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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.
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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;
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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
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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
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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
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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
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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
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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
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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.
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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
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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
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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
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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
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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.