Illinois General Assembly - Full Text of HB5255
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Full Text of HB5255  102nd General Assembly




State of Illinois
2021 and 2022


Introduced 1/31/2022, by Rep. Keith R. Wheeler


New Act
35 ILCS 10/5-5
35 ILCS 10/5-45
35 ILCS 10/5-77

    Creates the Business Location Efficiency Incentive Act of 2022. Provides that a company or its representative that negotiates or applies for economic development assistance from the Department of Commerce and Economic Opportunity may apply for increased economic development assistance if the project is located in an area that satisfies the Act's standards for affordable workforce housing or affordable and accessible mass transit. Amends the Economic Development for a Growing Economy Tax Credit Act. Provides that the Department may not enter into any new agreements after June 30, 2032 (currently, June 30, 2022). Makes changes concerning the maximum credit amount under the Act. Provides that the Department of Commerce and Economic Opportunity may award a taxpayer an increased credit amount or other benefits within the agreement if the taxpayer demonstrates that, in addition to the investment at the project location, the taxpayer plans to make a non-project-specific capital investment in the furtherance of community or supply-chain development within the general surrounding area of the project. Effective immediately, except that provisions creating the Business Location Efficiency Incentive Act of 2022 take effect on January 1, 2023.

LRB102 25352 HLH 34631 b





HB5255LRB102 25352 HLH 34631 b

1    AN ACT concerning revenue.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 1. Short title. This Act may be cited as the
5Business Location Efficiency Incentive Act of 2022.
6    Section 5. Definitions. In this Act:
7    "Accessible and affordable mass transit" means access to
8transit stops with regular and frequent service within one
9mile from the project site and pedestrian access to transit
11    "Affordable workforce housing" means owner-occupied or
12rental housing that costs, based on current census data for
13the municipality where the project is located or any
14municipality within 3 miles of the municipality where the
15project is located, no more than 35% of the median salary at
16the project site, exclusive of the highest 10% of the site's
17salaries. If the project is located in an unincorporated area,
18"affordable workforce housing" means no more than 35% of the
19median salary at the project site, excluding the highest 10%
20of the site's salaries, based on the median cost of rental or
21of owner-occupied housing in the county where the
22unincorporated area is located.
23    "Applicant" means a company or its representative that



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1negotiates or applies for economic development assistance from
2the Department.
3    "Department" or "DCEO" means the Department of Commerce
4and Economic Opportunity.
5    "Economic development assistance" means State tax credits
6and tax exemptions given as an incentive to an eligible
7company after certification by DCEO under the Economic
8Development for a Growing Economy Tax Credit Act (EDGE).
9    "Employee housing or transportation remediation plan"
10means a plan to increase affordable housing or transportation
11options, or both, for employees earning up to the median
12annual salary of the workforce at the project. The plan may
13include, but is not limited to, an employer-financed or
14assisted housing program that can be supplemented by State or
15federal grants, shuttle services between the place of
16employment and existing transit stops or other reasonably
17accessible places, facilitation of employee carpooling, or
18similar services.
19    "Existence of infrastructure" means the existence within
201,500 feet of the proposed site of roads, sewers, sidewalks,
21and other utilities and a description of the investments or
22improvements, if any, that an applicant expects State or local
23government to make to that infrastructure.
24    "Location efficient" means a project that maximizes the
25use of existing investments in infrastructure, avoids or
26minimizes additional government expenditures for new



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1infrastructure, and has nearby housing affordable to the
2permanent workforce of the project or has accessible and
3affordable mass transit or its equivalent or some combination
4of both.
5    "Location efficiency report" means a report that is
6prepared by an applicant for increased State economic
7development assistance under Section 10 and follows this Act
8and any related Department guidelines, and that describes the
9existence of (i) affordable workforce housing or (ii)
10accessible and affordable mass transit or its equivalent.
11    Section 10. Economic development assistance awards.
12    (a) An applicant that also wants to be considered for
13increased economic development assistance under this Act shall
14submit a location efficiency report.
15    (b) The Department may give an applicant an increased tax
16credit or extension if the applicant's location efficiency
17report demonstrates that the applicant is seeking assistance
18for a project to be located in an area that satisfies this
19Act's standards for affordable workforce housing or affordable
20and accessible mass transit. If the Department determines from
21the location efficiency report that the applicant is seeking
22assistance in an area that is not location efficient, the
23Department may award an increase in State economic development
24assistance if an applicant (i) submits, and the Department
25accepts, an applicant's employee housing and transportation



