093_HB0235eng HB0235 Engrossed LRB093 02644 ACG 02654 b 1 AN ACT concerning corporations. 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 Corporate Accountability for Tax Expenditures Act. 6 Section 5. Definitions. As used in this Act: 7 "Base years" means the first 2 complete calendar years 8 following the effective date of a recipient receiving 9 development assistance. 10 "Date of assistance" means the commencement date of the 11 assistance agreement, which date triggers the period during 12 which the recipient is obligated to create or retain jobs and 13 continue operations at the specific project site. 14 "Default" means that a recipient has not achieved its job 15 creation, job retention, or wage or benefit goals, as 16 applicable, during the prescribed period therefor. 17 "Department" means, unless otherwise noted, the 18 Department of Commerce and Community Affairs or any successor 19 agency. 20 "Development assistance" means (1) tax credits and tax 21 exemptions (other than given under tax increment financing) 22 given as an incentive to a recipient business organization 23 pursuant to a certification or designation made by the 24 Department under the Economic Development for a Growing 25 Economy Tax Credit Act and the Illinois Enterprise Zone Act, 26 including the High Impact Business program, (2) grants or 27 loans given to a recipient as an incentive to a business 28 organization pursuant to the Large Business Development 29 Program, the Business Development Public Infrastructure 30 Program, or the Industrial Training Program, (3) the State 31 Treasurer's Economic Program Loans, (4) the Illinois HB0235 Engrossed -2- LRB093 02644 ACG 02654 b 1 Department of Transportation Economic Development Program, 2 and (5) all successor and subsequent programs and tax credits 3 designed to promote large business relocations and 4 expansions. "Development assistance" does not include tax 5 increment financing, participation loans, or financial 6 transactions through statutorily authorized financial 7 intermediaries in support of small business loans and 8 investments or given in connection with the development of 9 affordable housing. 10 "Full-time, permanent job" means either: (1) the 11 definition therefor in the legislation authorizing the 12 programs described in the definition of development 13 assistance in the Act or (2) if there is no such definition, 14 then as defined in administrative rules implementing such 15 legislation, provided the administrative rules were in place 16 prior to the effective date of this Act. On and after the 17 effective date of this Act, if there is no definition of 18 "full-time, permanent job" in either the legislation 19 authorizing a program that constitutes economic development 20 assistance under this Act or in any administrative rule 21 implementing such legislation that was in place prior to the 22 effective date of this Act, then "full-time, permanent job" 23 means a job in which the new employee works for the recipient 24 at a rate of at least 35 hours per week. 25 "Granting body" means the Department, any State 26 department or agency that provides development assistance 27 that has reporting requirements under this Act, and any 28 successor agencies to any of the preceding. 29 "New employee" means either: (1) the definition therefor 30 in the legislation authorizing the programs described in the 31 definition of development assistance in the Act or (2) if 32 there is no such definition, then as defined in 33 administrative rules implementing such legislation, provided 34 the administrative rules were in place prior to the effective HB0235 Engrossed -3- LRB093 02644 ACG 02654 b 1 date of this Act. On and after the effective date of this 2 Act, if there is no definition of "new employee" in either 3 the legislation authorizing a program that constitutes 4 economic development assistance under this Act nor in any 5 administrative rule implementing such legislation that was in 6 place prior to the effective date of this Act, then "new 7 employee" means a full-time, permanent employee who 8 represents a net increase in the number of the recipient's 9 employees statewide. "New employee" includes an employee who 10 previously filled a new employee position with the recipient 11 who was rehired or called back from a layoff that occurs 12 during or following the base years. 13 The term "New Employee" does not include any of the 14 following: 15 (1) An employee of the recipient who performs a job 16 that was previously performed by another employee, if 17 that job existed for at least 6 months before hiring the 18 employee. 19 (2) A child, grandchild, parent, or spouse, other 20 than a spouse who is legally separated from the 21 individual, of any individual who has a direct or 22 indirect ownership interest of at least 5% in the 23 profits, capital, or value of any member of the 24 recipient. 