093_HB0235eng

 
HB0235 Engrossed                     LRB093 02644 ACG 02654 b

 1        AN ACT concerning corporations.

 2        Be it enacted by the People of  the  State  of  Illinois,
 3    represented in the General Assembly:

 4        Section  1.  Short  title.  This  Act may be cited as the
 5    Corporate Accountability for Tax Expenditures Act.

 6        Section 5. Definitions. As used in this Act:
 7        "Base years" means the first 2  complete  calendar  years
 8    following   the  effective  date  of  a  recipient  receiving
 9    development assistance.
10        "Date of assistance" means the commencement date  of  the
11    assistance  agreement,  which date triggers the period during
12    which the recipient is obligated to create or retain jobs and
13    continue operations at the specific project site.
14        "Default" means that a recipient has not achieved its job
15    creation,  job  retention,  or  wage  or  benefit  goals,  as
16    applicable, during the prescribed period therefor.
17        "Department"   means,   unless   otherwise   noted,   the
18    Department of Commerce and Community Affairs or any successor
19    agency.
20        "Development assistance" means (1) tax  credits  and  tax
21    exemptions  (other  than given under tax increment financing)
22    given as an incentive to a  recipient  business  organization
23    pursuant  to  a  certification  or  designation  made  by the
24    Department under  the  Economic  Development  for  a  Growing
25    Economy  Tax Credit Act and the Illinois Enterprise Zone Act,
26    including the High Impact Business  program,  (2)  grants  or
27    loans  given  to  a  recipient  as an incentive to a business
28    organization  pursuant  to  the  Large  Business  Development
29    Program,  the  Business  Development  Public   Infrastructure
30    Program,  or  the  Industrial Training Program, (3) the State
31    Treasurer's  Economic  Program  Loans,   (4)   the   Illinois
 
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 1    Department  of  Transportation  Economic Development Program,
 2    and (5) all successor and subsequent programs and tax credits
 3    designed  to   promote   large   business   relocations   and
 4    expansions.  "Development  assistance"  does  not include tax
 5    increment  financing,  participation  loans,   or   financial
 6    transactions   through   statutorily   authorized   financial
 7    intermediaries   in  support  of  small  business  loans  and
 8    investments or given in connection with  the  development  of
 9    affordable housing.
10        "Full-time,   permanent   job"   means  either:  (1)  the
11    definition  therefor  in  the  legislation  authorizing   the
12    programs   described   in   the   definition  of  development
13    assistance in the Act or (2) if there is no such  definition,
14    then  as  defined  in  administrative rules implementing such
15    legislation, provided the administrative rules were in  place
16    prior  to  the  effective  date of this Act. On and after the
17    effective date of this Act, if  there  is  no  definition  of
18    "full-time,   permanent   job"   in  either  the  legislation
19    authorizing a program that constitutes  economic  development
20    assistance  under  this  Act  or  in  any administrative rule
21    implementing such legislation that was in place prior to  the
22    effective  date  of this Act, then "full-time, permanent job"
23    means a job in which the new employee works for the recipient
24    at a rate of at least 35 hours per week.
25        "Granting  body"  means   the   Department,   any   State
26    department  or  agency  that  provides development assistance
27    that has reporting  requirements  under  this  Act,  and  any
28    successor agencies to any of the preceding.
29        "New  employee" means either: (1) the definition therefor
30    in the legislation authorizing the programs described in  the
31    definition  of  development  assistance  in the Act or (2) if
32    there  is  no   such   definition,   then   as   defined   in
33    administrative  rules implementing such legislation, provided
34    the administrative rules were in place prior to the effective
 
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 1    date of this Act. On and after the  effective  date  of  this
 2    Act,  if  there  is no definition of "new employee" in either
 3    the  legislation  authorizing  a  program  that   constitutes
 4    economic  development  assistance  under  this Act nor in any
 5    administrative rule implementing such legislation that was in
 6    place prior to the effective date  of  this  Act,  then  "new
 7    employee"   means   a   full-time,   permanent  employee  who
 8    represents a net increase in the number  of  the  recipient's
 9    employees  statewide. "New employee" includes an employee who
10    previously filled a new employee position with the  recipient
11    who  was  rehired  or  called  back from a layoff that occurs
12    during or following the base years.
13        The term "New Employee"  does  not  include  any  of  the
14    following:
15             (1)  An employee of the recipient who performs a job
16        that was previously performed  by  another  employee,  if
17        that  job existed for at least 6 months before hiring the
18        employee.
19             (2) A child, grandchild, parent,  or  spouse,  other
20        than   a   spouse  who  is  legally  separated  from  the
21        individual,  of  any  individual  who  has  a  direct  or
22        indirect  ownership  interest  of  at  least  5%  in  the
23        profits,  capital,  or  value  of  any  member   of   the
24        recipient.
25        "Part-time job" means either: (1) the definition therefor
26    in  the legislation authorizing the programs described in the
27    definition of development assistance in the  Act  or  (2)  if
28    there   is   no   such   definition,   then   as  defined  in
29    administrative rules implementing such legislation,  provided
30    the administrative rules were in place prior to the effective
31    date  of  this  Act.  On and after the effective date of this
32    Act, if there is no definition of "part-time job"  in  either
33    the   legislation  authorizing  a  program  that  constitutes
34    economic development assistance under  this  Act  or  in  any
 