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1remediation plan or (ii) creates jobs in a labor surplus area,
2as defined by the Department of Employment Security at the end
3of each calendar year.
4    (c) Applicants locating or expanding at location-efficient
5sites, with approved location efficiency plans, or creating
6jobs in labor surplus areas may receive (i) up to 10% more than
7the maximum allowable tax credits for which they are eligible
8under the Economic Development for a Growing Economy Tax
9Credit Act, but not to equal or exceed 100% of the applicant's
10tax liability or (ii) such other adjustment of those tax
11credits, including but not limited to extensions, as the
12Department deems appropriate.
13    (d) The Department may provide technical assistance to
14employers requesting assistance in developing an appropriate
15employee housing or transportation plan.
16    Section 15. Summaries; progress reports.
17    (a) The Department shall include summaries of the initial
18employee housing or transportation plans for each assisted
19project in the annual compilation and publication of project
20progress reports required under subsection (d) of Section 20
21of the Corporate Accountability for Tax Expenditures Act.
22Companies that fail to do so or that make inadequate progress
23shall have their increased tax credit or extension eliminated.
24Applicants and submitted data are subject to all disclosure,
25reporting, and recapture provisions provided under the



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1Corporate Accountability for Tax Expenditure Act.
2    (b) By June 1, 2023 and by June 1 of each year thereafter
3through 2032, the Department shall include, when appropriate,
4data on the outcomes or status of approved employee housing or
5transportation plans in the project progress reports required
6under the Corporate Accountability for Tax Expenditure Act.
7    Section 20. Duration of incentives; report to General
9    (a) Any multi-year incentive awarded under this Act shall
10continue for the time period called for in the agreement with
11the Department and shall not be altered by the repeal of this
13    (b) By January 1, 2024, the Department shall submit to the
14Speaker of the House of Representatives and the President of
15the Senate, for assignment to the appropriate committees, a
16report on the incentives awarded under this Act and the
17Department's activities, findings, and recommendations with
18respect to this Act and its extension, amendment, or repeal.
19The report, when acted upon by those committees, shall be
20distributed to each member of the General Assembly.
21    Section 25. Repeal. This Act is repealed on December 31,
23    Section 900. The Economic Development for a Growing



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1Economy Tax Credit Act is amended by changing Sections 5-5,
25-45, and 5-77 as follows:
3    (35 ILCS 10/5-5)
4    Sec. 5-5. Definitions. As used in this Act:
5    "Agreement" means the Agreement between a Taxpayer and the
6Department under the provisions of Section 5-50 of this Act.
7    "Applicant" means a Taxpayer that is operating a business
8located or that the Taxpayer plans to locate within the State
9of Illinois and that is engaged in interstate or intrastate
10commerce for the purpose of manufacturing, processing,
11assembling, warehousing, or distributing products, conducting
12research and development, providing tourism services, or
13providing services in interstate commerce, office industries,
14or agricultural processing, but excluding retail, retail food,
15health, or professional services. "Applicant" does not include
16a Taxpayer who closes or substantially reduces an operation at
17one location in the State and relocates substantially the same
18operation to another location in the State. This does not
19prohibit a Taxpayer from expanding its operations at another
20location in the State, provided that existing operations of a
21similar nature located within the State are not closed or
22substantially reduced. This also does not prohibit a Taxpayer
23from moving its operations from one location in the State to
24another location in the State for the purpose of expanding the
25operation provided that the Department determines that