25 "Part-time job" means either: (1) the definition therefor 26 in the legislation authorizing the programs described in the 27 definition of development assistance in the Act or (2) if 28 there is no such definition, then as defined in 29 administrative rules implementing such legislation, provided 30 the administrative rules were in place prior to the effective 31 date of this Act. On and after the effective date of this 32 Act, if there is no definition of "part-time job" in either 33 the legislation authorizing a program that constitutes 34 economic development assistance under this Act or in any HB0235 Engrossed -4- LRB093 02644 ACG 02654 b 1 administrative rule implementing such legislation that was in 2 place prior to the effective date of this Act, then 3 "part-time job" means a job in which the new employee works 4 for the recipient at a rate of less than 35 hours per week. 5 "Permanent job" means either: (1) the definition therefor 6 in the legislation authorizing the programs described in the 7 definition of development assistance in the Act or (2) if 8 there is no such definition, then as defined in 9 administrative rules implementing such legislation, provided 10 the administrative rules were in place prior to the effective 11 date of this Act. On and after the effective date of this 12 Act, if there is no definition of "permanent job" in either 13 the legislation authorizing a program that constitutes 14 economic development assistance under this Act or in any 15 administrative rule implementing such legislation that was in 16 place prior to the effective date of this Act, then 17 "permanent job" means a job in which a new employee works for 18 the recipient, not as an independent contractor or on a 19 consulting basis, at a rate of at least 35 hours per week 20 with the intention that such employment shall continue and 21 that the employee will receive all health insurance, pension, 22 profit sharing, and other benefits offered to other 23 full-time, permanent employees. 24 "Recipient" means any business that receives economic 25 development assistance. A business is any corporation, 26 limited liability company, partnership, joint venture, 27 association, sole proprietorship, or other legally recognized 28 entity. 29 "Retained employee" means either: (1) the definition 30 therefor in the legislation authorizing the programs 31 described in the definition of development assistance in the 32 Act or (2) if there is no such definition, then as defined in 33 administrative rules implementing such legislation, provided 34 the administrative rules were in place prior to the effective HB0235 Engrossed -5- LRB093 02644 ACG 02654 b 1 date of this Act. On and after the effective date of this 2 Act, if there is no definition of "retained employee" in 3 either the legislation authorizing a program that constitutes 4 economic development assistance under this Act or in any 5 administrative rule implementing such legislation that was in 6 place prior to the effective date of this Act, then "retained 7 employee" means any employee defined as having a full-time or 8 full-time equivalent job preserved at a specific facility or 9 site, the continuance of which is threatened by a specific 10 and demonstrable threat, which shall be specified in the 11 application for development assistance. 12 "Specific project site" means that distinct operational 13 unit to which any development assistance is applied. 14 "Temporary job" means either: (1) the definition therefor 15 in the legislation authorizing the programs described in the 16 definition of development assistance in the Act or (2) if 17 there is no such definition, then as defined in 18 administrative rules implementing such legislation, provided 19 the administrative rules were in place prior to the effective 20 date of this Act. On and after the effective date of this 21 Act, if there is no definition of "temporary job" in either 22 the legislation authorizing a program that constitutes 23 economic development assistance under this Act or in any 24 administrative rule implementing such legislation that was in 25 place prior to the effective date of this Act, then 26 "temporary job" means a job in which the new employee is 27 hired for a specific duration of time or season. 28 "Value of assistance" means the face value of any form of 29 development assistance. 30 Section 10. Unified Economic Development Budget. 