Bill Text: IL SB1755 | 2023-2024 | 103rd General Assembly | Introduced

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Bill Title: Amends the New Markets Development Program Act. Provides that the Department of Commerce and Economic Opportunity shall limit the monetary amount of qualified equity investments at no more than $20,000,000 of tax credits for the primary allocation and no more than $12,000,000 of tax credits for the targeted allocation. Provides that, on or after January 1, 2024, but not more than 120 days after the Community Development Financial Institutions Fund of the United States Department of the Treasury announces allocation awards under a Notice of Funding Availability that was published in the Federal Register on November 22, 2022, $250,000,000 of qualified equity investments for the primary allocation and $150,000,000 of qualified equity investments for the targeted allocation shall be allocated by the Department. Makes other changes. Defines terms. Effective immediately.

Spectrum: Slight Partisan Bill (Democrat 3-1)

Status: (Introduced) 2023-03-10 - Rule 3-9(a) / Re-referred to Assignments [SB1755 Detail]

Download: Illinois-2023-SB1755-Introduced.html

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103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB1755 Introduced 2/9/2023, by Sen. Christopher Belt SYNOPSIS AS INTRODUCED:
20 ILCS 663/5
20 ILCS 663/20
20 ILCS 663/25
20 ILCS 663/40
20 ILCS 663/45
20 ILCS 663/55
Amends the New Markets Development Program Act. Provides that the Department of Commerce and Economic Opportunity shall limit the monetary amount of qualified equity investments at no more than $20,000,000 of tax credits for the primary allocation and no more than $12,000,000 of tax credits for the targeted allocation. Provides that, on or after January 1, 2024, but not more than 120 days after the Community Development Financial Institutions Fund of the United States Department of the Treasury announces allocation awards under a Notice of Funding Availability that was published in the Federal Register on November 22, 2022, $250,000,000 of qualified equity investments for the primary allocation and $150,000,000 of qualified equity investments for the targeted allocation shall be allocated by the Department. Makes other changes. Defines terms. Effective immediately.
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A BILL FOR
SB1755 LRB103 06012 HLH 51037 b
AN ACT concerning State government.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The New Markets Development Program Act is
amended by changing Sections 5, 20, 25, 40, 45, and 55 as
follows:
(20 ILCS 663/5)
Sec. 5. Definitions. As used in this Act:
"Applicable percentage" means 0% for each of the first 2
credit allowance dates, 7% for the third credit allowance
date, and 8% for the next 4 credit allowance dates.
"Credit allowance date" means with respect to any
qualified equity investment:
(1) the date on which the investment is initially
made; and
(2) each of the 6 anniversary dates of that date
thereafter.
"Department" means the Department of Commerce and Economic
Opportunity.
"Long-term debt security" means any debt instrument issued
by a qualified community development entity, at par value or a
premium, with an original maturity date of at least 7 years
from the date of its issuance, with no acceleration of

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repayment, amortization, or prepayment features prior to its
original maturity date. Cumulative cash payments of interest
on the qualified debt instrument during the period commencing
with the issuance of the qualified debt instrument and ending
with the seventh anniversary of its issuance shall not exceed
the sum of such cash interest payments and the cumulative net
income of the issuing community development entity for the
same period. This definition in no way limits the holder's
ability to accelerate payments on the debt instrument in
situations where the issuer has defaulted on covenants
designed to ensure compliance with this Act or Section 45D of
the Internal Revenue Code of 1986, as amended.
"Primary allocation" means $250,000,000 in qualified
equity investment authority to be awarded on or after January
1, 2024 for investment in qualified active low-income
community businesses.
"Purchase price" means the amount paid to the issuer of a
qualified equity investment for that qualified equity
investment.
"Qualified active low-income community business" has the
meaning given to that term in Section 45D of the Internal
Revenue Code of 1986, as amended; except that any business
that derives or projects to derive 15% or more of its annual
revenue from the rental or sale of real estate is not
considered to be a qualified active low-income community
business. This exception does not apply to a business that is

