100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
HB5737

 

Introduced , by Rep. Jerry Lee Long

 

SYNOPSIS AS INTRODUCED:
 
New Act
35 ILCS 5/227 new

    Amends the Illinois Business Use Incentives for Large-Scale Development Act. Provides that the Department of Commerce and Economic Opportunity may enter into a financing agreement with an eligible industry with respect to an economic development project. Provides that those eligible industries are entitled to a credit against their Illinois income taxes in an amount not to exceed 5% of the gross wages paid in one year by an eligible industry to all eligible employees in new jobs. Provides that an "eligible industry" is a business located in the State which is engaged in interstate or intrastate commerce for the purpose of manufacturing, processing, or assembling products, conducting research and development, or providing services in interstate commerce, office industries, or agricultural processing, but excluding retail, health or professional services. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB5737LRB100 19656 HLH 34929 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 1. Short title. This Act may be cited as the
5Illinois Business Use Incentives for Large-Scale Development
6Act.
 
7    Section 5. Definitions. As used in this Act:
8    "Assessment" means an amount of up to 5% of the gross wages
9paid in one year by an eligible industry to all eligible
10employees in new jobs.
11    "Credit" means the amount agreed to between the Department
12and an eligible industry, but not to exceed the assessment
13attributable to the eligible industry's project.
14    "Department" means the Department of Commerce and Economic
15Opportunity.
16    "Economic development project" means:
17        (1) the acquisition of any real property by the
18    Department, the eligible industry, or its affiliate; or
19        (2) the fee ownership of real property by the eligible
20    industry or its affiliate; and
21        (3) for both paragraphs (1) and (2), "economic
22    development project" also means the development of the real
23    property including construction, installation, or

 

 

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1    equipping of a project, including fixtures and equipment,
2    and facilities necessary or desirable for improvement of
3    the real property, including surveys; site tests and
4    inspections; subsurface site work; excavation; removal of
5    structures, roadways, cemeteries and other surface
6    obstructions; filling, grading and provision of drainage,
7    storm water retention, installation of utilities such as
8    water, sewer, sewage treatment, gas, electricity,
9    communications and similar facilities; off-site
10    construction of utility extensions to the boundaries of the
11    real property; and the acquisition, installation, or
12    equipping of facilities on the real property, for use and
13    occupancy by the eligible industry or its affiliates.
14    "Eligible employee" means a person employed on a full-time
15basis in a new job at the economic development project
16averaging at least 35 hours per week who was not employed by
17the eligible industry or a related taxpayer in this State at
18any time during the 12-month period immediately prior to being
19employed at the economic development project.
20    "Eligible industry" means a business located in the State
21which is engaged in interstate or intrastate commerce for the
22purpose of manufacturing, processing, or assembling products,
23conducting research and development, or providing services in
24interstate commerce, office industries, or agricultural
25processing, but excluding retail, health or professional
26services. "Eligible industry" does not include a business that

 

 

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1closes or substantially reduces its operation at one location
2in the State and relocates substantially the same operation to
3another location in the State. This does not prohibit a
4business from expanding its operations at another location in
5the State provided that existing operations of a similar nature
6located within the State are not closed or substantially
7reduced. This also does not prohibit a business from moving its
8operations from one location in the State to another location
9in the State for the purpose of expanding such operation
10provided that the Department determines that such expansion
11cannot reasonably be accommodated within the municipality in
12which such business is located, or in the case of a business
13located in an incorporated area of the county, within the
14county in which such business is located, after conferring with
15the chief elected official of such municipality or county and
16taking into consideration any evidence offered by such
17municipality or county regarding the ability to accommodate
18such expansion within such municipality or county. An eligible
19industry must:
20        (1) pledge to invest a minimum of $10,000,000 in an
21    economic development project; and
22        (2) create a minimum of 100 new jobs for eligible
23    employees at the economic development project or a minimum
24    of 200 new jobs if the economic development project is an
25    office industry located within a distressed community, as
26    determined by the Department.

 

 

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1    "New job" means a job in a new or expanding eligible
2industry not including jobs of recalled workers, replacement
3jobs, or jobs that formerly existed in the eligible industry in
4the State.
5    "Obligation" means the revenue bonds or notes authorized to
6be issued by the Department pursuant to this Act.
7    "Office industry" means a regional, national, or
8international headquarters, a telecommunications operation, a
9computer operation, an insurance company, or a credit card
10billing and processing center.
 
