Bill
SB 4018
Closes with expanded flexibility for overlapping Enterprise Zone and Redevelopment Project Areas tax abatements and broadens STAR Bonds rules and oversight to support larger, mixed
SB4018 (104th General Assembly) - ENTERPRISE ZONE-STAR BONDS
Overview
- Jurisdiction: Illinois
- Introduced: February 6, 2026
- Main aim: Create clarifications and expanded flexibility for combining Enterprise Zone tax abatements with Redevelopment Project Areas (Tax Increment Allocation Redevelopment Act) and to modernize and broaden the Illinois STAR Bonds framework (State Sales Tax Increment Financing) under the Statewide Innovation Development and Economy Act.
Key Provisions and Changes
1) Enterprise Zone and Redevelopment Project Areas (Tax Increment Financing interplay)
- New flexibility for overlapping zones:
- If a municipality has an Enterprise Zone and later creates a Redevelopment Project Area (RPA) under the Tax Increment Allocation Redevelopment Act, the municipality may provide a partial tax abatement for property located in both the Enterprise Zone and the RPA.
- Conversely, if a municipality first creates an RPA and later adopts an Enterprise Zone that includes property within the RPA, the same partial abatement option applies.
- Abatement caveats:
- Property in both designations is generally not eligible for the full tax abatement under Section 18-170 of the Property Tax Code, unless explicitly allowed by amendments.
- If abatements are reduced or removed due to the overlap, any remaining taxes abated are governed by the applicable redevelopment agreement and tax increment financing (TIF) terms.
- Protections for pre-existing benefits:
- Existing businesses that have already received abatements or substantial pre-commitments prior to amendments remain eligible for benefits already extended, subject to certain evidentiary requirements (evidence of prior commitments and reasonable reliance).
2) Statewide Innovation Development and Economy Act (STAR Bonds)
- Definitions and scope updated:
- Clarifies terms such as “Base year,” “Commence work,” “Development user,” “NOVA district” (premium, larger NOVA districts), “Local hotel tax,” “Local sales taxes,” “Local sales tax increment,” and other STAR bond-related concepts.
- Expands the universe of project costs eligible for STAR bonds (infrastructure, public works, private improvements, job training, design/engineering, etc.) with specific exclusions (e.g., new municipal buildings not required to meet STAR objectives, general overhead).
- Project approval timeline:
- Requires STAR bond project plans to be submitted by June 1, 2028 for consideration.
- Establishes a detailed process for feasibility studies, market studies, economic impact analyses, and independent reviews, with the Governor’s Office of Management and Budget (GOMB) and state agencies involved.
- State agencies must jointly review and recommend approval; the Governor issues final approval.
- NOVA districts:
- NOVA districts have enhanced thresholds (e.g., larger minimum investment and job creation) and distinct revenue sharing provisions, including higher State sales tax increment capture in some cases.
- Project costs and financing:
- Specifies eligible revenues for STAR bond repayment, including State and local sales tax increments, local hotel taxes, and other pledges.
- Sets limits on debt maturity (generally up to 23 years, with potential extension up to 35 years by Governor approval) and conditions on extending maturities.
- Operational requirements and governance:
- Master developers and project labor agreements (PLAs) are integrated, with requirements for wage and apprenticeship goals, anti-strike/anti-lockout provisions, and procurement standards.
- Requires annual reporting by subdistricts on STAR bond project status, expenditures, and revenue projections, with audits potentially conducted by Auditor General or independent third parties at master developer’s cost.
- Revenue administration:
- Establishes dedicated STAR Bonds Revenue Funds and rules for distributing and certifying State and local increments to municipalities and counties.
- Addresses boundary/address reporting, boundary changes, and enforcement to ensure accurate tax increment allocation.
Who Would Be Affected
- Municipalities and counties establishing or overlapping Enterprise Zones, RPAs (TIF districts), and NOVA STAR bond districts.
- Property owners and developers within overlapping zones (enterprise zones and RPAs) who may receive partial tax abatements.
- Master developers, codevelopers, subdevelopers, and development users participating in STAR bond projects, NOVA districts, or related infrastructure and entertainment/hotel projects.
- Local governments that may impose STAR Bond occupation taxes, hotel taxes, and related increments to fund bond payments.
- State agencies (Department of Revenue, Governor’s Office, Department of Commerce and Economic Opportunity) responsible for approval, administration, auditing, and distribution of STAR bond revenues.
Timelines and Process
- June 1, 2028: Deadline for submitting proposed STAR bond projects to state agencies for consideration.
- Public hearings and project plan adoption follow statutory steps, including notices to counties and affected landowners, with varying hearing windows (typically 20–90 days after resolutions).
- Annual reporting on STAR bond projects due after project commencement, with potential audits.
- STAR bonds generally mature within 23 years, with possible extension to 35 years, including NOVA district-specific rules.
Impact Considerations
- Enables more flexible use of tax incentives by allowing overlapping benefits, potentially expanding redevelopment outcomes in distressed areas.
- Expands and tightens governance and oversight for STAR bond projects, aiming to improve accountability, financial viability, and economic impact for the State and localities.
- Balances incentives with protections for existing taxpayers and adheres to redevelopment financing norms by tying abatements to redevelopment agreements and TIF plans.
Compiled from official sources — confirm details with the bill’s official record.
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