Bill Text: IL HB5737 | 2017-2018 | 100th General Assembly | Introduced

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Bill Title: 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.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Failed) 2019-01-08 - Session Sine Die [HB5737 Detail]

Download: Illinois-2017-HB5737-Introduced.html

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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.
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FISCAL NOTE ACT MAY APPLY
A BILL FOR
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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

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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

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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.

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"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

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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

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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

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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

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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

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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;

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(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

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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

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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.

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(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)

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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.