HB1336ham002 98TH GENERAL ASSEMBLY

Rep. Jack D. Franks

Filed: 3/12/2013

09800HB1336ham002 LRB098 07447 HLH 42398 a

AMENDMENT TO HOUSE BILL 1336

AMENDMENT NO. ______. Amend House Bill 1336 by replacing everything after the enacting clause with the following:

"Section 5. The Illinois Economic Development Board Act is amended by changing Sections 3 and 4 as follows:

(20 ILCS 3965/3) (from Ch. 127, par. 3953)

Sec. 3. Illinois Economic Development Board; composition. The board shall be composed of citizens from both the private and public sectors who are actively engaged in organizations and businesses that support economic expansion, industry enhancement and job creation. The board shall be composed of 9 members appointed by the Governor, with the advice and consent of the Senate. Each member shall have experience in accounting or finance. Members shall be appointed so that no more than 5 members are affiliated with the same political party. the following persons:

(a) the Governor or his or her designee;

(b) four members of the General Assembly, one each appointed by the President of the Senate, the Speaker of the House of Representatives, and the minority leaders of the Senate and House of Representatives;

(c) 20 members appointed by the Governor including representatives of small business, minority owned companies, women owned companies, manufacturing, economic development professionals, and citizens at large.

(d) (blank);

(e) (blank);

(f) (blank);

(g) (blank);

(h) (blank);

(i) (blank);

(j) (blank);

(k) (blank);

(l) (blank);

(m) (blank).

The Director of Commerce and Economic Opportunity, the Director of Revenue, and the State Treasurer shall serve as ex-officio members an ex officio member of the board.

The Governor shall appoint the members of the board specified in subsection (c) of this Section, subject to the advice and consent of the Senate, within 30 days after the effective date of this amendatory Act of the 98th General Assembly Act. The first meeting of the board shall occur within 60 days after the effective date of this amendatory Act of the 98th General Assembly Act.

The Governor shall appoint a chairperson and a vice chairperson of the board. Members shall serve 8-year terms. 2-year terms. The position of a legislative member shall become vacant if the member ceases to be a member of the General Assembly. A vacancy in a board position shall be filled by the original appointing authority.

The board shall include representation from each of the State's geographic areas.

The board shall meet quarterly or at the call of the chair and shall create subcommittees as needed to deal with specific issues and concerns. Members shall serve without compensation but may be reimbursed for expenses.

(Source: P.A. 94-793, eff. 5-19-06; 95-331, eff. 8-21-07.)

(20 ILCS 3965/4) (from Ch. 127, par. 3954)

Sec. 4. The board has the following responsibilities and powers:

(a) (blank); to secure and encourage substantial private sector, community and citizen support in the analysis of economic development opportunities and development of specific recommendations for economic growth;

(b) (blank); to assist the Department's research efforts to identify and analyze key businesses and industries to determine their potential for expansion, diversification and production of value-added goods;

(c) (blank); to propose an appropriate State role in new product development, venture capital formation and research and development;

(d) to evaluate the performance of existing State economic development efforts for consistency, effectiveness and coordination, as well as for their effect on job creation, and to evaluate the long-term benefits to the State of these efforts;

(e) (blank); to propose, along with other State, local and private groups, new methods to increase public and private partnerships to foster economic development efforts;

(f) (blank); assist the Department's efforts to develop a long-term economic development strategy based on consensus goals and principles, an in-depth analysis of market opportunities, private sector support and investment, and specific private and public economic development measures that have a substantial potential to increase employment;

(g) (blank); assist the Department's efforts to study the key components of the State's business climate as they relate to the long-term development strategy including, but not limited to, education and training, energy, existing environmental conditions, research and development, capital, land, transportation, advanced communications, taxes and regulations with an analysis of their linkages to the State's economy;

(h) (blank); to review the various economic development policy recommendations made by other agencies or organizations and recommend to the Governor and legislature those strategies, policies and programs it deems to be in the best interest of the State by January 1, 1991, and thereafter by January 1 of each year; and

(i) (blank); to make specific recommendations for the establishment of public-private cooperative efforts in economic development and State-local cooperative efforts, including, but not limited to, the need for establishing formal working relationships, whether by contract or otherwise, for purposes of engaging in joint, cooperative economic development activities.

