Illinois Administrative Code › Title 86 - REVENUE › Part 4000 - STAR BONDS › Subpart A - PURPOSE, DEFINITIONS AND CONFIDENTIALITY › Section 4000.105 - Definitions

Current through Register Vol. 48, No. 28, July 12, 2024
The following definitions are applicable to this Part and
				  derived from Section 10 of the Act.
" Act" means the Innovation Development and Economy Act [50
				  ILCS 470 ].
"Adverse impacts" means the negative effect of the proposed
				  STAR bond project on existing businesses and units of local government within
				  the market area and includes, but is not limited to, any negative effects on
				  local, regional and State employment, including displacement; any negative
				  effect on the local, regional and State economies; any negative effect on sales
				  and income tax revenue; any negative effect on local vacancy rates for all
				  property in the market area similar to property that is proposed to be
				  developed in the STAR bonds district; and any negative environmental
				  impact.
"Applicant" means a political subdivision that applies to the
				  Illinois Department of Revenue for approval of a STAR bond district or STAR
				  bond project.
"Base year" means the calendar year immediately prior to the
				  calendar year in which the STAR bond district is established.
"Department" means the Illinois Department of Revenue.
"Destination hotel" means a hotel (as that term is defined in
				  Section 2 of the Hotel Operators' Occupation Tax Act [35 ILCS 145 ]) complex
				  having at least 150 guest rooms and that also includes a venue for
				  entertainment attractions, rides, or other activities oriented toward the
				  entertainment and amusement of its guests and other patrons.
"Destination user" means an owner, operator, licensee,
				  co-developer, subdeveloper or tenant:
that operates a business within a STAR bond district that is
				  a retail store having at least 150,000 square feet of sales floor area;
that at the time of opening does not have another Illinois
				  location within a 70 mile radius;
that has an annual average of not less than 30% of customers
				  who travel from at least 75 miles away or from out-of-state, as demonstrated by
				  data from a comparable existing store or stores, or, if there is no comparable
				  existing store, as demonstrated by an economic analysis that shows that the
				  proposed retailer will have an annual average of not less than 30% of customers
				  who travel from at least 75 miles away or from out-of-state who would not have
				  traveled without the presence of the destination user; and
that makes an initial capital investment, including project
				  costs and other direct costs, of not less than $30,000,000 for the retail
				  store.
"Director" means the Director of Revenue, who shall consult
				  with the Director of Commerce and Economic Opportunity in any approvals or
				  decisions required by the Director under the Act.
"Economic impact study" means a study conducted by an
				  independent economist to:
project the financial benefit of the proposed STAR bond
				  project to the local, regional and State economies;
consider the proposed adverse impacts on similar projects and
				  businesses, as well as municipalities within the projected market area;
				  and
draw conclusions about the net effect of the proposed STAR
				  bond project on the local, regional and State economies.
"Eligible area" means any improved or vacant area
				  that:
is contiguous and is not, in the aggregate, less than 250
				  acres nor more than 500 acres that include only parcels of real property
				  directly and substantially benefited by the proposed STAR bond district
				  plan;
is adjacent to a federal interstate highway;
is within one mile of 2 State highways;
is within one mile of an entertainment user, or a major or
				  minor league sports stadium or other similar entertainment venue that had an
				  initial capital investment of at least $20,000,000; and
includes land that was previously surface or strip
				  mined.
The area may be bisected by streets, highways, roads, alleys,
				  railways, bike paths, streams, rivers and other waterways and still be deemed
				  contiguous. In addition, in order to constitute an eligible area, one of the
				  following requirements must be satisfied and all of which are subject to the
				  review and approval of the Director as provided in Section
				  4000.201(b):
the governing body of the political subdivision shall have
				  determined that the area meets the requirements of a "blighted area" as defined
				  under the Tax Increment Allocation Redevelopment Act [65 ILCS 5 /Ch. 11, Div.