31 (a) For each State fiscal year ending on or after June 32 30, 2005, the Department shall submit an annual Unified 33 Economic Development Budget to the General Assembly. The HB0235 Engrossed -6- LRB093 02644 ACG 02654 b 1 Unified Economic Development Budget shall be due within 3 2 months after the end of the fiscal year, and shall present 3 all types of development assistance granted during the fiscal 4 year, including: 5 (1) The aggregate amount of uncollected or diverted 6 State tax revenues resulting from each type of 7 development assistance provided in the tax statutes, as 8 reported to the Department of Revenue on tax returns 9 filed during the fiscal year. 10 (2) All State on-budget development assistance. 11 (b) All data contained in the Unified Economic 12 Development Budget presented to the General Assembly shall be 13 fully subject to the Freedom of Information Act. 14 (c) The Department of Revenue shall submit a report of 15 the amounts in subdivision (a)(1) of this Section to the 16 Department, which may append such report to the Unified 17 Economic Development Budget rather than separately reporting 18 such amounts. 19 Section 15. Standardized applications for State on-budget 20 development assistance. 21 (a) All applications utilized by the Department or any 22 other State granting body regarding requests for development 23 assistance shall contain, at a minimum: 24 (1) An application tracking number that is specific 25 to both the State granting agency and to each 26 application. 27 (2) The name, street and mailing addresses, phone 28 number, and chief officer of the granting body. 29 (3) The name, street and mailing addresses, phone 30 number, 4-digit SIC number, and chief officer of the 31 applicant at the specific project site for which 32 development assistance is sought. 33 (4) The applicant's total number of employees at the HB0235 Engrossed -7- LRB093 02644 ACG 02654 b 1 specific project site on the date of the application, 2 broken down by full-time, permanent, part-time, and 3 temporary. 4 (5) The kind of development assistance and value of 5 assistance being applied for. 6 (6) The number of jobs to be created and retained or 7 both created and retained by the development assistance, 8 broken down by full-time, permanent, part-time, and 9 temporary. 10 (7) A detailed list of the occupation or job 11 classifications and number of new or retained employees 12 to be hired in full-time job positions, a schedule of 13 anticipated starting dates of the new hires and the 14 average wage by occupation or job classification and 15 total payroll to be created as a result of the 16 development assistance. 17 (8) A list of all other forms of development 18 assistance the applicant is seeking for the specific 19 project site and the name of each State granting body 20 from which that development assistance is being sought. 21 (9) A narrative, if necessary, describing why the 22 development assistance is needed and how the applicant's 23 use of the development assistance may reduce unemployment 24 at any site in Illinois. 25 (10) Individual certifications by the chief officers 26 of the applicant and the State granting body as to the 27 accuracy of the information contained in the application, 28 under penalty of perjury. 29 (b) Every State granting body either shall complete, or 30 shall require the applicant to complete, an application form 31 that meets the minimum requirements as prescribed in this 32 Section each time an applicant applies for development 33 assistance covered by this Act. HB0235 Engrossed -8- LRB093 02644 ACG 02654 b 1 Section 20. State on-budget development assistance 2 disclosure. 3 (a) Beginning February 1, 2005 and each year thereafter, 4 every State granting body in the State shall submit to the 5 Department copies of all application forms that meet the 6 requirements referenced in Section 15 of this Act for 7 development assistance that it approved in the previous 8 calendar year. Upon each form, the granting body shall 9 designate the date on which assistance will commence. 10 (b) For each development assistance application that was 11 approved, and for which the date of assistance has occurred 12 in a reporting year, each recipient shall submit to the 13 Department a progress report that shall include, but not 14 limited to, the following: 15 (1) The application tracking number. 16 (2) The name, street and mailing addresses, phone 17 number, and chief officer of the granting body. 18 (3) The name, street and mailing addresses, phone 19 number, 4-digit SIC number, and chief officer of the 20 applicant at the specific project site for which the 21 development assistance was approved. 22 (4) The kind of development assistance program and 23 value of assistance that was approved. 24 (5) The applicant's total level of employment at the 25 specific project site on the date of the application and 26 the applicant's total level of employment at the specific 27 project site on the date of the report, broken down by 28 full-time, permanent, part-time, and temporary, and a 29 computation of the gain or loss in each category. 