102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
HB1867

 

Introduced 2/17/2021, by Rep. Michael J. Zalewski

 

SYNOPSIS AS INTRODUCED:
 
20 ILCS 605/605-1055 new
20 ILCS 605/605-320 rep.
30 ILCS 750/Art. 11 rep.
35 ILCS 10/5-5
35 ILCS 10/5-10
35 ILCS 10/5-25
35 ILCS 10/5-70
35 ILCS 10/5-90
35 ILCS 10/5-40 rep.

    Amends the Economic Development for a Growing Economy Tax Credit Act. Repeals provisions concerning the Illinois Business Investment Committee. Amends the Department of Commerce and Economic Opportunity Law of the Civil Administrative Code. Creates the Illinois Small Business Fund as a nonappropriated separate and apart trust fund in the State Treasury. Provides that the Department of Commerce and Economic Opportunity shall use moneys in the Fund to manage proceeds that result from investments that the Department has undertaken through economic development programs. Repeals the Illinois Small Business Incubator Article within the Build Illinois Act.


LRB102 14727 HLH 20080 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB1867LRB102 14727 HLH 20080 b

1    AN ACT concerning State government.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Department of Commerce and Economic
5Opportunity Law of the Civil Administrative Code of Illinois
6is amended by adding Section 605-1055 as follows:
 
7    (20 ILCS 605/605-1055 new)
8    Sec. 605-1055. The Illinois Small Business Fund. The
9Illinois Small Business Fund is created as a nonappropriated
10separate and apart trust fund in the State Treasury. The
11Department shall use moneys in the Fund to manage proceeds
12that result from investments that the Department has
13undertaken through economic development programs, including
14but not limited to the Department's Venture Capital Investment
15Program. The Department may use moneys collected to reinvest
16in small business and economic development initiatives through
17grants or loans. The Fund may receive any grants or other
18moneys designated for small business growth from the State, or
19any unit of federal or local government, or any other person,
20firm, partnership, or corporation. Any interest earnings that
21are attributable to moneys in the Fund must be deposited into
22the Fund.
 

 

 

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1    (20 ILCS 605/605-320 rep.)
2    Section 10. The Department of Commerce and Economic
3Opportunity Law of the Civil Administrative Code of Illinois
4is amended by repealing Section 605-320.
 
5    (30 ILCS 750/Art. 11 rep.)
6    Section 15. The Build Illinois Act is amended by repealing
7Article 11.
 
8    Section 20. The Economic Development for a Growing Economy
9Tax Credit Act is amended by changing Sections 5-5, 5-10,
105-25, 5-70, and 5-90 as follows:
 
11    (35 ILCS 10/5-5)
12    Sec. 5-5. Definitions. As used in this Act:
13    "Agreement" means the Agreement between a Taxpayer and the
14Department under the provisions of Section 5-50 of this Act.
15    "Applicant" means a Taxpayer that is operating a business
16located or that the Taxpayer plans to locate within the State
17of Illinois and that is engaged in interstate or intrastate
18commerce for the purpose of manufacturing, processing,
19assembling, warehousing, or distributing products, conducting
20research and development, providing tourism services, or
21providing services in interstate commerce, office industries,
22or agricultural processing, but excluding retail, retail food,
23health, or professional services. "Applicant" does not include

 

 

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1a Taxpayer who closes or substantially reduces an operation at
2one location in the State and relocates substantially the same
3operation to another location in the State. This does not
4prohibit a Taxpayer from expanding its operations at another
5location in the State, provided that existing operations of a
6similar nature located within the State are not closed or
7substantially reduced. This also does not prohibit a Taxpayer
8from moving its operations from one location in the State to
9another location in the State for the purpose of expanding the
10operation provided that the Department determines that
11expansion cannot reasonably be accommodated within the
12municipality in which the business is located, or in the case
13of a business located in an incorporated area of the county,
14within the county in which the business is located, after
15conferring with the chief elected official of the municipality
16or county and taking into consideration any evidence offered
17by the municipality or county regarding the ability to
18accommodate expansion within the municipality or county.
19    "Committee" means the Illinois Business Investment
20Committee created under Section 5-25 of this Act within the
21Illinois Economic Development Board.
22    "Credit" means the amount agreed to between the Department
23and Applicant under this Act, but not to exceed the lesser of:
24(1) the sum of (i) 50% of the Incremental Income Tax
25attributable to New Employees at the Applicant's project and
26(ii) 10% of the training costs of New Employees; or (2) 100% of