(j) to approve or reject applications for credits under the Economic Development for a Growing Economy Tax Credit Act; and

(k) to evaluate whether or not credits awarded under the Economic Development for a Growing Economy Tax Credit Act are meeting their public policy objectives, and to make recommendations to the Department, the Governor, and the General Assembly for improvements to the Economic Development for a Growing Economy Tax Credit program.

(Source: P.A. 86-1430.)

Section 10. The Economic Development for a Growing Economy Tax Credit Act is amended by changing Sections 5-5, 5-10, 5-20, 5-25, 5-40, 5-45, 5-50, and 5-70 as follows:

(35 ILCS 10/5-5)

Sec. 5-5. Definitions. As used in this Act:

"Agreement" means the Agreement between a Taxpayer and the Department under the provisions of Section 5-50 of this Act.

"Applicant" means a Taxpayer that is operating a business located or that the Taxpayer plans to locate within the State of Illinois and that is engaged in interstate or intrastate commerce for the purpose of manufacturing, processing, assembling, warehousing, or distributing products, conducting research and development, providing tourism services, providing professional services, or providing services in interstate commerce, office industries, or agricultural processing, but excluding retail, retail food, or health, or professional services. "Applicant" does not include a Taxpayer who closes or substantially reduces an operation at one location in the State and relocates substantially the same operation to another location in the State. This does not prohibit a Taxpayer from expanding its operations at another location in the State, provided that existing operations of a similar nature located within the State are not closed or substantially reduced. This also does not prohibit a Taxpayer from moving its operations from one location in the State to another location in the State for the purpose of expanding the operation provided that the Department determines that expansion cannot reasonably be accommodated within the municipality in which the business is located, or in the case of a business located in an incorporated area of the county, within the county in which the business is located, after conferring with the chief elected official of the municipality or county and taking into consideration any evidence offered by the municipality or county regarding the ability to accommodate expansion within the municipality or county.

"Board" means the Illinois Economic Development Board created under Section 2 of the Illinois Economic Development Board Act.

"Committee" means the Illinois Business Investment Committee created under Section 5-25 of this Act within the Illinois Economic Development Board.

"Credit" means the amount agreed to between the Department and Applicant under this Act, but not to exceed the Incremental Income Tax attributable to the Applicant's project or $10,000 per New Employee, whichever is less.

"Department" means the Department of Commerce and Economic Opportunity.

"Director" means the Director of Commerce and Economic Opportunity.

"Full-time Employee" means an individual who is employed for consideration for at least 35 hours each week or who renders any other standard of service generally accepted by industry custom or practice as full-time employment. An individual for whom a W-2 is issued by a Professional Employer Organization (PEO) is a full-time employee if employed in the service of the Applicant for consideration for at least 35 hours each week or who renders any other standard of service generally accepted by industry custom or practice as full-time employment to Applicant.

"Incremental Income Tax" means the total amount withheld during the taxable year from the compensation of New Employees under Article 7 of the Illinois Income Tax Act arising from employment at a project that is the subject of an Agreement.

"New Employee" means:

(a) A Full-time Employee first employed by a Taxpayer in the project that is the subject of an Agreement and who is hired after the Taxpayer enters into the tax credit Agreement.

(b) The term "New Employee" does not include:

(1) an employee of the Taxpayer who performs a job that was previously performed by another employee, if that job existed for at least 6 months before hiring the employee;

(2) an employee of the Taxpayer who was previously employed in Illinois by a Related Member of the Taxpayer and whose employment was shifted to the Taxpayer after the Taxpayer entered into the tax credit Agreement; or

(3) a child, grandchild, parent, or spouse, other than a spouse who is legally separated from the individual, of any individual who has a direct or an indirect ownership interest of at least 5% in the profits, capital, or value of the Taxpayer.

(c) Notwithstanding paragraph (1) of subsection (b), an employee may be considered a New Employee under the Agreement if the employee performs a job that was previously performed by an employee who was:

(1) treated under the Agreement as a New Employee; and

(2) promoted by the Taxpayer to another job.

(d) Notwithstanding subsection (a), the Department may award Credit to an Applicant with respect to an employee hired prior to the date of the Agreement if:

(1) the Applicant is in receipt of a letter from the Department stating an intent to enter into a credit Agreement;

(2) the letter described in paragraph (1) is issued by the Department not later than 15 days after the effective date of this Act; and

(3) the employee was hired after the date the letter described in paragraph (1) was issued.