11    Section 10. Powers of the Authority.
12    (a) The Department shall have all the powers necessary to
13carry out and effectuate the purposes and provisions of this
14Act, including, but not limited to, the power to:
15        (1) provide and finance economic development projects
16    pursuant to the provisions of this Act, and cooperate with
17    eligible industries in order to promote, foster and support
18    economic development within the State;
19        (2) conduct hearings and inquiries, in the manner and
20    by the methods as it deems desirable, for the purpose of
21    gathering information with respect to eligible industries
22    and economic development projects, and for the purpose of
23    making any determinations necessary or desirable in the
24    furtherance of this Act; and
25        (3) negotiate the terms of, including the amount of

 

 

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1    project costs, and enter into financing agreements with
2    eligible industries, and in connection therewith to
3    acquire, convey, sell, mortgage, finance or otherwise
4    dispose of any property, real or personal, loan bond
5    proceeds, and permit the use of assessments, in connection
6    with an economic development project, and to pay, or cause
7    to be paid, in accordance with the provisions of a
8    financing agreement, the program costs of an economic
9    development project from any funds available the project.
10    (b) Obligations issued by the Department pursuant to this
11Act shall not constitute an indebtedness or liability of the
12State within the meaning of any state constitutional provision
13or statutory limitation, shall not constitute a pledge of the
14faith and credit of the State, shall not be guaranteed by the
15credit of the State, and unless approved by a concurrent
16resolution of the General Assembly, no obligation in default
17shall be paid by the State.
 
18    Section 15. Establishment of procedures to determine
19eligible industries.
20    (a) The Department shall establish the procedures and
21standards for the determination and approval of eligible
22industries and their economic development projects by the
23adoption of rules in accordance with the Illinois
24Administrative Procedure Act. Those rules shall mandate the
25evaluation of the credit worthiness of eligible industries, the

 

 

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1number of new jobs to be provided by an economic development
2project to residents of the State, and the likelihood of the
3economic success of the economic development project. No
4economic development project which will result in the
5replacement of facilities existing in the State shall be
6approved by the Department.
7    (b) With respect to each eligible industry making an
8application to the Department for incentives, and with respect
9to the economic development project described in the
10application, the Department shall request relevant
11information, documentation, and other materials and make
12inquiries of the applicant as necessary or appropriate. After a
13diligent review of relevant materials and completion of its
14inquiries, the Department may by resolution designate an
15economic development project.
 
16    Section 20. Financing agreement.
17    (a) The Department may enter into a financing agreement
18with any eligible industry with respect to an economic
19development project.
20    (b) The financing agreement shall provide in substance
21that:
22        (1) it may be assigned by the eligible industry only
23    upon the prior written consent of the Department; and
24        (2) upon default by the eligible industry in any
25    obligations under the financing agreement or other

 

 

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1    documents evidencing, securing, or related to the eligible
2    industry's obligations, the Department shall have the
3    right, at its option, to:
4            (A) declare the financing agreement or other such
5        documents in default;
6            (B) accelerate and declare the total of all such
7        payments due by the eligible industry and sell the
8        economic development project at public, private, or
9        judicial sale;
10            (C) pursue any remedy provided under the financing
11        agreement or other such documents;
12            (D) be entitled to the appointment of a receiver by
13        the circuit court wherein any part of the economic
14        development project is located; and
15            (E) pursue any other applicable legal remedy.
 
16    Section 25. Credit agreement; conditions. After receipt of
17an application, for taxable years ending on or after December
1831, 2019 and ending on or before December 31, 2024, the
19Department may enter into an agreement with an eligible
20industry for a credit pursuant to this Act against the taxes
21imposed by subsections (a) and (b) of Section 201 if the
22Department determines that all of the following conditions
23exist:
24        (1) the applicant's project will create new jobs that
25    were not jobs previously performed by employees of the

 

 

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1    applicant in the State;
2        (2) the applicant's project is economically sound and
3    will benefit the people of the State by increasing
4    opportunities for employment and strengthening the economy
5    of the State;
6        (3) significant local incentives with respect to the
7    project or eligible industry have been committed, which
8    incentives may consist of either or both of the following:
9            (A) cash or in-kind incentives derived from any
10        non-State source, including incentives provided by the
11        affected political subdivisions, private industry,
12        local chambers of commerce, or similar organizations;
13        and
14            (B) relief from local taxes, in either case as
15        acceptable to the Department;
16        (4) receiving the credit is a major factor in the
17    applicant's decision to go forward with the project and not
18    receiving the credit will result in the applicant not
19    creating new jobs in the State; and
20        (5) awarding the credit will result in an overall
21    positive fiscal impact to the State.
 
22    Section 30. Credit factors. In determining the amount of
23the credit that should be awarded, the Department shall take
24into consideration the following factors:
25        (1) the economy of the county where the projected

 

 

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1    investment is to occur;
2        (2) the potential impact on the economy of the State;
3        (3) the payroll attributable to the project;
4        (4) the capital investment attributable to the
5    project;
6        (5) whether the amount the average wage paid by the
7    applicant exceeds the average wage paid within the county
8    in which the project will be located;
9        (6) the costs to the and the affected units of local
10    government with respect to the project; and
11        (7) the financial assistance that is otherwise
12    provided by the State and the affected units of local
13    government.
 
14    Section 35. Department authority to determine projects.
15The Department shall determine the amount and duration of a
16project and its associated assessments, credits and refunds.
17The credit amount may not exceed the estimated assessment.
18Assessments made for any project may not exceed a period of 15
19years.
 
