HB2411 102ND GENERAL ASSEMBLY

LRB102 14689 RJF 20042 b

102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
HB2411

Introduced 2/17/2021, by Rep. William Davis

SYNOPSIS AS INTRODUCED:

20 ILCS 605/605-1025
20 ILCS 607/3-20
20 ILCS 663/25
20 ILCS 663/45
20 ILCS 663/50

Amends the Department of Commerce and Economic Opportunity Law of the Civil Administrative Code of Illinois. Provides that a qualifying Illinois date center is a place, among other criteria, that within 2 years (currently, 90 days) after being placed in service, certifies that it is carbon neutral or has attained other specified certification. Amends the Brownfields Redevelopment and Intermodal Promotion Act. Extends the use of the South Suburban Brownfields Redevelopment Fund. Amends the New Markets Development Program Act. Modifies provisions concerning certification of qualified equity investments and allocation thereof. Provides further rulemaking requirements. Provides that for fiscal years following fiscal year 2026 (currently, 2021), qualified equity investments under the Act shall not be made unless reauthorization is made. Makes other changes. Effective immediately.

A BILL FOR

AN ACT concerning State government.

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

Section 5. The Department of Commerce and Economic Opportunity Law of the Civil Administrative Code of Illinois is amended by changing Section 605-1025 as follows:

(20 ILCS 605/605-1025)

Sec. 605-1025. Data center investment.

(a) The Department shall issue certificates of exemption from the Retailers' Occupation Tax Act, the Use Tax Act, the Service Use Tax Act, and the Service Occupation Tax Act, all locally-imposed retailers' occupation taxes administered and collected by the Department, the Chicago non-titled Use Tax, and a credit certification against the taxes imposed under subsections (a) and (b) of Section 201 of the Illinois Income Tax Act to qualifying Illinois data centers.

(b) For taxable years beginning on or after January 1, 2019, the Department shall award credits against the taxes imposed under subsections (a) and (b) of Section 201 of the Illinois Income Tax Act as provided in Section 229 of the Illinois Income Tax Act.

(c) For purposes of this Section:

"Data center" means a facility: (1) whose primary services are the storage, management, and processing of digital data; and (2) that is used to house (i) computer and network systems, including associated components such as servers, network equipment and appliances, telecommunications, and data storage systems, (ii) systems for monitoring and managing infrastructure performance, (iii) Internet-related equipment and services, (iv) data communications connections, (v) environmental controls, (vi) fire protection systems, and (vii) security systems and services.

"Qualifying Illinois data center" means a new or existing data center that:

(1) is located in the State of Illinois;

(2) in the case of an existing data center, made a capital investment of at least $250,000,000 collectively by the data center operator and the tenants of the data center over the 60-month period immediately prior to January 1, 2020 or committed to make a capital investment of at least $250,000,000 over a 60-month period commencing before January 1, 2020 and ending after January 1, 2020; or

(3) in the case of a new data center, or an existing data center making an upgrade, makes a capital investment of at least $250,000,000 over a 60-month period beginning on or after January 1, 2020; and

(4) in the case of both existing and new data centers, results in the creation of at least 20 full-time or full-time equivalent new jobs over a period of 60 months by the data center operator and the tenants of the data center, collectively, associated with the operation or maintenance of the data center; those jobs must have a total compensation equal to or greater than 120% of the average wage paid to full-time employees in the county where the data center is located, as determined by the U.S. Bureau of Labor Statistics; and

(5) within 2 years 90 days after being placed in service, certifies to the Department that it is carbon neutral or has attained certification under one or more of the following green building standards:

(A) BREEAM for New Construction or BREEAM In-Use;

(B) ENERGY STAR;

(C) Envision;

(D) ISO 50001-energy management;

(E) LEED for Building Design and Construction or LEED for Operations and Maintenance;

(F) Green Globes for New Construction or Green Globes for Existing Buildings;

(G) UL 3223; or

(H) an equivalent program approved by the Department of Commerce and Economic Opportunity.

"Full-time equivalent job" means a job in which the new employee works for the owner, operator, contractor, or tenant of a data center or for a corporation under contract with the owner, operator or tenant of a data center at a rate of at least 35 hours per week. An owner, operator or tenant who employs labor or services at a specific site or facility under contract with another may declare one full-time, permanent job for every 1,820 man hours worked per year under that contract. Vacations, paid holidays, and sick time are included in this computation. Overtime is not considered a part of regular hours.