 

 

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1the Incremental Income Tax attributable to New Employees at
2the Applicant's project. However, if the project is located in
3an underserved area, then the amount of the Credit may not
4exceed the lesser of: (1) the sum of (i) 75% of the Incremental
5Income Tax attributable to New Employees at the Applicant's
6project and (ii) 10% of the training costs of New Employees; or
7(2) 100% of the Incremental Income Tax attributable to New
8Employees at the Applicant's project. If an Applicant agrees
9to hire the required number of New Employees, then the maximum
10amount of the Credit for that Applicant may be increased by an
11amount not to exceed 25% of the Incremental Income Tax
12attributable to retained employees at the Applicant's project;
13provided that, in order to receive the increase for retained
14employees, the Applicant must provide the additional evidence
15required under paragraph (3) of subsection (b) of Section
165-25.
17    "Department" means the Department of Commerce and Economic
18Opportunity.
19    "Director" means the Director of Commerce and Economic
20Opportunity.
21    "Full-time Employee" means an individual who is employed
22for consideration for at least 35 hours each week or who
23renders any other standard of service generally accepted by
24industry custom or practice as full-time employment. An
25individual for whom a W-2 is issued by a Professional Employer
26Organization (PEO) is a full-time employee if employed in the

 

 

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1service of the Applicant for consideration for at least 35
2hours each week or who renders any other standard of service
3generally accepted by industry custom or practice as full-time
4employment to Applicant.
5    "Incremental Income Tax" means the total amount withheld
6during the taxable year from the compensation of New Employees
7and, if applicable, retained employees under Article 7 of the
8Illinois Income Tax Act arising from employment at a project
9that is the subject of an Agreement.
10    "New Construction EDGE Agreement" means the Agreement
11between a Taxpayer and the Department under the provisions of
12Section 5-51 of this Act.
13    "New Construction EDGE Credit" means an amount agreed to
14between the Department and the Applicant under this Act as
15part of a New Construction EDGE Agreement that does not exceed
1650% of the Incremental Income Tax attributable to New
17Construction EDGE Employees at the Applicant's project;
18however, if the New Construction EDGE Project is located in an
19underserved area, then the amount of the New Construction EDGE
20Credit may not exceed 75% of the Incremental Income Tax
21attributable to New Construction EDGE Employees at the
22Applicant's New Construction EDGE Project.
23    "New Construction EDGE Employee" means a laborer or worker
24who is employed by an Illinois contractor or subcontractor in
25the actual construction work on the site of a New Construction
26EDGE Project, pursuant to a New Construction EDGE Agreement.

 

 

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1    "New Construction EDGE Incremental Income Tax" means the
2total amount withheld during the taxable year from the
3compensation of New Construction EDGE Employees.
4    "New Construction EDGE Project" means the building of a
5Taxpayer's structure or building, or making improvements of
6any kind to real property. "New Construction EDGE Project"
7does not include the routine operation, routine repair, or
8routine maintenance of existing structures, buildings, or real
9property.
10    "New Employee" means:
11        (a) A Full-time Employee first employed by a Taxpayer
12    in the project that is the subject of an Agreement and who
13    is hired after the Taxpayer enters into the tax credit
14    Agreement.
15        (b) The term "New Employee" does not include:
16            (1) an employee of the Taxpayer who performs a job
17        that was previously performed by another employee, if
18        that job existed for at least 6 months before hiring
19        the employee;
20            (2) an employee of the Taxpayer who was previously
21        employed in Illinois by a Related Member of the
22        Taxpayer and whose employment was shifted to the
23        Taxpayer after the Taxpayer entered into the tax
24        credit Agreement; or
25            (3) a child, grandchild, parent, or spouse, other
26        than a spouse who is legally separated from the

 

 