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1expansion cannot reasonably be accommodated within the
2municipality in which the business is located, or in the case
3of a business located in an incorporated area of the county,
4within the county in which the business is located, after
5conferring with the chief elected official of the municipality
6or county and taking into consideration any evidence offered
7by the municipality or county regarding the ability to
8accommodate expansion within the municipality or county.
9    "Credit" means the amount agreed to between the Department
10and Applicant under this Act, but not to exceed the lesser of:
11(1) the sum of (i) 50% of the Incremental Income Tax
12attributable to New Employees at the Applicant's project and
13(ii) 10% of the training costs of New Employees; or (2) 100% of
14the Incremental Income Tax attributable to New Employees at
15the Applicant's project. However, if the project is located in
16an underserved area, then the amount of the Credit may not
17exceed the lesser of: (1) the sum of (i) 75% of the Incremental
18Income Tax attributable to New Employees at the Applicant's
19project and (ii) 10% of the training costs of New Employees; or
20(2) 100% of the Incremental Income Tax attributable to New
21Employees at the Applicant's project. If an Applicant agrees
22to hire the required number of New Employees, then the maximum
23amount of the Credit for that Applicant may be increased by an
24amount not to exceed 50% 25% of the Incremental Income Tax
25attributable to retained employees at the Applicant's project;
26however, if the project is located in an underserved area,



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1then the amount of the Credit for that Applicant may be
2increased by an amount not to exceed 75% of the Incremental
3Income Tax attributable to retained employees at the
4Applicant's project. In provided that, in order to receive the
5increase for retained employees, the Applicant must provide
6the additional evidence required under paragraph (3) of
7subsection (b) of Section 5-25.
8    "Department" means the Department of Commerce and Economic
10    "Director" means the Director of Commerce and Economic
12    "Full-time Employee" means an individual who is employed
13for consideration for at least 35 hours each week or who
14renders any other standard of service generally accepted by
15industry custom or practice as full-time employment. An
16individual for whom a W-2 is issued by a Professional Employer
17Organization (PEO) is a full-time employee if employed in the
18service of the Applicant for consideration for at least 35
19hours each week or who renders any other standard of service
20generally accepted by industry custom or practice as full-time
21employment to Applicant.
22    "Incremental Income Tax" means the total amount withheld
23during the taxable year from the compensation of New Employees
24and, if applicable, retained employees under Article 7 of the
25Illinois Income Tax Act arising from employment at a project
26that is the subject of an Agreement.



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1    "New Construction EDGE Agreement" means the Agreement
2between a Taxpayer and the Department under the provisions of
3Section 5-51 of this Act.
4    "New Construction EDGE Credit" means an amount agreed to
5between the Department and the Applicant under this Act as
6part of a New Construction EDGE Agreement that does not exceed
750% of the Incremental Income Tax attributable to New
8Construction EDGE Employees at the Applicant's project;
9however, if the New Construction EDGE Project is located in an
10underserved area, then the amount of the New Construction EDGE
11Credit may not exceed 75% of the Incremental Income Tax
12attributable to New Construction EDGE Employees at the
13Applicant's New Construction EDGE Project.
14    "New Construction EDGE Employee" means a laborer or worker
15who is employed by an Illinois contractor or subcontractor in
16the actual construction work on the site of a New Construction
17EDGE Project, pursuant to a New Construction EDGE Agreement.
18    "New Construction EDGE Incremental Income Tax" means the
19total amount withheld during the taxable year from the
20compensation of New Construction EDGE Employees.
21    "New Construction EDGE Project" means the building of a
22Taxpayer's structure or building, or making improvements of
23any kind to real property. "New Construction EDGE Project"
24does not include the routine operation, routine repair, or
25routine maintenance of existing structures, buildings, or real



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1    "New Employee" means:
2        (a) A Full-time Employee first employed by a Taxpayer
3    in the project that is the subject of an Agreement and who
4    is hired after the Taxpayer enters into the tax credit
5    Agreement.
6        (b) The term "New Employee" does not include:
7            (1) an employee of the Taxpayer who performs a job
8        that was previously performed by another employee, if
9        that job existed for at least 6 months before hiring
10        the employee;
11            (2) an employee of the Taxpayer who was previously
12        employed in Illinois by a Related Member of the
13        Taxpayer and whose employment was shifted to the
14        Taxpayer after the Taxpayer entered into the tax
15        credit Agreement; or
16            (3) a child, grandchild, parent, or spouse, other
17        than a spouse who is legally separated from the
18        individual, of any individual who has a direct or an
19        indirect ownership interest of at least 5% in the
20        profits, capital, or value of the Taxpayer.
21        (c) Notwithstanding paragraph (1) of subsection (b),
22    an employee may be considered a New Employee under the
23    Agreement if the employee performs a job that was
24    previously performed by an employee who was:
25            (1) treated under the Agreement as a New Employee;
26        and