"Noncompliance Date" means, in the case of a Taxpayer that is not complying with the requirements of the Agreement or the provisions of this Act, the day following the last date upon which the Taxpayer was in compliance with the requirements of the Agreement and the provisions of this Act, as determined by the Director, pursuant to Section 5-65.

"Pass Through Entity" means an entity that is exempt from the tax under subsection (b) or (c) of Section 205 of the Illinois Income Tax Act.

"Professional Employer Organization" (PEO) means an employee leasing company, as defined in Section 206.1(A)(2) of the Illinois Unemployment Insurance Act.

"Related Member" means a person that, with respect to the Taxpayer during any portion of the taxable year, is any one of the following:

(1) An individual stockholder, if the stockholder and the members of the stockholder's family (as defined in Section 318 of the Internal Revenue Code) own directly, indirectly, beneficially, or constructively, in the aggregate, at least 50% of the value of the Taxpayer's outstanding stock.

(2) A partnership, estate, or trust and any partner or beneficiary, if the partnership, estate, or trust, and its partners or beneficiaries own directly, indirectly, beneficially, or constructively, in the aggregate, at least 50% of the profits, capital, stock, or value of the Taxpayer.

(3) A corporation, and any party related to the corporation in a manner that would require an attribution of stock from the corporation to the party or from the party to the corporation under the attribution rules of Section 318 of the Internal Revenue Code, if the Taxpayer owns directly, indirectly, beneficially, or constructively at least 50% of the value of the corporation's outstanding stock.

(4) A corporation and any party related to that corporation in a manner that would require an attribution of stock from the corporation to the party or from the party to the corporation under the attribution rules of Section 318 of the Internal Revenue Code, if the corporation and all such related parties own in the aggregate at least 50% of the profits, capital, stock, or value of the Taxpayer.

(5) A person to or from whom there is attribution of stock ownership in accordance with Section 1563(e) of the Internal Revenue Code, except, for purposes of determining whether a person is a Related Member under this paragraph, 20% shall be substituted for 5% wherever 5% appears in Section 1563(e) of the Internal Revenue Code.

"Taxpayer" means an individual, corporation, partnership, or other entity that has any Illinois Income Tax liability.

(Source: P.A. 94-793, eff. 5-19-06; 95-375, eff. 8-23-07.)

(35 ILCS 10/5-10)

Sec. 5-10. Powers of the Department. The Department, in addition to those powers granted under the Civil Administrative Code of Illinois, is granted and shall have all the powers necessary or convenient to carry out and effectuate the purposes and provisions of this Act, including, but not limited to, power and authority to:

(a) Promulgate procedures, rules, or regulations deemed necessary and appropriate for the administration of the programs; establish forms for applications, notifications, contracts, or any other agreements; and accept applications at any time during the year.

(b) Provide and assist Taxpayers pursuant to the provisions of this Act, and cooperate with Taxpayers that are parties to Agreements to promote, foster, and support economic development, capital investment, and job creation or retention within the State.

(c) Enter into agreements and memoranda of understanding for participation of and engage in cooperation with agencies of the federal government, local units of government, universities, research foundations or institutions, regional economic development corporations, or other organizations for the purposes of this Act.

(d) Gather information and conduct inquiries, in the manner and by the methods as it deems desirable, including without limitation, gathering information with respect to Applicants for the purpose of making any designations or certifications necessary or desirable or to gather information to assist the Board Committee with any recommendation or guidance in the furtherance of the purposes of this Act.

(e) Establish, negotiate and effectuate any term, agreement or other document with any person, necessary or appropriate to accomplish the purposes of this Act; and to consent, subject to the provisions of any Agreement with another party, to the modification or restructuring of any Agreement to which the Department is a party, provided that all Agreements entered into on or after the effective date of this amendatory Act of the 98th General Assembly, and all modifications to or restructuring of Agreements occurring on or after the effective date of this amendatory Act of the 98th General Assembly, require the approval of the Board prior to implementation or continuing implementation.