				  74.4 ]; or
the governing body of the political subdivision shall have
				  determined that the area is a blighted area as determined under the provisions
				  of Section 11-74.3-5 of the Illinois Municipal Code [65 ILCS 5/11-74.3-5] (the
				  Business District Development and Redevelopment Law); or
the governing body of the political subdivision shall make
				  the following findings:
that the vacant portions of the area have remained vacant for
				  at least one year, or that any building located on a vacant portion of the
				  property was demolished within the last year and that the building would have
				  qualified under the following paragraph;
if portions of the area are currently developed, that the
				  use, condition and character of the buildings on the property are not
				  consistent with the purposes set forth in Section 5 of the Act;
that the STAR bond district is expected to create or retain
				  job opportunities within the political subdivision;
that the STAR bond district will serve to further the
				  development of adjacent areas;
that without the availability of STAR bonds, the projects
				  described in the STAR bond district plan would not be possible;
that the master developer meets high standards of
				  creditworthiness and financial strength as demonstrated by one or more of the
				  following: corporate debenture ratings of BBB or higher by Standard &
				  Poor's Corporation or Baa or higher by Moody's Investors Service, Inc.; a
				  letter from a financial institution with assets of $10,000,000 or more
				  attesting to the financial strength of the master developer; or specific
				  evidence of equity financing for not less than 10% of the estimated total STAR
				  bond project costs;
that the STAR bond district will strengthen the commercial
				  sector of the political subdivision;
that the STAR bond district will enhance the tax base of the
				  political subdivision; and
that the formation of a STAR bond district is in the best
				  interest of the political subdivision.
"Entertainment user" means an owner, operator, licensee,
				  co-developer, subdeveloper or tenant that operates a business within a STAR
				  bond district that has a primary use of providing a venue for entertainment
				  attractions, rides or other activities oriented toward the entertainment and
				  amusement of its patrons, occupies at least 20 acres of land in the STAR bond
				  district, and makes an initial capital investment, including project costs and
				  other direct and indirect costs, of not less than $25,000,000 for that
				  venue.
"Feasibility study" means and includes all of the elements of
				  the feasibility study set forth in Section
				  4000.301.
"Financial benefit" means the positive effect of the proposed
				  STAR bond project on existing businesses and units of local government within
				  the market area and includes, but is not limited to, any positive effects on
				  local, regional and State employment; any positive effect on the local,
				  regional and State economies; any positive effect on sales and income tax
				  receipts; and any positive effect on local vacancy rates for all property in
				  the market area similar to property that is proposed to be developed in the
				  STAR bond district.
"Job" means a full-time permanent equivalent, direct
				  job.
"Local economy" means the economy of the political
				  subdivision in which the STAR bond project is proposed.
"Local sales taxes" means any locally-imposed taxes received
				  by a municipality, county, or other local governmental entity arising from
				  sales by retailers and servicemen within a STAR bond district, including
				  business district sales taxes and STAR bond occupation taxes, and that portion
				  of the net revenue realized under the Retailers' Occupation Tax Act [35 ILCS
				  120 ], the Use Tax Act [35 ILCS 105 ], the Service Use Tax Act [35 ILCS 110 ],
				  and the Service Occupation Tax Act [35 ILCS 115 ] from transactions at places
				  of business located within a STAR bond district that is deposited into the
				  Local Government Tax Fund and the County and Mass Transit District Fund. For
				  the purpose of the Act, "local sales taxes" does not include:
any taxes authorized pursuant to the Local Mass Transit
				  District Act [70 ILCS 3610 ], the Metro-East Park and Recreation District Act
				  [70 ILCS 1605 ], or the Flood Prevention District Act [70 ILCS 750 ] for so
				  long as the applicable taxing district does not impose a tax on real property;
				  or
county school facility occupation taxes imposed pursuant to
				  Section 5-1006.7 of the Counties Code. [55 ILCS
				  5/5-1006.7]
This means that, except as otherwise provided in this
				  definition, local sales taxes include any locally-imposed sales taxes in
				  addition to the
				  1.25 % portion of
				  the 6.25 % State-imposed sales tax on general merchandise and the 1%
				  State-imposed sales tax on qualifying food, drugs and medical
				  appliances.