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 1    administrative rule implementing such legislation that was in
 2    place   prior  to  the  effective  date  of  this  Act,  then
 3    "part-time job" means a job in which the new  employee  works
 4    for the recipient at a rate of less than 35 hours per week.
 5        "Permanent job" means either: (1) the definition therefor
 6    in  the legislation authorizing the programs described in the
 7    definition of development assistance in the  Act  or  (2)  if
 8    there   is   no   such   definition,   then   as  defined  in
 9    administrative rules implementing such legislation,  provided
10    the administrative rules were in place prior to the effective
11    date  of  this  Act.  On and after the effective date of this
12    Act, if there is no definition of "permanent job"  in  either
13    the   legislation  authorizing  a  program  that  constitutes
14    economic development assistance under  this  Act  or  in  any
15    administrative rule implementing such legislation that was in
16    place   prior  to  the  effective  date  of  this  Act,  then
17    "permanent job" means a job in which a new employee works for
18    the recipient, not as  an  independent  contractor  or  on  a
19    consulting  basis,  at  a  rate of at least 35 hours per week
20    with the intention that such employment  shall  continue  and
21    that the employee will receive all health insurance, pension,
22    profit   sharing,   and   other  benefits  offered  to  other
23    full-time, permanent employees.
24        "Recipient" means any  business  that  receives  economic
25    development   assistance.  A  business  is  any  corporation,
26    limited  liability  company,  partnership,   joint   venture,
27    association, sole proprietorship, or other legally recognized
28    entity.
29        "Retained  employee"  means  either:  (1)  the definition
30    therefor  in  the  legislation   authorizing   the   programs
31    described  in the definition of development assistance in the
32    Act or (2) if there is no such definition, then as defined in
33    administrative rules implementing such legislation,  provided
34    the administrative rules were in place prior to the effective
 
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 1    date  of  this  Act.  On and after the effective date of this
 2    Act, if there is no  definition  of  "retained  employee"  in
 3    either the legislation authorizing a program that constitutes
 4    economic  development  assistance  under  this  Act or in any
 5    administrative rule implementing such legislation that was in
 6    place prior to the effective date of this Act, then "retained
 7    employee" means any employee defined as having a full-time or
 8    full-time equivalent job preserved at a specific facility  or
 9    site,  the  continuance  of which is threatened by a specific
10    and demonstrable threat, which  shall  be  specified  in  the
11    application for development assistance.
12        "Specific  project  site" means that distinct operational
13    unit to which any development assistance is applied.
14        "Temporary job" means either: (1) the definition therefor
15    in the legislation authorizing the programs described in  the
16    definition  of  development  assistance  in the Act or (2) if
17    there  is  no   such   definition,   then   as   defined   in
18    administrative  rules implementing such legislation, provided
19    the administrative rules were in place prior to the effective
20    date of this Act. On and after the  effective  date  of  this
21    Act,  if  there is no definition of "temporary job" in either
22    the  legislation  authorizing  a  program  that   constitutes
23    economic  development  assistance  under  this  Act or in any
24    administrative rule implementing such legislation that was in
25    place  prior  to  the  effective  date  of  this  Act,   then
26    "temporary  job"  means  a  job  in which the new employee is
27    hired for a specific duration of time or season.
28        "Value of assistance" means the face value of any form of
29    development assistance.