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controlled by or under common control with another business if
the second business (i) does not derive or project to derive
15% or more of its annual revenue from the rental or sale of
real estate and (ii) is the primary tenant of the real estate
leased from the initial business. A business shall be
considered a qualified active low-income community business
for the duration of the qualified community development
entity's investment in or loan to the business if the entity
reasonably expects, at the time it makes the investment or
loan, that the business will continue to satisfy the
requirements for being a qualified active low-income community
business throughout the entire period of the investment or
loan.
"Qualified community development entity" has the meaning
given to that term in Section 45D of the Internal Revenue Code
of 1986, as amended; provided that such entity has entered
into, or is controlled by an entity that has entered into, an
allocation agreement with the Community Development Financial
Institutions Fund of the U.S. Treasury Department with respect
to credits authorized by Section 45D of the Internal Revenue
Code of 1986, as amended, that includes the State of Illinois
within the service area set forth in that allocation
agreement.
"Qualified equity investment" means any equity investment
in, or long-term debt security issued by, a qualified
community development entity that:

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(1) is acquired after the effective date of this Act
at its original issuance solely in exchange for cash;
(2) with respect to qualified equity investments made
before January 1, 2024 2017, has at least 85% of its cash
purchase price used by the issuer to make qualified
low-income community investments in the State of Illinois,
and, with respect to qualified equity investments made on
or after January 1, 2024 2017, has 100% of the cash
purchase price used by the issuer to make qualified
low-income community investments in the State of Illinois;
and
(3) is designated by the issuer as a qualified equity
investment under this Act; with respect to qualified
equity investments made on or after January 1, 2024 2017,
is designated by the issuer as a qualified equity
investment under Section 45D of the Internal Revenue Code
of 1986, as amended; and is certified by the Department as
not exceeding the limitation contained in Section 20.
This term includes any qualified equity investment that
does not meet the provisions of item (1) of this definition if
the investment was a qualified equity investment in the hands
of a prior holder.
"Qualified low-income community investment" means any
capital or equity investment in, or loan to, any qualified
active low-income community business. With respect to any one
qualified active low-income community business, the maximum

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amount of qualified low-income community investments made in
that business, on a collective basis with all of its
affiliates that may be counted towards the satisfaction of
paragraph (2) of the definition of qualified equity
investment, shall be $10,000,000 whether issued to one or
several qualified community development entities.
"Targeted allocation" means $150,000,000 in qualified
equity investment authority to be awarded for investment in
qualified active low-income community businesses engaged in
targeted industries.
"Targeted industries" means any business engaged in an
activity classified by the North American Industry
Classification System (NAICS) as Sector 11, 31-33, or 2211.
"Tax credit" means a credit against any income, franchise,
or insurance premium taxes, including insurance retaliatory
taxes, otherwise due under Illinois law.
"Taxpayer" means any individual or entity subject to any
income, franchise, or insurance premium tax under Illinois
law.
(Source: P.A. 100-408, eff. 8-25-17.)
(20 ILCS 663/20)
Sec. 20. Annual cap on credits. The Department shall limit
the monetary amount of qualified equity investments permitted
under this Act to a level necessary to limit tax credit use at
no more than $20,000,000 of tax credits for the primary

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allocation and no more than $12,000,000 of tax credits for the
targeted allocation in any fiscal year. This limitation on
qualified equity investments shall be based on the anticipated
use of credits without regard to the potential for taxpayers
to carry forward tax credits to later tax years.
(Source: P.A. 100-408, eff. 8-25-17.)
(20 ILCS 663/25)
Sec. 25. Certification of qualified equity investments.
(a) A qualified community development entity that seeks to
have an equity investment or long-term debt security
designated as a qualified equity investment and eligible for
tax credits under this Section shall apply to the Department.
The qualified community development entity must submit an
application on a form that the Department provides that
includes:
(1) The name, address, tax identification number of
the entity, and evidence of the entity's certification as
a qualified community development entity.
(2) A copy of the allocation agreement executed by the
entity, or its controlling entity, and the Community
Development Financial Institutions Fund.
(3) A certificate executed by an executive officer of
the entity attesting that the allocation agreement remains
in effect and has not been revoked or cancelled by the
Community Development Financial Institutions Fund.