"Local sales tax increment" means, with respect to local
				  sales taxes administered by the Department:
all of the local sales tax paid by destination users,
				  destination hotels and entertainment users that is in excess of the local sales
				  tax paid by destination users, destination hotels and entertainment users for
				  the same month in the base year, as determined by the Department;
in the case of a municipality forming a STAR bond district
				  that is wholly within the corporate boundaries of the municipality and, in the
				  case of a municipality and county forming a STAR bond district that is only
				  partially within a municipality, that portion of the local sales tax paid by
				  taxpayers that are not destination users, destination hotels or entertainment
				  users that is in excess of the local sales tax paid by taxpayers that are not
				  destination users, destination hotels or entertainment users for the same month
				  in the base year, as determined by the Department; and
in the case of a county in which a STAR bond district is
				  formed that is wholly within a municipality, that portion of the local sales
				  tax paid by taxpayers that are not destination users, destination hotels or
				  entertainment users that is in excess of the local sales tax paid by taxpayers
				  that are not destination users, destination hotels or entertainment users for
				  the same month in the base year, as determined by the Department, but only if
				  the corporate authorities of the county adopt an ordinance, and file a copy
				  with the Department within the same time frames as required for STAR bond
				  occupation taxes under Section 31 of the Act, that designates the taxes
				  referenced in this paragraph as part of the local sales tax increment under the
				  Act.
As indicated in the previous paragraph, if a STAR bond
				  district is formed that is wholly within the boundaries of a municipality, then
				  in order for the proceeds of a county-imposed sales tax or a county's 0.25 %
				  share of the 6.25% State-imposed sales tax that is generated in the STAR bond
				  district by taxpayers that are not destination users, destination hotels or
				  entertainment users to be considered as part of the "local sales tax
				  increment", the corporate authorities of the county must adopt an ordinance
				  that designates these tax revenues as part of the local sales tax increment and
				  file a certified copy of that ordinance with the Department on or before April
				  1 for implementation on the following July 1 or on or before October 1 for
				  implementation on the following January 1. Otherwise, those sales tax revenues
				  will continue to be allocated and distributed by the Department as otherwise
				  directed by the statute, as if there were no STAR bond district.
"Market study" means a study to determine the ability of the
				  proposed STAR bond project to gain market share locally and regionally and to
				  remain profitable past the term of repayment of STAR bonds.
"Master developer" means a developer cooperating with a
				  political subdivision to plan, develop and implement a STAR bond project plan
				  for a STAR bond district. Subject to the limitations of Section 25 of the Act,
				  the master developer may work with and transfer certain development rights to
				  other developers for the purpose of implementing STAR bond project plans and
				  achieving the purposes of the Act. A master developer for a STAR bond district
				  shall be appointed by a political subdivision in the resolution establishing
				  the STAR bond district, and the master developer must, at the time of
				  appointment, own or have control of, through purchase agreements, option
				  contracts or other means, not less than 50% of the acreage within the STAR bond
				  district and the master developer or its affiliate must have ownership or
				  control on June 1, 2010.
"Master development agreement" means an agreement between the
				  master developer and the political subdivision to govern a STAR bond district
				  and any STAR bond projects.
"New job" means a full-time permanent equivalent, direct job,
				  after accounting for displacement.
"Pledged STAR revenues" means those sales tax and revenues
				  and other sources of funds pledged to pay debt service on STAR bonds or to pay
				  project costs pursuant to Section 30 of the Act. Notwithstanding any provision
				  to the contrary, the following revenues shall not constitute pledged STAR
				  revenues or be available to pay principal and interest on STAR bonds: any State
				  sales tax increment or local sales tax increment from a retail entity
				  initiating operations in a STAR bond district while terminating operations at
				  another Illinois location within 25 miles of the STAR bond district. For
				  purposes of this definition, "terminating operations" means a closing of a
				  retail operation that is directly related to the opening of the same operation,
				  or like retail entity owned or operated by more than 50% of the original
				  ownership, in a STAR bond district within one year before or after initiating
				  operations in the STAR bond district, but it does not mean closing an operation
				  for reasons beyond the control of the retail entity, as documented by the
				  retail entity, subject to a reasonable finding by the municipality (or county
				  if the retail operation is not located within a municipality) in which the
				  terminated operations were located that the closed location contained
				  inadequate space, had become economically obsolete or was no longer a viable
				  location for the retailer or serviceman.