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1        individual, of any individual who has a direct or an
2        indirect ownership interest of at least 5% in the
3        profits, capital, or value of the Taxpayer.
4        (c) Notwithstanding paragraph (1) of subsection (b),
5    an employee may be considered a New Employee under the
6    Agreement if the employee performs a job that was
7    previously performed by an employee who was:
8            (1) treated under the Agreement as a New Employee;
9        and
10            (2) promoted by the Taxpayer to another job.
11        (d) Notwithstanding subsection (a), the Department may
12    award Credit to an Applicant with respect to an employee
13    hired prior to the date of the Agreement if:
14            (1) the Applicant is in receipt of a letter from
15        the Department stating an intent to enter into a
16        credit Agreement;
17            (2) the letter described in paragraph (1) is
18        issued by the Department not later than 15 days after
19        the effective date of this Act; and
20            (3) the employee was hired after the date the
21        letter described in paragraph (1) was issued.
22    "Noncompliance Date" means, in the case of a Taxpayer that
23is not complying with the requirements of the Agreement or the
24provisions of this Act, the day following the last date upon
25which the Taxpayer was in compliance with the requirements of
26the Agreement and the provisions of this Act, as determined by

 

 

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1the Director, pursuant to Section 5-65.
2    "Pass Through Entity" means an entity that is exempt from
3the tax under subsection (b) or (c) of Section 205 of the
4Illinois Income Tax Act.
5    "Professional Employer Organization" (PEO) means an
6employee leasing company, as defined in Section 206.1(A)(2) of
7the Illinois Unemployment Insurance Act.
8    "Related Member" means a person that, with respect to the
9Taxpayer during any portion of the taxable year, is any one of
10the following:
11        (1) An individual stockholder, if the stockholder and
12    the members of the stockholder's family (as defined in
13    Section 318 of the Internal Revenue Code) own directly,
14    indirectly, beneficially, or constructively, in the
15    aggregate, at least 50% of the value of the Taxpayer's
16    outstanding stock.
17        (2) A partnership, estate, or trust and any partner or
18    beneficiary, if the partnership, estate, or trust, and its
19    partners or beneficiaries own directly, indirectly,
20    beneficially, or constructively, in the aggregate, at
21    least 50% of the profits, capital, stock, or value of the
22    Taxpayer.
23        (3) A corporation, and any party related to the
24    corporation in a manner that would require an attribution
25    of stock from the corporation to the party or from the
26    party to the corporation under the attribution rules of

 

 

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1    Section 318 of the Internal Revenue Code, if the Taxpayer
2    owns directly, indirectly, beneficially, or constructively
3    at least 50% of the value of the corporation's outstanding
4    stock.
5        (4) A corporation and any party related to that
6    corporation in a manner that would require an attribution
7    of stock from the corporation to the party or from the
8    party to the corporation under the attribution rules of
9    Section 318 of the Internal Revenue Code, if the
10    corporation and all such related parties own in the
11    aggregate at least 50% of the profits, capital, stock, or
12    value of the Taxpayer.
13        (5) A person to or from whom there is attribution of
14    stock ownership in accordance with Section 1563(e) of the
15    Internal Revenue Code, except, for purposes of determining
16    whether a person is a Related Member under this paragraph,
17    20% shall be substituted for 5% wherever 5% appears in
18    Section 1563(e) of the Internal Revenue Code.
19    "Taxpayer" means an individual, corporation, partnership,
20or other entity that has any Illinois Income Tax liability.
21    "Underserved area" means a geographic area that meets one
22or more of the following conditions:
23        (1) the area has a poverty rate of at least 20%
24    according to the latest federal decennial census;
25        (2) 75% or more of the children in the area
26    participate in the federal free lunch program according to

 

 

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1    reported statistics from the State Board of Education;
2        (3) at least 20% of the households in the area receive
3    assistance under the Supplemental Nutrition Assistance
4    Program (SNAP); or
5        (4) the area has an average unemployment rate, as
6    determined by the Illinois Department of Employment
7    Security, that is more than 120% of the national
8    unemployment average, as determined by the U.S. Department
9    of Labor, for a period of at least 2 consecutive calendar
10    years preceding the date of the application.
11(Source: P.A. 100-511, eff. 9-18-17; 101-9, eff. 6-5-19.)
 