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(4) A description of the proposed amount, structure,
and purchaser of the equity investment or long-term debt
security and, for applications submitted after January 1,
2024, whether qualified equity investment authority is
sought under the primary allocation or the targeted
allocation.
(5) The name and tax identification number of any
taxpayer eligible to utilize tax credits earned as a
result of the issuance of the qualified equity investment.
(6) Information regarding the proposed use of proceeds
from the issuance of the qualified equity investment.
(7) A nonrefundable application fee of $5,000. This
fee shall be paid to the Department and shall be required
of each application submitted.
(7.5) For applications submitted after January 1,
2024, a description of whether a qualified community
development entity is applying for the primary allocation
or the targeted allocation.
(8) With respect to qualified equity investments made
on or after January 1, 2017, the amount of qualified
equity investment authority the applicant agrees to
designate as a federal qualified equity investment under
Section 45D of the Internal Revenue Code, including a copy
of the screen shot from the Community Development
Financial Institutions Fund's Allocation Tracking System
of the applicant's remaining federal qualified equity

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investment authority.
(b) Within 30 days after receipt of a completed
application containing the information necessary for the
Department to certify a potential qualified equity investment,
including the payment of the application fee, the Department
shall grant or deny the application in full or in part. If the
Department denies any part of the application, it shall inform
the qualified community development entity of the grounds for
the denial. If the qualified community development entity
provides any additional information required by the Department
or otherwise completes its application within 15 days of the
notice of denial, the application shall be considered
completed as of the original date of submission. If the
qualified community development entity fails to provide the
information or complete its application within the 15-day
period, the application remains denied and must be resubmitted
in full with a new submission date.
(c) If the application is deemed complete, the Department
shall certify the proposed equity investment or long-term debt
security as a qualified equity investment that is eligible for
tax credits under this Section, subject to the limitations
contained in Section 20. The Department shall provide written
notice of the certification to the qualified community
development entity. The notice shall include the names of
those taxpayers who are eligible to utilize the credits and
their respective credit amounts. If the names of the taxpayers

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who are eligible to utilize the credits change due to a
transfer of a qualified equity investment or a change in an
allocation pursuant to Section 15, the qualified community
development entity shall notify the Department of such change.
(d) With respect to applications received before January
1, 2017, the Department shall certify qualified equity
investments in the order applications are received by the
Department. Applications received on the same day shall be
deemed to have been received simultaneously. For applications
received on the same day and deemed complete, the Department
shall certify, consistent with remaining tax credit capacity,
qualified equity investments in proportionate percentages
based upon the ratio of the amount of qualified equity
investment requested in an application to the total amount of
qualified equity investments requested in all applications
received on the same day.
(d-5) With respect to applications received on or after
January 1, 2017, the Department shall certify applications by
applicants that agree to designate qualified equity
investments as federal qualified equity investments in
accordance with item (8) of subsection (a) of this Section in
proportionate percentages based upon the ratio of the amount
of qualified equity investments requested in an application to
be designated as federal qualified equity investments to the
total amount of qualified equity investments to be designated
as federal qualified equity investments requested in all

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applications received on the same day.
(d-10) With respect to applications received on or after
January 1, 2017, after complying with subsection (d-5), the
Department shall certify the qualified equity investments of
all other applicants, including the remaining qualified equity
investment authority requested by applicants not designated as
federal qualified equity investments in accordance with item
(8) of subsection (a) of this Section, in proportionate
percentages based upon the ratio of the amount of qualified
equity investments requested in the applications to the total
amount of qualified equity investments requested in all
applications received on the same day.
(e) Once the Department has certified qualified equity
investments that, on a cumulative basis, are eligible for
$20,000,000 in tax credits for the primary allocation and
$12,000,000 in tax credits for the targeted allocation, the
Department may not certify any more qualified equity
investments. If a pending request cannot be fully certified,
the Department shall certify the portion that may be certified
unless the qualified community development entity elects to
withdraw its request rather than receive partial credit.
(f) Within 30 days after receiving notice of
certification, the qualified community development entity
shall (i) issue the qualified equity investment and receive
cash in the amount of the certified amount and (ii) with
respect to qualified equity investments made on or after