"Political subdivision" means a municipality or county that
				  undertakes to establish a STAR bond district pursuant to the provisions of the
				  Act.
"Project costs" means and includes the sum total of all costs
				  incurred or estimated to be incurred on or following the date of establishment
				  of a STAR bond district that are reasonable or necessary to implement a STAR
				  bond district plan or any STAR bond project plans, or both, including costs
				  incurred for public improvements and private improvements that serve the public
				  purposes set forth in Section 5 of the Act. Those costs include without
				  limitation the following:
costs of studies, surveys, development of plans and
				  specifications, formation, implementation, and administration of a STAR bond
				  district, STAR bond district plan, any STAR bond projects or any STAR bond
				  project plans, including, but not limited to, staff and professional service
				  costs for architectural, engineering, legal, financial, planning or other
				  services, provided however that no charges for professional services may be
				  based on a percentage of the tax increment collected and no contracts for
				  professional services, excluding architectural and engineering services, may be
				  entered into if the terms of the contract extend beyond a period of 3
				  years;
property assembly costs, including, but not limited to,
				  acquisition of land and other real property or rights or interests in that
				  property, located within the boundaries of a STAR bond district, demolition of
				  buildings, site preparation, site improvements that serve as an engineered
				  barrier addressing ground level or below ground environmental contamination,
				  including, but not limited to, parking lots and other concrete or asphalt
				  barriers, the clearing and grading of land, and importing additional soil and
				  fill materials, or removal of soil and fill materials from the site;
subject to the provisions of the
				  6th indented paragraph of this definition
				  (concerning costs of the design and construction of infrastructure and public
				  works), costs of buildings and other vertical improvements that are located
				  within the boundaries of a STAR bond district and owned by a political
				  subdivision or other public entity, including without limitation police and
				  fire stations, educational facilities and public restrooms and rest
				  areas;
costs of buildings and other vertical improvements that are
				  located within the boundaries of a STAR bond district and owned by a
				  destination user or destination hotel; except that only 2 destination users in
				  a STAR bond district and one destination hotel are eligible to include the cost
				  of those vertical improvements as project costs;
costs of buildings; rides and attractions, which include
				  carousels, slides, roller coasters, displays, models, towers, works of art and
				  similar theme and amusement park improvements; and other vertical improvements
				  that are located within the boundaries of a STAR bond district and owned by an
				  entertainment user; except that only one entertainment user in a STAR bond
				  district is eligible to include the cost of those vertical improvements as
				  project costs;
costs of the design and construction of infrastructure and
				  public works located within the boundaries of a STAR bond district that are
				  reasonable or necessary to implement a STAR bond district plan or any STAR bond
				  project plans, or both, except that project costs shall not include the cost of
				  constructing a new municipal public building principally used to provide
				  offices, storage space, or conference facilities or vehicle storage,
				  maintenance, or repair for administrative, public safety, or public works
				  personnel and that is not intended to replace an existing public building
				  unless the political subdivision makes a reasonable determination in a STAR
				  bond district plan or any STAR bond project plans, supported by information
				  that provides the basis for that determination, that the new municipal building
				  is required to meet an increase in the need for public safety purposes
				  anticipated to result from the implementation of the STAR bond district plan or
				  any STAR bond project plans;
costs of the design and construction of the following
				  improvements located outside the boundaries of a STAR bond district, provided
				  that the costs are essential to further the purpose and development of a STAR
				  bond district plan and either are part of and connected to sewer, water, or
				  utility service lines that physically connect to the STAR bond district or are
				  significant improvements for adjacent offsite highways, streets, roadways and
				  interchanges that are approved by the Illinois Department of Transportation. No
				  other cost of infrastructure and public works improvements located outside the
				  boundaries of a STAR bond district may be deemed project costs;
costs of job training and retraining projects, including the
				  cost of "welfare to work" programs implemented by businesses located within a
				  STAR bond district;
financing costs, including, but not limited to, all necessary
				  and incidental expenses related to the issuance of obligations and that may
				  include payment of interest on any obligations issued, including interest
				  accruing during the estimated period of construction of any improvements in a