(f) Fix, determine, charge, and collect any premiums, fees, charges, costs, and expenses from Applicants, including, without limitation, any application fees, commitment fees, program fees, financing charges, or publication fees as deemed appropriate to pay expenses necessary or incident to the administration, staffing, or operation in connection with the Department's or Board's Committee's activities under this Act, or for preparation, implementation, and enforcement of the terms of the Agreement, or for consultation, advisory and legal fees, and other costs; however, all fees and expenses incident thereto shall be the responsibility of the Applicant.

(g) Provide for sufficient personnel to permit administration, staffing, operation, and related support required to adequately discharge its duties and responsibilities described in this Act from funds made available through charges to Applicants or from funds as may be appropriated by the General Assembly for the administration of this Act.

(h) Require Applicants, upon written request, to issue any necessary authorization to the appropriate federal, state, or local authority for the release of information concerning a project being considered under the provisions of this Act, with the information requested to include, but not be limited to, financial reports, returns, or records relating to the Taxpayers' or its project.

(i) Require that a Taxpayer shall at all times keep proper books of record and account in accordance with generally accepted accounting principles consistently applied, with the books, records, or papers related to the Agreement in the custody or control of the Taxpayer open for reasonable Department inspection and audits, and including, without limitation, the making of copies of the books, records, or papers, and the inspection or appraisal of any of the Taxpayer or project assets.

(j) Take whatever actions are necessary or appropriate to protect the State's interest in the event of bankruptcy, default, foreclosure, or noncompliance with the terms and conditions of financial assistance or participation required under this Act, including the power to sell, dispose, lease, or rent, upon terms and conditions determined by the Director to be appropriate, real or personal property that the Department may receive as a result of these actions.

(Source: P.A. 91-476, eff. 8-11-99.)

(35 ILCS 10/5-20)

Sec. 5-20. Application for a project to create and retain new jobs.

(a) Any Taxpayer proposing a project located or planned to be located in Illinois may request consideration for designation of its project, by formal written letter of request or by formal application to the Department, in which the Applicant states its intent to make at least a specified level of investment and intends to hire or retain a specified number of full-time employees at a designated location in Illinois. The Department shall prepare a standard, formal, written application form for all Applicants. All Applicants who apply for Credits under this Act on or after the effective date of this amendatory Act of the 98th General Assembly shall complete that application. As circumstances require, the Department may require a formal application from an Applicant and a formal letter of request for assistance.

(b) In order to qualify for Credits under this Act, an Applicant's project must employ at least 25 New Employees within the State as a direct result of the project, except that (i) if the Applicant has 100 or fewer employees, then the Applicant must employ at least 5 New Employees within the State as a direct result of the project, and (ii) if the Department and the Board determine that the project will provide a substantial economic benefit to the State, then the Applicant may employ fewer than 25 New Employees within the State. If an Applicant's project employs fewer than 25 New Employees under item (ii) of this subsection (b), then the Department and the Board must expressly specify the minimum number of New Employees that the Applicant is required to employ. If, in any taxable year during which an Agreement is in effect, the total number of employees employed by the Taxpayer in Illinois is less than the total number of employees employed the Taxpayer in Illinois during the previous taxable year, the Taxpayer shall be deemed to be in noncompliance with the Agreement. :

(1) involve an investment of at least $5,000,000 in capital improvements to be placed in service and to employ at least 25 New Employees within the State as a direct result of the project;

(2) involve an investment of at least an amount (to be expressly specified by the Department and the Committee) in capital improvements to be placed in service and will employ at least an amount (to be expressly specified by the Department and the Committee) of New Employees within the State, provided that the Department and the Committee have determined that the project will provide a substantial economic benefit to the State; or

(3) if the applicant has 100 or fewer employees, involve an investment of at least $1,000,000 in capital improvements to be placed in service and to employ at least 5 New Employees within the State as a direct result of the project.

(c) After receipt of an application, the Department may enter into an Agreement with the Applicant if the application is accepted in accordance with Section 5-25 and the Agreement is approved by the Board.

(Source: P.A. 93-882, eff. 1-1-05.)

(35 ILCS 10/5-25)

Sec. 5-25. Review of Application.

