Radical Changes to Enterprise Zone Laws under Consideration

Recent legislative concerns about the perceived use and abuse of enterprise zone tax incentives and the call to extend the life of zones that may be close to lapsing have resulted in newly proposed legislation that would radically alter the existing enterprise zone program in Illinois. Rep. John Bradley has proposed Amendment #1 to HB 4189 which would allow all existing enterprise zones to lapse at the end of their current certification period and force existing zones to re-apply for the lapsed zone certification along with any other area that may want to compete for that enterprise zone designation. The life of all new zones would be limited to a maximum of 10 years.  

As proposed, applicants for a lapsed zone would be vetted by a new 6-person Enterprise Zone Board within the Department of Commerce and Economic Opportunity (DCEO). Members of the Board would be appointed by legislative leaders. The Board would review all applications submitted for open zone designations and make recommendations to DCEO based on a point system that awards points for considerations such as unemployment and poverty levels within the zone. In addition, a minimum requirement of 1,000 full time jobs and investment of $100 million or more would be required per zone. A zone would be subject to de-certification if job and investment targets are not met.  

The new Board would “grade” the zone applicants on a point system based on criteria outlined in the legislation and make recommendations for certification to DCEO. DCEO would make the final certification decision.  

New reporting requirements would also be established for zone businesses that would require detailed monthly reporting to DCEO, itemizing all transactions to which a tax incentive applies. However, rather than claiming an immediate tax deduction or credit on items like building materials incorporated into a zone, businesses will be required to pay the tax upfront and file claims for refunds.     

Enterprise zone reform discussions will begin anew when the legislature re-convenes next week.  We’ll be keeping you advised.