				  STAR bond district or any STAR bond projects for which such obligations are
				  issued and for not exceeding 36 months thereafter, and including reasonable
				  reserves related to that financing;
to the extent the political subdivision by written agreement
				  accepts and approves the same, all or a portion of a taxing district's capital
				  costs resulting from a STAR bond district or STAR bond projects necessarily
				  incurred or to be incurred within a taxing district in furtherance of the
				  objectives of a STAR bond district plan or STAR bond project plans;
interest cost incurred by a developer for project costs
				  related to the acquisition, formation, implementation, development,
				  construction and administration of a STAR bond district, STAR bond district
				  plan, STAR bond projects or any STAR bond project plans, provided that:
payment of interest costs in any one year may not exceed 30%
				  of the annual interest costs incurred by the developer with regard to the STAR
				  bond district or any STAR bond projects during that year; and
the total of interest payments paid pursuant to the Act may
				  not exceed 30% of the total cost paid or incurred by the developer for a STAR
				  bond district or STAR bond projects, plus project costs, excluding any property
				  assembly costs incurred by a political subdivision pursuant to the Act;
costs of common areas located within the boundaries of a STAR
				  bond district;
costs of landscaping and plantings, retaining walls and
				  fences, man-made lakes and ponds, shelters, benches, lighting and similar
				  amenities located within the boundaries of a STAR bond district;
costs of mounted building signs, site monument and pylon
				  signs located within the boundaries of a STAR bond district; or
if included in the STAR bond district plan and approved in
				  writing by the Director, salaries or a portion of salaries for local government
				  employees to the extent the same are directly attributable to the work of those
				  employees on the establishment and management of a STAR bond district or any
				  STAR bond projects.
Except as specified in the preceding paragraphs, "project
				  costs" shall not include:
the cost of construction of buildings that are privately
				  owned or owned by a municipality and leased to a developer or retail user for
				  non-entertainment retail uses;
moving expenses for employees of the businesses locating
				  within the STAR bond district;
property taxes for property located in the STAR bond
				  district;
lobbying costs; and
general overhead or administrative costs of the political
				  subdivision that would still have been incurred by the political subdivision if
				  the political subdivision had not established a STAR bond district.
"Projected market area" means any area within the State in
				  which a STAR bond district or STAR bond project is projected to have a
				  significant fiscal or market impact as determined by the Director.
"Regional economy" means the market area surrounding the STAR
				  bond district located within Illinois, as determined by the economist preparing
				  the economic impact study and the feasibility consultants preparing the
				  feasibility study.
"STAR bond" means a sales tax and revenue bond, note or other
				  obligation payable from pledged STAR revenues and issued by a political
				  subdivision, the proceeds of which shall be used only to pay project costs as
				  defined in the Act and this Part.
"STAR bond district" means the specific area declared to be
				  an eligible area as determined by the political subdivision, and approved by
				  the Director, in which the political subdivision may develop one or more STAR
				  bond projects.
"STAR bond district plan" means the preliminary or conceptual
				  plan that generally identifies the proposed STAR bond project areas and
				  identifies in a general manner the buildings, facilities and improvements to be
				  constructed or improved in each STAR bond project area.
"STAR bond project" means a project within a STAR bond
				  district that is approved pursuant to Section 20 of the Act.
"STAR bond project area" means the geographic area within a
				  STAR bond district in which there may be one or more STAR bond projects.
"STARbond project plan" means the written plan adopted by a
				  political subdivision for the development of a STAR bond project in a STAR bond
				  district; the plan may include, but is not limited to:
project costs incurred prior to the date of the STAR bond
				  project plan and estimated future STAR bond project costs;
proposed sources of funds to pay those costs;
the nature and estimated term of any obligations to be issued
				  by the political subdivision to pay those costs;
the most recent equalized assessed valuation of the STAR bond
				  project area;
an estimate of the equalized assessed valuation of the STAR
				  bond district or applicable project area after completion of a STAR bond
				  project;
a general description of the types of any known or proposed
				  developers, users or tenants of the STAR bond project or projects included in
				  the plan;
a general description of the type, structure and character of
				  the property or facilities to be developed or improved;
a description of the general land uses to apply to the STAR
				  bond project; and
a general description or an estimate of the type, class and
				  number of employees to be employed in the operation of the STAR bond
				  project.
