions of this subsection, the incentive agreement shall be a covenant running with the land.

(b) A company may enter into lending, financing, security, leasing, or similar arrangements, or a succession of such arrangements, with a financing entity concerning all or part of a project including, without limitation, a sale-leaseback arrangement, equipment lease, build-to-suit lease, synthetic lease, nordic lease, defeased tax benefit, or transfer lease, an assignment, sublease, or similar arrangement, or succession of those arrangements, with one or more financing entities concerning all or part of a project, regardless of the identity of the income tax or fee owner of the mega project. Neither the original transfer to the financing entity nor the later transfer from the financing entity back to the company, pursuant to terms in the sale-leaseback agreement, shall affect the assessment freeze or the validity of the mega project certificate issued under this Division, regardless of whether the income tax basis is changed for income tax purposes. For purposes of this Division, if a single company enters into a financing arrangement of the type described in this subsection (b), the investment in or financing of the property by a developer, lessor, financing entity, or other third party in accordance with this arrangement is considered investment by the company. Investment by a related person to the company is considered investment by the company.

(c) The Department must receive notice of all transfers undertaken with respect to other projects to effect a financing. Notice shall be made in writing within 60 days after the transfer, identifying each transferee and containing other information required by the Department with the appropriate returns. Failure to meet this notice requirement does not adversely affect the assessment freeze.

(35 ILCS 200/10-955 new)

Sec. 10-955. Minimum investment by company affiliates. To be eligible for the benefits of this Division, a company must invest the minimum investment. Investments by company affiliates during the investment period may be applied toward the minimum investment under this Division regardless of whether the company affiliate was part of the project. To qualify for the assessment freeze, the minimum investments pursuant must be at the mega project.

(35 ILCS 200/10-960 new)

Sec. 10-960. Projects to be valued at fair cash value for purposes of bonded indebtedness and limitations on property tax extensions. Projects to which an assessment freeze applies pursuant to this Division shall be valued at their fair cash value for purposes of calculating a municipality's general obligation bond limits and a taxing district's limitation on tax extensions.

(35 ILCS 200/10-965 new)

Sec. 10-965. Abatements. Any taxing district, upon a majority vote of its governing authority, may, after the determination of the assessed valuation as set forth in this Division, order the clerk of the appropriate municipality or county to abate any portion of real property taxes otherwise levied or extended by the taxing district on a mega project.

(35 ILCS 200/10-970 new)

Sec. 10-970. Filing of returns, contracts, and other information; due date of payments and returns.

(a) The company and the local municipality shall file notices, reports, and other information as required by the Department.

(b) Special payments are due at the same time as property tax payments and property tax returns are due for the mega project property.

(c) Failure to make a timely special payment results in the assessment of penalties as if the payment were a delinquent property tax payment or return.

(d) Within 30 days after the date of execution of an incentive agreement, a copy of the incentive agreement must be filed with the Department, the county assessor, and the county auditor for the county in which the mega project is located.

(35 ILCS 200/10-980 new)

Sec. 10-980. Rules. The Department may issue rulings and adopt rules as necessary to carry out the purpose of this Division.

(35 ILCS 200/10-990 new)

Sec. 10-990. Invalidity. If all or any part of this Division is determined to be unconstitutional or otherwise unenforceable by a court of competent jurisdiction, a company has 180 days from the date of the determination to transfer title to a mega project to an authorized economic development authority, which may qualify for property tax assessment under this Division or which may be exempt from property taxes.

Section 97. Severability. The provisions of this Act are severable under Section 1.31 of the Statute on Statutes.

Section 99. Effective date. This Act takes effect June 1, 2025.