20    Section 40. Agreement contents. An agreement between the
21Department and an eligible industry shall include all of the
22following:
23        (1) a detailed description of the project that is the
24    subject of the agreement;

 

 

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1        (2) a specific method for determining the number of new
2    employees employed during a taxable year who are performing
3    jobs not previously performed by an employee of the
4    eligible industry;
5        (3) a requirement that the taxpayer shall annually
6    report to the Department the number of new employees who
7    are performing jobs not previously performed by an
8    employee, the total amount of salaries and wages paid to
9    eligible employees in new jobs, and any other information
10    the Department needs to perform its duties pursuant to this
11    Act;
12        (4) a requirement that the taxpayer shall provide
13    written notification to the Department not more than 30
14    days after the taxpayer makes or receives a proposal that
15    would transfer the taxpayer's State tax liability
16    obligations to a successor taxpayer;
17        (5) any other performance conditions that the
18    Department determines are appropriate; and
19        (6) a requirement that the taxpayer shall maintain
20    operations at the project location for at least a period of
21    time equal to the number of years for which credits are
22    authorized in the financing agreement with the Department.
 
23    Section 45. Noncompliance by eligible industry;
24determination; penalty. If the Department determines that an
25eligible industry that has received a credit pursuant to this

 

 

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1Act is not complying with the requirements of the credit
2agreement or all of the provisions of this Act, the Department
3shall, after giving the industry an opportunity to explain the
4noncompliance, notify the Department of Revenue of the
5noncompliance and request a penalty. The Department shall state
6the amount of the penalty, which may not exceed the sum of any
7previously allowed credit awards pursuant to this Act.
 
8    Section 50. Evaluation of program. On an annual basis, the
9Department shall provide for an evaluation of the program. The
10evaluation shall include an assessment of the effectiveness of
11the program in creating new jobs in the State and of the
12revenue impact of the program. The Department shall submit a
13report on the evaluation to the Governor and the General
14Assembly no later than July 1, 2023.
 
15    Section 55. Program costs; how paid; assessments. An
16agreement between the Department and an eligible industry shall
17provide that all or part of program costs are to be met by
18receipt of assessments. Assessments shall be based upon wages
19paid to eligible employees. If business or employment
20conditions cause the amount of the assessment to be less than
21the amount projected in the agreement for any time period, then
22the employer shall pay to the Department the amount of such
23difference, and a portion of withholding tax paid by the
24employer pursuant to Article 7 of the Illinois Income Tax Act

 

 

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1may be credited to the Department by the amount of such
2difference. The employer shall remit the amount of the
3assessment to the Department. When all program costs, including
4the principal of, premium, if any, and interest on the
5obligation have been paid, the employer credits shall cease.
 
6    Section 60. Special fund; purposes; certification by
7employer.
8    (a) The Department shall establish a special fund for and
9in the name of each project. All moneys received by the
10Department in respect of the project and required by the
11agreement to be used to pay program costs for the project shall
12be deposited into the special fund. Amounts held in the special
13fund may be used and disbursed by the Department only to pay
14program costs for the project.
15    (b) Any disbursement in respect of a project pursuant to
16the provisions of this Act, and the special fund into which
17moneys received in respect of the project are paid, may be
18irrevocably pledged by the Department for the payment of the
19principal of, premium, if any, and interest on obligations
20issued by the Department to finance or refinance, in whole or
21in part, the project.
22    (c) The employer shall certify to the Department of Revenue
23that the assessment is in accordance with an agreement and
24shall provide other information the Department of Revenue may
25require.

 

 

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1    (d) If an agreement provides that all or part of program
2costs are to be met by receipt of assessments, the provisions
3of this Section shall also apply to any successor to the
4original employer until such time as the principal and interest
5on the obligation have been paid.
 
6    Section 65. Obligations issued by the Department. To
7provide funds for the present payment of the costs of economic
8development projects, the Department may borrow money and issue
9and sell obligations payable from a sufficient portion of the
10future receipts of payments authorized by the agreement. The
11receipts shall be pledged to the payment of principal of and
12interest on the obligations. Obligations may be sold at public
13sale or at private sale at par, premium, or discount of not
14less than 95% of the par value thereof, at the discretion of
15the Department, and may bear interest at such rate or rates as
16the Department shall determine, notwithstanding the provisions
17of law to the contrary. Obligations may be issued with respect
18to a single project or multiple projects and may contain terms
19or conditions as the Department may provide by resolution
20authorizing the issuance of the obligations.
 
21    Section 900. The Illinois Income Tax Act is amended by
22adding Section 227 as follows:
 
23    (35 ILCS 5/227 new)

 

 

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1    Sec. 227. Illinois Business Use Incentives for Large-Scale
2Development Act. For taxable years ending on or after December
331, 2019 and ending on or before December 31, 2029, a taxpayer
4that is awarded a credit under the Illinois Business Use
5Incentives for Large-Scale Development Act is entitled to a
6credit as provided in that Act.
7    For partners, shareholders of Subchapter S corporations,
8and owners of limited liability companies, if the liability
9company is treated as a partnership for purposes of federal and
10State income taxation, there shall be allowed a credit under
11this Section to be determined in accordance with the
12determination of income and distributive share of income under
13Sections 702 and 704 and Subchapter S of the Internal Revenue
14Code.
 
15    Section 999. Effective date. This Act takes effect upon
16becoming law.