"State sales tax" means all of the net revenue realized under
				  the Retailers' Occupation Tax Act, the Use Tax Act, the Service Use Tax Act and
				  the Service Occupation Tax Act from transactions at places of business located
				  within a STAR bond district, excluding that portion of the net revenue realized
				  under the Retailers' Occupation Tax Act, the Use Tax Act, the Service Use Tax
				  Act and the Service Occupation Tax Act from transactions at places of business
				  located within a STAR bond district that is deposited into the Local Government
				  Tax Fund and the County and Mass Transit District Fund.
"State sales tax increment" means:
100% of the State sales tax that is in excess of the State
				  sales tax for the same month in the base year from transactions at up to 2
				  destination users, one destination hotel and one entertainment user located
				  within a STAR bond district, which destination users, destination hotel and
				  entertainment user shall be designated by the master developer and approved by
				  the political subdivision and the Director in conjunction with the applicable
				  STAR bond project approval. For example, if there were no destination users,
				  destination hotels or entertainment users open in the base year in the area
				  that becomes a STAR bond district, then the sales tax in the base year
				  generated by these types of entities would be zero and the increment would
				  equal the entire amount generated by these designated entities after the STAR
				  bond district is created and these designated entities become operational;
				  and
25% of the State sales tax that is in excess of the State
				  sales tax for the same month in the base year from all other transactions
				  within a STAR bond district.
If any portion of State sales taxes are, at the time of
				  formation of a STAR bond district, already subject to tax increment financing
				  under the Tax Increment Allocation Redevelopment Act [65 ILCS 5 ], then the
				  State sales tax increment for that portion shall be frozen at the base year
				  established in accordance with the Act, and all future incremental increases
				  shall be included in the State sales tax increment under the Act. Any party
				  otherwise entitled to receipt of incremental State sales tax revenues through
				  an existing tax increment financing district shall be entitled to continue to
				  receive those revenues up to the amount frozen in the base year. Nothing in the
				  Act shall affect the prior qualification of existing redevelopment project
				  costs incurred that are eligible for reimbursement under the Tax Increment
				  Allocation Redevelopment Act. In that event, prior to approving a STAR bond
				  district, the political subdivision forming the STAR bond district shall take
				  such action as is necessary, including amending the existing tax increment
				  financing district redevelopment plan, to carry out the provisions of the
				  Act.
"Substantial change" means a change in which the proposed
				  STAR bond project plan differs substantially in size, scope or use from the
				  approved STAR bond district plan or STAR bond project plan. If a destination
				  user, destination hotel or entertainment user has been approved as part of a
				  district plan or project plan, then any proposal to change to a different
				  destination user, destination hotel or entertainment user is a substantial
				  change. Any substantial changes to a STAR bond project plan as adopted shall be
				  subject to a public hearing following publication of notice in a newspaper of
				  general circulation in the political subdivision and approval by resolution of
				  the governing body of the political subdivision. [50 ILCS
				  470/20(i) ] In accordance with the
				  purpose of the Act, which includes encouraging true destination development,
				  any proposal to change to a different destination user, destination hotel, or
				  entertainment user must not take place unless it is also approved by the
				  Director.
"Total development costs" means the aggregate public and
				  private investment in a STAR bond district, including project costs and other
				  direct and indirect costs related to the development of the STAR bond
				  district.
"Traditional retail use" means the operation of a business
				  that derives at least 90% of its annual gross revenue from sales at retail, as
				  that phrase is defined by Section 1 of the Retailers' Occupation Tax Act, but
				  does not include the operations of destination users, entertainment users,
				  restaurants, hotels, retail uses within hotels or any other non-retail
				  uses.
"Vacant" means that portion of the land in a proposed STAR
				  bond district that is not occupied by a building, facility or other vertical
				  improvement.