HB5737 100TH GENERAL ASSEMBLY

LRB100 19656 HLH 34929 b

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.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning revenue.

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 Illinois Business Use Incentives for Large-Scale Development Act.

Section 5. Definitions. As used in this Act:

"Assessment" means an amount of up to 5% of the gross wages paid in one year by an eligible industry to all eligible employees in new jobs.

"Credit" means the amount agreed to between the Department and an eligible industry, but not to exceed the assessment attributable to the eligible industry's project.

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

"Economic development project" means:

(1) the acquisition of any real property by the Department, the eligible industry, or its affiliate; or

(2) the fee ownership of real property by the eligible industry or its affiliate; and

(3) for both paragraphs (1) and (2), "economic development project" also means the development of the real property including construction, installation, or equipping of a project, including fixtures and equipment, and facilities necessary or desirable for improvement of the real property, including surveys; site tests and inspections; subsurface site work; excavation; removal of structures, roadways, cemeteries and other surface obstructions; filling, grading and provision of drainage, storm water retention, installation of utilities such as water, sewer, sewage treatment, gas, electricity, communications and similar facilities; off-site construction of utility extensions to the boundaries of the real property; and the acquisition, installation, or equipping of facilities on the real property, for use and occupancy by the eligible industry or its affiliates.

"Eligible employee" means a person employed on a full-time basis in a new job at the economic development project averaging at least 35 hours per week who was not employed by the eligible industry or a related taxpayer in this State at any time during the 12-month period immediately prior to being employed at the economic development project.

"Eligible industry" means 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. "Eligible industry" does not include a business that closes or substantially reduces its operation at one location in the State and relocates substantially the same operation to another location in the State. This does not prohibit a business 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 business from moving its operations from one location in the State to another location in the State for the purpose of expanding such operation provided that the Department determines that such expansion cannot reasonably be accommodated within the municipality in which such business is located, or in the case of a business located in an incorporated area of the county, within the county in which such business is located, after conferring with the chief elected official of such municipality or county and taking into consideration any evidence offered by such municipality or county regarding the ability to accommodate such expansion within such municipality or county. An eligible industry must:

(1) pledge to invest a minimum of $10,000,000 in an economic development project; and

(2) create a minimum of 100 new jobs for eligible employees at the economic development project or a minimum of 200 new jobs if the economic development project is an office industry located within a distressed community, as determined by the Department.

"New job" means a job in a new or expanding eligible industry not including jobs of recalled workers, replacement jobs, or jobs that formerly existed in the eligible industry in the State.

"Obligation" means the revenue bonds or notes authorized to be issued by the Department pursuant to this Act.

"Office industry" means a regional, national, or international headquarters, a telecommunications operation, a computer operation, an insurance company, or a credit card billing and processing center.

Section 10. Powers of the Authority.

(a) The Department shall have all the powers necessary to carry out and effectuate the purposes and provisions of this Act, including, but not limited to, the power to:

(1) provide and finance economic development projects pursuant to the provisions of this Act, and cooperate with eligible industries in order to promote, foster and support economic development within the State;

(2) conduct hearings and inquiries, in the manner and by the methods as it deems desirable, for the purpose of gathering information with respect to eligible industries and economic development projects, and for the purpose of making any determinations necessary or desirable in the furtherance of this Act; and

(3) negotiate the terms of, including the amount of project costs, and enter into financing agreements with eligible industries, and in connection therewith to acquire, convey, sell, mortgage, finance or otherwise dispose of any property, real or personal, loan bond proceeds, and permit the use of assessments, in connection with an economic development project, and to pay, or cause to be paid, in accordance with the provisions of a financing agreement, the program costs of an economic development project from any funds available the project.

(b) Obligations issued by the Department pursuant to this Act shall not constitute an indebtedness or liability of the State within the meaning of any state constitutional provision or statutory limitation, shall not constitute a pledge of the faith and credit of the State, shall not be guaranteed by the credit of the State, and unless approved by a concurrent resolution of the General Assembly, no obligation in default shall be paid by the State.

