HB3360 100TH GENERAL ASSEMBLY

LRB100 11034 RJF 21273 b

100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
HB3360

Introduced , by Rep. Elgie R. Sims, Jr.

SYNOPSIS AS INTRODUCED:

New Act
35 ILCS 5/216
35 ILCS 25/25
35 ILCS 25/30

Creates the Community Renewal and Revitalization Act. Provides for the qualifications for and designation of Health, Opportunity, Prosperity, and Empowerment (HOPE) Zones. Provides for a HOPE Zone tax credit and other credits and benefits going to businesses operating in HOPE Zones. Provides for the powers and duties of the Department of Commerce and Economic Opportunity under the Act. Provides for State incentives regarding public services and physical infrastructure. Provides for State regulatory exemptions in HOPE Zones. Provides for State and local regulatory alternatives under the Act. Amends the Illinois Income Tax Act to allow for a specified tax credit for wages paid to qualified ex-offenders in HOPE Zones. Modifies the term "qualified ex-offender" to include a person hired by a taxpayer 5 years (currently, 3 years) after being released from an Illinois adult correctional center. Amends the Small Business Job Creation Tax Credit Act to allow a specified tax credit for businesses operating in HOPE Zones. Provides that the Department shall limit the monetary amount of credits awarded under the Act to no more than $100,000,000 (currently, $50,000,000).

A BILL FOR

AN ACT concerning government.

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

Section 1. Short title. This Act may be cited as the Community Renewal and Revitalization Act.

Section 5. Intent. The intent of this Act is to spur investment in areas of high unemployment and high crime through various economic development tools intended to incentivize businesses to relocate, expand, and develop within those communities. It is the hope and belief of the General Assembly that through the creation of Health, Opportunity, Prosperity, and Empowerment (HOPE) Zones, economic growth and vitality can foster in impoverished communities of this State.

Section 10. Definitions. As used in this Act:

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

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

"HOPE Zone" or "Zone" means a Health, Opportunity, Prosperity, and Empowerment Zone established under this Act.

Section 15. Qualifications for HOPE Zones.

(a) An area is qualified to become a HOPE Zone if:

(1) it is a contiguous area, provided that a zone area may exclude wholly surrounded territory within its boundaries;

(2) it is comprised of a minimum of one-half square mile and not more than 15 square miles, in total area, exclusive of lakes and waterways;

(3) it is entirely within a municipality or entirely within the unincorporated areas of a county, except where reasonable need is established for such zone to cover portions of more than one municipality or county;

(4) all or part of the area to be designated as a HOPE Zone has had an annual average unemployment rate of at least 120% of the State's annual average unemployment rate for the most recent calendar year or the most recent fiscal year as reported by the Department of Employment Security; and

(5) all or part of the area to be designated as a HOPE Zone has a poverty rate of at least 20% according to the latest federal decennial census, and a census tract crime rate higher than the State average.

(b) Any criteria established by the Department or by law which utilize the rate of unemployment for a particular area shall provide that all persons who are not presently employed and have exhausted all unemployment benefits shall be considered unemployed, whether or not such persons are actively seeking employment.

Section 20. Designation of HOPE Zones.

(a) Any area determined by the Director of the Department of Commerce and Economic Opportunity as meeting the qualifications established under Section 10 shall be designated a HOPE Zone, and be eligible for benefits under this Act.

(b) Upon designation of a HOPE Zone, the Director shall provide:

(1) a precise description of the area comprising the Zone, either in the form of a legal description or by reference to roadways, lakes and waterways, and township and county boundaries;

(2) a finding that the Zone area meets the qualifications established under Section 10;

(3) provisions for any tax incentives or reimbursement for taxes, which under State and federal law apply to businesses within the designated Zone;

(4) the duration or term of the HOPE Zone, which shall be no less than 10 years in duration; and

(5) any other information the Director deems necessary to the establishment of HOPE Zones under this Act.

(c) Nothing in this Section shall prohibit a municipality or county from extending additional tax incentives or reimbursement for businesses in HOPE Zones or throughout their territory by separate ordinance. Nothing in this Section shall prohibit a municipality or county from applying to be an Enterprise Zone under the Illinois Enterprise Zone Act.

Section 25. HOPE Zone tax credit.

(a) The HOPE Zone tax credit is hereby created to be granted to businesses relocating to, expanding within, developing within, or existing within areas designated as HOPE Zones under this Act.

(b) Businesses maintaining operations within a HOPE Zone shall be eligible to receive a 50% tax credit on its annual corporate income tax, and a tax credit to all fees and franchise taxes paid to the Secretary of State for organizing and maintaining any business organization within the Zone.

(c) Individuals living within a HOPE Zone shall also be eligible to receive a 50% tax credit to their annual individual income tax.

