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Home My WebLink AboutS3-15 (3) Ordinance No. S3-15 AN ORDINANCE EXTENDING THE EXPIRATION DATE OF THE ELGIN ENTERPRISE ZONE WHEREAS, by authority granted in the Illinois Enterprise Zone Act (20 ILCS 655/1 et seq., as amended) (the "Act"), the City passed ordinance G63-84 on December 17, 1984 (the "Designating Ordinance") to support the establishment of the Elgin Enterprise Zone for a life of ten years through December 31, 1995; and WHEREAS, the designation of the Elgin Enterprise Zone along with various subsequent amendments to the Designating Ordinance have been certified by the Illinois Department of Commerce and Economic Opportunity ("DCEO") or by the Illinois Department of Commerce and Community Affairs, the predecessor of DCEO; and WHEREAS, the City passed ordinance G67-95 on September 13, 1995 to extend the Elgin Enterprise Zone for an additional ten years, expiring on December 31, 2005; and WHEREAS, DCEO on November 3, 1995 extended the certification of the Elgin Enterprise Zone for ten years, ending December 31, 2005 under the provisions of the Act; and, WHEREAS, the City passed ordinance S30-04 on October 27, 2004 to extend the Elgin Enterprise Zone for an additional ten years, expiring on December 31, 2015; and WHEREAS, DCEO on December 2, 2004 extended the certification of the Elgin Enterprise Zone for ten years, ending December 31, 2015 under the provisions of the Act; and WHEREAS, Section 5.3(c) of the Act provides that each enterprise zone scheduled to terminate before July 1, 2016 may have its termination date extended until July 1, 2016 upon amendment of the Designating Ordinance by the designating municipality pursuant to Section 5.4 of the Act; and WHEREAS, enterprise zones provide state and local incentives to promote the economic growth of the area, to reduce unemployment, and to encourage expansion, rehabilitation, and new construction of structures within the Elgin Enterprise Zone; and WHEREAS, the City has determined it is necessary and desirable to further amend the Designating Ordinance by extending the termination date of the Elgin Enterprise Zone to July 1, 2016. l`9b%`�9<<cts" • Tom- 4 NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF ELGIN, ILLINOIS: Section 1. That Designating Ordinance G63-84, as amended, be and the same is hereby further amended so that the Elgin Enterprise Zone shall terminate on July 1, 2016. All incentives and exemptions available in the Elgin Enterprise Zone shall expire on July 1, 2016. Section 2. That all other provisions of Designating Ordinance G63-84, as amended, not inconsistent with this ordinance shall remain in effect. Section 3. The City, upon passage, approval and publication of this ordinance as required by law, shall file with the DCEO an application for approval of said ordinance, pursuant to Section 5.4 of the Act. Section 4. All ordinances, or parts of ordinances, in conflict with this ordinance are, to the extent of such conflict, hereby repealed. Section 5. This ordinance shall be in full force and effect from and after its passage, approval and publication as provided by law. s/David J. Kaptain David J. Kaptain, Mayor Presented: May 6, 2015 Passed: May 6, 2015 Omnibus Vote: Yeas: 9 Nays: 0 Recorded: May 6, 2015 Published: May 7, 2015 Attest: s/Kimberly Dewis Kimberly Dewis, City Clerk • - 2 - *--- ill a REPORT TO MAYOR & MEMBERS OF CITY COUNCIL E LG I N THE CITY IN THE SUBURBS AGENDA ITEM: E MEETING DATE: April 22, 2015 ITEM: Extend Expiration Date of Elgin Enterprise Zone (No cost to the City) OBJECTIVE: Extend the expiration of the Elgin Enterprise Zone by six months in accordance with amend- ments to Illinois Enterprise Zone Act. RECOMMENDATION: Adopt ordinance extending the expiration of the Elgin Enterprise Zone until July 1, 2016. BACKGROUND The Elgin Enterprise Zone (EZ) was established in late 1984 with a ten-year duration. The city has extended the expiration of the EZ for two additional ten-year periods, once in 1995 and again in 2004. The EZ will expire at the end of 2015 unless the city votes to extend the expira- tion date by six months until July 1, 2016 by taking advantage of recent amendments to the Illi- nois Enterprise Zone Act. The EZ was once comprised of five distinct zones: the Downtown Zone; North State Street Zone; Route 20 Zone; Gifford-Spaulding Zone; and the Madeline Lane Zone. But when the city created its River Edge Redevelopment Zone (RERZ) in late 2009 to receive capital funding from the State for the Riverside Drive Promenade and other downtown projects, the city was required to re- move any territory from the