30        Section 10. Unified Economic Development Budget.
31        (a)  For each State fiscal year ending on or  after  June
32    30,  2005,  the  Department  shall  submit  an annual Unified
33    Economic Development Budget  to  the  General  Assembly.  The
 
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 1    Unified  Economic  Development  Budget  shall be due within 3
 2    months after the end of the fiscal year,  and  shall  present
 3    all types of development assistance granted during the fiscal
 4    year, including:
 5             (1)  The aggregate amount of uncollected or diverted
 6        State   tax   revenues   resulting   from  each  type  of
 7        development assistance provided in the tax  statutes,  as
 8        reported  to  the  Department  of  Revenue on tax returns
 9        filed during the fiscal year.
10             (2)  All State on-budget development assistance.
11        (b)  All  data  contained   in   the   Unified   Economic
12    Development Budget presented to the General Assembly shall be
13    fully subject to the Freedom of Information Act.
14        (c)  The  Department  of Revenue shall submit a report of
15    the amounts in subdivision (a)(1)  of  this  Section  to  the
16    Department,  which  may  append  such  report  to the Unified
17    Economic Development Budget rather than separately  reporting
18    such amounts.

19        Section 15. Standardized applications for State on-budget
20    development assistance.
21        (a)  All  applications  utilized by the Department or any
22    other State granting body regarding requests for  development
23    assistance shall contain, at a minimum:
24             (1)  An application tracking number that is specific
25        to  both  the  State  granting   agency   and   to   each
26        application.
27             (2)  The  name,  street and mailing addresses, phone
28        number, and chief officer of the granting body.
29             (3) The name, street and  mailing  addresses,  phone
30        number,  4-digit  SIC  number,  and  chief officer of the
31        applicant  at  the  specific  project  site   for   which
32        development assistance is sought.
33             (4) The applicant's total number of employees at the
 
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 1        specific  project  site  on  the date of the application,
 2        broken  down  by  full-time,  permanent,  part-time,  and
 3        temporary.
 4             (5) The kind of development assistance and value  of
 5        assistance being applied for.
 6             (6) The number of jobs to be created and retained or
 7        both  created and retained by the development assistance,
 8        broken  down  by  full-time,  permanent,  part-time,  and
 9        temporary.
10             (7)  A  detailed  list  of  the  occupation  or  job
11        classifications and number of new or  retained  employees
12        to  be  hired  in  full-time job positions, a schedule of
13        anticipated starting dates  of  the  new  hires  and  the
14        average  wage  by  occupation  or  job classification and
15        total  payroll  to  be  created  as  a  result   of   the
16        development assistance.
17             (8)  A  list  of  all  other  forms  of  development
18        assistance  the  applicant  is  seeking  for the specific
19        project site and the name of  each  State  granting  body
20        from which that development assistance is being sought.
21             (9)  A  narrative,  if necessary, describing why the
22        development assistance is needed and how the  applicant's
23        use of the development assistance may reduce unemployment
24        at any site in Illinois.
25             (10) Individual certifications by the chief officers
26        of  the  applicant  and the State granting body as to the
27        accuracy of the information contained in the application,
28        under penalty of perjury.
29        (b) Every State granting body either shall  complete,  or
30    shall  require the applicant to complete, an application form
31    that meets the minimum requirements  as  prescribed  in  this
32    Section  each  time  an  applicant  applies  for  development
33    assistance covered by this Act.
 
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 1        Section   20.   State  on-budget  development  assistance
 2    disclosure.
 3        (a) Beginning February 1, 2005 and each year  thereafter,
 4    every  State  granting  body in the State shall submit to the
 5    Department copies of all  application  forms  that  meet  the
 6    requirements  referenced  in  Section  15  of  this  Act  for
 7    development  assistance  that  it  approved  in  the previous
 8    calendar year.  Upon  each  form,  the  granting  body  shall
 9    designate the date on which assistance will commence.
10        (b)  For each development assistance application that was
11    approved, and for which the date of assistance  has  occurred
12    in  a  reporting  year,  each  recipient  shall submit to the
13    Department a progress report  that  shall  include,  but  not
14    limited to, the following:
15             (1) The application tracking number.
16             (2)  The  name,  street and mailing addresses, phone
17        number, and chief officer of the granting body.
18             (3) The name, street and  mailing  addresses,  phone
19        number,  4-digit  SIC  number,  and  chief officer of the
20        applicant at the specific  project  site  for  which  the
21        development assistance was approved.
22             (4)  The  kind of development assistance program and
23        value of assistance that was approved.
24             (5) The applicant's total level of employment at the
25        specific project site on the date of the application  and
26        the applicant's total level of employment at the specific
27        project  site  on  the date of the report, broken down by
28        full-time, permanent, part-time,  and  temporary,  and  a
29        computation of the gain or loss in each category.
30             (6)   The  number  of  new  and  retained  jobs  the
31        applicant stated in its development assistance agreement,
32        if any, if not, then in its application, would be created
33        by the development assistance broken down  by  full-time,
34        permanent, part-time, and temporary.
 