Section 15. Establishment of procedures to determine eligible industries.

(a) The Department shall establish the procedures and standards for the determination and approval of eligible industries and their economic development projects by the adoption of rules in accordance with the Illinois Administrative Procedure Act. Those rules shall mandate the evaluation of the credit worthiness of eligible industries, the number of new jobs to be provided by an economic development project to residents of the State, and the likelihood of the economic success of the economic development project. No economic development project which will result in the replacement of facilities existing in the State shall be approved by the Department.

(b) With respect to each eligible industry making an application to the Department for incentives, and with respect to the economic development project described in the application, the Department shall request relevant information, documentation, and other materials and make inquiries of the applicant as necessary or appropriate. After a diligent review of relevant materials and completion of its inquiries, the Department may by resolution designate an economic development project.

Section 20. Financing agreement.

(a) The Department may enter into a financing agreement with any eligible industry with respect to an economic development project.

(b) The financing agreement shall provide in substance that:

(1) it may be assigned by the eligible industry only upon the prior written consent of the Department; and

(2) upon default by the eligible industry in any obligations under the financing agreement or other documents evidencing, securing, or related to the eligible industry's obligations, the Department shall have the right, at its option, to:

(A) declare the financing agreement or other such documents in default;

(B) accelerate and declare the total of all such payments due by the eligible industry and sell the economic development project at public, private, or judicial sale;

(C) pursue any remedy provided under the financing agreement or other such documents;

(D) be entitled to the appointment of a receiver by the circuit court wherein any part of the economic development project is located; and

(E) pursue any other applicable legal remedy.

Section 25. Credit agreement; conditions. After receipt of an application, for taxable years ending on or after December 31, 2019 and ending on or before December 31, 2024, the Department may enter into an agreement with an eligible industry for a credit pursuant to this Act against the taxes imposed by subsections (a) and (b) of Section 201 if the Department determines that all of the following conditions exist:

(1) the applicant's project will create new jobs that were not jobs previously performed by employees of the applicant in the State;

(2) the applicant's project is economically sound and will benefit the people of the State by increasing opportunities for employment and strengthening the economy of the State;

(3) significant local incentives with respect to the project or eligible industry have been committed, which incentives may consist of either or both of the following:

(A) cash or in-kind incentives derived from any non-State source, including incentives provided by the affected political subdivisions, private industry, local chambers of commerce, or similar organizations; and

(B) relief from local taxes, in either case as acceptable to the Department;

(4) receiving the credit is a major factor in the applicant's decision to go forward with the project and not receiving the credit will result in the applicant not creating new jobs in the State; and

(5) awarding the credit will result in an overall positive fiscal impact to the State.

Section 30. Credit factors. In determining the amount of the credit that should be awarded, the Department shall take into consideration the following factors:

(1) the economy of the county where the projected investment is to occur;

(2) the potential impact on the economy of the State;

(3) the payroll attributable to the project;

(4) the capital investment attributable to the project;

(5) whether the amount the average wage paid by the applicant exceeds the average wage paid within the county in which the project will be located;

(6) the costs to the and the affected units of local government with respect to the project; and

(7) the financial assistance that is otherwise provided by the State and the affected units of local government.

Section 35. Department authority to determine projects. The Department shall determine the amount and duration of a project and its associated assessments, credits and refunds. The credit amount may not exceed the estimated assessment. Assessments made for any project may not exceed a period of 15 years.