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January 1, 2017, if applicable, designate the required amount
of qualified equity investment authority as a federal
qualified equity investment. The qualified community
development entity must provide the Department with evidence
of the receipt of the cash investment within 10 business days
after receipt and, with respect to qualified equity
investments made on or after January 1, 2017, if applicable,
provide evidence that the required amount of qualified equity
investment authority was designated as a federal qualified
equity investment. If the qualified community development
entity does not receive the cash investment and issue the
qualified equity investment within 30 days following receipt
of the certification notice, the certification shall lapse and
the entity may not issue the qualified equity investment
without reapplying to the Department for certification. A
certification that lapses reverts back to the Department and
may be reissued only in accordance with the application
process outline in this Section 25.
(g) Allocation rounds enabled by this Act shall be applied
for according to the following schedule:
(1) on January 2, 2019, $125,000,000 of qualified
equity investments; and
(2) not less than 45 days after but not more than 90
days after the Community Development Financial
Institutions Fund of the United States Department of the
Treasury announces allocation awards under a Notice of

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Funding Availability that is published in the Federal
Register after September 6, 2019, $125,000,000 of
qualified equity investments.
(3) on or after January 1, 2024, but not more than 120
days after the Community Development Financial
Institutions Fund of the United States Department of the
Treasury announces allocation awards under a Notice of
Funding Availability that was published in the Federal
Register on November 22, 2022, $250,000,000 of qualified
equity investments for the primary allocation and
$150,000,000 of qualified equity investments for the
targeted allocation.
(Source: P.A. 100-408, eff. 8-25-17; 101-604, eff. 12-13-19.)
(20 ILCS 663/40)
Sec. 40. Recapture. The Department of Revenue shall
recapture, from the taxpayer that claimed the credit on a
return, the tax credit allowed under this Act if:
(1) any amount of the federal tax credit available
with respect to a qualified equity investment that is
eligible for a tax credit under this Act is recaptured
under Section 45D of the Internal Revenue Code of 1986, as
amended. In that case, the Department of Revenue's
recapture shall be proportionate to the federal recapture
with respect to that qualified equity investment;
(2) the issuer redeems or makes principal repayment

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with respect to a qualified equity investment prior to the
7th anniversary of the issuance of the qualified equity
investment. In that case, the Department of Revenue's
recapture shall be proportionate to the amount of the
redemption or repayment with respect to the qualified
equity investment;
(3) the issuer fails to invest at least 85% of the cash
purchase price of the qualified equity investment with
respect to qualified equity investments made before
January 1, 2017 and 100% of the cash purchase price of the
qualified equity investment with respect to qualified
equity investments made on or after January 1, 2017 in
qualified low-income community investments in the State of
Illinois within 12 months of the issuance of the qualified
equity investment and maintain such level of investment in
qualified low-income community investments in Illinois
until the last credit allowance date for such qualified
equity investment, provided that with respect to qualified
equity investments made after January 1, 2024 pursuant to
the targeted allocation, the issuer must invest 100% of
the cash purchase price of the qualified equity investment
in qualified low-income community investments in the State
of Illinois in qualified active low-income community
businesses engaged in a targeted industry within 12 months
of the issuance of the qualified equity investment and
maintain such level of investment in qualified low-income

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community investments in such targeted industries until
the last credit allowance date; or
(4) with respect to qualified equity investments made
on or after January 1, 2017, the issuer violates Section
43 of this Act.
For purposes of this Section, an investment shall be
considered held by an issuer even if the investment has been
sold or repaid; provided that the issuer reinvests an amount
equal to the capital returned to or recovered by the issuer
from the original investment, exclusive of any profits
realized, in another qualified low-income community investment
in this State within 12 months after the receipt of that
capital. An issuer is not required to reinvest capital
returned from qualified low-income community investments after
the 6th anniversary of the issuance of the qualified equity
investment, the proceeds of which were used to make the
qualified low-income community investment, and the qualified
low-income community investment shall be considered held by
the issuer through the 7th anniversary of the qualified equity
investment's issuance.
The Department of Revenue shall provide notice to the
qualified community development entity of any proposed
recapture of tax credits pursuant to this Section. The entity
shall have 90 days to cure any deficiency indicated in the
Department of Revenue's original recapture notice and avoid
such recapture. If the entity fails or is unable to cure such

