Enterprise
Zone
Although the program is administered
at the state level by the Department of Commerce and
Economic Opportunity (DCEO), the Alliance and our
partners will work with your company in securing these
benefits. An enterprise zone is a specific area designated
by the State of Illinois in cooperation with local
governments to receive various tax incentives and
other benefits to stimulate economic activity and
neighborhood revitalization.
Currently there is one Enterprise
Zone in Edwardsville (view
map), which is designed to encourage companies
to locate or expand within this designated area. Additionally,
this zone offers distinctive local incentives to enhance
business or neighborhood development efforts. Such
local incentives include abatement of property taxes
on new improvements, homesteading and shopsteading
programs, waiver of business licensing and permit
fees, streamlined building code and zoning requirements,
and special local financing programs and resources.
State Incentives
Property Tax Abatement
- Property owners that improve or renovate industrial,
commercial, or manufacturing property within the zones
(and not within Tax Increment Financing Districts)
are eligible to receive property tax abatement on
the assessed value of the improvements.
Sales Tax Exemption
– A 6.25 percent state sales tax exemption is
permitted on building materials to be used in an Enterprise
Zone. Materials must be permanently affixed to the
property and must be purchased from a qualified retailer.
Income Tax Deduction
for Financial Institutions: Banks
are eligible for a special deduction from their Illinois
corporate income tax return. Such institutions may
deduct from their taxable income, an amount equal
to the interest received from a loan for development
in an enterprise zone.
Enterprise Zone Machinery
and Equipment Consumables/Pollution Control Facilities
Sales Tax Exemption – The
Revenue Act 35 ILCS 120/1d-1f A 6.25 percent sales
tax exemption on purchases of tangible personal property
to be used in the manufacturing or assembly process
or in the operation of a pollution control facility
within an Enterprise Zone is available. Eligibility
is based on business making an investment in an Enterprise
Zone of at least $5 million in qualified property
that creates a minimum of 200 full-time-equivalent
jobs, a business investing at least $40 million in
a zone and retaining at least 2,000 jobs, or a business
investing at least $40 million in a zone which causes
the retention of at least 90 percent of the jobs existing
on the date it is certified to receive the exemption.
Enterprise Zone Utility
Tax Exemption – A state utility tax
exemption on gas, electricity, the Illinois Commerce
Commission’s administrative charge and telecommunication
excise tax is available to businesses located in Enterprise
Zones. Eligible businesses must make an investment
of at least $5 million in a qualified property that
creates a minimum of 200 full-time-equivalent jobs
in Illinois, an investment of $20 million that retains
at least 1,000 full-time-equivalent jobs, or an investment
of $175 million that creates 150 full-time-equivalent
jobs in Illinois. The majority of the jobs created
must be located in the Enterprise Zone where the investment
occurs.
Enterprise Zone Investment
Tax Credit – A state investment tax
credit of 0.5 percent is allowed a taxpayer who invests
in a qualified property in an Enterprise Zone. Qualified
property includes machinery, equipment and buildings.
The credit may be carried forward for up to five years.
This credit is in addition to the regular 0.5 percent
investment tax credit, which is available throughout
the state, and up to 0.5 percent credit for an increase
in employment over the previous year.
Dividend Income Deduction
– Individuals, corporations, trusts
and estates are not taxed on dividend income from
corporations doing substantially all their business
in an Enterprise Zone.
Jobs Tax Credit –
The Enterprise Zone Jobs Tax Credit allows a business
a $500 credit on Illinois income taxes for each job
created in the Zone for which a certified eligible
worker is hired. The credit may be carried forward
for up to five years. A minimum of five workers must
be hired to qualify for the credit. The credit is
effective for people hired on or after January 1,
1986.
Interest Deduction
– Financial institutions are not taxed on the
interest received on loans for development within
an Enterprise Zone.
Contribution Deduction
– Business may deduct double the value of a
cash or in-kind contribution to an approved project
of a designated Enterprise Zone organization from
taxable income.
Enterprise
Zone Participation Loan Program (EZ/PLP) The EZ/PLP
is a variation of the conventional PLP Program, in
that DCEO subordinates the loans through participating
lending institutions, but the EZ/PLP may be able to
provide small businesses located in an Enterprise
Zone a more attractive loan rate than a conventional
PLP.
Authorization:
The EZ/PLP program is authorized by the Illinois Enterprise
Zone Act found in statute 70
ILCS 520/10 from Ch. 85, par. 6160.
How the Program Works
The EZ/PLP is a variation of the conventional PLP
Program, in that DCEO subordinates the loans through
participating lending institutions, but the EZ/PLP
may be able to provide small businesses located in
an Enterprise Zone a more attractive loan rate than
a conventional PLP. Edwardsville is home to a large
Enterprise Zone.
Enterprise Zone PLP Program is designed to encourage
economic development and neighborhood revitalization
in Illinois Enterprise Zones. DCEO can provide below-market
subordinated financing to companies located in, or
expanding in, an Illinois Enterprise Zone. Participation
works the same as a conventional PLP, but offers an
incentive rate of 200 basis points below index rate
on DCEO's portion of financing for variable rate loans,
with fixed and adjustable rate loans being comparable
with U.S. Treasury notes plus 0-1%. Funds available
through these three programs can be used for a number
of business activities, such as purchase and installation
of machinery and equipment, working capital, purchase
of land, or construction or renovation of buildings.
Funds cannot be used for debt refinancing or contingency
funding.
Any for-profit small business operating in Illinois
which has fewer than 500 full-time employees (including
its affiliates), and is located within a designated
Illinois Enterprise Zone, is eligible for participation
in this program.
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