State of Illinois
90th General Assembly
Legislation

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90_SB0938

      New Act
          Creates  the  Business  Use  Incentives  for  Large-Scale
      Development Act. Provides that an eligible industry  creating
      at  least  25 new jobs in the State may apply for incentives,
      including tax credits in an amount equal to the  gross  wages
      paid  to  the  new  employees  of the industry, as part of an
      economic development project through the Illinois Development
      Finance Authority. Authorizes the  Authority  to  enter  into
      financing  agreements  with eligible industries it selects to
      receive the incentives. Provides  that  the  Authority  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
      Authority  to issue up to $35,000,000 in bonds to finance the
      economic development projects. Authorizes  the  Authority  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.  Effective
      immediately.
                                                     LRB9002074KDcb
                                               LRB9002074KDcb
 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  equal to the gross wages
 8    paid in one year by an  eligible  industry  to  all  eligible
 9    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 under Section 60 of
14    this Act.
15        "Credit" means the amount agreed to between the Authority
16    and an eligible industry, but not to exceed the    assessment
17    attributable to the eligible industry's project.
18        "Economic development project" means:
19             (1)  The  acquisition  of  any  real property by the
20        Authority, the eligible industry, or its affiliate; or
21             (2)  The fee  ownership  of  real  property  by  the
22        eligible industry or its affiliate; and
23             (3)  For   both  paragraphs  (1)  and  (2)  of  this
24        definition, "economic  development  project"  shall  also
25        include  the  development  of the real property including
26        construction, installation, or equipping  of  a  project,
27        including   fixtures   and   equipment,   and  facilities
28        necessary  or  desirable  for  improvement  of  the  real
29        property, including surveys; site tests and  inspections;
30        subsurface  site work; excavation; removal of structures,
31        roadways, cemeteries,  and  other  surface  obstructions;
                            -2-                LRB9002074KDcb
 1        filling,  grading, and provision of drainage, storm water
 2        retention,  installation  of  utilities  such  as  water,
 3        sewer,    sewage     treatment,     gas,     electricity,
 4        communications,    and   similar   facilities;   off-site
 5        construction of utility extensions to the  boundaries  of
 6        the  real property; and the acquisition, installation, or
 7        equipping of facilities on the real property, for use and
 8        occupancy by the eligible industry or its affiliates.
 9        "Eligible  employee"  means  a  person  employed   on   a
10    full-time  basis  in  a  new  job at the economic development
11    project averaging at least 35 hours  per  week  who  was  not
12    employed  by  the  eligible industry or a related taxpayer in
13    this State at any time during the 12-month period immediately
14    prior to being employed at the economic development project.
15        "Eligible industry" means a business located  within  the
16    State of Illinois that is engaged in interstate or intrastate
17    commerce  for  the  purpose  of manufacturing, processing, or
18    assembling products, conducting research and development,  or
19    providing services in interstate commerce, office industries,
20    or  agricultural processing, but excluding retail, health, or
21    professional services. "Eligible industry" does not include a
22    business that closes or substantially reduces  its  operation
23    at one location in the State and relocates  substantially the
24    same  operation  to  another location in the State. This does
25    not prohibit a business  from  expanding  its  operations  at
26    another   location   in  the  State  provided  that  existing
27    operations of a similar nature located within the  State  are
28    not  closed  or  substantially  reduced.  This  also does not
29    prohibit a business  from  moving  its  operations  from  one
30    location  in  the  State to another location in the State for
31    the purpose of expanding  the  operation  provided  that  the
32    Authority  determines  that  expansion  cannot  reasonably be
33    accommodated within the municipality in which the business is
34    located,  or  in  the  case  of  a  business  located  in  an
                            -3-                LRB9002074KDcb
 1    incorporated area of the county, within the county  in  which
 2    the  business  is  located,  after  conferring with the chief
 3    elected official of the municipality  or  county  and  taking
 4    into  consideration  any evidence offered by the municipality
 5    or county regarding  the  ability  to  accommodate  expansion
 6    within  the municipality or county. An eligible industry must
 7    create a minimum of 25 new jobs for eligible employees at the
 8    economic development project.
 9        "New job" means a job in  a  new  or  expanding  eligible
10    industry  not including jobs of recalled workers, replacement
11    jobs, or jobs that formerly existed in the eligible  industry
12    in the State.