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1            (2) promoted by the Taxpayer to another job.
2        (d) Notwithstanding subsection (a), the Department may
3    award Credit to an Applicant with respect to an employee
4    hired prior to the date of the Agreement if:
5            (1) the Applicant is in receipt of a letter from
6        the Department stating an intent to enter into a
7        credit Agreement;
8            (2) the letter described in paragraph (1) is
9        issued by the Department not later than 15 days after
10        the effective date of this Act; and
11            (3) the employee was hired after the date the
12        letter described in paragraph (1) was issued.
13    "Noncompliance Date" means, in the case of a Taxpayer that
14is not complying with the requirements of the Agreement or the
15provisions of this Act, the day following the last date upon
16which the Taxpayer was in compliance with the requirements of
17the Agreement and the provisions of this Act, as determined by
18the Director, pursuant to Section 5-65.
19    "Pass Through Entity" means an entity that is exempt from
20the tax under subsection (b) or (c) of Section 205 of the
21Illinois Income Tax Act.
22    "Professional Employer Organization" (PEO) means an
23employee leasing company, as defined in Section 206.1(A)(2) of
24the Illinois Unemployment Insurance Act.
25    "Related Member" means a person that, with respect to the
26Taxpayer during any portion of the taxable year, is any one of



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1the following:
2        (1) An individual stockholder, if the stockholder and
3    the members of the stockholder's family (as defined in
4    Section 318 of the Internal Revenue Code) own directly,
5    indirectly, beneficially, or constructively, in the
6    aggregate, at least 50% of the value of the Taxpayer's
7    outstanding stock.
8        (2) A partnership, estate, or trust and any partner or
9    beneficiary, if the partnership, estate, or trust, and its
10    partners or beneficiaries own directly, indirectly,
11    beneficially, or constructively, in the aggregate, at
12    least 50% of the profits, capital, stock, or value of the
13    Taxpayer.
14        (3) A corporation, and any party related to the
15    corporation in a manner that would require an attribution
16    of stock from the corporation to the party or from the
17    party to the corporation under the attribution rules of
18    Section 318 of the Internal Revenue Code, if the Taxpayer
19    owns directly, indirectly, beneficially, or constructively
20    at least 50% of the value of the corporation's outstanding
21    stock.
22        (4) A corporation and any party related to that
23    corporation in a manner that would require an attribution
24    of stock from the corporation to the party or from the
25    party to the corporation under the attribution rules of
26    Section 318 of the Internal Revenue Code, if the



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1    corporation and all such related parties own in the
2    aggregate at least 50% of the profits, capital, stock, or
3    value of the Taxpayer.
4        (5) A person to or from whom there is attribution of
5    stock ownership in accordance with Section 1563(e) of the
6    Internal Revenue Code, except, for purposes of determining
7    whether a person is a Related Member under this paragraph,
8    20% shall be substituted for 5% wherever 5% appears in
9    Section 1563(e) of the Internal Revenue Code.
10    "Taxpayer" means an individual, corporation, partnership,
11or other entity that has any Illinois Income Tax liability.
12    "Underserved area" means a geographic area that meets one
13or more of the following conditions:
14        (1) the area has a poverty rate of at least 20%
15    according to the latest federal decennial census;
16        (2) 75% or more of the children in the area
17    participate in the federal free lunch program according to
18    reported statistics from the State Board of Education;
19        (3) at least 20% of the households in the area receive
20    assistance under the Supplemental Nutrition Assistance
21    Program (SNAP); or
22        (4) the area has an average unemployment rate, as
23    determined by the Illinois Department of Employment
24    Security, that is more than 120% of the national
25    unemployment average, as determined by the U.S. Department
26    of Labor, for a period of at least 2 consecutive calendar