30 (6) The number of new and retained jobs the 31 applicant stated in its development assistance agreement, 32 if any, if not, then in its application, would be created 33 by the development assistance broken down by full-time, 34 permanent, part-time, and temporary. HB0235 Engrossed -9- LRB093 02644 ACG 02654 b 1 (7) A declaration of whether the recipient is 2 satisfying all job creation and retention or other 3 economic development requirements the recipient committed 4 to when receiving development assistance covered by this 5 Act. 6 (8) A detailed list of the occupation or job 7 classifications and number of new or retained employees 8 to be hired in full-time job positions, a schedule of 9 anticipated starting dates of the new hires and the 10 average wage by occupation or job classification and 11 total payroll to be created as a result of the 12 development assistance. 13 (9) A narrative, if necessary, describing how the 14 recipient's use of the development assistance during the 15 reporting year has reduced unemployment at any site in 16 Illinois. 17 (10) Signed individual certifications by the chief 18 officer of the applicant as to the accuracy of the 19 progress report, under penalty of perjury. 20 (c) The State granting body and the Department, or a 21 successor agency, shall have full investigative authority to 22 verify the applicant's progress report data, including but 23 not limited to inspection of the specific project site and 24 analysis of tax and payroll records. 25 (d) By June 1, 2005 and by June 1 of each year 26 thereafter, the Department shall compile and publish all data 27 in all of the development assistance progress reports in both 28 written and electronic form. 29 (e) Every aspect of all approved development assistance 30 applications, progress reports, and compilations of 31 applications and progress reports shall be fully subject to 32 the Freedom of Information Act. 33 (f) If a recipient of development assistance fails to 34 comply with subsections (a) and (b) of this Section, the HB0235 Engrossed -10- LRB093 02644 ACG 02654 b 1 Department shall, within 20 working days after the reporting 2 submittal deadlines set forth in (i) the legislation 3 authorizing, (ii) the administrative rules implementing, or 4 (iii) specific provisions in development assistance 5 agreements pertaining to the development assistance programs, 6 suspend within 33 working days any current development 7 assistance to the recipient under its control, and shall be 8 prohibited from completing any current or providing any 9 future development assistance until it receives proof that 10 the recipient has come into compliance with the requirements 11 of subsections (a) and (b) of this Section. 12 Section 25. Recapture. 13 (a) All recipients of development assistance must execute 14 agreements that contain, at a minimum, the following 15 recapture provisions: 16 (1) The recipient must (i) make the level of capital 17 investment in the economic development project specified 18 in the development assistance agreement; (ii) create or 19 retain, or both, the requisite number of jobs, paying not 20 less than specified wages for the created and retained 21 jobs, within and for the duration of the time period 22 specified in the legislation authorizing, or the 23 administrative rules implementing, the development 24 assistance programs and the development assistance 25 agreement. 26 (2) If the recipient fails to create or retain the 27 requisite number of jobs within and for the time period 28 specified, in the legislation authorizing, or the 29 administrative rules implementing, the development 30 assistance programs and the development assistance 31 agreement, the recipient shall be deemed to no longer 32 qualify for the State economic assistance and the 33 applicable recapture provisions shall take effect. HB0235 Engrossed -11- LRB093 02644 ACG 02654 b 1 (3) If the recipient receives State economic 2 assistance in the form of a High Impact Business 3 designation pursuant to Section 5.5 of the Illinois 4 Enterprise Zone Act and the business receives the benefit 5 of the exemption authorized under Section 5l of the 6 Retailers' Occupation Tax Act (for the sale of building 7 materials incorporated into a High Impact Business 8 location) and the recipient fails to create or retain the 9 requisite number of jobs, as determined by the 10 legislation authorizing the development assistance 11 programs or the administrative rules implementing such 12 legislation, or both, within the requisite period of 13 time, the recipient shall be required to pay to the State 14 the full amount of the State tax exemption that it 15 received as a result of the High Impact Business 16 designation. 