13        "Office   industry"   means   a  regional,  national,  or
14    international headquarters, a telecommunications operation, a
15    computer operation, an insurance company, or  a  credit  card
16    billing and processing center.
17        "Program  costs" means all necessary and incidental costs
18    of  providing  program  services  including  payment  of  the
19    principal of premium, if any, and interest  on  certificates,
20    including  capitalized interest, issued to finance a project,
21    and funding and maintenance of a debt service reserve fund to
22    secure the certificates.  Program  costs  shall  include  the
23    following:
24             (1)  Obligations  incurred for labor and obligations
25        incurred to contractors,  subcontractors,  builders,  and
26        materialmen   in   connection   with   the   acquisition,
27        construction,  installation,  or equipping of an economic
28        development project.
29             (2)  The cost of acquiring land or  rights  in  land
30        and  any  cost  incidental  thereto,  including recording
31        fees.
32             (3)  The cost of contract bonds and of insurance  of
33        all  kinds  that  may be required or necessary during the
34        course of  acquisition,  construction,  installation,  or
                            -4-                LRB9002074KDcb
 1        equipping  of an economic development project that is not
 2        paid  by  the  contractor  or  contractors  or  otherwise
 3        provided for.
 4             (4)  All  costs  of  architectural  and  engineering
 5        services, including  test  borings,  surveys,  estimates,
 6        plans and specifications, preliminary investigations, and
 7        supervision of construction, as well as the costs for the
 8        performance  of  all the duties required by or consequent
 9        upon  the  acquisition,  construction,  installation,  or
10        equipping of an economic development project.
11             (5)  All costs that are required to  be  paid  under
12        the   terms   of   any  contract  or  contracts  for  the
13        acquisition, construction, installation, or equipping  of
14        an economic development project.
15             (6)  All other costs of a nature comparable to those
16        described in this definition.
17        "Program  services"  means administrative expenses of the
18    Authority, including contracted  professional  services,  and
19    the cost of issuance of certificates.
20        Section  10.  Powers  of  the  Authority.   The Authority
21    shall have, in addition to the powers provided to it  in  the
22    Illinois  Development  Finance  Authority Act, all the powers
23    necessary to  carry  out  and  effectuate  the  purposes  and
24    provisions  of  this  Act, including, but not limited to, the
25    power to:
26             (1)  Provide  and   finance   economic   development
27        projects, under the provisions of this Act, and cooperate
28        with eligible industries in order to promote, foster, and
29        support economic development within the State.
30             (2)  Conduct  hearings  and inquiries, in the manner
31        and by the methods as it deems desirable, for the purpose
32        of  gathering  information  with  respect   to   eligible
33        industries and economic development projects, and for the
                            -5-                LRB9002074KDcb
 1        purpose   of   making  any  determinations  necessary  or
 2        desirable in the furtherance of this Act.
 3             (3)  Negotiate the terms of, including the amount of
 4        project costs, and enter into financing  agreements  with
 5        eligible  industries,  and  in  connection  therewith  to
 6        acquire,  convey,  sell,  mortgage, finance, or otherwise
 7        dispose of any property,  real  or  personal,  loan  bond
 8        proceeds,   and   permit   the  use  of  assessments,  in
 9        connection with an economic development project,  and  to
10        pay,  or  cause  to  be  paid,  in  accordance  with  the
11        provisions of a financing agreement, the program costs of
12        an  economic development project from any funds available
13        therefor.
