Kankakee County Top Employer Luncheon

October 1, 2015

Kankakee County Enterprise Zone Program• Historical Perspective

• 92 Zones State-wide

• Zones Established in 1984• Kankakee River Valley Enterprise Zone

• Projects: 140 Capital Investment: ~$1B *since 2005• Kankakee County Enterprise Zone

• Projects: 122 Capital Investment: $133,650,000 *since inception

• Incentives are Boundary Specific; No minimum qualifications; No case-by-case approval; no clawback

Kankakee County Enterprise Zone Program• Both Zones Set to Expire on July 1, 2016• New State Legislation• New zone application process in 2014• Competitive Process• New Application with 9 Criteria

• State ranks applications based on scoring system• Criteria reflects degree of economic distress and potential projects• Scoring was performed during first half of 2015 by DCEO• 49 zones recommended for certification

• Kankakee County was Successful in Both Applications

Kankakee County Enterprise Zones• Kankakee River Valley• City of Kankakee• Village of Aroma Park• Village of Bourbonnais• Village of Bradley• Village of Herscher• Unincorporated Kankakee County

• Kankakee County• Village of Grant Park• Village of Hopkins Park• Village of Manteno• City of Momence• Unincorporated Kankakee County

Incentive Overview• Property Tax Abatement• Free or Discounted Building Permits• Expedited Approval Process/Point-of-Contact• Sales Tax Deduction (Building Materials)• Investment Tax Credit• Machinery and Equipment Sales Tax Exemption• Utility Tax Exemption

Incentives• Property Tax (Local)• New Construction• 5 years – 100%, 80%, 60%, 40%, 20%• Industrial, manufacturing, distribution, warehousing• Kankakee County – includes commercial, office, and retail

• Free or Discounted Building Permits (Local)• Free – Villages of Bourbonnais, Bradley, Aroma Park, Manteno, Grant Park,

Hopkins Park (all charge inspection fees)• 50% Discount – City of Kankakee and Kankakee County• No Discount – Momence, Hopkins Park, Herscher

EZ Incentives• Sales Tax Deduction (Building Materials Exemption)• Building Materials• Issuance of Building Permit Required• Certificate of Eligibility for Sales Tax Exemption• What qualifies? “Building materials that are eligible for the enterprise zone sales tax deduction

include items that are permanently affixed to real property such as lumber, mortar, glued-down carpets, wallpaper, and similar affixed items.”

• Investment Tax Credit• Allows a .5 percent credit against the state income tax for investments in

qualified property, which is placed in service in an enterprise zone.

EZ Incentives• Investment Tax Credit Continued• The credit may be taken by a qualified taxpayer who makes an investment in

“qualified property” and who otherwise meet the terms of the State• “Qualified Property” – tangible, whether new or used, including buildings and

structural components of buildings, acquired by purchase, is depreciable, has a useful life….• Examples: buildings, structural components of buildings, elevators, material

tanks, boilers, and major computer installations.

EZ Incentives• EZ Machinery and Equipment Sales Tax Exemption• Certification by the State is required prior to getting exemption• Several qualifying criteria

• Utility Tax Exemption• State certification is required• Several qualifying criteria must be met by the company• 5 percent state tax exemption on gas, electricity, and the ICC .1 percent

administrative charge and excise tax on the act or privilege or originating or receiving telecommunications.

New Zone Requirement• Enterprise Zone Fee• Effective January 1, 2016• All projects obtaining a Sales Tax Exemption Certificate in both Zones• Enterprise Zone Fee (IL Statutes)

( “b) The Zone Administrator shall collect and aggregate the following information: (1) the estimated cost of each building project, broken down into labor and materials; and (2) within 60 days after the end of the project, the estimated cost of each building project, broken down into labor and materials. (c) By April 1 of each year, each Zone Administrator shall file a copy of its fee schedule with the Department, and the Department shall post the fee schedule on its website. Zone Administrators shall charge no more than 0.5% of the cost of building materials of the project associated with the specific Enterprise Zone, with a maximum fee of no more than $50,000.”

Enterprise Zone Fee• Purpose of Fee:

Supplemental funding for Kankakee County economic development activities, including administration of the zone, staffing and resources to meet existing industries’ needs, additional economic development programming to make Kankakee County a good place to do business, marketing Kankakee County for business.

• Accountability For Use of Funds:Enterprise Zone Boards comprised of Mayors of participating communities and County Board Chair.

• Fee Computed for Building Materials only. Does not include the cost of engineering/design, land, nor machinery or equipment.

Example• Project Cost: $1,000,000• Project Breakdown• Labor = 40% of project; Equipment = 40% Materials = 20%

• $200,000 material costs* 0.5% EZ Fee = $1,000• Minimum Sales Tax Saving (6.25%) = $11,500• Kankakee County Scenario

Building Permit Fee (50%) = $2,488 ($600,000 project)

EZ Fee = $1,000TOTAL Fees for Project = $3,488

Reporting• Businesses receiving EZ benefits and entities obtaining a Building

Materials Exemption Certificate are required to complete a report to the Illinois Department of Revenue by May 31st of each year for benefits received the previous year.

• Website: http://www.tax.illinois.gov/Businesses/Incentives/

Questions