(a) In addition to those duties granted under the Illinois Economic Development Board Act, the Illinois Economic Development Board shall form a Business Investment Committee for the purpose of making recommendations for applications. At the request of the Board, the Director of Commerce and Economic Opportunity or his or her designee, the Director of the Governor's Office of Management and Budget or his or her designee, the Director of Revenue or his or her designee, the Director of Employment Security or his or her designee, and an elected official of the affected locality, such as the chair of the county board or the mayor, may serve as members of the Committee to assist with its analysis and deliberations. The Business Investment Committee shall be dissolved on the effective date of this amendatory Act of the 98th General Assembly, and the duties and responsibilities of the Committee shall be assumed by the Board.

(b) At the Department's request, the Board Committee shall convene, make inquiries, and conduct studies in the manner and by the methods as it deems desirable, review information with respect to Applicants, and make recommendations for projects to benefit the State. In making its recommendation that an Applicant's application for Credit should or should not be accepted, which shall occur within a reasonable time frame as determined by the nature of the application, the Board Committee shall determine that all the following conditions exist:

(1) The Applicant Applicant's project intends, as required by subsection (b) of Section 5-20 to make the required investment in the State and intends to hire the required number of New Employees in Illinois as a result of that project.

(2) The Applicant's project is economically sound and will benefit the people of the State of Illinois by increasing opportunities for employment and strengthen the economy of Illinois.

(3) That, if not for the Credit, the project would not occur in Illinois, which may be demonstrated by any means including, but not limited to, evidence the Applicant has multi-state location options and could reasonably and efficiently locate outside of the State, or demonstration that at least one other state is being considered for the project, or evidence the receipt of the Credit is a major factor in the Applicant's decision and that without the Credit, the Applicant likely would not create new jobs in Illinois, or demonstration that receiving the Credit is essential to the Applicant's decision to create or retain new jobs in the State.

(4) A cost differential is identified, using best available data, in the projected costs for the Applicant's project compared to the costs in the competing state, including the impact of the competing state's incentive programs. The competing state's incentive programs shall include state, local, private, and federal funds available.

(5) The political subdivisions affected by the project have committed local incentives with respect to the project, considering local ability to assist.

(6) Awarding the Credit will result in an overall positive fiscal impact to the State, as certified by the Board Committee using the best available data.

(7) The Credit is not prohibited by Section 5-35 of this Act.

(Source: P.A. 94-793, eff. 5-19-06.)

(35 ILCS 10/5-40)

Sec. 5-40. Determination of Amount of the Credit. In determining the amount of the Credit that should be awarded, the Board Committee shall provide guidance on, and the Department shall take into consideration, the following factors:

(1) The number and location of jobs created and retained in relation to the economy of the county where the projected investment is to occur.

(2) The potential impact on the economy of Illinois.

(3) The magnitude of the cost differential between Illinois and the competing state.

(4) The incremental payroll attributable to the project.

(5) (Blank). The capital investment attributable to the project.

(6) The amount of the average wage and benefits paid by the Applicant in relation to the wage and benefits of the area of the project.

(7) The costs to Illinois and the affected political subdivisions with respect to the project.

(8) The financial assistance that is otherwise provided by Illinois and the affected political subdivisions.

(9) Whether the Applicant's proposed credit per job is lower or higher than other past credits awarded.

(10) Whether the Applicant's proposed credit per job is lower or higher than other Applicants.

(Source: P.A. 91-476, eff. 8-11-99.)

(35 ILCS 10/5-45)

Sec. 5-45. Amount and duration of the credit.

(a) Subject to the approval of the Board, the The Department shall determine the amount and duration of the credit awarded under this Act. The duration of the credit may not exceed 5 10 taxable years. The credit may be stated as a percentage of the Incremental Income Tax attributable to the applicant's project and may include a fixed dollar limitation.

(b) Notwithstanding subsection (a), and except as the credit may be applied in a carryover year pursuant to Section 211(4) of the Illinois Income Tax Act, the credit may be applied against the State income tax liability in more than 10 taxable years but not in more than 15 taxable years for an eligible business that (i) qualifies under this Act and the Corporate Headquarters Relocation Act and has in fact undertaken a qualifying project within the time frame specified by the Department of Commerce and Economic Opportunity under that Act, and (ii) applies against its State income tax liability, during the entire 15-year period, no more than 60% of the maximum credit per year that would otherwise be available under this Act.