EZ that was located in the RERZ. State law prohibited property from being located within both an EZ and RERZ. After the creation of the RERZ, the EZ has been substantially reduced. Now, only the Route 20 Zone and Gifford-Spaulding Zone remain, along with a substantially reduced Downtown Zone. Three maps are attached for reference, one depicting the EZ boundaries before 2010 and an- other after 2010. The third map depicts the RERZ's boundaries. OPERATIONAL ANALYSIS • The Illinois Enterprise Zone Act (IEZA) was amended in 2012 to extend the expirations of enter- prise zones until July, 2016. The IEZA's 2012 amendments also eliminate River Edge Redevel- opment Zones upon their expiration, but allow an expiring RERZ to apply to become an enter- prise zones. The Elgin RERZ expires on December 31, 2039. • The 2012 IEZA amendments create new eligibility rules and create more specific criteria regard- ing the socio-economic conditions of an area before an extension to the duration of an EZ will be granted. Zones designated under the enrolled bill would have a 15-year term, with a review by the new Enterprise Zone Board at 13 years to determine whether the zone designation should be extended for an additional ten years. The Department of Commerce and Economic Opportunity (DCEO) will be utilizing new criteria to assign a score to EZ applications. DCEO will then submit applications and scores to the new five-member Enterprise Zone Board that is charged with approving or rejecting Enterprise Zone applications by majority vote. The law also eliminates three of the tax incentives provided to businesses in Enterprise Zones: the income tax credit of $500 for each hire that is economically disadvantaged or a dislocated worker; the income tax exemption for dividends paid by corporations; and the deduction for interest income from loans secured by eligible investment credit property. Businesses in enter- prise zones can still take advantage of the remaining five state tax incentives: (1) investment tax credit which allows a half-percent credit against the state income tax for investments in quali- fied property, which is placed in service in an EZ; (2) sales tax deduction for building materials incorporated into real estate in an EZ; (3) machinery and equipment sales tax exemption for a business that either creates a minimum of 200 full-time equivalent jobs in Illinois, retains a min- imum of 2,000 full-time jobs in Illinois, or which retains 90 percent of its existing jobs; (4) utility tax exemption for any business making an investment in a zone that either creates a minimum of 200 full-time equivalent jobs in Illinois or retains a minimum of 1,000 full-time jobs in Illinois; and (5) property tax abatement, as determined by the municipality in which the EZ is situated. Extending the expiration of the Elgin EZ will enable the city to perform the analysis necessary to determine whether the remaining property within the Elgin EZ qualifies for an additional exten- sion under the IEZA amendments. While a preliminary review indicates the Elgin EZ may meet the stricter criteria in some of the areas, with the Elgin RERZ expiring on December 31, 2039, the city will continue to realize the development benefits afforded to the geographic area of the city that most closely satisfies the socio-economic factors governing the creation and exten- sion of enterprise zones. INTERESTED PERSONS CONTACTED The Elgin Development Group was consulted and supports the extending the expiration of the Elgin Enterprise Zone. 2 FINANCIAL ANALYSIS The financial incentives available under the Illinois Enterprise Zone Act do not directly affect the city's revenue streams, with the exception of the property tax abatement incentive. However, the city, alone, determines whether to abate property taxes for businesses within the Elgin En- terprise Zone. BUDGET IMPACT FUND(S) ACCOUNT(S) PROJECT#(S) AMOUNT AMOUNT BUDGETED AVAILABLE N/A N/A N/A N/A N/A LEGAL IMPACT None. ALTERNATIVES The city council may allow the Elgin Enterprise Zone to expire on December 31, 2015. This al- ternative requires no further action by the city council. NEXT STEPS Adopt an ordinance extending the expiration of the Elgin Enterprise Zone until July 1, 2016. Originators: Richard G. Kozal, Assistant City Manager Final Review: Debra Nawrocki, Chief Financial Officer William A. Cogley, Corporation Counsel/Chief Development Officer Sean R. Stegall, City Manager 3 ATTACHMENTS A. Elgin Enterprise Zone Map—Pre-2010 B. Elgin Enterprise Zone Map—Post-2010 C. Elgin River Edge Enterprise Zone Map D. Ordinance Extending Expiration Date of Elgin Enterprise Zone •