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1    years preceding the date of the application.
2(Source: P.A. 101-9, eff. 6-5-19; 102-330, eff. 1-1-22.)
3    (35 ILCS 10/5-45)
4    Sec. 5-45. Amount and duration of the credit.
5    (a) The Department shall determine the amount and duration
6of the credit awarded under this Act. The duration of the
7credit may not exceed 10 taxable years. The credit may be
8stated as a percentage of the Incremental Income Tax
9attributable to the applicant's project and may include a
10fixed dollar limitation.
11    (b) Notwithstanding subsection (a), and except as the
12credit may be applied in a carryover year pursuant to Section
13211(4) of the Illinois Income Tax Act, the credit may be
14applied against the State income tax liability in more than 10
15taxable years but not in more than 15 taxable years for an
16eligible business that (i) qualifies under this Act and the
17Corporate Headquarters Relocation Act and has in fact
18undertaken a qualifying project within the time frame
19specified by the Department of Commerce and Economic
20Opportunity under that Act, and (ii) applies against its State
21income tax liability, during the entire 15-year period, no
22more than 60% of the maximum credit per year that would
23otherwise be available under this Act.
24    (c) Nothing in this Section shall prevent the Department,
25in consultation with the Department of Revenue, from adopting



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1rules to extend the sunset of any earned, existing, and unused
2tax credit or credits a taxpayer may be in possession of, as
3provided for in Section 605-1070 605-1055 of the Department of
4Commerce and Economic Opportunity Law of the Civil
5Administrative Code of Illinois, notwithstanding the
6carry-forward provisions pursuant to paragraph (4) of Section
7211 of the Illinois Income Tax Act.
8    (d) Notwithstanding subsection (a) or (b), a recipient of
9a credit may request a certificate of transferability of
10credit from the Department for the amount of credit not
11previously claimed. A transferability certificate so issued
12may be transferred or sold by the recipient to another
13Illinois taxpayer. Transferors and sellers shall submit to the
14Department of Revenue a notification of any transfer or sale
15of tax credits within 30 days after the transfer or sale of
16those tax credits. The notification, which shall be in the
17form prescribed by the Department, shall include the
18transferor's tax credit balance prior to transfer, the credit
19certificate number, the identifying number of the EDGE
20agreement, the transferor's remaining tax credit balance after
21transfer, all tax identification numbers for both transferor
22and transferee, the date of transfer, the amount transferred,
23a copy of the credit certificate, and any other information
24required by the Department of Revenue. The transfer or sale of
25the credit does not extend the time in which credit can be
26used. The carry forward period for a credit that is



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1transferred or sold begins on the date on which the credit was
2originally granted by the Department. To the extent the
3transferor did not have rights to claim or use the credit at
4the time of the transfer or sale, the Department of Revenue
5shall either disallow the credit claimed by the transferee or
6recapture the credit from the transferee through any
7collection method authorized by statute. In such case, the
8transferee's recourse is against the transferor.
9    (e) The Department may award a Taxpayer an increased
10credit amount or other benefits within the Agreement if the
11Taxpayer demonstrates that, in addition to the investment at
12the project location, the Taxpayer plans to make a
13non-project-specific capital investment in the furtherance of
14community or supply-chain development within the general
15surrounding area of the project. In determining the type of
16eligible investment allowed under this Section (e), the
17Department shall consider the proximity of the non-project
18specific investment to the development, the amount and purpose
19of the non-project specific investment, and the overall
20economic development benefit for the surrounding area.
21Non-project specific investments may include, but are not
22limited to, partnerships with educational systems, including
23school, community college, or university, workforce
24development programs, infrastructure and technological
25infrastructure investments that serve a greater area than the
26project, affordable housing and real estate development,



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1health care services, and other purposes as deemed appropriate
2by the Department. Non-project-specific investments may also
3include contracts that utilize existing business and economic
4development projects or support new businesses and economic
5development projects in the surrounding area.
6(Source: P.A. 102-16, eff. 6-17-21; revised 12-6-21.)
7    (35 ILCS 10/5-77)
8    Sec. 5-77. Sunset of new Agreements. The Department shall
9not enter into any new Agreements under the provisions of
10Section 5-50 of this Act after June 30, 2032 June 30, 2022.
11(Source: P.A. 99-925, eff. 1-20-17; 100-511, eff. 9-18-17.)
12    Section 999. Effective date. This Act takes effect upon
13becoming law, except that Sections 1 through 25 take effect on
14January 1, 2023.