(c) Notwithstanding any other provision of law, no more than $100,000,000 in credits may be awarded under this Act in State Fiscal Year 2014. In each State fiscal year thereafter, the total amount of credits that may be awarded under this Act shall be increased by the percentage increase, if any, in the Consumer Price Index for All Urban Consumers, as issued by the United States Department of Labor, Bureau of Labor Statistics, during the 12-month calendar year immediately preceding that State fiscal year. This limitation does not apply to amounts that are carried forward under Section 211 of the Illinois Income Tax Act.

(Source: P.A. 94-793, eff. 5-19-06.)

(35 ILCS 10/5-50)

Sec. 5-50. Contents of Agreements with Applicants. The Department shall enter into an Agreement with an Applicant that is awarded a Credit under this Act. The Agreement must include all of the following:

(1) A detailed description of the project that is the subject of the Agreement, including the location and amount of the investment and the number of jobs created or retained.

(2) The duration of the Credit and the first taxable year for which the Credit may be claimed.

(3) The Credit amount that will be allowed for each taxable year.

(4) A requirement that the Taxpayer shall maintain operations at the project location that shall be stated as a minimum number of years not to exceed 5 10.

(5) A specific method for determining the number of New Employees employed during a taxable year.

(6) A requirement that the Taxpayer shall annually report to the Department the number of New Employees, the Incremental Income Tax withheld in connection with the New Employees, and any other information the Director needs to perform the Director's duties under this Act.

(7) A requirement that the Director is authorized to verify with the appropriate State agencies the amounts reported under paragraph (6), and after doing so shall issue a certificate to the Taxpayer stating that the amounts have been verified.

(8) A requirement that the Taxpayer shall provide written notification to the Director not more than 30 days after the Taxpayer makes or receives a proposal that would transfer the Taxpayer's State tax liability obligations to a successor Taxpayer.

(9) A detailed description of the number of New Employees to be hired, and the occupation and payroll of the full-time jobs to be created or retained as a result of the project.

(10) (Blank). The minimum investment the business enterprise will make in capital improvements, the time period for placing the property in service, and the designated location in Illinois for the investment.

(11) A requirement that the Taxpayer shall provide written notification to the Director and the Board Committee not more than 30 days after the Taxpayer determines that the minimum job creation or retention, employment payroll, or investment, if applicable, no longer is being or will be achieved or maintained as set forth in the terms and conditions of the Agreement.

(12) A provision that, if the total number of New Employees falls below a specified level, the allowance of Credit shall be suspended until the number of New Employees equals or exceeds the Agreement amount.

(13) A detailed description of the items for which the costs incurred by the Taxpayer will be included in the limitation on the Credit provided in Section 5-30.

(13.5) A provision that, if the Taxpayer never meets either the investment or job creation and retention requirements specified in the Agreement during the entire 5-year period beginning on the first day of the first taxable year in which the Agreement is executed and ending on the last day of the fifth taxable year after the Agreement is executed, then the Agreement is automatically terminated on the last day of the fifth taxable year after the Agreement is executed and the Taxpayer is not entitled to the award of any credits for any of that 5-year period.

(14) Any other performance conditions or contract provisions as the Department determines are appropriate.

The Department shall post on its website the terms of each Agreement entered into under this Act on or after the effective date of this amendatory Act of the 97th General Assembly.

Any Agreement entered into on or after the effective date of this amendatory Act of the 98th General Assembly is subject to the approval of the Board. Any modifications to an existing Agreement that take effect on or after the effective date of this amendatory Act of the 98th General Assembly are subject to the approval of the Board. The Department must forward any proposed Agreements or modifications to the Board within 15 days after the terms of the Agreement or modification are finalized.

(Source: P.A. 97-2, eff. 5-6-11; 97-749, eff. 7-6-12.)

(35 ILCS 10/5-70)

Sec. 5-70. Annual report. On or before July 1 each year, the Board Committee shall submit a report to the Department on the tax credit program under this Act to the Governor and the General Assembly. The report shall include information on the number of Agreements that were entered into under this Act during the preceding calendar year, a description of the project that is the subject of each Agreement, an update on the status of projects under Agreements entered into before the preceding calendar year, and the sum of the Credits awarded under this Act. A copy of the report shall be delivered to the Governor and to each member of the General Assembly and shall be posted on the Department's website.

(Source: P.A. 91-476, eff. 8-11-99.)".