"Qualified tangible personal property" means: electrical systems and equipment; climate control and chilling equipment and systems; mechanical systems and equipment; monitoring and secure systems; emergency generators; hardware; computers; servers; data storage devices; network connectivity equipment; racks; cabinets; telecommunications cabling infrastructure; raised floor systems; peripheral components or systems; software; mechanical, electrical, or plumbing systems; battery systems; cooling systems and towers; temperature control systems; other cabling; and other data center infrastructure equipment and systems necessary to operate qualified tangible personal property, including fixtures; and component parts of any of the foregoing, including installation, maintenance, repair, refurbishment, and replacement of qualified tangible personal property to generate, transform, transmit, distribute, or manage electricity necessary to operate qualified tangible personal property; and all other tangible personal property that is essential to the operations of a computer data center. "Qualified tangible personal property" also includes building materials physically incorporated in to the qualifying data center.

To document the exemption allowed under this Section, the retailer must obtain from the purchaser a copy of the certificate of eligibility issued by the Department.

(d) New and existing data centers seeking a certificate of exemption for new or existing facilities shall apply to the Department in the manner specified by the Department. The Department shall determine the duration of the certificate of exemption awarded under this Act. The duration of the certificate of exemption may not exceed 20 calendar years. The Department and any data center seeking the exemption, including a data center operator on behalf of itself and its tenants, must enter into a memorandum of understanding that at a minimum provides:

(1) the details for determining the amount of capital investment to be made;

(2) the number of new jobs created;

(3) the timeline for achieving the capital investment and new job goals;

(4) the repayment obligation should those goals not be achieved and any conditions under which repayment by the qualifying data center or data center tenant claiming the exemption will be required;

(5) the duration of the exemption; and

(6) other provisions as deemed necessary by the Department.

(e) Beginning July 1, 2021, and each year thereafter, the Department shall annually report to the Governor and the General Assembly on the outcomes and effectiveness of Public Act 101-31 that shall include the following:

(1) the name of each recipient business;

(2) the location of the project;

(3) the estimated value of the credit;

(4) the number of new jobs and, if applicable, retained jobs pledged as a result of the project; and

(5) whether or not the project is located in an underserved area.

(f) New and existing data centers seeking a certificate of exemption related to the rehabilitation or construction of data centers in the State shall require the contractor and all subcontractors to comply with the requirements of Section 30-22 of the Illinois Procurement Code as they apply to responsible bidders and to present satisfactory evidence of that compliance to the Department.

(g) New and existing data centers seeking a certificate of exemption for the rehabilitation or construction of data centers in the State shall require the contractor to enter into a project labor agreement approved by the Department.

(h) Any qualifying data center issued a certificate of exemption under this Section must annually report to the Department the total data center tax benefits that are received by the business. Reports are due no later than May 31 of each year and shall cover the previous calendar year. The first report is for the 2019 calendar year and is due no later than May 31, 2020.

To the extent that a business issued a certificate of exemption under this Section has obtained an Enterprise Zone Building Materials Exemption Certificate or a High Impact Business Building Materials Exemption Certificate, no additional reporting for those building materials exemption benefits is required under this Section.

Failure to file a report under this subsection (h) may result in suspension or revocation of the certificate of exemption. Factors to be considered in determining whether a data center certificate of exemption shall be suspended or revoked include, but are not limited to, prior compliance with the reporting requirements, cooperation in discontinuing and correcting violations, the extent of the violation, and whether the violation was willful or inadvertent.

(i) The Department shall not issue any new certificates of exemption under the provisions of this Section after July 1, 2029. This sunset shall not affect any existing certificates of exemption in effect on July 1, 2029.

(j) The Department shall adopt rules to implement and administer this Section.

(Source: P.A. 101-31, eff. 6-28-19; 101-604, eff. 12-13-19.)

