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Illinois General Assembly Passes Multifaceted Economic Development Bill

In the last two days of its spring session, the Illinois General Assembly passed SB 20, the "Economic Development Act of 2013." The bill proposes changes to variety of existing programs and would pave the way for new developments. The following Policy Update reviews several components of the bill that would affect the seven-county metropolitan Chicago region.

South Suburban Airport
The first article in SB 20 would permit the formation of a public-private partnership (PPP) to develop a south suburban airport. The Illinois Department of Transportation (IDOT) would oversee the development of the project and enter into a public-private agreement on behalf of the State. This contrasts with prior proposals that suggested other entities, such as Will County or a new board, govern the process. Ultimately, the Governor would have the power to accept or reject the selected PPP agreement. The legislation stipulates that the PPP could be no longer than 75 years and could only be extended with the General Assembly's approval. The bill would require related project developments to align with CMAP's current comprehensive regional plan and regional Transportation Improvement Program, as well as the State Transportation Improvement Program.

South Suburban Brownfields
The bill also establishes the "Brownfields Redevelopment and Intermodal Promotion Act," which would facilitate the remediation and productive reuse of brownfields in industrial-zoned sites adjacent to Canadian National (CN) and Union Pacific (UP) intermodal freight yards in suburban Cook County. The act's three stated purposes include:

  • Redevelopment to maximize protection and improvement of the natural environment.
  • Restoration of industrially zoned land to its best and highest use, defined in the bill as logistics or manufacturing operations.
  • Employment of local low- and moderate-income residents.

To guide the development, the bill would establish a South Suburban Brownfields Advisory Council comprised of representatives from affected municipalities and experts appointed by the Governor and Cook County Board President. Under the proposed legislation, eligible brownfield uses must be based on the Urban Land Institute's "Guide to Classifying Industrial Property." Waste processing of any kind or container storage without an attached goods movement facility would be prohibited under SB 20.

The bill would create a Brownfields Redevelopment Zone to be funded with incremental individual income tax generated from employees in the zone. The amount of increment allocated to the Zone would be limited to $3 million annually. Without this diversion in place for brownfield redevelopment, the individual income tax revenues would normally go to state education, general revenues, and local governments. However, to the extent that a Zone could catalyze other economic activity, local governments within a Zone may receive more property tax, sales tax, or utility tax revenue than they otherwise would have received without the diversion.

The bill outlines eligible uses for Brownfield Redevelopment Zone funds, including: site assessments and plans; remediation of brownfield sites; land acquisition and site assembly; demolition; and recruiting and training of minority residents within the Zone for logistics and light manufacturing employment. The bill would limit expenditures for recruiting and training activities to 20 percent of the dollars available in the South Suburban Increment Fund, or no more than 15 percent in one year. The Zone would be managed by an appointee of Cook County, and the Zone would expire in 2021. Many of the provisions regarding brownfields redevelopment had previously been included in HB 2940.

A GO TO 2040 strategy paper highlights significant opportunities for brownfield redevelopment in the seven-county region, particularly in Cook County and older communities around the region. The paper also points out that brownfields remediation can bring significant a return on investments.

Enterprise Zones (EZ) and High-Impact Businesses
SB 20 would make several adjustments to the existing EZ statute. The bill would add a number of criteria to the EZ application scoring system, including: severity of unemployment, number of jobs created and aggregated amount of investment promised, and severity of environmental impact of brownfield or federal disaster area or flooding, among other considerations. Other changes would impact administration by the Illinois Department of Commerce and Economic Opportunity's (DCEO) of the EZ program by changing application process deadlines. The EZ program oversight body -- a board within DCEO comprised of DCEO's director, the director of the Illinois Department of Revenue (DOR), and three members appointed by the Governor -- would have additional responsibilities under SB 20. The bill would also require the board, in reviewing EZ applications, to consider "the costs incurred by the State and units of local government as a result of tax benefits received by the enterprise zone." Businesses receiving tax incentives in EZs or designated High-Impact Businesses would also have new reporting requirements to the board regarding tax benefits to the business and additional information on the use of sales tax exemptions for building materials.

This bill would also amend the High-Impact Business designation to provide tax incentives for a fertilizer plant proposed in Tuscola, south of Champaign, Illinois. The firm would be required to invest at least $500 million in the plant and create 125 full-time equivalent jobs.

River Edge Redevelopment Zones
The bill would repeal the jobs tax credit for River Edge Redevelopment Zones, which currently provide tax incentives to environmentally challenged properties adjacent to rivers in four zones in Illinois. Two of these zones are located in Aurora and Elgin.

In addition, the bill would create a new Riverfront Development Fund to promote development in river-edge redevelopment zones within financially distressed cities. Currently, just one city in Illinois, East St. Louis, has received this designation. The program would be funded with incremental income tax revenue attributable to new employees of employers in the zone, up to a maximum of $3 million annually. The funds would be appropriated to DCEO to make infrastructure grants to developers in the zone.

McCormick Place
SB 20 would also allow for maintenance of an existing facility and the creation of a new facility under the Metropolitan Pier and Exposition Authority Act. Up to $5 million annually would be available for repair, maintenance, and improvement of the Rosemont convention center and its debt service. Additionally, the bill would permit a new facility near McCormick Place in the City of Chicago. The legislation would also make changes to clauses regarding audits of exhibitor rights, notably requiring a single annual audit instead of the current twice-yearly financial audit and compliance attestation.

Other Changes
The bill would change the criteria under which Grundy County can rebate taxes in County Economic Development Project Areas, modify the soil productivity index calculation that is used in assessing farmland for property tax purposes, extend two tax increment financing districts in the City of Chicago to 35 years (Michigan/Cermak area and the Midwest Redevelopment), and provide additional funding to the Underground Storage Tank Fund.

SB 20 has passed out of both chambers, and Governor Quinn indicated he will sign it. The bill addresses some GO TO 2040 recommendations, such as incenting brownfield redevelopment and encouraging innovative transportation financing. However, it makes little progress toward ensuring that economic development programs get evaluated and targeted. In the last hours of session, the bill was amended to include several separate bills -- as well as other new provisions -- that had not been introduced previously. The process left little time for public input and analysis.