(d) Any business designated as a "High Impact Business" under Section 5.5 of the Illinois Enterprise Zone Act that intends to invest in a HOPE Zone, in a manner specified in subparagraphs (A) through (F) of that Section, shall be eligible for the credits and benefits provided in that Section. All provisions and procedures in Section 5.5 of the Illinois Enterprise Zone Act with respect to the application and designation of High Impact Businesses shall apply.

Section 30. Powers and duties of the Department.

(a) General powers. The Department shall administer this Act and shall have the following powers and duties:

(1) To monitor the implementation of this Act and submit reports evaluating the effectiveness of the program and any suggestions for legislation to the Governor and General Assembly by October 1 of every year preceding a regular Session of the General Assembly and to annually report to the General Assembly initial and current population, employment, per capita income, number of business establishments, dollar value of new construction and improvements, and the aggregate value of each tax incentive, based on information provided by the Department of Revenue, for each HOPE Zone.

(2) To adopt all necessary rules and regulations to carry out the purposes of this Act in accordance with The Illinois Administrative Procedure Act.

(3) To assist municipalities and counties in obtaining federal status as an Enterprise Zone.

(b) Specific duties:

(1) The Department shall provide information and appropriate assistance to persons desiring to locate and engage in business in a HOPE Zone, to persons engaged in business in a HOPE Zone, and to designated Zone organizations operating there.

(2) The Department shall, in cooperation with appropriate units of local government and State agencies, coordinate and streamline existing State business assistance programs and permit and license application procedures for HOPE Zone businesses.

(3) The Department shall publicize existing tax incentives and economic development programs within the Zone and upon request, offer technical assistance in abatement and alternative revenue source development to local units of government which have HOPE Zones within their jurisdiction.

(4) The Department shall work together with the responsible State and federal agencies to promote the coordination of other relevant programs, including, but not limited to, housing, community and economic development, small business, banking, financial assistance, and employment training programs which are carried on in a HOPE Zone.

(5) In order to stimulate employment opportunities for Zone residents, the Department, in cooperation with the Department of Human Services and the Department of Employment Security, is to initiate a test of the following 2 programs within the 12 month period following designation and approval by the Department of the first HOPE zones: (i) the use of aid to families with dependent children benefits payable under Article IV of the Illinois Public Aid Code, General Assistance benefits payable under Article VI of the Illinois Public Aid Code, the unemployment insurance benefits payable under the Unemployment Insurance Act as training or employment subsidies leading to unsubsidized employment; and (ii) a program for voucher reimbursement of the cost of training Zone residents eligible under the Targeted Jobs Tax Credit provisions of the Internal Revenue Code for employment in private industry. These programs shall not be designed to subsidize businesses, but are intended to open up job and training opportunities not otherwise available. Nothing in this paragraph (5) shall be deemed to require Zone businesses to utilize these programs. These programs should be designed (i) for those individuals whose opportunities for job-finding are minimal without program participation; (ii) to minimize the period of benefit collection by such individuals; and (iii) to accelerate the transition of those individuals to unsubsidized employment. The Department is to seek agreement with business, organized labor and the appropriate State Department, and agencies on the design, operation, and evaluation of the test programs.

A report with recommendations including representative comments of these groups shall be submitted by the Department to the Governor and General Assembly not later than 12 months after such test programs have commenced, or not later than 3 months following the termination of such test programs, whichever first occurs.

Section 35. State incentives regarding public services and physical infrastructure.

(a) Industrial development bonds. Priority in the use of industrial development bonds issued by the Illinois Finance Authority shall be given to businesses located in HOPE Zones.

(b) Deposit of State funds by the State Treasurer. The State Treasurer is authorized and encouraged to place deposits of State funds with financial institutions doing business in HOPE Zones.

Section 40. State regulatory exemptions in HOPE Zones.

(a) The Department shall conduct an ongoing review of such agency rules and regulations that may be identified by the Department as businesses and preliminarily appearing to the Department to:

(i) affect the conduct of business, industry, and commerce;

(ii) impose excessive costs on either the creation or conduct of such businesses; and

(iii) inhibit the development and expansions of businesses within HOPE Zones.

The Department shall conduct hearings, pursuant to public notice, to solicit public comment on such identified rules and regulations as part of this review process.

(b) No later than August 1 of each calendar year, the Department shall publish in the Illinois Register a list of such rules and regulations identified under subsection (a). The Department shall transmit a copy of the list to each agency which has adopted rules or regulations on the list.