14        (b)  Certificates  issued  by  the  Authority  under  the
15    provisions of  this Act shall not constitute an  indebtedness
16    or  liability  of  the  State within the meaning of any State
17    constitutional provision or statutory limitation,  shall  not
18    constitute  a  pledge  of  the faith and credit of the State,
19    shall not be guaranteed by  the  credit  of  the  State,  and
20    unless  approved  by  a  concurrent resolution of the General
21    Assembly, no certificate in default  shall  be  paid  by  the
22    State.
23        Section 15.  Selection of eligible industries.
24        (a)  The  Authority  shall  establish  the procedures and
25    standards for the  determination  and  approval  of  eligible
26    industries  and  their  economic  development projects by the
27    promulgation of  rules  in  accordance  with  this  Act,  the
28    Illinois  Administrative  Procedure  Act,  and  the  Illinois
29    Development  Finance Authority Act. These rules shall mandate
30    the  evaluation  of  the  credit   worthiness   of   eligible
31    industries,  the  number  of  new  jobs  to be provided by an
32    economic development project to residents of the  State,  and
33    the  likelihood  of  the  economic  success  of  the economic
                            -6-                LRB9002074KDcb
 1    development  project. No economic  development  project  that
 2    will  result in the replacement of facilities existing in the
 3    State shall be approved by the Authority.
 4        (b)  With respect to each  eligible  industry  making  an
 5    application to the Authority for incentives, and with respect
 6    to   the   economic  development  project  described  in  the
 7    application,   the   Authority   shall    request    relevant
 8    information,  documentation,  and  other  materials  and make
 9    inquiries of the applicant as necessary or appropriate. After
10    a diligent review of relevant materials and completion of its
11    inquiries, the  Authority  may  by  resolution  designate  an
12    economic development project.
13        Section 20.  Financing agreement.
14        (a)  The  Authority  may  enter  into,  with any eligible
15    industry, a financing agreement with respect to its  economic
16    development   project.   Subject  to  the  inclusion  of  the
17    mandatory provisions set forth in this  Act,  the  terms  and
18    provisions of each financing agreement shall be determined by
19    negotiations between the Authority and the eligible industry.
20        (b)  The  financing  agreement shall provide in substance
21    that:
22             (1)  It may be assigned  by  the  eligible  industry
23        only  upon  the  prior  written  consent of the Authority
24        following the adoption of a resolution by  the  Authority
25        to such effect; and
26             (2)  Upon  default  by  the eligible industry in any
27        obligations  under  the  financing  agreement  or   other
28        documents   evidencing,   securing,  or  related  to  the
29        eligible industry's obligations, the Authority shall have
30        the right, at its option, to:
31                  (A)  Declare the financing agreement  or  other
32             documents in default.
33                  (B)  Accelerate  and  declare  the total of all
                            -7-                LRB9002074KDcb
 1             payments due by the eligible industry and  sell  the
 2             economic  development project at public, private, or
 3             judicial sale.
 4                  (C)  Pursue  any  remedy  provided  under   the
 5             financing agreement or other documents.
 6                  (D)  Be   entitled  to  the  appointment  of  a
 7             receiver by the circuit court wherein  any  part  of
 8             the economic development project is located.
 9                  (E)  Pursue  any other applicable legal remedy.
10        Section 25.  Requirements for credit.  After  receipt  of
11    an  application,  the  Authority  may enter into an agreement
12    with an eligible industry for a credit under this Act if  the
13    Authority  determines  that  all  of the following conditions
14    exist:
15             (1)  The applicant's project will  create  new  jobs
16        that  were  not jobs previously performed by employees of
17        the applicant in Illinois.
18             (2)  The applicant's project is  economically  sound
19        and  will  benefit  the  people of Illinois by increasing
20        opportunities  for  employment  and   strengthening   the
21        economy of Illinois.
22             (3)  The  political  subdivisions  affected  by  the
23        project  have committed significant local incentives with
24        respect to the project.
25             (4)  Receiving the credit is a major factor  in  the
26        applicant's  decision  to go forward with the project and
27        not receiving the credit will result in the applicant not
28        creating new jobs in Illinois.
29             (5)  Awarding the credit will result in  an  overall
30        positive fiscal impact to the State.
31             (6)  There  is  at  least  one  other state that the
32        applicant verifies is being considered for the project.
33             (7)  A significant disparity  is  identified,  using
                            -8-                LRB9002074KDcb
 1        best  available  data  in  the  projected  costs  for the
 2        applicant's  project  compared  to  the  costs   in   the
 3        competing  state,  including  the impact of the competing
 4        state's  incentive  programs.   The   competing   state's
 5        incentive  program  shall  include state, local, private,
 6        and federal funds.
 7        Section  30.  Determining  the  amount  of  credit.    In
 8    determining  the credit that should be awarded, the Authority
 9    shall take into consideration the following factors:
10             (1)  The economy of the county where  the  projected
11        investment is to occur.
12             (2)  The   potential   impact   on  the  economy  of
13        Illinois.
14             (3)  The payroll attributable to the project.
15             (4)  The  capital  investment   and   debt   service
16        attributable to the project.
17             (5)  The   amount  the  average  wage  paid  by  the
18        applicant exceeds the average wage paid within the county
19        in which the project will be located.
20             (6)  The  costs  to  Illinois   and   the   affected
21        political subdivisions with respect to the project.