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deficiency with the 90-day period, the Department of Revenue
shall provide the entity and the taxpayer from whom the credit
is to be recaptured with a final order of recapture. Any tax
credit for which a final recapture order has been issued shall
be recaptured by the Department of Revenue from the taxpayer
who claimed the tax credit on a tax return.
(Source: P.A. 100-408, eff. 8-25-17.)
(20 ILCS 663/45)
Sec. 45. Examination and Rulemaking.
(a) The Department may conduct examinations to verify that
the tax credits under this Act have been received and applied
according to the requirements of this Act and to verify that no
event has occurred that would result in a recapture of tax
credits under Section 40.
(b) Neither the Department nor the Department of Revenue
shall have the authority to promulgate rules under the Act,
but, with respect to qualified equity investments issued
before January 1, 2024, the Department and the Department of
Revenue shall have the authority to issue advisory letters to
individual qualified community development entities and their
investors that are limited to the specific facts outlined in
an advisory letter request from a qualified community
development entity. Such rulings cannot be relied upon by any
person or entity other than the qualified community
development entity that requested the letter and the taxpayers

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that are entitled to any tax credits generated from
investments in such entity. For purposes of this subsection,
"rules" is given the meaning contained in Section 1-70 of the
Illinois Administrative Procedure Act.
(c) In rendering advisory letters and making other
determinations under this Act prior to January 1, 2024, to the
extent applicable, the Department and the Department of
Revenue shall look for guidance to Section 45D of the Internal
Revenue Code of 1986, as amended, and the rules and
regulations issued thereunder.
(d) It is the intent of the General Assembly that
qualified equity investment structures allowed pursuant to
advisory letters and other determinations by the Department
and the Department of Revenue prior to January 1, 2024 shall be
allowed under the primary allocation and the targeted
allocation and that qualified community development entities
may rely on the rules and regulations issued under Section 45D
of the Internal Revenue Code of 1986, as amended, where
applicable.
(Source: P.A. 95-1024, eff. 12-31-08.)
(20 ILCS 663/55)
Sec. 55. Annual report. Each qualified community
development entity shall submit an annual report to the
Department within 45 days after the beginning of each calendar
year during the compliance period. No annual report shall be

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due prior to the first anniversary of the initial credit
allowance date. The report shall include, but is not limited
to, the following:
(1) an attestation from an authorized officer of the
qualified community development entity that the entity has
not been the subject of any investigation by a government
agency relating to tax credits or financial services
during the preceding calendar year;
(2) information with respect to all qualified
low-income community investments made by the qualified
community development entity, including:
(A) the date and amount of, and bank statements or
wire transfer reports documenting, such qualified
low-income community investments;
(B) the name, address, and EIN, and the North
American Industry Classification System (NAICS) code
for the targeted allocation, of each qualified active
low-income community business funded by the qualified
community development entity, the number of persons
employed by such business at the time of the initial
investment, and a brief description of the business,
the financing, and community benefits of the
financing; and
(C) the number of employment positions maintained
by each qualified active low-income community business
as of the date of report or the end of the preceding

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calendar year and the average annual salaries of such
positions; and
(D) the total number of employment positions
created and retained as a result of qualified
low-income community investments and the average
annual salaries of those positions; and
(3) any changes with respect to the taxpayers entitled
to claim tax credits with respect to qualified equity
investments issued by the qualified community development
entity since its last report pursuant to this Section.
The qualified community development entity is not required
to provide the annual report set forth in this Section for
qualified low-income community investments that have been
redeemed or repaid.
(Source: P.A. 100-408, eff. 8-25-17.)
Section 99. Effective date. This Act takes effect upon
becoming law.