Section 10. The Brownfields Redevelopment and Intermodal Promotion Act is amended by changing Section 3-20 as follows:

(20 ILCS 607/3-20)

Sec. 3-20. South Suburban Brownfields Redevelopment Fund; eligible projects. In State fiscal years 2015 through 2031 2021, all moneys in the South Suburban Brownfields Redevelopment Fund shall be held solely to fund eligible projects undertaken pursuant to the provisions of Section 3-35 of this Act and performed either directly by Cook County through a development agreement with the Department, by an entity designated by Cook County through a development agreement with the Department to perform specific tasks, or by an Eligible Developer or an Eligible Employer through a development agreement. All Eligible Projects are subject to review and approval by the Managing Partner and by the Department. The life span of the Fund may be extended past 2036 2026 by law.

(Source: P.A. 101-275, eff. 8-9-19.)

Section 15. The New Markets Development Program Act is amended by changing Sections 25, 45, and 50 as follows:

(20 ILCS 663/25)

Sec. 25. Certification of qualified equity investments.

(a) A qualified community development entity that seeks to have an equity investment or long-term debt security designated as a qualified equity investment and eligible for tax credits under this Section shall apply to the Department. The qualified community development entity must submit an application on a form that the Department provides that includes:

(1) The name, address, tax identification number of the entity, and evidence of the entity's certification as a qualified community development entity.

(2) A copy of the allocation agreement executed by the entity, or its controlling entity, and the Community Development Financial Institutions Fund.

(3) A certificate executed by an executive officer of the entity attesting that the allocation agreement remains in effect and has not been revoked or cancelled by the Community Development Financial Institutions Fund.

(4) A description of the proposed amount, structure, and purchaser of the equity investment or long-term debt security.

(5) The name and tax identification number of any taxpayer eligible to utilize tax credits earned as a result of the issuance of the qualified equity investment.

(6) Information regarding the proposed use of proceeds from the issuance of the qualified equity investment.

(7) A nonrefundable application fee of $5,000. This fee shall be paid to the Department and shall be required of each application submitted.

(8) With respect to qualified equity investments made on or after January 1, 2017, the amount of qualified equity investment authority the applicant agrees to designate as a federal qualified equity investment under Section 45D of the Internal Revenue Code, including a copy of the screen shot from the Community Development Financial Institutions Fund's Allocation Tracking System of the applicant's remaining federal qualified equity investment authority.

(b) (Blank). Within 30 days after receipt of a completed application containing the information necessary for the Department to certify a potential qualified equity investment, including the payment of the application fee, the Department shall grant or deny the application in full or in part. If the Department denies any part of the application, it shall inform the qualified community development entity of the grounds for the denial. If the qualified community development entity provides any additional information required by the Department or otherwise completes its application within 15 days of the notice of denial, the application shall be considered completed as of the original date of submission. If the qualified community development entity fails to provide the information or complete its application within the 15-day period, the application remains denied and must be resubmitted in full with a new submission date.

(c) (Blank). If the application is deemed complete, the Department shall certify the proposed equity investment or long-term debt security as a qualified equity investment that is eligible for tax credits under this Section, subject to the limitations contained in Section 20. The Department shall provide written notice of the certification to the qualified community development entity. The notice shall include the names of those taxpayers who are eligible to utilize the credits and their respective credit amounts. If the names of the taxpayers who are eligible to utilize the credits change due to a transfer of a qualified equity investment or a change in an allocation pursuant to Section 15, the qualified community development entity shall notify the Department of such change.

(d) (Blank). With respect to applications received before January 1, 2017, the Department shall certify qualified equity investments in the order applications are received by the Department. Applications received on the same day shall be deemed to have been received simultaneously. For applications received on the same day and deemed complete, the Department shall certify, consistent with remaining tax credit capacity, qualified equity investments in proportionate percentages based upon the ratio of the amount of qualified equity investment requested in an application to the total amount of qualified equity investments requested in all applications received on the same day.

(d-5) (Blank). With respect to applications received on or after January 1, 2017, the Department shall certify applications by applicants that agree to designate qualified equity investments as federal qualified equity investments in accordance with item (8) of subsection (a) of this Section in proportionate percentages based upon the ratio of the amount of qualified equity investments requested in an application to be designated as federal qualified equity investments to the total amount of qualified equity investments to be designated as federal qualified equity investments requested in all applications received on the same day.