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 1             (7)  A  declaration  of  whether  the  recipient  is
 2        satisfying  all  job  creation  and  retention  or  other
 3        economic development requirements the recipient committed
 4        to  when receiving development assistance covered by this
 5        Act.
 6             (8)  A  detailed  list  of  the  occupation  or  job
 7        classifications and number of new or  retained  employees
 8        to  be  hired  in  full-time job positions, a schedule of
 9        anticipated starting dates  of  the  new  hires  and  the
10        average  wage  by  occupation  or  job classification and
11        total  payroll  to  be  created  as  a  result   of   the
12        development assistance.
13             (9)  A  narrative,  if necessary, describing how the
14        recipient's use of the development assistance during  the
15        reporting  year  has  reduced unemployment at any site in
16        Illinois.
17             (10) Signed individual certifications by  the  chief
18        officer  of  the  applicant  as  to  the  accuracy of the
19        progress report, under penalty of perjury.
20        (c) The State granting body  and  the  Department,  or  a
21    successor  agency, shall have full investigative authority to
22    verify the applicant's progress report  data,  including  but
23    not  limited  to  inspection of the specific project site and
24    analysis of tax and payroll records.
25        (d)  By  June  1,  2005  and  by  June  1  of  each  year
26    thereafter, the Department shall compile and publish all data
27    in all of the development assistance progress reports in both
28    written and electronic form.
29        (e) Every aspect of all approved  development  assistance
30    applications,   progress   reports,   and   compilations   of
31    applications  and  progress reports shall be fully subject to
32    the Freedom of Information Act.
33        (f) If a recipient of  development  assistance  fails  to
34    comply  with  subsections  (a)  and  (b) of this Section, the
 
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 1    Department shall, within 20 working days after the  reporting
 2    submittal   deadlines   set  forth  in  (i)  the  legislation
 3    authorizing, (ii) the administrative rules  implementing,  or
 4    (iii)   specific   provisions   in   development   assistance
 5    agreements pertaining to the development assistance programs,
 6    suspend  within  33  working  days  any  current  development
 7    assistance  to  the recipient under its control, and shall be
 8    prohibited from  completing  any  current  or  providing  any
 9    future  development  assistance  until it receives proof that
10    the recipient has come into compliance with the  requirements
11    of subsections (a) and (b) of this Section.

12        Section 25. Recapture.
13        (a) All recipients of development assistance must execute
14    agreements   that   contain,  at  a  minimum,  the  following
15    recapture provisions:
16             (1) The recipient must (i) make the level of capital
17        investment in the economic development project  specified
18        in  the  development assistance agreement; (ii) create or
19        retain, or both, the requisite number of jobs, paying not
20        less than specified wages for the  created  and  retained
21        jobs,  within  and  for  the  duration of the time period
22        specified  in  the  legislation   authorizing,   or   the
23        administrative   rules   implementing,   the  development
24        assistance  programs  and  the   development   assistance
25        agreement.
26             (2)  If  the recipient fails to create or retain the
27        requisite number of jobs within and for the  time  period
28        specified,   in   the  legislation  authorizing,  or  the
29        administrative  rules   implementing,   the   development
30        assistance   programs   and  the  development  assistance
31        agreement, the recipient shall be  deemed  to  no  longer
32        qualify   for  the  State  economic  assistance  and  the
33        applicable recapture provisions shall take effect.
 
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 1             (3)  If  the  recipient  receives   State   economic
 2        assistance   in  the  form  of  a  High  Impact  Business
 3        designation pursuant  to  Section  5.5  of  the  Illinois
 4        Enterprise Zone Act and the business receives the benefit
 5        of  the  exemption  authorized  under  Section  5l of the
 6        Retailers' Occupation Tax Act (for the sale  of  building
 7        materials   incorporated  into  a  High  Impact  Business
 8        location) and the recipient fails to create or retain the
 9        requisite  number  of  jobs,   as   determined   by   the
10        legislation   authorizing   the   development  assistance
11        programs or the administrative  rules  implementing  such
12        legislation,  or  both,  within  the  requisite period of
13        time, the recipient shall be required to pay to the State
14        the full amount  of  the  State  tax  exemption  that  it
15        received   as  a  result  of  the  High  Impact  Business
16        designation.
17             (4) If  the  recipient  receives  a  grant  or  loan
18        pursuant  to  the Large Business Development Program, the
19        Business Development Public  Infrastructure  Program,  or
20        the  Industrial  Training Program and the recipient fails
21        to create or retain the requisite number of jobs for  the
22        requisite  time  period,  as  provided in the legislation
23        authorizing the development assistance  programs  or  the
24        administrative  rules  implementing  such legislation, or
25        both, or in the  development  assistance  agreement,  the
26        recipient  shall  be required to repay to the State a pro
27        rata amount of the grant; that amount shall  reflect  the
28        percentage of the deficiency between the requisite number
29        of  jobs  to  be created or retained by the recipient and
30        the actual number of such jobs in  existence  as  of  the
31        date the Department determines the recipient is in breach
32        of  the  job creation or retention covenants contained in
33        the development assistance agreement. If the recipient of
34        development   assistance   under   the   Large   Business
 