12    (35 ILCS 10/5-10)
13    Sec. 5-10. Powers of the Department. The Department, in
14addition to those powers granted under the Civil
15Administrative Code of Illinois, is granted and shall have all
16the powers necessary or convenient to carry out and effectuate
17the purposes and provisions of this Act, including, but not
18limited to, power and authority to:
19    (a) Promulgate procedures, rules, or regulations deemed
20necessary and appropriate for the administration of the
21programs; establish forms for applications, notifications,
22contracts, or any other agreements; and accept applications at
23any time during the year.
24    (b) Provide and assist Taxpayers pursuant to the
25provisions of this Act, and cooperate with Taxpayers that are

 

 

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1parties to Agreements to promote, foster, and support economic
2development, capital investment, and job creation or retention
3within the State.
4    (c) Enter into agreements and memoranda of understanding
5for participation of and engage in cooperation with agencies
6of the federal government, local units of government,
7universities, research foundations or institutions, regional
8economic development corporations, or other organizations for
9the purposes of this Act.
10    (d) Gather information and conduct inquiries, in the
11manner and by the methods as it deems desirable, including
12without limitation, gathering information with respect to
13Applicants for the purpose of making any designations or
14certifications necessary or desirable or to gather information
15to assist the Department Committee with any recommendation or
16guidance in the furtherance of the purposes of this Act.
17    (e) Establish, negotiate and effectuate any term,
18agreement or other document with any person, necessary or
19appropriate to accomplish the purposes of this Act; and to
20consent, subject to the provisions of any Agreement with
21another party, to the modification or restructuring of any
22Agreement to which the Department is a party.
23    (f) Fix, determine, charge, and collect any premiums,
24fees, charges, costs, and expenses from Applicants, including,
25without limitation, any application fees, commitment fees,
26program fees, financing charges, or publication fees as deemed

 

 

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1appropriate to pay expenses necessary or incident to the
2administration, staffing, or operation in connection with the
3Department's or Committee's activities under this Act, or for
4preparation, implementation, and enforcement of the terms of
5the Agreement, or for consultation, advisory and legal fees,
6and other costs; however, all fees and expenses incident
7thereto shall be the responsibility of the Applicant.
8    (g) Provide for sufficient personnel to permit
9administration, staffing, operation, and related support
10required to adequately discharge its duties and
11responsibilities described in this Act from funds made
12available through charges to Applicants or from funds as may
13be appropriated by the General Assembly for the administration
14of this Act.
15    (h) Require Applicants, upon written request, to issue any
16necessary authorization to the appropriate federal, state, or
17local authority for the release of information concerning a
18project being considered under the provisions of this Act,
19with the information requested to include, but not be limited
20to, financial reports, returns, or records relating to the
21Taxpayers' or its project.
22    (i) Require that a Taxpayer shall at all times keep proper
23books of record and account in accordance with generally
24accepted accounting principles consistently applied, with the
25books, records, or papers related to the Agreement in the
26custody or control of the Taxpayer open for reasonable

 

 

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1Department inspection and audits, and including, without
2limitation, the making of copies of the books, records, or
3papers, and the inspection or appraisal of any of the Taxpayer
4or project assets.
5    (j) Take whatever actions are necessary or appropriate to
6protect the State's interest in the event of bankruptcy,
7default, foreclosure, or noncompliance with the terms and
8conditions of financial assistance or participation required
9under this Act, including the power to sell, dispose, lease,
10or rent, upon terms and conditions determined by the Director
11to be appropriate, real or personal property that the
12Department may receive as a result of these actions.
13(Source: P.A. 91-476, eff. 8-11-99.)
 
14    (35 ILCS 10/5-25)
15    Sec. 5-25. Review of Application.
16    (a) (Blank). In addition to those duties granted under the
17Illinois Economic Development Board Act, the Illinois Economic
18Development Board shall form a Business Investment Committee
19for the purpose of making recommendations for applications. At
20the request of the Board, the Director of Commerce and
21Economic Opportunity or his or her designee, the Director of
22the Governor's Office of Management and Budget or his or her
23designee, the Director of Revenue or his or her designee, the
24Director of Employment Security or his or her designee, and an
25elected official of the affected locality, such as the chair

 

 