(c) Within 90 days of the publication of the list by the Department, each agency which adopted rules or regulations identified therein shall file a written report with the Department detailing for each identified rule or regulation:

(i) the need or justification;

(ii) whether the rule or regulation is mandated by State or federal law, or is discretionary, and to what extent;

(iii) a synopsis of the history of the rule, including any internal agency review after its original adoption; and

(iv) any appropriate explanation of its relationship to other regulatory requirements.

The adopting agency shall also include any available data, analysis, and studies concerning the economic impact of the identified rules and regulations. The agency responses shall be public records.

(d) No later than January 1 of the following calendar year, the Department shall file proposed rules exempting businesses within HOPE Zones from those agency rules and regulations contained in the published list, for which the Department finds that the job creation or business development incentives for HOPE Zone development engendered by the exemption outweigh the need and justification for the rule or regulation. In making its findings, the Department shall consider all information, data, and opinions submitted to it by the public, as well as by adopting agencies, as well as information otherwise available to it.

(e) The proposed rules and regulations adopted by the Department shall be in the form of amendments to the existing rules and regulations to be affected, and shall be subject to the Illinois Administrative Procedure Act.

(f) Upon its effective date, any exempting rule or regulation of the Department shall supersede the exempted agency rule or regulation in accordance with the terms of the exemption. Such exemptions may apply only to businesses within HOPE Zones during the effective term of the respective Zones. Agencies may not adopt emergency rules to circumvent an exemption effected by a Department exemption rule; any such emergency rules shall not be effective within HOPE Zones to the extent inconsistent with the terms of such an exemption.

Section 45. State and local regulatory alternatives.

(a) Agencies may provide in their rules and regulations for (i) the exemption of businesses within HOPE Zones; or (ii) modifications or alternatives specifically applicable to businesses within HOPE Zones, which impose less stringent standards or alternative standards for compliance, including performance-based standards as a substitute for specific mandates of methods, procedures, or equipment.

Such exemptions, modifications, or alternatives shall be effected by rule or regulation adopted in accordance with the Illinois Administrative Procedure Act. The agency adopting exemptions, modifications, or alternatives shall file with its proposed rule or regulation its findings that the proposed rule or regulation provides economic incentives within HOPE Zones which promote the purposes of this Act, and which, to the extent they include any exemptions or reductions in regulatory standards or requirements, outweigh the need or justification for the existing rule or regulation.

(b) If any agency adopts a rule or regulation under subsection (a) of this Section affecting a rule or regulation contained on the list published by the Department under Section 35 of this Act, prior to the completion of the rule making process for the Department's rules under that Section, the agency shall immediately transmit a copy of its proposed rule or regulation to the Department, together with a statement of reasons as to why the Department should defer to the agency's proposed rule or regulation. Agency rules adopted under subsection (a) of this Section shall, however, be subject to the exemption rules and regulations of the Department adopted under Section 35 of this Act.

(c) The county or municipality containing a HOPE Zone may modify all local ordinances and regulations regarding (1) zoning; (2) licensing; (3) building codes, excluding however, any regulations treating building defects; and (4) rent control and price controls; except for the minimum wage. Notwithstanding any shorter statute of limitation to the contrary, actions against any contractor or architect who designs, constructs, or rehabilitates a building or structure in a HOPE Zone in accordance with local standards specifically applicable within Zones which have been relaxed may be commenced within 10 years from the time of beneficial occupancy of the building or use of the structure.

Section 100. The Illinois Income Tax Act is amended by changing Section 216 as follows:

(35 ILCS 5/216)

Sec. 216. Credit for wages paid to ex-felons.

(a) For each taxable year beginning on or after January 1, 2007, each taxpayer is entitled to a credit against the tax imposed by subsections (a) and (b) of Section 201 of this Act in an amount equal to 5% of qualified wages paid by the taxpayer during the taxable year to one or more Illinois residents who are qualified ex-offenders. The total credit allowed to a taxpayer with respect to each qualified ex-offender may not exceed $1,500 for all taxable years, except that a taxpayer operating a business in a HOPE Zone under the Community Renewal and Revitalization Act shall be allowed a total credit up to $3,000 with respect to each qualified ex-offender for all taxable years. For partners, shareholders of Subchapter S corporations, and owners of limited liability companies, if the liability company is treated as a partnership for purposes of federal and State income taxation, there shall be allowed a credit under this Section to be determined in accordance with the determination of income and distributive share of income under Sections 702 and 704 and Subchapter S of the Internal Revenue Code.

(b) For purposes of this Section, "qualified wages":

(1) includes only wages that are subject to federal unemployment tax under Section 3306 of the Internal Revenue Code, without regard to any dollar limitation contained in that Section;

(2) does not include any amounts paid or incurred by an employer for any period to any qualified ex-offender for whom the employer receives federally funded payments for on-the-job training of that qualified ex-offender for that period; and

(3) includes only wages attributable to service rendered during the one-year period beginning with the day the qualified ex-offender begins work for the employer.