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 1        Development  Program,  the  Business  Development  Public
 2        Infrastructure  Program,  or  the   Industrial   Training
 3        Program  ceases  operations at the specific project site,
 4        during the  5-year  period  commencing  on  the  date  of
 5        assistance,  the recipient shall be required to repay the
 6        entire amount of the grant or to accelerate repayment  of
 7        the loan back to the State.
 8             (5) If the recipient receives a tax credit under the
 9        Economic  Development  for  a  Growing Economy tax credit
10        program,  the  development  assistance   agreement   must
11        provide  that  (i)  if  the  number  of  new  or retained
12        employees falls below the requisite number set  forth  in
13        the  development  assistance  agreement, the allowance of
14        the credit shall be  automatically  suspended  until  the
15        number  of  new  and retained employees equals or exceeds
16        the  requisite  number  in  the  development   assistance
17        agreement;  (ii) if the recipient discontinues operations
18        at the specific project site during the first 5 years  of
19        the 10-year term of the development assistance agreement,
20        the  recipient  shall  forfeit  all  credits taken by the
21        recipient during such 5-year period;  and  (iii)  in  the
22        event  of  a  revocation or suspension of the credit, the
23        Department shall  contact  the  Director  of  Revenue  to
24        initiate  proceedings  against  the  recipient to recover
25        wrongfully exempted Illinois State income taxes  and  the
26        recipient  shall  promptly  repay  to  the  Department of
27        Revenue any wrongfully  exempted  Illinois  State  income
28        taxes.  The  forfeited  amount of credits shall be deemed
29        assessed  on  the  date  the  Department   contacts   the
30        Department  of  Revenue  and the recipient shall promptly
31        repay  to  the  Department  of  Revenue  any   wrongfully
32        exempted Illinois State income taxes.
33        (b)  The  Director  may elect to waive enforcement of any
34    contractual right arising out of the  development  assistance
 
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 1    agreement  required  by  this Act based on a finding that the
 2    waiver is necessary to avert an imminent,  demonstrable,  and
 3    material  hardship  to  the recipient that may result in such
 4    recipient's  insolvency  or   discharge   of   workers.   The
 5    recipient's request for waiver and the justification therefor
 6    must  be published in electronic form by the Department for a
 7    period of 30 days before the Director may take action on  the
 8    waiver  request.  If  a waiver is granted, the recipient must
 9    agree to  a  contractual  modification,  including  recapture
10    provisions,  to  the  development  assistance  agreement. The
11    existence of any waiver granted pursuant to  this  subsection
12    (c),  the  date  of  the granting of such waiver, and a brief
13    summary of the reasons supporting the granting of such waiver
14    shall be disclosed consistent with the provisions of  Section
15    25 of this Act.
16        (c)    Beginning  June  1,  2004,  the  Department  shall
17    annually  compile  a report on the outcomes and effectiveness
18    of recapture provisions by program, including but not limited
19    to:  (i)  the  total  number  of   companies   that   receive
20    development assistance as defined in this Act; (ii) the total
21    number  of  recipients in violation of development agreements
22    with the Department; (iii)  the  total  number  of  completed
23    recapture efforts; (iv) the total number of recapture efforts
24    initiated; and (v) the number of waivers granted. This report
25    shall  be disclosed consistent with the provisions of Section
26    20 of this Act.
27        (d) For the purposes of this Act, recapture provisions do
28    not  include  the  Illinois  Department   of   Transportation
29    Economic  Development  Program  or  any successor programs as
30    described in the term "development assistance" in  Section  5
31    of this Act.

32        Section  99.  Effective  date. This Act takes effect upon
33    becoming law.