Section 40. Agreement contents. An agreement between the Department and an eligible industry shall include all of the following:

(1) a detailed description of the project that is the subject of the agreement;

(2) a specific method for determining the number of new employees employed during a taxable year who are performing jobs not previously performed by an employee of the eligible industry;

(3) a requirement that the taxpayer shall annually report to the Department the number of new employees who are performing jobs not previously performed by an employee, the total amount of salaries and wages paid to eligible employees in new jobs, and any other information the Department needs to perform its duties pursuant to this Act;

(4) a requirement that the taxpayer shall provide written notification to the Department 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;

(5) any other performance conditions that the Department determines are appropriate; and

(6) a requirement that the taxpayer shall maintain operations at the project location for at least a period of time equal to the number of years for which credits are authorized in the financing agreement with the Department.

Section 45. Noncompliance by eligible industry; determination; penalty. If the Department determines that an eligible industry that has received a credit pursuant to this Act is not complying with the requirements of the credit agreement or all of the provisions of this Act, the Department shall, after giving the industry an opportunity to explain the noncompliance, notify the Department of Revenue of the noncompliance and request a penalty. The Department shall state the amount of the penalty, which may not exceed the sum of any previously allowed credit awards pursuant to this Act.

Section 50. Evaluation of program. On an annual basis, the Department shall provide for an evaluation of the program. The evaluation shall include an assessment of the effectiveness of the program in creating new jobs in the State and of the revenue impact of the program. The Department shall submit a report on the evaluation to the Governor and the General Assembly no later than July 1, 2023.

Section 55. Program costs; how paid; assessments. An agreement between the Department and an eligible industry shall provide that all or part of program costs are to be met by receipt of assessments. Assessments shall be based upon wages paid to eligible employees. If business or employment conditions cause the amount of the assessment to be less than the amount projected in the agreement for any time period, then the employer shall pay to the Department the amount of such difference, and a portion of withholding tax paid by the employer pursuant to Article 7 of the Illinois Income Tax Act may be credited to the Department by the amount of such difference. The employer shall remit the amount of the assessment to the Department. When all program costs, including the principal of, premium, if any, and interest on the obligation have been paid, the employer credits shall cease.

Section 60. Special fund; purposes; certification by employer.

(a) The Department shall establish a special fund for and in the name of each project. All moneys received by the Department in respect of the project and required by the agreement to be used to pay program costs for the project shall be deposited into the special fund. Amounts held in the special fund may be used and disbursed by the Department only to pay program costs for the project.

(b) Any disbursement in respect of a project pursuant to the provisions of this Act, and the special fund into which moneys received in respect of the project are paid, may be irrevocably pledged by the Department for the payment of the principal of, premium, if any, and interest on obligations issued by the Department to finance or refinance, in whole or in part, the project.

(c) The employer shall certify to the Department of Revenue that the assessment is in accordance with an agreement and shall provide other information the Department of Revenue may require.

(d) If an agreement provides that all or part of program costs are to be met by receipt of assessments, the provisions of this Section shall also apply to any successor to the original employer until such time as the principal and interest on the obligation have been paid.

Section 65. Obligations issued by the Department. To provide funds for the present payment of the costs of economic development projects, the Department may borrow money and issue and sell obligations payable from a sufficient portion of the future receipts of payments authorized by the agreement. The receipts shall be pledged to the payment of principal of and interest on the obligations. Obligations may be sold at public sale or at private sale at par, premium, or discount of not less than 95% of the par value thereof, at the discretion of the Department, and may bear interest at such rate or rates as the Department shall determine, notwithstanding the provisions of law to the contrary. Obligations may be issued with respect to a single project or multiple projects and may contain terms or conditions as the Department may provide by resolution authorizing the issuance of the obligations.

Section 900. The Illinois Income Tax Act is amended by adding Section 227 as follows:

(35 ILCS 5/227 new)

Sec. 227. Illinois Business Use Incentives for Large-Scale Development Act. For taxable years ending on or after December 31, 2019 and ending on or before December 31, 2029, a taxpayer that is awarded a credit under the Illinois Business Use Incentives for Large-Scale Development Act is entitled to a credit as provided in that Act.

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.

Section 999. Effective date. This Act takes effect upon becoming law.