22             (7)  The  financial  assistance  that  is  otherwise
23        provided   by   Illinois   and   the  affected  political
24        subdivisions.
25             (8)  The magnitude of the cost differential  between
26        Illinois and the competing state.
27        Section 35.  Project determinations.
28        (a)  The   Authority   shall  determine  the  amount  and
29    duration  of  a  project  and  its  associated   assessments,
30    credits,  and  refunds.  The credit amount may not exceed the
31    estimated assessment.  Assessments made for any  project  may
32    not exceed a period of 15 years.
                            -9-                LRB9002074KDcb
 1        (b)  An  agreement  between the Authority and an eligible
 2    industry shall include all of the following:
 3             (1)  A detailed description of the project  that  is
 4        the subject of the agreement.
 5             (2)  A specific method for determining the number of
 6        new  employees  employed  during  a  taxable year who are
 7        performing jobs not previously performed by  an  employee
 8        of the eligible industry.
 9             (3)  A  requirement that the taxpayer shall annually
10        report to the Authority the number of new  employees  who
11        are  performing  jobs  not  previously  performed  by  an
12        employee,  the total amount of salaries and wages paid to
13        eligible employees in new jobs, and any other information
14        the Authority needs to perform its duties under this Act.
15             (4)  A requirement that the taxpayer  shall  provide
16        written  notification  to  the Authority not more than 30
17        days after the taxpayer makes or receives a proposal that
18        would  transfer  the  taxpayer's  State   tax   liability
19        obligations to a successor taxpayer.
20             (5)  Any   other  performance  conditions  that  the
21        Authority determines are appropriate.
22             (6)  A requirement that the taxpayer shall  maintain
23        operations  at the project location for at least a period
24        of time equal to the number of years  for  which  credits
25        are  authorized  in  the  financing  agreement  with  the
26        Authority.
27        Section 40.  Non-compliance by eligible industry.  If the
28    Authority  determines  that  an  eligible industry, which has
29    received a credit under this Act, is not complying  with  the
30    requirements of the credit agreement or all of the provisions
31    of  this  Act, the Authority shall, after giving the industry
32    an opportunity  to  explain  the  noncompliance,  notify  the
33    Department  of  Revenue  of  the  noncompliance and request a
                            -10-               LRB9002074KDcb
 1    penalty. The Authority shall state the amount of the penalty,
 2    which may not  exceed  the  sum  of  any  previously  allowed
 3    assessments under this Act.
 4        Section  45.  Annual evaluation.  On an annual basis, the
 5    Authority shall provide for an evaluation of the program. The
 6    evaluation shall include a review of the effectiveness of the
 7    program in creating new jobs in Illinois and of  the  revenue
 8    impact of the program. The Authority shall submit a report on
 9    the  evaluation to the Governor, the President of the Senate,
10    and the Speaker of the House of Representatives.
11        Section 50.  Program costs.   An  agreement  between  the
12    Authority  and an eligible industry shall provide that all or
13    part  of  program  costs  are  to  be  met  by   receipt   of
14    assessments.  Assessments  shall  be based upon wages paid to
15    eligible employees.  If  business  or  employment  conditions
16    cause the amount of the assessment to be less than the amount
17    projected  in  the  agreement  for  any time period, then the
18    employer shall pay  to  the  Authority  the  amount  of  such
19    difference,  then  a  portion  of withholding tax paid by the
20    employer under Article 7 of the Illinois Income Tax Act,  may
21    be   credited   to  the  Authority  by  the  amount  of  such
22    difference. The  employer  shall  remit  the  amount  of  the
23    assessment   to   the  Authority.  When  all  program  costs,
24    including the principal of, premium, if any, and interest  on
25    the  certificates  have been paid, the employer credits shall
26    cease.
27        Section 55.  Establishment of funds.
28        (a)  The Authority shall establish a special fund for and
29    in the name of  each  project.  All  funds  received  by  the
30    Authority  in  respect  of  the  project  and required by the
31    agreement to be used to pay program  costs  for  the  project
                            -11-               LRB9002074KDcb
 1    shall be deposited into the special fund. Amounts held in the
 2    special  fund may be used and disbursed by the Authority only
 3    to pay program costs for the project.