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1of the county board or the mayor, may serve as members of the
2Committee to assist with its analysis and deliberations.
3    (b) The Department shall determine which projects will At
4the Department's request, the Committee shall convene, make
5inquiries, and conduct studies in the manner and by the
6methods as it deems desirable, review information with respect
7to Applicants, and make recommendations for projects to
8benefit the State. In making its recommendation that an
9Applicant's application for Credit should or should not be
10accepted, which shall occur within a reasonable time frame as
11determined by the nature of the application, the Department
12Committee shall determine that all the following conditions
13exist:
14        (1) The Applicant's project intends, as required by
15    subsection (b) of Section 5-20 to make the required
16    investment in the State and intends to hire the required
17    number of New Employees in Illinois as a result of that
18    project.
19        (2) The Applicant's project is economically sound and
20    will benefit the people of the State of Illinois by
21    increasing opportunities for employment and strengthen the
22    economy of Illinois.
23        (3) That, if not for the Credit, the project would not
24    occur in Illinois, which may be demonstrated by evidence
25    that receipt of the Credit is essential to the Applicant's
26    decision to create new jobs in the State, such as the

 

 

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1    magnitude of the cost differential between Illinois and a
2    competing State; in addition, if the Applicant is seeking
3    an increase in the maximum amount of the Credit for
4    retained employees, the Applicant must provide evidence
5    the Applicant has multi-state location options and could
6    reasonably and efficiently locate outside of the State or
7    demonstrate that at least one other state is being
8    considered for the project.
9        (4) A cost differential is identified, using best
10    available data, in the projected costs for the Applicant's
11    project compared to the costs in the competing state,
12    including the impact of the competing state's incentive
13    programs. The competing state's incentive programs shall
14    include state, local, private, and federal funds
15    available.
16        (5) The political subdivisions affected by the project
17    have committed local incentives with respect to the
18    project, considering local ability to assist.
19        (6) Awarding the Credit will result in an overall
20    positive fiscal impact to the State, as certified by the
21    Department Committee using the best available data.
22        (7) The Credit is not prohibited by Section 5-35 of
23    this Act.
24(Source: P.A. 100-511, eff. 9-18-17.)
 
25    (35 ILCS 10/5-70)

 

 

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1    Sec. 5-70. Annual report. On or before July 1 each year,
2the Department Committee shall submit a report to the
3Department on the tax credit program under this Act to the
4Governor and the General Assembly. The report shall include
5information on the number of Agreements that were entered into
6under this Act during the preceding calendar year, a
7description of the project that is the subject of each
8Agreement, an update on the status of projects under
9Agreements entered into before the preceding calendar year,
10and the sum of the Credits awarded under this Act. A copy of
11the report shall be delivered to the Governor and to each
12member of the General Assembly.
13    The report must include, for each Agreement:
14        (1) the original estimates of the value of the Credit
15    and the number of new jobs to be created and, if
16    applicable, the number of retained jobs;
17        (2) any relevant modifications to existing Agreements;
18        (3) a statement of the progress made by each Taxpayer
19    in meeting the terms of the original Agreement;
20        (4) a statement of wages paid to New Employees and, if
21    applicable, retained employees in the State;
22        (5) any information reported under Section 5-57 of
23    this Act; and
24        (6) a copy of the original Agreement or a link the
25    Agreement on the Department's website.
26(Source: P.A. 100-511, eff. 9-18-17.)
 

 

 

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1    (35 ILCS 10/5-90)
2    Sec. 5-90. Program Terms and Conditions.
3    (a) Any documentary materials or data made available or
4received by any member of a Committee or any agent or employee
5of the Department shall be deemed confidential and shall not
6be deemed public records to the extent that the materials or
7data consists of trade secrets, commercial or financial
8information regarding the operation of the business conducted
9by the Applicant for or recipient of any tax credit under this
10Act, or any information regarding the competitive position of
11a business in a particular field of endeavor.
12    (b) Nothing in this Act shall be construed as creating any
13rights in any Applicant to enter into an Agreement or in any
14person to challenge the terms of any Agreement.
15(Source: P.A. 91-476, eff. 8-11-99.)
 
16    (35 ILCS 10/5-40 rep.)
17    Section 25. The Economic Development for a Growing Economy
18Tax Credit Act is amended by repealing Section 5-40.