If the taxpayer has received any payment from a program established under Section 482(e)(1) of the federal Social Security Act with respect to a qualified ex-offender, then, for purposes of calculating the credit under this Section, the amount of the qualified wages paid to that qualified ex-offender must be reduced by the amount of the payment.

(c) For purposes of this Section, "qualified ex-offender" means any person who:

(1) has been convicted of a crime in this State or of an offense in any other jurisdiction, not including any offense or attempted offense that would subject a person to registration under the Sex Offender Registration Act;

(2) was sentenced to a period of incarceration in an Illinois adult correctional center; and

(3) was hired by the taxpayer within 5 3 years after being released from an Illinois adult correctional center.

(d) In no event shall a credit under this Section reduce the taxpayer's liability to less than zero. If the amount of the credit exceeds the tax liability for the year, the excess may be carried forward and applied to the tax liability of the 5 taxable years following the excess credit year. The tax credit shall be applied to the earliest year for which there is a tax liability. If there are credits for more than one year that are available to offset a liability, the earlier credit shall be applied first.

(e) This Section is exempt from the provisions of Section 250.

(Source: P.A. 98-165, eff. 8-5-13.)

Section 105. The Small Business Job Creation Tax Credit Act is amended by changing Sections 25 and 30 as follows:

(35 ILCS 25/25)

Sec. 25. Tax credit.

(a) Subject to the conditions set forth in this Act, an applicant is entitled to a credit against payment of taxes withheld under Section 704A of the Illinois Income Tax Act:

(1) for new employees who participated as worker-trainees in the Put Illinois to Work Program during 2010:

(A) in the first calendar year ending on or after the date that is 6 months after December 31, 2010, or the date of hire, whichever is later. Under this subparagraph, the applicant is entitled to one-half of the credit allowable for each new employee who is employed for at least 6 months after the date of hire; and

(B) in the first calendar year ending on or after the date that is 12 months after December 31, 2010, or the date of hire, whichever is later. Under this subparagraph, the applicant is entitled to one-half of the credit allowable for each new employee who is employed for at least 12 months after the date of hire;

(2) for all other new employees, in the first calendar year ending on or after the date that is 12 months after the date of hire of a new employee. The credit shall be allowed as a credit to an applicant for each full-time employee hired during the incentive period that results in a net increase in full-time Illinois employees, where the net increase in the employer's full-time Illinois employees is maintained for at least 12 months.

(b) The Department shall make credit awards under this Act to further job creation.

(c) The credit shall be claimed for the first calendar year ending on or after the date on which the certificate is issued by the Department.

(d) The credit shall not exceed $2,500 per new employee hired; however, businesses operating within HOPE Zones under the Community Renewal and Revitalization Act shall be allowed a credit up to $5,000 per new employee hired.

(e) The net increase in full-time Illinois employees, measured on an annual full-time equivalent basis, shall be the total number of full-time Illinois employees of the applicant on the final day of the incentive period, minus the number of full-time Illinois employees employed by the employer on the first day of that same incentive period. For purposes of the calculation, an employer that begins doing business in this State during the incentive period, as determined by the Director, shall be treated as having zero Illinois employees on the first day of the incentive period.

(f) The net increase in the number of full-time Illinois employees of the applicant under subsection (e) must be sustained continuously for at least 12 months, starting with the date of hire of a new employee during the incentive period. Eligibility for the credit does not depend on the continuous employment of any particular individual. For purposes of this subsection (f), if a new employee ceases to be employed before the completion of the 12-month period for any reason, the net increase in the number of full-time Illinois employees shall be treated as continuous if a different new employee is hired as a replacement within a reasonable time for the same position.

(g) The Department shall promulgate rules to enable an applicant for which a PEO has been contracted to issue W-2s and make payment of taxes withheld under Section 704A of the Illinois Income Tax Act for new employees to retain the benefit of tax credits to which the applicant is otherwise entitled under this Act.

(Source: P.A. 96-888, eff. 4-13-10; 96-1498, eff. 1-18-11; 97-636, eff. 6-1-12; 97-1052, eff. 8-23-12.)

(35 ILCS 25/30)

Sec. 30. Maximum amount of credits allowed. The Department shall limit the monetary amount of credits awarded under this Act to no more than $100,000,000 $50,000,000. If applications for a greater amount are received, credits shall be allowed on a first-come-first-served basis, based on the date on which each properly completed application for a certificate of eligibility is received by the Department. If more than one certificate of eligibility is received on the same day, the credits will be awarded based on the time of submission for that particular day.

(Source: P.A. 96-888, eff. 4-13-10.)