 4        (b)  Any disbursement in respect of a project  under  the
 5    provisions of this Act, and the special fund into which it is
 6    paid,  may  be  irrevocably  pledged by the Authority for the
 7    payment of the principal of, premium, if any, and interest on
 8    the  certificate  issued  by  the  Authority  to  finance  or
 9    refinance, in whole or in part, the project.
10        (c)  The employer shall  certify  to  the  Department  of
11    Revenue  that  the  assessment  is  in  accordance  with  the
12    financing  agreement  and shall provide other information the
13    Department may require.
14        (d)  If the financing agreement provides that all or part
15    of program costs are to be met by receipt of assessments, the
16    provisions of this Section shall also apply to any  successor
17    to the original employer until such time as the principal and
18    interest on the certificates have been paid.
19        Section 60.  Sale of certificates.
20        (a)  To  provide  funds  for  the  present payment of the
21    costs of economic development  projects,  the  Authority  may
22    borrow  money  and issue and sell certificates payable from a
23    sufficient  portion  of  the  future  receipts  of   payments
24    authorized  by the agreement. The total amount of outstanding
25    certificates  sold  by  the  Authority   shall   not   exceed
26    $35,000,000.  The receipts shall be pledged to the payment of
27    principal of and interest on the  certificates.  Certificates
28    may  be  sold  at  public  sale  or  at  private sale at par,
29    premium, or discount of not less than 95% of  the  par  value
30    thereof,  at  the  discretion  of the Authority, and may bear
31    interest at  such  rate  or  rates  as  the  Authority  shall
32    determine  in  accordance  with  Section  7  of  the Illinois
33    Development  Finance  Authority  Act.   Certificates  may  be
                            -12-               LRB9002074KDcb
 1    issued with respect to a single project or multiple  projects
 2    and  may  contain  terms  or  conditions as the Authority may
 3    provide  by  resolution  authorizing  the  issuance  of   the
 4    certificates.
 5        (b)  Certificates issued to refund other certificates may
 6    be sold at public sale or at private sale as provided in this
 7    Section  with  the  proceeds from the sale to be used for the
 8    payment of the certificates  being  refunded.  The  refunding
 9    certificates may be exchanged in payment and discharge of the
10    certificates  being  refunded,  in  installments at different
11    times or an entire issue or series  at  one  time.  Refunding
12    certificates may be sold or exchanged at any time on, before,
13    or  after  the maturity of the outstanding certificates to be
14    refunded. They may be issued for the purpose of  refunding  a
15    like, greater, or lesser principal amount of certificates and
16    may bear a higher, lower, or equivalent rate of interest than
17    the certificates being renewed or refunded.
18        (c)  The  Authority  shall determine if revenues provided
19    in the  agreement  are  sufficient  to  secure  the  faithful
20    performance of obligations in the agreement.
21        (d)  Certificates  issued under this Section shall not be
22    deemed to be an indebtedness of the State or the Authority or
23    of any political subdivision of the State.
24        Section 65.  Job development assessment fee; tax credit.
25        (a)  The approved company shall remit to the Authority  a
26    job development assessment fee, not to exceed an amount equal
27    to  the  gross  wages of each eligible employee whose job was
28    created as a result of the economic development project,  for
29    the   purpose  of  retiring  bonds  that  fund  the  economic
30    development project.
31        (b)  Any approved  company  remitting  an  assessment  as
32    provided  in  subsection  (a)  of this Section shall make its
33    payroll books and records available to the Authority at  such
                            -13-               LRB9002074KDcb
 1    reasonable  times  as  the  Authority shall request and shall
 2    file  with  the  Authority   documentation   respecting   the
 3    assessment as the Authority may require.
 4        (c)  Any assessment remitted under subsection (a) of this
 5    Section shall cease on the date the bonds are retired.
 6        (d)  Any approved company that has paid an assessment for
 7    debt  reduction  shall  be  allowed a tax credit equal to the
 8    amount of the assessment.  The  tax  credit  may  be  claimed
 9    against  taxes  otherwise  imposed by the Illinois Income Tax
10    Act, except withholding taxes imposed under the provisions of
11    Article 7 of the Illinois Income Tax Act, which were incurred
12    during the tax period in which the assessment was made.
13        (e)  The Director of  the  Department  of  Revenue  shall
14    issue a refund to the approved company to the extent that the
15    amount  of  credits allowed in subsection (d) of this Section
16    exceed the amount of the approved company's income tax.
17        Section 99.  Effective date.  This Act takes effect  upon
18    becoming law.

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