17 (4) If the recipient receives a grant or loan 18 pursuant to the Large Business Development Program, the 19 Business Development Public Infrastructure Program, or 20 the Industrial Training Program and the recipient fails 21 to create or retain the requisite number of jobs for the 22 requisite time period, as provided in the legislation 23 authorizing the development assistance programs or the 24 administrative rules implementing such legislation, or 25 both, or in the development assistance agreement, the 26 recipient shall be required to repay to the State a pro 27 rata amount of the grant; that amount shall reflect the 28 percentage of the deficiency between the requisite number 29 of jobs to be created or retained by the recipient and 30 the actual number of such jobs in existence as of the 31 date the Department determines the recipient is in breach 32 of the job creation or retention covenants contained in 33 the development assistance agreement. If the recipient of 34 development assistance under the Large Business HB0235 Engrossed -12- LRB093 02644 ACG 02654 b 1 Development Program, the Business Development Public 2 Infrastructure Program, or the Industrial Training 3 Program ceases operations at the specific project site, 4 during the 5-year period commencing on the date of 5 assistance, the recipient shall be required to repay the 6 entire amount of the grant or to accelerate repayment of 7 the loan back to the State. 8 (5) If the recipient receives a tax credit under the 9 Economic Development for a Growing Economy tax credit 10 program, the development assistance agreement must 11 provide that (i) if the number of new or retained 12 employees falls below the requisite number set forth in 13 the development assistance agreement, the allowance of 14 the credit shall be automatically suspended until the 15 number of new and retained employees equals or exceeds 16 the requisite number in the development assistance 17 agreement; (ii) if the recipient discontinues operations 18 at the specific project site during the first 5 years of 19 the 10-year term of the development assistance agreement, 20 the recipient shall forfeit all credits taken by the 21 recipient during such 5-year period; and (iii) in the 22 event of a revocation or suspension of the credit, the 23 Department shall contact the Director of Revenue to 24 initiate proceedings against the recipient to recover 25 wrongfully exempted Illinois State income taxes and the 26 recipient shall promptly repay to the Department of 27 Revenue any wrongfully exempted Illinois State income 28 taxes. The forfeited amount of credits shall be deemed 29 assessed on the date the Department contacts the 30 Department of Revenue and the recipient shall promptly 31 repay to the Department of Revenue any wrongfully 32 exempted Illinois State income taxes. 33 (b) The Director may elect to waive enforcement of any 34 contractual right arising out of the development assistance HB0235 Engrossed -13- LRB093 02644 ACG 02654 b 1 agreement required by this Act based on a finding that the 2 waiver is necessary to avert an imminent, demonstrable, and 3 material hardship to the recipient that may result in such 4 recipient's insolvency or discharge of workers. The 5 recipient's request for waiver and the justification therefor 6 must be published in electronic form by the Department for a 7 period of 30 days before the Director may take action on the 8 waiver request. If a waiver is granted, the recipient must 9 agree to a contractual modification, including recapture 10 provisions, to the development assistance agreement. The 11 existence of any waiver granted pursuant to this subsection 12 (c), the date of the granting of such waiver, and a brief 13 summary of the reasons supporting the granting of such waiver 14 shall be disclosed consistent with the provisions of Section 15 25 of this Act. 16 (c) Beginning June 1, 2004, the Department shall 17 annually compile a report on the outcomes and effectiveness 18 of recapture provisions by program, including but not limited 19 to: (i) the total number of companies that receive 20 development assistance as defined in this Act; (ii) the total 21 number of recipients in violation of development agreements 22 with the Department; (iii) the total number of completed 23 recapture efforts; (iv) the total number of recapture efforts 24 initiated; and (v) the number of waivers granted. This report 25 shall be disclosed consistent with the provisions of Section 26 20 of this Act. 27 (d) For the purposes of this Act, recapture provisions do 28 not include the Illinois Department of Transportation 29 Economic Development Program or any successor programs as 30 described in the term "development assistance" in Section 5 31 of this Act. 32 Section 99. Effective date. This Act takes effect upon 33 becoming law.