(d-10) (Blank). With respect to applications received on or after January 1, 2017, after complying with subsection (d-5), the Department shall certify the qualified equity investments of all other applicants, including the remaining qualified equity investment authority requested by applicants not designated as federal qualified equity investments in accordance with item (8) of subsection (a) of this Section, in proportionate percentages based upon the ratio of the amount of qualified equity investments requested in the applications to the total amount of qualified equity investments requested in all applications received on the same day.

(e) Once the Department has certified qualified equity investments that, on a cumulative basis, are eligible for $20,000,000 in tax credits, the Department may not certify any more qualified equity investments. If a pending request cannot be fully certified, the Department shall certify the portion that may be certified unless the qualified community development entity elects to withdraw its request rather than receive partial credit.

(f) (Blank). Within 30 days after receiving notice of certification, the qualified community development entity shall (i) issue the qualified equity investment and receive cash in the amount of the certified amount and (ii) with respect to qualified equity investments made on or after January 1, 2017, if applicable, designate the required amount of qualified equity investment authority as a federal qualified equity investment. The qualified community development entity must provide the Department with evidence of the receipt of the cash investment within 10 business days after receipt and, with respect to qualified equity investments made on or after January 1, 2017, if applicable, provide evidence that the required amount of qualified equity investment authority was designated as a federal qualified equity investment. If the qualified community development entity does not receive the cash investment and issue the qualified equity investment within 30 days following receipt of the certification notice, the certification shall lapse and the entity may not issue the qualified equity investment without reapplying to the Department for certification. A certification that lapses reverts back to the Department and may be reissued only in accordance with the application process outline in this Section 25.

(g) Allocation rounds enabled by this Act shall be applied for according to the following schedule:

(1) (blank); on January 2, 2019, $125,000,000 of qualified equity investments; and

(2) not less than 45 days after but not more than 90 days after the Community Development Financial Institutions Fund of the United States Department of the Treasury announces allocation awards under a Notice of Funding Availability that is published in the Federal Register on after September 6, 2019, $125,000,000 of qualified equity investments; and .

(3) for any round occurring after January 1, 2022, at times published on the Department's website.

(Source: P.A. 100-408, eff. 8-25-17; 101-604, eff. 12-13-19.)

(20 ILCS 663/45)

Sec. 45. Examination and Rulemaking.

(a) The Department may conduct examinations to verify that the tax credits under this Act have been received and applied according to the requirements of this Act and to verify that no event has occurred that would result in a recapture of tax credits under Section 40.

(b) The Neither the Department and nor the Department of Revenue shall have the authority to adopt promulgate rules under the Act, including, but not limited to, the areas of eligibility criteria, application review, award procedures, and prohibited activities and interests. Rules relating to eligibility may include criteria that prioritize investments in targeted industries or that are likely to increase local employment. but the Department and the Department of Revenue shall have the authority to issue advisory letters to individual qualified community development entities and their investors that are limited to the specific facts outlined in an advisory letter request from a qualified community development entity. Such rulings cannot be relied upon by any person or entity other than the qualified community development entity that requested the letter and the taxpayers that are entitled to any tax credits generated from investments in such entity. For purposes of this subsection, "rules" is given the meaning contained in Section 1-70 of the Illinois Administrative Procedure Act.

(c) (Blank). In rendering advisory letters and making other determinations under this Act, to the extent applicable, the Department and the Department of Revenue shall look for guidance to Section 45D of the Internal Revenue Code of 1986, as amended, and the rules and regulations issued thereunder.

(Source: P.A. 95-1024, eff. 12-31-08.)

(20 ILCS 663/50)

Sec. 50. Sunset. For fiscal years following fiscal year 2026 2021, qualified equity investments shall not be made under this Act unless reauthorization is made pursuant to this Section. For all fiscal years following fiscal year 2026 2021, unless the General Assembly adopts a joint resolution granting authority to the Department to approve qualified equity investments for the Illinois new markets development program and clearly describing the amount of tax credits available for the next fiscal year, or otherwise complies with the provisions of this Section, no qualified equity investments may be permitted to be made under this Act. The amount of available tax credits contained in such a resolution shall not exceed the limitation provided under Section 20. Nothing in this Section precludes a taxpayer who makes a qualified equity investment prior to the expiration of authority to make qualified equity investments from claiming tax credits relating to that qualified equity investment for each applicable credit allowance date.

(Source: P.A. 100-408, eff. 8-25-17.)

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